x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 54-1701843 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
9120 Lockwood Boulevard, Mechanicsville, Virginia | 23116 |
(Address of principal executive offices) | (Zip Code) |
Post Office Box 27626, Richmond, Virginia | 23261-7626 |
(Mailing address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | ||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net revenue | $ | 2,305,858 | $ | 2,236,077 | $ | 4,562,239 | $ | 4,482,461 | |||||||
Cost of goods sold | 2,023,586 | 1,962,646 | 3,998,771 | 3,929,979 | |||||||||||
Gross margin | 282,272 | 273,431 | 563,468 | 552,482 | |||||||||||
Selling, general and administrative expenses | 225,838 | 212,548 | 451,448 | 430,269 | |||||||||||
Acquisition-related and exit and realignment charges | 7,593 | 638 | 10,855 | 2,648 | |||||||||||
Depreciation and amortization | 13,892 | 12,276 | 27,756 | 24,905 | |||||||||||
Other operating income, net | (2,152 | ) | (2,081 | ) | (9,978 | ) | (3,274 | ) | |||||||
Operating earnings | 37,101 | 50,050 | 83,387 | 97,934 | |||||||||||
Interest expense, net | 3,342 | 3,248 | 6,589 | 6,446 | |||||||||||
Income before income taxes | 33,759 | 46,802 | 76,798 | 91,488 | |||||||||||
Income tax provision | 13,883 | 17,930 | 31,436 | 36,518 | |||||||||||
Net income | $ | 19,876 | $ | 28,872 | $ | 45,362 | $ | 54,970 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 | |||||||
Diluted | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 | |||||||
Cash dividends per common share | $ | 0.25 | $ | 0.24 | $ | 0.50 | $ | 0.48 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net income | $ | 19,876 | $ | 28,872 | $ | 45,362 | $ | 54,970 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Currency translation adjustments (net of income tax of $0 in 2014 and income tax expense of $56 and benefit of $539 in 2013) | (570 | ) | 1,683 | (103 | ) | (6,144 | ) | ||||||||
Change in unrecognized net periodic pension costs (net of income tax expense of $90 and $187 in 2014 and $132 and $266 in 2013) | 112 | 209 | 219 | 417 | |||||||||||
Other (net of income tax benefit of $8 and $16 in 2014 and $8 and $16 in 2013) | 15 | (12 | ) | 6 | (25 | ) | |||||||||
Total other comprehensive income (loss), net of tax | (443 | ) | 1,880 | 122 | (5,752 | ) | |||||||||
Comprehensive income | $ | 19,433 | $ | 30,752 | $ | 45,484 | $ | 49,218 |
June 30, | December 31, | ||||||
(in thousands, except per share data) | 2014 | 2013 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 92,027 | $ | 101,905 | |||
Accounts and notes receivable, net of allowances of $15,328 and $15,030 | 545,179 | 572,854 | |||||
Merchandise inventories | 820,882 | 771,663 | |||||
Other current assets | 287,844 | 279,510 | |||||
Total current assets | 1,745,932 | 1,725,932 | |||||
Property and equipment, net of accumulated depreciation of $149,361 and $137,526 | 207,140 | 191,961 | |||||
Goodwill, net | 275,975 | 275,439 | |||||
Intangible assets, net | 38,679 | 40,406 | |||||
Other assets, net | 96,085 | 90,304 | |||||
Total assets | $ | 2,363,811 | $ | 2,324,042 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 698,648 | $ | 643,872 | |||
Accrued payroll and related liabilities | 29,691 | 23,296 | |||||
Deferred income taxes | 38,951 | 41,613 | |||||
Other accrued liabilities | 251,015 | 280,398 | |||||
Total current liabilities | 1,018,305 | 989,179 | |||||
Long-term debt, excluding current portion | 219,098 | 213,815 | |||||
Deferred income taxes | 42,080 | 43,727 | |||||
Other liabilities | 52,943 | 52,278 | |||||
Total liabilities | 1,332,426 | 1,298,999 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Owens & Minor, Inc. 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 - 63,066 shares and 63,096 shares | 126,133 | 126,193 | |||||
Paid-in capital | 199,019 | 196,605 | |||||
Retained earnings | 696,543 | 691,547 | |||||
Accumulated other comprehensive income | 9,690 | 9,568 | |||||
Total Owens & Minor, Inc. shareholders’ equity | 1,031,385 | 1,023,913 | |||||
Noncontrolling interest | — | 1,130 | |||||
Total equity | 1,031,385 | 1,025,043 | |||||
Total liabilities and equity | $ | 2,363,811 | $ | 2,324,042 |
Six Months Ended June 30, | |||||||
(in thousands) | 2014 | 2013 | |||||
Operating activities: | |||||||
Net income | $ | 45,362 | $ | 54,970 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 27,756 | 24,905 | |||||
Share-based compensation expense | 4,190 | 3,449 | |||||
Provision for losses on accounts and notes receivable | 334 | 315 | |||||
Deferred income tax (benefit) expense | (5,151 | ) | 5,777 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts and notes receivable | 28,477 | 1,789 | |||||
Merchandise inventories | (48,575 | ) | (31,176 | ) | |||
Accounts payable | 54,922 | 191,406 | |||||
Net change in other assets and liabilities | (32,765 | ) | (69,462 | ) | |||
Other, net | (1,078 | ) | (2,794 | ) | |||
Cash provided by operating activities | 73,472 | 179,179 | |||||
Investing activities: | |||||||
Additions to property and equipment | (25,657 | ) | (16,221 | ) | |||
Additions to computer software and intangible assets | (13,166 | ) | (14,826 | ) | |||
Proceeds from sale of investment | 1,937 | — | |||||
Proceeds from sale of property and equipment | 45 | 68 | |||||
Cash used for investing activities | (36,841 | ) | (30,979 | ) | |||
Financing activities: | |||||||
Cash dividends paid | (31,564 | ) | (30,411 | ) | |||
Repurchases of common stock | (9,448 | ) | (8,297 | ) | |||
