UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 (I.R.S. Employer
incorporation or organization) 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
(Former name, former address and former fiscal year,
if changed since last report)
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 April 29, 1997 was 31,992,349 shares.
Owens & Minor, Inc. and Subsidiaries
Index
Page
Part I. Financial Information
Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996 3
Consolidated Statements of Income - Three Months
Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Part II. Other Information 11-12
2
Part I. Financial Information
Item 1. Financial Statements
Owens & Minor, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In thousands, except per share data)
March 31, December 31,
1997 1996
<S> <C>
Assets
Current assets
Cash and cash equivalents $ 596 $ 743
Accounts and notes receivable,
net 154,658 147,243
Merchandise inventories 268,292 281,839
Other current assets 25,949 25,675
Total current assets 449,495 455,500
Property and equipment, net 27,637 29,231
Excess of purchase price over
net assets acquired, net 166,230 167,366
Other assets, net 26,354 27,404
Total assets $ 669,716 $ 679,501
Liabilities and shareholders'
equity
Current liabilities
Accounts payable $ 208,548 $ 224,037
Accrued payroll and related
liabilities 5,982 5,001
Other accrued liabilities 37,506 33,472
Total current liabilities 252,036 262,510
Long-term debt 165,320 167,549
Accrued pension and retirement
plans 7,186 7,042
Total liabilities 424,542 437,101
Shareholders' equity
Preferred stock,
par value $100 per share;
authorized - 10,000 shares
Series A; Participating
Cumulative Preferred
Stock; none issued - -
Series B; Cumulative Preferred
Stock; 4.5%, convertible;
issued and outstanding -
1,150 shares 115,000 115,000
Common stock, par value $2
per share; authorized -
200,000 shares; issued and
outstanding - 31,933 shares
at March 31, 1997 and 31,907
shares at December 31, 1996 63,866 63,814
Paid-in capital 5,549 5,086
Retained earnings 60,759 58,500
Total shareholders' equity 245,174 242,400
Total liabilities and
shareholders' equity $ 669,716 $ 679,501
</TABLE>
See accompanying notes to consolidated financial
statements.
3
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
(In thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
<S> <C>
Net sales $749,623 $771,312
Cost of goods sold 674,521 697,133
Gross margin 75,102 74,179
Selling, general and
administrative expenses 56,437 61,040
Depreciation and
amortization 4,205 3,930
Interest expense, net 3,947 5,800
Discount on accounts
receivable securitization 1,866 744
Total expenses 66,455 71,514
Income before income taxes 8,647 2,665
Income tax provision 3,653 1,146
Net income 4,994 1,519
Dividends on preferred stock 1,294 1,294
Net income attributable
to common stock $ 3,700 $ 225
Net income per common share $ 0.12 $ 0.01
Cash dividends per
common share $ 0.045 $ 0.045
Weighted average common
shares and common share
equivalents 32,000 31,140
</TABLE>
See accompanying notes to consolidated financial
statements.
4
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
<S> <C>
Operating Activities
Net income $ 4,994 $ 1,519
Adjustments to reconcile
net income to cash
provided by operating
activities
Depreciation and
amortization 4,205 3,930
Provision for LIFO
reserve 1,300 2,748
Changes in operating
assets and
liabilities
Accounts and notes
receivable (7,306) (4,669)
Merchandise
inventories 12,247 7,302
Accounts payable (4,514) (2,464)
Net change in other
current assets
and current
liabilities 5,157 2,423
Other, net 942 1,830
Cash provided by operating
activities 17,025 12,619
Investing Activities
Additions to property
and equipment (1,845) (1,249)
Additions to computer
software (894) (2,483)
Proceeds from sale of
property and equipment 1,588 27
Cash used for investing
activities (1,151) (3,705)
Financing Activities
Reductions of long-term
debt (2,500) (10,362)
Other short-term
financing, net (10,975) 4,094
Cash dividends paid (2,735) (2,683)
Exercise of stock options 189 117
Cash used for financing
activities (16,021) (8,834)
Net increase (decrease)
in cash and cash
equivalents (147) 80
Cash and cash equivalents
at beginning of year 743 215
Cash and cash equivalents
at end of period $ 596 $ 295
</TABLE>
See accompanying notes to consolidated financial
statements.
