OWENS & MINOR INC/VA/ (Form: 10-K, Received: 02/25/2011 16:17:41)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the year ended December 31, 2010

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-9810

OWENS & MINOR, INC.

(Exact name of registrant as specified in its charter)


Virginia		54-1701843
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9120 Lockwood Boulevard, Mechanicsville, Virginia		23116
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (804) 723-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $2 par value		New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange
6.35% Senior Notes due 2016		Not Listed

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of Common Stock held by non-affiliates (based upon the closing sales price) was approximately $1,797,441,907 as of June 30, 2010.

The number of shares of the Company’s common stock outstanding as of February 18, 2011 was 63,456,598 shares.

Documents Incorporated by Reference

The proxy statement for the annual meeting of shareholders to be held on April 29, 2011, is incorporated by reference for Item 5 of Part II and Part III.

Form 10-K Table of Contents


Item No.		Page
Part I

1.	Business		3
1A.	Risk Factors		10
1B.	Unresolved Staff Comments		13
2.	Properties		13
3.	Legal Proceedings		13

Part II

5.	Market for Registrant’s Common Equity and Related Stockholder Matters		14
6.	Selected Consolidated Financial Data		16
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
7A.	Quantitative and Qualitative Disclosures About Market Risk		24
8.	Financial Statements and Supplementary Data		24
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		25
9A.	Controls and Procedures		25
9B.	Other Information		25
	Management’s Report on Internal Control over Financial Reporting		26
	Report of Independent Registered Public Accounting Firm		27

Part III

10.	Directors and Executive Officers of the Registrant		28
11.	Executive Compensation		28
12.	Security Ownership of Certain Beneficial Owners and Management		28
13.	Certain Relationships and Related Transactions		28
14.	Principal Accountant Fees and Services		28

Part IV

15.	Exhibits and Financial Statement Schedules		29

Corporate Officers, located on page 8 of the company’s printed Annual Report, can be found at the end of the electronic filing of this Form 10-K.

Part I

Item 1. Business

The Company

Owens & Minor, Inc. and subsidiaries (we, us, or our) is a Fortune 500 company providing distribution, third-party logistics, and other supply-chain management services to healthcare providers and suppliers of medical and surgical products, and is a leading national distributor of medical and surgical supplies to the acute-care market. The description of our business should be read in conjunction with the consolidated financial statements and supplementary data included in this Form 10-K.

Our core service consists of the distribution of finished medical and surgical products procured from over 1,200 suppliers to approximately 4,400 healthcare providers from 52 distribution and service centers nationwide. We also perform distribution and inventory management services on an outsourced basis from facilities that are owned by customers. In serving our healthcare customers, including acute-care and alternate-site providers and healthcare products suppliers (suppliers), we also provide a range of data analysis tools and outsourced resource management and consulting services, such as inventory, supply spending and contract management, as well as low-unit-of measure shipments and tailored deliveries. We also provide third-party logistics services for the manufacturers and suppliers of healthcare and life-science products.

We typically provide supply-chain management services, including distribution services, under contractual arrangements with healthcare providers such as hospitals, hospital-based systems, and alternate-site providers. Most of our revenue is derived from the distribution of consumable medical and surgical goods to healthcare providers. In addition, when providing consulting and outsourcing services to the healthcare market, we enter into fee-based service contracts of varying lengths and terms with customers.

Our company was founded in 1882 and incorporated in 1926 in Richmond, Virginia, as a wholesale drug company. Since 1992, when we sold the wholesale drug division, we have been focused on medical and surgical supply distribution and other supply-chain management services. We have significantly expanded and strengthened our national presence through internal growth and acquisitions. Additional information regarding recent acquisition activity is included in Note 3 of the Notes to Consolidated Financial Statements included in this Form 10-K.

The Healthcare Supply Distribution Industry

Distributors of medical and surgical supplies provide a wide variety of products and services to healthcare providers which include hospitals, hospital-based systems and alternate-site providers. Distributors contract with healthcare providers, including integrated healthcare networks (IHNs), directly and through group purchasing organizations (GPOs) that negotiate distribution contracts on behalf of their members. Distributors also serve suppliers by selling and distributing suppliers’ healthcare products, including supplies used in medical treatment and surgical procedures.

The healthcare industry continues to grow as a percentage of the United States’ gross domestic product, as a result of an aging population that consumes an increasing amount of healthcare services. The healthcare distribution industry is also growing as demand increases from healthcare providers and suppliers focused on improving the management of their supply-chain operations. Healthcare providers rely on strategic relationships with national medical and surgical supply distributors to perform traditional warehousing and delivery functions, as well as to efficiently manage their entire supply chain. Suppliers also turn to distributors for supply-chain management expertise and services.

Consolidation trends in the overall healthcare market, including IHN acquisitions of physicians’ practices and ambulatory surgery centers, have led to the creation of larger and more sophisticated healthcare providers,

which increasingly seek methods to lower the total cost of delivering healthcare services. These healthcare providers face a variety of financial challenges, including the cost of purchasing, receiving, storing and tracking medical and surgical supplies. These trends have driven significant consolidation within the healthcare supply distribution industry due to the competitive advantages enjoyed by larger distributors, which include, among other things, the ability to serve customers in widespread geographical locations, buy inventory in large volume, and develop technology platforms and decision support systems. Distributors have also developed services to help reduce supply-chain costs for both healthcare providers and suppliers by streamlining the supply chain through more effective inventory, supply spending and contract management.

The Healthcare Supply Distribution Business Model

Through our healthcare provider distribution business, we purchase a large volume of medical and surgical products from suppliers, store these items at our distribution centers, and provide delivery of these products and related services to our healthcare provider customers. In addition, we have a third-party logistics offering for suppliers that is branded as OM Healthcare Logistics (OM HCL). OM HCL offers flexible warehousing and distribution services and business process outsourcing services to suppliers, enabling them to take advantage of our advanced supply-chain management expertise and significant presence in the healthcare industry.

In serving the healthcare industry, we also provide outsourced resource management and consulting services, which make use of our proprietary supply-chain management programs and technologies. Our OMSolutions ^SM team provides, to acute-care providers, fee-based consulting and outsourcing services designed to improve the provider supply chain through better management of inventory, supply spending and related data.

We have 52 distribution centers located throughout the continental United States; three of these are integrated service centers primarily serving the needs of specific healthcare systems and two others are dedicated to OM HCL’s third-party logistics services. Our distribution centers generally serve hospitals and other customers within a 200-mile radius, delivering most customer orders with a fleet of leased trucks. Almost all of our delivery personnel are our employees, thereby ensuring the consistency of customer service. Contract carriers and parcel services are used in situations where they are more cost-effective and timely, including for OM HCL. We customize our product pallets, truckloads and delivery schedules according to customers’ needs, to increase their efficiency in receiving and storing the product. Sales, logistics, credit management and operations teammates are located at or near distribution centers to manage service to customers . In certain of our distribution centers, we utilize automation equipment in low-unit-of-measure picking modules, and we have deployed voice-pick technology company-wide to improve speed and accuracy in certain warehousing processes.

Our supply-chain management offering is supported by a significant investment in information technology infrastructure and services. We use a variety of software and information technology systems to support our business needs and efficiently manage our business growth, including warehouse management systems, customer service functions, and demand forecasting programs. We employ a number of customer-facing technology solutions, including OMDirect ^SM , an Internet-based product catalog and direct ordering system that facilitates commerce with customers and suppliers.

Products & Services

We offer customers a broad portfolio of products and services. Distribution of medical and surgical supplies to healthcare providers, including our MediChoice ^® private label product line, accounts for over 95% of our revenues. Additional services include logistics, supplier management, analytics inventory management, outsourced resource management, clinical supply management and business process consulting. Examples of our service offerings include the following:

•

PANDAC ^® is an operating room-focused inventory management program that helps healthcare providers manage suture and endo-mechanical inventory. We provide detailed analysis and ongoing

reporting which enables customers to decrease redundancy and obsolescence and increase inventory turns, which in turn reduces investment in these high-cost products.

•

SurgiTrack ^® is a customizable surgical supply service that includes the assembly and delivery of surgical supplies in procedure-based totes, based on a healthcare provider’s surgical schedule. The SurgiTrack program also provides in-depth analysis designed to enable healthcare providers to standardize products used in procedures, reduce inventory and streamline workflow.

•

OMSolutions is a supply-chain consulting, customer technology and resource management service offering. OMSolutions implements customized healthcare supply-chain solutions through the integration of people, processes and technologies. Services offered by OMSolutions decrease supply-chain costs while increasing operating efficiency. For example, OMSolutions provides consultants who work one-on-one with hospital staff to standardize and efficiently utilize products, processes and technologies. Other examples of OMSolutions services are in-depth value analysis and cost management, cost reduction through the management of purchased services, receiving and storeroom redesign, conducting physical inventories, and configuration of automatic inventory replenishment systems. Additional services offered by OMSolutions are WISDOM Gold ^SM , Clinical Supply Solutions ^SM and Implant Purchase Manager ^SM .

WISDOM Gold is an Internet-based supply spend management, data normalization and contract management solution, which is supported by OMSolutions analysts who identify cost-saving opportunities for customers. WISDOM Gold enables customers to gain deeper understanding and control over their supply procurement and contracting efforts.

Clinical Supply Solutions is an inventory and contract management service that enables healthcare providers to reduce expenses by accurately tracking and managing physician-preference products and medical/surgical inventories in high-cost clinical specialty departments, such as cardiac catheterization labs, radiology and operating rooms. Clinical Supply Solutions is enabled by our proprietary web-based technology, including a complete database of products, and the expertise of our inventory specialists and professional analysts.

Implant Purchase Manager is a technology-based service that enables healthcare provider customers to better manage their high-dollar implants and devices inventory, through improved tracking of utilization, contract compliance, and billing. Typically, these implants are not held in inventory, but are delivered just-in-time for procedures. We began offering this technology in 2010 to expand our reach into clinical areas of the supply chain and further differentiate our service offering.

•

OM HCL is an offering of customized third-party logistics and business process outsourcing services, primarily provided to medical device and life science companies. This business provides flexible warehousing and distribution services to meet unique product requirements. OM HCL also provides full order-to-cash services, including reverse logistics and chargeback management. The two logistics centers dedicated to OM HCL are state-of-the art facilities that are strategically positioned in central and western U.S. locations. OM HCL’s services are enabled by sophisticated supply-chain management software and technology.

Customers

We currently provide distribution, outsourced resource management and/or consulting services to approximately 4,400 healthcare providers, including acute-care hospitals, which are our primary customers. Many of the hospital customers are represented by IHNs or GPOs that negotiate pricing with suppliers and also contract for distribution services with us. We also serve the federal government, including the U.S. Department of Defense, as a prime vendor for medical and surgical supply distribution services. On a more limited basis, we serve alternate-site providers, including ambulatory surgery centers, physicians’ practices, clinics, home healthcare organizations, nursing homes and rehabilitation facilities. We also provide supply-chain management

services, including third-party logistics and business process outsourcing services, to manufacturers of medical and surgical products.

GPOs and IHNs

GPOs are entities that act on behalf of a group of healthcare providers to obtain better pricing and other benefits than may be available to individual providers. Hospitals, physicians and other types of healthcare providers have joined GPOs to take advantage of improved economies of scale and to obtain services from medical and surgical supply distributors ranging from discounted product pricing to logistical and clinical support. GPOs negotiate directly with medical and surgical product suppliers and distributors on behalf of their members, establishing exclusive or multi-supplier relationships; however, GPOs cannot ensure that members will purchase their supplies from a particular distributor.

We have contracts to provide distribution services to the members of a number of national GPOs, including Novation, LLC (Novation), MedAssets Inc. (MedAssets) and its subsidiary Broadlane, Inc. (Broadlane) and Premier Purchasing Partners, L.P. (Premier). Our agreement with Novation expires in August 2011 and is renewable for two additional years. Sales to Novation members represented approximately 37% of our revenue in 2010. Our agreement with Broadlane expires in January 2012, and our agreement with MedAssets expires in March 2013. Sales to MedAssets and Broadlane members combined represented approximately 22% of our revenue in 2010. Our agreement with Premier expires December 2011. Sales to Premier members represented approximately 20% of our revenue in 2010.

IHNs are typically networks of commonly owned or managed healthcare providers that seek to offer a broad spectrum of healthcare services and geographic coverage to a particular market. IHNs are significant in the acute-care market because of their expanding role in healthcare delivery and cost containment and their reliance upon the hospital as a key component of their organizations. Because IHNs frequently rely on cost containment as a competitive advantage, IHNs have become an important source of demand for our enhanced inventory management and other value-added services.

Individual Providers

In addition to contracting with healthcare providers at the IHN level and through GPOs, we contract directly with individual healthcare providers and smaller networks of healthcare providers that have joined together to negotiate terms.

Sales and Marketing

Our sales and marketing organization is built to support a broad customer base with sales and service teams positioned within the markets we serve so that we can effectively respond to local needs. Enterprise sales and national account teams support IHNs and GPOs, helping to coordinate our multifaceted engagements and implement our service offerings consistently across their network or membership. Our integrated marketing strategy centers around five areas of value-added supply-chain services, including supplier management, distribution and logistics, analytics, outsourced resource management and consulting, and clinical supply management.

Pricing

Industry practice is for healthcare providers, or their IHNs or GPOs, to negotiate product pricing directly with suppliers and then negotiate distribution pricing terms with distributors. The medical/surgical supply distribution industry is characterized by pricing pressure.

The majority of our distribution arrangements compensate us on a cost-plus percentage basis, under which a negotiated percentage distribution fee is added to the contract price agreed to by the customer and the supplier.

The determination of this percentage distribution fee is typically based on purchase volume, as well as other factors, and usually remains constant for the life of the contract. In many cases, distribution contracts in the medical/surgical supply industry specify a minimum volume of product to be purchased and are terminable by either party upon relatively short notice.

In some cases, we may offer pricing that varies during the life of the contract depending upon purchase volume, and, as a result, the negotiated percentage distribution fee may increase or decrease over time as purchase volumes change. Under these contracts, customers’ percentage distribution fees may be reset after a measurement period to either more or less favorable pricing based on significant changes in purchase volume. If a customer’s percentage distribution fee is adjusted, the modified percentage distribution fee applies only to purchases made following the change. Because customers’ sales volumes typically change gradually, changes in percentage distribution fees for individual customers under this type of arrangement have an insignificant effect on total company results.

Pricing under our CostTrack ^SM activity-based pricing model differs from pricing under a traditional cost-plus model. With CostTrack , the pricing of services is based on our cost of providing the services required by the customer. As a result, this pricing model aligns distribution fees charged with the costs of the individual services provided.

OMSolutions pricing is based on professional rates and costs of managing and providing a team, or individual, to provide specific services. Additionally, pricing for technology services is based on the structure and complexity of the customer engagement, including spending level and number of contracts, system interfaces and facilities. We have contracts for OMSolutions and other supply-chain management services which include performance targets related to cost-saving initiatives for customers that result from our services. Achievement against these performance targets is measured as determined by contractual terms. In the event the performance targets are not achieved, we may be obligated to refund or reduce a portion of our fees, or to provide a credit toward future purchases by the customer. When performance targets are achieved, we may be entitled to additional fees.

OM Healthcare Logistics pricing is activity-based, with service-based fees determined by customers’ particular requirements.

Suppliers

We offer a variety of supplier programs that benefit our supplier partners and which are designed to increase market share, drive sales growth for their products, or result in operational efficiencies. Through standardization and consolidation of these suppliers’ products for sale to our customer base, we strive to provide operational benefits and cost savings throughout the supply chain. Supplier programs, which are generally negotiated on an annual basis, provide for enhanced levels of support that are aligned with annual supplier objectives.

We have contractual arrangements with suppliers participating in these programs that provide incentives, including operational efficiency and performance-based incentives, and cash discounts for prompt payment, on a monthly, quarterly or annual basis.

Additionally, we offer customers a private-label brand of medical and surgical products and equipment, known as MediChoice ^® , which provides cost-saving alternatives on over 2,700 commodity products. We source our MediChoice products from a select group of manufacturers known for their quality and high service levels. Through our offering of both MediChoice products and branded supplier products, we offer a comprehensive product portfolio to our customers.

Sales of products supplied by subsidiaries of Covidien Ltd. accounted for approximately 14% of our revenue for 2010. Sales of products supplied by Johnson & Johnson Health Care Systems, Inc. were approximately 10% of our revenue for 2010.

Information Technology

To support our strategic efforts, we have implemented information systems to manage all aspects of operations, including order fulfillment, customer service, warehouse and inventory management, asset management, electronic commerce, and financial management. We believe our investment in technology in the management of operations provides us with a significant competitive advantage.

We have an agreement with Dell Perot Systems through July 2014 to outsource our information technology operations. This agreement includes the management and operation of information technology and infrastructure, as well as support, development and enhancement of all key business systems.

Our technology strategy and expenditures focus on customer service, electronic commerce, data warehousing, decision support, supply-chain management, warehousing management, and sales and marketing programs, as well as significant enhancements to back office systems and overall technology infrastructure. We use electronic commerce technology to conduct business transactions with customers, suppliers and other trading partners. Our proprietary technology includes the OMDirect ^SM Internet order fulfillment system, the WISDOM Gold ^SM knowledge management and decision-support system, and the QSight ^SM clinical inventory management system.

Asset Management

In the healthcare supply distribution industry, a significant investment in inventory and accounts receivable is required to meet the rapid delivery requirements of customers and provide high-quality service. As a result, efficient asset management is essential to our profitability. We are focused on effective processes to optimize inventory and collect accounts receivable.

Inventory

We are focused in our efforts to optimize inventory and continually consolidate products and collaborate with supply-chain partners on inventory productivity initiatives. In 2010, we continued the implementation of voice-pick technology, which is hands-free communication technology that improves inventory accuracy, in addition to improving the productivity of warehouse teammates, and invested in other infrastructure technologies that increase accuracy and efficiency in inventory management. We actively monitor inventory for obsolescence and use inventory turnover and other operational metrics to measure our performance in managing inventory.

Accounts Receivable

We provide credit in the normal course of business to our customers and utilize credit management techniques to evaluate customers’ creditworthiness and to facilitate collection. These techniques include performing initial and ongoing credit evaluations of customers based primarily on financial information provided by them and from sources available to the general public. As part of credit evaluations, we also use third-party information from sources such as credit reporting agencies, as well as bank and credit references. We actively manage our accounts receivable to minimize credit risk, days sales outstanding (DSO) and accounts receivable carrying costs. Field and home office specialists work together in collecting accounts receivable and resolving disputed balances. Our ability to properly invoice and ship product to customers enhances our collection results and, accordingly, our DSO performance. Also, we have arrangements with certain customers under which they make deposits on account, either because they do not meet our standards for creditworthiness or in order to obtain more favorable pricing.

Competition

The acute-care medical/surgical supply distribution industry in the United States is highly competitive. The sector includes two major nationwide distributors: Owens & Minor, Inc. and Cardinal Health, Inc., a smaller national distributor of medical and surgical supplies, Medline, Inc., and a number of regional and local distributors, as well as customer self-distribution models.

Competitive factors within the medical/surgical supply distribution industry include market pricing, expense control, product availability, the ability to fill and invoice orders accurately, delivery time, range of services provided, efficient product sourcing, inventory management, information technology, electronic commerce capabilities, and the ability to meet customer-specific requirements. We believe our emphasis on technology, combined with a customer-focused approach to distribution and value-added services, enables us to compete effectively with other distribution models.

Direct-to-Consumer Supply Distribution Business

We exited our direct-to-consumer diabetes supply (DTC) business to focus on our distribution business for healthcare providers and suppliers. In January 2009, we sold certain assets of this business, including customer data and intellectual property, to Liberty Healthcare Group, Inc., a subsidiary of Medco Health Solutions, Inc., for $63.0 million. We retained the remaining assets and liabilities of the business, including accounts receivable. We operated the DTC business under the trade name AOM Healthcare Solutions (AOM) beginning with our acquisition of Access Diabetic Supply, LLC in 2005. AOM primarily marketed blood glucose monitoring devices, test strips and other ancillary products used by diabetic consumers for self-testing, mainly through direct-response advertising using a variety of media. We substantially completed our exit from this business by the end of the second quarter of 2009, by liquidating our remaining assets and vacating our leased premises. Additional information regarding this discontinued operation is included in Note 4 of the Notes to Consolidated Financial Statements included in this Form 10-K.

Other Matters

Regulation

The medical/surgical supply distribution industry is subject to regulation by federal, state and local government agencies. Each of our distribution centers is licensed to distribute medical and surgical supplies, as well as certain pharmaceutical and related products. We must comply with laws and regulations, including those governing operating, storage, transportation, safety and security standards for each of our distribution centers, of the Food and Drug Administration, the Drug Enforcement Agency, the Department of Transportation, the Department of Homeland Security, the Occupational Safety and Health Administration, and state boards of pharmacy, or similar state licensing boards and regulatory agencies as they apply to the operation of each of our distribution centers. We are also subject to various federal and state laws intended to protect the privacy of health or other personal information and to prevent healthcare fraud and abuse. In addition, the DTC business was required to comply with Medicare regulations regarding billing practices. We believe we are in material compliance with all statutes and regulations applicable to distributors of medical and surgical supply products and pharmaceutical and related products, including the Healthcare Insurance Portability and Accountability Act of 1996 (HIPAA), Medicare, Medicaid, as well as applicable general employment and employee health and safety laws and regulations.

Employees

At the end of 2010, we employed approximately 4,800 full- and part-time teammates. We believe that ongoing teammate training is critical to performance and use Owens & Minor University ^® , an in-house training facility, to offer classes in leadership, management development, finance, operations, safety and sales. We believe that relations with teammates are good.

Available Information

We make our Forms 10-K, Forms 10-Q and Forms 8-K (and all amendments to these reports) available free of charge through the SEC Filings link in the Investor Relations content section on our website located at www.owens-minor.com as soon as reasonably practicable after they are filed with or furnished to the SEC. Information included on our website is not incorporated by reference into this Annual Report on Form 10-K.

You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You 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 the company (http://www.sec.gov).

Additionally, we have adopted a written Code of Honor that applies to all of our directors, officers and teammates, including our principal executive officer and senior financial officers. This Code of Honor (including any amendments to or waivers of a provision thereof) and our Corporate Governance Guidelines are available on our website at www.owens-minor.com.

Item 1A. Risk Factors

Set forth below are certain risk factors that we believe could materially affect our business, financial condition and prospects. These risk factors are in addition to those mentioned in other parts of this report and are not the only risks we face.

Competition

The medical/surgical supply distribution industry in the United States is highly competitive and characterized by intense pricing pressure. We compete with other national distributors and a number of regional and local distributors, as well as customer self-distribution models. Competitive factors within the medical/surgical supply distribution industry include market pricing, total delivered product cost, product availability, the ability to fill and invoice orders accurately, delivery time, range of services provided, efficient product sourcing, inventory management, information technology, electronic commerce capabilities, and the ability to meet special requirements of customers. Our success is dependent on the ability to compete on the above factors, while managing internal costs and expenses. These competitive pressures could have a material adverse effect on our results of operations.

Dependence on Significant Customers

In 2010, our top ten customers represented approximately 21% of our revenue. In addition, in 2010, approximately 79% of our revenue was from sales to member hospitals under contract with our largest GPOs: Novation, Premier, Broadlane and MedAssets. We could lose a significant customer or GPO relationship if an existing contract expires without being replaced or is terminated by the customer or GPO prior to our expiration (if permitted by the applicable contract). Although the termination of our relationship with a given GPO would not necessarily result in the loss of all of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual customer relationship, could have a material adverse effect on our results of operations.

We have a contract with Defense Logistics Agency Troop Support, Philadelphia (DLATS) under which the U.S. Department of Defense, our largest customer, and other federal agencies purchase supplies and services. The DLATS contract, which was due to expire in October 2010, was extended under the existing terms for up to another 18 months. A significant decline in volume of sales under this contract, less favorable terms, or a failure to renew the contract upon expiration, could have a material adverse effect on our results of operations.

Dependence on Significant Suppliers

We distribute products from over 1,200 suppliers and are dependent on these suppliers for the continuing supply of products. In 2010, sales of products of our ten largest suppliers accounted for approximately 54% of revenue. We rely on suppliers to provide agreeable purchasing and delivery terms and performance incentives. Our ability to sustain adequate operating earnings has been, and will continue to be, partially dependent upon our ability to obtain favorable terms and incentives from suppliers, as well as suppliers’ continuing use of third-party distributors to sell and deliver their products. A change in terms by a significant supplier, or the decision of such a supplier to distribute its products directly to healthcare providers rather than through third-party distributors, could have a material adverse effect on our results of operations.

Bankruptcy, Insolvency or other Credit Failure of Customers

We provide credit in the normal course of business to customers. We perform initial and ongoing credit evaluations of customers and maintain reserves for credit losses. The bankruptcy, insolvency or other credit failure of one or more customers with substantial balances due to us could have a material adverse effect on our results of operations.

Changes in the Healthcare Environment

We along with our customers and suppliers are subject to extensive federal and state regulations relating to healthcare as well as the policies and practices of the private healthcare insurance industry. In recent years, there have been a number of government and private initiatives to reduce healthcare costs and government spending. These changes have included an increased reliance on managed care; consolidation of competitors, suppliers and customers; and the development of larger, more sophisticated purchasing groups. All of these changes place additional financial pressure on healthcare providers, who in turn seek to reduce the costs and pricing of products and services provided by us. We expect the healthcare industry to continue to change significantly and these potential changes, which may include a reduction in government support of healthcare services, adverse changes in legislation or regulations, and reductions in healthcare reimbursement practices, could have a material adverse effect on our results of operations.

In March 2010, Congress passed and President Obama signed into law the Patient Protection and Affordable Care Act and related Reconciliation Bill, which includes a variety of healthcare reform provisions and requirements that will become effective at varying times from 2010 to 2018. This healthcare reform legislation includes, among other things, provisions for expanded Medicaid eligibility and access to healthcare insurance as well as increased taxes and fees on certain corporations and medical products. The uncertainties surrounding the components of this legislation and the impact of its implementation on the healthcare industry may have an adverse effect on both customer purchasing and payment behavior and supplier product prices and terms of sale, which could adversely affect our results of operations.

Operating Margin Initiatives

Competitive pricing pressure has been a significant factor in recent years, and management expects this trend to continue. In addition, suppliers continue to seek more restrictive agreements with distributors. We are working to counteract the effects of these trends through several profitability improvement initiatives, including resource management outsourcing and consulting services offered through OMSolutions ^SM , our MediChoice ^® private-label brand of select medical and surgical products, the provision of third-party logistics services through OM Healthcare Logistics and investments in technology enhancements to increase operational efficiency in our distribution centers and to improve customer service support. In addition, we offer customers a wide range of value-added services, including PANDAC ^® , Wisdom Gold ^SM , Clinical Supply Solutions ^SM and others, all of which enhance profitability. If these initiatives are unsuccessful, it could have an adverse effect on our future performance.

Reliance on Information Systems and Technological Advancement

We rely on information systems to receive, process, analyze and manage data in distributing thousands of inventory items to customers from numerous distribution centers across the country. These systems are also relied upon for billings to and collections from customers, as well as the purchase of and payment for inventory and related transactions from our suppliers. In addition, the success of our long-term growth strategy is dependent upon the ability to continually monitor and upgrade our information systems to provide better service to customers. A third-party service provider, Dell Perot Systems, is responsible for managing a significant portion of our information systems, including key operational and financial systems. Our business and results of operations may be materially adversely affected if systems are interrupted or damaged by unforeseen events or fail to operate for an extended period of time, if we fail to appropriately enhance our systems to support growth and strategic initiatives or if our third-party service provider does not perform satisfactorily.