Excess tax benefits related to share-based compensation | 444 | 550 | |||||
Proceeds from exercise of stock options | 1,180 | 4,195 | |||||
Purchase of noncontrolling interest | (1,500 | ) | — | ||||
Other, net | (4,441 | ) | (5,167 | ) | |||
Cash used for financing activities | (45,329 | ) | (39,130 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1,180 | ) | 868 | ||||
Net increase (decrease) in cash and cash equivalents | (9,878 | ) | 109,938 | ||||
Cash and cash equivalents at beginning of period | 101,905 | 97,888 | |||||
Cash and cash equivalents at end of period | $ | 92,027 | $ | 207,826 | |||
Supplemental disclosure of cash flow information: | |||||||
Income taxes paid, net | $ | 40,680 | $ | 40,364 | |||
Interest paid | $ | 7,402 | $ | 7,691 |
Owens & Minor, Inc. Shareholders’ Equity | ||||||||||||||||||||||||||
(in thousands, except per share data) | Common Shares Outstanding | Common Stock ($ 2 par value ) | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Total Equity | |||||||||||||||||||
Balance December 31, 2012 | 63,271 | $ | 126,544 | $ | 187,394 | $ | 658,994 | $ | (406 | ) | $ | 1,130 | $ | 973,656 | ||||||||||||
Net income | 54,970 | 54,970 | ||||||||||||||||||||||||
Other comprehensive income | (5,752 | ) | (5,752 | ) | ||||||||||||||||||||||
Dividends declared ($0.48 per share) | (30,324 | ) | (30,324 | ) | ||||||||||||||||||||||
Shares repurchased and retired | (257 | ) | (515 | ) | (7,782 | ) | (8,297 | ) | ||||||||||||||||||
Share-based compensation expense, exercises and other | 319 | 636 | 4,932 | 5,568 | ||||||||||||||||||||||
Balance June 30, 2013 | 63,333 | $ | 126,665 | $ | 192,326 | $ | 675,858 | $ | (6,158 | ) | $ | 1,130 | $ | 989,821 | ||||||||||||
Balance December 31, 2013 | 63,096 | $ | 126,193 | $ | 196,605 | $ | 691,547 | $ | 9,568 | $ | 1,130 | $ | 1,025,043 | |||||||||||||
Net income | 45,362 | 45,362 | ||||||||||||||||||||||||
Other comprehensive income | 122 | 122 | ||||||||||||||||||||||||
Dividends declared ($0.50 per share) | (31,473 | ) | (31,473 | ) | ||||||||||||||||||||||
Shares repurchased and retired | (277 | ) | (555 | ) | (8,893 | ) | (9,448 | ) | ||||||||||||||||||
Share-based compensation expense, exercises and other | 247 | 495 | 3,109 | 3,604 | ||||||||||||||||||||||
Purchase of noncontrolling interest | (695 | ) | (1,130 | ) | (1,825 | ) | ||||||||||||||||||||
Balance June 30, 2014 | 63,066 | $ | 126,133 | $ | 199,019 | $ | 696,543 | $ | 9,690 | $ | — | $ | 1,031,385 |
Domestic Segment | International Segment | Total | |||||||||
Carrying amount of goodwill, December 31, 2013 | $ | 248,498 | $ | 26,941 | $ | 275,439 | |||||
Currency translation adjustments | — | 536 | 536 | ||||||||
Carrying amount of goodwill, June 30, 2014 | $ | 248,498 | $ | 27,477 | $ | 275,975 |
June 30, 2014 | December 31, 2013 | ||||||||||||||
Customer Relationships | Other Intangibles | Customer Relationships | Other Intangibles | ||||||||||||
Gross intangible assets | $ | 52,047 | $ | 4,012 | $ | 51,544 | $ | 3,933 | |||||||
Accumulated amortization | (16,669 | ) | (711 | ) | (14,281 | ) | (790 | ) | |||||||
Net intangible assets | $ | 35,378 | $ | 3,301 | $ | 37,263 | $ | 3,143 |
Lease Obligations | Severance and Other | Total | |||||||||
Accrued exit and realignment costs, December 31, 2013 | $ | 2,434 | $ | 475 | $ | 2,909 | |||||
Provision for exit and realignment activities | 532 | 807 | 1,339 | ||||||||
Cash payments, net of sublease income | (411 | ) | (327 | ) | (738 | ) | |||||
Accrued exit and realignment costs, March 31, 2014 | 2,555 | 955 | 3,510 | ||||||||
Provision for exit and realignment activities | 6 | $ | 2,236 | $ | 2,242 | ||||||
Cash payments, net of sublease income | (383 | ) | $ | (1,095 | ) | $ | (1,478 | ) | |||
Accrued exit and realignment costs, June 30, 2014 | $ | 2,178 | $ | 2,096 | $ | 4,274 | |||||
Accrued exit and realignment costs, December 31, 2012 | $ | 5,098 | $ | 1,116 | $ | 6,214 | |||||
Provision for exit and realignment activities | 538 | 3 | 541 | ||||||||
Cash payments, net of sublease income | (4,844 | ) | (147 | ) | (4,991 | ) | |||||
Accrued exit and realignment costs, March 31, 2013 | 792 | 972 | 1,764 | ||||||||
Cash payments, net of sublease income | (118 | ) | (137 | ) | (255 | ) | |||||
Accrued exit and realignment costs, June 30, 2013 | $ | 674 | $ | 835 | $ | 1,509 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 40 | $ | 33 | $ | 75 | $ | 66 | |||||||
Interest cost | 482 | 413 | 965 | 827 | |||||||||||
Recognized net actuarial loss | 202 | 341 | 406 | 683 | |||||||||||
Net periodic benefit cost | $ | 724 | $ | 787 | $ | 1,446 | $ | 1,576 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Numerator: | |||||||||||||||
Net income | $ | 19,876 | $ | 28,872 | $ | 45,362 | $ | 54,970 | |||||||
Less: income allocated to unvested restricted shares | (159 | ) | (156 | ) | (345 | ) | (351 | ) | |||||||
Net income attributable to common shareholders - basic | 19,717 | 28,716 | 45,017 | 54,619 | |||||||||||
Add: undistributed income attributable to unvested restricted shares - basic | 19 | 64 | 68 | 122 | |||||||||||
Less: undistributed income attributable to unvested restricted shares - diluted | (19 | ) | (64 | ) | (68 | ) | (122 | ) | |||||||
Net income attributable to common shareholders - diluted | $ | 19,717 | $ | 28,716 | $ | 45,017 | $ | 54,619 | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding - basic | 62,311 | 62,707 | 62,271 | 62,695 | |||||||||||
Dilutive shares - stock options | 5 | 45 | 9 | 51 | |||||||||||
Weighted average shares outstanding - diluted | 62,316 | 62,752 | 62,280 | 62,746 | |||||||||||
