10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 1-9810

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)

Virginia	54-1701843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4800 Cox Road, Glen Allen, Virginia	23060
(Address of principal executive offices)	(Zip Code)
Post Office Box 27626, Richmond, Virginia	23261-7626
(Mailing address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (804) 747-9794

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of July 30, 2004, was 39,334,213 shares.

Owens & Minor, Inc. and Subsidiaries

Index

			Page
Part I.	Financial Information
	Item 1.	Financial Statements
		Consolidated Statements of Income – Three Months and Six Months Ended June 30, 2004 and 2003	3
		Consolidated Balance Sheets – June 30, 2004 and December 31, 2003	4
		Consolidated Statements of Cash Flows – Six Months Ended June 30, 2004 and 2003	5
		Notes to Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
	Item 4.	Controls and Procedures	18
Part II.	Other Information
	Item 1.	Legal Proceedings	19
	Item 4.	Submission of Matters to a Vote of Shareholders	19
	Item 6.	Exhibits and Reports on Form 8-K	19

2

Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Income

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	2004			2003			2004			2003
Revenue	$	1,119,375		$	1,054,502		$	2,225,449		$	2,072,471
Cost of revenue		1,004,544			945,610			1,996,558			1,856,778
Gross margin		114,831			108,892			228,891			215,693
Selling, general and administrative expenses		84,533			78,834			168,550			156,245
Depreciation and amortization		3,815			3,952			7,521			7,933
Other operating income and expense, net		(1,171	)		(1,313	)		(2,272	)		(2,480	)
Operating earnings		27,654			27,419			55,092			53,995
Interest expense, net		3,043			3,492			6,289			7,011
Discount on accounts receivable securitization		83			178			261			382
Distributions on mandatorily redeemable preferred securities		—			1,402			—			2,898
Other expense		—			—			—			154
Income before income taxes		24,528			22,347			48,542			43,550
Income tax provision		9,203			8,759			18,592			17,071
Net income	$	15,325		$	13,588		$	29,950		$	26,479
Net income per common share-basic	$	0.39		$	0.41		$	0.77		$	0.79
Net income per common share-diluted	$	0.39		$	0.37		$	0.76		$	0.72
Cash dividends per common share	$	0.11		$	0.09		$	0.22		$	0.17

See accompanying notes to consolidated financial statements.

3

Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)

(in thousands, except per share data)	June 30, 2004			December 31, 2003
Assets
Current assets
Cash and cash equivalents	$	48,674		$	16,335
Accounts and notes receivable, net of allowance of $7,357 and $8,350		329,049			353,431
Merchandise inventories		413,611			384,266
Other current assets		30,391			27,343
Total current assets		821,725			781,375
Property and equipment, net of accumulated depreciation of $70,760 and $74,056		22,596			21,088
Goodwill		198,938			198,063
Other assets, net		43,323			45,222
Total assets	$	1,086,582		$	1,045,748
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	331,411		$	314,723
Accrued payroll and related liabilities		12,399			13,279
Other accrued liabilities		68,245			67,630
Total current liabilities		412,055			395,632
Long-term debt		207,032			209,499
Other liabilities		31,274			30,262
Total liabilities		650,361			635,393
Shareholders’ equity
Preferred stock, par value $100 per share; authorized - 10,000 shares
Series A; Participating Cumulative Preferred Stock; none issued		—			—
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding – 39,297 shares and 38,979 shares		78,594			77,958
Paid-in capital		122,763			118,843
Retained earnings		241,778			220,468
Accumulated other comprehensive loss		(6,914	)		(6,914	)
Total shareholders’ equity		436,221			410,355
Total liabilities and shareholders’ equity	$	1,086,582		$	1,045,748

See accompanying notes to consolidated financial statements.

4

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended June 30,
(in thousands)	2004			2003
Operating activities
Net income	$	29,950		$	26,479
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		7,521			7,933
Provision for LIFO reserve		2,595			2,870
Provision for losses on accounts and notes receivable		891			1,380
Changes in operating assets and liabilities:
Accounts and notes receivable		23,513			31,162
Merchandise inventories		(31,940	)		(42,218	)
Accounts payable		38,161			88,790
Net change in other current assets and liabilities		(3,341	)		(5,739	)
Other, net		3,706			4,243
Cash provided by operating activities		71,056			114,900
Investing activities
Additions to property and equipment		(5,087	)		(2,615	)
Additions to computer software		(2,570	)		(5,106	)
Net cash paid for acquisition of business		(2,500	)		—
Other, net		12			25
Cash used for investing activities		(10,145	)		(7,696	)
Financing activities
Repurchase of mandatorily redeemable preferred securities		—			(20,412	)
Repurchase of common stock		—			(10,884	)
Net payments on revolving credit facility		—			(27,900	)
Cash dividends paid		(8,640	)		(5,714	)
Proceeds from exercise of stock options		2,751			2,880
Decrease in drafts payable		(21,500	)		(30,000	)
Other, net		(1,183	)		—
Cash used for financing activities		(28,572	)		(92,030	)
Net increase in cash and cash equivalents		32,339			15,174
Cash and cash equivalents at beginning of period		16,335			3,361
Cash and cash equivalents at end of period	$	48,674		$	18,535

See accompanying notes to consolidated financial statements.

5

Owens & Minor, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1. Accounting Policies

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which are comprised only of normal recurring accruals and the use of estimates) necessary to present fairly the consolidated financial position of Owens & Minor, Inc. and its wholly-owned subsidiaries (O&M or the company) as of June 30, 2004 and the consolidated results of operations for the three and six month periods and cash flows for the six month periods ended June 30, 2004 and 2003, in conformity with generally accepted accounting principles.

2. Interim Results of Operations

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

3. Reclassifications

Certain prior period amounts have been reclassified in order to conform to the current period presentation. The reclassifications have no effect on total revenue or net income as previously reported. The most significant reclassifications are as follows:

• Certain direct costs related to consulting and other service revenue are now included in cost of revenue. These costs were previously included in selling, general and administrative expense.

• Customer finance charge income is now included in other operating income and expense, net. This income was previously included in interest expense, net.

4. Acquisition

In March 2004, the company acquired certain net assets of 5nQ, a small, clinical inventory management solutions company. 5nQ developed an innovative software service, QSight^™, for clinical healthcare inventory management solutions. This strategic acquisition enables O&M to enhance the OMSolutions^SM technology and service offerings to hospitals and suppliers.

The acquisition has been accounted for as a purchase of a business and, accordingly, the operating results of 5nQ have been included in the company’s consolidated financial statements since the date of acquisition. The company paid $2.5 million in cash for the purchase, and will also make additional payments to the previous owners, who are now employed by O&M, based on the amount of QSight^™ subscription revenues through March 2007. The allocation of the purchase price included $1.5 million of computer software and $0.2 million of intangible assets, both included in “other assets, net” on the consolidated balance sheet, and $0.9 million of goodwill. Had the acquisition taken place on January 1, 2003, the consolidated revenue and net income of the company would not have materially differed from the amounts reported for the three months ended June 30, 2003 and the six months ended June 30, 2004 and 2003.