Regulatory Requirements

We must comply with numerous laws and regulations, including those of the Food and Drug Administration, the Drug Enforcement Agency, the Department of Transportation, the Department of Homeland Security, the Occupational Safety and Health Administration, and state boards of pharmacy, or similar state licensing boards, and other regulatory agencies. Also, we are subject to various federal and state laws intended to protect the privacy of health or other personal information and prevent healthcare fraud and abuse. Although we believe we are in material compliance with all applicable laws and regulations, any failure to comply with existing laws and regulations or the imposition of any additional laws and regulations could have a material adverse effect on our business.

Changes in Tax Laws

We operate throughout the United States. As a result we are subjected to the tax laws and regulations of many jurisdictions. From time to time, legislative and regulatory initiatives are proposed, including proposals to repeal LIFO (last-in, first-out) treatment of inventory or change tax accounting methods for inventory or other tax items, that could adversely affect our tax positions, tax rate or cash payments for taxes.

Strategic Initiatives

We have made and are continuing to make substantial investments in the development and implementation of certain strategic initiatives designed to produce long-term growth in profitability and shareholder value. There can be no assurance that we will be able to successfully implement our strategic initiatives or that they will produce the desired results. If we are unsuccessful it could have an adverse effect on our future performance.

General Economic Climate

Deterioration in the financial and economic climate in recent years is continuing to have a negative impact on most sectors of the U.S. economy. This deterioration in the financial and economic climate has reduced patient demand for healthcare services, intensified pressures on healthcare providers to reduce both costs and purchases of our products and services and could compromise customers’ ability to timely pay for their purchases. Poor economic conditions could lead our suppliers to offer less favorable terms of purchase to distributors, which would negatively affect our profitability. These and other possible consequences of financial and economic changes including, but not limited to, the ability of banks to honor commitments under our credit facility, could materially and adversely affect our business and results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We have 52 distribution centers, including office and warehouse space, across the United States as of December 31, 2010. We lease 51 of these distribution centers from unaffiliated third parties and own one. Three of the distribution centers are operating as integrated service centers and two are dedicated to OM Healthcare Logistics . We also lease additional warehouse space near two of our distribution centers, as well as small offices for sales and consulting personnel across the United States. In addition, we have a warehousing arrangement in Honolulu, Hawaii, with an unaffiliated third party, and lease space on a temporary basis from time to time to meet our inventory storage needs. We own our corporate headquarters building, and adjacent acreage, in Mechanicsville, Virginia, a suburb of Richmond, Virginia.

We also own three warehouses, which were acquired from The Burrows Company in 2008 and are closed as of December 31, 2010. These warehouses are being offered for sale. We also have five leases with remaining terms of less than one year for offices and warehouse facilities that we have vacated.

We regularly assess our business needs and make changes to the capacity and location of distribution centers. We believe that our facilities are adequate to carry on our business as currently conducted. A number of leases are scheduled to terminate within the next several years. We believe that, if necessary, we could find facilities to replace these leased premises without suffering a material adverse effect on our business.

Item 3. Legal Proceedings

We are subject to various legal actions that are ordinary and incidental to our business, including contract disputes, employment, workers’ compensation, product liability, regulatory and other matters. We establish reserves from time to time based upon periodic assessment of the potential outcomes of pending matters. In addition, we believe that any potential liability arising from employment, product liability, workers’ compensation and other personal injury litigation matters would be adequately covered by our insurance coverage, subject to policy limits, applicable deductibles and insurer solvency. While the outcome of legal actions cannot be predicted with certainty, we believe, based on current knowledge and the advice of counsel, that the outcome of these currently pending matters, individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.

Part II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Owens & Minor, Inc.’s common stock trades on the New York Stock Exchange under the symbol OMI. As of February 18, 2011, there were approximately 3,900 common shareholders of record. We believe there are an estimated additional 47,000 beneficial holders of our common stock. See Selected Quarterly Financial Information in Item 15 of this report for high and low closing sales prices of our common stock and quarterly cash dividends per common share and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a discussion of our dividend payments.

On March 31, 2010, we effected a three-for-two stock split of our outstanding shares of common stock in the form of a stock dividend of one share of common stock for every two shares outstanding to stockholders of record on March 15, 2010. The common stock began trading on a post-split basis on April 1, 2010. All share and per-share data (except par value) have been adjusted to reflect this split.

5-Year Total Shareholder Return

The following performance graph compares the performance of our common stock to the S&P 500 Index and an Industry Peer Group (which includes the companies listed below) for the last five years. This graph assumes that the value of the investment in the common stock and each index was $100 on December 31, 2005, and that all dividends were reinvested.

LOGO

(Data provided by Standard & Poor’s)


	Base Period 12/2005		12/2006		12/2007		12/2008		12/2009		12/2010
Owens & Minor, Inc.	$	100.00	$	115.78	$	159.94	$	144.62	$	168.67	$	177.68
S&P 500 Index		100.00		115.79		122.16		76.96		97.33		111.99
Peer Group		100.00		99.88		104.98		66.11		95.90		113.60

The Industry Peer Group, weighted by market capitalization, consists of companies engaged in the business of healthcare product distribution. The Peer Group includes pharmaceutical distribution companies: AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson Corporation; and medical product distribution companies: Henry Schein, Inc., Patterson Companies, Inc., and PSS World Medical, Inc.

Item 6. Selected Consolidated Financial Data

(in thousands, except ratios and per share data)


	At or for the Year Ended December 31, ⁽¹⁾
	2010 ⁽²⁾			2009			2008			2007			2006
Summary of Operations:
Net revenue	$	8,123,608		$	8,037,624		$	7,243,237		$	6,694,596		$	5,441,266
Income from continuing operations	$	110,579		$	116,859		$	101,257		$	71,411		$	53,953
(Loss) income from discontinued operations, net of tax		—			(12,201	)		(7,930	)		1,299			(5,201	)

Net income	$	110,579		$	104,658		$	93,327		$	72,710		$	48,752

Per Common Share ⁽³⁾ :
Income (loss) per common share—basic:
Continuing operations	$	1.76		$	1.87		$	1.64		$	1.18		$	0.90
Discontinued operations		—			(0.19	)		(0.13	)		0.02			(0.09	)

Net income per share—basic	$	1.76		$	1.68		$	1.51		$	1.20		$	0.81

Income (loss) per common share—diluted:
Continuing operations	$	1.75		$	1.86		$	1.63		$	1.17		$	0.89
Discontinued operations		—			(0.19	)		(0.13	)		0.02			(0.09	)

Net income per share—diluted	$	1.75		$	1.67		$	1.50		$	1.19		$	0.80

Cash dividends	$	0.708		$	0.613		$	0.533		$	0.453		$	0.400
Stock price at year end	$	29.43		$	28.62		$	25.10		$	28.29		$	20.85
Book value at year end ⁽⁴⁾	$	13.52		$	12.23		$	11.08		$	10.02		$	9.07
Summary of Financial Position:
Total assets	$	1,822,039		$	1,747,088		$	1,776,190		$	1,528,003		$	1,697,044
Cash and cash equivalents	$	159,213		$	96,136		$	7,886		$	10,395		$	7,990
Total debt	$	210,906		$	210,917		$	362,003		$	286,976		$	436,930
Shareholders’ equity	$	857,518		$	769,179		$	689,051		$	614,359		$	547,454
Selected Ratios:
Gross margin as a percent of revenue		9.94	%		10.13	%		10.23	%		10.02	%		10.25	%
Selling, general, and administrative expense as a percent of revenue		6.94	%		7.37	%		7.52	%		7.69	%		7.97	%
Operating earnings as a percent of revenue		2.41	%		2.50	%		2.50	%		2.10	%		2.05	%
Day sales outstanding ⁽⁵⁾		19.6			21.4			24.5			23.6			29.5
Average annual inventory turnover ⁽⁶⁾		10.4			10.6			10.4			9.7			8.9
Days payables outstanding ⁽⁶⁾		26.5			27.6			28.9			28.6			40.3
Total debt to equity ⁽⁷⁾		0.25			0.27			0.53			0.47			0.80

⁽¹⁾

In January 2009, we exited our direct-to-consumer diabetes supply (DTC) business. Accordingly, the DTC business is presented as discontinued operations for all periods presented. For additional information regarding discontinued operations, see Note 4 of Notes to Consolidated Financial Statements.

⁽²⁾

We terminated our frozen defined benefit pension plan in the fourth quarter of 2010 and recognized a settlement charge of $19.6 million ($11.9 million after taxes, or $0.19 per common share). See Note 13 of Notes to Consolidated Financial Statements.

⁽³⁾

Prior periods have been retroactively adjusted to reflect a three-for-two stock split effected on March 31, 2010. See Note 1 of Notes to Consolidated Financial Statements.

⁽⁴⁾

Represents shareholders’ equity divided by year-end common shares outstanding.

⁽⁵⁾

Based on net revenues for the fourth quarter of the year.

⁽⁶⁾

Based on cost of goods sold for the preceding 12 months.

⁽⁷⁾

Represents total debt divided by shareholders’ equity.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

2010 Financial Results

Overview. Owens & Minor, Inc. (we, us, or our) earned income from continuing operations of $110.6 million in 2010, $116.9 million in 2009 and $101.3 million in 2008. Income from continuing operations per diluted common share was $1.75 in 2010, $1.86 in 2009 and $1.63 in 2008. Income from continuing operations in 2010 was negatively affected by a settlement charge of $19.6 million recognized due to the termination of our defined benefit pension plan. Income from continuing operations in 2009 was positively affected by increased revenues from the acquired acute-care distribution business of The Burrows Company (Burrows) and other net new business. Income from continuing operations in 2008 reflects the cost of integrating a portion of the acquired acute-care distribution business of Burrows.

Stock Split. On March 31, 2010, we effected a three-for-two stock split of our outstanding shares of common stock in the form of a stock dividend of one share of common stock for every two shares outstanding to stockholders of record on March 15, 2010. All share and per-share data (except par value) have been retroactively adjusted to reflect this stock split for all periods presented.

Divestiture. In January 2009, we exited our direct-to-consumer distribution business (DTC business). Accordingly, the DTC business is presented as discontinued operations in our consolidated financial statements, and all prior period information has been reclassified to be consistent with the current period presentation.

Acquisitions. We acquired certain assets and liabilities of Burrows, a Chicago-based distributor of medical and surgical supplies to the acute-care market, in the fourth quarter of 2008, and also purchased certain real property used in the operation of the business. The adjusted purchase price, including transaction costs, was approximately $90.6 million.

Results of Operations

Financial highlights. The following table presents highlights from our consolidated statements of income on a percentage-of-revenue basis:


Year ended December 31,	2010			2009			2008
Gross margin		9.94	%		10.13	%		10.23	%
Selling, general, and administrative expenses		6.94	%		7.37	%		7.52	%
Operating earnings		2.41	%		2.50	%		2.50	%
Income from continuing operations		1.36	%		1.45	%		1.40	%

Net revenue. Net revenue was $8.12 billion for 2010, $8.04 billion for 2009 and $7.24 billion for 2008, representing increases of 1.1% for 2010 compared to 2009 and 11.0% for 2009 compared to 2008. For 2010, the increase in net revenue resulted from greater sales of products to existing customers of $189 million and to new customers of $242 million, totaling $431 million, which were partially offset by a decrease in sales to lost customers of $342 million. In 2010, net revenues from provider customers, excluding any new or acquired business, grew at a rate of 2.1% as compared with the prior year.

In comparing 2009 to 2008, the increase in net revenue resulted from greater sales of products to existing customers of $372 million and to customers acquired from Burrows and other new business of $715 million, totaling approximately $1.1 billion, which were partially offset by a decrease in sales to lost customers of $301 million. In 2009, net revenues from provider customers, excluding any new or acquired business, grew at a rate of 5.7% as compared with 2008.

Gross margin. Gross margin dollars decreased 0.8% to $807.7 million for 2010, as compared with $814.4 million for 2009. The decrease in gross margin dollars and a decrease of 19 basis points in gross margin as a percentage of revenue were comprised of lower gross margin as a percentage of revenue on sales to new and existing customers (6 basis points) and a net decrease in fee-for-service revenues (5 basis points). In addition, the decrease in gross margin dollars reflects an $8.4 million greater last-in, first out (LIFO) provision (11 basis points). Gross margin dollars in 2009 benefitted from a lower LIFO provision due primarily to the effect of net supplier price changes.

Gross margin dollars increased 9.9% to $814.4 million for 2009, as compared with $741.1 million for 2008. The increase in gross margin dollars was primarily due to an increase in revenues. The decline of 10 basis points in gross margin as a percentage of revenue for 2009 as compared with 2008 was comprised of lower gross margin as a percentage of revenue on sales to new customers and customers obtained from the Burrows acquisition, and a decrease in supplier incentives as a percentage of revenue. These decreases were partially offset by the effect of net supplier price changes, as well as the impact of changes in inventory mix on the LIFO provision, which resulted in a $10.5 million lower LIFO provision for 2009 compared to 2008.

We value inventory under the LIFO method. Had inventory been valued under the first-in, first-out (FIFO) method, gross margin as a percentage of revenue would have been higher by 14 basis points in 2010, 3 basis points in 2009 and 18 basis points in 2008.

Selling, general and administrative (SG&A) expenses. SG&A expenses of $564.2 million for 2010 decreased $28.2 million compared to 2009. SG&A expenses decreased $17.3 million for labor costs, primarily related to incentive compensation expense; $7.6 million for information technology outsourcing and consulting primarily related to technology infrastructure enhancements; $4.3 million in Burrows acquisition transition-related expenses; $1.6 million for delivery costs; and $1.3 million resulting from a lower provision for losses on accounts and notes receivable. These decreases in SG&A expenses were partially offset by an increase of $4.7 million for costs incurred in our third-party logistics operations. The decrease in incentive compensation expense for 2010 compared with 2009 reflects lower achievement against certain performance-based measures.

SG&A expenses of $592.3 million for 2009 increased $47.4 million compared to 2008. Increases in labor costs of $31.2 million and occupancy costs of $3.4 million, both of which primarily relate to serving new and acquired customers, as well as increases of $5.7 million for information technology outsourcing and consulting services and $2.1 million in Burrows acquisition transition-related expenses, represented the majority of the increase. The increase in labor costs is net of a $4.6 million decrease in incentive expense reflecting decreased achievement against certain performance-based measures. Expenses to introduce third-party logistics services in 2009 also increased SG&A expenses $4.4 million for the year.

Pension expense. In 2010, we terminated our defined benefit pension plan (which had been frozen since December 31, 1996), contributed $13.9 million to the plan, and completed the distribution of substantially all of the plan assets to plan participants. Pension expense of $21.4 million for 2010 includes net actuarial losses of $19.6 million recognized due to the settlement of the plan’s obligations and $1.8 million in other net periodic pension cost. The settlement charge had a negative impact of $0.19 on income from continuing operations per diluted common share for 2010.

Depreciation and amortization expense. Depreciation and amortization expense increased to $29.1 million for 2010 from $25.3 million for 2009. The increase was primarily due to amortization of computer software related to enhancements in infrastructure and customer-facing technologies, technology for our third-party logistics operations, and voice-pick systems for our distribution centers, as well as amortization of leasehold improvements for our third-party logistics distribution centers and relocated or expanded distribution centers. Depreciation and amortization expense increased $3.3 million in 2009 from $22.0 million for 2008. The increase was primarily due to depreciation of warehouse equipment and amortization of intangible assets and leasehold

improvements related to the acquired Burrows business, as well as amortization of computer software related to warehouse automation and voice-pick technology. Voice-pick is hands-free communication technology that enables warehouse teammates to improve speed and accuracy as they compile and pick customer orders in the warehouse setting.

Other operating income, net. Other operating income, net, was $2.9 million, $5.2 million and $6.8 million for 2010, 2009 and 2008, including finance charge income of $2.3 million for 2010, $4.8 million for 2009, and $4.4 million for 2008 .

Operating earnings. Operating earnings for 2010 decreased 2.7% to $195.9 million from $201.3 million for 2009, which was increased 11.4% from $180.7 million for 2008. In comparing 2010 to 2009, the decrease in operating earnings was primarily due to an increase in pension expense, resulting from the termination of our defined benefit pension plan, and a decrease in gross margin, partially offset by a decrease in SG&A expenses. In comparing 2009 to 2008, the increase in operating earnings of $20.6 million was primarily due to sales to customers acquired from Burrows and other new business, partially offset by increased SG&A expenses to service the growth in sales.

Interest expense, net. Interest expense, net of interest earned on cash balances, was $14.3 million for 2010, as compared with $13.0 million for 2009 and $16.0 million for 2008. The increase of $1.3 million in 2010 compared to last year is primarily due to increases in commitment fees and amortization of deferred financing transaction costs related to a new revolving credit facility. Net interest expense for 2008 included a loss of $3.1 million on the termination of interest rate swaps. Excluding this loss, net interest expense increased slightly in 2009 compared to 2008.

Our effective interest rate was 6.8% on average borrowings of $209.8 million in 2010. Our effective interest rate was 6.0% on average borrowings of $217.4 million in 2009. Excluding the $3.1 million loss on interest rate swaps, the effective interest rate for 2008 was 5.7% on average borrowings of $226.3 million.

Income taxes. The provision for income taxes was $71.0 million for 2010, compared with $71.4 million for 2009, and $63.5 million for 2008. Our effective tax rate was 39.1% for 2010, as compared with 37.9% for 2009, and 38.5% for 2008. The lower effective tax rate for 2009 compared to 2010 and 2008 was primarily the result of recognizing tax benefits due to the conclusion of audits by the Internal Revenue Service of our 2007 and 2006 income tax returns.

Income from continuing operations. Income from continuing operations was $110.6 million for 2010, $116.9 million for 2009, and $101.3 million for 2008. The decrease for 2010 compared to 2009 is primarily due to a decrease in operating earnings of $5.3 million, which included a pension settlement charge of $11.9 million, net of tax. The increase for 2009 compared to 2008 is primarily due to an increase in operating earnings of $20.6 million and a decline in net interest expense of $3.0 million, partially offset by a $7.9 million greater income tax provision.

Loss from discontinued operations, net of tax. There was no income or loss from discontinued operations in 2010. Loss from discontinued operations, net of tax, was $12.2 million in 2009 and $7.9 million in 2008. The increased loss of $4.3 million for 2009 compared to 2008 was due to exiting the DTC business, including employee retention and lease exit costs, partially offset by a $3.2 million gain on the sale of the business.

Financial Condition, Liquidity and Capital Resources

Financial Condition. Accounts and notes receivable, net of allowances, decreased 5.3% to $472 million at December 31, 2010, from $498 million at December 31, 2009, primarily due to improved collections. Accounts receivable days outstanding (DSO), based on three months’ sales, improved to 19.6 days at December 31, 2010,

from 21.4 days at December 31, 2009, as a result of improved collections and increases in customer deposits compared to last year.

Merchandise inventories increased 4.4% to $720 million at December 31, 2010 from $690 million at December 31, 2009. Average annual inventory turnover was 10.4 and 10.6 in 2010 and 2009. The increase in merchandise inventories at 2010 year-end and the decline in inventory turnover for 2010 compared to the prior year primarily resulted from the inventory buildup for new customers. The improvement in average annual inventory turnover for 2009 compared to 2008 was the result of improved inventory management.

Liquidity and capital expenditures. The following table summarizes our consolidated statements of cash flows for the years ended December 31, 2010, 2009 and 2008:


*(in millions)*
	2010			2009			2008
Net cash provided by (used for) continuing operations:
Operating activities	$	244.6		$	165.3		$	62.9
Investing activities	$	(37.4	)	$	(21.2	)	$	(123.3	)
Financing activities	$	(142.4	)	$	(129.1	)	$	65.3
Net cash (used for) provided by discontinued operations	$	(1.7	)	$	73.3		$	(7.3	)

Cash and cash equivalents increased to $159 million at December 31, 2010 from $96 million at December 31, 2009. We generated cash from continuing operations of approximately $245 million in 2010, $165 million in 2009 and $63 million in 2008. Cash from continuing operations for 2010 was positively affected by operating earnings, a decrease in accounts and notes receivable resulting from improved collections and an increase in accounts payable, and was negatively affected by an increase in inventory for new customers. Cash from continuing operations for 2009 was positively affected by operating earnings and a decrease in accounts and notes receivable, and negatively affected by a decrease in accounts payable and an increase in inventory. Cash from continuing operations for 2008 was negatively affected by increases in accounts receivable and inventories largely as a result of the Burrows acquisition.

Cash used for investing activities increased to $37.4 million for 2010 from $21.2 million for 2009, which was decreased from $123.3 million for 2008. Capital expenditures were $41.3 million for 2010, primarily related to relocating or expanding distribution centers for new distribution and third-party logistics business, as well as continued investment in operational efficiency initiatives. Capital expenditures in 2010 also included investments in software for the continued implementation of voice-pick and customer-facing technologies and other technology infrastructure enhancements. These capital expenditures were partially offset by proceeds from the sale of properties acquired from Burrows.

In 2009, capital expenditures were $32.3 million, primarily related to our strategic initiatives, including leasehold improvements and information technology systems for our third-party logistics operations. During 2009, we also invested in infrastructure initiatives designed to improve operational efficiency in our operating units. We installed automation equipment in certain large distribution centers where the high volume of low unit-of-measure business benefits the most from the use of such equipment through productivity improvements, such as an increase in the number of lines-picked-per-hour. In addition, we installed voice-pick technology in 40 distribution centers in 2009. These capital expenditures were partially offset by proceeds from the sale of properties acquired from Burrows and the receipt of a $7.0 million purchase price adjustment.

Cash used for investing activities in 2008 was largely due to acquisition activity, as we invested $96.8 million in the Burrows business, including intangible assets. We acquired certain assets and liabilities of Burrows, in exchange for cash consideration of $17.5 million, net of a $7.0 million purchase price adjustment receivable at December 31, 2008, and including transaction costs, plus $56.1 million of assumed debt. The

assumed debt was satisfied in full on the acquisition date. We borrowed approximately $80 million under our revolving credit facility to fund this acquisition. In connection with the acquisition, we also acquired real property from Burrows in December 2008 for $17.0 million. Of the real property acquired, three properties were sold in 2010, two properties were sold in 2009, one is used in our operations and the remaining three are being offered for sale. In 2008, we invested $27.0 million in capital expenditures, primarily for software, warehouse equipment and additional land for possible future expansion of our headquarters.

Our financing activities used cash of $142.4 million in 2010 and $129.1 million in 2009 and provided $65.3 million of cash in 2008. In 2010, we reduced drafts payable by $101.4 million, paid dividends of $44.8 million and paid financing costs of $2.8 million. In 2009, proceeds of $63.0 million from the sale of the DTC business, as well as cash from operating activities of continuing operations and discontinued operations, were used primarily to reduce our revolving credit facility by $150.6 million, net of borrowings, and to pay dividends of $38.4 million. These decreases in cash were partially offset by an increase in drafts payable in 2009. In 2008, cash provided by financing activities was primarily due to net borrowings under the revolving credit facility of $74.1 million, partially offset by the payment of dividends of $33.0 million. The borrowings were used to partially fund the Burrows acquisition in 2008.

Cash generated by the operating activities of discontinued operations during 2009 was primarily from the collection of accounts receivable, partially offset by the payment of costs associated with exiting the DTC business.

Capital resources. Our sources of liquidity include cash and cash equivalents and a revolving credit facility. On June 7, 2010, we entered into a Credit Agreement with Bank of America, N.A., Wells Fargo Bank, N.A. and a syndication of banks. This agreement replaced an existing $306 million revolving credit facility (which was to expire in May 2011) with a $350 million revolving credit facility which expires on June 7, 2013 (the Revolving Credit Facility). The interest rate on the new facility, which is subject to adjustment quarterly, is based on, at our discretion, the London Interbank Offered Rate (LIBOR), the Federal Funds Rate or the Prime Rate, plus an adjustment based on our leverage ratio (Credit Spread). We are charged a commitment fee of between 37.5 and 62.5 basis points on the unused portion of the facility. At December 31, 2010, the following financial institutions had commitments under the facility: Bank of America, N.A., Wells Fargo Bank, N.A., SunTrust Bank, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A., Branch Banking & Trust Company, Citibank N.A., Comerica Bank, Fifth Third Bank, and PNC Bank N.A. We may utilize the Revolving Credit Facility for long-term strategic growth, capital expenditures, working capital and general corporate purposes. If we were unable to access the Revolving Credit Facility, it could impact our ability to fund these needs.

During 2010, we had no borrowings or repayments under the Revolving Credit Facility. At December 31, 2010, we had $10.4 million of letters of credit and no borrowings outstanding under the facility, leaving $339.6 million available for borrowing. Based on our leverage ratio at December 31, 2010, the interest rate under the Revolving Credit Facility, which is subject to adjustment quarterly, will remain unchanged at LIBOR plus 250 basis points at the next adjustment date.

We have $200 million of senior notes outstanding, which mature in 2016 and bear interest at 6.35%, payable semi-annually on April 15 and October 15 . The Revolving Credit Facility and senior notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. We believe we were in compliance with our debt covenants at December 31, 2010.

We paid quarterly cash dividends on our outstanding common stock at the rate of $0.177 per share during 2010 and $0.153 per share during 2009. Our annual dividend payout ratio for the three years ended December 31, 2010, was in the range of 35.5% to 40.7%. In February 2011, the Board of Directors approved a 13% increase in the amount of our quarterly dividend to $0.20 per share. We anticipate continuing to pay quarterly cash dividends

in the future. However, the payment of future dividends remains within the discretion of the Board of Directors and will depend upon our results of operations, financial condition, capital requirements and other factors.

In February 2011, the Board of Directors authorized a share repurchase program of up to $50 million of our outstanding common stock to be executed at the discretion of management over a three-year period, expiring in February 2014. The program is intended to offset shares issued in conjunction with our stock incentive plan and may be suspended or discontinued at any time.

We believe available financing sources, including cash generated from continuing operations and borrowings under the Revolving Credit Facility, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, payments of quarterly cash dividends, share repurchases and other cash requirements. While we believe that we will have the ability to meet our financing needs in the foreseeable future, changes in economic conditions may impact (i) the ability of financial institutions to meet their contractual commitments to us, (ii) the ability of our customers and suppliers to meet their obligations to us or (iii) our cost of borrowing.

Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on financial condition or liquidity.

Contractual Obligations

The following is a summary of our significant contractual obligations as of December 31, 2010:


*(in millions)*
Contractual obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
6.35% Senior Notes maturing April 2016 including interest payments ⁽¹⁾	$	269.9	$	12.7	$	25.4	$	25.4	$	206.4
Operating leases ⁽²⁾		148.6		42.0		62.6		30.8		13.2
Purchase obligations ⁽²⁾		112.7		31.9		62.7		18.1		—
Unrecognized tax benefits, net ⁽³⁾		12.8		0.1		—		—		—
Capital lease obligations ⁽¹⁾		7.0		2.2		2.7		1.6		0.5
Other long-term liabilities ⁽⁴⁾		24.4		2.6		4.6		4.1		13.1

Total contractual obligations ⁽⁵⁾	$	575.4	$	91.5	$	158.0	$	80.0	$	233.2

⁽¹⁾

See Note 10 of Notes to Consolidated Financial Statements. Debt is assumed to be held to maturity with interest paid at the stated rate in effect at December 31, 2010.