Net income per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 | |||||||
Diluted | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 |
Defined Benefit Pension Plans | Currency Translation Adjustments | Other | Total | ||||||||||||
Accumulated other comprehensive income (loss), March 31, 2014 | $ | (6,372 | ) | $ | 16,359 | $ | 146 | $ | 10,133 | ||||||
Other comprehensive income (loss) before reclassifications | — | (570 | ) | 29 | (541 | ) | |||||||||
Income tax | — | — | — | — | |||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | — | (570 | ) | 29 | (541 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 202 | — | (22 | ) | 180 | ||||||||||
Income tax | (90 | ) | — | 8 | (82 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 112 | — | (14 | ) | 98 | ||||||||||
Other comprehensive income (loss) | 112 | (570 | ) | 15 | (443 | ) | |||||||||
Accumulated other comprehensive income (loss), June 30, 2014 | $ | (6,260 | ) | $ | 15,789 | $ | 161 | $ | 9,690 | ||||||
Accumulated other comprehensive income (loss), March 31, 2013 | $ | (10,110 | ) | $ | 1,922 | $ | 150 | $ | (8,038 | ) | |||||
Other comprehensive income (loss) before reclassifications | — | 1,739 | — | 1,739 | |||||||||||
Income tax | — | (56 | ) | — | (56 | ) | |||||||||
Other comprehensive income (loss) before reclassifications, net of tax | — | 1,683 | — | 1,683 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 341 | — | (20 | ) | 321 | ||||||||||
Income tax | (132 | ) | — | 8 | (124 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 209 | — | (12 | ) | 197 | ||||||||||
Other comprehensive income (loss) | 209 | 1,683 | (12 | ) | 1,880 | ||||||||||
Accumulated other comprehensive income (loss), June 30, 2013 | $ | (9,901 | ) | $ | 3,605 | $ | 138 | $ | (6,158 | ) |
Defined Benefit Pension Plans | Currency Translation Adjustments | Other | Total | ||||||||||||
Accumulated other comprehensive income (loss), December 31, 2013 | $ | (6,479 | ) | $ | 15,892 | $ | 155 | $ | 9,568 | ||||||
Other comprehensive income (loss) before reclassifications | — | (103 | ) | 31 | (72 | ) | |||||||||
Income tax | — | — | — | — | |||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | — | (103 | ) | 31 | (72 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 406 | — | (41 | ) | 365 | ||||||||||
Income tax | (187 | ) | — | 16 | (171 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 219 | — | (25 | ) | 194 | ||||||||||
Other comprehensive income (loss) | 219 | (103 | ) | 6 | 122 | ||||||||||
Accumulated other comprehensive income (loss), June 30, 2014 | $ | (6,260 | ) | $ | 15,789 | $ | 161 | $ | 9,690 | ||||||
Accumulated other comprehensive income (loss), December 31, 2012 | $ | (10,318 | ) | $ | 9,749 | $ | 163 | $ | (406 | ) | |||||
Other comprehensive income (loss) before reclassifications | — | (6,683 | ) | — | (6,683 | ) | |||||||||
Income tax | — | 539 | — | 539 | |||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | — | (6,144 | ) | — | (6,144 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 683 | — | (41 | ) | 642 | ||||||||||
Income tax | (266 | ) | — | 16 | (250 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 417 | — | (25 | ) | 392 | ||||||||||
Other comprehensive income (loss) | 417 | (6,144 | ) | (25 | ) | (5,752 | ) | ||||||||
Accumulated other comprehensive income (loss), June 30, 2013 | $ | (9,901 | ) | $ | 3,605 | $ | 138 | $ | (6,158 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net revenue: | |||||||||||||||
Domestic | $ | 2,187,535 | $ | 2,143,691 | $ | 4,336,451 | $ | 4,298,406 | |||||||
International | 118,323 | 92,386 | 225,788 | 184,055 | |||||||||||
Consolidated net revenue | $ | 2,305,858 | $ | 2,236,077 | $ | 4,562,239 | $ | 4,482,461 | |||||||
Operating earnings (loss): | |||||||||||||||
Domestic | $ | 48,317 | $ | 51,245 | $ | 101,053 | $ | 104,151 | |||||||
International | (3,623 | ) | (557 | ) | (6,811 | ) | (3,569 | ) | |||||||
Acquisition-related and exit and realignment charges | (7,593 | ) | (638 | ) | (10,855 | ) | (2,648 | ) | |||||||
Consolidated operating earnings | $ | 37,101 | $ | 50,050 | $ | 83,387 | $ | 97,934 | |||||||
Depreciation and amortization: | |||||||||||||||
Domestic | $ | 8,812 | $ | 8,887 | $ | 17,787 | $ | 17,969 | |||||||
International | 5,080 | 3,389 | 9,969 | 6,936 | |||||||||||
Consolidated depreciation and amortization | $ | 13,892 | $ | 12,276 | $ | 27,756 | $ | 24,905 | |||||||
Capital expenditures: | |||||||||||||||
Domestic | $ | 18,858 | $ | 12,872 | $ | 29,033 | $ | 24,474 | |||||||
International | 5,737 | 3,398 | 9,790 | 6,573 | |||||||||||
Consolidated capital expenditures | $ | 24,595 | $ | 16,270 | $ | 38,823 | $ | 31,047 |
June 30, 2014 | December 31, 2013 | ||||||
Total assets: | |||||||
Domestic | $ | 1,787,026 | $ | 1,747,572 | |||
International | 484,758 | 474,565 | |||||
Segment assets | 2,271,784 | 2,222,137 | |||||
Cash and cash equivalents | 92,027 | 101,905 | |||||
Consolidated total assets | $ | 2,363,811 | $ | 2,324,042 |
Three Months Ended June 30, 2014 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Statements of Income | |||||||||||||||||||
Net revenue | $ | — | $ | 2,187,130 | $ | 137,683 | $ | (18,955 | ) | $ | 2,305,858 | ||||||||
Cost of goods sold | — | 1,978,815 | 63,299 | (18,528 | ) | 2,023,586 | |||||||||||||
Gross margin | — | 208,315 | 74,384 | (427 | ) | 282,272 | |||||||||||||
Selling, general and administrative expenses | 61 | 152,122 | 73,655 | — | 225,838 | ||||||||||||||