6

5. Stock-based Compensation

The company uses the intrinsic value method as defined by Accounting Principles Board Opinion No. 25 to account for stock-based compensation. This method requires compensation expense to be recognized for the excess of the quoted market price of the stock at the grant date or the measurement date over the amount an employee must pay to acquire the stock. The following table presents the effect on net income and earnings per share had the company used the fair value method, as defined in Statement of Financial Accounting Standards No. (SFAS) 123, Accounting for Stock-Based Compensation, to account for stock-based compensation:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	2004			2003			2004			2003
Net income	$	15,325		$	13,588		$	29,950		$	26,479
Add: stock-based employee compensation expense included in reported net income, net of tax		200			147			412			326
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		(616	)		(501	)		(1,029	)		(909	)
Pro forma net income	$	14,909		$	13,234		$	29,333		$	25,896
Per common share - basic:
Net income, as reported	$	0.39		$	0.41		$	0.77		$	0.79
Pro forma net income	$	0.38		$	0.40		$	0.75		$	0.77
Per common share - diluted:
Net income, as reported	$	0.39		$	0.37		$	0.76		$	0.72
Pro forma net income	$	0.38		$	0.36		$	0.74		$	0.70

6. Retirement Plans

In December 2003, the Financial Accounting Standards Board (FASB) revised Statement of Financial Accounting Standards No. (SFAS) 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits. The revised statement requires disclosures in addition to those in the original SFAS 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. Most of the additional disclosure requirements were effective for the company as of December 31, 2003, with the remaining requirements effective in 2004. The adoption of the revised statement did not affect the company’s financial condition or results of operations. The revised statement requires interim disclosures to be made about the components of net periodic pension cost of the company’s retirement plans. The components of net periodic pension cost of the company’s retirement plans for the three and six months ended June 30, 2004 and 2003 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2004			2003			2004			2003
Service cost	$	255		$	177		$	510		$	353
Interest cost		762			722			1,526			1,443
Expected return on plan assets		(432	)		(350	)		(866	)		(700	)
Amortization of prior service cost		71			71			141			141
Recognized net actuarial loss		217			174			434			348
Net periodic pension cost	$	873		$	794		$	1,745		$	1,585

7

7. Comprehensive Income

The company’s comprehensive income for the three and six months ended June 30, 2004 and 2003 is shown in the table below:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2004		2003			2004		2003
Net income	$	15,325	$	13,588		$	29,950	$	26,479
Other comprehensive income – change in unrealized gain on investment, net of tax		—		(24	)		—		(13	)
Comprehensive income	$	15,325	$	13,564		$	29,950	$	26,466

8. Net Income per Common Share

  The following sets forth the computation of basic and diluted net income per common share:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2004		2003		2004		2003
Numerator:
Numerator for basic net income per common share – net income	$	15,325	$	13,588	$	29,950	$	26,479
Distributions on convertible mandatorily redeemable preferred securities, net of income taxes		—		854		—		1,767
Numerator for diluted net income per common share – net income attributable to common stock after assumed conversions	$	15,325	$	14,442	$	29,950	$	28,246
Denominator:
Denominator for basic net income per common share – weighted average shares		39,002		33,383		38,937		33,458
Effect of dilutive securities:
Conversion of mandatorily redeemable preferred securities		—		5,061		—		5,316
Stock options and restricted stock		599		572		621		504
Denominator for diluted net income per common share – adjusted weighted average shares and assumed conversions		39,601		39,016		39,558		39,278
Net income per common share – basic	$	0.39	$	0.41	$	0.77	$	0.79
Net income per common share – diluted	$	0.39	$	0.37	$	0.76	$	0.72

9. Recently Adopted Accounting Pronouncements

In December 2003, the FASB issued FASB Interpretation No. (FIN) 46R (revised December 2003), Consolidation of Variable Interest Entities, which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January 2003. The company was required to apply FIN 46R to interests in variable interest entities (VIEs) as of March 31, 2004. Application of this Interpretation did not affect the company’s financial condition or results of operations.

8

10. Condensed Consolidating Financial Information

The following tables present condensed consolidating financial information for: Owens & Minor, Inc.; on a combined basis, the guarantors of Owens & Minor, Inc.’s 8.5% Senior Subordinated 10-year Notes (the Notes); and the non-guarantor subsidiaries of the Notes. Separate financial statements of the guarantor subsidiaries are not presented because the guarantors are jointly, severally and unconditionally liable under the guarantees and the company believes the condensed consolidating financial information is more meaningful in understanding the financial position, results of operations and cash flows of the guarantor subsidiaries.

Condensed Consolidating Financial Information

(in thousands)

For the three months ended June 30, 2004	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Operations
Revenue	$	—		$	1,119,375		$	—		$	—		$	1,119,375
Cost of revenue		—			1,004,544			—			—			1,004,544
Gross margin		—			114,831			—			—			114,831
Selling, general and administrative expenses		391			84,137			5			—			84,533
Depreciation and amortization		—			3,815			—			—			3,815
Other operating income and expense, net		—			(572	)		(599	)		—			(1,171	)
Operating earnings (loss)		(391	)		27,451			594			—			27,654
Interest (income) expense, net		(309	)		2,962			390			—			3,043
Intercompany dividend income		—			(20,342	)		—			20,342			—
Discount on accounts receivable securitization		—			3			80			—			83
Income (loss) before income taxes		(82	)		44,828			124			(20,342	)		24,528
Income tax provision (benefit)		(37	)		9,191			49			—			9,203
Net income (loss)	$	(45	)	$	35,637		$	75		$	(20,342	)	$	15,325

For the three months ended June 30, 2003	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations		Consolidated
Statements of Operations
Revenue	$	—		$	1,054,502		$	—		$	—	$	1,054,502
Cost of revenue		—			945,610			—			—		945,610
Gross margin		—			108,892			—			—		108,892
Selling, general and administrative expenses		—			78,659			175			—		78,834
Depreciation and amortization		—			3,952			—			—		3,952
Other operating income and expense, net		—			(23	)		(1,290	)		—		(1,313	)
Operating earnings		—			26,304			1,115			—		27,419
Interest (income) expense, net		(4,982	)		9,356			(882	)		—		3,492
Discount on accounts receivable securitization		—			5			173			—		178
Distributions on mandatorily redeemable preferred securities		—			—			1,402			—		1,402
Income before income taxes		4,982			16,943			422			—		22,347
Income tax provision		1,990			6,596			173			—		8,759
Net income	$	2,992		$	10,347		$	249		$	—	$	13,588

9

Condensed Consolidating Financial Information

(in thousands)

For the six months ended June 30, 2004	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Operations
Revenue	$	—		$	2,225,449		$	—		$	—		$	2,225,449
Cost of revenue		—			1,996,558			—			—			1,996,558
Gross margin		—			228,891			—			—			228,891
Selling, general and administrative expenses		457			167,970			123			—			168,550
Depreciation and amortization		—			7,521			—			—			7,521
Other operating income and expense, net		—			(570	)		(1,702	)		—			(2,272	)
Operating earnings		(457	)		53,970			1,579			—			55,092
Interest (income) expense, net		(1,124	)		6,577			836			—			6,289
Intercompany dividend income		—			(20,342	)		—			20,342			—
Discount on accounts receivable securitization		—			8			253			—			261
Income before income taxes		667			67,727			490			(20,342	)		48,542
Income tax provision		256			18,144			192			—			18,592
Net income	$	411		$	49,583		$	298		$	(20,342	)	$	29,950