5
Owens & Minor, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
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 (the Company) as of March 31,
1997 and the consolidated results of operations and cash
flows for the three month periods ended March 31, 1997 and
1996.
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. Interim Gross Margin Reporting
In general, the Company uses estimated gross margin rates to
determine the cost of goods sold during interim periods. To
improve the accuracy of its estimated gross margins for
interim reporting purposes, the Company takes physical
inventories at selected distribution centers. Reported
results of operations for the three month periods ended March
31, 1997 and 1996 reflect the results of such inventories, if
materially different. Management will continue a program of
interim physical inventories at selected distribution centers
to the extent it deems appropriate to ensure the accuracy of
interim reporting and to minimize year-end adjustments.
4. Condensed Consolidating Financial Information
The following table presents condensed consolidating
financial information for: Owens & Minor, Inc.; on a combined
basis, the guarantors of Owens & Minor, Inc.'s Senior
Subordinated 10-year Notes (all of the wholly owned
subsidiaries of Owens & Minor, Inc. except for O&M Funding
Corp. (OMF)); and OMF, Owens & Minor, Inc.'s only non-
guarantor subsidiary 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 statements are
more meaningful in understanding the financial position of
the guarantor subsidiaries.
6
<TABLE>
<CAPTION>
(In thousands)
As of and for
the three Owens
months ended & Minor, Guarantor
March 31, 1997 Inc. Subsidiaries OMF
Eliminations Consolidated
<S> <C>
Current assets $157,917 $ 430,884 $ 79,897
$(219,203) $ 449,495
Noncurrent assets 306,530 228,550 -
(314,859) 220,221
Total assets $464,447 $ 659,434 $ 79,897
$(534,062) $ 669,716
Current
liabilities $ 6,087 $ 403,114 $ 63,238
$(220,403) $ 252,036
Noncurrent
liabilities 154,000 18,506 -
- 172,506
Shareholders'
equity 304,360 237,814 16,659
(313,659) 245,174
Total
liabilities and
shareholders'
equity $464,447 $ 659,434 $ 79,897
$(534,062) $ 669,716
Net sales $ 4,138 $ 749,623 $ 3,722
$(7,860) $ 749,623
Expenses 4,452 745,570 3,117
(8,510) 744,629
Net income
(loss) $ (314) $ 4,053 $ 605
$ 650 $ 4,994
</TABLE>
7
Item 2.
Owens & Minor, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
First quarter of 1997 compared with first quarter of 1996
Net sales. Net sales decreased 2.8% to $749.6 million in the
first quarter of 1997 from $771.3 million in the first
quarter of 1996. The sales decline was a result of the
Company's late 1995 and early 1996 price increase initiative
and its continuing efforts to reduce unprofitable sales and
therefore increase the overall profitability of the Company.
The Company is committed to profitable sales growth and has
recently signed several new agreements that will provide an
opportunity for such future growth, although, such growth
cannot be assured.
Gross margin. Gross margin as a percentage of net sales
increased to 10.0% in the first quarter of 1997 from 9.6% in
the first quarter of 1996. The improvement has been a result
of the price increases discussed above, the standardization
of suppliers and products and the increased utilization of an
activity-based management system designed to identify costs
associated with certain delivery and management services.
During the first quarter of 1997, the Company's LIFO (last-
in, first-out) provision declined to $1.3 million as compared
to $2.7 million in the first quarter of 1996. The decrease
was due primarily to lower price increases from manufacturers
and lower inventory levels. The Company will continue to
focus on maintaining this margin level through the continued
utilization of the activity-based management system and
continued standardization of suppliers and products.
Selling, general and administrative expenses. Selling,
general and administrative (SG&A) expenses as a percentage of
net sales decreased to 7.5% in the first quarter of 1997 from
7.9% in the first quarter of 1996. The SG&A expense decline
was a result of many cost-saving initiatives including the
reduction of over 450 full-time equivalent (FTE) employees
since March 31, 1996; the reduction in the cost of employee
retirement plans; the more cost effective utilization of
computer resources; the implementation of improved inventory
management systems; the continuing automation of
administrative functions through the utilization of
electronic data interchange (EDI); and the refocus on best
practices within the Company. The results of these
initiatives have been and will be partially offset by costs
associated with computer system changes required to
accommodate the year 2000. Although the results of its
efforts cannot be assured, the Company believes it will be
able to maintain or reduce SG&A expense as a percentage of
net sales by continuing its efforts on operational
improvement.