⁽²⁾

See Note 18 of Notes to Consolidated Financial Statements.

⁽³⁾

Total liability for unrecognized tax benefits, net, includes $12.7 million, for which we cannot reasonably estimate the timing of cash settlement.

⁽⁴⁾

Other long-term liabilities include estimated minimum required payments for our unfunded retirement plan for certain officers. See Note 14 of Notes to Consolidated Financial Statements. Certain long-term liabilities, including deferred tax liabilities and post-retirement benefit obligations, are excluded as we cannot reasonably estimate the timing of payments for these items.

⁽⁵⁾

Excludes certain contingent contractual obligations that are required to be paid in the event that performance targets specified by customer contracts are not achieved. See Note 18 of Notes to Consolidated Financial Statements .

Critical Accounting Policies

Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We continually evaluate the accounting policies and estimates used to prepare the financial statements.

Critical accounting policies are defined as those policies that relate to estimates that require us to make assumptions about matters that are highly uncertain at the time the estimate is made and could have a material impact on our results due to changes in the estimate or the use of different assumptions that could reasonably have been used. Our estimates are generally based on historical experience and various other assumptions that are judged to be reasonable in light of the relevant facts and circumstances. Because of the uncertainty inherent in such estimates, actual results may differ. We believe our critical accounting policies and estimates include allowances for losses on accounts and notes receivable, inventory valuation, accounting for goodwill and long-lived assets, self-insurance liabilities, and supplier incentives.

Allowances for losses on accounts and notes receivable. We maintain valuation allowances based upon the expected collectability of accounts and notes receivable. The allowances include specific amounts for accounts that are likely to be uncollectible, such as customer bankruptcies and disputed amounts, and general allowances for accounts that may become uncollectible. These allowances are estimated based on a number of factors, including industry trends, current economic conditions, creditworthiness of customers, age of the receivables, changes in customer payment patterns, and historical experience. At December 31, 2010, accounts and notes receivable were $471.7 million, net of allowances of $15.4 million. An unexpected bankruptcy or other adverse change in the financial condition of a customer could result in increases in these allowances, which could have a material effect on the results of operations.

Inventory valuation. Merchandise inventories are valued at the lower of cost or market, with cost determined using the last-in, first-out (LIFO) method. An actual valuation of inventory under the LIFO method is made only at the end of the year based on the inventory levels and costs at that time. LIFO calculations are required for interim reporting purposes and are based on estimates of the expected mix of products in year-end inventory. In addition, inventory valuation includes estimates of allowances for obsolescence and variances between actual inventory on-hand and perpetual inventory records that can arise between physical inventory dates. These estimates are based on factors such as the age of inventory and historical trends. At December 31, 2010, the carrying value of inventory was $720.1 million, which is $93.0 million less than the value of inventory accounted for on a current cost or first-in, first out (FIFO) basis.

Goodwill and long-lived assets. Goodwill represents the excess of consideration paid over the fair value of identifiable net assets acquired. Long-lived assets, which are a component of identifiable net assets, include intangible assets with finite useful lives, property and equipment, and computer software costs. Intangible assets with finite useful lives consist primarily of customer relationships and non-compete agreements acquired through business combinations. Certain assumptions and estimates are employed in determining the fair value of identifiable net assets acquired.

We evaluate goodwill for impairment annually and whenever events occur or changes in circumstance indicate that the carrying amount of goodwill may not be recoverable. In performing the impairment test, we estimate the fair value of the reporting unit using valuation techniques which can include comparable multiples of the reporting unit’s earnings before interest, taxes, depreciation and amortization (EBITDA) and discounted cash flows. The EBITDA multiples are based on an analysis of current enterprise valuations and recent acquisition prices of similar companies, if available. The carrying value of the reporting unit is then compared to its fair value to determine potential impairment. Goodwill totaled $247.3 million at December 31, 2010.

Long-lived assets, which exclude goodwill, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We assess long-

lived assets for potential impairment by comparing the carrying value of an asset, or group of related assets, to its estimated undiscounted future cash flows. At December 31, 2010, long-lived assets included property and equipment of $101.5 million, net of accumulated depreciation; intangible assets of $24.8 million, net of accumulated amortization; and computer software costs of $27.3 million, net of accumulated amortization.

We did not record any impairment losses related to goodwill or long-lived assets in 2010. However, the impairment review of goodwill and long-lived assets requires the extensive use of accounting judgment, estimates and assumptions. The application of alternative assumptions could produce materially different results.

Self-insurance liabilities. We are self-insured for most employee healthcare, workers’ compensation and automobile liability costs; however, we maintain insurance for individual losses exceeding certain limits. Liabilities are estimated for healthcare costs using current and historical claims data. Liabilities for workers’ compensation and automobile liability claims are estimated using historical claims data and loss development factors. If the underlying facts and circumstances of existing claims change or historical trends are not indicative of future trends, then we may be required to record additional expense that could have a material effect on the results of operations. Self-insurance liabilities recorded in our consolidated balance sheet for employee healthcare, workers’ compensation and automobile liability costs totaled $11.2 million at December 31, 2010.

Supplier incentives. We have contractual arrangements with certain suppliers that provide incentives, including operational efficiency and performance-based incentives, on a monthly, quarterly or annual basis. These incentives are recognized as a reduction in cost of goods sold as targets become probable of achievement. Supplier incentives receivable are recorded for interim and annual reporting purposes and are based on our estimate of the amounts which are expected to be realized. If we do not achieve required targets under certain programs as estimated, it could have a material effect on our results of operations.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 1 of Notes to the Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We provide credit in the normal course of business to our customers and are exposed to losses resulting from nonpayment or delinquent payment by customers. We perform initial and ongoing credit evaluations of our customers and maintain reserves for estimated credit losses. We measure our performance in collecting customer accounts receivable in terms of days sales outstanding (DSO). Accounts receivable from continuing operations at December 31, 2010, were $471.7 million, and DSO at December 31, 2010, was 19.6, based on three months’ sales. A hypothetical increase in DSO of one day would result in a decrease in our cash balances, an increase in borrowings against our revolving credit facility, or a combination thereof of approximately $24 million.

We are exposed to market risk from changes in interest rates related to our revolving credit facility. We had no outstanding borrowings and $10.4 million in letters of credit under the facility at December 31, 2010. A hypothetical increase in interest rates of 100 basis points would result in a potential reduction in future pre-tax earnings of approximately $0.1 million per year for every $10 million of outstanding borrowings under the revolving credit facility.

Item 8. Financial Statements and Supplementary Data

See Item 15, Exhibits and Financial Statement Schedules.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

We carried out an evaluation, with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2010.

There has been no change in our internal control over financial reporting during our last fiscal quarter (our fourth quarter in the case of an annual report) ended December 31, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not applicable.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), for Owens & Minor, Inc. (the company). Under the supervision and with the participation of management, including the company’s principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2010, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the COSO framework , management concluded that the company’s internal control over financial reporting was effective as of December 31, 2010.

The effectiveness of the company’s internal control over financial reporting as of December 31, 2010, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included in this annual report.

Craig R. Smith

President & Chief Executive Officer

James L. Bierman

Senior Vice President & Chief Financial Officer

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Owens & Minor, Inc.:

We have audited Owens & Minor, Inc.’s (the Company) internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Owens & Minor, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Owens & Minor, Inc. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2010, and our report dated February 25, 2011, expressed an unqualified opinion on those consolidated financial statements.

LOGO

Richmond, Virginia

February 25, 2011

Part III

Items 10-14.

Information required by Items 10-14 can be found under Corporate Officers on page 8 of the Annual Report (or at the end of the electronic filing of this Form 10-K) and the registrant’s 2010 Proxy Statement pursuant to instructions (1) and G(3) of the General Instructions to Form 10-K.

Because our common stock is listed on the New York Stock Exchange (NYSE), our Chief Executive Officer is required to make, and he has made, an annual certification to the NYSE stating that he was not aware of any violation by of the corporate governance listing standards of the NYSE. Our Chief Executive Officer made his annual certification to that effect to the NYSE as of May 20, 2010. In addition, we have filed, as exhibits to this Annual Report on Form 10-K, the certifications of our principal executive officer and principal financial officer required under Sections 906 and 302 of the Sarbanes-Oxley Act of 2002 to be filed with the Securities and Exchange Commission regarding the quality of our public disclosure.

Part IV

Item 15. Exhibits and Financial Statement Schedules

a) The following documents are filed as part of this report:


	Page
Consolidated Statements of Income for the Years Ended December 31, 2010, 2009 and 2008		30
Consolidated Balance Sheets as of December 31, 2010 and 2009		31
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008		32
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2010, 2009 and 2008		33
Notes to Consolidated Financial Statements		34
Report of Independent Registered Public Accounting Firm		65
Selected Quarterly Financial Information (unaudited)		66

b) Exhibits:

See Index to Exhibits on page 67.

OWENS & MINOR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)


Year ended December 31,	2010			2009			2008
Net revenue	$	8,123,608		$	8,037,624		$	7,243,237
Cost of goods sold		7,315,883			7,223,237			6,502,129

Gross margin		807,725			814,387			741,108
Selling, general, and administrative expenses		564,169			592,340			544,894
Pension expense		21,366			752			355
Depreciation and amortization		29,148			25,265			21,955
Other operating income, net		(2,894	)		(5,245	)		(6,821	)

Operating earnings		195,936			201,275			180,725
Interest expense, net		14,323			13,028			15,999

Income from continuing operations before income taxes		181,613			188,247			164,726
Income tax provision		71,034			71,388			63,469

Income from continuing operations		110,579			116,859			101,257
Loss from discontinued operations, net of tax		—			(12,201	)		(7,930	)

Net income	$	110,579		$	104,658		$	93,327

Income (loss) per common share—basic:
Continuing operations	$	1.76		$	1.87		$	1.64
Discontinued operations		—			(0.19	)		(0.13	)

Net income per share—basic	$	1.76		$	1.68		$	1.51

Income (loss) per common share—diluted:
Continuing operations	$	1.75		$	1.86		$	1.63
Discontinued operations		—			(0.19	)		(0.13	)

Net income per share—diluted	$	1.75		$	1.67		$	1.50

Cash dividends per common share	$	0.708		$	0.613		$	0.533

See accompanying notes to consolidated financial statements.

OWENS & MINOR, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


December 31,	2010			2009
Assets
Current assets
Cash and cash equivalents	$	159,213		$	96,136
Accounts and notes receivable, net		471,661			498,080
Merchandise inventories		720,116			689,889
Other current assets		52,799			57,962

Total current assets		1,403,789			1,342,067
Property and equipment, net		101,545			84,965
Goodwill, net		247,271			247,271
Intangible assets, net		24,825			27,809
Other assets, net		44,609			44,976

Total assets	$	1,822,039		$	1,747,088

Liabilities and shareholders’ equity
Current liabilities
Accounts and drafts payable	$	531,735		$	546,989
Accrued payroll and related liabilities		20,588			34,885
Deferred income taxes		39,082			25,784
Other accrued liabilities		102,797			90,519
Current liabilities of discontinued operations		279			1,939

Total current liabilities		694,481			700,116
Long-term debt, excluding current portion		209,096			208,418
Deferred income taxes		12,107			8,947
Other liabilities		48,837			60,428

Total liabilities		964,521			977,909

Commitments and contingencies
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—63,433 shares and 62,870 shares		126,867			83,827
Paid-in capital		165,447			193,905
Retained earnings		570,320			504,480
Accumulated other comprehensive loss		(5,116	)		(13,033	)

Total shareholders’ equity		857,518			769,179

Total liabilities and shareholders’ equity	$	1,822,039		$	1,747,088

See accompanying notes to consolidated financial statements.

OWENS & MINOR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


*(in thousands)*

Year ended December 31,	2010			2009			2008
Operating activities:
Net income	$	110,579		$	104,658		$	93,327
Adjustments to reconcile net income to cash provided by operating activities of continuing operations:
Loss from discontinued operations, net of tax		—			12,201			7,930
Depreciation and amortization		29,148			25,265			21,955
Pension expense		21,366			752			355
Pension contributions		(13,850	)		(1,500	)		(1,500	)
Share-based compensation expense		6,358			7,035			7,563
Deferred income tax (benefit) provision		(94	)		10,869			17,618
Provision for losses on accounts and notes receivable		1,808			3,976			4,274
Provision for LIFO reserve		11,088			2,708			13,172
Loss on interest rate swaps		—			—			3,141
Changes in operating assets and liabilities:
Accounts and notes receivable		24,611			19,255			(48,464	)
Merchandise inventories		(41,315	)		(13,528	)		(56,156	)
Accounts payable		86,146			(18,755	)		(13,584	)
Net change in other assets and liabilities		9,334			13,756			13,859
Other, net		(596	)		(1,372	)		(612	)

Cash provided by operating activities of continuing operations		244,583			165,320			62,878

Investing activities:
Additions to property and equipment		(31,221	)		(19,746	)		(17,669	)
Additions to computer software and intangible assets		(10,128	)		(12,543	)		(9,281	)
Net cash received (paid) related to acquisitions of businesses		—			6,994			(96,790	)
Proceeds from sale of property and equipment		3,926			4,080			409

Cash used for investing activities of continuing operations		(37,423	)		(21,215	)		(123,331	)

Financing activities:
Payments on revolving credit facility		—			(301,964	)		(668,836	)
Borrowings on revolving credit facility		—			151,386			742,914
Cash dividends paid		(44,780	)		(38,370	)		(33,048	)
(Decrease) increase in drafts payable		(101,400	)		52,718			11,316
Proceeds from exercise of stock options		7,234			6,593			8,968
Excess tax benefits related to share-based compensation		2,091			2,570			3,421
Proceeds from termination of interest rate swaps		—			—			3,795
Other, net		(5,568	)		(2,045	)		(3,267	)

Cash (used for) provided by financing activities of continuing operations		(142,423	)		(129,112	)		65,263

Discontinued operations:
Operating cash flows		(1,660	)		10,257			(7,115	)
Investing cash flows		—			63,000			(204	)

Net cash (used for) provided by discontinued operations		(1,660	)		73,257			(7,319	)

Net increase (decrease) in cash and cash equivalents		63,077			88,250			(2,509	)
Cash and cash equivalents at beginning of year		96,136			7,886			10,395

Cash and cash equivalents at end of year	$	159,213		$	96,136		$	7,886

See accompanying notes to consolidated financial statements.

OWENS & MINOR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


*(in thousands, except per share data)*
	Common Shares Outstanding		Common Stock ($2 par value)		Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance December 31, 2007		61,311	$	81,748	$	161,978		$	377,913		$	(7,280	)	$	614,359
Net income									93,327						93,327
Other comprehensive loss:
Retirement and pension benefit plan adjustments, net of $3,049 tax benefit												(4,768	)		(4,768	)
Cash flow hedge activity, net of $32 tax benefit												(48	)		(48	)

Comprehensive income															88,511

Dividends declared ($0.533 per share)									(33,048	)					(33,048	)
Share-based compensation expense, exercises and other		851		1,133		18,096									19,229

Balance December 31, 2008		62,162		82,881		180,074			438,192			(12,096	)		689,051
Net income									104,658						104,658
Other comprehensive loss:
Retirement and pension benefit plan adjustments, net of $566 tax benefit												(885	)		(885	)
Cash flow hedge activity, net of $32 tax benefit												(52	)		(52	)

Comprehensive income															103,721

Dividends declared ($0.613 per share)									(38,370	)					(38,370	)
Share-based compensation expense, exercises and other		708		946		13,831									14,777

Balance December 31, 2009		62,870		83,827		193,905			504,480			(13,033	)		769,179
Net income									110,579						110,579
Other comprehensive income (loss):
Retirement and pension benefit plan adjustments, net of $5,094 tax expense												7,967			7,967
Cash flow hedge activity, net of $32 tax benefit												(50	)		(50	)

Comprehensive income															118,496

Stock split (three-for-two)				42,126		(42,126	)								—
Dividends declared ($0.708 per share)									(44,739	)					(44,739	)
Share-based compensation expense, exercises and other		563		914		13,668									14,582

Balance December 31, 2010		63,433	$	126,867	$	165,447		$	570,320		$	(5,116	)	$	857,518

See accompanying notes to consolidated financial statements.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, unless otherwise indicated)

Note 1—Summary of Significant Accounting Policies

Owens & Minor, Inc. and its wholly owned subsidiaries (we, us, or our) is a Fortune 500 company providing distribution, third-party logistics, and other supply-chain management services to healthcare providers and suppliers of medical and surgical products, and is a leading national distributor of medical and surgical supplies to the acute-care market. Prior to January 2009, we had operations in the direct-to-consumer diabetes supply (DTC) business.

Basis of Presentation. The consolidated financial statements include the accounts of Owens & Minor, Inc. and its wholly owned subsidiaries in conformity with U.S generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated.

On March 31, 2010, we effected a three-for-two stock split of our outstanding shares of common stock in the form of a stock dividend of one share of common stock for every two shares outstanding to stockholders of record on March 15, 2010 (Stock Split). All share and per-share data (except par value) have been retroactively adjusted to reflect the Stock Split for all periods presented.

In January 2009, we exited the DTC business. Accordingly, the DTC business is reported as discontinued operations for all periods presented and, unless otherwise noted, all amounts presented in the accompanying consolidated financial statements, including note disclosures, contain only information related to our continuing operations.

Reclassifications. Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Estimates are used for, but are not limited to, the allowances for losses on accounts and notes receivable, inventory valuation allowances, supplier incentives, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, valuation of property held for sale, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies. Actual results may differ from these estimates.

Cash and Cash Equivalents. Cash and cash equivalents includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash and cash equivalents are stated at cost.

Accounts and Notes Receivable, Net. Accounts receivable from customers are recorded at the invoiced amount. We assess finance charges on overdue accounts receivable that are recognized as other operating income based on their estimated ultimate collectability. We have arrangements with certain customers under which they make deposits on account. Customer deposits in excess of outstanding receivable balances are classified as other current liabilities.

We maintain valuation allowances based upon the expected collectability of accounts and notes receivable. Our allowances include specific amounts for accounts that are likely to be uncollectible, such as customer bankruptcies and disputed amounts and general allowances for accounts that may become uncollectible. Allowances are estimated based on a number of factors, including industry trends, current economic conditions, creditworthiness of customers, age of the receivables, changes in customer payment patterns, and historical experience. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Merchandise Inventories. Merchandise inventories are valued at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method.

Property and Equipment. Property and equipment are stated at cost less accumulated depreciation or, if acquired under capital leases, at the lower of the present value of minimum lease payments or fair market value at the inception of the lease less accumulated amortization. Depreciation and amortization expense for financial reporting purposes is computed on a straight-line method over the estimated useful lives of the assets or, for capital leases and leasehold improvements, over the term of the lease, if shorter. In general, the estimated useful lives for computing depreciation and amortization are four to eight years for warehouse equipment, five to 40 years for buildings and building improvements, and three to eight years for computers, furniture and fixtures, and office and other equipment. Straight-line and accelerated methods of depreciation are used for income tax purposes. Normal maintenance and repairs are expensed as incurred, and renovations and betterments are capitalized.

Leases. We have entered into non-cancelable agreements to lease most of our office and warehouse facilities with remaining terms generally ranging from one to ten years. We also lease most of our transportation and material handling equipment for terms generally ranging from five to eight years. Certain information technology assets embedded in an outsourcing agreement are accounted for as capital leases. Leases are classified as operating leases or capital leases at their inception. Rent expense for leases with rent holidays or pre-determined rent increases are recognized on a straight-line basis over the lease term. Incentives and allowances for leasehold improvements are deferred and recognized as a reduction of rent expense over the lease term.

Goodwill. We evaluate goodwill for impairment annually, as of April 30 , and whenever events occur or changes in circumstance indicate that the carrying amount of goodwill may not be recoverable. We test goodwill for impairment by first comparing the carrying amount to the fair value of the reporting unit. If the fair value of the reporting unit is determined to be less than its carrying value, a second step is performed to measure the goodwill impairment loss as the excess of the carrying value of the reporting unit’s goodwill over the estimated fair value of its goodwill. We estimate the fair value of the reporting unit using valuation techniques which can include comparable multiples of the unit’s earnings before interest, taxes, depreciation and amortization (EBITDA) and present value of expected cash flows. The EBITDA multiples are based on an analysis of current enterprise values and recent acquisition prices of similar companies, if available. During 2010, 2009, and 2008, the fair value of the reporting units substantially exceeded their carrying value.

Intangible Assets. Intangible assets acquired through purchases or business combinations are stated at fair value at the acquisition date, net of accumulated amortization. Intangible assets consisting of customer relationships, non-competition agreements and trademarks are amortized over their estimated useful lives. In determining the useful life of an intangible asset, we consider our historical experience in renewing or extending similar arrangements. Customer relationships are generally amortized for 15 years. Other intangible assets are amortized on a straight-line basis, generally for periods between three and 15 years.

Computer Software. We develop and purchase software for internal use. Software development costs incurred during the application development stage are capitalized. Once the software has been installed and tested, and is ready for use, additional costs incurred in connection with the software are expensed as incurred. Capitalized computer software costs are amortized over the estimated useful life of the software, usually between three and five years. Computer software costs are included in other assets, net, in the consolidated balance sheets. Unamortized software at December 31, 2010 and 2009 was $27.3 million and $25.3 million. Depreciation and amortization expense includes $8.1 million, $6.7 million and, $5.9 million of software amortization for the years ended December 31, 2010, 2009 and 2008.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Long-Lived Assets. Long-lived assets, which excludes goodwill, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We assess long-lived assets for potential impairment by comparing the carrying value of an asset, or group of related assets, to their estimated undiscounted future cash flows.

Self-Insurance Liabilities. We are self-insured for most employee healthcare, workers’ compensation and automobile liability costs; however, we maintain insurance for individual losses exceeding certain limits. Liabilities are estimated for healthcare costs using current and historical claims data. Liabilities for workers’ compensation and automobile liability claims are estimated using historical claims data and loss development factors. If the underlying facts and circumstances of existing claims change or historical trends are not indicative of future trends, then we may be required to record additional expense or reductions to expense. Self-insurance liabilities are included in other accrued liabilities on the consolidated balance sheets.

Revenue Recognition. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price or fee is fixed or determinable, and collectability is reasonably assured.

Under most of our healthcare provider distribution contracts, title passes to the customer when the product is received by the customer. We record product revenue at the time that shipment is completed. Distribution fee revenue, when calculated as a mark-up of the product cost, is also recognized at the time that shipment is completed.

Revenue for activity-based distribution fees and other services is recognized as work is performed and as amounts are earned. Depending on the specific contractual provisions and nature of the deliverable, revenue from services may be recognized on a straight-line basis over the term of the service, on a proportional performance model, based on level of effort, or when final deliverables have been provided. Additionally, we generate fees from arrangements that include performance targets related to cost-savings initiatives for customers that result from our supply-chain management services. Achievement against performance targets, measured in accordance with contractual terms, may result in additional fees paid to us or, if performance targets are not achieved, we may be obligated to refund or reduce a portion of our fees to provide credits toward future purchases by the customer. For these arrangements, all contingent revenue is deferred and recognized as the performance target is achieved and the applicable contingency is released. When we determine that a loss is probable under a contract, the estimated loss is accrued.

We allocate revenue for arrangements with multiple deliverables meeting the criteria for a separate unit of accounting using the relative fair value method and recognize revenue for each deliverable in accordance with applicable revenue recognition criteria.

In most cases, we record revenue gross, as we are the primary obligor in our sales arrangements and bear the risk of general and physical inventory loss. We also have some discretion in supplier selection and carry all credit risk associated with sales. Sales taxes collected from customers and remitted to governmental authorities are excluded from revenues.

Shipping and Handling Costs. Shipping and handling costs are included in selling, general and administrative expenses on the consolidated statements of income and include costs to store, move and prepare products for shipment, as well as costs to deliver products to customers. Shipping and handling costs billed to customers are included in net revenues. Freight costs incurred for shipments of products from manufacturers to our distribution centers are included in cost of goods sold.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Supplier Incentives. We have contractual arrangements with certain suppliers that provide incentives, including cash discounts for prompt payment, operational efficiency and performance-based incentives. These incentives are recognized as a reduction in cost of goods sold as targets become probable of achievement.

Share-Based Compensation. We account for share-based payments to employees at fair value and recognize the related expense in selling, general and administrative expenses over the service period for awards expected to vest.

Derivative Financial Instruments. During 2008, we held interest rate swaps as part of our interest rate risk management strategy. The purpose of these swaps was to maintain a mix of fixed to floating rate financing in order to manage interest rate risk. These swaps were recognized on the balance sheet at their fair value, based on estimates of the prices obtained from a dealer. All of the interest rate swaps were designated as hedges of the fair value of a portion of long-term debt using the shortcut method, as both the swaps and the long-term debt met all of the conditions for the use of this method. Accordingly, no net gains or losses were recorded in the consolidated statements of income related to our underlying debt and interest rate swaps. The fair value of the swaps was determined using observable market inputs (Level 2). The swaps were terminated in the third quarter of 2008, and we did not hold any derivative financial instruments during 2010 or 2009.

Income Taxes. We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income from continuing operations in the period that includes the enactment date. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized. When we have claimed tax benefits that may be challenged by a tax authority, an estimate of the effect of these uncertain tax positions is recorded. It is our policy to provide for uncertain tax positions and the related interest and penalties based upon an assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent that the tax outcome of these uncertain tax positions changes, based on our assessment, such changes in estimate may impact the income tax provision in the period in which such determination is made.

Fair Value Measurements. Fair value is determined based on assumptions that a market participant would use in pricing an asset or liability. The assumptions used are in accordance with a three-tier hierarchy, defined by GAAP, that draws a distinction between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the use of present value and other valuation techniques in the determination of fair value (Level 3).

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. Property held for sale is reported at estimated fair value less selling costs with fair value determined based on recent sales prices for comparable properties in similar locations (Level 2). The fair value of our long-term debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Notes 7, 10 and 11 for the fair value of property held for sale, debt instruments and interest rate swaps.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Income Per Share. Basic and diluted income per share is calculated pursuant to the two-class method, under which unvested share-based payment awards containing nonforfeitable rights to dividends are participating securities.

Recent Accounting Pronouncements

In the first quarter of 2010, we adopted a Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) relating to disclosures about fair value measurements. This ASU clarified existing guidance for disclosures about inputs and valuation techniques used in estimating fair value measurements, requires additional disclosures for significant transfers in and out of Levels 1 and 2, and requires a reconciliation of Level 3 activity to be presented on a gross basis. The adoption of this update had no impact on our financial position and results of operations or disclosures.

In the first quarter of 2010, we adopted an ASU that provided additional guidance relating to the evaluation and disclosure of subsequent events. The adoption of this guidance had no impact on our financial position or results of operations.

In July 2010, FASB issued an ASU requiring increased disclosures related to financing receivables. We adopted this guidance when it became effective in the fourth quarter of 2010. The adoption of this guidance did not have an impact on our financial statements.

In December 2010, FASB issued an ASU regarding how the carrying amount of a reporting unit should be calculated when performing the first step of the goodwill impairment test. We will adopt this guidance when it becomes effective in the first quarter of 2011. We do not expect this guidance to have an impact on our financial statements.

In December 2010, FASB issued an ASU regarding disclosure of supplementary pro forma information for business combinations. We will adopt this guidance prospectively for business combinations completed after December 31, 2010. The adoption of this guidance will not have an impact on our financial statements, except for disclosures.