For the six months ended June 30, 2003	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations		Consolidated
Statements of Operations
Revenue	$	—		$	2,072,471		$	—		$	—	$	2,072,471
Cost of revenue		—			1,856,778			—			—		1,856,778
Gross margin		—			215,693			—			—		215,693
Selling, general and administrative expenses		—			155,512			733			—		156,245
Depreciation and amortization		—			7,933			—			—		7,933
Other operating income and expense, net		—			(83	)		(2,397	)		—		(2,480	)
Operating earnings		—			52,331			1,664			—		53,995
Interest (income) expense, net		(6,241	)		15,910			(2,658	)		—		7,011
Discount on accounts receivable securitization		—			10			372			—		382
Distributions on mandatorily redeemable preferred securities		—			—			2,898			—		2,898
Other expense, net		154			—			—			—		154
Income before income taxes		6,087			36,411			1,052			—		43,550
Income tax provision		2,424			14,227			420			—		17,071
Net income	$	3,663		$	22,184		$	632		$	—	$	26,479

10

Condensed Consolidating Financial Information

(in thousands)

June 30, 2004	Owens & Minor, Inc.		Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents	$	46,410	$	2,263		$	1		$	—		$	48,674
Accounts and notes receivable, net		—		329,049			—			—			329,049
Merchandise inventories		—		413,611			—			—			413,611
Intercompany advances, net		91,252		(91,108	)		(144	)		—			—
Other current assets		—		30,391			—			—			30,391
Total current assets		137,662		684,206			(143	)		—			821,725
Property and equipment, net		—		22,596			—			—			22,596
Goodwill		—		198,938			—			—			198,938
Intercompany investments		383,415		7,773			—			(391,188	)		—
Other assets, net		10,354		32,969			—			—			43,323
Total assets	$	531,431	$	946,482		$	(143	)	$	(391,188	)	$	1,086,582
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	—	$	331,411		$	—		$	—		$	331,411
Accrued payroll and related liabilities		—		12,399			—			—			12,399
Other accrued liabilities		6,214		62,031			—			—			68,245
Total current liabilities		6,214		405,841			—			—			412,055
Long-term debt		206,889		143			—			—			207,032
Intercompany long-term debt		—		138,890			—			(138,890	)		—
Other liabilities		—		31,274			—			—			31,274
Total liabilities		213,103		576,148			—			(138,890	)		650,361
Shareholders’ equity
Common stock		78,594		—			1,500			(1,500	)		78,594
Paid-in capital		122,763		249,797			1,001			(250,798	)		122,763
Retained earnings (deficit)		116,971		127,451			(2,644	)		—			241,778
Accumulated other comprehensive loss		—		(6,914	)		—			—			(6,914	)
Total shareholders’ equity		318,328		370,334			(143	)		(252,298	)		436,221
Total liabilities and shareholders’ equity	$	531,431	$	946,482		$	(143	)	$	(391,188	)	$	1,086,582

11

Condensed Consolidating Financial Information

(in thousands)

December 31, 2003	Owens & Minor, Inc.		Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents	$	14,156	$	2,178		$	1		$	—		$	16,335
Accounts and notes receivable, net		—		5,985			347,446			—			353,431
Merchandise inventories		—		384,266			—			—			384,266
Intercompany advances, net		126,182		186,302			(312,484	)		—			—
Other current assets		18		27,325			—			—			27,343
Total current assets		140,356		606,056			34,963			—			781,375
Property and equipment, net		—		21,088			—			—			21,088
Goodwill		—		198,063			—			—			198,063
Intercompany investments		383,415		22,773			—			(406,188	)		—
Other assets, net		13,624		31,598			—			—			45,222
Total assets	$	537,395	$	879,578		$	34,963		$	(406,188	)	$	1,045,748
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	—	$	314,723		$	—		$	—		$	314,723
Accrued payroll and related liabilities		—		13,279			—			—			13,279
Other accrued liabilities		6,030		61,538			62			—			67,630
Total current liabilities		6,030		389,540			62			—			395,632
Long-term debt		209,364		135			—			—			209,499
Intercompany long-term debt		—		138,890			—			(138,890	)		—
Other liabilities		—		30,262			—			—			30,262
Total liabilities		215,394		558,827			62			(138,890	)		635,393
Shareholders’ equity
Common stock		77,958		—			1,500			(1,500	)		77,958
Paid-in capital		118,843		249,797			16,001			(265,798	)		118,843
Retained earnings		125,200		77,868			17,400			—			220,468
Accumulated other comprehensive loss		—		(6,914	)		—			—			(6,914	)
Total shareholders’ equity		322,001		320,751			34,901			(267,298	)		410,355
Total liabilities and shareholders’ equity	$	537,395	$	879,578		$	34,963		$	(406,188	)	$	1,045,748

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Condensed Consolidating Financial Information

(in thousands)

For the six months ended June 30, 2004	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Cash Flows
Operating activities
Net income	$	411		$	49,583		$	298		$	(20,342	)	$	29,950
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		—			7,521			—			—			7,521
Provision for LIFO reserve		—			2,595			—			—			2,595
Provision for losses on accounts and notes receivable		—			778			113			—			891
Noncash intercompany dividend income		—			(20,342	)		—			20,342			—
Changes in operating assets and liabilities:
Accounts and notes receivable		—			9,455			14,058			—			23,513
Merchandise inventories		—			(31,940	)		—			—			(31,940	)
Accounts payable		—			38,161			—			—			38,161
Net change in other current assets and liabilities		202			(3,481	)		(62	)		—			(3,341	)
Other, net		2,189			1,517			—			—			3,706
Cash provided by operating activities		2,802			53,847			14,407			—			71,056
Investing activities
Additions to property and equipment		—			(5,087	)		—			—			(5,087	)
Additions to computer software		—			(2,570	)		—			—			(2,570	)
Net cash paid for acquisition of business		—			(2,500	)		—			—			(2,500	)
Other, net		—			12			—			—			12
Cash used for investing activities		—			(10,145	)		—			—			(10,145	)
Financing activities
Change in intercompany advances		35,341			(20,934	)		(14,407	)		—			—
Cash dividends paid		(8,640	)		—			—			—			(8,640	)
Proceeds from exercise of stock options		2,751			—			—			—			2,751
Decrease in drafts payable		—			(21,500	)		—			—			(21,500	)
Other, net		—			(1,183	)		—			—			(1,183	)
Cash provided by (used for) financing activities		29,452			(43,617	)		(14,407	)		—			(28,572	)
Net increase in cash and cash equivalents		32,254			85			—			—			32,339
Cash and cash equivalents at beginning of period		14,156			2,178			1			—			16,335
Cash and cash equivalents at end of period	$	46,410		$	2,263		$	1		$	—		$	48,674

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Condensed Consolidating Financial Information

(in thousands)

