Owens & Minor Annual Report 2007

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FY2007 Annual Report · Owens & Minor

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Owens&Minor, Inc.

2007 Annual Report & Form 10-K

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Corporate Office
804-723-7000
www.owens-minor.com

Street Address
9120 Lockwood Boulevard
Mechanicsville, Virginia 23116

Mailing Address
Post Office Box 27626
Richmond, Virginia 23261-7626

Integrity. Service. Value.

OM07ARCover_final 3/6/08 2:05 PM Page 2

Company Overview 2007

Owens & Minor, Inc., a FORTUNE 500
company headquartered in Richmond,Virginia,
is the leading distributor of medical and surgical
supplies to the acute-care market and a leading
healthcare supply-chain management company.
In 2007, Owens & Minor reported 23% revenue
growth fueled by a strategic acquisition, as well as
strong organic growth. For the year, revenues
topped $6.8 billion.

Using its network of distribution centers

located nationwide, the company provides
hospitals, integrated healthcare systems, alternate
care locations, the federal government and
individual consumers with a comprehensive
offering of medical and surgical products.The
company also provides acute-care provider
customers with advanced supply-chain
management services, enabling them to achieve
greater efficiency and lower the overall cost of
the healthcare supply chain.

Founded in Richmond in 1882, Owens
& Minor is proud of its legacy of service. The
company’s essential mission, vision and values
continue to support a culture of customer-
service excellence, teammate well-being,
business integrity, social responsibility, and the
creation of shareholder value. In fact, Owens &
Minor’s stock price increased 35.7% in 2007,
while its ten-year cumulative total return to
shareholders exceeds 200%.

Today, Owens & Minor common shares are
traded on the New York Stock Exchange under
the symbol OMI. For more information, visit the
company’s Web site at www.owens-minor.com.

Mission
To create consistent value for our customers and
supply-chain partners that will maximize shareholder
value and long-term earnings growth; we will do this
by managing our business with integrity and the
highest ethical standards, while acting in a socially
responsible manner with particular emphasis on the
well-being of our teammates and the communities
we serve.

Vision
To be a world class provider of supply-chain
management solutions to the selected segments of
the healthcare industry we serve.

Values
We believe in high integrity as the guiding principle

of doing business.

We believe in our teammates and their well-being.
We believe in providing superior customer service.
We believe in supporting the communities we serve.
We believe in delivering long-term value to

our shareholders.

Contents
1 . . . . . . . . . . . . . . . . . . . . . . .Financial Highlights
2 . . . . . . . . . . . . . . . . . . . . Letter to Shareholders
4 . . . . . Board of Directors and Corporate Officers
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form 10-K
Inside Back Cover . . . . . . . Corporate Information

2007 Annual Report & Form 10-K

Corporate Information

Annual Meeting
The annual meeting of Owens & Minor, Inc.’s shareholders
will be held at 10:00 a.m. on Friday, April 25, 2008, at
Owens & Minor, Inc., 9120 Lockwood Boulevard,
Mechanicsville,Virginia, 23116.

Transfer Agent, Registrar
and Dividend Disbursing Agent
The Bank of New York
Investor Services Department
P.O. Box 11258
Church Street Station
New York, NY 10286-1258
800-524-4458
shareowners@bankofny.com

BuyDIRECTSM Stock Purchase
and Dividend Reinvestment Plan
Our transfer agent,The Bank of New York, offers a Direct
Purchase and Sale Plan for shares of Owens & Minor, Inc.
common stock known as the BuyDIRECTSM Plan.The
BuyDIRECTSM Plan provides registered shareholders of
Owens & Minor and interested first-time investors a way
to buy and sell shares of Owens & Minor common stock.
Inquiries should be directed to The Bank of New York
(see contact information above).

Shareholder Records
Direct correspondence concerning Owens & Minor, Inc.
stock holdings or change of address to The Bank of
New York’s Investor Services Department (listed above).
Direct correspondence concerning lost or missing dividend
checks to:

The Bank of New York
Receive and Deliver Department
P.O. Box 11002
Church Street Station
New York, NY 10286-1002

Duplicate Mailings
When a shareholder owns shares in more than one account
or when several shareholders live at the same address, they
may receive multiple copies of company mailings.To
eliminate multiple mailings, please write to the transfer
agent.

Counsel
Hunton & Williams
Richmond,Virginia

Independent Auditors
KPMG LLP
Richmond,Virginia

Press Releases
Owens & Minor, Inc.’s press releases are available
at www.owens-minor.com.