In the fourth quarter of 2009, FASB issued an ASU for multiple deliverable revenue arrangements. The update requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The update eliminates the residual method of revenue allocation and requires revenues to be allocated using the relative selling price method. We will adopt this update prospectively for revenue arrangements entered into or materially modified beginning January 1, 2011. We do not expect that the adoption of this guidance will have a material impact on our financial position and results of operations.

Note 2—Significant Risks and Uncertainties

Many of our hospital customers are represented by group purchasing organizations (GPOs) that contract with us for distribution services on behalf of the GPO members. GPOs representing a significant portion of our business are Novation, LLC (Novation), MedAssets Inc. (MedAssets) and its subsidiary Broadlane, Inc. (Broadlane) and Premier Purchasing Partners, L.P. (Premier). Members of Novation, Broadlane, MedAssets and Premier have incentives to purchase from their primary selected distributor; however, they operate independently and are free to negotiate directly with distributors and manufacturers. For 2010, 2009 and 2008, net revenue from

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

hospitals under contract with these GPOs represented the following percentages of our net revenue annually: Novation—37% to 38%; Broadlane and MedAssets combined—21% to 22%; and Premier—20%.

Net revenue from sales of product supplied by subsidiaries of Covidien Ltd. and Johnson & Johnson Healthcare Systems, Inc. represented approximately 14% and 10% of our net revenue annually for 2010, 2009 and 2008.

Note 3—Acquisitions of Businesses

On October 1, 2008, we acquired certain assets and liabilities of The Burrows Company (Burrows), a Chicago-based, privately-held distributor of medical and surgical supplies to the acute-care market, and entered into an agreement to purchase certain real property used in the operation of the business. The acquisition cost was approximately $90.6 million, including transaction costs, comprised of $17.5 million of cash paid at acquisition, net of a $7.0 million purchase price adjustment receivable at December 31, 2008, $56.1 million of assumed debt which was satisfied in full on the acquisition date, and $17.0 million cash paid in December 2008 for the real property. The acquisition was financed with borrowings under our revolving credit facility and available cash.

The group of assets acquired constitutes a business; therefore, the acquisition was accounted for as a business combination. The acquired assets and liabilities were recorded based on their estimated fair values as of the acquisition date. During the third quarter of 2009, we finalized our allocation of the purchase price, including the values assigned to real property, acquired customer relationships, a non-compete agreement, involuntary termination costs, and lease exit liabilities. These adjustments resulted in a $5.1 million decrease in goodwill. Approximately $14.4 million of the purchase price has been allocated to goodwill, all of which is deductible for tax purposes over 15 years.

The following table presents the adjusted purchase price allocation of the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:


Purchase allocation
Assets acquired
Accounts receivable	$	37,484
Inventory		58,164
Other current assets		292
Property and equipment		2,094
Property held for sale		15,150
Intangible assets		13,900
Goodwill		14,425

Total assets acquired		141,509

Liabilities assumed
Current liabilities		51,411

Total liabilities assumed		51,411

Net assets acquired, less cash assumed	$	90,098

The results of operations of the acquired business are included in our financial statements as of the acquisition date. The unaudited pro forma impact of the acquisition, as if the acquisition had been completed as

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

of the beginning of 2008 is an increase of less than 10% of consolidated revenues. The unaudited pro forma impact of the acquisition on income from continuing operations and income from continuing operations per diluted common share for 2008 is not material.

Note 4—Discontinued Operations

In January 2009, we sold certain assets of the DTC business to Liberty Healthcare Group, Inc., a subsidiary of Medco Health Solutions, Inc., for $63.0 million in cash and recognized a gain on sale of $3.2 million.

There were no revenues or income or loss from discontinued operations in 2010. The following table provides summary financial information for the DTC business for the years ended December 31, 2009 and 2008:


December 31,	2009			2008
Revenue	$	—		$	94,417

Loss from discontinued operations before income taxes	$	(19,570	)	$	(12,487	)
Income tax benefit		7,369			4,557

Loss from discontinued operations	$	(12,201	)	$	(7,930	)

We incurred charges associated with exiting the DTC business during 2009 related to the valuation of accounts receivable, as we entered into an agreement with a third party during 2009 to pursue collection of remaining accounts receivable; losses on the disposal of other remaining assets; costs associated with leased facilities; and payroll costs, including severance. We incurred charges totaling $7.8 million in 2008 for costs associated with exiting the DTC business, including abandoned software, employee severance and accrued contract termination costs. No debt was required to be repaid as a result of the sale. We elected not to allocate a portion of consolidated interest expense to discontinued operations.

Included in the consolidated balance sheets at December 31, 2010 and 2009 are $0.3 million and $1.9 million of accrued liabilities associated with leased facilities of the discontinued DTC business.

Note 5—Accounts and Notes Receivable, Net

Allowances for losses on accounts and notes receivable of $15.4 million, $16.4 million and $14.8 million have been applied as reductions of accounts receivable at December 31, 2010, 2009, and 2008. Write-offs of accounts and notes receivable were $2.9 million, $2.4 million and $2.8 million for 2010, 2009 and 2008.

Note 6—Merchandise Inventories

At December 31, 2010 and 2009, we had inventory of $720.1 million and $689.9 million. If LIFO inventories had been valued on a current cost or first-in, first-out (FIFO) basis, they would have been greater by $93.0 million and $81.9 million as of December 31, 2010 and 2009.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Note 7—Property and Equipment

Property and equipment consists of the following:


December 31,	2010			2009
Warehouse equipment	$	72,914		$	57,884
Computer equipment		34,006			32,665
Building and improvements		25,204			25,128
Leasehold improvements		25,400			15,613
Land and improvements		13,778			13,759
Furniture and fixtures		10,987			10,586
Office equipment and other		8,504			5,904

		190,793			161,539
Accumulated depreciation and amortization		(89,248	)		(76,574	)

Property and equipment, net	$	101,545		$	84,965

Depreciation and amortization expense for property and equipment was $18.0 million, $15.6 million, and $13.9 million for the years ended December 31, 2010, 2009, and 2008.

Property held for sale of $7.4 million and $11.5 million at December 31, 2010 and 2009 is included in other assets, net, in the consolidated balance sheets. We are actively marketing the property for sale; however, the ultimate timing is dependent on local market conditions.

Note 8—Goodwill and Intangible Assets

Goodwill was $247.3 million at December 31, 2010 and 2009. Goodwill was reduced $5.1 million in 2009 to reflect a purchase price allocation adjustment related to the Burrows acquisition.

Intangible assets at December 31, 2010 and 2009 are as follows:


	2010						2009
	Customer Relationships			Other Intangibles			Customer Relationships			Other Intangibles
Gross intangible assets	$	31,300		$	4,670		$	31,300		$	4,631
Accumulated amortization		(7,257	)		(3,888	)		(5,187	)		(2,935	)

Net intangible assets	$	24,043		$	782		$	26,113		$	1,696

Weighted average useful life		15 years			5 years			15 years			5 years

Amortization expense for intangible assets was $3.0 million each for 2010 and 2009 and $2.1 million for 2008.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $2.8 million for 2011 and $2.1 million annually for 2012 through 2015.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Note 9—Accounts and Drafts Payable

Accounts and drafts payable consists of the following:


December 31,	2010		2009
Accounts payable—trade	$	524,835	$	438,689
Drafts payable		6,900		108,300

Total	$	531,735	$	546,989

Drafts payable are checks written in excess of bank balances to be funded upon clearing the bank.

Note 10—Debt

Debt consists of the following:


December 31,	2010						2009
December 31,	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
6.35% Senior Notes, $200 million par value, maturing April 2016	$	204,785		$	203,250		$	205,682		$	196,250
Capital leases		6,092			6,092			4,236			4,236
Other		29			29			999			999

Total debt		210,906			209,371			210,917			201,485
Less current maturities		(1,810	)		(1,810	)		(2,499	)		(2,499	)

Long-term debt	$	209,096		$	207,561		$	208,418		$	198,986

At December 2010 and 2009, we had $200 million of 6.35% Senior Notes outstanding, which mature on April 15, 2016 (Senior Notes). Interest on the Senior Notes is payable semi-annually on April 15 and October 15. We may redeem the Senior Notes, in whole or in part, at a redemption price of the greater of 100% of the principal amount of the Senior Notes or the present value of remaining scheduled payments of principal and interest discounted at the applicable Treasury Rate plus 0.25%.

On June 7, 2010, we entered into a Credit Agreement with Bank of America, N.A., Wells Fargo Bank, N.A and a syndication of banks. This agreement replaced an existing $306 million revolving credit facility (which was to expire in May 2011) with a $350 million revolving credit facility which expires on June 7, 2013 (the Revolving Credit Facility). Under the new facility, we have the ability to request two one-year extensions and to request an increase in aggregate commitments by up to $150 million. The interest rate on the new facility, which is subject to adjustment quarterly, is based on, at our discretion, the London Interbank Offered Rate (LIBOR), the Federal Funds Rate or the Prime Rate, plus an adjustment based on our leverage ratio (Credit Spread). We are charged a commitment fee of between 37.5 and 62.5 basis points on the unused portion of the facility. The Credit Spread for LIBOR-based borrowings ranges from 225 basis points at a leverage ratio of less than 0.5 to 325 basis points at a leverage ratio of greater than or equal to 2.50. The terms of the agreement limit the amount of indebtedness that we may incur and require us to maintain ratios for leverage (debt to EBITDA ratio of no greater than 3.5) and interest coverage (EBITDA to interest ratio of no less than 3.0), including on a pro forma basis in the event of an acquisition. At December 31, 2010, we had no borrowings and letters of credit of $10.4 million outstanding on the Revolving Credit Facility, leaving $339.6 million available for borrowing.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The Revolving Credit Facility and Senior Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. We believe we were in compliance with our debt covenants at December 31, 2010.

Cash payments for interest during 2010, 2009 and 2008 were $13.8 million, $13.2 million and $12.9 million.

Based on lease commitments outstanding at December 31, 2010, minimum capital lease payments, excluding interest, are $1.8 million in 2011, $1.3 million in 2012, $1.0 million in 2013, $0.8 million in 2014, and $0.6 million in 2015.

Note 11—Derivative Financial Instruments

In April 2006, in conjunction with the issuance of the Senior Notes, we entered into interest rate swap agreements of $100 million notional amounts, under which we paid counterparties a variable rate based on LIBOR, and the counterparties paid us a fixed interest rate of 6.35%, effectively converting one-half of the Senior Notes to variable-rate debt. The swaps were designated as a fair value hedge of a portion of the Senior Notes using the shortcut method, as both the swaps and the Senior Notes met all of the conditions for the use of this method. Accordingly, no net gains or losses were recorded on the consolidated statements of income related to our underlying debt and interest rate swap agreements. The fair value of the swaps was determined using observable market inputs (Level 2).

During 2008, Lehman Brothers Holdings, Inc., guarantor of one of the interest rate swaps, declared bankruptcy. We determined at that date that the swaps were no longer expected to be effective in offsetting interest rate risk. We discontinued accounting for the swaps as a fair value hedge as of that date. We terminated the swaps in the third quarter of 2008 and received proceeds of $3.8 million, plus accrued interest of $0.9 million. We realized a loss of $3.1 million, included in interest expense, net, in 2008. This loss represents the difference between the fair value of the swaps as of the date that hedge accounting was discontinued and the proceeds received on the termination of the swaps. The fair value adjustment of $6.9 million to the carrying value of the related debt, recorded prior to the discontinuance of hedge accounting, is being recognized as an offset to interest expense using the interest method over the remaining life of the debt.

We had no interest rate swap agreements or other derivative financial instruments at December 31, 2010 and 2009.

Note 12—Share-Based Compensation

We maintain a share-based compensation plan (the Plan) that is administered by the Compensation and Benefits Committee of the Board of Directors. The Plan allows us to award or grant to officers, directors and employees incentive, non-qualified and deferred compensation stock options, stock appreciation rights (SARs), performance shares, and restricted and unrestricted stock. We use authorized and unissued common shares for grants of restricted stock or for stock option exercises. At December 31, 2010, approximately 2.4 million common shares were available for issuance under the Plan.

Restricted stock awarded under the Plan generally vests over one, three or five years. Certain restricted stock grants contain accelerated vesting provisions, based on the satisfaction of certain performance criteria related to the achievement of certain financial and operational results. Performance shares awarded under the

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Plan are issuable as restricted stock upon meeting performance goals and vest over three years. Stock options awarded under the Plan are generally subject to graded vesting over three years and expire seven to ten years from the date of grant. The options are granted at a price equal to fair market value at the date of grant.

We have a Management Equity Ownership Program that requires each of our officers to own common stock at specified levels, which gradually increase over five years. Officers and certain other employees who meet specified ownership goals in a given year are awarded restricted stock or performance shares under the provisions of the program. We recognize the fair value of stock-based compensation awards, which is based upon the market price of the underlying common stock at the grant date, on a straight-line basis over the estimated requisite service period, which may be based on a service condition, a performance condition, or a combination of both. The fair value of performance shares as of the date of grant is estimated assuming that performance goals will be achieved at target levels. If such goals are not probable of being met, or are probable of being met at different levels, recognized compensation cost is adjusted to reflect the change in estimated fair value of restricted stock to be issued at the end of the performance period.

Total share-based compensation expense for December 31, 2010, 2009 and 2008, was $6.4 million, $7.0 million and $7.6 million, with recognized tax benefits of $2.5 million, $2.7 million and $2.9 million. The total unrecognized compensation cost related to nonvested awards was $9.0 million, expected to be recognized over a weighted-average period of 2.1 years at December 31, 2010.

The following table summarizes the activity and value of nonvested restricted stock and performance share awards for the years ended December 31, 2010, 2009 and 2008:


	2010					2009					2008
	Number of Shares (000’s)			Weighted Average Grant-date Value (per share)		Number of Shares (000’s)			Weighted Average Grant-date Value (per share)		Number of Shares (000’s)			Weighted Average Grant-date Value (per share)
Nonvested awards at beginning of year		878		$	25.00		734		$	25.32		552		$	21.30
Granted		317			30.05		316			22.93		348			28.97
Vested		(124	)		22.34		(144	)		14.17		(133	)		20.51
Forfeited		(44	)		23.50		(28	)		25.94		(33	)		23.93

Nonvested awards at end of year		1,027			27.61		878			25.00		734			25.32

The total value of restricted stock vesting during the years ended December 31, 2010, 2009 and 2008, was $2.8 million, $2.1 million and $2.7 million. There were no SARs outstanding at December 31, 2010 and 2009.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The following table summarizes the activity and terms of outstanding options at December 31, 2010, and for each of the years in the three-year period then ended:


	Number of Options (000’s)			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (millions)
Options outstanding at December 31, 2007		2,489		$	18.09
Exercised		(573	)		15.62
Forfeited		(35	)		22.35

Options outstanding at December 31, 2008		1,881			18.77
Exercised		(473	)		13.92
Forfeited		(2	)		22.67

Options outstanding at December 31, 2009		1,406			20.39
Exercised		(396	)		18.25
Forfeited		(17	)		17.69

Options outstanding at December 31, 2010		993			21.30		2.77	$	8.1

At December 31, 2010, the following stock option groups were outstanding:


Range of Exercise Prices (per share)	Number of Options (000’s)		Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (years)
$12.32—17.00		79	$	14.72		2.09
$17.01—22.00		551		20.46		2.49
$22.01—27.00		363		24.00		3.30

Options outstanding at December 31, 2010		993		21.30		2.77

The total intrinsic value of stock options exercised during the years ended December 31, 2010, 2009 and 2008, was $4.8 million, $6.5 million, and $8.2 million. No options were granted in 2008, 2009 or 2010. All options outstanding at December 31, 2010, were vested and exercisable.

Note 13—Terminated Pension Plan

Pension Plan. We had a noncontributory defined benefit pension plan (the Pension Plan). The plan covered substantially all employees who had earned benefits as of December 31, 1996. On that date, substantially all of the benefits of employees under the plan were frozen and all participants became fully vested. In December 2009, the Board of Directors approved a plan to fund and terminate the plan. In 2010, we received final approval to terminate the plan, contributed $13.9 million to the plan, and completed the distribution of substantially all of the plan assets. Pension expense included on the consolidated statement of income for 2010 includes net actuarial losses of $19.6 million recognized due to the settlement of the plan’s obligations and $1.8 million in other net periodic pension cost.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The following table sets forth the Pension Plan’s financial status and the amounts recognized in our consolidated balance sheets:


December 31,	2010			2009
Change in benefit obligation
Benefit obligation, beginning of year	$	36,041		$	31,022
Service cost		—			—
Interest cost		1,473			1,853
Actuarial loss		3,198			4,564
Benefits and settlement payments		(39,912	)		(1,398	)
Prior service cost		—			—

Benefit obligation, end of year	$	800		$	36,041

Change in plan assets
Fair value of plan assets, beginning of year	$	26,693		$	21,841
Actual return on plan assets		(240	)		4,750
Employer contribution		13,850			1,500
Benefits and settlement payments		(39,912	)		(1,398	)

Fair value of plan assets, end of year	$	391		$	26,693

Funded status at December 31	$	(409	)	$	(9,348	)

Amounts recognized in the consolidated balance sheets
Other accrued liabilities	$	(409	)	$	—
Other liabilities		—			(9,348	)
Accumulated other comprehensive loss		—			16,020

Net amount recognized	$	(409	)	$	6,672

Accumulated benefit obligation	$	—		$	36,041

Discount rate used to determine obligation		n/a			5.00	%

Plan assets and plan benefit obligations of the Pension Plan were measured as of the plan settlement date in 2010 and as of December 31, 2009. Plan benefit obligations are determined using assumptions developed at the measurement date. The weighted average discount rate, which is used to calculate the present value of plan liabilities, is an estimate of the interest rate at which the plan liabilities could be effectively settled at the measurement date. When estimating the discount rate, we review yields available on high-quality, fixed-income debt instruments and use a yield curve model from which the discount rate is derived by applying the projected benefit payments under the plan to points on a published yield curve. The plan benefit obligation as of the plan settlement date was measured based on the amounts to be distributed in the form of lump sum payments and for the purchase of a nonparticipating group annuity contract.

Prior to December 2009, the objective of our investment policy for the management of the assets of the Pension Plan was to achieve an adequate rate of return to satisfy the obligations of the plan while keeping long-term risk to an acceptable level. In preparation for the final termination and distribution, we began investing in cash and cash equivalents with a shorter duration and fewer redemption restrictions.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The major categories of assets held by the Pension Plan, measured at fair value, as of December 31, 2010 and 2009 are as follows:


December 31,	2010		2009
Level 1:
Cash and cash equivalents	$	37	$	17,784
Common stock		—		1,479
Level 3:
Alternative investment funds		354		7,430

Total investments	$	391	$	26,693

The table below sets forth a summary of changes in the fair value of the Pension Plan’s Level 3 assets for the years ended December 31, 2010 and 2009:


	Alternative Investment Funds
Balance, December 31, 2008	$	6,494
Unrealized gains		936

Balance December 31, 2009		7,430
Redemption of plan investment in funds		(6,347	)
Unrealized losses		(559	)
Realized losses		(261	)
Realized gains		91

Balance, December 31, 2010	$	354

The Level 3 asset held by the Pension Plan at December 31, 2010, consisted of a multi-strategy fund which was sold and proceeds received subsequent to December 31, 2010.

Pension expense is determined using assumptions developed at the beginning of each year. To develop the expected long-term rate of return on assets assumption, we considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. The assumption also considered expenses that are to be paid directly by the plan.

The components of pension expense for the Pension Plan are as follows:


Year ended December 31,	2010			2009			2008
Interest cost	$	1,473		$	1,853		$	1,833
Expected return on plan assets		(542	)		(1,835	)		(1,960	)
Recognized net actuarial loss		862			734			482
Recognized net actuarial loss due to settlement		19,573			—			—

Pension expense	$	21,366		$	752		$	355

Weighted average assumptions used to determine pension expense
Discount rate		5.00	%		6.20	%		6.00	%
Expected long-term rate of return on plan assets		2.00	%		7.00	%		7.00	%

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Amounts recognized as a component of other comprehensive income for the Pension Plan are as follows:


Year ended December 31,	2010			2009			2008
Net actuarial loss	$	(3,553	)	$	(914	)	$	(8,895	)
Recognized net actuarial loss due to settlement		19,573			—			—
Deferred tax (expense) benefit		(6,248	)		356			3,469

Other comprehensive income (loss), net of tax		9,772			(558	)		(5,426	)
Accumulated other comprehensive loss, net of tax, beginning of year		(9,772	)		(9,214	)		(3,788	)

Accumulated other comprehensive loss, net of tax, end of year	$	—		$	(9,772	)	$	(9,214	)

Note 14—Retirement Plans

Savings and Retirement Plans. We maintain a voluntary 401(k) savings and retirement plan covering substantially all full-time and certain part-time employees who have completed one month of service and have attained age 18. We match a certain percentage of each employee’s contribution. The plan also provides for a minimum contribution by us to the plan for all eligible employees of 1% of their salary, subject to certain limits, and discretionary profit-sharing contributions. We may increase or decrease our matching contributions at our discretion, on a prospective basis. We incurred $9.1 million, $9.3 million, and $8.1 million of expense related to this plan in 2010, 2009 and 2008.

Additionally, a 401(k) plan was offered to employees of the DTC business. In connection with exiting the DTC business in 2009, we terminated this plan. This plan was voluntary to all full-time and part-time employees of this business who had completed three months of service, attained age 18 and met certain other criteria. We matched a certain percentage of each employee’s contribution and made additional discretionary contributions to eligible employees.

Retirement Plan. We have a noncontributory, unfunded retirement plan for certain officers and other key employees (the Retirement Plan). Benefits are based on a percentage of the employees’ compensation.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The following table sets forth the Retirement Plan’s financial status and the amounts recognized in our consolidated balance sheets:


December 31,	2010			2009
Change in benefit obligation
Benefit obligation, beginning of year	$	29,911		$	27,628
Service cost		1,318			1,206
Interest cost		1,708			1,630
Actuarial loss		3,435			811
Benefits paid		(1,465	)		(1,364	)
Prior service cost		89			—

Benefit obligation, end of year	$	34,996		$	29,911

Change in plan assets
Fair value of plan assets, beginning of year	$	—		$	—
Actual return on plan assets		—			—
Employer contribution		1,465			1,364
Benefits paid		(1,465	)		(1,364	)

Fair value of plan assets, end of year	$	—		$	—

Funded status at December 31	$	(34,996	)	$	(29,911	)

Amounts recognized in the consolidated balance sheets
Other accrued liabilities	$	(1,606	)	$	(1,414	)
Other liabilities		(33,390	)		(28,497	)
Accumulated other comprehensive loss		8,818			5,859

Net amount recognized	$	(26,178	)	$	(24,052	)

Accumulated benefit obligation	$	33,671		$	26,657

Weighted average assumptions used to determine benefit obligation
Discount rate		5.20	%		5.75	%
Rate of increase in compensation levels		3.00	%		5.50	%

Plan benefit obligations of the Retirement Plan were measured as of December 31, 2010 and 2009. Plan benefit obligations are determined using assumptions developed at the measurement date. The weighted average discount rate, which is used to calculate the present value of plan liabilities, is an estimate of the interest rate at which the plan liabilities could be effectively settled at the measurement date. When estimating the discount rate, we review yields available on high-quality, fixed-income debt instruments and use a yield curve model from which the discount rate is derived by applying the projected benefit payments under the plan to points on a published yield curve. To estimate the rate of increase in compensation levels, we consider historic and expected changes in participant compensation.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The components of net periodic benefit cost for the Retirement Plan, which is included in selling, general and administrative expenses in the consolidated statements of income, are as follows:


Year ended December 31,	2010			2009			2008
Service cost	$	1,318		$	1,206		$	1,233
Interest cost		1,708			1,630			1,584
Amortization of prior service cost		279			158			158
Recognized net actuarial loss		286			117			288

Net periodic benefit cost	$	3,591		$	3,111		$	3,263

Weighted average assumptions used to determine net periodic benefit cost
Discount rate		5.75	%		6.20	%		6.00	%
Rate of increase in future compensation levels		5.50	%		5.50	%		5.50	%

Amounts recognized as a component of other comprehensive income for the Retirement Plan are as follows:


Year ended December 31,	2010			2009			2008
Net actuarial (loss) gain	$	(2,960	)	$	(537	)	$	1,078
Deferred tax benefit (expense)		1,155			210			(420	)

Other comprehensive (loss) income, net of tax		(1,805	)		(327	)		658
Accumulated other comprehensive loss, net of tax, beginning of year		(3,574	)		(3,247	)		(3,905	)

Accumulated other comprehensive loss, net of tax, end of year	$	(5,379	)	$	(3,574	)	$	(3,247	)

Amounts recognized as a component of accumulated other comprehensive loss as of the end of the year that have not been recognized as a component of the net periodic benefit cost are presented in the following table. We expect to recognize approximately $0.6 million of the net actuarial loss and $0.3 million of the prior service cost reported in the following table as of December 31, 2010, as a component of net periodic benefit cost during 2011.


Year ended December 31,	2010			2009
Net actuarial loss	$	(8,291	)	$	(5,142	)
Prior service cost		(527	)		(717	)
Deferred tax benefit		3,439			2,285

Amounts included in accumulated other comprehensive loss, net of tax	$	(5,379	)	$	(3,574	)

As of December 31, 2010, the expected benefit payments required for each of the next five years and the five-year period thereafter for the Retirement Plan are as follows:


Year
2011	$	1,647
2012		1,741
2013		1,818
2014		1,979
2015		2,022
2016-2020		12,953

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Note 15—Income Taxes

Total income tax expense (benefit) is allocated as follows:


Year ended December 31,	2010		2009			2008
Continuing operations	$	71,034	$	71,388		$	63,469
Discontinued operations		—		(7,369	)		(4,557	)

Total income tax expense	$	71,034	$	64,019		$	58,912

The income tax provision for continuing operations consists of the following:


Year ended December 31,	2010			2009		2008
Current tax provision:
Federal	$	60,882		$	51,548	$	39,571
State		10,246			8,971		6,280

Total current provision		71,128			60,519		45,851

Deferred tax provision:
Federal		(545	)		9,794		15,510
State		451			1,075		2,108

Total deferred provision		(94	)		10,869		17,618

Total income tax provision	$	71,034		$	71,388	$	63,469

A reconciliation of the federal statutory rate to our effective income tax rate for continuing operations is shown below:


Year ended December 31,	2010			2009			2008
Federal statutory rate		35.0	%		35.0	%		35.0	%
Increases in the rate resulting from:
State income taxes, net of federal income tax impact		3.8	%		3.5	%		3.3	%
Other		0.3	%		(0.6	%)		0.2	%

Effective income tax rate		39.1	%		37.9	%		38.5	%

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:


Year ended December 31,	2010			2009
Deferred tax assets:
Employee benefit plans	$	25,183		$	24,844
Allowance for losses on accounts and notes receivable		3,245			12,452
Accrued liabilities not currently deductible		16,735			10,081
Finance charges		7,867			8,609
Intangible assets		3,623			3,100
Other		902			540

Total deferred tax assets		57,555			59,626

Deferred tax liabilities:
Merchandise inventories		68,071			59,428
Goodwill		26,637			23,157
Property and equipment		7,524			7,759
Insurance		1,240			1,958
Computer software		5,104			1,555
Other		168			500

Total deferred tax liabilities		108,744			94,357

Net deferred tax liability	$	(51,189	)	$	(34,731	)

At December 31, 2010 and 2009, we had deferred tax assets related to discontinued operations of $0.7 million and $12.6 million. These deferred tax items include allowances for losses on accounts and notes receivable, accrued liabilities not currently deductible, intangible assets, and direct response advertising costs. Upon the sale of the discontinued operations, the tax attributes of the discontinued operations remained with the continuing operations.