For the six months ended June 30, 2003	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations		Consolidated
Statements of Cash Flows
Operating activities
Net income	$	3,663		$	22,184		$	632		$	—	$	26,479
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		—			7,933			—			—		7,933
Provision for LIFO reserve		—			2,870			—			—		2,870
Provision for losses on accounts and notes receivable		—			657			723			—		1,380
Changes in operating assets and liabilities:
Accounts and notes receivable		—			(530	)		31,692			—		31,162
Merchandise inventories		—			(42,218	)		—			—		(42,218	)
Accounts payable		—			88,790			—			—		88,790
Net change in other current assets And liabilities		(278	)		(5,270	)		(191	)		—		(5,739	)
Other, net		1,581			2,662			—			—		4,243
Cash provided by operating activities		4,966			77,078			32,856			—		114,900
Investing activities
Additions to property and equipment		—			(2,615	)		—			—		(2,615	)
Additions to computer software		—			(5,106	)		—			—		(5,106	)
Other, net		—			25			—			—		25
Cash used for investing activities		—			(7,696	)		—			—		(7,696	)
Financing activities
Repurchase of mandatorily redeemable preferred securities		(20,412	)		—			—			—		(20,412	)
Repurchase of common stock		(10,884	)		—			—			—		(10,884	)
Net payments on revolving credit facility		(27,900	)		—			—			—		(27,900	)
Change in intercompany advances		72,269			(39,413	)		(32,856	)		—		—
Cash dividends paid		(5,714	)		—			—			—		(5,714	)
Proceeds from exercise of stock options		2,880			—			—			—		2,880
Decrease in drafts payable		—			(30,000	)		—			—		(30,000	)
Cash provided by (used for) financing activities		10,239			(69,413	)		(32,856	)		—		(92,030	)
Net increase (decrease) in cash and cash equivalents		15,205			(31	)		—			—		15,174
Cash and cash equivalents at beginning of period		1,244			2,116			1			—		3,361
Cash and cash equivalents at end of period	$	16,449		$	2,085		$	1		$	—	$	18,535

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis describes material changes in the financial condition of Owens & Minor, Inc. and its wholly-owned subsidiaries (O&M or the company) since December 31, 2003. Trends of a material nature are discussed to the extent known and considered relevant. This discussion should be read in conjunction with the consolidated financial statements, related notes thereto and management’s discussion and analysis of financial condition and results of operations included in the company’s 2003 Annual Report on Form 10-K for the year ended December 31, 2003.

Reclassifications

As a result of the growth of the OMSolutions^SM business and the increasing effect of customer finance charge income on interest expense in recent periods, the company made certain changes to the presentation of its income statement effective January 1, 2004, to provide more useful information to investors. These reclassifications have no effect on total revenue or net income as previously reported. The most significant reclassifications are as follows:

• Certain direct costs related to consulting and other service revenue are now included in cost of revenue. These costs were previously included in selling, general and administrative expense.

• Customer finance charge income is now included in other operating income and expense, net. This income was previously included in interest expense, net.

Financial information for all prior periods included in this report has been reclassified to conform to the current presentation.

Results of Operations

Second quarter and first six months of 2004 compared with 2003

Overview. For the second quarter and first six months of 2004, net income increased by 13%. The increase in net income was driven by increased operating earnings, lower financing costs aided by improved collections of accounts receivable and a lower effective tax rate. Operating earnings increased by 1% from the second quarter of 2003 to the second quarter of 2004, while for the first six months of the year, operating earnings increased by 2% over the prior year period. Operating earnings increased due to revenue growth, as well as productivity improvements in the core distribution business offset by increased spending on strategic initiatives.

Revenue. Revenue increased 6% to $1.12 billion in the second quarter of 2004 from $1.05 billion in the second quarter of 2003. For the first six months of 2004, revenue increased 7% over the comparable prior year period. This revenue increase resulted from new core distribution business, including HealthTrust Purchasing Group, and increased sales to existing customers.

Operating earnings. As a percentage of revenue, operating earnings decreased slightly to 2.5% in the second quarter and first six months of 2004 from 2.6% in the comparable periods of 2003. The decrease in operating earnings as a percentage of revenue from 2003 resulted from slightly lower gross margin and continued spending on strategic initiatives, particularly OMSolutions^SM and Owens & Minor University, partially offset by productivity improvements in the core distribution business. OMSolutions^SM expenses exceeded revenue for the second quarter and the first six months of 2004. The company anticipates that the OMSolutions^SM business will become accretive in the second half of the year.

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The following table presents the components of operating earnings as a percent of revenue for the second quarter and first six months of 2004 and 2003:

	Three months ended June 30,				Six months ended June 30,
	2004		2003		2004		2003
Gross margin	10.3	%	10.3	%	10.3	%	10.4	%
SG&A expense	7.6	%	7.5	%	7.6	%	7.5	%
Depreciation and amortization	0.3	%	0.4	%	0.3	%	0.4	%
Other operating income and expense, net	(0.1	)%	(0.1	)%	(0.1	)%	(0.1	)%
Operating earnings	2.5	%	2.6	%	2.5	%	2.6	%

Percentages may not foot due to rounding

The decrease in gross margin from the first six months of 2003 to the same period of 2004 resulted primarily from competitive pricing pressure and fewer inventory buying opportunities.

Competitive pricing pressure has been a significant factor in recent years, and management expects this trend to continue. In addition, as suppliers continue to seek more restrictive agreements with distributors, the company has access to fewer special inventory buying opportunities than in the past. The company is working to counteract the effects of these trends by continuing to offer customers a wide range of value-added services, such as OMSolutions^SM, PANDAC^® and other programs, as well as expanding the MediChoice^® private label product line. The company also continues to work with suppliers on programs to enhance gross margin.

SG&A expenses were 7.6% of revenue in both the second quarter and the first six months of 2004, up from 7.5% in the comparable periods of 2003. The company continues to invest in its strategic initiatives, such as OMSolutions^SM and Owens & Minor University. These additional costs, as well as increases in other operating costs such as employee healthcare and information technology support, were partially offset by productivity improvements achieved in the core distribution business. The company expects to continue to invest in its strategic initiatives while also focusing on operation standardization in order to further improve productivity.

Financing costs. Financing costs, which include interest expense, discount on accounts receivable securitization and distributions on mandatorily redeemable preferred securities, totaled $3.1 million and $6.6 million for the second quarter and first six months of 2004, compared with $5.1 million and $10.3 million for the same periods of 2003. The decrease in financing costs from 2003 resulted primarily from reductions in outstanding financing, most significantly the repurchase of $20.8 million and conversion of $104.4 million of mandatorily redeemable preferred securities in 2003. Financing costs were also favorably affected by interest income from increased cash and cash equivalents helped by improved collections of accounts receivable.

The company expects to continue to manage its financing costs by managing working capital levels. Future financing costs will be affected primarily by changes in short-term interest rates, as well as working capital requirements.

Income taxes. The provision for income taxes was $9.2 million and $18.6 million in the second quarter and first six months of 2004 compared with $8.8 million and $17.1 million in the same periods of 2003. The effective tax rate was 37.5% and 38.3% for the second quarter and first half of 2004,

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compared to 38.9% for the full year of 2003. The provision for the second quarter and first six months of 2004 includes an adjustment of the company’s reserve for tax liabilities for years subject to audit as the company was better able to estimate its ultimate liability for these years.