Investor Relations
804-723-7555

Information for Investors
The company files annual, quarterly and current reports,
information statements and other information with the
Securities and Exchange Commission (SEC).The public
may read and copy any materials that the company files
with the SEC at the SEC’s Public Reference Room at
100 F Street, N.E.,Washington, D.C. 20549.The public
may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet site that contains
reports, proxy and information statements, and other
information regarding issuers that file electronically with
the SEC.The address of that site is http://www.sec.gov.
The address of the company’s Internet Web site is
www.owens-minor.com.Through a link to the SEC’s
Internet site on the Investor Relations portion of our Web
site, we make available all of our filings with the SEC,
including our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports, as well as beneficial
ownership reports filed with the SEC by directors, officers
and other reporting persons relating to holdings in Owens
& Minor, Inc. securities.This information is available as
soon as the filing is accepted by the SEC.

Corporate Governance
The company’s Bylaws, Corporate Governance Guidelines,
Code of Honor and the charters of the Audit,
Compensation & Benefits, and Governance & Nominating
Committees are available on the company’s Internet Web
site at www.owens-minor.com and are available in print to
any shareholder upon request by writing to:

Corporate Secretary
Owens & Minor, Inc.
9120 Lockwood Boulevard
Mechanicsville,Virginia 23116

Communications with the Board of Directors
The Board of Directors has approved a process for
shareholders to send communications to the Board.
Shareholders can send written communications to the
Board, any committee of the Board, the Lead Director
or any other individual director at the following address: P.O.
Box 26383, Richmond,Virginia 23260. All communications
will be relayed directly to the applicable director(s), except
for communications screened for security purposes.

Certifications
The company’s Chief Executive Officer certified to the
New York Stock Exchange (NYSE) within 30 days after
the company’s 2007 Annual Meeting of Shareholders that
he was not aware of any violation by the company of
NYSE corporate governance listing standards.The company
also filed with the SEC as exhibits 31.1, 31.2, 32.1 and 32.2
to its Annual Report on Form 10-K for the year ended
December 31, 2007, certifications by its Chief Executive
Officer and Chief Financial Officer.

2007 Annual Report & Form 10-K

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Financial Highlights

(in thousands, except per share data)

Year ended December 31,

2007

2006

2005

07/06

06/05

Percent Change

Revenue

Net income

Net income per common share - diluted

Cash dividends per common share

Book value per common share at year-end

Stock price per common share at year-end

$6,800,466

$5,533,736

$4,822,414

22.9% 14.8%

72,710

1.79

0.68

15.03

42.43

48,752

1.20

0.60

13.60

31.27

64,420

49.1% (24.3%)

1.61

49.2% (25.5%)

0.52

13.3% 15.4%

12.84

10.5%

5.9%

27.53

35.7% 13.6%

Total assets

$1,515,080

$1,685,750

$1,239,850

(10.1%)

36.0%

Long-term debt

$ 283,845

$ 433,133

$ 204,418

(34.5%)

111.9%

Shareholders' equity

$ 614,359

$ 547,454

$ 511,998

12.2%

6.9%

2007 Annual Report & Form 10-K 1

’07’06’05$6.80$4.82$5.53REVENUE(Dollars in billions)’07’06’05$72.7$64.4$48.8NET INCOME(Dollars in millions)’07’06’05$1.79$1.61$1.20DILUTED EPS(Dollars per share)’07’06’05$0.68$0.52$0.60DIVIDENDS(Dollars per share)OM2007AR_FH_LTR_BD_final.qxp 3/6/08 1:47 PM Page 2

Dear Shareholders, Teammates and Friends,

2007 was an exciting year for Owens & Minor, as we turned the
page on our 125th anniversary and began looking forward to a
new chapter in our history.We experienced significant growth in
2007, most of which was due to the acquisition of the $1 billion,
acute-care distribution business from McKesson Corporation in
late 2006, but about 40% of the growth was organic. In fact, our
business continued to grow faster than our market sector.We
believe that our revenue growth is directly related to our close
customer relationships and our ability to meet their supply-chain
needs on both basic and sophisticated levels.

In the course of my travels over the last year, I met with many

of our hospital customers and our healthcare supplier partners.
What I continue to hear from them validates our strategy in the
marketplace.We continue to win new accounts with our value-
analysis approach, offering solutions and techniques that produce
real supply-chain savings.

Our teams in the field and at the Home Office work

collaboratively with customers to create supply-chain management
solutions, such as storeroom and warehouse redesigns, inventory
management techniques, clinical supply-chain solutions, and
information management tools. Underlying our efforts are
benchmarks and metrics that target supply-chain savings and
efficiency improvements.We improve transparency and provide
greater visibility into the supply chain for customers and suppliers
alike. Our hospital customers increasingly view us as an integrated
partner, rather than as a vendor.

In 2007, as we completed the transition and integration of the

acquired business, we invested in right-sizing our distribution
network and adjusting our workforce to meet our business needs.
In the coming year, we expect to continue investing in the
infrastructure and systems that make our services possible and
enable us to take on faster-than-industry growth.