Depreciation and amortization. Depreciation and amortization
increased by 7.0% in the first quarter of 1997 compared to
the first quarter of 1996. This increase was due primarily to
the Company's continued investment in information technology
(I/T). The Company anticipates similar increases in
depreciation and amortization for the remainder of 1997
associated with additional capital investment in I/T.
8
Interest expense, net and discount on accounts receivable
securitization (financing costs). Financing costs, net of
finance charge income of $1.0 million and $1.2 million in the
first quarter of 1997 and 1996, respectively, decreased to
$5.8 million in the first quarter of 1997 from $6.5 million
in the first quarter of 1996. The decline in financing costs
has been a result of the Company s ability to reduce working
capital requirements by substantially completing the
implementation of its client/server-based inventory
forecasting system and strengthening its accounts receivable
collection procedures. Due to the reduction in working
capital requirements, the Company has reduced outstanding
financing by approximately $107.4 million since March 31,
1996. Additionally, during 1996, the Company completed a
refinancing plan that, in addition to the Company s improved
financial performance, reduced the effective rate of its
outstanding financing. The Company will continue to take
action to reduce financing costs by continuing its working
capital reduction initiatives, although, the results of these
initiatives cannot be assured.
Income taxes. The Company had an income tax provision of
$3.7 million in the first quarter of 1997 (representing an
effective tax rate of 42.2%) compared with an income tax
provision of $1.1 million (representing an effective tax rate
of 43.0%) in the first quarter of 1996. The decline in the
effective tax rate is due primarily to increased income
before taxes reducing the impact of nondeductible goodwill
amortization.
Net income. Net income increased $3.5 million in the first
quarter of 1997 compared to the first quarter of 1996. The
increase was primarily due to the initiatives previously
discussed related to gross margin, SG&A expenses and
financing costs. Although the trend has been favorable and
the Company continues to pursue these and other initiatives,
the future impact on net income cannot be assured.
Financial Condition, Liquidity and Capital Resources
Liquidity. The Company's liquidity position improved
significantly during the first quarter of 1997 compared to
the first quarter of 1996. Outstanding financing was reduced
$107.4 million from March 31, 1996 and $18.6 million from
December 31, 1996. The capitalization ratio (excluding the
impact of the off balance sheet accounts receivable
securitization) decreased to 52.9% at March 31, 1997 from
61.7% at March 31, 1996 and from 54.8% at December 31, 1996.
The improvement was the result of reduced working capital
requirements, increased earnings and the completion of the
Company's refinancing plan in the second quarter of 1996.
The Company expects that its available financing will be
sufficient to fund its working capital needs and long-term
strategic growth plans, although this cannot be assured. At
March 31, 1997, the Company had approximately $221.0 million
of unused credit under its revolving credit facility.
Working Capital Management. During the first quarter of
1997, the Company's working capital management improved
significantly compared to the first quarter of 1996.
Inventory turnover for the quarter improved to 9.9 times in
the first quarter of 1997 from 8.7 times in the first quarter
of 1996 and from 9.4 times in the fourth quarter of 1996.
This improvement was due to the implementation of the
Company's client/server-based inventory forecasting system
and the initiative to reduce the number of items from
multiple manufacturers distributed by the Company.
9
The Company has also reduced accounts receivable days sales
outstanding (DSO) (excluding the impact of the off balance
sheet accounts receivable securitization) to 32.3 days in the
first quarter of 1997 from 39.0 days in the first quarter of
1996 and from 33.9 days in the fourth quarter of 1996. This
reduction has been achieved through strengthening the
Company's methods of monitoring and enforcing contract
payment terms and basing a portion of its sales force
incentives on reducing days sales outstanding. The Company
will focus on maintaining these working capital management
measurements, although the results of its efforts cannot be
assured.
Capital Expenditures. Capital expenditures were
approximately $2.7 million in the first quarter of 1997, of
which approximately $1.2 million was for computer systems.
The Company expects to continue to invest in technology for
the foreseeable future as the most cost effective method of
reducing operating expenses. These capital expenditures are
expected to be funded through cash flow from operations.
Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board
( FASB ) issued Statement of Financial Accounting Standards
No. 128 ( SFAS 128 ), Earnings per Share. SFAS 128 prescribes
the computation, presentation and disclosure requirements for
earnings per share. This standard is effective for reporting
periods ending after December 15, 1997. Management believes
the adoption of this new standard will not have a material
impact on the financial condition or results of operations of
the Company.
Forward-Looking Statements
Certain statements in this discussion constitute forward-
looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-
looking statements involve known and unknown risks,
including, but not limited to, general economic and business
conditions, competition, changing trends in customer profiles
and changes in government regulations. Although the Company
believes that its expectations with respect to the forward-
looking statements are based upon reasonable assumptions
within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ
materially from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
10
Part II. Other Information
Item 1. Legal Proceedings
As of April 22, 1997, Stuart had been named as a defendant
along with product manufacturers, distributors, healthcare
providers, trade associations and others in approximately 290
lawsuits, filed in various federal and state courts (the
"Cases"). The Cases represent the claims of approximately 365
plaintiffs claiming personal injuries and approximately 245
spouses asserting claims for loss of consortium. The Cases
seek damages for personal injuries allegedly attributable to
spinal fixation devices. The great majority of the Cases seek
compensatory and punitive damages in unspecified amounts.
Prior to December 1992 and the Company's acquisition of
Stuart in 1994, Stuart distributed spinal fixation devices
manufactured by Sofamor SNC, a predecessor of Sofamor Danek
Group, Inc. ("Sofamor Danek"). Approximately 30% of the Cases
involve plaintiffs implanted with spinal fixation devices
manufactured by Sofamor Danek. Such plaintiffs allege that
Stuart is liable to them under applicable products liability
law for injuries caused by such devices distributed and sold
by Stuart. In addition, such plaintiffs allege that Stuart
distributed and sold the spinal fixation devices through
deceptive and misleading means and in violation of applicable
law. In the remaining Cases, plaintiffs seek to hold Stuart
liable for injuries caused by other manufacturers' devices
that were neither distributed nor sold by Stuart. Such
plaintiffs allege that Stuart engaged in a civil conspiracy
and concerted action with manufacturers, distributors and
others to promote the sale of spinal fixation devices through
deceptive and misleading means and in violation of applicable
law. Stuart never manufactured any spinal fixation devices.
The Company believes that affirmative defenses are available
to Stuart. All Cases filed against Stuart have been, and will
continue to be, vigorously defended.
A majority of the Cases have been transferred to, and
consolidated for pretrial proceedings, in the Eastern
District of Pennsylvania in Philadelphia under the style MDL
Docket No. 1014: In re Orthopedic Bone Screw Products
Liability Litigation. Discovery proceedings, including the
taking of depositions, have been ongoing in certain of the
Cases that were first to be filed. Discovery in certain Cases
filed later may begin in 1997. Because of the preliminary
status of the Cases, the Company is unable at this time to
determine with certainty whether or not Stuart may be held
liable.
In January 1997, the presiding judge entered an order
preliminarily approving a settlement agreement between one
manufacturer of spinal fixation devices, AcroMed Corporation
("AcroMed"), and the plaintiff's legal committee in the
multi-district litigation. Under the proposed terms of the
settlement, AcroMed would establish a settlement fund
consisting of $100 million in cash and the proceeds of its
product liability insurance coverage. Stuart did not
distribute devices manufactured by AcroMed and is not a party
to the AcroMed settlement. A final hearing will be held later
in 1997 to approve the fairness, adequacy and reasonableness
of the settlement. It is anticipated that nonsettling
defendants, including other manufacturers and distributors,
will object to the terms of the settlement and the proposed
terms of the notice of the settlement.
11
The Company believes that Stuart may be named as a defendant
in additional similar cases in the future as a result of the
pending AcroMed settlement or as statutes of limitations
approach expiration.
Based upon management's analysis of indemnification
agreements between Stuart and Sofamor Danek, the manufacturer
of the devices distributed by Stuart, the Company believes
that Stuart is entitled to indemnification by Sofamor Danek
at least with respect to claims brought by plaintiffs
implanted with devices manufactured by Sofamor Danek. Such
Cases are being defended by Stuart's insurance carriers.