Acquisition-related and exit and realignment charges | — | 3,886 | 3,707 | — | 7,593 | ||||||||||||||
Depreciation and amortization | 2 | 8,790 | 5,100 | — | 13,892 | ||||||||||||||
Other operating income, net | — | (814 | ) | (1,338 | ) | — | (2,152 | ) | |||||||||||
Operating earnings (loss) | (63 | ) | 44,331 | (6,740 | ) | (427 | ) | 37,101 | |||||||||||
Interest expense (income), net | 2,924 | 791 | (373 | ) | — | 3,342 | |||||||||||||
Income (loss) before income taxes | (2,987 | ) | 43,540 | (6,367 | ) | (427 | ) | 33,759 | |||||||||||
Income tax (benefit) provision | (1,200 | ) | 17,808 | (2,725 | ) | — | 13,883 | ||||||||||||
Equity in earnings of subsidiaries | 21,663 | — | — | (21,663 | ) | — | |||||||||||||
Net income (loss) | 19,876 | 25,732 | (3,642 | ) | (22,090 | ) | 19,876 | ||||||||||||
Other comprehensive income (loss) | (443 | ) | 111 | (570 | ) | 459 | (443 | ) | |||||||||||
Comprehensive income (loss) | $ | 19,433 | $ | 25,843 | $ | (4,212 | ) | $ | (21,631 | ) | $ | 19,433 |
Three Months Ended June 30, 2013 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Statements of Income | |||||||||||||||||||
Net revenue | $ | — | $ | 2,143,576 | $ | 104,259 | $ | (11,758 | ) | $ | 2,236,077 | ||||||||
Cost of goods sold | — | 1,932,112 | 42,201 | (11,667 | ) | 1,962,646 | |||||||||||||
Gross margin | — | 211,464 | 62,058 | (91 | ) | 273,431 | |||||||||||||
Selling, general and administrative expenses | 221 | 152,387 | 59,940 | — | 212,548 | ||||||||||||||
Acquisition-related and exit and realignment charges | — | 397 | 241 | — | 638 | ||||||||||||||
Depreciation and amortization | 3 | 8,865 | 3,408 | — | 12,276 | ||||||||||||||
Other operating income, net | — | (1,498 | ) | (583 | ) | — | (2,081 | ) | |||||||||||
Operating earnings (loss) | (224 | ) | 51,313 | (948 | ) | (91 | ) | 50,050 | |||||||||||
Interest expense (income), net | 5,154 | (1,696 | ) | (210 | ) | — | 3,248 | ||||||||||||
Income (loss) before income taxes | (5,378 | ) | 53,009 | (738 | ) | (91 | ) | 46,802 | |||||||||||
Income tax (benefit) provision | (2,045 | ) | 20,594 | (618 | ) | (1 | ) | 17,930 | |||||||||||
Equity in earnings of subsidiaries | 32,205 | — | — | (32,205 | ) | — | |||||||||||||
Net income (loss) | 28,872 | 32,415 | (120 | ) | (32,295 | ) | 28,872 | ||||||||||||
Other comprehensive income (loss) | 1,880 | 209 | 1,682 | (1,891 | ) | 1,880 | |||||||||||||
Comprehensive income (loss) | $ | 30,752 | $ | 32,624 | $ | 1,562 | $ | (34,186 | ) | $ | 30,752 |
Six Months Ended June 30, 2014 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Net revenue | $ | — | $ | 4,335,495 | $ | 257,558 | $ | (30,814 | ) | $ | 4,562,239 | ||||||||
Cost of goods sold | — | 3,918,280 | 110,897 | (30,406 | ) | 3,998,771 | |||||||||||||
Gross margin | — | 417,215 | 146,661 | (408 | ) | 563,468 | |||||||||||||
Selling, general and administrative expenses | 14 | 306,372 | 145,062 | — | 451,448 | ||||||||||||||
Acquisition-related and exit and realignment charges | — | 5,180 | 5,675 | — | 10,855 | ||||||||||||||
Depreciation and amortization | 1 | 17,741 | 10,014 | — | 27,756 | ||||||||||||||
Other operating income, net | — | (7,877 | ) | (2,101 | ) | — | (9,978 | ) | |||||||||||
Operating earnings (loss) | (15 | ) | 95,799 | (11,989 | ) | (408 | ) | 83,387 | |||||||||||
Interest expense (income), net | 5,399 | 2,034 | (844 | ) | — | 6,589 | |||||||||||||
Income (loss) before income taxes | (5,414 | ) | 93,765 | (11,145 | ) | (408 | ) | 76,798 | |||||||||||
Income tax (benefit) provision | (2,155 | ) | 37,994 | (4,403 | ) | — | 31,436 | ||||||||||||
Equity in earnings of subsidiaries | 48,621 | — | — | (48,621 | ) | — | |||||||||||||
Net income (loss) | 45,362 | 55,771 | (6,742 | ) | (49,029 | ) | 45,362 | ||||||||||||
Other comprehensive income (loss) | 122 | 218 | (103 | ) | (115 | ) | 122 | ||||||||||||
Comprehensive income (loss) | $ | 45,484 | $ | 55,989 | $ | (6,845 | ) | $ | (49,144 | ) | $ | 45,484 |
Six Months Ended June 30, 2013 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Net revenue | $ | — | $ | 4,298,290 | $ | 206,240 | $ | (22,069 | ) | $ | 4,482,461 | ||||||||
Cost of goods sold | — | 3,868,204 | 83,483 | (21,708 | ) | 3,929,979 | |||||||||||||
Gross margin | — | 430,086 | 122,757 | (361 | ) | 552,482 | |||||||||||||
Selling, general and administrative expenses | 874 | 308,735 | 120,660 | — | 430,269 | ||||||||||||||
Acquisition-related and exit and realignment charges | — | 1,259 | 1,389 | — | 2,648 | ||||||||||||||
Depreciation and amortization | 7 | 17,924 | 6,974 | — | 24,905 | ||||||||||||||
Other operating income, net | — | (2,142 | ) | (1,132 | ) | — | (3,274 | ) | |||||||||||
Operating earnings (loss) | (881 | ) | 104,310 | (5,134 | ) | (361 | ) | 97,934 | |||||||||||
Interest expense (income), net | 9,549 | (2,585 | ) | (518 | ) | — | 6,446 | ||||||||||||
Income (loss) before income taxes | (10,430 | ) | 106,895 | (4,616 | ) | (361 | ) | 91,488 | |||||||||||
Income tax (benefit) provision | (4,007 | ) | 42,051 | (1,526 | ) | — | 36,518 | ||||||||||||
Equity in earnings of subsidiaries | 61,393 | — | — | (61,393 | ) | — | |||||||||||||
Net income (loss) | 54,970 | 64,844 | (3,090 | ) | (61,754 | ) | 54,970 | ||||||||||||
Other comprehensive income (loss) | (5,752 | ) | 416 | (6,146 | ) | 5,730 | (5,752 | ) | |||||||||||
Comprehensive income (loss) | $ | 49,218 | $ | 65,260 | $ | (9,236 | ) | $ | (56,024 | ) | $ | 49,218 |
June 30, 2014 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non- guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Balance Sheets | |||||||||||||||||||
