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Teamwork:
Success starts with
the Fundamentals.




              2008
            ANNUAL REPORT
             & FORM 10-K
Company Stats 2008




O
                    wens & Minor, Inc., a FORTUNE                               Founded in Richmond in 1882, Owens &
                    500 company headquartered in                             Minor’s mission, vision and values provide
                    Richmond, Virginia, is a                                 fundamental support for a culture that places a
                    leading distributor of medical                           premium on customer-service excellence,
                    and surgical supplies to the                                         teammate well-being, shareholder
acute-care market, and a well-                                                           value, business integrity and social
known provider of healthcare                                                             responsibility. In support of their
supply-chain management solutions.                                                        communities, teammates through-
Revenues for Owens & Minor                                                                out the company volunteer for a
topped $7.2 billion in 2008,                                                              wide range of community service
resulting from solid organic growth                                                        organizations.
and a strategic acquisition in the final                                                            With a 126-year history of
quarter of the year. Over time, this                                                           serving customers, Owens &
faster-than-industry growth rate has                                                           Minor has always dedicated itself
helped to solidify the company’s                                                               to delivering long-term value to
 market-leading position.                                                                       shareholders, and has paid
                                                                                                dividends consistently since 1930.
    With the help of 5,300 teammates
                                                                             Conservative business practices, along with solid
nationwide, Owens & Minor serves hospitals,
                                                                             operating performance, have enabled the
integrated healthcare systems, alternate care locations,
                                                                             company to produce an 88% total return over the
and the federal government with diverse product and
                                                                             last five years for its shareholders.
service offerings. Working from its distribution
centers located strategically around the country,                                Today, Owens & Minor’s common shares are
Owens & Minor leverages its operational efficiency,                          traded on the New York Stock Exchange under
technology innovation and advanced supply-chain                              the symbol OMI. As of December 31, 2008, there
management services, enabling healthcare providers                           were approximately 41,441,000 common shares
to improve efficiency and lower cost across the entire                       outstanding. For more information, visit the
medical supply chain.                                                        company’s Web site at www.owens-minor.com.



  Mission                                         Vision                                          Values
  To create consistent value for our customers    To be a world class provider of supply-chain    We believe in high integrity as the
  and supply-chain partners that will maximize    management solutions to the selected            guiding principle of doing business.
  shareholder value and long-term earnings        segments of the healthcare industry we serve.   We believe in our teammates and
  growth; we will do this by managing our                                                         their well-being.
  business with integrity and the highest
                                                                                                  We believe in providing superior
  ethical standards, while acting in a socially
                                                                                                  customer service.
  responsible manner with particular emphasis
                                                                                                  We believe in supporting the communities we
  on the well-being of our teammates and the
                                                                                                  serve.
  communities we serve.
                                                                                                  We believe in delivering long-term value
                                                                                                  to our shareholders.


2008 Annual Report & Form 10-K
Financial Highlights

                                                                                                                         Percent Change
 (in millions, except per share data)

 Year ended December 31, (1) (2)                                     2008           2007                   2006       '08/'07            '07/'06

 Revenue                                                                          $6,694.6           $5,441.3          8.2%               23.0%
                                                                   $7,243.2
 Income from continuing operations                                                   $71.4                  $54.0     41.8%               32.4%
                                                                     $101.3
 Income (loss) from discontinued
  operations, net of tax                                                                  $1.3               ($5.2)    NM                  NM
                                                                       ($7.9)
 Net income                                                                          $72.7                  $48.8     28.4%               49.1%
                                                                       $93.3
 Income (loss) per share - diluted:
        Continuing operations                                                        $1.76                  $1.33     38.6%               32.3%
                                                                       $2.44
        Discontinued operations                                                      $0.03                 ($0.13)     NM                  NM
                                                                    ($0.19)i
        Net income per common share - diluted                                        $1.79                  $1.20     25.70%              49.2%
                                                                       $2.25


 Cash dividends per common share                                                     $0.68                  $0.60     17.7%               13.3%
                                                                       $0.80
 Book value per common share at year-end                                           $15.03                  $13.60     10.7%               10.5%
                                                                    $16.63
 Stock price per common share at year-end                                          $42.43                  $31.27     (11.3%)             35.7%
                                                                     $37.65


 Total assets                                                                    $1,528.0            $1,697.0         16.6%              (10.0%)
                                                                   $1,776.2
 Long-term debt                                                                    $283.8                  $433.1     26.6%              (34.5%)
                                                                    $359.2
 Shareholders' equity                                                              $614.4                  $547.5     12.2%               12.2%
                                                                    $689.1

 1) During the fourth quarter of 2008, the company committed to plans to exit its direct-to-consumer business (the quot;DTC businessquot;),
    thereby meeting criteria for classification of discontinued operations in accordance with generally accepted accounting principles.
    Accordingly, results from the DTC business are presented as results for discontinued operations for all periods presented. For
    additional information regarding discontinued operations, see Note 4 of quot;Notes to Consolidated Financial Statements.quot;
 2) NM - Percent change is not meaningful.