Financial Condition, Liquidity and Capital Resources

Liquidity. The company’s liquidity remained strong in the first six months of 2004, as its cash and cash equivalents increased $32.3 million to $48.7 million at June 30, and long-term debt remained consistent at $207.0 million, down $2.5 million from December 31, 2003. In the first six months of 2004, the company generated $71.1 million of cash flow from operations, compared with $114.9 million in the first half of 2003. Cash flows in both periods were positively affected by improved collections of accounts receivable, while cash flows for the first half of 2003 were also significantly enhanced by timing of payments for inventory purchases. Accounts receivable days sales outstanding at June 30, 2004 were 25.5 days, improved from 27.8 days at December 31, 2003 and 28.0 days at June 30, 2003. Inventory turnover increased slightly to 10.0 in the second quarter of 2004 from 9.9 in the second quarter of 2003.

Effective May 4, 2004, the company amended its revolving credit facility, extending its expiration to May 2009. The credit limit of the amended facility increased from $150.0 million to $250.0 million, and the interest rate is based on, at the company’s discretion, LIBOR, the Federal Funds Rate or the Prime Rate, plus an adjustment based on the company’s leverage ratio. Under the new terms of the facility, the company is charged a commitment fee of between 0.15% and 0.35% on the unused portion of the facility. The terms of the agreement limit the amount of indebtedness that the company may incur, require the company to maintain certain levels of net worth, leverage ratio and fixed charge coverage ratio, and restrict the ability of the company to materially alter the character of the business through consolidation, merger, or purchase or sale of assets. As a result of the increased borrowing capacity under the amended revolving credit facility, the company terminated its off balance sheet accounts receivable financing facility.

The company expects that its available financing will be sufficient to fund its working capital needs and long-term strategic growth, although this cannot be assured. At June 30, 2004, the company had $243.5 million of unused credit under its revolving credit facility.

Capital Expenditures. Capital expenditures were $7.7 million in the first six months of both 2004 and 2003. The mix of expenditures changed from 2003 to 2004, with increased spending on equipment and improvements related to the relocation of two of the company’s distribution centers, offset by reduced capital spending on information systems. The company expects capital expenditures for the remainder of 2004 to include increased spending on the design and construction of a new corporate headquarters. Capital expenditures for information systems are expected to continue to run at a lower rate than in 2003.

Risks

The company is subject to risks associated with changes in the healthcare industry, including competition and continued efforts to control costs, which place pressure on operating earnings, changes in the way medical and surgical services are delivered, and changes in manufacturer preferences between the sale of product directly to hospital customers and the use of wholesale distribution. The loss of one of the company’s larger customers could have a significant effect on its business.

Forward-looking Statements

Certain statements in this discussion constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although O&M believes its expectations with respect

17

to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, all forward-looking statements involve risks and uncertainties and, as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including, but not limited to:

• general economic and business conditions

• the ability of the company to implement its strategic initiatives

• dependence on sales to certain customers

• dependence on suppliers

• changes in manufacturer preferences between direct sales and wholesale distribution

• competition

• changing trends in customer profiles

• the ability of the company to meet customer demand for additional value added services

• the ability to convert customers to CostTrack^SM

• the availability of supplier incentives

• the ability to capitalize on inventory buying opportunities

• the ability of business partners to perform their contractual responsibilities

• the ability to manage operating expenses

• the ability of the company to manage financing costs and interest rate risk

• the risk that a decline in business volume or profitability could result in an impairment of goodwill

• the ability to timely or adequately respond to technological advances in the medical supply industry

• the ability to successfully identify, manage or integrate possible future acquisitions

• the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims

• changes in government regulations.

As a result of these and other factors, no assurance can be given as to the company’s future results. The company is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future results, or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The company believes there has been no material change in its exposure to market risk from that discussed in Item 7A in the company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Item 4. Controls and Procedures

The company carried out an evaluation, with the participation of the company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the company’s disclosure controls and procedures (pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the company required to be included in the company’s periodic SEC filings. There has been no change in the company’s internal controls over financial reporting during the quarter ended June 30, 2004, that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

Certain legal proceedings pending against the company are described in the company’s Annual Report on Form 10-K for the year ended December 31, 2003. Through June 30, 2004, there have been no material developments in any legal proceedings reported in such Annual Report.

Item 4. Submission of Matters to a Vote of Shareholders

The following matters were submitted to a vote of O&M’s shareholders at its annual meeting held on April 29, 2004, with the voting results designated below each such matter:

(1) Election of A. Marshall Acuff, Jr., Henry A. Berling, James B. Farinholt, Jr., and Anne Marie Whittemore as directors of O&M for a three–year term.

Directors	Votes For	Votes Against Or Withheld	Abstentions	Broker Non-Votes
A. Marshall Acuff, Jr.	34,456,277	1,641,586	0	0
Henry A. Berling	34,340,733	1,757,130	0	0
James B. Farinholt, Jr.	34,316,964	1,780,899	0	0
Anne Marie Whittemore	22,710,128	13,387,735	0	0

(2) Ratification of the appointment of KPMG LLP as O&M’s independent auditors for 2004.

Votes For	Votes Against Or Withheld	Abstentions
35,754,970	324,617	18,276

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

3.1	Amended and Restated Bylaws of the company
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

The company filed a Current Report on Form 8-K dated April 21, 2004, under Items 7 and 12, announcing its earnings for the first quarter ended March 31, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Owens & Minor, Inc.
	(Registrant)
Date August 5, 2004	/s/ G. GILMER MINOR, III
	G. Gilmer Minor, III
	Chairman and Chief Executive Officer
Date August 5, 2004	/s/ JEFFREY KACZKA
	Jeffrey Kaczka
	Senior Vice President
	Chief Financial Officer
Date August 5, 2004	/s/ OLWEN B. CAPE
	Olwen B. Cape
	Vice President & Controller
	Chief Accounting Officer

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Exhibits Filed with SEC

Exhibit #
3.1	Amended and Restated Bylaws of the company.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

BYLAWS

OF

OWENS & MINOR, INC.

ARTICLE I

Meetings of Shareholders

1.1 Places of Meetings. All meetings of the shareholders shall be held at such place, either within or without the Commonwealth of Virginia, as from time to time may be fixed by the Board of Directors.

1.2 Annual Meetings. The annual meeting of the shareholders, for the election of Directors and transaction of such other business as may come before the meeting, shall be held in each year on the fourth Tuesday in April, at 11:00 a.m., or on such other business day that is not earlier than the first day of March and not later than the last day of April, or at such other time, as shall be fixed by the Board of Directors.

1.3 Special Meetings. A special meeting of the shareholders for any purpose or purposes may be called at any time by the Chairman of the Board, the Chief Executive Officer, or by a majority of the Board of Directors. At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.

1.4 Notice of Meetings. Written or printed notice stating the place, day and hour of every meeting of the shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be mailed not less than ten nor more than sixty days before the date of the meeting to each shareholder of record entitled to vote at such meeting, at his address which appears in the share transfer books of the Corporation. Such further notice shall be given as may be required by law, but meetings may be held without notice if all the shareholders entitled to vote at the meeting are present in person or by proxy or if notice is waived in writing by those not present, either before or after the meeting.