Assets | |||||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 56,792 | $ | 13,098 | $ | 22,137 | $ | — | $ | 92,027 | |||||||||
Accounts and notes receivable, net | — | 467,878 | 80,241 | (2,940 | ) | 545,179 | |||||||||||||
Merchandise inventories | — | 789,732 | 33,021 | (1,871 | ) | 820,882 | |||||||||||||
Other current assets | 281 | 94,250 | 193,118 | 195 | 287,844 | ||||||||||||||
Total current assets | 57,073 | 1,364,958 | 328,517 | (4,616 | ) | 1,745,932 | |||||||||||||
Property and equipment, net | — | 102,897 | 104,243 | — | 207,140 | ||||||||||||||
Goodwill, net | — | 247,271 | 28,704 | — | 275,975 | ||||||||||||||
Intangible assets, net | — | 16,841 | 21,838 | — | 38,679 | ||||||||||||||
Due from O&M and subsidiaries | — | 435,286 | — | (435,286 | ) | — | |||||||||||||
Advances to and investment in consolidated subsidiaries | 1,582,217 | — | — | (1,582,217 | ) | — | |||||||||||||
Other assets, net | 320 | 69,262 | 26,502 | 1 | 96,085 | ||||||||||||||
Total assets | $ | 1,639,610 | $ | 2,236,515 | $ | 509,804 | $ | (2,022,118 | ) | $ | 2,363,811 | ||||||||
Liabilities and equity | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Accounts payable | $ | — | $ | 650,725 | $ | 50,863 | $ | (2,940 | ) | $ | 698,648 | ||||||||
Accrued payroll and related liabilities | — | 18,364 | 11,327 | — | 29,691 | ||||||||||||||
Deferred income taxes | — | 38,818 | 133 | — | 38,951 | ||||||||||||||
Other accrued liabilities | 5,938 | 87,285 | 157,792 | — | 251,015 | ||||||||||||||
Total current liabilities | 5,938 | 795,192 | 220,115 | (2,940 | ) | 1,018,305 | |||||||||||||
Long-term debt, excluding current portion | 203,165 | 6,759 | 9,174 | — | 219,098 | ||||||||||||||
Due to O&M and subsidiaries | 399,122 | — | 36,825 | (435,947 | ) | — | |||||||||||||
Intercompany debt | — | 138,890 | — | (138,890 | ) | — | |||||||||||||
Deferred income taxes | — | 30,872 | 11,208 | — | 42,080 | ||||||||||||||
Other liabilities | — | 48,114 | 4,829 | — | 52,943 | ||||||||||||||
Total liabilities | 608,225 | 1,019,827 | 282,151 | (577,777 | ) | 1,332,426 | |||||||||||||
Equity | |||||||||||||||||||
Common stock | 126,133 | — | 1,500 | (1,500 | ) | 126,133 | |||||||||||||
Paid-in capital | 199,019 | 242,024 | 258,047 | (500,071 | ) | 199,019 | |||||||||||||
Retained earnings (deficit) | 696,543 | 980,988 | (47,820 | ) | (933,168 | ) | 696,543 | ||||||||||||
Accumulated other comprehensive income (loss) | 9,690 | (6,324 | ) | 15,926 | (9,602 | ) | 9,690 | ||||||||||||
Total O&M shareholders’ equity | 1,031,385 | 1,216,688 | 227,653 | (1,444,341 | ) | 1,031,385 | |||||||||||||
Noncontrolling Interest | — | — | — | — | — | ||||||||||||||
Total equity | 1,031,385 | 1,216,688 | 227,653 | (1,444,341 | ) | 1,031,385 | |||||||||||||
Total liabilities and equity | $ | 1,639,610 | $ | 2,236,515 | $ | 509,804 | $ | (2,022,118 | ) | $ | 2,363,811 |
December 31, 2013 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Balance Sheets | |||||||||||||||||||
Assets | |||||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 74,391 | $ | 2,012 | $ | 25,502 | $ | — | $ | 101,905 | |||||||||
Accounts and notes receivable, net | — | 496,310 | 79,722 | (3,178 | ) | 572,854 | |||||||||||||
Merchandise inventories | — | 750,999 | 22,128 | (1,464 | ) | 771,663 | |||||||||||||
Other current assets | 201 | 72,049 | 207,058 | 202 | 279,510 | ||||||||||||||
Total current assets | 74,592 | 1,321,370 | 334,410 | (4,440 | ) | 1,725,932 | |||||||||||||
Property and equipment, net | 2 | 96,500 | 95,459 | — | 191,961 | ||||||||||||||
Goodwill, net | — | 247,271 | 28,168 | — | 275,439 | ||||||||||||||
Intangible assets, net | — | 17,881 | 22,525 | — | 40,406 | ||||||||||||||
Due from O&M and subsidiaries | — | 377,786 | — | (377,786 | ) | — | |||||||||||||
Advances to and investments in consolidated subsidiaries | 1,533,294 | — | — | (1,533,294 | ) | — | |||||||||||||
Other assets, net | 408 | 63,848 | 26,048 | — | 90,304 | ||||||||||||||
Total assets | $ | 1,608,296 | $ | 2,124,656 | $ | 506,610 | $ | (1,915,520 | ) | $ | 2,324,042 | ||||||||
Liabilities and equity | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Accounts payable | $ | — | $ | 595,865 | $ | 51,185 | $ | (3,178 | ) | $ | 643,872 | ||||||||
Accrued payroll and related liabilities | — | 12,792 | 10,504 | — | 23,296 | ||||||||||||||
Deferred income taxes | — | 41,464 | 149 | — | 41,613 | ||||||||||||||
Other current liabilities | 6,811 | 87,795 | 185,792 | — | 280,398 | ||||||||||||||
Total current liabilities | 6,811 | 737,916 | 247,630 | (3,178 | ) | 989,179 | |||||||||||||
Long-term debt, excluding current portion | 204,028 | 7,228 | 2,559 | — | 213,815 | ||||||||||||||
Due to O&M and subsidiaries | 373,544 | — | 2,910 | (376,454 | ) | — | |||||||||||||
Intercompany debt | — | 138,890 | — | (138,890 | ) | — | |||||||||||||
Deferred income taxes | — | 32,173 | 11,554 | — | 43,727 | ||||||||||||||
Other liabilities | — | 47,816 | 4,462 | — | 52,278 | ||||||||||||||
Total liabilities | 584,383 | 964,023 | 269,115 | (518,522 | ) | 1,298,999 | |||||||||||||
Equity | |||||||||||||||||||
Common stock | 126,193 | — | 1,500 | (1,500 | ) | 126,193 | |||||||||||||
Paid-in capital | 196,605 | 242,024 | 259,864 | (501,888 | ) | 196,605 | |||||||||||||
Retained earnings (deficit) | 691,547 | 925,184 | (41,029 | ) | (884,155 | ) | 691,547 | ||||||||||||
Accumulated other comprehensive income (loss) | 9,568 | (6,575 | ) | 16,030 | (9,455 | ) | 9,568 | ||||||||||||