                                                               $93.3
                        $7.2                                                                           $2.25
                                                                                                                                           $0.80
            $6.7

                                                                                                                                 $0.68
                                                  $72.7                                      $1.79
 $5.4
                                                                                                                       $0.60


                                        $48.8                                     $1.20




                                                                                                                       ’06       ’07        ’08
                                                                                  ’06        ’07       ’08
                                        ’06        ’07         ’08
 ’06        ’07         ’08

        REVENUE                                                                    NET INCOME                             DIVIDENDS
                                         NET INCOME
                                                                                PER DILUTED SHARE
    (Dollars in billions)                                                                                                 (Dollars per share)
                                           (Dollars in millions)
                                                                                     (Dollars per share)


                                                                                                      2008 Annual Report & Form 10-K               1
To Our Shareholders




T
Dear Shareholders, Teammates and Friends:

                  he year 2008 was a fast-paced and profitable one for
                  Owens & Minor, even though the overall economy
                  experienced unprecedented volatility and history-
                  making change. Despite these challenges, we continued
                  to expand our business with strong organic growth, the
addition of important new customers, and the strategic acquisition of
certain assets of The Burrows Company, a hospital supply company
based in Chicago. We have always believed that our close relationships
with our customers, supported by our supply-chain management
services and technology-based programs, have enabled us to grow faster
than our market sector. Today, more than ever, our healthcare provider
customers are asking for our value-added programs and services and our
supply-chain management expertise as they seek ways to deliver
efficient, cost-effective patient care.
     As I travel around the country meeting with hospital customers and
our supplier partners, I am convinced that our strategic vision of
creating efficiency and productivity in the supply chain is valued by all
the major stakeholders in the healthcare supply chain. Our mission is to
collaborate with our customers and suppliers, helping them with cost-
saving solutions and efficiency measures that truly improve the
healthcare supply chain. We provide solutions as wide-ranging as
storeroom and warehouse redesigns, data management tools, clinical
supply-chain management solutions, outsourcing and warehousing.
These solutions have a common theme - they improve transparency and
visibility into the supply chain, enabling healthcare providers and
suppliers to more effectively manage inventories, purchasing patterns
and cash flow.
     In the fourth quarter of 2008, we completed the Burrows
acquisition and began the process of converting these customers to our
systems, platforms and facilities. This Midwest-based business is a good
                              strategic fit for Owens & Minor, and we
                                     welcome these new customers. The




2 2008 Annual Report & Form 10-K
transition of this business requires a focused,
intensive effort, and fortunately for Owens &
Minor, our transition team wrote the
playbook for phased conversions of this type.
By collaborating with teams in the field, at
the Home Office, and with the new
customers, the transition team is scheduled
to conclude this large-scale transition by
the end of the second quarter 2009.
    Also, in the fourth quarter, we chose
to recommit ourselves to a business-to-
business model for the customers we
serve, making the decision to exit the
direct-to-consumer diabetes supply
market. When we purchased the direct-
to-consumer business in 2005, we believed
that this consumer-oriented effort would
ultimately support the company in revenue
growth and margin enhancement. However,
as our strategic initiatives evolved, it became
apparent that opportunities were developing
in adjacent markets, as our hospital
customers began pursuing non-acute-care
ventures, such as free-standing surgery
centers and physician practices.
    Reflecting on 2008, we continued to
invest in our people, our infrastructure, and
our new strategic initiatives. For example, we
introduced automation equipment into
our distribution centers and we develop-
ed a comprehensive clinical inventory
management service. At the same time, we




                                  2008 Annual Report & Form 10-K 3
To Our Shareholders (continued)




focused every day on meeting our long-term financial, cultural, customer and shareholder goals. I firmly believe
our performance in 2008 demonstrates that our long-term dedication to customer service, teamwork and
conservative business practices works to our advantage. We believe the best course for us is to continue investing
in our business, allowing us to grow profitably, while still providing our customers with exceptional supply-chain
management solutions.
    During 2008, we grew our top line by 8% to $7.2 billion. Our revenue growth benefited from the Burrows
acquisition and our ability to expand our relationships with existing customers. We reported record net income
of $93 million. Income from continuing operations was $101 million, increased nearly 42% for the year. We
generated $63 million in operating cash flow during 2008, even after the Burrows acquisition and investments
made to accommodate competitive new business signed in late 2008. Long-term debt as of the end of the year
was $359 million, reflecting our acquisition of the Burrows business.
     If we look at our 2008 total return to shareholders, we are pleased to report that OMI fared better than the
stocks in our peer group and the S&P 500, even though we ended the year with a 10% decline, when compared
to December 31, 2007. In contrast, the S&P 500 and our peer group both declined 37% over the same period.
Of course, we prefer to see our stock price on the upswing, but we believe we exhibited real resilience last year
when viewed against the extreme volatility in the market. One fact remains constant: we are committed to
providing long-term value to our shareholders. Consequently, our board of directors approved a 15% increase in
the first quarter 2009 dividend, citing their confidence in Owens & Minor, our ability to achieve our goals, and
in recognition of the value we bring to the healthcare market.
    For this year’s annual report, we chose a theme of teamwork, and for good reason. Since 1882, we have strived
to work collaboratively to meet the needs and challenges of our customers and business partners. One thing we
have all learned is that we can’t do it alone. Teamwork is what makes the difference at our company. One of
the “team stats” I am most proud of is 2008’s customer satisfaction rating among the 800 customers we
survey every year. In 2008, we achieved a 98% customer satisfaction rating. Customer satisfaction in 2007 had
dipped to 94%; and we set a goal to achieve real improvement last year, and we did it. You might say we “hit the
               ball out of the park.”
                                          As for training and development, our teammates stepped up to the
                                   plate and took thousands of courses in 2008, either online, in the field, or in
                                         our home office classrooms at Owens & Minor University (OMU).
                                            Since we opened the doors to OMU in 2005, our teammates have
                                             completed nearly 38,000 courses. If you ask me, this represents an
                                             amazing commitment to learning. And the benefits are real. We




4 2008 Annual Report & Form 10-K
have seen a decline in teammate turnover, and our teammates have improved their ability
to satisfy our customers. This company-wide push for training and development has also
enabled us to conduct effective succession planning, as we are developing our bench
strength with every class taken.
     At Owens & Minor, we know our success depends on the fundamentals.We have long
been viewed as conservative, and in today’s market, we believe that’s the right place for us
to be. For us, that means paying close attention to the needs of our customers and
suppliers, providing superior customer service, and fine-tuning our operations so that we
deliver our services at peak efficiency. We will continue the practice of closely
monitoring our customers’ credit quality. We will invest in making our business better,
and we will pursue new opportunities in markets adjacent to those we serve today. But,
most importantly, we will rely on each other, working together every day in a spirit
of teamwork.
    And finally, I am grateful to our customers, suppliers, business partners, shareholders,
board of directors, and teammates for their enduring support. No one person can ever
achieve what a team can achieve. For Owens & Minor, the fundamental element of
success truly is teamwork.
                                          Sincerely,