Based on management’s judgments using available evidence about future events, management believes it is more likely than not that we will realize the benefits of our deferred tax assets. The valuation allowance at December 31, 2010 and 2009 and changes in the valuation allowance for 2010, 2009 and 2008 were not material.

Cash payments for income taxes, including interest, for 2010, 2009, and 2008 were $55.9 million, $57.3 million, and $58.1 million.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

At December 31, 2010 and 2009, the liability for unrecognized tax benefits was $13.4 million and $21.4 million. At December 31, 2010 and 2009, the liability for unrecognized tax benefits of the discontinued operations was approximately $0.2 million and $2.5 million. A reconciliation of the changes in unrecognized tax benefits from the beginning to the end of the reporting period is as follows:


	2010			2009
Unrecognized tax benefits at January 1,	$	21,431		$	21,081
Increases for positions taken during current period		1,896			2,259
Increases for positions taken during prior periods		61			3,237
Decreases for positions taken during prior periods		(9,902	)		(3,287	)
Lapse of statute of limitations		(13	)		(1,304	)
Settlements with taxing authorities		(61	)		(555	)

Unrecognized tax benefit at December 31,	$	13,412		$	21,431

Included in the liability for unrecognized tax benefits at December 31, 2010 and 2009, were $10.9 million and $18.9 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. These tax positions are temporary differences which do not impact the annual effective tax rate under deferred tax accounting. Any change in the deductibility period of these tax positions would impact the timing of cash payments to taxing jurisdictions. Unrecognized tax benefits of $2.4 million and $2.3 million at December 31, 2010 and 2009, would impact our effective tax rate if recognized.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. Accrued interest at December 31, 2010 and 2009 was $0.6 million and $0.5 million. Interest expense recognized during 2010 was $0.2 million. Interest income recognized during 2009 and 2008 was $1.4 million and $0.3 million. There were no penalties accrued at December 31, 2010 or 2009 or recognized in 2010, 2009 and 2008.

Our 2009 and 2008 federal income tax returns are subject to examination. Our income tax returns for state and local jurisdictions are generally open for the years 2007 through 2009; however, certain returns may be subject to examination for differing periods.

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Note 16—Income from Continuing Operations per Common Share

The following summarizes the calculation of income from continuing operations per common share for the years ended December 31, 2010, 2009, and 2008.


Year ended December 31,	2010			2009			2008
Numerator:
Income from continuing operations	$	110,579		$	116,859		$	101,257
Less: income allocated to unvested restricted shares		(1,167	)		(1,282	)		(793	)

Income from continuing operations attributable to common shareholders—basic		109,412			115,577			100,464
Add: undistributed income attributable to unvested restricted shares—basic		555			787			534
Less: undistributed income reallocated to unvested restricted shares—diluted		(553	)		(783	)		(529	)

Income from continuing operations attributable to common shareholders—diluted	$	109,414		$	115,581		$	100,469

Denominator:
Weighted average shares outstanding—basic		62,315			61,716			61,189
Dilutive shares—stock options		248			368			572

Weighted average shares outstanding—diluted		62,563			62,084			61,761

Income from continuing operations per share attributable to common shareholders:
Basic	$	1.76		$	1.87		$	1.64
Diluted	$	1.75		$	1.86		$	1.63

Note 17—Shareholders’ Equity

The number of shares of common stock issuable upon exercise of outstanding stock options or achievement of certain performance criteria and the number of shares reserved for issuance under our share-based compensation plan and shareholder rights agreement were proportionately increased for the Stock Split, described in Note 1, in accordance with terms of the respective plans. The Stock Split was recorded by a transfer of $42.1 million from paid-in capital to common stock, representing a $2 par value for each additional share issued. The number of authorized common shares remained at 200 million, and the number of authorized preferred shares, none of which have been issued, remained at 10 million.

We have a shareholder rights agreement under which one Right is attendant to each outstanding share of our common stock. Adjusted for the Stock Split, each Right entitles the registered holder to purchase from us one fifteen-hundredth of a share of a new Series A Participating Cumulative Preferred Stock (New Series A Preferred Stock) at an exercise price of $66.67 (New Purchase Price). The Rights will become exercisable, if not earlier redeemed, only if a person or group acquires more than 15% of the outstanding shares of our common stock, or if the Board of Directors so determines following the commencement of a public announcement of a tender or exchange offer, the consummation of which would result in ownership by a person or group of more than 15% of such outstanding shares. Each holder of a Right, upon the occurrence of certain events, will become entitled to receive, upon exercise and payment of the New Purchase Price, New Series A Preferred Stock (or in certain circumstances, cash, property or other securities of ours or a potential acquirer) having a value equal to twice the

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

amount of the New Purchase Price. The agreement is subject to review every three years by our independent directors. The Rights will expire on April 30, 2014, if not earlier redeemed.

Note 18—Commitments and Contingencies

We have a contractual commitment to outsource information technology operations, including the management and operation of our information technology systems and distributed services processing, as well as application support, development and enhancement services through July 2014. The commitment is cancelable with 180 days notice and payment of a termination fee. The termination fee is based upon certain costs which would be incurred by the vendor as a direct result of the early termination of the agreement. The maximum termination fee payable was $3.6 million at December 31, 2010, declining each year to zero at the end of the final contract year.

Assuming no early termination of the contract, the fixed and determinable portion of the remaining obligations under this agreement ranges from $32.3 million in 2011 to $18.2 million in 2014, totaling $113.6 million. These obligations can vary annually up to a certain level for changes in the Consumer Price Index or for a significant increase in our medical/surgical distribution business. Additionally, the service fees under this contract can vary to the extent additional services are provided by the vendor which are not covered by the negotiated base fees, or as a result of reduction in services that were included in these base fees. We paid $46.6 million, $52.9 million, and $51.8 million under this contract in 2010, 2009, and 2008. We have recorded approximately $4.9 million of capital lease assets associated with this outsourcing contract.

We have entered into non-cancelable agreements to lease most of our office and warehouse facilities with remaining terms generally ranging from one to ten years. Certain leases include renewal options, generally for five-year increments. We also lease most of our transportation and material handling equipment for terms generally ranging from five to eight years. At December 31, 2010, future minimum annual payments under non-cancelable lease agreements with original terms in excess of one year are as follows:


	Total
2011	$	43,677
2012		35,331
2013		29,668
2014		19,371
2015		13,048
Later years		13,830

Total minimum payments	$	154,925

Rent expense for all operating leases for the years ended December 31, 2010, 2009, and 2008, was $55.3 million, $54.2 million, and $50.7 million.

We have contractual obligations that are required to be paid to customers in the event that certain contractual performance targets are not achieved as of specified dates, generally within 36 months from inception of the contract. These contingent obligations total $4.4 million as of December 31, 2010. If none of the

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

performance targets are met as of the specified dates, and customers have met their contractual commitments, payments will be due as follows: 2011—$1.0 million; 2012—$0.8 million; and 2013—$2.6 million. None of these contingent obligations were accrued at December 31, 2010, as we do not consider any of them probable. We deferred the recognition of fees that are contingent upon our future performance under the terms of these contracts. As of December 31, 2010, $1.1 million of deferred revenue related to outstanding contractual performance targets is included in other accrued liabilities.

The state of California is conducting an administrative review of certain ongoing local sales tax incentives that may be available to us beginning with the third quarter of 2007. As a result of this review, we may receive tax incentive payments for all or some of these periods. The exact amount, if any, is dependent upon a number of factors, including the timing of negotiation and execution of certain customer agreements, the variability in sales and our operations in California.

Prior to exiting the DTC business in January 2009, we received reimbursements from Medicare, Medicaid, and private healthcare insurers for certain customer billings. We are subject to audits of these reimbursements for up to seven years from the date of the service.

Note 19—Legal Proceedings

We are subject to various legal actions that are ordinary and incidental to our business, including contract disputes, employment, workers’ compensation, product liability, regulatory and other matters. We establish reserves from time to time based upon periodic assessment of the potential outcomes of pending matters. In addition, we believe that any potential liability arising from employment, product liability, workers’ compensation and other personal injury litigation matters would be adequately covered by our insurance coverage, subject to policy limits, applicable deductibles and insurer solvency. While the outcome of legal actions cannot be predicted with certainty, we believe, based on current knowledge and the advice of counsel, that the outcome of currently pending matters, individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.

Note 20—Condensed Consolidating Financial Information

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

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2010	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	8,121,944		$	1,664		$	—		$	8,123,608
Cost of goods sold		—			7,315,791			92			—			7,315,883

Gross margin		—			806,153			1,572			—			807,725
Selling, general and administrative expenses		1,900			560,550			1,719			—			564,169
Pension expense		—			21,366			—						21,366
Depreciation and amortization		—			29,144			4			—			29,148
Other operating income, net		(313	)		(2,581	)		—			—			(2,894	)

Operating (loss) earnings		(1,587	)		197,674			(151	)		—			195,936
Interest expense, net		10,396			3,861			66			—			14,323

Income (loss) from continuing operations before income taxes		(11,983	)		193,813			(217	)		—			181,613
Income tax (benefit) provision		(4,687	)		75,806			(85	)		—			71,034
Equity in earnings of subsidiaries		117,875			—			—			(117,875	)		—

Income (loss) from continuing operations		110,579			118,007			(132	)		(117,875	)		110,579
Loss from discontinued operations, net of tax		—			—			—			—			—

Net income (loss)	$	110,579		$	118,007		$	(132	)	$	(117,875	)	$	110,579

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2009	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	8,036,886		$	738		$	—		$	8,037,624
Cost of goods sold		—			7,223,185			52			—			7,223,237

Gross margin		—			813,701			686			—			814,387
Selling, general and administrative expenses		2,254			589,025			1,061			—			592,340
Pension expense		—			752			—			—			752
Depreciation and amortization		—			25,233			32			—			25,265
Other operating (income) and expense, net		—			(5,370	)		125			—			(5,245	)

Operating (loss) earnings		(2,254	)		204,061			(532	)		—			201,275
Interest (income) expense, net		(1,317	)		14,277			68			—			13,028
Equity in earnings of subsidiaries		105,240			—			—			(105,240	)		—

Income (loss) from continuing operations before income taxes		104,303			189,784			(600	)		(105,240	)		188,247
Income tax (benefit) provision		(355	)		71,971			(228	)		—			71,388

Income (loss) from continuing operations		104,658			117,813			(372	)		(105,240	)		116,859
Loss from discontinued operations, net of tax		—			—			(12,201	)		—			(12,201	)

Net income (loss)	$	104,658		$	117,813		$	(12,573	)	$	(105,240	)	$	104,658

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2008	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	7,243,237		$	—		$	—		$	7,243,237
Cost of goods sold		—			6,502,129			—			—			6,502,129

Gross margin		—			741,108			—			—			741,108
Selling, general and administrative expenses		1,607			543,287			—			—			544,894
Pension expense		—			355			—			—			355
Depreciation and amortization		—			21,955			—			—			21,955
Other operating income, net		—			(6,821	)		—			—			(6,821	)

Operating (loss) earnings		(1,607	)		182,332			—			—			180,725
Interest (income) expense, net		(598	)		16,597			—			—			15,999
Equity in earnings of subsidiaries		93,946			—			—			(93,946	)		—

Income from continuing operations before income taxes		92,937			165,735			—			(93,946	)		164,726
Income tax (benefit) provision		(390	)		63,859			—			—			63,469

Income from continuing operations		93,327			101,876			—			(93,946	)		101,257
Loss from discontinued operations, net of tax		—			—			(7,930	)		—			(7,930	)

Net income (loss)	$	93,327		$	101,876		$	(7,930	)	$	(93,946	)	$	93,327

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


December 31, 2010	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents	$	156,897		$	2,316		$	—		$	—		$	159,213
Accounts and notes receivable, net		313			471,348			—			—			471,661
Merchandise inventories		—			720,116			—			—			720,116
Other current assets		118			52,438			243			—			52,799

Total current assets		157,328			1,246,218			243			—			1,403,789
Property and equipment, net		—			101,542			3			—			101,545
Goodwill, net		—			247,271			—			—			247,271
Intangible assets, net		—			24,825			—			—			24,825
Due from O&M and subsidiaries		—			84,966			41,523			(126,489	)		—
Advances to and investments in consolidated subsidiaries		1,036,211			—			—			(1,036,211	)		—
Other assets, net		1,450			43,159			—			—			44,609

Total assets	$	1,194,989		$	1,747,981		$	41,769		$	(1,162,700	)	$	1,822,039

Liabilities and shareholders’ equity
Current liabilities
Accounts and drafts payable	$	—		$	531,732		$	3		$	—		$	531,735
Accrued payroll and related liabilities		—			20,570			18			—			20,588
Deferred income taxes		—			39,082			—			—			39,082
Other accrued liabilities		6,197			96,311			289			—			102,797
Current liabilities of discontinued operations		—			—			279			—			279

Total current liabilities		6,197			687,695			589			—			694,481
Long-term debt, excluding current portion		204,785			4,311			—			—			209,096
Due to O&M and subsidiaries		126,489			—			—			(126,489	)		—
Intercompany debt		—			138,890			—			(138,890	)		—
Deferred income taxes		—			12,107			—			—			12,107
Other liabilities		—			48,837			—			—			48,837

Total liabilities		337,471			891,840			589			(265,379	)		964,521

Shareholders’ equity
Common stock		126,867			—			1,500			(1,500	)		126,867
Paid-in capital		165,447			242,024			62,814			(304,838	)		165,447
Retained earnings (deficit)		570,320			619,496			(23,134	)		(596,362	)		570,320
Accumulated other comprehensive loss		(5,116	)		(5,379	)		—			5,379			(5,116	)

Total shareholders’ equity		857,518			856,141			41,180			(897,321	)		857,518

Total liabilities and shareholders’ equity	$	1,194,989		$	1,747,981		$	41,769		$	(1,162,700	)	$	1,822,039

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


December 31, 2009	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents	$	92,088		$	3,765		$	283		$	—		$	96,136
Accounts and notes receivable, net		—			498,080			—			—			498,080
Merchandise inventories		—			689,889			—			—			689,889
Other current assets		136			57,824			2			—			57,962

Total current assets		92,224			1,249,558			285			—			1,342,067
Property and equipment, net		—			84,960			5			—			84,965
Goodwill, net		—			247,271			—			—			247,271
Intangible assets, net		—			27,809			—			—			27,809
Due from O&M and subsidiaries		—			—			43,380			(43,380	)		—
Advances to and investments in consolidated subsidiaries		925,370			—			—			(925,370	)		—
Other assets, net		1,633			43,341			2			—			44,976

Total assets	$	1,019,227		$	1,652,939		$	43,672		$	(968,750	)	$	1,747,088

Liabilities and shareholders’ equity
Current liabilities
Accounts and drafts payable	$	—		$	546,984		$	5		$	—		$	546,989
Accrued payroll and related liabilities		—			34,870			15			—			34,885
Deferred income taxes		—			25,784			—			—			25,784
Other accrued liabilities		5,684			84,433			402			—			90,519
Current liabilities of discontinued operations		—			—			1,939			—			1,939

Total current liabilities		5,684			692,071			2,361			—			700,116
Long-term debt, excluding current portion		205,682			2,736			—			—			208,418
Due to O&M and subsidiaries		38,682			4,698			—			(43,380	)		—
Intercompany debt		—			138,890			—			(138,890	)		—
Deferred income taxes		—			8,947									8,947
Other liabilities and deferred income taxes		—			60,428			—			—			60,428

Total liabilities		250,048			907,770			2,361			(182,270	)		977,909

Shareholders’ equity
Common stock		83,827			—			1,500			(1,500	)		83,827
Paid-in capital		193,905			242,024			62,814			(304,838	)		193,905
Retained earnings (deficit)		504,480			516,491			(23,003	)		(493,488	)		504,480
Accumulated other comprehensive loss		(13,033	)		(13,346	)		—			13,346			(13,033	)

Total shareholders’ equity		769,179			745,169			41,311			(786,480	)		769,179

Total liabilities and shareholders’ equity	$	1,019,227		$	1,652,939		$	43,672		$	(968,750	)	$	1,747,088

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2010	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss)	$	110,579		$	118,007		$	(132	)	$	(117,875	)	$	110,579
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries		(117,875	)		—			—			117,875			—
Depreciation and amortization		—			29,144			4			—			29,148
Pension expense		—			21,366			—			—			21,366
Pension contributions		—			(13,850	)		—			—			(13,850	)
Share-based compensation expense		534			5,824			—			—			6,358
Deferred income tax benefit		—			(94	)		—			—			(94	)
Provision for losses on accounts and notes receivable		—			1,808			—			—			1,808
Provision for LIFO reserve		—			11,088			—			—			11,088
Changes in operating assets and liabilities:
Accounts and notes receivable		(313	)		24,924			—			—			24,611
Merchandise inventories		—			(41,315	)		—			—			(41,315	)
Accounts payable		—			86,148			(2	)		—			86,146
Net change in other assets and liabilities		(142	)		9,825			(349	)		—			9,334
Other, net		(1,153	)		557			—			—			(596	)

Cash provided by (used for) operating activities of continuing operations		(8,370	)		253,432			(479	)		—			244,583

Investing activities:
Additions to property and equipment		—			(31,221	)		—			—			(31,221	)
Additions to computer software and intangible assets		—			(10,128	)		—			—			(10,128	)
Proceeds from sale of property and equipment		—			3,926			—			—			3,926

Cash used for investing activities of continuing operations		—			(37,423	)		—			—			(37,423	)

Financing activities:
Change in intercompany advances		108,634			(110,490	)		1,856			—			—
Cash dividends paid		(44,780	)		—			—			—			(44,780	)
Decrease in drafts payable		—			(101,400	)		—			—			(101,400	)
Proceeds from exercise of stock options		7,234			—			—			—			7,234
Excess tax benefits related to share-based compensation		2,091			—			—			—			2,091
Other, net		—			(5,568	)		—			—			(5,568	)

Cash (used for) provided by financing activities of continuing operations		73,179			(217,458	)		1,856			—			(142,423	)

Discontinued operations:
Operating cash flows		—			—			(1,660	)		—			(1,660	)

Net cash used for discontinued operations		—			—			(1,660	)		—			(1,660	)

Net increase (decrease) in cash and cash equivalents		64,809			(1,449	)		(283	)		—			63,077
Cash and cash equivalents at beginning of year		92,088			3,765			283			—			96,136

Cash and cash equivalents at end of year	$	156,897		$	2,316		$	—		$	—		$	159,213

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2009	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss)	$	104,658		$	117,813		$	(12,573	)	$	(105,240	)	$	104,658
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries		(105,240	)		—			—			105,240			—
Loss from discontinued operations		—			—			12,201			—			12,201
Depreciation and amortization		—			25,233			32			—			25,265
Provision for losses on accounts and notes receivable		—			3,976			—			—			3,976
Provision for LIFO reserve		—			2,708			—			—			2,708
Share-based compensation expense		520			6,515			—			—			7,035
Deferred income tax provision		—			10,869			—			—			10,869
Pension expense		—			752			—			—			752
Pension contributions		—			(1,500	)		—			—			(1,500	)
Changes in operating assets and liabilities:
Accounts and notes receivable		—			19,239			16			—			19,255
Merchandise inventories		—			(13,538	)		10			—			(13,528	)
Accounts payable		—			(18,705	)		(50	)		—			(18,755	)
Net change in other assets and liabilities		185			13,667			(96	)		—			13,756
Other, net		(1,533	)		161			—			—			(1,372	)

Cash provided by (used for) operating activities of continuing operations		(1,410	)		167,190			(460	)		—			165,320

Investing activities:
Additions to property and equipment		—			(19,739	)		(7	)		—			(19,746	)
Additions to computer software		—			(12,543	)		—			—			(12,543	)
Net cash received for acquisition of business		—			6,994			—			—			6,994
Proceeds from sale of property and equipment		—			4,080			—			—			4,080

Cash used for investing activities of continuing operations		—			(21,208	)		(7	)		—			(21,215	)

Financing activities:
Change in intercompany advances		116,817			(43,259	)		(73,558	)		—			—
Payments on revolving credit facility		—			(301,964	)		—			—			(301,964	)
Borrowings on revolving credit facility		—			151,386			—			—			151,386
Cash dividends paid		(38,370	)		—			—			—			(38,370	)
Increase in drafts payable		—			52,718			—			—			52,718
Proceeds from exercise of stock options		6,593			—			—			—			6,593
Excess tax benefits related to share-based compensation		2,570			—			—			—			2,570
Other, net		—			(2,045	)		—			—			(2,045	)

Cash used for financing activities of continuing operations		87,610			(143,164	)		(73,558	)		—			(129,112	)

Discontinued operations:
Operating cash flows		—			—			10,257			—			10,257
Investing cash flows		—			—			63,000			—			63,000

Net cash provided by discontinued operations		—			—			73,257			—			73,257

Net increase (decrease) in cash and cash equivalents		86,200			2,818			(768	)		—			88,250
Cash and cash equivalents at beginning of year		5,888			947			1,051			—			7,886

Cash and cash equivalents at end of year	$	92,088		$	3,765		$	283		$	—		$	96,136

OWENS & MINOR, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(in thousands unless otherwise indicated)

Condensed Consolidating Financial Information


Year ended December 31, 2008	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss)	$	93,327		$	101,876		$	(7,930	)	$	(93,946	)	$	93,327
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries		(93,946	)		—			—			93,946			—
Loss from discontinued operations		—			—			7,930			—			7,930
Depreciation and amortization		—			21,955			—			—			21,955
Pension expense		—			355			—			—			355
Pension contributions		—			(1,500	)		—			—			(1,500	)
Provision for losses on accounts and notes receivable		—			4,274			—			—			4,274
Provision for LIFO reserve		—			13,172			—			—			13,172
Share-based compensation expense		654			6,909			—			—			7,563
Deferred income tax provision		—			17,618			—			—			17,618
Loss on interest rate swaps		3,141			—			—			—			3,141
Changes in operating assets and liabilities:														—
Accounts and notes receivable		—			(48,464	)		—			—			(48,464	)
Merchandise inventories		—			(56,150	)		(6	)		—			(56,156	)
Accounts payable		—			(13,454	)		(130	)		—			(13,584	)
Net change in other assets and liabilities		(410	)		14,265			4			—			13,859
Other, net		(1,309	)		697			—			—			(612	)

Cash provided by (used for) operating activities of continuing operations		1,457			61,553			(132	)		—			62,878

Investing activities:
Additions to property and equipment		—			(17,669	)		—			—			(17,669	)
Additions to computer software		—			(9,339	)		58			—			(9,281	)
Net cash paid for acquisition of business		—			(96,790	)		—			—			(96,790	)
Proceeds from sale of property and equipment		—			409			—			—			409

Cash (used for) provided by investing activities of continuing operations		—			(123,389	)		58			—			(123,331	)

Financing activities:
Change in intercompany advances		20,587			(28,660	)		8,073			—			—
Payments on revolving credit facility		—			(668,836	)		—			—			(668,836	)
Borrowings on revolving credit facility		—			742,914			—			—			742,914
Cash dividends paid		(33,048	)		—			—			—			(33,048	)
Increase in drafts payable		—			11,316			—			—			11,316
Proceeds from exercise of stock options		8,968			—			—			—			8,968
Excess tax benefits related to share-based compensation		3,421			—			—			—			3,421
Proceeds from termination of interest rate swaps		3,795			—			—			—			3,795
Other, net		—			(3,267	)		—			—			(3,267	)

Cash (used for) provided by financing activities of continuing operations		3,723			53,467			8,073			—			65,263

Discontinued operations:
Operating cash flows		—			—			(7,115	)		—			(7,115	)
Investing cash flows		—			—			(204	)		—			(204	)

Net cash used for discontinued operations		—			—			(7,319	)		—			(7,319	)

Net increase (decrease) in cash and cash equivalents		5,180			(8,369	)		680			—			(2,509	)
Cash and cash equivalents at beginning of year		708			9,316			371			—			10,395

Cash and cash equivalents at end of year	$	5,888		$	947		$	1,051		$	—		$	7,886

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Owens & Minor, Inc.:

We have audited the accompanying consolidated balance sheets of Owens & Minor, Inc. and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Owens & Minor, Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 25, 2011 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

LOGO

Richmond, Virginia

February 25, 2011

SELECTED QUARTERLY FINANCIAL INFORMATION

(unaudited)


	Year Ended December 31, 2010 ⁽¹⁾
*(in thousands, except per share data)*	1st Quarter			2nd Quarter			3rd Quarter		4th Quarter ⁽³⁾
Net revenue	$	1,969,670		$	2,019,893		$	2,063,879	$	2,070,166
Gross margin		197,001			198,940			203,954		207,830
Income from continuing operations	$	27,817		$	29,469		$	31,505	$	21,788
Income (loss) from discontinued operations, net of tax		—			—			—		—

Net income	$	27,817		$	29,469		$	31,505	$	21,788

Income per common share—basic:
Continued operations	$	0.44		$	0.47		$	0.50	$	0.35
Discontinued operations		—			—			—		—

Net income per share—basic	$	0.44		$	0.47		$	0.50	$	0.35

Income per common share—diluted:
Continued operations	$	0.44		$	0.46		$	0.50	$	0.34
Discontinued operations		—			—			—		—

Net income per share—diluted	$	0.44		$	0.46		$	0.50	$	0.34

Cash dividends per common share	$	0.177		$	0.177		$	0.177	$	0.177
Market price:
High	$	31.19		$	32.60		$	29.28	$	30.08
Low		26.73			28.06			26.02		27.52

	Year Ended December 31, 2009 ⁽¹⁾
*(in thousands, except per share data)*	1st Quarter			2nd Quarter			3rd Quarter		4th Quarter
Net revenue	$	1,948,628		$	2,013,780		$	2,034,792	$	2,040,424
Gross margin		189,896			204,771			211,206		208,513
Income from continuing operations	$	22,358		$	27,775		$	34,687	$	32,039
(Loss) income from discontinued operations, net of tax ⁽²⁾		(8,382	)		(4,127	)		—		308

Net income	$	13,976		$	23,648		$	34,687	$	32,347

Income (loss) per common share—basic:
Continued operations	$	0.36		$	0.45		$	0.56	$	0.51
Discontinued operations		(0.13	)		(0.07	)		—		0.01

Net income per share—basic	$	0.23		$	0.38		$	0.56	$	0.52

Income (loss) per common share—diluted:
Continued operations	$	0.36		$	0.44		$	0.55	$	0.51
Discontinued operations		(0.14	)		(0.06	)		—		—

Net income per share—diluted	$	0.22		$	0.38		$	0.55	$	0.51

Cash dividends per common share	$	0.153		$	0.153		$	0.153	$	0.153
Market price:
High	$	28.39		$	29.39		$	30.83	$	32.25
Low		20.13			21.14			28.20		25.52

⁽ ¹ ⁾

Per share data for prior periods have been retroactively adjusted to reflect a three-for-two stock split effected on March 31, 2010. See Note 1 of Notes to Consolidated Financial Statements.

⁽²⁾

In January 2009, we exited our direct-to-consumer distribution business (DTC business). We incurred charges associated with exiting the DTC business in the first and second quarters of 2009. See Note 4 of Notes to Consolidated Financial Statements.

⁽³⁾

We terminated our defined benefit plan in the fourth quarter of 2010 and recognized a settlement charge of $19.6 million ($11.9 million after taxes, or $0.19 per common share).