Total Owens & Minor, Inc. shareholders’ equity | 1,023,913 | 1,160,633 | 236,365 | (1,396,998 | ) | 1,023,913 | |||||||||||||
Noncontrolling interest | — | — | 1,130 | — | 1,130 | ||||||||||||||
Total equity | 1,023,913 | 1,160,633 | 237,495 | (1,396,998 | ) | 1,025,043 | |||||||||||||
Total liabilities and equity | $ | 1,608,296 | $ | 2,124,656 | $ | 506,610 | $ | (1,915,520 | ) | $ | 2,324,042 |
Six Months Ended June 30, 2014 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Statements of Cash Flows | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 45,362 | $ | 55,771 | $ | (6,742 | ) | $ | (49,029 | ) | $ | 45,362 | |||||||
Adjustments to reconcile net income to cash provided by (used for) operating activities: | |||||||||||||||||||
Equity in earnings of subsidiaries | (48,621 | ) | — | — | 48,621 | — | |||||||||||||
Depreciation and amortization | 1 | 17,741 | 10,014 | — | 27,756 | ||||||||||||||
Share-based compensation expense | — | 4,190 | — | — | 4,190 | ||||||||||||||
Provision for losses on accounts and notes receivable | — | 146 | 188 | — | 334 | ||||||||||||||
Deferred income tax expense (benefit) | — | (4,117 | ) | (1,034 | ) | — | (5,151 | ) | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts and notes receivable | — | 28,286 | 428 | (237 | ) | 28,477 | |||||||||||||
Merchandise inventories | — | (38,733 | ) | (10,248 | ) | 406 | (48,575 | ) | |||||||||||
Accounts payable | — | 54,860 | (177 | ) | 239 | 54,922 | |||||||||||||
Net change in other assets and liabilities | (952 | ) | (15,272 | ) | (16,541 | ) | — | (32,765 | ) | ||||||||||
Other, net | (776 | ) | (280 | ) | (22 | ) | — | (1,078 | ) | ||||||||||
Cash provided by (used for) operating activities | (4,986 | ) | 102,592 | (24,134 | ) | — | 73,472 | ||||||||||||
Investing activities: | |||||||||||||||||||
Proceeds from the sale of investment | 1,937 | 1,937 | |||||||||||||||||
Additions to property and equipment | — | (16,777 | ) | (8,880 | ) | — | (25,657 | ) | |||||||||||
Additions to computer software and intangible assets | — | (12,256 | ) | (910 | ) | — | (13,166 | ) | |||||||||||
Proceeds from the sale of property and equipment | — | 35 | 10 | — | 45 | ||||||||||||||
Cash used for investing activities | — | (27,061 | ) | (9,780 | ) | — | (36,841 | ) | |||||||||||
Financing activities: | |||||||||||||||||||
Change in intercompany advances | 28,847 | (62,995 | ) | 34,148 | — | — | |||||||||||||
Cash dividends paid | (31,564 | ) | — | — | — | (31,564 | ) | ||||||||||||
Repurchases of common stock | (9,448 | ) | — | — | — | (9,448 | ) | ||||||||||||
Excess tax benefits related to share-based compensation | 444 | — | — | — | 444 | ||||||||||||||
Proceeds from exercise of stock options | 1,180 | — | — | — | 1,180 | ||||||||||||||
Purchase of noncontrolling interest | — | — | (1,500 | ) | — | (1,500 | ) | ||||||||||||
Other, net | (2,072 | ) | (1,450 | ) | (919 | ) | — | (4,441 | ) | ||||||||||
Cash provided by (used for) financing activities | (12,613 | ) | (64,445 | ) | 31,729 | — | (45,329 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (1,180 | ) | — | (1,180 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (17,599 | ) | 11,086 | (3,365 | ) | — | (9,878 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 74,391 | 2,012 | 25,502 | — | 101,905 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 56,792 | $ | 13,098 | $ | 22,137 | $ | — | $ | 92,027 |
Six months ended June 30, 2013 | Owens & Minor, Inc. | Guarantor Subsidiaries | Non-guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Statements of Cash Flows | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 54,970 | $ | 64,844 | $ | (3,090 | ) | $ | (61,754 | ) | $ | 54,970 | |||||||
Adjustments to reconcile net income to cash provided by (used for) operating activities: | — | ||||||||||||||||||
Equity in earnings of subsidiaries | (61,393 | ) | — | — | 61,393 | — | |||||||||||||
Depreciation and amortization | 7 | 17,924 | 6,974 | — | 24,905 | ||||||||||||||
Share-based compensation expense | — | 3,449 | — | — | 3,449 | ||||||||||||||
Provision for losses on accounts and notes receivable | — | 297 | 18 | — | 315 | ||||||||||||||
Deferred income tax expense | — | 7,443 | (1,666 | ) | — | 5,777 | |||||||||||||
Changes in operating assets and liabilities: | — | ||||||||||||||||||
Accounts and notes receivable | — | 3,061 | 426 | (1,698 | ) | 1,789 | |||||||||||||
Merchandise inventories | — | (23,151 | ) | (8,386 | ) | 361 | (31,176 | ) | |||||||||||
Accounts payable | — | 151,208 | 38,500 | 1,698 | 191,406 | ||||||||||||||
Net change in other assets and liabilities | 636 | (24,934 | ) | (45,164 | ) | — | (69,462 | ) | |||||||||||
Other, net | (809 | ) | 331 | (2,316 | ) | — | (2,794 | ) | |||||||||||
Cash provided by (used for) operating activities | (6,589 | ) | 200,472 | (14,704 | ) | — | 179,179 | ||||||||||||
Investing activities: | |||||||||||||||||||
Additions to property and equipment | — | (12,640 | ) | (3,581 | ) | — | (16,221 | ) | |||||||||||
Additions to computer software and intangible assets | — | (11,816 | ) | (3,010 | ) | — | (14,826 | ) | |||||||||||
Proceeds from the sale of property and equipment | — | 59 | 9 | — | 68 | ||||||||||||||
Cash used for investing activities | — | (24,397 | ) | (6,582 | ) | — | (30,979 | ) | |||||||||||
Financing activities: | |||||||||||||||||||
Change in intercompany advances | 143,569 | (174,270 | ) | 30,701 | — | — | |||||||||||||
Cash dividends paid | (30,411 | ) | — | — | — | (30,411 | ) | ||||||||||||
Repurchases of common stock | (8,297 | ) | — | — | — | (8,297 | ) | ||||||||||||