                                          Craig R. Smith
                                          President & CEO
                                          Owens & Minor




                                                                                2008 Annual Report & Form 10-K 5
Our Team of MVPs




A
                  t Owens & Minor, we are very proud
                  of our 5,300 teammates. Together,
                  they form a team of highly
                  experienced, dedicated players, who
                  take the field every day to serve the
healthcare industry. Our healthcare provider customers
depend on us to provide the right products, at the right
time, at the right price, with every delivery. In order
                           to maintain high customer
                           satisfaction, our teammates
                           must consistently perform
                            their jobs with accuracy and
                                                              Our healthcare provider customers
                            speed. The complexity of
                                                              depend on us to provide the right
                            our customers’ business
                                                              products, at the right time, at the
                             also demands continuous
                                                              right price, with every delivery.
                             innovation. In response, we
                             have drafted teams of
                             experts who use their
                              advanced skills to create and
                              provide new solutions.
     Among these solutions are data-mining tools and
contract-management solutions, as well as inventory
management programs focused on the operating
room. In many of our distribution centers, teams also
provide customized procedure-based surgical supply
kits based on hospital surgery schedules. In the field,
our supply-chain management consultants work with
hospitals to improve supply-chain costs and increase
operating efficiency. With these solutions, our
teammates strive to provide exceptional service and
ongoing innovation, enabling the nation’s healthcare
providers to offer efficient, cost-effective patient care.
     In addition to serving our customers, our
teammates live our mission, vision and values every
day. Whether through hard work and problem solving,
growing our business, or through volunteering with
community service organizations, our teammates are
improving our industry, expanding our market share,
and helping to make our communities better.

6 2008 Annual Report & Form 10-K
In addition to serving our customers,
our teammates live our mission, vision
and values every day.

                2008 Annual Report & Form 10-K 7
Board of Directors

                                                      John T. Crotty (71) 2,4*                               Robert C. Sledd (56) 3,4
  G. Gilmer Minor, III (68) 1*
                                                      Managing Partner,                                      Managing Partner,
  Chairman & Retired CEO,
                                                      CroBern Management Partnership                         Pinnacle Ventures, LLC and
  Owens & Minor, Inc.
                                                      President, CroBern, Inc.                               Sledd Properties, LLC
  James E. Rogers (63) 1
                                                      Richard E. Fogg (68) 1,2*,4                            Craig R. Smith (57) 1,4
  Lead Director,
                                                      Retired Partner,                                       President & CEO,
  Owens & Minor, Inc.
                                                      PricewaterhouseCoopers LLP                             Owens & Minor, Inc.
  President, SCI Investors Inc.

                                                                                                             James E. Ukrop (71) 2,5
                                                      Eddie N. Moore, Jr. (61) 2,5
  A. Marshall Acuff, Jr. (69) 1,3,5*
                                                      President,                                             Chairman, First Market Bank
  Retired Senior Vice President
                                                      Virginia State University                              Former Chairman,
  & Managing Director,
                                                                                                             Ukrop’s Super Markets, Inc.
  Salomon Smith Barney, Inc.
                                                      Peter S. Redding (70) 2,4
  J. Alfred Broaddus, Jr. (69) 3,5                    Retired President & CEO,                               Anne Marie Whittemore (62) 1, 3*,5
  Retired President,                                  Standard Register Company                              Partner, McGuireWoods LLP
  Federal Reserve Bank of Richmond

                                                                            Board Committees:
                                                1Executive Committee, 2Audit Committee, 3 Compensation & Benefits Committee,
                                          4 Strategic Planning Committee, 5 Governance & Nominating Committee, *Denotes Chairman