Index to Exhibits


2.1		Form of Asset Purchase Agreement dated as of August 19, 2008 by and among Owens & Minor Distribution, Inc., The Burrows Company and George J. Burrows (incorporated herein by reference to our Current Report on Form 8-K, Exhibit 2.1, dated August 22, 2008)

2.2		Form of First Amendment to Asset Purchase Agreement dated as of September 30, 2008 by and among Owens & Minor Distribution, Inc., The Burrows Company and George J. Burrows (incorporated herein by reference to our Current Report on Form 8-K, Exhibit 2.1, dated October 6, 2008)

3.1		Amended and Restated Articles of Incorporation of Owens & Minor, Inc. (incorporated herein by reference to our Current Report on Form 8-K, Exhibit 3.1, dated July 29, 2008)

3.2		Amended and Restated Bylaws of Owens & Minor, Inc. (incorporated herein by reference to our Current Report on Form 8-K, Exhibit 3.1, dated October 26, 2010)

4.1		Form of Credit Agreement, dated June 7, 2010, among Owens & Minor Distribution, Inc., and Owens & Minor Medical, Inc. as Borrowers, Owens & Minor, Inc. and certain of its Subsidiaries, as Guarantors, the banks identified on the signature pages hereto and Bank of America, N.A. (as administrative agent) (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.1, dated June 10, 2010)

4.2		Indenture, dated as of April 7, 2006, for the Senior Notes due 2016 among the Company, Owens & Minor Distribution, Inc., Owens & Minor Medical, Inc., Owens & Minor Healthcare Supply, Inc., Access Diabetic Supply, LLC and SunTrust Bank, as trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.2, dated April 7, 2006)

4.3		Form of Global Security for the Senior Notes due 2016 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.3, dated April 7, 2006)

4.4		Rights Agreement dated as of April 30, 2004, between Owens & Minor, Inc., and Bank of New York, as Rights Agent (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 4.6, for the year ended December 31, 2003)

10.1		Owens & Minor, Inc. 1998 Stock Option and Incentive Plan, as amended (incorporated herein by reference to the Company’s Registration Statement on Form S-8, Registration No. 333-61550, Exhibit 4)*

10.2		Owens & Minor, Inc. 1998 Directors’ Compensation Plan (incorporated herein by reference from Annex B of the Company’s definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act on March 13, 1998 (File No. 001-09810))*

10.3		Amendment No. 1 to Owens & Minor, Inc. 1998 Directors’ Compensation Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.15, for the year ended December 31, 1998)*

10.4		Amendment to Owens & Minor, Inc. 1998 Directors’ Compensation Plan (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.5, for the quarter ended March 31, 2008)*

10.5		Owens & Minor, Inc. 2003 Directors’ Compensation Plan (incorporated herein by reference to Annex B of the Company’s definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act on March 13, 2003 (File No. 001-09810))*

10.6		Amendment to 2003 Directors’ Compensation Plan (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.6, for the quarter ended March 31, 2008)*


10.7		Form of Director Restricted Stock Grant Agreement (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.3, for the quarter ended March 31, 2008)*

10.8		Owens & Minor, Inc. Directors’ Deferred Compensation Plan, as amended and restated effective January 1, 2005 (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.3, for the quarter ended September 30, 2008)*

10.9		Deferral Election Form for The Owens & Minor, Inc. Directors’ Deferred Compensation Plan* filed herewith.

10.10		Form of Owens & Minor, Inc. Executive Severance Agreement (effective January 1, 2011)* filed herewith.

10.11		Owens & Minor, Inc. Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2005* (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.1, for the quarter ended September 30, 2008)*

10.12		Owens & Minor, Inc. Amended and Restated Management Equity Ownership Program and Stock Ownership Rewards Program (incorporated by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.15, for the year ended December 31, 2009)*

10.13		Owens & Minor, Inc. Executive Deferred Compensation Plan as amended and restated effective January 1, 2005* filed herewith.

10.14		Amended and Restated Owens & Minor, Inc. Deferred Compensation Trust Agreement (“Deferred Compensation Trust”) (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.4, dated December 31, 2004)*

10.15		Resolutions of the Board of Directors of the Company amending the Deferred Compensation Trust (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.3, dated December 31, 2004)*

10.16		Owens & Minor, Inc. Pension Plan, as amended and restated effective January 1, 1994 (“Pension Plan”) (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10(c), for the year ended December 31, 1996)*

10.17		Amendment No. 1 to Pension Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10(d), for the year ended December 31, 1996)*

10.18		Amendment No. 2 to Pension Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.5, for the year ended December 31, 1998)*

10.19		Resolutions of the Board of Directors of the Company amending the Owens & Minor, Inc. Pension Plan. (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.5, dated May 3, 2006)*

10.20		Amendment No. 3 to Pension Plan (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.2, for the quarter ended September 30, 2008)*

10.21		Fourth Amendment to Pension Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.24, for the year ended December 31, 2009) *

10.22		Fifth, Sixth, and Seventh Amendments to Pension Plan* filed herewith.

10.23		Owens & Minor, Inc. 2005 Stock Incentive Plan, as amended (incorporated herein by reference to the Company’s Registration Statement on Form S-8, Registration No. 333-124965)*

10.24		Resolution of the Board of Directors of the Company amending the Owens & Minor, Inc. 2005 Stock Incentive Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.21, for the year ended December 31, 2007)*

10.25		Amendment to Owens & Minor, Inc. 2005 Stock Incentive Plan (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.4, for the quarter ended March 31, 2008)*


10.26		Amendment to Owens & Minor, Inc. 2005 Stock Incentive Plan (incorporated herein by reference to the Company’s definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act on March 17, 2010 (File No. 001-09810))*

10.27		Form of Owens & Minor, Inc. Stock Option Grant Agreement under 2005 Stock Incentive Plan (incorporated herein by reference to the company’s Current Report on Form 8-K, Exhibit 10.1, dated June 23, 2005)*

10.28		Form of Owens & Minor, Inc. Restricted Stock Grant Agreement under 2005 Stock Incentive Plan (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.2, for the quarter ended March 31, 2008)*

10.29		Form of Performance Accelerated Restricted Stock Grant Agreement (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.2, dated May 3, 2006)*

10.30		Form of 2008 Performance Share Award Agreement (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, Exhibit 10.1, for the quarter ended March 31, 2008)*

10.31		Form of 2009 Performance Share Award Agreement (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.33, for the year ended December 31, 2008)*

10.32		Form of Performance Share Award Agreement* filed herewith.

10.33		2010 Incentive Program (incorporated herein by reference to the Company’s Current Report on Form 8-K, dated November 21, 2009)*

10.34		Owens & Minor, Inc. Officer Severance Policy Terms (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.1, dated December 19, 2005)*

10.35		Policy on Recoupment of Executive Incentive Compensation (incorporated herein by reference to the Company’s Annual Report on Form 10-K, Exhibit 10.36, for the year ended December 31, 2009)*

10.36		Medical-Surgical Distribution Agreement between Novation, LLC and Owens & Minor Distribution, Inc. effective September 1, 2006 (incorporated herein by reference to the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)**

11.1		Calculation of Net Income per Common Share. Information related to this item is in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15—Net Income per Common Share

21.1		Subsidiaries of Registrant

23.1		Consent of KPMG LLP, independent registered public accounting firm

31.1		Certification of Chief Executive Officer pursuant to Rule 13(a)-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 13(a)-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

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

*	Management contract or compensatory plan or arrangement.

**	The Company has requested confidential treatment by the Commission of certain portions of this Agreement, which portions have been omitted and filed separately with the Commission.

†

XBRL (Extensible Business Reporting Language) information is furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on the 25 ^th day of February, 2011.

OWENS & MINOR, INC.

/ S / C RAIG R. S MITH

Craig R. Smith

President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 25 ^th day of February, 2011:


/ S / C RAIG R. S MITH Craig R. Smith President & Chief Executive Officer		/ S / J OHN W. G ERDELMAN John W. Gerdelman Director

/ S / J AMES L. B IERMAN James L. Bierman Senior Vice President & Chief Financial Officer (Principal Financial Officer)		/ S / E DDIE N. M OORE , J R . Eddie N. Moore, Jr. Director

/ S / D. A NDREW E DWARDS D. Andrew Edwards Vice President, Controller & Chief Accounting Officer (Principal Accounting Officer)		/ S / P ETER S. R EDDING Peter S. Redding Director

/ S / G. G ILMER M INOR , III G. Gilmer Minor, III Chairman of the Board of Directors		/ S / J AMES E. R OGERS James E. Rogers Lead Director

/ S / A. M ARSHALL A CUFF , J R . A. Marshall Acuff, Jr. Director		/ S / R OBERT C. S LEDD Robert C. Sledd Director

/ S / J. A LFRED B ROADDUS , J R . J. Alfred Broaddus, Jr. Director		/ S / J AMES E. U KROP James E. Ukrop Director

/ S / J OHN T. C ROTTY John T. Crotty Director		/ S / A NNE M ARIE W HITTEMORE Anne Marie Whittemore Director

/ S / R ICHARD E. F OGG Richard E. Fogg Director

Corporate Officers

Craig R. Smith (59)

President & Chief Executive Officer

President since 1999 and Chief Executive Officer since July 2005. Mr. Smith has been with us since 1989.

Charles C. Colpo (53)

Executive Vice President & Chief Operating Officer

Executive Vice President & Chief Operating Officer since 2010. Previously, Mr. Colpo served as Executive Vice President, Administration, from 2008 until 2010. Prior to that, Mr. Colpo served as Senior Vice President, Operations, from 1999 until 2008. He also served as Senior Vice President, Operations & Technology, from April 2005 to July 2006. Mr. Colpo has been with the company since 1981.

James L. Bierman (58)

Senior Vice President & Chief Financial Officer

Senior Vice President & Chief Financial Officer since joining Owens & Minor in June 2007. Previously, Mr. Bierman served as Executive Vice President & Chief Financial Officer at Quintiles Transnational Corp. from 2001 to 2004. He joined Quintiles in 1998. Prior to that Mr. Bierman was a partner of Arthur Andersen LLP from 1988 to 1998.

D. Andrew Edwards (52)

Vice President, Controller & Chief Accounting Officer

Vice President, Controller & Chief Accounting Officer, since April 2010. Previously, Mr. Edwards served as Vice President, Finance, from December 2009 until April 2010. Prior to joining Owens & Minor, Mr. Edwards served as Vice President & Chief Financial Officer at Tredegar Corporation from August 2003 to December 2009. He joined Tredegar in 1992.

E.V. Clarke (50)

Executive Vice President, Supply Chain

Executive Vice President, Supply Chain, since 2010. Previously Mr. Clarke served as Executive Vice President, Distribution, from 2008 until April 2010, and Group Vice President, Sales & Distribution, from October 2006 until 2008. Prior to that, he served as President of Acute-Care for McKesson Medical-Surgical from April 2002 until September 2006, when the business was acquired by Owens & Minor.

Erika T. Davis (47)

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 us since 1993.

Grace R. den Hartog (59)

Senior Vice President, General Counsel & Corporate Secretary

Senior Vice President, General Counsel & Corporate Secretary, since joining Owens & Minor in 2003. Previously, Ms. den Hartog served as a partner of McGuireWoods LLP from 1990 to 2003.

Hugh F. Gouldthorpe, Jr. (72)

Retired Vice President, Quality & Communications

Vice President, Quality & Communications, since 1993. Mr. Gouldthorpe joined the company in 1986. He retired in December 2010.

Richard W. Mears (50)

Senior Vice President, Chief Information Officer

Senior Vice President, Chief Information Officer, since joining Owens & Minor in 2005. Previously, Mr. Mears was an Executive Director with Perot Systems (now Dell Perot Systems) from 2003 to 2005, and an account executive from 1998 to 2003.

W. Marshall Simpson (42)

Senior Vice President, Sales & Operations

Senior Vice President, Sales & Operations, since April 2010. Previously, Mr. Simpson served as Senior Vice President Sales & Marketing, from 2007 until April 2010, Group Vice President, Sales & Distribution, from 2005 until 2007, and as Regional Vice President from 2004 to 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 (53)

Senior Vice President, Strategy & Business Development

Senior Vice President, Strategy & Business Development, since 2007, and Senior Vice President, Business Development, since 2006. Prior to that, Mr. Van Sumeren was Senior Vice President, OMSolutions ^SM from 2003 to 2006. Mr. Van Sumeren previously served as Vice President for Cap Gemini Ernst & Young from 2000 to 2003. He has been with the company since 2003.

Numbers inside parentheses indicate age.

Exhibit 10.9

2011 DEFERRAL ELECTION

I do not wish to participate in the

Directors’ Deferred Compensation Plan.

Name:

DEFERRAL ELECTION FORM

FOR

THE OWENS & MINOR, INC.

DIRECTORS’ DEFERRED COMPENSATION PLAN

I acknowledge that I have received a copy of and am familiar with the Owens & Minor, Inc. Directors’ Deferred Compensation Plan (the “Plan”) as amended and restated effective January 1, 2005. I elect to be a Participant (“Participant”) under the terms and conditions of the Plan and make the elections below. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Plan.

A.	DEFERRAL ELECTION

Retainer Fee

Please defer 100% / 75% / 50% / 25% / none (circle one) of my Retainer Fee payable in cash, including any annual Committee Chairman Fees, in accordance with the Plan.

Please defer 100% / 75% / 50% / 25% / none (circle one) of my Retainer Fee payable as a Stock Award in accordance with the Plan. ¹

I do not wish to defer any part of my Retainer Fee.

Meeting Fees

Please defer 100% / 75% / 50% / 25% (circle one) of my Meeting Fees in accordance with the Plan.

I do not wish to defer any part of my Meeting Fees.

This deferral election shall remain in effect with respect to all future Compensation until it is revoked or a new election is made by me in accordance with the terms of the Plan; provided, however, that on each Election Date a deferral election becomes irrevocable with respect to Compensation to be earned and payable in the calendar year after the Election Date.

¹	Note: The Stock Retainer will be deferred into the Owens & Minor, Inc. Common Stock Account and cannot be transferred to the Fixed Income Fund subaccount until the stock would have vested.

B.	INVESTMENT DIRECTIONS TO SUBACCOUNTS

The amounts deferred pursuant to Section A above shall be allocated for investment in the following Subaccounts [must be in integral multiples of 10%]

a. %

Owens & Minor Common Stock Account

b. %

Fixed Income Fund ²

100%

Deferrals of the Stock Retainer initially are deferred 100% to the Owens & Minor Common Stock Account. Investment directions and any changes thereto will become effective as provided in the Plan. A different election form must be used to change the allocation of prior years’ deferrals among the investment Subaccounts available under the Plan.

C.	DISTRIBUTION ELECTION

Distribute the Deferred Amount governed by this Deferral Election Form in accordance with the Plan as follows:

Commencement of Benefit Payments

The first day of the calendar month following the date of termination of the Participant’s service as a member of the Board.

The first day of [state month and year].

The earlier to occur of a. or b. above.

The later to occur of a. or b. above.

A Distribution Date election shall become effective on the Election Date with respect to Compensation earned and payable after the Election Date. The commencement of benefits may be postponed in accordance with the terms of the Plan in order to assure compliance with Section 16 of the Securities Exchange Act of 1934 and Section 409A of the Internal Revenue Code.

²	Interest on fees deferred to the Fixed Income Fund are based on rates of return for the Fidelity Managed Income Portfolio of the Owens & Minor, Inc. 401(k) Plan.

12/10

Number of Benefit Payments

In [not more than 180] monthly installments;

In [not more than 60] quarterly installments;

In [not more than 15] annual installments; or

In a lump sum.

D.	BENEFICIARY DESIGNATION

I designate (Social Security # or E.I.N. ) as my primary Beneficiary of any benefits that become payable under Owens & Minor, Inc. Directors’ Deferred Compensation Plan as a result of my death.

If the person I designate above predeceases me (or, if I named a trust, and if the trust is not in existence at the time of my death) I designate (Social Security # or E.I.N. ) as my contingent Beneficiary of any benefits that become payable under the Plan as a result of my death.

If a designated Beneficiary survives me but dies (or, if a trust, terminates) before all benefits have been paid to the Beneficiary, the balance remaining in the Account of the Beneficiary shall be payable to the Beneficiary’s estate in a lump sum.

This designation revokes and rescinds any prior Beneficiary designation made by me and applies to all deferrals under the Plan. I understand that this Beneficiary designation applies until revoked by my written request. I also understand that, in executing this Beneficiary designation, I agree to be bound by the terms and conditions of the Plan and agree that such terms and conditions are binding upon my Beneficiary, distributee, and personal representative.

By signing this election form, I acknowledge that I have no interest in any asset Owens & Minor, Inc. may acquire to assist it in meeting its obligations under the Plan and I confirm that, as a general creditor, I must look solely to Owens & Minor, Inc. for the payment of any amounts due me under the Plan.



Date				Participant’s Signature


Social Security Number				Print Name

12/10

Exhibit 10.10

EXECUTIVE SEVERANCE AGREEMENT

[Name]

[Title]

Dear :

Owens & Minor, Inc. (the “Company”) considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. In this connection, the Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s senior management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Company, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (the “Agreement”) in the event your employment with the Company is terminated under the circumstances described below.

Term of Agreement .

(a) The Initial Term of this Agreement shall commence on January 1, 2011, and shall end on December 31, 2011. Commencing January 1, 2012, and each other January 1 thereafter, the term of this Agreement shall be automatically extended for one additional year unless the Company, not later than September 30 of the preceding year, shall have given you written notice (a “Nonrenewal Notice”) that it does not wish to extend this Agreement. For purposes of this Agreement, the word “Term” means the Initial Term and the period of any extension pursuant to the preceding sentence or the following Paragraph 1(b).

(b) Paragraph 1(a) to the contrary notwithstanding, if a Change in Control occurs during the Term of this Agreement, the Term shall be extended, i.e. , this Agreement shall continue in effect, for a period not less than twenty-four (24) months after the month in which the Change in Control occurs.

(c) Paragraph 1(a) to the contrary notwithstanding, the Company may not give a Nonrenewal Notice during the period beginning on the date a Potential Change in Control occurs and ending on the earlier of (i) the date that is twelve (12) months after the date the Potential Change in Control occurs or (ii) the date a Change in Control occurs.

(d) Notwithstanding any other provision of this Paragraph 1, the Term of this Agreement shall end, i.e. , this Agreement shall cease to be in effect (other than Paragraphs 5 and 11 which shall continue to apply) if, before a Change in Control or Potential Change in Control your position with the Company is changed such that you no longer serve in your current position with the Company or a more senior position.

Change in Control; Potential Change in Control .

(a) No benefits shall be payable hereunder unless there is a Change in Control during the Term of this Agreement. For purposes of this Agreement, a Change in Control shall be deemed to have occurred if:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company or any employee benefit plan of the Company or any subsidiary of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities; provided, however, that an increase in the percentage of beneficial ownership in the Company’s voting securities of a “person” (as hereinabove defined) on account of acquisitions of Company securities by the Company, a subsidiary or any employee benefit plan of the Company or a subsidiary, shall be disregarded;

(ii) individuals who, as of January 1, 2011, constitute the Board (the “Incumbent Board”) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director after January 1, 2011, shall be considered as though such individual was a member of the Incumbent Board if the individual’s election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board; and provided further that any individual whose initial service as a director occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as hereinabove defined) shall not be considered a member of the Incumbent Board;

(iii) there is a merger or consolidation of the Company with any other company, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined) acquires more than 30% of the combined voting power of the Company’s then outstanding securities; or

(iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

(b) For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have occurred if:

(i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(ii) any “person” (as hereinabove defined) (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control;

-2-

(iii) any “person” (as hereinabove defined), other than an employee benefit plan of the Company or a subsidiary of the Company, who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company’s then outstanding securities, increases his beneficial ownership of such securities by 3 percentage points or more over the percentage so owned by such person on the date hereof; provided, however, that an increase in a person’s percentage of beneficial ownership in the Company’s voting securities on account of acquisitions of Company securities by the Company, a subsidiary or any employee benefit plan of the Company or a subsidiary shall be disregarded; or

(iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of the Company has occurred.

(c) You agree that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control, you will remain in the employ of the Company until the earliest of (i) the date which is 180 days from the occurrence of such Potential Change in Control of the Company, (ii) the termination by you of your employment by reason of a physical or mental illness or physical injury which has lasted, or can be expected to last, at least six months or (iii) the date on which your employment is terminated by the Company.

Termination Following Change in Control .

(a) General . If a Change in Control occurs during the Term of this Agreement, you shall be entitled to the benefits provided in Paragraph 4(b) upon the termination of your employment during the Term of this Agreement if termination is (i) by the Company for other than Cause on or after a Change in Control, (ii) by you for Good Reason on or after a Change in Control or (iii) by the Company for other than Cause no more than 90 days before a Change in Control. You shall not be entitled to the benefits provided in Paragraph 4(b) if (i) your employment with the Company is terminated for any reason before a Change in Control other than a termination by the Company for other than Cause no more than 90 days before a Change in Control or (ii) your employment with the Company is terminated on or after a Change in Control on account of your death, physical or mental illness or physical injury, by the Company for Cause or by you for any reason other than for Good Reason.

(b) Cause . Termination by the Company of your employment for “Cause” shall mean termination (i) upon the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or physical injury or any such actual or anticipated failure after you give a Notice of Termination (as defined in Paragraph 3(d)) for Good Reason (as defined in Paragraph 3(c)), or (ii) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless (i) the Company gives you a written Notice of Termination specifying the grounds that it asserts constitute Cause, (ii) you fail to cure or remedy those grounds to the satisfaction of the Company within thirty (30) days of the Company’s notice and (iii) following the thirty (30) day period the Board adopts and delivers to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above and specifying the particulars thereof in detail and that the conduct was not cured or remedied during the thirty (30) day period.

(c) Good Reason . For purposes of this Agreement, “Good Reason” shall mean, after a Change in Control, the occurrence of any of the following circumstances without your express written consent:

-3-

(i) a material diminution in your authority, duties or responsibilities as compared to your authority, duties and responsibilities immediately prior to the Change in Control;

(ii) a material reduction in your annual base salary and/or your target bonus opportunity (including any material adverse change in the formula for such annual bonus target) as in effect immediately prior to the Change in Control, or as the same may be increased from time to time thereafter (other than a reduction in annual base salary and/or target bonus opportunity of not more than ten percent (10%) and that is applied equally to all officers of the Company and/or all officers of the surviving entity in the Change in Control);

(iii) any requirement of the Company that you (A) be based more than 35 miles from the Company office at which you are principally employed immediately prior to the date of the Change in Control or (B) travel on the Company’s business to an extent substantially greater than your travel obligations immediately prior to the Change in Control;

(iv) the failure by the Company to pay to you any portion of your current compensation or compensation under any deferred compensation program of the Company within seven (7) days of the date such compensation is due;

(v) a material reduction in the benefits that you have earned or may earn under “employee pension benefit plans” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended) or a material reduction in the benefits provided under health or medical plans, in either case as compared to the terms of any such plans in which you are eligible to participate immediately prior to the Change in Control;

(vi) a change in your reporting relationship such that (A) if immediately before the Change in Control you report directly to the Company’s Chief Executive Officer, on or after the Change in Control you do not report directly to the Company’s Chief Executive Officer or (B) if immediately before the Change in Control you report directly to the Board, on or after the Change in Control you do not report directly to the Board;

(vii) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 6 hereof; or

(viii) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Paragraph 3(d) below, which purported termination shall not be effective for purposes of this Agreement.

Your right to terminate your employment for Good Reason shall not be affected by your incapacity due to physical or mental illness or physical injury. A termination will not be for Good Reason unless you give the Company written Notice of Termination specifying the grounds that you assert constitute Good Reason within ninety (90) days after the initial existence of those grounds and the Company fails to cure or remedy those grounds within thirty (30) days of your notice.

(d) Notice of Termination . Any purported termination of your employment by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 8. “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(e) Date of Termination . “Date of Termination” pursuant to Paragraph 3(b) or 3(c) shall mean, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days from the date such Notice of Termination is given, and in the case of termination for

-4-

Good Reason shall not be less than thirty (30) nor more than sixty (60) days from the date such Notice of Termination is given).

Compensation Upon Termination .

If a Change in Control occurs during the Term of this Agreement, you shall be entitled to the following benefits upon termination of your employment, provided that such termination occurs during the Term:

(a) If your employment ends for any reason other than a termination by the Company for other than Cause or by you for Good Reason, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any retirement, insurance or other compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

(b) If your employment by the Company is terminated by the Company other than for Cause, either after a Change in Control or no more than 90 days before a Change in Control, or if you terminate your employment for Good Reason after a Change in Control, you shall be entitled to the benefits provided below, subject to the provisions of Section 5:

(i) the Company shall pay you (A) your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given; (B) a lump sum cash payment equal to 50% of your base salary and prorated for the number of months of employment during the calendar year of termination; and (C) all other amounts to which you are entitled under any compensation plan of the Company, including the Company’s supplemental executive retirement plan, at the time such payments are due;

(ii) in lieu of any further salary payments to you for periods after the Date of Termination, the Company shall pay you a lump sum severance payment equal to 2.99 times the sum of (A) the greater of (1) your annual rate of base salary in effect on the Date of Termination or (2) your annual rate of base salary in effect immediately prior to the Change in Control and (B) the greater of (1) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the Date of Termination or (2) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding such Change in Control;

(iii) the Company shall pay you all reasonable legal fees and expenses incurred by you as a result of such termination, including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement (other than any such fees or expenses incurred in connection with any such claim which is determined by a court of competent jurisdiction to be frivolous) or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”);

(iv) the Company shall pay you an amount equal to 24 times the difference between (1) the monthly premium for continued health plan coverage under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), i.e. , “COBRA,” for the health plan coverage in effect for you and your dependents on the Date of Termination minus (2) the monthly premium for such coverage paid by active employees of the Company; and

(v) the Company shall pay you an amount equal to 24 times the monthly premium that you would pay if you convert your Company-provided life insurance coverage to individual life insurance coverage (regardless of whether you convert to individual coverage).

The amount payable under this Paragraph 4(b) shall be reduced, but not below zero, for any severance benefits payable to you by the Company under any other severance plan, policy, arrangement or agreement.

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The amount payable under this Paragraph 4(b) shall be paid in a single cash payment, less applicable income and employment taxes, within five business days after the Date of Termination.

(c) You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise and, except as provided in Paragraph 4(b), the amount of any payment or benefit provided for in this Section 4 shall not be reduced by any compensation earned by you as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by you to the Company, or otherwise.

Restrictive Covenants .

(a) When used in this Section 5, the following terms shall have the meanings specified:

(i) “Confidential Information” shall mean any data or information with respect to the business conducted prior to the Change in Control by the Company, its divisions, subsidiaries and affiliates that is material to the Company’s business operations and is not generally known to the public. Without limitation and to the extent consistent with the foregoing, Confidential Information includes any information that is confidential and proprietary to the Company, including but not limited to: (A) reports, pricing, sales manuals and training manuals, selling, purchasing, and pricing procedures and financing methods of the Company, together with any specific and proprietary techniques utilized by the Company in designing, developing, testing or marketing its products, product mix and supplier information or in performing services for clients, customers and accounts of the Company; (B) the business plans and financial statements, reports and projections of the Company prior to the Change in Control; (C) research or development projects or results; (D) identities and addresses of consultants, customers or clients or any other confidential information relating to or dealing with the business operations or activities of the Company; (E) information concerning trade secrets of the Company; and (F) information concerning existing or contemplated software, products, services, technology, designs, processes and research or product developments of the Company. Confidential information includes any such information that you may prepare or create during your employment with the Company, as well as such information that has been or may be created or prepared by others.