Excess tax benefits related to share-based compensation | 550 | — | — | — | 550 | ||||||||||||||
Proceeds from exercise of stock options | 4,195 | — | — | — | 4,195 | ||||||||||||||
Other, net | (2,510 | ) | (1,364 | ) | (1,293 | ) | — | (5,167 | ) | ||||||||||
Cash provided by (used for) financing activities | 107,096 | (175,634 | ) | 29,408 | — | (39,130 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 868 | — | 868 | ||||||||||||||
Net (decrease) increase in cash and cash equivalents | 100,507 | 441 | 8,990 | — | 109,938 | ||||||||||||||
Cash and cash equivalents at beginning of period | 58,190 | 13,641 | 26,057 | — | 97,888 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 158,697 | $ | 14,082 | $ | 35,047 | $ | — | $ | 207,826 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Dollars in thousands except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Operating earnings, as reported (GAAP) | $ | 37,101 | $ | 50,050 | $ | 83,387 | $ | 97,934 | |||||||
Acquisition-related and exit and realignment charges | 7,593 | 638 | 10,855 | 2,648 | |||||||||||
Operating earnings, adjusted (non-GAAP) (Adjusted Operating Earnings) | $ | 44,694 | $ | 50,688 | $ | 94,242 | $ | 100,582 | |||||||
Adjusted Operating Earnings as a percent of revenue (non-GAAP) | 1.94 | % | 2.27 | % | 2.07 | % | 2.24 | % | |||||||
Net income, as reported (GAAP) | $ | 19,876 | $ | 28,872 | $ | 45,362 | $ | 54,970 | |||||||
Acquisition-related and exit and realignment charges, net of tax | 5,095 | 412 | 7,317 | 1,933 | |||||||||||
Net income, adjusted (non-GAAP) (Adjusted Net Income) | $ | 24,971 | $ | 29,284 | $ | 52,679 | $ | 56,903 | |||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.32 | $ | 0.46 | $ | 0.72 | $ | 0.87 | |||||||
Acquisition-related and exit and realignment charges, per diluted common share | 0.08 | — | 0.12 | 0.03 | |||||||||||
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS) | $ | 0.40 | $ | 0.46 | $ | 0.84 | $ | 0.90 |
Three Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Domestic | $ | 2,187,535 | $ | 2,143,691 | $ | 43,844 | 2.0 | % | ||||||
International | 118,323 | 92,386 | 25,937 | 28.1 | % | |||||||||
Net revenue | $ | 2,305,858 | $ | 2,236,077 | $ | 69,781 | 3.1 | % |
Six Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Domestic | $ | 4,336,451 | $ | 4,298,406 | $ | 38,045 | 0.9 | % | ||||||
International | 225,788 | 184,055 | 41,733 | 22.7 | % | |||||||||
Net revenue | $ | 4,562,239 | $ | 4,482,461 | $ | 79,778 | 1.8 | % |
Three Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Gross margin | $ | 282,272 | $ | 273,431 | $ | 8,841 | 3.2 | % | ||||||
As a % of net revenue | 12.24 | % | 12.23 | % |
Six Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Gross margin | $ | 563,468 | $ | 552,482 | $ | 10,986 | 2.0 | % | ||||||
As a % of net revenue | 12.35 | % | 12.33 | % |
Three Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
SG&A expenses | $ | 225,838 | $ | 212,548 | $ | 13,290 | 6.3 | % | ||||||
As a % of net revenue | 9.79 | % | 9.51 | % | ||||||||||
Depreciation and amortization | $ | 13,892 | $ | 12,276 | $ | 1,616 | 13.2 | % | ||||||
Other operating income, net | $ | (2,152 | ) | $ | (2,081 | ) | $ | (71 | ) | 3.4 | % |
Six Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
SG&A expenses | $ | 451,448 | $ | 430,269 | $ | 21,179 | 4.9 | % | ||||||
As a % of net revenue | 9.90 | % | 9.60 | % | ||||||||||
Depreciation and amortization | $ | 27,756 | $ | 24,905 | $ | 2,851 | 11.4 | % | ||||||
Other operating income, net | $ | (9,978 | ) | $ | (3,274 | ) | $ | (6,704 | ) | 204.8 | % |
Three Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Interest expense, net | $ | 3,342 | $ | 3,248 | $ | 94 | 2.9 | % | ||||||
Effective interest rate | 6.12 | % | 6.00 | % |
Six Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Interest expense, net | $ | 6,589 | $ | 6,446 | $ | 143 | 2.2 | % | ||||||
Effective interest rate | 6.10 | % | 6.00 | % |
Three Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Income tax provision | $ | 13,883 | $ | 17,930 | $ | (4,047 | ) | (22.6 | )% | |||||
Effective tax rate | 41.1 | % | 38.3 | % |
Six Months Ended June 30, | Change | |||||||||||||
(Dollars in thousands) | 2014 | 2013 | $ | % | ||||||||||
Income tax provision | $ | 31,436 | $ | 36,518 | $ | (5,082 | ) | (13.9 | )% | |||||
Effective tax rate | 40.9 | % | 39.9 | % |
June 30, 2014 | December 31, 2013 | Change | ||||||||||||
(Dollars in thousands) | $ | % | ||||||||||||
Cash and cash equivalents | $ | 92,027 | $ | 101,905 | $ | (9,878 | ) | (9.7 | )% | |||||
Accounts and notes receivable, net of allowances | $ | 545,179 | $ | 572,854 | $ | (27,675 | ) | (4.8 | )% | |||||
Consolidated DSO (1) | 20.6 | 22.1 | ||||||||||||
Merchandise inventories | $ | 820,882 | $ | 771,663 | $ | 49,219 | 6.4 | % | ||||||
Consolidated inventory turnover (2) | 10.2 | 10.4 | ||||||||||||
Accounts payable | $ | 698,648 | $ | 643,872 | $ | 54,776 | 8.5 | % |
(Dollars in thousands) | 2014 | 2013 | |||||
Net cash provided by (used for): | |||||||
Operating activities | $ | 73,472 | $ | 179,179 | |||
Investing activities | (36,841 | ) | (30,979 | ) | |||
Financing activities | (45,329 | ) | (39,130 | ) | |||
Effect of exchange rate changes | (1,180 | ) | 868 | ||||
Increase (decrease) in cash and cash equivalents | $ | (9,878 | ) | $ | 109,938 |
• | competitive pressures in the marketplace, including intense pricing pressure; |
• | our ability to retain existing and attract new customers in a market characterized by significant customer consolidation and intense cost-containment initiatives; |