  Corporate Officers

   Craig R. Smith (57)                                                                 Grace R. den Hartog (57)
   President & Chief Executive Officer                                                 Senior Vice President, General Counsel & Corporate Secretary
   President since 1999 and Chief Executive Officer since July 2005. Mr. Smith         Senior Vice President, General Counsel & Corporate Secretary, since 2003.
   has been with the company since 1989.                                               Ms. den Hartog previously served as a partner of McGuireWoods LLP from
                                                                                       1990 to 2003. Ms. den Hartog has been with the company since 2003.
   James L. Bierman (56)
                                                                                       Hugh F. Gouldthorpe, Jr. (70)
   Senior Vice President & Chief Financial Officer
                                                                                       Vice President, Quality & Communications
   Senior Vice President & Chief Financial Officer since June 2007. Previously,
   Mr. Bierman served as Executive Vice President & Chief Financial Officer            Vice President, Quality & Communications, since 1993. Mr. Gouldthorpe
   at Quintiles Transnational Corp. from 2001 to 2004. He joined Quintiles in          has been with the company since 1986.
   1998. Prior to that Mr. Bierman was a partner of Arthur Andersen LLP from
                                                                                       Richard W. Mears (48)
   1988 to 1998. Mr. Bierman has been with the company since 2007.
                                                                                       Senior Vice President, Chief Information Officer
   Richard F. Bozard (61)                                                              Senior Vice President, Chief Information Officer, since 2005. Previously,
   Vice President, Treasurer                                                           Mr. Mears was an Executive Director with Perot Systems from 2003 to
   Vice President, Treasurer, since 1991. Mr. Bozard has been with the                 2005, and an account executive from 1998 to 2003. Mr. Mears has been
   company since 1988.                                                                 with the company since 2005.
   Olwen B. Cape (59)                                                                  Scott W. Perkins (52)
   Vice President, Controller                                                          Vice President, West
   Vice President, Controller, since 1997. Ms. Cape has been with the company          Vice President, West, since 2008, and Group Vice President, Sales &
   since 1997.                                                                         Distribution, from 2005 to 2008. Mr. Perkins served as Senior Vice
                                                                                       President, Sales & Distribution, from January to October 2005. Prior to that,
   E.V. Clarke (48)                                                                    he served as Regional Vice President from March to December 2004, and
   Executive Vice President, Distribution                                              as Area Vice President from 2002 to 2004. Mr. Perkins has been with the
   Executive Vice President, Distribution, since 2008. Previously Mr. Clarke           company since 1989.
   served as Group Vice President, Sales & Distribution, from October 2006
                                                                                       W. Marshall Simpson (40)
   until 2008. Previously, he served as President of Acute Care for McKesson
                                                                                       Senior Vice President, Sales & Marketing
   Medical-Surgical from April 2002 until September 2006, when the business
   was acquired by Owens & Minor.                                                      Senior Vice President, Sales & Marketing, since November 2007. Previously,
                                                                                       Mr. Simpson served as Group Vice President, Sales & Distribution, from
   Charles C. Colpo (51)                                                               2005 until 2007, and as Regional Vice President from 2004 to 2005. Prior
   Executive Vice President, Administration                                            to that, Mr. Simpson served as Operating Vice President of Corporate
   Executive Vice President, Administration, since 2008. Previously, Mr. Colpo         Accounts from 2003 until 2004, and as Operating Vice President of Business
   served as Senior Vice President, Operations, from 1999 until 2008. He also          Integration from 2002 to 2003. Mr. Simpson has been with the company
   served as Senior Vice President, Operations & Technology, from April 2005           since 1991.
   to July 2006. Mr. Colpo has been with the company since 1981.
                                                                                       Mark A. Van Sumeren (51)
   Erika T. Davis (45)                                                                 Senior Vice President, Strategic Planning & Business Development
   Senior Vice President, Human Resources                                              Senior Vice President, Strategic Planning & Business Development, since
   Senior Vice President, Human Resources, since 2001. From 1999 to 2001,              2007, and Senior Vice President, Business Development, since 2006. Prior to
                                                                                       that, Mr.Van Sumeren was Senior Vice President, OMSolutionsSM from 2003
   Ms. Davis was Vice President of Human Resources. Ms. Davis has been with
   the company since 1993.                                                             to 2006. Mr. Van Sumeren previously served as Vice President for Cap
                                                                                       Gemini Ernst & Young from 2000 to 2003. He has been with the company
                                                                                       since 2003.
                                                                                       Numbers inside parentheses indicate age.


8 2008 Annual Report & Form 10-K
Corporate Information

 Annual Meeting                                                                   Communications
                                                                                  and Investor Relations
 The 2009 annual meeting of Owens & Minor, Inc.’s shareholders will be held at
 10:00 a.m. on Friday, April 24, 2009, at Owens & Minor, Inc., 9120 Lockwood      Press Releases
 Boulevard, Mechanicsville, Virginia, 23116.                                      Owens & Minor, Inc.’s press releases are available
                                                                                  at www.owens-minor.com.
 Transfer Agent, Registrar                                                        Investor Relations
 and Dividend Disbursing Agent                                                    804-723-7555
 BNY Mellon Shareowner Services
                                                                                  Information for Investors
 P.O. Box 358015
 Pittsburgh, PA 15252-8015
                                                                                  The company files annual, quarterly and current reports, information
 Web site: www.bnymellon/shareowner/isd
                                                                                  statements and other information with the Securities and Exchange
 Toll-free: (866) 252-0358                                                        Commission (SEC).The public may read and copy any materials that the
 (Inside the United States and Canada)                                            company files with the SEC at the SEC’s Public Reference Room at 100 F Street,
                                                                                  N.E.,Washington, D.C. 20549.The public may obtain information on the
 (201) 680-6685
                                                                                  operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
 (Outside the United States and Canada)
                                                                                  The SEC also maintains an Internet site that contains reports, proxy and
                                                                                  information statements, and other information regarding issuers that file
 BuyDIRECTSM Stock Purchase                                                       electronically with the SEC. The address of that site is http://www.sec.gov.
 and Dividend Reinvestment Plan                                                   The address of the company’s Web site is www.owens-minor.com. Through a
                                                                                  link to the SEC’s Internet site on the Investor Relations portion of our Web site,
 Our transfer agent,The Bank of New York Mellon, offers a Direct Purchase and
                                                                                  we make available our filings with the SEC, including our annual report on
 Sale Plan for shares of Owens & Minor, Inc. common stock known as the
                                                                                  Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
 BuyDIRECTSM Plan. The BuyDIRECTSM Plan provides registered shareholders of
                                                                                  amendments to those reports, as well as beneficial ownership reports filed
 Owens & Minor and interested first-time investors a way to buy and sell shares
                                                                                  with the SEC by directors, officers and other reporting persons relating to
 of Owens & Minor common stock. Inquiries should be directed to BNY
                                                                                  holdings in Owens & Minor, Inc. securities. This information is available as
 Mellon Shareowner Services (see contact information above).
                                                                                  soon as the filing is accepted by the SEC.