(ii) “Person” shall mean any corporation, partnership, joint venture, trust, sole proprietorship, limited liability company, unincorporated business association, natural person, and any other entity that may be treated as a person under applicable law.

(iii) “Prohibited Business” shall mean any Person who competes with the Company in the business of (a) medical/surgical supply distribution and supply chain inventory management services for providers of healthcare or manufacturers/suppliers of healthcare products, (B) selling or distributing healthcare products directly to the homes of consumers or (C) other services in competition with the services sold or being definitively planned or developed by the Company at the time of the Change in Control. However, nothing in the agreement shall be construed to prohibit you from involvement with any aspect of a portion of a Prohibited Business that is not competitive to the business operations of the Company prior to or at the time of the Change in Control.

(iv) “Restricted Area” shall mean the cities and counties within the United States of America.

(b) In consideration of the Company’s obligation to pay the severance benefits described in Paragraphs 4 (b) (ii), (iii), (iv) and (v) in accordance with this Agreement, you agree that during your employment and for a period of twelve (12) months following your Date of Termination from the Company, you will not compete with the Company within the Restricted Area by directly or indirectly performing for or providing to a Prohibited Business the same or similar duties or services that you performed for the Company within the last twelve (12) months preceding the Change in Control.

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(c) In consideration of the Company’s obligation to pay the severance benefits described in Paragraphs 4 (b) (ii), (iii), (iv) and (v) in accordance with this Agreement, independent of the foregoing provisions, you agree that during your employment and for a period of twelve (12) months following your Date of Termination from the Company, you will not directly or indirectly, market, sell, attempt to sell, provide or attempt to provide any products or services that compete with those products or services sold or provided by the Company to any Person who is a customer of the Company during the twelve (12) months of employment prior to the Change in Control or a prospective customer with whom the Company has had written contact with the six (6) months preceding the Change in Control.

(d) In consideration of the Company’s obligation to pay the severance benefits described in Paragraphs 4 (b) (ii), (iii), (iv) and (v) in accordance with this Agreement, independent of the foregoing provision, you agree that during your employment and for a period of twelve (12) months following your Date of Termination with the Company, you will not directly or indirectly, cause any Person to terminate, reduce, alter, divert, reject or refuse business with the Company.

(e) In consideration of the Company’s obligation to pay the severance benefits described in Paragraphs 4 (b) (ii), (iii), (iv) and (v) in accordance with this Agreement, independent of the foregoing provisions, you agree that during your employment and for a period of twelve (12) months following your Date of Termination from the Company, you will not, directly or indirectly, hire or attempt to hire any employee of the Company, nor will you directly or indirectly, encourage or otherwise contact any person employed by the Company to voluntarily terminate his or her employment with the Company or to cease providing service to or on behalf of the company.

(f) You acknowledge and understand that during your employment you will be making use of, acquiring or adding to the Company’s Confidential Information. In order to protect the Confidential Information, you agree that you will not in any way utilize any of the Confidential Information except in connection with your efforts for and on behalf of the Company. You agree that you will not at any time use any Confidential Information for your own benefit or the benefit of any person except the Company. Except as expressly authorized in writing by the Company, you will not at any time, copy, reproduce or remove from the Company’s premises the original or any copies of Confidential Information, and you will not at any time disclose any Confidential Information to anyone. You agree to surrender and return to the Company any and all Confidential Information in your possession or control as of your Date of Termination.

(g) You acknowledge and understand that the Company has a legitimate business interest in preventing you from taking any actions in violation of this Section 5 and that this Section 5 is intended to protect the business and good will of the Company. You further acknowledge that a breach of the provisions in this Section 5 will irreparably and continually damage the Company. You therefore agree that in the event you violate any of the terms of this Section 5, the Company will be entitled to seek injunctive relief, specific performance or other equitable remedies, breach of contract and such other causes of action for damages that may be available under the law.

(h) This Section 5 is intended to limit your right to compete only to the extent necessary to protect the Company from unfair competition. You acknowledge that you will be reasonably able to earn a livelihood without violating the terms of this Section 5. If any of the provision of this Section 5 should be deemed to exceed the time, geographic area or activity limitations permitted by applicable law, you agree that such provision may be reformed to the maximum time, geographic area and activity limitations permitted by the applicable law, and authorize a court or other trier of fact having jurisdiction to so reform such provisions.

(i) You acknowledge and understand that each subsection of this Section 5, and each provision and clause of each subsection, shall be regarded as separate and independent contractual provisions. The invalidity of any subsection, provision or clause shall not affect the other subsections, provisions or clauses and

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this Section 5 shall be construed in all respects as if such invalid or unenforceable subsection, provision or clause were omitted. If any subsection, provision or clause should be found unenforceable by a court of competent jurisdiction, it shall not impair the enforceability of the other subsections, provisions or clauses of this Section 5.

Code Section 280G .

(a) The severance pay and other payments, distributions and benefits provided by the Company to or for your benefit pursuant to this Agreement and under other plans, programs, and agreements may constitute Parachute Payments that are subject to the “golden parachute” rules of Code section 280G and the excise tax of Code section 4999. The Company and you intend to reduce any Parachute Payments (but not any payment, distribution or other benefit that is not a Parachute Payment) if, and only to the extent that, a reduction will allow you to receive a greater Net After Tax Amount than you would receive absent a reduction. The remaining provisions of this subsection describe how that intent will be effectuated.

(b) The Accounting Firm will first determine the amount of any Parachute Payments that are payable to you. The Accounting Firm will also determine the Net After Tax Amount attributable to your total Parachute Payments.

(c) The Accounting Firm will next determine the amount of your Capped Parachute Payments. Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable to your Capped Parachute Payments.

(d) You will receive the total Parachute Payments unless the Accounting Firm determines that the Capped Parachute Payments will yield you a higher Net After Tax Amount, in which case you will receive the Capped Parachute Payments. If you will receive the Capped Parachute Payments, your total Parachute Payments will be adjusted by first reducing any benefits that are not subject to Code section 409A and by next reducing any benefits that are subject to Code section 409A (in each case with the reductions first coming from cash benefits and then from noncash benefits). The Accounting Firm will notify you and the Company if it determines that the Parachute Payments must be reduced to the Capped Parachute Payments and will send you and the Company a copy of its detailed calculations supporting that determination.

(e) As a result of any uncertainty in the application of Code sections 280G and 4999 at the time that the Accounting Firm makes its determinations under this Section 6, it is possible that amounts will have been paid or distributed to you that should not have been paid or distributed under this Section 6 (“Overpayments”), or that additional amounts should be paid or distributed to you under this Section 6 (“Underpayments”). If the Accounting Firm determines, based on either controlling precedent, substantial authority or the assertion of a deficiency by the Internal Revenue Service against you or the Company, which assertion the Accounting Firm believes has a high probability of success, that an Overpayment has been made, then you shall have an obligation to pay the Company upon demand an amount equal to the sum of the Overpayment plus interest on such Overpayment at the prime rate provided in Code section 7872(f)(2) from the date of your receipt of such Overpayment until the date of such repayment; provided, however, that you shall be obligated to make such repayment if, and only to the extent, that the repayment would either reduce the amount on which you are subject to tax under Code section 4999 or generate a refund of tax imposed under Code section 4999. If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Accounting Firm will notify you and the Company of that determination and the Company will pay the amount of that Underpayment to you promptly in a lump sum, with interest calculated on such Underpayment at the prime rate provided in Code section 7872(f)(2) from the date such Underpayment should have been paid until actual payment.

(f) All determinations made by the Accounting Firm under this Section 6 are binding on you and the Company and must be made as soon as practicable but no later than thirty days after your Date of

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Termination. Within thirty days after your Date of Termination, the Company will pay to you the severance pay under Section 4 or the reduced Severance Amount as calculated by the Accounting Firm pursuant to Section 6.

(g) For purposes of this Agreement, the following terms shall have the meanings indicated below:

(i) “ Accounting Firm ” means the public accounting firm retained as the Company’s independent auditor as of the date immediately prior to the Change in Control. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, you shall be entitled to appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If, however, such firm declines or is unable to undertake the determinations assigned to it under this Agreement, then “Accounting Firm” shall mean such other independent accounting firm mutually agreed upon by the Company and you.

(ii) “ Capped Parachute Payments ” means the largest amount of Parachute Payments that may be paid to you without liability for any excise tax under Code section 4999.

(iii) “ Net After Tax Amount ” means the amount of any Parachute Payments or Capped Parachute Payments, as applicable, net of taxes imposed under Code sections 1, 3101(b) and 4999 and any state or local income taxes applicable to you as in effect on the date of the payment under Section 6 of this Agreement. The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Parachute Payments, as applicable, in effect for the year for which the determination is made.

(iv) “ Parachute Payment ” means a payment that is described in Code section 280G(b)(2) (without regard to whether the aggregate present value of such payments exceeds the limit prescribed by Code section 280G(b)(2)(A)(ii)). The amount of any Parachute Payment shall be determined in accordance with Code section 280G and the regulations promulgated thereunder, or, in the absence of final regulations, the proposed regulations promulgated under Code section 280G

Successors: Binding Agreement .

(a) The Company will require any successor (whether direct or indirect, by purchase, merger consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to terminate your employment and to receive compensation from the Company in the same amount and on the same terms to which you would be entitled hereunder if you terminate your employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(b) This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

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Notice .

For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notice to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

Code Section 409A .

This Agreement and the benefits provided under this Agreement are intended to comply with, or otherwise be exempt from, Section 409A of the Code (“Section 409A”), after giving effect to the exemptions in Treasury Regulation section 1.409A-1(b)(3) through (b)(12). This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board and without requiring your consent, in such manner as the Board determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A; provided, however, that in exercising its discretion under this Section 6, the Board shall modify this Agreement in the least restrictive manner necessary. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A.

With respect to any reimbursement of expenses of, or any provision of in-kind benefits to you, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following limitations: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made as specified in this Agreement and in no event later than the end of the year after the year in which such expense was incurred and (iii) the right to reimbursement or in-kind benefit shall not be subject to liquidation or exchange for another benefit.

If a payment obligation under this Agreement arises on account of your termination of employment and such payment obligation constitutes “deferred compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation section 1.409A-1(b)(3) through (b)(12)), it shall be payable only after your “separation from service” (as determined under Treasury Regulation section 1.409A-1(b)); provided, however, that if you are a “specified employee” (as determined under Treasury Regulation section 1.409A-1(i)), any payment that is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of your separation from service or, if earlier, within fifteen days after the appointment of the personal representative or executor of your estate following your death.

10.

Miscellaneous .

No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation,

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construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia without regard to its conflicts of law principles. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. The obligations of the Company under Section 4 shall survive the expiration of the initial or any extension term of this Agreement if benefits have become payable under such section before such expiration.

11.

Validity .

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12.

Counterparts .

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.

Arbitration .

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in the Commonwealth of Virginia, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid the benefits described in Paragraph 4(b) during the pendency of any dispute or controversy arising under or in connection with this Agreement.

14.

Entire Agreement .

This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and during the term of the Agreement supersedes the provisions of all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto with respect to the subject matter hereof.

15.

Effective Date .

This Agreement shall become effective as of the date set forth above. If this letter sets forth our agreement on the subject matter thereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject.

Sincerely,

[Name]

[Title]

Agreed as of the day

[Name]

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Exhibit 10.13

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

Amended and Restated

Effective January 1, 2005

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS


Section		Page

PURPOSE			1

ARTICLE I	DEFINITIONS		1

1.01.	Account		1
1.02.	Affiliate		1
1.03.	Beneficiary or Beneficiaries		1
1.04.	Beneficiary Designation Form		1
1.05.	Board		1
1.06.	Cash Bonus		1
1.07.	Change of Control		2
1.08.	Code		3
1.09.	Committee		3
1.10.	Company		3
1.11.	Compensation		3
1.12.	Control Change Date		3
1.13.	Deferral Election Form		3
1.14.	Deferral Year		3
1.15.	Deferred Benefit		3
1.16.	Disability or Disabled		3
1.17.	Distribution Election Form		4
1.18.	Election Date		4
1.19.	Eligible Employee		4
1.20.	Investment Options		4
1.21.	Participant		5
1.22.	Plan		5
1.23.	Salary		5
1.24.	Specified Employee		5
1.25.	Terminate, Terminating, or Termination		5

ARTICLE II	PARTICIPATION		6

ARTICLE III	DEFERRAL ELECTIONS		7

3.01.	Eligibility To Make Deferral Election		7
3.02.	Effectiveness of Deferral Election		7
3.03.	Compensation That May Be Deferred		7
3.04.	Deferral Election Irrevocable		7
3.05.	Rejection of Deferral Election		8
3.06.	Effect of No Election		8

(i)

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN


ARTICLE IV	CREDITING DEFERRALS TO ACCOUNTS	9

ARTICLE V	INVESTMENT MEASURES	10

5.01.	Investment Subaccounts	10
5.02.	Investment Options	10
5.03.	Investment Direction	10
5.04.	New Investment Directions	10
5.05.	Investment Transfers	10
5.06.	Crediting Earnings & Losses	11

ARTICLE VI	VESTING	12

ARTICLE VII	DISTRIBUTIONS	13

7.01.	Distribution Elections	13
7.02.	Commencement of Distributions	13
7.03.	Medium of Payment	14
7.04.	Form of Payment	14
7.05.	Changing Distribution Election	14
7.06.	Hardship Distributions	14

ARTICLE VIII	COMPANY’S OBLIGATION	15

ARTICLE IX	CONTROL BY PARTICIPANT	16

ARTICLE X	AMENDMENT OR TERMINATION	17

ARTICLE XI	ADMINISTRATION	18

11.01.	Committee	18
11.02.	Indemnification	18
11.03.	Eligibility Determinations	18
11.04.	Information to Committee	18
11.05.	Notices	18
11.06.	Waiver	18
11.07.	Binding Nature of Plan	19
11.08.	Construction	19

EXHIBIT I INVESTMENT OPTIONS

(ii)

PURPOSE

The Owens & Minor, Inc. Executive Deferred Compensation Plan (the “Plan”) is intended to constitute a deferred compensation plan for a select group of management and highly compensated employees of the Company and its Affiliates as those terms are used in the Employee Retirement Income Security Act of 1974. The Plan will be administered and interpreted in a manner that is consistent with that intent.

The Plan was originally effective as of , 2004. The Plan, as amended and restated herein, is intended to satisfy the requirements of Section 409A of the Code. The Plan will be administered and interpreted in a manner that is consistent with that intent. this amendment and restatement of the Plan is effective as of January 1, 2005.

ARTICLE I

DEFINITIONS

The following definitions apply to this Plan and to the Deferral Election Forms and Beneficiary Designation Forms.

1.01.

Account

Account means an unfunded deferred compensation account established to record a Participant’s interest in the Plan. The term Account encompasses the subaccounts established for each Investment Option.

1.02.

Affiliate

Affiliate means

(a) any entity that is a member of a controlled group of corporations as defined in Code section 1563(a), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(c), of which the Company is a member according to Code section 414(b); or

(b) an unincorporated trade or business that is under common control with the Company as determined according to Code section 414(c).

1.03.

Beneficiary or Beneficiaries

Beneficiary or Beneficiaries means a person or persons or other entity designated on a Beneficiary Designation Form by a Participant as allowed in Article VII of this Plan to receive a Deferred Benefit payment. If there is no valid designation by the Participant, or if the designated Beneficiary or Beneficiaries fail to survive the Participant or otherwise fail to take the Deferred Benefit, the Participant’s Beneficiary is the first of the following who survives the Participant: a Participant’s spouse (the person legally married to the Participant when the Participant dies); the Participant’s children in equal shares; and the Participant’s estate.

1.04.

Beneficiary Designation Form

Beneficiary Designation Form means a form acceptable to the Committee used by a Participant according to this Plan to name his or her Beneficiary or Beneficiaries who will receive all Deferred Benefit and payments under this Plan if he dies.

1.05.

Board

Board means the board of directors of the Company.

1.06.

Cash Bonus

Cash Bonus, with respect to a Deferral Year, means any bonus or other similar payment from the Company or an Affiliate that is (i) paid to an Eligible Employee in cash, and (ii) is

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

based on the performance of the Company, an Affiliate, the Eligible Employee, or any of them, during the Deferral Year, even if paid after the close of the Deferral Year.

1.07.

Change of Control

Change of Control means any of the following events:

(a) Any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities;

(b) During any period of two consecutive years (not including any period prior to the effective date of this Plan), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board of nomination for election by the Company’s stockholders was approved by a vote of a majority of the directors then still in office who either (x) were directors at the beginning of such period or (y) were so elected or nominated with such approval, cease for any reason to constitute at least a majority of the Board;

(c) The stockholders of the Company approve a merger or consolidation of the Company with any other Company, other than (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined) acquired more than 20% of the combined voting power of the Company’s then outstanding securities; or

(d) The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, the occurrence of one of the preceding events shall not constitute a Change in Control unless it also constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets, all as determined in accordance with the regulations under Section 409A of the Code.

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

1.08.

Code

Code means the Internal Revenue Code of 1986, as amended.

1.09.

Committee

Committee means the Compensation and Benefits Committee of the Board.

1.10.

Company

Company means Owens & Minor, Inc. and any successor business by merger, purchase, or otherwise that maintains the Plan.

1.11.

Compensation

Compensation means an Eligible Employee’s aggregate combined Salary and Cash Bonus for a Deferral Year.

1.12.

Control Change Date

Control Change Date means the date on which a Change of Control occurs. If a Change of Control occurs on account of a series of transactions, the “Control Change Date” is the date of the last of such transactions.

1.13.

Deferral Election Form

Deferral Election Form means a document governed by the provisions of Articles III, V and VII of this Plan, including (i) the portion that is the Distribution Election Form and (ii) the related Beneficiary Designation Form that applies to all of that Participant’s Deferred Benefits under the Plan.

1.14.

Deferral Year

Deferral Year means a calendar year for which a Participant has an operative Deferral Election Form.

1.15.

Deferred Benefit

Deferred Benefit means the benefit payable under the Plan.

1.16.

Disability or Disabled

Disability or Disabled means that a Participant is unable to perform the material duties of his position with the Company or an Affiliate on account of a mental or physical condition or impairment as determined by the Committee in its sole and absolute discretion.

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EXECUTIVE DEFERRED COMPENSATION PLAN

1.17.

Distribution Election Form

Distribution Election Form means that part of a Deferral Election Form used by a Participant according to this Plan to establish the duration of deferral and the frequency of payments of a Deferred Benefit. If a Deferred Benefit has no Distribution Election Form that is operative according to Article III, distribution of that Deferred Benefit is governed by Article VII.

1.18.

Election Date

Election Date means the date established by this Plan as the last date on which an Eligible Employee may submit a valid Deferral Election Form to the Committee. Except as provided in the following paragraph, the Election Date for each Deferral Year is December 31 of the preceding calendar year.

Notwithstanding the preceding paragraph, Election Date means the thirtieth day after an individual becomes an Eligible Employee if the individual was not previously eligible to participate in a nonqualified deferred compensation plan maintained by the Company or an Affiliate that provided a benefit based on the value of each participant’s account. A Deferral Election Form that is submitted to the Committee pursuant to the preceding sentence may defer Salary and Cash Bonus that is earned and payable after the date of the Deferral Election Form; provided, however, that only a pro rata amount of the Cash Bonus may be affected by the Deferral Election Form if the performance measurement period for the Cash Bonus began before the date of the Deferral Election Form. The pro ration shall be determined based on the number of days remaining in the performance measurement period for the Cash Bonus after the date of the Deferral Election Form and the total number of days in the performance measurement period.

1.19.

Eligible Employee

Eligible Employee means an employee of the Company or an Affiliate who is a member of a select group of management or a highly compensated employee (as such terms are used in Section 201(2) of the Employee Retirement Income Security Act of 1974), and who is designated by the Committee as eligible to elect a Deferred Benefit under Article III. Once an individual is designated by the Committee as eligible to elect a Deferred Benefit under Article III, such employee shall continue to be an Eligible Employee until the date he is no longer a member of management or a highly compensated employee or the date the Committee declares he or she is no longer eligible to elect a Deferred Benefit.

1.20.

Investment Options

Investment Options shall mean the investment options shown on Exhibit I, or otherwise announced by the Committee from time to time.

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EXECUTIVE DEFERRED COMPENSATION PLAN

1.21.

Participant

Participant, with respect to any Deferral Year, means an Eligible Employee whose Deferral Election Form is operative for that Deferral Year according to Article III of this Plan.

1.22.

Plan

Plan means the Owens & Minor, Inc. Executive Deferred Compensation Plan.

1.23.

Salary

Salary means an Eligible Employee’s base salary and does not include bonuses or other payments from the Company or an Affiliate that are not made on a regular basis.

1.24.

Specified Employee

Specified Employee means a Participant who is a “specified employee” under Section 409A of the Code.

1.25.

Terminate, Terminating, or Termination

Terminate, Terminating, or Termination, with respect to a Participant, mean cessation of an employment relationship with the Company or an Affiliate whether by death, Disability, retirement or severance for any other reason. Terminate, Terminating, or Termination do not include situations where the Participant transfers employment among the Company and one of its Affiliates.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE II

PARTICIPATION

An Eligible Employee becomes a Participant for any Deferral Year by filing a valid Deferral Election Form according to Article III on or before the applicable Election Date but only if his or her Deferral Election Form is operative according to Article III. An Eligible Employee who becomes a Participant will continue to be a Participant as long as an Account is being maintained (or is required to be maintained under the terms of the Plan) for him or her.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE III

DEFERRAL ELECTIONS

3.01.

Eligibility To Make Deferral Election

An individual may elect a Deferred Benefit for any Deferral Year if he or she is an Eligible Employee at the beginning of that Deferral Year. An individual may elect a Deferred Benefit for the Deferral Year in which he or she first becomes an Eligible Employee only as permitted under the second paragraph of Section 1.18. Each Eligible Employee will be provided a Deferral Election Form by the Committee before the first day of a Deferral Year and each individual who first becomes an Eligible Employee and who is entitled to elect a Deferred Benefit under the second paragraph of Section 1.18 will be provided a Deferral Election Form by the Committee within thirty days after first becoming an Eligible Employee.

3.02.

Effectiveness of Deferral Election

A Deferral Election Form is effective when it is completed, signed by the electing Eligible Employee and received by the Committee. A single Deferral Election Form may apply to each element of an Eligible Employee’s Compensation ( e.g. , Salary and Cash Bonus) for a Deferral Year. Alternatively, an Eligible Employee may have more than one Deferral Election Form for a Deferral Year; provided, however, that only one Deferral Election Form will be effective with respect to a particular element of the Eligible Employee’s Compensation.

3.03.

Compensation That May Be Deferred

(a) A Deferral Election Form may result in the deferral of Compensation, only if it is effective on or before the applicable Election Date.

(b) Subject to the requirements of Section 3.03(a), an Eligible Employee may elect to defer:

(1) Up to % of Salary (in multiples of 1%); and

(2) Up to % of Cash Bonus (in multiples of 1%).

3.04.

Deferral Election Irrevocable

An Eligible Employee may not revoke a Deferral Election Form as to an element of Compensation after the applicable Election Date. Any revocation before the applicable Election Date is the same as a failure to submit a Deferral Election Form or a Distribution Election Form as to the particular element or elements of Compensation covered by the revocation. Any writing signed by an Eligible Employee expressing an intention to revoke his or her Deferral Election Form, in whole or in part, and delivered to the Committee before the close of business on the applicable Election Date is a revocation.

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EXECUTIVE DEFERRED COMPENSATION PLAN

3.05.

Rejection of Deferral Election

If it does so before the applicable Election Date, the Committee may reject any Deferral Election Form, in whole or in part, and the Committee is not required to state a reason for any rejection. The Committee’s rejections must be made on a uniform basis with respect to similarly situated Participants. If the Committee rejects a Deferral Election Form, the Participant must be paid the Compensation he or she would then have been entitled to receive if he or she had not submitted the rejected Deferral Election Form.

3.06.

Effect of No Election

An Eligible Employee who has not submitted a valid Deferral Election Form to the Committee on or before the applicable Election Date may not defer any Compensation for the Deferral Year under this Plan.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE IV

CREDITING DEFERRALS TO ACCOUNTS

Compensation that is deferred under this Plan shall be credited to the Participant’s Account as follows:

(1) Salary deferrals shall be credited to the Participant’s Account as of the last day of the payroll period in which the deferred Salary would have been paid to the Participant; and

(2) Cash Bonus deferrals shall be credited to the Participant’s Account as of the date such amount would have been paid to the Participant.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE V

INVESTMENT MEASURES

5.01.

Investment Subaccounts

The Committee shall establish investment subaccounts within the Account of each Participant. The investment subaccounts shall be established only for bookkeeping purposes. An investment subaccount shall be established for each Investment Option.

5.02.

Investment Options

The Investment Options shall be selected by the Committee and identified on Exhibit I to the Plan. The Committee may change, delete or modify any of the Investment Options without the necessity of amending the Plan.

5.03.

Investment Direction

At the time an Eligible Employee first becomes a Participant, the Participant shall choose one or more of the Investment Options in integral multiples of 10%. Such Investment Options will be used as a measure of the investment performance of the Participant’s Account. An investment direction shall remain in effect with respect to all future deferrals until a new investment direction is made by the Participant in accordance with Section 5.04. To the extent a Participant fails to select an Investment Option, he or she shall be deemed to have elected the Investment Option designated as the default investment measure on Exhibit I.

5.04.

New Investment Directions

Once each calendar quarter a Participant may change his or her election direction among the Investment Options for future deferrals credited to his or her Account in accordance with procedures established by the Committee. An election to change an Investment Option shall be made on forms designated for this purpose by the Committee and shall specify the Investment Options that will be used to measure the investment performance of future deferrals in integral multiples of 10%. Until a Participant delivers a new election form to the Committee, his or her prior Investment Option selection shall control the measure of investment performance of his or her Account.

5.05.

Investment Transfers

A Participant or a Beneficiary (after the death of the Participant), may transfer to one or more different Investment Options all or a part (in integral multiples of 10%), of the amount credited to the Participant under an Investment Option. The transfer election shall be made on forms designated for this purpose by the Committee. A Participant may transfer among Investment Options in accordance with procedures established by the Committee; provided, however, that a Participant may not reallocate his or her Account among the Investment Options more than once each calendar quarter.

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EXECUTIVE DEFERRED COMPENSATION PLAN

5.06.

Crediting Earnings & Losses

Earnings and losses will be credited to, or debited from, a Participant’s Account as if such account balances were invested and the earnings reinvested in the Investment Options selected by the Participant (or if no Investment Options were selected for a portion of the Participant’s accounts, as if such account balances were invested according to the last sentence of Section 5.03) in the manner set forth in the following sentence. As of the last business day of each month in which any amount remains credited to the Account of a Participant, each portion of such Account deemed invested in a particular Investment Option shall either be credited or debited with an amount equal to the amount determined by multiplying the balance of such portion of such account as of the last day of the preceding month by the return rate for that month for the applicable Investment Option. As to any amount distributed or transferred from an Investment Option since the last day of the preceding month, the Company shall cease crediting and debiting the Participant’s subaccount for that Investment Option with earnings and losses on the last day of the month preceding the date of distribution.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE VI

VESTING

A Participant’s interest in his or her Account is always vested and nonforfeitable.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE VII

DISTRIBUTIONS

7.01.