1.5 Quorum. Any number of shareholders together holding at least a majority of the outstanding shares of capital stock entitled to vote with respect to the business to be transacted, who shall be present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of business. If less than a quorum shall be in attendance at the time for

which a meeting shall have been called, the meeting may be adjourned from time to time by a majority of the shareholders present or represented by proxy without notice other than by announcement at the meeting.

1.6 Voting. At any meeting of the shareholders each shareholder of a class entitled to vote on any matter coming before the meeting shall, as to such matter, have one vote, in person or by proxy, for each share of capital stock of such class standing in his name on the books of the Corporation on the date, not more than seventy days prior to such meeting, fixed by the Board of Directors as the record date for the purpose of determining shareholders entitled to vote. Every proxy shall be in writing, dated and signed by the shareholder entitled to vote or his duly authorized attorney-in-fact.

1.7 Inspectors. An appropriate number of inspectors for any meeting of shareholders may be appointed by the Chairman of such meeting. Inspectors so appointed will open and close the polls, will receive and take charge of proxies and ballots, and will decide all questions as to the qualifications of voters, validity of proxies and ballots, and the number of votes properly cast.

1.8 Nomination by Shareholders. Subject to any rights of holders of shares of the Preferred Stock of the Corporation, nominations for the election of directors shall be made by the Board of Directors or by any shareholder entitled to vote in elections of directors. However, any shareholder entitled to vote in the election of directors may nominate one or more persons for election as directors only at an annual meeting and if written notice of such shareholders’ intent to make such nomination or nominations has been given, either by personal delivery or by United States registered or certified mail, postage prepaid, to the Secretary of the Corporation not later than 90 days before the anniversary of the date of the first mailing of the Corporation’s proxy statement for the immediately preceding year’s annual meeting. In no event shall the public announcement of an adjournment or postponement of an annual meeting or the fact that an annual meeting is held after the anniversary of the preceding annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Each notice shall set forth (i) the name and address of record of the shareholder who intends to make the nomination, the beneficial owner, if any, on whose behalf the nomination is made and of the person or persons to be nominated, (ii) the class and number of shares of the Corporation that are owned by the shareholder and such beneficial owners, (iii) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (iv) a description of all arrangements, understandings or relationships between the shareholder and each nominee and any other person or person (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder, and such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required to be disclosed, pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors, and shall include a consent signed by each such nominee to

2

serve as a director of the Corporation it so elected. In the event that a shareholder attempts to nominate any person without complying with the procedures set forth in this Section 1.8, such person shall not be nominated and shall not stand for election at such meeting. The Chairman of the Board of Directors shall have the power and duty to determine whether a nomination proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 1.8 and, if any proposed nomination is not in compliance with this Section 1.8, to declare that such defective proposal shall be disregarded.

1.9 Business Proposed by a Shareholder. To be properly brought before a meeting of shareholders, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before an annual meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice must be given, either by personal delivery or by United States registered or certified mail, postage prepaid, to the Secretary of the Corporation not later than 90 days before the anniversary of the date of the first mailing of the Corporation’s proxy statement for the immediately preceding year’s annual meeting. In no event shall the public announcement of an adjournment or postponement of an annual meeting or the fact that an annual meeting is held after the anniversary of the preceding annual meeting commence a new time period for the giving of a shareholder’s notice as described above. A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting, including the complete text of any resolutions to be presented at the meeting with respect to such business, and the reasons for conducting such business at the meeting, (ii) the name and address of record of the shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the Corporation that are owned by the shareholder and such beneficial owner and (iv) any material interest of the shareholder and such beneficial owner, in such business. In the event that a shareholder attempts to bring business before a meeting without complying with the procedures set forth in this Section 1.9, such business shall not be transacted at such meeting. The Chairman of the Board of Directors shall have the power and duty to determine whether any proposal to bring business before the meeting was made in accordance with the procedures set forth in this Section 1.9 and, if any business is not proposed in compliance with this Section 1.9, to declare that such defective proposal shall be disregarded and that such proposed business shall not be transacted at such meeting.

3

ARTICLE II

Directors

2.1 General Powers. The property, affairs and business of the Corporation shall be managed under the direction of the Board of Directors, and, except as otherwise expressly provided by law, the Articles of Incorporation or these Bylaws, all of the powers of the Corporation shall be vested in such Board.

2.2 Number of Directors. The number of Directors constituting the Board of Directors shall be twelve (12). The Directors shall be divided into three (3) classes, each class to be as nearly equal in number as possible.

2.3 Election and Removal of Directors; Quorum.

(a) At each annual meeting of shareholders, (i) the number of Directors equal to the number in the class whose term expires at the time of such meeting shall be elected to hold office until the third succeeding annual meeting and until their successors are elected, and (ii) any other vacancies then existing shall be filled.

(b) Any Director may be removed from office at a meeting called expressly for that purpose by the vote of shareholders holding not less than a majority of the shares entitled to vote at an election of Directors.

(c) Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of the majority of the remaining Directors though less than a quorum of the Board, and the term of office of any Director so elected shall expire at the next shareholders’ meeting at which directors are elected.

(d) A majority of the number of Directors fixed by these Bylaws shall constitute a quorum for the transaction of business. The act of a majority of Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Less than a quorum may adjourn any meeting.

2.4 Meetings of Directors. An annual meeting of the Board of Directors shall be held as soon as practicable after the adjournment of the annual meeting of shareholders at such place as the Board may designate. Other meetings of the Board of Directors shall be held at places within or without the Commonwealth of Virginia and at times fixed by resolution of the Board, or upon call of the Chairman of the Board, the Chief Executive Officer or a majority of the Directors. The

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Secretary or officer performing the Secretary’s duties shall give not less than twenty-four hours’ notice by letter, telegraph or telephone (or in person) of all meetings of the Board of Directors, provided that notice need not be given of the annual meeting or of regular meetings held at times and places fixed by resolution of the Board. Meetings may be held at any time without notice if all of the Directors are present, or if those not present waive notice in writing either before or after the meeting. The notice of meetings of the Board need not state the purpose of the meeting.

2.5 Compensation. By resolution of the Board, Directors who are not employed by the Corporation may receive reasonable Directors’ fees in the form of cash and/or equity based awards including additional amounts paid to chairs of committees and to members of committees that meet more frequently or for longer periods of time.

2.6 Eligibility for Service as a Director. Except for any present Director who is more than 65 years of age on December 14, 1998, no person shall be appointed or be eligible for election to the Board of Directors of the Corporation if such person, at the time of the prospective appointment or election, is then more than 67 years of age (so that no such person shall be more than 70 years of age at the expiration of his or her term as a Director of the Corporation). Any present Director who is more than 65 years of age on December 14, 1998 shall not be appointed or be eligible for election to the Board if such Director is more than 72 years of age at the time of the prospective appointment or election (so that no such Director shall be more than 75 years of age at the expiration of his or her term as a Director of the Corporation).

2.7 Director Emeritus. The Board of Directors may from time to time elect one or more former directors as Directors Emeriti. Election as a Director Emeritus shall be in recognition of contributions during his or her tenure on the Board of Directors and in appreciation for loyal and dedicated service. A Director Emeritus shall be elected for a term expiring on the date of the next annual meeting of the Board and will be recognized at the annual meeting. A Director Emeritus is an honorary non-compensated position and not considered a “Director” or Section 16 Insider for the purposes of these bylaws or for any other purpose. Therefore, Director Emeriti shall attend Board meetings and participate in other Board events only at the invitation of the Chairman.