 Shareholder Records                                                              Corporate Governance
 Direct correspondence concerning Owens & Minor, Inc. stock holdings, lost or
                                                                                  The company’s Bylaws, Corporate Governance Guidelines, Code of Honor and
 missing dividend checks, or change of address to BNY Mellon’s Investor
                                                                                  the charters of the Audit, Compensation & Benefits, and Governance &
 Services Department:
                                                                                  Nominating Committees are available on the company’s Web site at
 Owens & Minor, Inc.                                                              www.owens-minor.com and are available in print to any shareholder upon
 c/o BNY Mellon Shareowner Services                                               request by writing to:
 Investor Services Department
                                                                                  Corporate Secretary
 P.O. Box 358015
                                                                                  Owens & Minor, Inc.
 Pittsburgh, PA 15252-8015
                                                                                  9120 Lockwood Boulevard
                                                                                  Mechanicsville, Virginia 23116
 Duplicate Mailings
                                                                                  Communications with
 When a shareholder owns shares in more than one account or when several
                                                                                  the Board of Directors
 shareholders live at the same address, they may receive multiple copies of
 company mailings. To eliminate multiple mailings, please write to the transfer
                                                                                  The Board of Directors has approved a process for shareholders to send
 agent or consider enrolling in MLink (via the BNY Mellon Web site above)
                                                                                  communications to the Board. Shareholders can send written
 which offers secure on-line access to financial documents and shareowner
                                                                                  communications to the Board, any committee of the Board, the Lead
 communications.
                                                                                  Director or any other individual director at the following address: P.O. Box
 Counsel                                                                          26383, Richmond, Virginia 23260.

                                                                                  Certifications
 Hunton & Williams
 Richmond, Virginia
                                                                                  The company’s Chief Executive Officer certified to the New York Stock
 Independent Auditors                                                             Exchange (NYSE) within 30 days after the company’s 2008 Annual Meeting of
                                                                                  Shareholders that he was not aware of any violation by the company of NYSE
                                                                                  corporate governance listing standards. The company also filed with the SEC
 KPMG LLP
                                                                                  as exhibits 31.1, 31.2, 32.1 and 32.2 to its Annual Report on Form 10-K for the
 Richmond, Virginia
                                                                                  year ended December 31, 2008, certifications by its Chief Executive Officer and
                                                                                  Chief Financial Officer.




                                                                                                                      2008 Annual Report & Form 10-K
Owens & Minor, Inc.
Corporate Office      Street Address                   Mailing Address
804-723-7000          9120 Lockwood Boulevard          Post Office Box 27626
www.owens-minor.com   Mechanicsville, Virginia 23116   Richmond, Virginia 23261-7626

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Teamwork Fundamentals Success Annual Report