Reflecting on 2007, we recognize that it was a year of
operational and financial achievement for Owens & Minor.
We completed the transition and integration of the acquisition
according to schedule. And, although we may not have hit every

Craig R. Smith
President & Chief Executive Officer

2 2007 Annual Report & Form 10-K

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benchmark, we did achieve strong revenue growth
and are now nearly a $7 billion company. Disciplined
asset management resulted in operating cash flow of
nearly $220 million, allowing us to reduce long-term
debt by approximately $150 million over the year.

diversity as we conduct our daily business.We strive
each year to increase the diversity of our supplier base,
as we also work to ensure that our teammates reflect
the diversity around us.We are proud of our
achievements in this area.

As for our 2007 performance on Wall Street, our
stock price increased 35.7% over the course of the year.
We outperformed major broad market indices
including the S&P 500, the Dow Jones Industrials,
and the NYSE composite.We also outperformed our
industry peer group, as well as our own small cap
and healthcare indices. Because our board of directors
believes strongly in delivering long-term value to
shareholders, it increased our dividend by nearly 18%
for the first quarter of 2008.And, I’m pleased to report
that over the last ten years, our cumulative total return
to shareholders has exceeded 200%.

These financial and operational achievements are
important, but I am equally proud of the investment
we made in our teammates and in our communities in
2007. One of the ways we invest in our teammates is
by providing education and training through Owens &
Minor University (OMU). In 2007, our teammates
participated in more than 5,000 on-line courses, while
more than 1,300 students took instructor-led courses.
As we now offer classes to customers, some 200
professionals from hospitals around the country enrolled
last year in OMU supply-chain management courses.

Another important part of our mission, vision,
and values is supporting the communities we serve.
Through our Volunteer Council, we donated time,
talent and funds to scores of community organizations.
Our teammates in the field and at the Home Office
raised money, donated time and participated in causes
ranging from Big Brothers Big Sisters to the Special
Olympics.We also believe in supporting the ideal of

In a final note, I want to recognize the passing of a

pivotal figure in our company’s history. Mr. Philip M.
Minor, the uncle of our chairman, passed away in
January 2008. Phil Minor began his career in the
stockroom and performed many roles for the company,
finally serving as acting chairman for a decade. I can
only second what our Chairman, G. Gilmer Minor, III,
said about his uncle: “He personified everything that is
good about Owens & Minor.” We will truly miss him.

With every decision we make, we aim to do what’s
right for our customers and suppliers – to provide value
with every service and to improve what we do every
year. Every day with our teammates, we strive to
provide a supportive workplace as they serve our
customers.

In 2007, our teammates went above and beyond

their normal duties in a year that was extremely
complex and challenging. I want to convey my
gratitude for their efforts and my pride in their
accomplishments in what I believe was an excellent
year for the company. And, as we do every year, we
extend our thanks to our customers, suppliers, and
shareholders for their enduring support.

Sincerely,

Craig R. Smith
President & Chief Executive Officer

Integrity

Service

Value

2007 Annual Report & Form 10-K 3

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Board of Directors

G. Gilmer Minor, III (67) 1*
Chairman & Retired CEO,
Owens & Minor, Inc.

James E. Rogers (62) 1
Lead Director,
Owens & Minor, Inc.
President, SCI Investors Inc.

A. Marshall Acuff, Jr. (68)1,3,5*
Retired Senior Vice President
& Managing Director,
Salomon Smith Barney, Inc.

J. Alfred Broaddus, Jr. (68) 3,5
Retired President,
Federal Reserve Bank of Richmond

John T. Crotty (70) 2,4*
Managing Partner,
CroBern Management Partnership
President, CroBern, Inc.

Richard E. Fogg (67) 1,2*,4
Retired Partner,
PricewaterhouseCoopers LLP

Eddie N. Moore, Jr. (60) 2,5
President,
Virginia State University

Peter S. Redding (69) 2,4
Retired President & CEO,
Standard Register Company

Robert C. Sledd (55) 3,4
Chairman,
Performance Food Group

Craig R. Smith (56) 1,4
President & CEO,
Owens & Minor, Inc.

James E. Ukrop (70) 2,5
Chairman,
Ukrop’s Super Markets, Inc.
Chairman, First Market Bank

Anne Marie Whittemore (61)1, 3*,5
Partner, McGuireWoods LLP

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

Corporate Officers

Craig R. Smith (56)
President & Chief Executive Officer
President since 1999 and Chief Executive Officer since July 2005.
Mr. Smith has been with the company since 1989.

James L. Bierman (55)
Senior Vice President & Chief Financial Officer
Senior Vice President & Chief Financial Officer since June 2007.
Previously, he served as Executive Vice President & Chief Financial
Officer at Quintiles Transnational Corp. from 2001 until 2004.
He joined Quintiles in 1998. Prior to that Mr. Bierman was a
Partner of Arthur Andersen LLP from 1988 until 1998.