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ARTICLE III

Committees.

3.1 Executive Committee. The Board of Directors, by resolution adopted by a majority of the number of Directors fixed by these Bylaws, may elect an Executive Committee which shall consist of not less than three Directors, including the Chief Executive Officer (if the Chief Executive Officer is also a Director). When the Board of Directors is not in session, the Executive Committee shall have all power vested in the Board of Directors by law, by the Articles of Incorporation, or by these Bylaws, provided that the Executive Committee shall not have power to (i) approve or recommend to shareholders action that the Virginia Stock Corporation Act requires to be approved by shareholders; (ii) fill vacancies on the Board or on any of its committees; (iii) amend the Articles of Incorporation pursuant to §13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the Bylaws; (v) approve a plan of merger not requiring shareholder approval; (vi) authorize or approve a distribution, except according to a general formula or method prescribed by the Board of Directors; or (vii) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, other than within limits specifically prescribed by the Board of Directors. The Executive Committee shall report at the next regular or special meeting of the Board of Directors all action that the Executive Committee may have taken on behalf of the Board since the last regular or special meeting of the Board of Directors.

3.2 Other Committees. The Board of Directors, by resolution adopted by a majority of the number of Directors fixed by these Bylaws, may establish such other standing or special committees of the Board as it may deem advisable, consisting of not less than two Directors; and the members, terms and authority of such committees shall be as set forth in the resolutions establishing the same.

3.3 Meetings. Regular and special meetings of any Committee established pursuant to this Article may be called and held subject to the same requirements with respect to time, place and notice as are specified in these Bylaws for regular and special meetings of the Board of Directors.

3.4 Quorum and Manner of Acting. A majority of the number of members of any Committee shall constitute a quorum for the transaction of business at such meeting. The action of a majority of those members present at a Committee meeting at which a quorum is present shall constitute the act of the Committee.

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3.5 Term of Office. Members of any Committee shall be elected as above provided and shall hold office until their successors are elected by the Board of Directors or until such Committee is dissolved by the Board of Directors.

3.6 Resignation and Removal. Any member of a Committee may resign at any time by giving written notice of his intention to do so to the Chief Executive Officer or the Secretary of the Corporation, or may be removed, with or without cause, at any time by such vote of the Board of Directors as would suffice for his election.

3.7 Vacancies. Any vacancy occurring in a Committee resulting from any cause whatever may be filled by a majority of the number of Directors fixed by these Bylaws.

ARTICLE IV

Officers

4.1 Election of Officers: Terms. The officers of the Corporation shall consist of a Chief Executive Officer, a President, a Secretary and a Treasurer. Other officers, including a Chairman of the Board, one or more Vice Presidents (whose seniority and titles, including Executive Vice Presidents and Senior Vice Presidents, may be specified by the Board of Directors), and assistant and subordinate officers, may from time to time be elected by the Board of Directors. All officers shall hold office until the next annual meeting of the Board of Directors and until their successors are elected. . Any two or more officers may be combined in the same person as the Board of Directors may determine.

4.2 Removal of Officers: Vacancies. Any officer of the Corporation may be removed summarily with or without cause, at any time, by the Board of Directors. Vacancies may be filled by the Board of Directors.

4.3 Duties. The officers of the Corporation shall have such duties as generally pertain to their offices, respectively, as well as such powers and duties as are prescribed by law or are hereinafter provided or as from time to time shall be conferred by the Board of Directors. The Board of Directors may require any officer to give such bond for the faithful performance of his duties as the Board may see fit.

4.4 Duties of the Chief Executive Officer. The Chief Executive Officer shall be either the Chairman of the Board or the President of the Corporation, as designated by the Board of Directors. Subject to the direction and control of the Board of Directors, the Chief Executive Officer shall supervise and control the management of the Corporation, shall be primarily

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responsible for the implementation of policies of the Board of Directors and shall have such duties and authority as are normally incident to the position of chief executive officer of a corporation and such other duties and authority as may be prescribed from time to time by the Board of Directors or as are provided elsewhere in these Bylaws. The Chief Executive Officer may sign and execute in the name of the Corporation share certificates, deeds, mortgages, bonds, contracts or other instruments except in cases where the signing and execution thereof shall be expressly delegated by these Bylaws to some other officer or agent of the Corporation or shall be required by law otherwise to be signed or executed.

4.5 Duties of the Chairman of the Board. The Board of Directors may, but need not, appoint from among its members an officer designated as the Chairman of the Board. The Chairman of the Board shall, when present, preside over meetings of the Board of Directors and shall have such other duties and authority as may be prescribed from time to time by the Board of Directors or as are provided for elsewhere in these Bylaws.

4.6 Duties of the President. Subject to the direction and control of the Board of Directors and the Chief Executive Officer (if the President is not also the Chief Executive Officer), the President shall supervise and control the operations of the Corporation and shall have such other duties as may be prescribed from time to time by the Board of Directors or the Chief Executive Officer (if the President is not also the Chief Executive Officer) or as are provided elsewhere in these Bylaws. The President may sign and execute in the name of the Corporation share certificates, deeds, mortgages, bonds, contracts or other instruments except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or the Chief Executive Officer to some other officer or agent of the Corporation or shall be required by law otherwise to be signed or executed.

4.7 Duties of the Vice Presidents. Each Vice President (which term includes any Senior Executive Vice President, Executive Vice President and Senior Vice President), if any, shall have such powers and duties as may from time to time be assigned to him by the Chief Executive Officer or the Board of Directors. Any Vice President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Directors, except where the signing and execution of such documents shall be expressly delegated by the Board of Directors or the Chief Executive Officer to some other officer or agent of the Corporation or shall be required by law or otherwise to be signed or executed.

4.8 Duties of the Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit all monies and securities of the Corporation in such banks and depositories as shall be designated by the Board of Directors. He shall be responsible (i) for maintaining adequate financial accounts and records in accordance with generally accepted accounting practices; (ii) for the preparation of appropriate

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operating budgets and financial statements; (iii) for the preparation and filing of all tax returns required by law; and (iv) for the performance of all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. The Treasurer may sign and execute in the name of the Corporation share certificates, deeds, mortgages, bonds, contracts or other instruments, except in cases where the signing and the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law or otherwise to be signed or executed.

4.9 Duties of the Secretary. The Secretary shall act as secretary of all meetings of the Board of Directors and shareholders of the Corporation. When requested, he shall also act as secretary of the meetings of the committees of the Board. He shall keep and preserve the minutes of all such meetings in permanent books. He shall see that all notices required to be given by the Corporation are duly given and served; shall have custody of the seal of the Corporation and shall affix the seal or cause it to be affixed by facsimile or otherwise to all share certificates of the Corporation and to all documents the execution of which on behalf of the Corporation under its corporate seal is required in accordance with law or the provisions of these Bylaws; shall have custody of all deeds, leases, contracts and other important corporate documents; shall have charge of the books, records and papers of the Corporation relating to its organization and management as a Corporation; shall see that all reports, statements and other documents required by law (except tax returns) are properly filed; and shall in general perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer.