  • 1. Teamwork: Success starts with the Fundamentals. 2008 ANNUAL REPORT & FORM 10-K
  • 2. Company Stats 2008 O wens & Minor, Inc., a FORTUNE Founded in Richmond in 1882, Owens & 500 company headquartered in Minor’s mission, vision and values provide Richmond, Virginia, is a fundamental support for a culture that places a leading distributor of medical premium on customer-service excellence, and surgical supplies to the teammate well-being, shareholder acute-care market, and a well- value, business integrity and social known provider of healthcare responsibility. In support of their supply-chain management solutions. communities, teammates through- Revenues for Owens & Minor out the company volunteer for a topped $7.2 billion in 2008, wide range of community service resulting from solid organic growth organizations. and a strategic acquisition in the final With a 126-year history of quarter of the year. Over time, this serving customers, Owens & faster-than-industry growth rate has Minor has always dedicated itself helped to solidify the company’s to delivering long-term value to market-leading position. shareholders, and has paid dividends consistently since 1930. With the help of 5,300 teammates Conservative business practices, along with solid nationwide, Owens & Minor serves hospitals, operating performance, have enabled the integrated healthcare systems, alternate care locations, company to produce an 88% total return over the and the federal government with diverse product and last five years for its shareholders. service offerings. Working from its distribution centers located strategically around the country, Today, Owens & Minor’s common shares are Owens & Minor leverages its operational efficiency, traded on the New York Stock Exchange under technology innovation and advanced supply-chain the symbol OMI. As of December 31, 2008, there management services, enabling healthcare providers were approximately 41,441,000 common shares to improve efficiency and lower cost across the entire outstanding. For more information, visit the medical supply chain. company’s Web site at www.owens-minor.com. Mission Vision Values To create consistent value for our customers To be a world class provider of supply-chain We believe in high integrity as the and supply-chain partners that will maximize management solutions to the selected guiding principle of doing business. shareholder value and long-term earnings segments of the healthcare industry we serve. We believe in our teammates and growth; we will do this by managing our their well-being. business with integrity and the highest We believe in providing superior ethical standards, while acting in a socially customer service. responsible manner with particular emphasis We believe in supporting the communities we on the well-being of our teammates and the serve. communities we serve. We believe in delivering long-term value to our shareholders. 2008 Annual Report & Form 10-K
  • 3. Financial Highlights Percent Change (in millions, except per share data) Year ended December 31, (1) (2) 2008 2007 2006 '08/'07 '07/'06 Revenue $6,694.6 $5,441.3 8.2% 23.0% $7,243.2 Income from continuing operations $71.4 $54.0 41.8% 32.4% $101.3 Income (loss) from discontinued operations, net of tax $1.3 ($5.2) NM NM ($7.9) Net income $72.7 $48.8 28.4% 49.1% $93.3 Income (loss) per share - diluted: Continuing operations $1.76 $1.33 38.6% 32.3% $2.44 Discontinued operations $0.03 ($0.13) NM NM ($0.19)i Net income per common share - diluted $1.79 $1.20 25.70% 49.2% $2.25 Cash dividends per common share $0.68 $0.60 17.7% 13.3% $0.80 Book value per common share at year-end $15.03 $13.60 10.7% 10.5% $16.63 Stock price per common share at year-end $42.43 $31.27 (11.3%) 35.7% $37.65 Total assets $1,528.0 $1,697.0 16.6% (10.0%) $1,776.2 Long-term debt $283.8 $433.1 26.6% (34.5%) $359.2 Shareholders' equity $614.4 $547.5 12.2% 12.2% $689.1 1) During the fourth quarter of 2008, the company committed to plans to exit its direct-to-consumer business (the quot;DTC businessquot;), thereby meeting criteria for classification of discontinued operations in accordance with generally accepted accounting principles. Accordingly, results from the DTC business are presented as results for discontinued operations for all periods presented. For additional information regarding discontinued operations, see Note 4 of quot;Notes to Consolidated Financial Statements.quot; 2) NM - Percent change is not meaningful. $93.3 $7.2 $2.25 $0.80 $6.7 $0.68 $72.7 $1.79 $5.4 $0.60 $48.8 $1.20 ’06 ’07 ’08 ’06 ’07 ’08 ’06 ’07 ’08 ’06 ’07 ’08 REVENUE NET INCOME DIVIDENDS NET INCOME PER DILUTED SHARE (Dollars in billions) (Dollars per share) (Dollars in millions) (Dollars per share) 2008 Annual Report & Form 10-K 1
  • 4. To Our Shareholders T Dear Shareholders, Teammates and Friends: he year 2008 was a fast-paced and profitable one for Owens & Minor, even though the overall economy experienced unprecedented volatility and history- making change. Despite these challenges, we continued to expand our business with strong organic growth, the addition of important new customers, and the strategic acquisition of certain assets of The Burrows Company, a hospital supply company based in Chicago. We have always believed that our close relationships with our customers, supported by our supply-chain management services and technology-based programs, have enabled us to grow faster than our market sector. Today, more than ever, our healthcare provider customers are asking for our value-added programs and services and our supply-chain management expertise as they seek ways to deliver efficient, cost-effective patient care. As I travel around the country meeting with hospital customers and our supplier partners, I am convinced that our strategic vision of creating efficiency and productivity in the supply chain is valued by all the major stakeholders in the healthcare supply chain. Our mission is to collaborate with our customers and suppliers, helping them with cost- saving solutions and efficiency measures that truly improve the healthcare supply chain. We provide solutions as wide-ranging as storeroom and warehouse redesigns, data management tools, clinical supply-chain management solutions, outsourcing and warehousing. These solutions have a common theme - they improve transparency and visibility into the supply chain, enabling healthcare providers and suppliers to more effectively manage inventories, purchasing patterns and cash flow. In the fourth quarter of 2008, we completed the Burrows acquisition and began the process of converting these customers to our systems, platforms and facilities. This Midwest-based business is a good strategic fit for Owens & Minor, and we welcome these new customers. The 2 2008 Annual Report & Form 10-K
  • 5. transition of this business requires a focused, intensive effort, and fortunately for Owens & Minor, our transition team wrote the playbook for phased conversions of this type. By collaborating with teams in the field, at the Home Office, and with the new customers, the transition team is scheduled to conclude this large-scale transition by the end of the second quarter 2009. Also, in the fourth quarter, we chose to recommit ourselves to a business-to- business model for the customers we serve, making the decision to exit the direct-to-consumer diabetes supply market. When we purchased the direct- to-consumer business in 2005, we believed that this consumer-oriented effort would ultimately support the company in revenue growth and margin enhancement. However, as our strategic initiatives evolved, it became apparent that opportunities were developing in adjacent markets, as our hospital customers began pursuing non-acute-care ventures, such as free-standing surgery centers and physician practices. Reflecting on 2008, we continued to invest in our people, our infrastructure, and our new strategic initiatives. For example, we introduced automation equipment into our distribution centers and we develop- ed a comprehensive clinical inventory management service. At the same time, we 2008 Annual Report & Form 10-K 3