Richard F. Bozard (60)
Vice President,Treasurer
Vice President,Treasurer since 1991.
Mr. Bozard has been with the company since 1988.

Olwen B. Cape (58)
Vice President, Controller
Vice President, Controller since 1997.
Ms. Cape has been with the company since 1997.

E.V. Clarke (47)
Group Vice President, Sales & Distribution
Group Vice President, Sales & Distribution since October 2006.
Previously, Mr. Clarke served as President of Acute Care for
McKesson Medical-Surgical from April 2002 until September 2006,
when the business was acquired by Owens & Minor.

Charles C. Colpo (50)
Senior Vice President, Operations
Senior Vice President, Operations since 1999 and Senior
Vice President, Operations & Technology from April 2005 to
July 2006. Mr. Colpo has been with the company since 1981.

Erika T. Davis (44)
Senior Vice President, Human Resources
Senior Vice President, Human Resources since 2001.
From 1999 to 2001, Ms. Davis was Vice President of
Human Resources. Ms. Davis has been with the company
since 1993.

4 2007 Annual Report & Form 10-K

Grace R. den Hartog (56)
Senior Vice President, General Counsel & Corporate Secretary
Senior Vice President, General Counsel & Corporate Secretary since 2003.
Ms. den Hartog previously served as a Partner of McGuireWoods LLP
from 1990 to 2003.

Hugh F. Gouldthorpe, Jr. (69)
Vice President, Quality & Communications
Vice President, Quality & Communications since 1993.
Mr. Gouldthorpe has been with the company since 1986.

Richard W. Mears (47)
Senior Vice President, Chief Information Officer
Senior Vice President, Chief Information Officer since 2005. Previously,
Mr. Mears was an Executive Director with Perot Systems from 2003 to
2005, and an account executive from 1998 to 2003.

Scott W. Perkins (51)
Group Vice President, Sales & Distribution
Group Vice President, Sales & Distribution since 2005. Mr. Perkins
served as Senior Vice President, Sales & Distribution from January to
October 2005. Prior to that, he served as Regional Vice President from
March to December 2004, and as Area Vice President from 2002 to 2004.
Mr. Perkins has been with Owens & Minor since 1989.

W. Marshall Simpson (39)
Senior Vice President, Sales & Marketing
Senior Vice President, Sales & Marketing since November 2007.
Previously, Mr. Simpson served as Group Vice President, Sales &
Distribution from October 2005 until November 2007, and as Regional
Vice President from 2004 to October 2005. Prior to that, Mr. Simpson
served as Operating Vice President of Corporate Accounts from 2003
until 2004, and as Operating Vice President of Business Integration from
2002 to 2003. Mr. Simpson has been with the company since 1991.

Mark A.Van Sumeren (50)
Senior Vice President, Strategic Planning & Business Development
Senior Vice President, Strategic Planning & Business Development since
September 2007; and Senior Vice President, Business Development since
July 2006. Prior to that, Mr.Van Sumeren was Senior Vice President,
OMSolutionsSM from 2003 to 2006. Mr.Van Sumeren previously served as
Vice President for Cap Gemini Ernst & Young from 2000 to 2003.

Numbers inside parentheses indicate age .

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Company Overview 2007

Using its network of distribution centers

Today, Owens & Minor common shares are
traded on the New York Stock Exchange under
the symbol OMI. For more information, visit the
company’s Web site at www.owens-minor.com.

Vision
To be a world class provider of supply-chain
management solutions to the selected segments of
the healthcare industry we serve.

Values
We believe in high integrity as the guiding principle

of doing business.

We believe in our teammates and their well-being.
We believe in providing superior customer service.
We believe in supporting the communities we serve.
We believe in delivering long-term value to

our shareholders.

2007 Annual Report & Form 10-K

Corporate Information

The Bank of New York
Receive and Deliver Department
P.O. Box 11002
Church Street Station
New York, NY 10286-1002

Counsel
Hunton & Williams
Richmond,Virginia

Independent Auditors
KPMG LLP
Richmond,Virginia

Press Releases
Owens & Minor, Inc.’s press releases are available
at www.owens-minor.com.

Investor Relations
804-723-7555

Corporate Secretary
Owens & Minor, Inc.
9120 Lockwood Boulevard
Mechanicsville,Virginia 23116

2007 Annual Report & Form 10-K

OM07ARCover_final 3/6/08 2:05 PM Page 1

Owens&Minor, Inc.

2007 Annual Report & Form 10-K

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Corporate Office
804-723-7000
www.owens-minor.com

Street Address
9120 Lockwood Boulevard
Mechanicsville, Virginia 23116

Mailing Address
Post Office Box 27626
Richmond, Virginia 23261-7626

Integrity. Service. Value.