• | our dependence on sales to certain customers or the loss or material reduction in purchases by key customers; |
• | our dependence on distribution of product of certain suppliers; |
• | our ability to successfully identify, manage or integrate acquisitions, including the management and integration of our acquisition of Movianto and our pending acquisition of Medical Action; |
• | our ability to successfully manage our international operations, including risks associated with changes in international trade regulations, foreign currency volatility, changes in regulatory conditions, deteriorating economic conditions, adverse tax consequences, and other risks of operating in international markets; |
• | uncertainties related to and our ability to adapt to changes in government regulations, including healthcare laws and regulations (including the Affordable Care Act); |
• | risks arising from possible violations of legal, regulatory or licensing requirements of the markets in which we operate; |
• | uncertainties related to general economic, regulatory and business conditions; |
• | our ability to successfully implement our strategic initiatives; |
• | the availability of and modifications to existing supplier funding programs and our ability to meet the terms to qualify for certain of these programs; |
• | our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product; |
• | the ability of customers and suppliers to meet financial commitments due to us; |
• | changes in manufacturer preferences between direct sales and wholesale distribution; |
• | changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services; |
• | our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles; |
• | our ability to meet performance targets specified by customer contracts under contractual commitments; |
• | availability of and our ability to access special inventory buying opportunities; |
• | the ability of business partners and financial institutions to perform their contractual responsibilities; |
• | the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices; |
• | our ability to continue to obtain financing at reasonable rates and to manage financing costs and interest rate risk; |
• | the risk that information systems are interrupted or damaged or fail for any extended period of time or that there is a data security breach; |
• | the risk that a decline in business volume or profitability could result in an impairment of goodwill or other long-lived assets; |
• | our ability to timely or adequately respond to technological advances in the medical supply industry; |
• | the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims; |
• | adverse changes in U.S. and foreign tax laws and the outcome of outstanding tax contingencies and legislative and tax proposals; and |
• | other factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2013. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of a publicly announced program | Maximum dollar value of shares that may yet be purchased under the program | |||||||||
April 2014 | — | $ | — | — | $ | 95,000,018 | |||||||
May 2014 | 95,145 | $ | 33.25 | 95,145 | $ | 91,836,793 | |||||||
June 2014 | 39,286 | $ | 34.35 | 39,286 | $ | 90,487,451 | |||||||
Total | 134,431 | 134,431 |
Owens & Minor, Inc. | |||
(Registrant) | |||
Date: | July 29, 2014 | /s/ Craig R. Smith | |
Craig R. Smith | |||
Chairman & Chief Executive Officer | |||
Date: | July 29, 2014 | /s/ Richard A. Meier | |
Richard A. Meier | |||
Executive Vice President & Chief Financial Officer |
(a) | Exhibits |
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. | |
10.1 | Agreement and Plan of Merger dated as of June 24, 2014 by and among Owens & Minor, Inc., Mongoose Merger Sub Inc. and Medical Action Industries Inc., (incorporated by reference to the Company's Current Report on Form 8-K, Exhibit 10.1, dated June 25, 2014) | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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; and |
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: | July 29, 2014 |
/s/ Craig R. Smith | |
Craig R. Smith | |
Chairman & Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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; and |
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: | July 29, 2014 |
/s/ Richard A. Meier | |
Richard A. Meier | |
Executive Vice President & Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Craig R. Smith |
Craig R. Smith |
Chairman & Chief Executive Officer |
Owens & Minor, Inc. |
July 29, 2014 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Richard A. Meier |
Richard A. Meier |
Executive Vice President & Chief Financial Officer |
Owens & Minor, Inc. |
July 29, 2014 |
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2014
|
|
Commitments and Contingencies Disclosure [Abstract] | |
Contractual obligations, repayment term | 36 months |
Total contingent obligations due if contractual performance targets are not achieved | $ 1.4 |
Total contingent obligations due in 2015 if contractual performance targets are not achieved | 0.9 |
Total contingent obligations due in 2016 if contractual performance targets are not achieved | 0.2 |
Loss Contingency Possible Range Of Loss Maximum Year Three | 0.3 |
Deferred revenue related to outstanding contractual performance targets | $ 0.9 |
Audit reimbursement period (in years), maximum | 7 years |
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