  • 6. To Our Shareholders (continued) focused every day on meeting our long-term financial, cultural, customer and shareholder goals. I firmly believe our performance in 2008 demonstrates that our long-term dedication to customer service, teamwork and conservative business practices works to our advantage. We believe the best course for us is to continue investing in our business, allowing us to grow profitably, while still providing our customers with exceptional supply-chain management solutions. During 2008, we grew our top line by 8% to $7.2 billion. Our revenue growth benefited from the Burrows acquisition and our ability to expand our relationships with existing customers. We reported record net income of $93 million. Income from continuing operations was $101 million, increased nearly 42% for the year. We generated $63 million in operating cash flow during 2008, even after the Burrows acquisition and investments made to accommodate competitive new business signed in late 2008. Long-term debt as of the end of the year was $359 million, reflecting our acquisition of the Burrows business. If we look at our 2008 total return to shareholders, we are pleased to report that OMI fared better than the stocks in our peer group and the S&P 500, even though we ended the year with a 10% decline, when compared to December 31, 2007. In contrast, the S&P 500 and our peer group both declined 37% over the same period. Of course, we prefer to see our stock price on the upswing, but we believe we exhibited real resilience last year when viewed against the extreme volatility in the market. One fact remains constant: we are committed to providing long-term value to our shareholders. Consequently, our board of directors approved a 15% increase in the first quarter 2009 dividend, citing their confidence in Owens & Minor, our ability to achieve our goals, and in recognition of the value we bring to the healthcare market. For this year’s annual report, we chose a theme of teamwork, and for good reason. Since 1882, we have strived to work collaboratively to meet the needs and challenges of our customers and business partners. One thing we have all learned is that we can’t do it alone. Teamwork is what makes the difference at our company. One of the “team stats” I am most proud of is 2008’s customer satisfaction rating among the 800 customers we survey every year. In 2008, we achieved a 98% customer satisfaction rating. Customer satisfaction in 2007 had dipped to 94%; and we set a goal to achieve real improvement last year, and we did it. You might say we “hit the ball out of the park.” As for training and development, our teammates stepped up to the plate and took thousands of courses in 2008, either online, in the field, or in our home office classrooms at Owens & Minor University (OMU). Since we opened the doors to OMU in 2005, our teammates have completed nearly 38,000 courses. If you ask me, this represents an amazing commitment to learning. And the benefits are real. We 4 2008 Annual Report & Form 10-K
  • 7. have seen a decline in teammate turnover, and our teammates have improved their ability to satisfy our customers. This company-wide push for training and development has also enabled us to conduct effective succession planning, as we are developing our bench strength with every class taken. At Owens & Minor, we know our success depends on the fundamentals.We have long been viewed as conservative, and in today’s market, we believe that’s the right place for us to be. For us, that means paying close attention to the needs of our customers and suppliers, providing superior customer service, and fine-tuning our operations so that we deliver our services at peak efficiency. We will continue the practice of closely monitoring our customers’ credit quality. We will invest in making our business better, and we will pursue new opportunities in markets adjacent to those we serve today. But, most importantly, we will rely on each other, working together every day in a spirit of teamwork. And finally, I am grateful to our customers, suppliers, business partners, shareholders, board of directors, and teammates for their enduring support. No one person can ever achieve what a team can achieve. For Owens & Minor, the fundamental element of success truly is teamwork. Sincerely, Craig R. Smith President & CEO Owens & Minor 2008 Annual Report & Form 10-K 5
  • 8. Our Team of MVPs A t Owens & Minor, we are very proud of our 5,300 teammates. Together, they form a team of highly experienced, dedicated players, who take the field every day to serve the healthcare industry. Our healthcare provider customers depend on us to provide the right products, at the right time, at the right price, with every delivery. In order to maintain high customer satisfaction, our teammates must consistently perform their jobs with accuracy and Our healthcare provider customers speed. The complexity of depend on us to provide the right our customers’ business products, at the right time, at the also demands continuous right price, with every delivery. innovation. In response, we have drafted teams of experts who use their advanced skills to create and provide new solutions. Among these solutions are data-mining tools and contract-management solutions, as well as inventory management programs focused on the operating room. In many of our distribution centers, teams also provide customized procedure-based surgical supply kits based on hospital surgery schedules. In the field, our supply-chain management consultants work with hospitals to improve supply-chain costs and increase operating efficiency. With these solutions, our teammates strive to provide exceptional service and ongoing innovation, enabling the nation’s healthcare providers to offer efficient, cost-effective patient care. In addition to serving our customers, our teammates live our mission, vision and values every day. Whether through hard work and problem solving, growing our business, or through volunteering with community service organizations, our teammates are improving our industry, expanding our market share, and helping to make our communities better. 6 2008 Annual Report & Form 10-K
  • 9. In addition to serving our customers, our teammates live our mission, vision and values every day. 2008 Annual Report & Form 10-K 7
  • 10. Board of Directors John T. Crotty (71) 2,4* Robert C. Sledd (56) 3,4 G. Gilmer Minor, III (68) 1* Managing Partner, Managing Partner, Chairman & Retired CEO, CroBern Management Partnership Pinnacle Ventures, LLC and Owens & Minor, Inc. President, CroBern, Inc. Sledd Properties, LLC James E. Rogers (63) 1 Richard E. Fogg (68) 1,2*,4 Craig R. Smith (57) 1,4 Lead Director, Retired Partner, President & CEO, Owens & Minor, Inc. PricewaterhouseCoopers LLP Owens & Minor, Inc. President, SCI Investors Inc. James E. Ukrop (71) 2,5 Eddie N. Moore, Jr. (61) 2,5 A. Marshall Acuff, Jr. (69) 1,3,5* President, Chairman, First Market Bank Retired Senior Vice President Virginia State University Former Chairman, & Managing Director, Ukrop’s Super Markets, Inc. Salomon Smith Barney, Inc. Peter S. Redding (70) 2,4 J. Alfred Broaddus, Jr. (69) 3,5 Retired President & CEO, Anne Marie Whittemore (62) 1, 3*,5 Retired President, Standard Register Company Partner, McGuireWoods LLP Federal Reserve Bank of Richmond Board Committees: 1Executive Committee, 2Audit Committee, 3 Compensation & Benefits Committee, 4 Strategic Planning Committee, 5 Governance & Nominating Committee, *Denotes Chairman Corporate Officers Craig R. Smith (57) Grace R. den Hartog (57) President & Chief Executive Officer Senior Vice President, General Counsel & Corporate Secretary President since 1999 and Chief Executive Officer since July 2005. Mr. Smith Senior Vice President, General Counsel & Corporate Secretary, since 2003. has been with the company since 1989. Ms. den Hartog previously served as a partner of McGuireWoods LLP from 1990 to 2003. Ms. den Hartog has been with the company since 2003. James L. Bierman (56) Hugh F. Gouldthorpe, Jr. (70) Senior Vice President & Chief Financial Officer Vice President, Quality & Communications Senior Vice President & Chief Financial Officer since June 2007. Previously, Mr. Bierman served as Executive Vice President & Chief Financial Officer Vice President, Quality & Communications, since 1993. Mr. Gouldthorpe at Quintiles Transnational Corp. from 2001 to 2004. He joined Quintiles in has been with the company since 1986. 