4.10 Compensation. The Board of Directors shall have authority to fix the compensation of all officers of the Corporation.

ARTICLE V

Capital Stock

5.1 Certificates. The shares of capital stock of the Corporation shall be evidenced by certificates in forms prescribed by the Board of Directors and executed in any manner permitted by law and stating thereon the information required by law. Transfer agents and/or registrars for one or more classes of shares of the Corporation may be appointed by the Board of Directors and may be required to countersign certificates representing shares of such class or classes. If any officer whose signature or facsimile thereof shall have been used on a share certificate shall for any reason cease to be an officer of the Corporation and such certificate shall not then have been delivered by the Corporation, the Board of Directors may nevertheless adopt such certificate and it may then be issued and delivered as though such person had not ceased to be an officer of the Corporation.

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5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the certificate therefor, and the Board of Directors may in its discretion cause one or more new certificates for the same number of shares in the aggregate to be issued to such shareholder upon the surrender of the mutilated certificate or upon satisfactory proof of such loss or destruction, and the deposit of a bond in such form and amount and with such surety as the Board of Directors may require.

5.3 Transfer of Shares. The shares of the Corporation shall be transferable or assignable only on the books of the Corporation by the holder in person or by attorney on surrender of the certificate for such shares duly endorsed and, if sought to be transferred by attorney, accompanied by a written power of attorney to have the same transferred on the books of the Corporation. The Corporation will recognize, however, the exclusive right of the person registered on its books as the owner of shares to receive dividends or other distributions and to vote as such owner. To the extent that any provision of the Amended and Restated Rights Agreement between the Corporation and Bank of New York, as Rights Agent, dated as of February 9, 1998, is deemed to constitute a restriction on the transfer of any securities of the Corporation, including, without limitation, the Rights, as defined therein, such restriction is hereby authorized by these Bylaws.

5.4 Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend or other distribution, the date on which notices of the meeting are mailed or the date on which the resolution of the Board of Directors declaring such dividend or other distribution is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

5.5 Control Share Acquisition Statute. Article 14.1 of the Virginia Stock Corporation Act shall not apply to acquisitions of shares of capital stock of the Corporation.

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ARTICLE VI

Miscellaneous Provisions

6.1 Seal. The seal of the Corporation shall consist of a circular design with the words “Owens & Minor, Inc.” around the top margin thereof, “Richmond, Virginia” around the lower margin thereof and the word “Seal” in the center thereof.

6.2 Fiscal Year. The fiscal year of the Corporation shall end on such date and shall consist of such accounting periods as may be fixed by the Board of Directors.

6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders for the payment of money shall be signed by such persons as the Board of Directors from time to time may authorize. When the Board of Directors so authorizes, however, the signature of any such person may be a facsimile.

6.4 Amendment of Bylaws. Unless proscribed by the Articles of Incorporation, these Bylaws may be amended or altered at any meeting of the Board of Directors by affirmative vote of a majority of the number of Directors fixed by these Bylaws. The shareholders entitled to vote in respect of the election of Directors, however, shall have the power to rescind, amend, alter or repeal any Bylaws and to enact Bylaws which, if expressly so provided, may not be amended, altered or repealed by the Board of Directors.

6.5 Voting of Shares Held. Unless otherwise provided by resolution of the Board of Directors or of the Executive Committee, if any, the Chief Executive Officer may cast the vote which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation, or to consent in writing to any action by any such other corporation, or in lieu thereof, from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast such votes or give such consents. The Chief Executive Officer shall instruct any person or persons so appointed as to the manner of casting such votes or giving such consent and may execute or cause to be executedon behalf of the Corporation, and under its corporate seal or otherwise, such written proxies, consents, waivers or other instruments as may be necessary or proper.

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ARTICLE VII

Emergency Bylaws

7.1 The Emergency Bylaws provided in this Article VII shall be operative during any emergency, notwithstanding any different provision in the preceding Articles of these Bylaws or in the Articles of Incorporation of the Corporation or in the Virginia Stock Corporation Act (other than those provisions relating to emergency bylaws). An emergency exists if a quorum of the Corporation’s Board of Directors cannot readily be assembled because of some catastrophic event. To the extent not inconsistent with these Emergency Bylaws, the Bylaws provided in the preceding Articles shall remain in effect during such emergency and upon the termination of such emergency the Emergency Bylaws shall cease to be operative unless and until another such emergency shall occur.

7.2 During any such emergency:

(a) Any meeting of the Board of Directors may be called by any officer of the Corporation or by any Director. The notice thereof shall specify the time and place of the meeting. To the extent feasible, notice shall be given in accord with Section 2.4 above, but notice may be given only to such of the Directors as it may be feasible to reach at the time, by such means as may be feasible at the time, including publication or radio, and at a time less than twenty-four hours before the meeting if deemed necessary by the person giving notice. Notice shall be similarly given, to the extent feasible, to the other persons referred to in (b) below.

(b) At any meeting of the Board of Directors, a quorum shall consist of a majority of the number of Directors fixed at the time by these Bylaws. If the Directors present at any particular meeting shall be fewer than the number required for such quorum, other persons present as referred to below, to the number necessary to make up such quorum, shall be deemed Directors for such particular meeting as determined by the following provisions and in the following order of priority:

(i) Vice-Presidents not already serving as Directors, in the order of their seniority of first election to such offices, or if two or more shall have been first elected to such offices on the same day, in the order of their seniority in age;

(ii) All other officers of the Corporation in the order of their seniority of first election to such offices, or if two or more shall have been first elected to such offices on the same day, in the order of their seniority in age; and

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(iii) Any other persons that are designated on a list that shall have been approved by the Board of Directors before the emergency, such persons to be taken in such order of priority and subject to such conditions as may be provided in the resolution approving the list.

(c) The Board of Directors, during as well as before any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

(d) The Board of Directors, during as well as before any such emergency, may, effective in the emergency, change the principal office, or designate several alternative offices, or authorize the officers so to do.

7.3 No officer, Director or employee shall be liable for action taken in good faith in accordance with these Emergency Bylaws.

7.4 These Emergency Bylaws shall be subject to repeal or change by further action of the Board of Directors or by action of the shareholders, except that no such repeal or change shall modify the provisions of the next preceding paragraph with regard to action or inaction prior to the time of such repeal or change. Any such amendment of these Emergency Bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, G. Gilmer Minor, III, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 of Owens & Minor, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [omitted in reliance on SEC Release No. 33-8238; 34-47986 Section III.E.]

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2004

/s/ G. GILMER MINOR, III

G. Gilmer Minor, III

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Kaczka, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 of Owens & Minor, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [omitted in reliance on SEC Release No. 33-8238; 34-47986 Section III.E.]

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2004

/s/ JEFFREY KACZKA

Jeffrey Kaczka

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Owens & Minor, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Gilmer Minor, III, Chief Executive Officer and Chairman of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fully presents, in all material respects, the financial condition and results of operations of the Company.

/s/ G. GILMER MINOR, III

G. Gilmer Minor, III

Chief Executive Officer

Owens & Minor, Inc.

August 5, 2004

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Owens & Minor, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey Kaczka, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fully presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JEFFREY KACZKA

Jeffrey Kaczka

Chief Financial Officer

Owens & Minor, Inc.

August 5, 2004