Regarding those Cases filed by plaintiffs implanted with
other manufacturers' devices, one of Stuart's primary
insurance carriers has notified a representative of the
former shareholders of Stuart that it will withdraw its
provision of defense of such Cases and another one of
Stuart's primary insurance carriers has notified a
representative of the former shareholders of Stuart that it
has declined to provide a defense for such Cases, in both
instances asserting that such Cases involve only conspiracy
and concerted action claims. The former shareholders of
Stuart are contesting the insurance companies' withdrawal and
declination of the defense of such Cases. The Company and
Stuart are also contractually entitled to indemnification by
the former shareholders of Stuart for any liabilities and
related expenses incurred by the Company or Stuart in
connection with the foregoing litigation. The Company
believes that Stuart's available insurance coverage together
with the indemnification rights discussed above are adequate
to cover any losses should they occur, and accordingly has
accrued no liability therefor. Except as set forth above, the
Company is not aware of any uncertainty as to the
availability and adequacy of such insurance or
indemnification, although there can be no assurance that
Sofamor Danek and the former shareholders will have
sufficient financial resources in the future to meet such
obligations.
The Company is party to various other legal actions that are
ordinary and incidental to its business. While the outcome of
legal actions cannot be predicted with certainty, management
believes the outcome of these proceedings will not have a
material adverse effect on the Company's financial condition
or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a) Amended and Restated Bylaws of the
Company.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months
ended March 31, 1997.
12
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 May 12, 1997 /s/ Ann Greer Rector
Ann Greer Rector
Senior Vice President &
Chief Financial Officer
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
President, 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.
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
nine (9). 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 President or a majority of the Directors.
The 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 may be allowed a fee and expenses for
attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other
capacities and receiving compensation for such other
services.
2.6 Eligibility for Service as a Director. No
person shall be elected or reelected as a Director if at
the time of such proposed election or re-election such
person shall have attained the age of 75 years. No
person shall serve as a Director after the annual
meeting following his or her seventy-fifth (75th)
birthday; provided that the provisions of this sentence
shall not apply to any person elected as a director for
a term beginning prior to January 1, 1993, during such
term.
2.7 Director Emeritus. The Board of Directors
may from time to time elect one or more Directors
Emeritus. A Director Emeritus may be named "Chairman
Emeritus" or "Vice Chairman Emeritus" if such person
holds the office of Chairman or Vice Chairman of the
Corporation or any of its subsidiaries at the time of
retirement as a Director thereof. Each Director
Emeritus shall be elected for a term expiring on the
date of the next annual meeting of the Board. Directors
Emeritus may attend meetings of the Board of Directors
but shall not be entitled to vote at such meetings and
shall not be considered "directors" for purposes of
these Bylaws or for any other purpose, except that they
shall be entitled to receive notice of all regular and
special meetings of the Board of Directors. Each
Director Emeritus shall be paid the same fees as members
of the Board of Directors for attendance at Board
meetings.
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 President. 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.
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 President 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 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. The
President shall be chosen from among the Directors. Any
two 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 President. The President
shall be the chief executive officer of the Corporation
and shall be primarily responsible for the
implementation of policies of the Board of Directors.
He shall have authority over the general management and
direction of the business and operations of the
Corporation and its divisions, if any, subject only to
the ultimate authority of the Board of Directors. He
shall be a Director and, except as otherwise provided in
these Bylaws or in the resolutions establishing such
committees, he shall be ex officer a member of all
Committees of the Board. In the absence of the Chairman
and the Vice-Chairman of the Board, or if there are no
such officers, the President shall preside at all
corporate meetings. He 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 these Bylaws to some other
officer or agent of the Corporation or shall be required
by law otherwise to be signed or executed. In addition,
he shall perform all duties incident to the office of
the President and such other duties as from time to time
may be assigned to him by the Board of Directors.
4.5 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
President 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
President to some other officer or agent of the
Corporation or shall be required by law or otherwise to
be signed or executed.
4.6 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 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
President. 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.
4.7 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 President.
4.8 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.
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 Wachovia
Bank of North Carolina, N.A., as Rights Agent, dated as
of May __, 1994, 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.
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 President 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 President 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 executed on 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.
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
(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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