1998. Prior to that Mr. Bierman was a partner of Arthur Andersen LLP from Richard W. Mears (48) 1988 to 1998. Mr. Bierman has been with the company since 2007. Senior Vice President, Chief Information Officer Richard F. Bozard (61) Senior Vice President, Chief Information Officer, since 2005. Previously, Vice President, Treasurer Mr. Mears was an Executive Director with Perot Systems from 2003 to Vice President, Treasurer, since 1991. Mr. Bozard has been with the 2005, and an account executive from 1998 to 2003. Mr. Mears has been company since 1988. with the company since 2005. Olwen B. Cape (59) Scott W. Perkins (52) Vice President, Controller Vice President, West Vice President, Controller, since 1997. Ms. Cape has been with the company Vice President, West, since 2008, and Group Vice President, Sales & since 1997. Distribution, from 2005 to 2008. Mr. Perkins served as Senior Vice President, Sales & Distribution, from January to October 2005. Prior to that, E.V. Clarke (48) he served as Regional Vice President from March to December 2004, and Executive Vice President, Distribution as Area Vice President from 2002 to 2004. Mr. Perkins has been with the Executive Vice President, Distribution, since 2008. Previously Mr. Clarke company since 1989. served as Group Vice President, Sales & Distribution, from October 2006 W. Marshall Simpson (40) until 2008. Previously, he served as President of Acute Care for McKesson Senior Vice President, Sales & Marketing Medical-Surgical from April 2002 until September 2006, when the business was acquired by Owens & Minor. Senior Vice President, Sales & Marketing, since November 2007. Previously, Mr. Simpson served as Group Vice President, Sales & Distribution, from Charles C. Colpo (51) 2005 until 2007, and as Regional Vice President from 2004 to 2005. Prior Executive Vice President, Administration to that, Mr. Simpson served as Operating Vice President of Corporate Executive Vice President, Administration, since 2008. Previously, Mr. Colpo Accounts from 2003 until 2004, and as Operating Vice President of Business served as Senior Vice President, Operations, from 1999 until 2008. He also Integration from 2002 to 2003. Mr. Simpson has been with the company served as Senior Vice President, Operations & Technology, from April 2005 since 1991. to July 2006. Mr. Colpo has been with the company since 1981. Mark A. Van Sumeren (51) Erika T. Davis (45) Senior Vice President, Strategic Planning & Business Development Senior Vice President, Human Resources Senior Vice President, Strategic Planning & Business Development, since Senior Vice President, Human Resources, since 2001. From 1999 to 2001, 2007, and Senior Vice President, Business Development, since 2006. Prior to that, Mr.Van Sumeren was Senior Vice President, OMSolutionsSM from 2003 Ms. Davis was Vice President of Human Resources. Ms. Davis has been with the company since 1993. to 2006. Mr. Van Sumeren previously served as Vice President for Cap Gemini Ernst & Young from 2000 to 2003. He has been with the company since 2003. Numbers inside parentheses indicate age. 8 2008 Annual Report & Form 10-K
  • 11. Corporate Information Annual Meeting Communications and Investor Relations The 2009 annual meeting of Owens & Minor, Inc.’s shareholders will be held at 10:00 a.m. on Friday, April 24, 2009, at Owens & Minor, Inc., 9120 Lockwood Press Releases Boulevard, Mechanicsville, Virginia, 23116. Owens & Minor, Inc.’s press releases are available at www.owens-minor.com. Transfer Agent, Registrar Investor Relations and Dividend Disbursing Agent 804-723-7555 BNY Mellon Shareowner Services Information for Investors P.O. Box 358015 Pittsburgh, PA 15252-8015 The company files annual, quarterly and current reports, information Web site: www.bnymellon/shareowner/isd statements and other information with the Securities and Exchange Toll-free: (866) 252-0358 Commission (SEC).The public may read and copy any materials that the (Inside the United States and Canada) company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E.,Washington, D.C. 20549.The public may obtain information on the (201) 680-6685 operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. (Outside the United States and Canada) The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file BuyDIRECTSM Stock Purchase electronically with the SEC. The address of that site is http://www.sec.gov. and Dividend Reinvestment Plan The address of the company’s Web site is www.owens-minor.com. Through a link to the SEC’s Internet site on the Investor Relations portion of our Web site, Our transfer agent,The Bank of New York Mellon, offers a Direct Purchase and we make available our filings with the SEC, including our annual report on Sale Plan for shares of Owens & Minor, Inc. common stock known as the Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and BuyDIRECTSM Plan. The BuyDIRECTSM Plan provides registered shareholders of amendments to those reports, as well as beneficial ownership reports filed Owens & Minor and interested first-time investors a way to buy and sell shares with the SEC by directors, officers and other reporting persons relating to of Owens & Minor common stock. Inquiries should be directed to BNY holdings in Owens & Minor, Inc. securities. This information is available as Mellon Shareowner Services (see contact information above). soon as the filing is accepted by the SEC. Shareholder Records Corporate Governance Direct correspondence concerning Owens & Minor, Inc. stock holdings, lost or The company’s Bylaws, Corporate Governance Guidelines, Code of Honor and missing dividend checks, or change of address to BNY Mellon’s Investor the charters of the Audit, Compensation & Benefits, and Governance & Services Department: Nominating Committees are available on the company’s Web site at Owens & Minor, Inc. www.owens-minor.com and are available in print to any shareholder upon c/o BNY Mellon Shareowner Services request by writing to: Investor Services Department Corporate Secretary P.O. Box 358015 Owens & Minor, Inc. Pittsburgh, PA 15252-8015 9120 Lockwood Boulevard Mechanicsville, Virginia 23116 Duplicate Mailings Communications with When a shareholder owns shares in more than one account or when several the Board of Directors shareholders live at the same address, they may receive multiple copies of company mailings. To eliminate multiple mailings, please write to the transfer The Board of Directors has approved a process for shareholders to send agent or consider enrolling in MLink (via the BNY Mellon Web site above) communications to the Board. Shareholders can send written which offers secure on-line access to financial documents and shareowner communications to the Board, any committee of the Board, the Lead communications. Director or any other individual director at the following address: P.O. Box Counsel 26383, Richmond, Virginia 23260. Certifications Hunton & Williams Richmond, Virginia The company’s Chief Executive Officer certified to the New York Stock Independent Auditors Exchange (NYSE) within 30 days after the company’s 2008 Annual Meeting of Shareholders that he was not aware of any violation by the company of NYSE corporate governance listing standards. The company also filed with the SEC KPMG LLP as exhibits 31.1, 31.2, 32.1 and 32.2 to its Annual Report on Form 10-K for the Richmond, Virginia year ended December 31, 2008, certifications by its Chief Executive Officer and Chief Financial Officer. 2008 Annual Report & Form 10-K
  • 12. Owens & Minor, Inc. Corporate Office Street Address Mailing Address 804-723-7000 9120 Lockwood Boulevard Post Office Box 27626 www.owens-minor.com Mechanicsville, Virginia 23116 Richmond, Virginia 23261-7626