Distribution Elections

Each Distribution Election Form is part of the Deferral Election on which it appears or to which it states it is related. The Committee may allow a Participant to file one Distribution Election Form for all of his or her Deferred Benefits.

7.02.

Commencement of Distributions

(a) Except as provided in the following subsections (b), (c), (d) and (e), payments to a Participant shall begin on the date or event he or she elects on the Distribution Election Form or in accordance with the last sentence of this Section 7.02(a). A Participant may elect on his or her Distribution Election Form that payments will begin on one of the following dates or events, the first to occur of two or more of the following dates or events or the last to occur of two or more of the following dates or events:

(1)

on the last day of the month in which his or her Termination occurs;

(2)

on the last day of the month in which he or she attains a specified age; or

(3)

on the last day of a specified month in a specified year.

Any Deferred Benefits for which a Participant has not filed a valid Distribution Election Form shall be paid to the Participant commencing on the earlier of the last day of the month in which the Participant attains age sixty-five or the last day of the month in which his or her Termination occurs.

(b) If a Participant Terminates as a result of Disability, his or her Deferred Benefits will be paid to the Participant in installments over a period of ten years commencing on the date of Termination. Notwithstanding the preceding sentence, the payment of benefits to a Specified Employee shall be governed by Section 7.02(e). If, after his or her Termination as a result of Disability, the Participant recovers before the balance in his or her Account is exhausted, distributions will be suspended and any remaining Deferred Benefits will be paid in accordance with the Participant’s Distribution Election Form and this Article VII.

(c) Upon the death of a Participant, the balance in his or her Account will be paid to the Participant’s Beneficiary in a lump sum on the last day of the month in which the Participant’s death occurs.

(d) The balance of the Participant’s Account shall be paid to the Participant (or his or her Beneficiary) in a lump sum within thirty days after a Control Change Date.

(e) If the Participant is a Specified Employee and if a distribution is payable on account of Termination for a reason other than Participant’s death or disability (as defined under

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EXECUTIVE DEFERRED COMPENSATION PLAN

Section 409A), then the distribution will be paid or commence to be paid as of the first day of the seventh month beginning after the Participant’s Termination. If the Participant’s benefit is payable in installments, the first such payment shall include any installments that would have been payable to the Participant prior to the first day of the seventh month beginning after his or her Termination but for the delay in payment required by the preceding sentence.

7.03.

Medium of Payment

All distributions from the Plan shall be paid in cash.

7.04.

Form of Payment

Except for payments triggered by a Participant’s Disability (which are governed by Section 7.02(b)), Deferred Benefits shall be paid in a lump sum unless the Participant’s Distribution Election Form specifies installment payments over a period of up to fifteen years (in which case the installments are treated as a single payment for purposes of Section 7.05 and Section 409A of the Code). If permitted on a Distribution Election Form, a Participant may elect one form of distribution if the payment begins on particular dates and another form of distribution if the payment begins on account of Termination. Installment payments shall reduce the Participant’s interest under each Investment Option pro rata.

7.05.

Changing Distribution Election

A Participant may amend his or her Distribution Election Form with respect to the commencement of distributions, the form of distributions or both if (i) the amended Distribution Form is completed and submitted to the Committee at least one year before the date that payments are scheduled to begin under the previous Distribution Election Form, (ii) the new Distribution Form is not given effect for one year after it is submitted to the Committee, (iii) the date that payments commence under the new Distribution Election Form is at least five years after the date that payments were scheduled to commence under the previous Distribution Election Form and (iv) the change in commencement date, form of payment or both conforms to the requirements of the Plan. The requirements of this Section 7.05 shall be applied in accordance with the regulations under Section 409A(a)(4)(C) of the Code.

7.06.

Hardship Distributions

(a) At its sole discretion and at the request of a Participant before or after the Participant’s Termination, the Committee may accelerate and pay all or part of a Participant’s Deferred Benefits under this Plan. Accelerated distributions may be allowed only in the event of an “unforeseeable emergency” (as defined under Section 409A of the Code). An accelerated distribution must be limited to the amount determined by the Committee to be necessary to satisfy the unforeseeable emergency. A Deferred Benefit is adjusted for a distribution under this section by reducing the Participant’s Account balance by the amount of the distribution. A distribution under this section shall reduce the Participant’s interest under each Investment Option pro rata.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE VIII

COMPANY’S OBLIGATION

The Plan is unfunded. A Deferred Benefit is at all times a mere contractual obligation of the Company. A Participant and his or her Beneficiaries have no right, title, or interest in the Deferred Benefits or any claim against them. All Deferred Benefits will be satisfied solely out of the general corporate assets of the Company, which shall remain subject to the claims of its creditors and the creditors of any Affiliate that is an employer of a Participant. The Company may establish one or more trusts under which payments may be made that will satisfy the Company’s obligations under this Plan to the extent of such payments. The assets of any such trusts will remain subject to the claims of the creditors of the Company and any Affiliate that is an employer of a Participant.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE IX

CONTROL BY PARTICIPANT

A Participant has no control over Deferred Benefits except according to his or her Deferral Election Forms, his or her Distribution Election Forms, his or her Beneficiary Designation Form, and any Investment Options elected on the form specified by the Committee. A Participant may not transfer or assign any rights that he or she has under the Plan other than by will or the laws of descent and distribution or by the designation of a Beneficiary. No right or interest of any Participant or Beneficiary under the Plan shall be liable for, or subject to, any lien, obligation or liability of such Participant or Beneficiary.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE X

AMENDMENT OR TERMINATION

Except as otherwise provided in this Article X, this Plan may be altered, amended, suspended, or terminated at any time by the Board; provided, however, that an amendment or termination of the Plan shall not result in a distribution of Deferred Benefits unless the distribution is permitted under Section 409A of the Code. Except for a termination of the Plan caused by the determination of the Board that the laws upon which the Plan is based have changed in a manner that negates the Plan’s objectives, the Board may not alter, amend, suspend, or terminate this Plan without the majority consent of all Eligible Employees if that action would result either in a distribution of all Deferred Benefits in any manner other than as provided in this Plan or that would result in immediate taxation of Deferred Benefits to Participants.

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EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE XI

ADMINISTRATION

11.01.

Committee

The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee may adopt such rules and regulations as may be necessary to carry out the purposes hereof. The Committee’s interpretation and construction of any provision of the Plan shall be final and conclusive.

11.02.

Indemnification

The Company shall indemnify and hold harmless each member of the Committee against any and all expenses and liabilities arising out of membership on the Committee relating to administration of the Plan, excepting only expenses and liabilities arising out of a member’s own willful misconduct. Expenses against which a member of the Committee shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled.

11.03.

Eligibility Determinations

In addition to the powers hereinabove specified, the Committee shall have the power to select which employees of the Company and its Affiliates will be eligible to elect a Deferred Benefit under the Plan, to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is entitled to a benefit under the Plan.

11.04.

Information to Committee

To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the compensation of all Participants, their retirement, death or other cause for termination of employment, and such other pertinent facts as the Committee may require.

11.05.

Notices

Notices and elections under this Plan must be in writing. A notice or election is deemed delivered if it is delivered personally or if it is mailed by registered or certified mail to the person or business at its last known business address.

11.06.

Waiver

The waiver of a breach of any provision in this Plan does not operate as and may not be construed as a waiver of any later breach.

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EXECUTIVE DEFERRED COMPENSATION PLAN

11.07.

Binding Nature of Plan

The Plan shall be binding upon the Company, its Affiliates and the successors and assigns of the Company and its Affiliates, subject to the provisions set forth in Article X, and upon a Participant, his or her Beneficiary, and either of their assigns, heirs, executors or committees.

11.08.

Construction

This Plan is created, adopted, and maintained according to the laws of the Commonwealth of Virginia (except its choice-of-law rules). It is governed by those laws in all respects. Headings and captions are only for convenience; they do not have substantive meaning. If a provision of this Plan is not valid or not enforceable, that fact in no way affects the validity or enforceability of any other provision. Use of one gender includes all, and the singular and plural include each other.

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EXECUTIVE DEFERRED COMPENSATION PLAN

EXHIBIT I

INVESTMENT OPTIONS

A fixed income fund designated by the Committee and communicated to Eligible Employees.

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EXECUTIVE DEFERRED COMPENSATION PLAN

OWENS & MINOR, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

Deferral Election Form

I. ACKNOWLEDGEMENT

I acknowledge that I have received a copy of the Owens & Minor, Inc., Executive Deferred Compensation Plan (hereinafter the “Plan”), that I am familiar with the provisions of the Plan and that my participation therein is subject to its terms and conditions.

I elect to participate in the Plan according to its provisions and according to the elections completed below. All capitalized terms not defined herein have the same meaning as given those terms in the Plan.

I also acknowledge that my Deferral Election in this Form is effective only with respect to Salary and any Cash Bonus that is not yet payable or paid.

II. PARTICIPANT INFORMATION

Please complete the blanks in A and B as necessary.

A.	General Information


1.		Name of Participant



2.		Address



3.		Social Security Number



4.		Date of Birth

B.	Purpose of this Form

This Form represents one or more of the following:


1.				an initial election to defer Salary or Cash Bonus
2.				a request to change or revoke a prior election as to future Deferrals of Salary or Cash Bonus
3.				a request to change an existing Distribution Election

Note that any request to change your Distribution Election with respect to deferrals for previous years (a) must be submitted at least one year before distributions are scheduled to commence under the prior election, (b) will not be given effect until one year after the new election is submitted, (c) must postpone the distribution at least five

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EXECUTIVE DEFERRED COMPENSATION PLAN

years from the date distributions will commence under the previous election and (d) the distribution event and form of payment must be consistent with the Plan.

III. DEFERRAL ELECTION

Please mark the appropriate elections and complete the blanks as necessary.

A.	Salary Deferral


1.				Please defer % (up to 100% in 1% multiples) of my Salary earned for each payroll period following the applicable Election Date as provided under the Plan. I understand that the amount deferred above will be deducted from my Salary that is paid on the last day of the payroll period following the Election Date for which this Deferral Election Form is effective. *(Use this election to make an initial Salary deferral election, to increase a prior Salary election or to reduce (but not revoke) a prior Salary deferral election.)*

2.				I do not wish to defer any part of my Salary.

3.				Please revoke my prior election to defer Salary.

B.	Cash Bonus Deferral


1.				Please defer % (up to 100% in 1% multiples) of my Cash Bonus for each performance period after the applicable Election Date as provided under the Plan. I understand that the amount deferred will be deducted from my Cash Bonus at the time or times that such Cash Bonus is to be paid. *(Use this election to make an initial Cash Bonus deferral election, to increase a prior Cash Bonus deferral election or to reduce (but not revoke) a prior Cash Bonus deferral election.)*

2.				I do not wish to defer any part of my Cash Bonus.

3.				Please revoke my prior election to defer Cash Bonus.

I acknowledge that the Deferral Election(s) shown above will remain in effect until I amend or revoke the election(s) by submitting a new election form.

IV. DISTRIBUTION ELECTION

Complete this Section to specify when your Deferred Benefits should be distributed and whether the distribution of your Deferred Benefits will be paid in a single sum or in installments.

Please mark the appropriate elections and complete the blanks as necessary.

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EXECUTIVE DEFERRED COMPENSATION PLAN

A. Commencement Date for Distribution

Please distribute amounts credited to my Account on the following date (the “Distribution Date”). (You may select any combination of 1, 2 or 3 below if you also select either the “earlier of” or “later of” provisions set forth below.)



1.				The last day of the calendar month in which I attain age [specify age which is at least one year after the applicable Election Date for this Deferral Election Form].

2.				The last day of the calendar month following the date of my termination of employment with the Company and its Affiliates (whether upon the Participant’s death, disability or otherwise).

3.				The last day of [specify month and year which is at least one year after the applicable Election Date for this Deferral Election Form.].

				The Distribution Date will be the earlier or earliest to occur of any of the dates checked in 1, 2 or 3 above.

				The Distribution Date will be the last to occur of any of the dates checked in 1, 2, or 3 above.

				Note: Notwithstanding your election, the Plan provides that (i) the balance in your Account will be paid to your Beneficiary in a lump sum on the last day of the month in which your death occurs, (ii) the balance in your Account will be paid to you in a lump sum within thirty days after a Change in Control and (iii) if your employment Terminates on account of Disability, distributions will commence as of the date of Termination.

				Note: Distributions on account of Termination will be postponed for six months as required by Section 409A of the Internal Revenue Code if you are a Specified Employee.

B. Method of Distribution


1.				I elect for my Deferred Benefit to be paid in installments as specified in a, b, or c below:

				a. monthly installments for years (insert a whole number up to 15).

				b. quarterly installments for years (insert a whole number up to 15).

				c. annual installments for years (insert a whole number up to 15).

				Note: the actual amount of monthly, quarterly or annual installments may differ somewhat from year to year, as a result of variances in earnings and losses over the payment period.

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EXECUTIVE DEFERRED COMPENSATION PLAN


2.				I elect for my Deferred Benefit to be paid in a lump sum.

3.				I elect for my Deferred Benefit to be paid in one form (an installment method or lump sum) if commencement is triggered by a particular date and a different form (an installment method or lump sum) if commencement is triggered by Termination. [specify which method of distribution applies to which commencement events elected above]







				Note: If a Participant terminates employment on account of a Disability, any Deferred Benefit will be paid to the Participant in installments over ten (10) years commencing on the date his/her Disability is certified by the Committee unless the Committee, in its sole discretion, approves a longer or shorter payment period.

				Note: Distributions triggered by death or Change in Control are paid in a lump sum.

Subject to the terms and conditions of the Plan, I am submitting this Deferral Election Form. I understand that my election to defer all or any part of my Salary or Cash Bonus in accordance with this Deferral Election Form is irrevocable after the applicable Election Date.

Signature of Participant

Date


ACCEPTED

By:



Date:

Exhibit 10.22

Fifth Amendment

to the

Owens & Minor, Inc. Pension Plan

(Amended to include all amendments adopted through December 15, 2009)

Pursuant to the provisions set forth in Section 10.01 of the Owens & Minor, Inc. Pension Plan (the “Plan”), the Plan is hereby amended, effective as of the dates set forth below:

First: Effective January 1, 2010, the “Introduction” is amended by replacing the penultimate sentence with the following:

Effective December 31, 1996, the Plan became frozen to new participants and with respect to Credited Service and Service. The accrued benefits of Employees who were Participants on such date became frozen, unless such individuals were eligible for transition Accrued Benefits as described in Section 1.02.

Effective January 1, 2002, the Plan was amended to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). Such amendments were intended as good faith compliance with the requirements of EGTRRA and guidance issued thereunder.

The Plan was further amended for IRS Notice 2005-5 and the final Treasury Regulations for IRC Section 401(a)(9) required minimum distributions. The Plan was further amended for the Pension Protection Act of 2006, and for good faith compliance with the final Treasury Regulations for IRC Section 415.

Second: Effective March 31, 2010, the “Introduction” is further amended by adding the following as the last paragraph:

The Plan is amended and restated effective January 1, 2010. The Plan is finally amended effective March 31, 2010, to terminate the Plan and to comply with any requirement of the IRC currently effective as of such date.

Third: Effective for Plan Years beginning on and after January 1, 2009, Plan section 1.09, “Compensation,” is amended by adding the following paragraph at the end thereof:

Differential Wage Payments to Active Duty Members of the Uniformed Services. To the extent required by law or as provided by the Committee, any differential wage payments, as defined in IRC Section 3401(h), made to a Participant with respect to any period during which the Participant is performing services in the uniformed services (as defined in chapter 43 of title 38, United States Code) while on active duty for a period of more than 30 days, shall be Compensation for Plan purposes with respect to amounts paid after December 31, 2008.

Fourth: Effective for Plan Years beginning on and after January 1, 2009, Plan section 1.19, “Employee,” is amended by adding the following paragraph at the end thereof:

Effective for Plan Years beginning on and after January 1, 2009, a Participant who is performing services in the uniformed services (as defined in chapter 43 of title 38, United States Code) while on active duty for a period of more than 30 days and receiving a differential wage payment described in Section 1.09 from the Employer shall be treated as an Employee for all purposes under the Plan.

Fifth: Effective January 1, 2010, the first sentence in the first paragraph of Plan section 4.02, “Available Options,” is replaced with the following sentence:

Subject to Sections 4.05(a)-(e), no less than 30 days and no more than 180 days (90 days for Plan Years starting before January 1, 2010) prior to the Annuity Starting Date, each Participant and his Spouse shall be given a written notice to the effect that benefits thereafter payable shall be in the form specified in Section 4.03 unless the Participant, with the written consent of his Spouse, elects to the contrary during the 180-day period (90-day period, for Plan Years starting before January 1, 2010) prior to the Annuity Starting Date.

Sixth: Effective January 1, 2010, Plan section 4.02 is further amended by replacing the last sentence in the firs paragraph with the following sentence:

If a Participant or his Spouse requests additional information, as permitted under the terms of the notice, commencement of benefits for any purpose hereunder shall not begin until at least 180 days (90 days, for Plan Years starting before January 1, 2010) following the receipt of such additional information.

Seventh: Effective January 1, 2010, Plan section 4.03, “Automatic Option,” is amended by replacing the first sentence in the second paragraph with the following sentence:

It is specifically provided that, subject to Sections 4.06(a)-(e), the Spouse of the Participant shall consent in writing to any form of payment other than that provided under this Section 4.03 during the 180-day period (90-day period, for Plan Years starting before January 1, 2010) prior to the Annuity Starting Date.

Eighth: Effective March 1, 2010, Plan section 4.04, “Lump Sum Payments,” is amended by replacing the first and second paragraphs therein with the following:

Notwithstanding any other provisions of this Plan, if the Actuarial Equivalent of a terminated or retiring Participant’s vested Accrued Benefit payable at Normal Retirement Date as calculated at the date of distribution does not exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)) (including any previous distributions made to the Participant) or such other amount as may be prescribed by the Secretary of Treasury, the Committee shall direct that such amount be paid in a lump sum to such terminated or retiring Participant. If the Actuarial Equivalent of a Participant’s vested Accrued Benefit at the time of any distribution hereunder exceeds five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)), (including any previous distributions made to the Participant) then the Actuarial Equivalent of the vested Accrued Benefit at any subsequent time shall be deemed to exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)).

Notwithstanding the previous sentences, and effective March 28, 2005, if the Actuarial Equivalent of a Participant’s vested Accrued Benefit at the time the Participant is eligible for a distribution does not exceed one thousand dollars ($1,000), the benefit will be distributed to the Participant in a single lump sum payment as soon as administratively practicable after the Participant has terminated or retired. If the Actuarial Equivalent of the Participant’s vested Accrued Benefit exceeds one thousand dollars ($1,000) but does not exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)), the Participant may elect, without the consent of any other person, to receive the distribution directly in a lump sum or to defer the distribution until no later than the date the Participant attains age 65, in accordance with such procedures as the Plan Administrator may elect consistent with applicable law. If such Participant does not elect to receive the distribution, the Participant’s vested Accrued Benefit shall continue to be held in the Plan until the date the Participant attains age 65 when it shall be distributed in a lump sum. Consent of the Participant’s Spouse, if otherwise applicable, is required only if the Participant’s vested Accrued Benefit exceeds five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)), in accordance with Section 4.06 (previously, Section 4.07).

Ninth: Effective January 1, 2010, Plan section 4.05, “Rollover Distributions,” is amended by restating paragraph (b)(i) to read as follows:

Eligible Rollover Distribution — An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: (A) any distribution that is one of a series of substantially equal periodic payments, (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or any distribution for a specified period of ten (10) years or more; (B) any hardship distribution; or (C) any distribution to the extent such distribution is required under IRC Section 401(a)(9). For Plan Years beginning after December 31, 2009, Eligible Rollover Distribution shall include any distribution to a designated Beneficiary that would be treated as an eligible rollover distribution if the requirements of IRC Section 402(c)(11) were satisfied.

Tenth: Effective January 1, 2010, Plan section 4.05(c), “Rollover Distributions, Rollover Notice” is replaced with the following:

(c) Rollover Notice. The Committee shall provide to each Participant who is entitled to make an Eligible Rollover Distribution a notice that describes the Plan’s default distribution procedure in the event the Participant fails to make a rollover election and that satisfies IRC Section 402(f) at least 30 but not more than 180 days (90 days, for Plan Years starting before January 1, 2010) before the Participant’s Annuity Starting Date.

Eleventh: Effective March 1, 2010, Plan section 4.06, “Consent Prior to Distribution from the Plan,” is amended by replacing the first paragraph with the following:

Notwithstanding anything contained in the Plan to the contrary, the written consent of the Participant and his Spouse (or where either the Participant or the Spouse has died, the survivor) shall be required prior to any distribution of any portion of the Accrued Benefit if the present value of the nonforfeitable Accrued Benefit exceeds five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)) (including any prior distributions made under the Plan) and any such distribution is made prior to the later of the date the Participant attains (or would have attained) his Normal Retirement Age or age sixty-two (62). Notwithstanding the previous sentence, and effective March 28, 2005, consent of the Participant (but not the consent of the Participant’s Spouse) is required if the Actuarial Equivalent of a Participant’s vested Accrued Benefit exceeds one thousand dollars ($1,000) but does not exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)) at the time of distribution, in accordance with Section 4.04 (previously, Section 4.05). For purposes of this Section 4.05(a), if the present value of the vested Accrued Benefit at the time of any distribution under the Plan exceeds five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)), then the present value of the vested Accrued Benefit at any subsequent time will be deemed to exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)).

Twelfth: Effective January 1, 2010, Plan section 4.06 is further amended by replacing the second paragraph therein with the following:

No less than 30 days and no more than 180 days (90 days, for Plan Years starting before January 1, 2010) prior to the Annuity Starting Date, the Committee shall provide written notice to the Participant of the right to defer any distribution under the Plan until the later of the date the Participant attains (or would have attained) his Normal Retirement Age or age sixty-two (62). The notice shall include a general description of the material features and optional forms of payment available under the Plan and shall be provided in the same manner as provided in Section 4.02. The Participant and his Spouse must consent in writing to such distribution in the 180-day period (90-day period, for Plan Years starting before January 1, 2010) prior to the Annuity Starting Date.

Thirteenth: Effective March 1, 2010, Plan section 6.06, “Lump Sum Death Benefit,” is amended by replacing the first sentence therein with the following:

Notwithstanding anything contained herein to the contrary, if the Actuarial Equivalent of the benefit payable to the Spouse under Sections 6.01, 6.02, 6.03 or 6.04 does not exceed five thousand dollars ($5,000) (for distributions prior to March 1, 2010, three thousand five hundred dollars ($3,500)), the Committee shall direct payment of the benefit in a lump sum to the Spouse.

Fourteenth: Effective for Plan Years starting on or after January 1, 207, Article VI, “Benefits on Death,” is amended by adding new Section 6.08 at the end thereof:

6.08 Heroes Earnings Assistance and Tax Relief Act of 2008 (HEART Act)

Pursuant to IRC Section 401(a)(37), and effective for Plan Years commencing on or after January 1, 2007, the Beneficiary of a Participant who dies while on qualified military service, defined in IRC Section 414(u), shall be entitled to any additional benefits (other than benefit accruals relating to a period of qualified military service) provided under the Plan in the same manner as if the Participant had resumed employment with the Employer and then terminated on account of death.

Sixth Amendment

to the

Owens & Minor, Inc. Pension Plan

Pursuant to the provisions set forth in Section 10.01 of the Owens & Minor, Inc. Pension Plan (the “Plan”), the Plan is hereby amended, effective as of the dates set forth below:

First: Effective August 1, 2010, Plan section 4.02, “Available Options,” is amended by adding new subsection (c) at the end thereof:

Second: Effective August 1, 2010, Plan section 4.04, “Lump Sum Payments,” is amended by adding the following paragraph as the third paragraph therein:

Notwithstanding the previous paragraphs, and in the event of a mandatory distribution made on or after August 1, 2010, if the Actuarial Equivalent of a Participant’s vested Accrued Benefit is greater than one thousand dollars ($1,000) but does not exceed five thousand dollars ($5,000), and the Participant does not elect to have such distribution paid directly to an Eligible Retirement Plan, defined in Section 4.05(b)(ii), specified by the Participant in a Direct Rollover or to receive the distribution directly in accordance with Section 4.02, then the Committee shall direct that the Participant’s vested Accrued Benefit be distributed in a Direct Rollover to an individual retirement plan, within the meaning of Code section 7701(a)(37)), designated by the Committee.

Third: Effective August 1, 2010, Plan section 4.06, “Consent Prior to Distribution from the Plan,” is amended by adding the following as the second paragraph therein:

Notwithstanding the previous paragraph, and in the event of a mandatory distribution made on or after August 1, 2010, if the Actuarial Equivalent of a Participant’s vested Accrued Benefit is greater than one thousand dollars ($1,000) but does not exceed five thousand dollars ($5,000), the Participant’s consent is not required for a distribution in the form of a Direct Rollover to an individual retirement plan designated by the Committee in accord with Section 4.04.

Seventh Amendment

to the

Owens & Minor, Inc. Pension Plan

Pursuant to the provisions set forth in Section 10.01 of the Owens & Minor, Inc. Pension Plan (the “Plan”), the Plan is hereby amended, effective as of the dates set forth below:

First: Effective August 1, 2010, the final sentence of the third paragraph of Plan section 4.02, “Available Options,” is amended to read as follows:

Except as provided in Section 4.02(c), after retirement benefit payments have commenced, no future elections or revocations of an optional form will be permitted under any circumstances.

Second: Effective August 1, 2010, subsection (c) of Plan section 4.02, “Available Options,” is amended to read as follows:

Effective August 1, 2010, a Participant (including a vested terminated Participant) or Beneficiary may elect to receive a lump sum distribution of his or her entire Accrued Benefit, provided the Participant and the Participant’s Spouse, as applicable, or the Beneficiary consent to receive the distribution in this form. Notwithstanding any other provision of the Plan to the contrary, a Participant or Beneficiary who is already receiving retirement benefit payments as of such date may elect to receive a lump-sum distribution that is the Actuarial Equivalent to his or her remaining Accrued Benefit. For purposes of this option, the Actuarial Equivalent of the Participant’s Accrued Benefit payable at Normal Retirement Age shall be determined using the Applicable Interest Rate and the Applicable Mortality Table specified in the Appendix.

Exhibit 10.32

OWENS & MINOR, INC.

PERFORMANCE SHARE AWARD AGREEMENT

THIS PERFORMANCE SHARE AWARD AGREEMENT (“Agreement”) dated as of between Owens & Minor, Inc., a Virginia corporation (the “Company”), and (“Participant”) is made pursuant to and subject to the provisions of the Company’s 2005 Stock Incentive Plan (the “Plan”). All capitalized terms used in this Agreement that are not otherwise defined shall have the same meanings given to them in the Plan.

1. Grant of Performance Share Award. In accordance with the Plan, on (the “Date of Grant”), the Company granted to the Participant, subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, Performance Shares, subject to adjustment as provided in Section 2 (the “Performance Shares”). The Participant will earn the Performance Shares to the extent that the requirements of Section 2 are satisfied. The Company will issue shares of Common Stock in accordance with Section 3 in settlement of the Performance Shares, if any, that the Participant earns in accordance with Section 2, which shares of Common Stock (the “Restricted Stock”) will be further subject to the vesting and forfeiture provisions described in Section 4 (except as otherwise specifically provided in Section 3(b)).

2. Earning Performance Shares. This Section 2 determines the number of Performance Shares that the Participant earns under this Agreement.

(a) Performance Criteria . The Participant will earn Performance Shares based on achievement by the Company of the following applicable level of compounded annual growth in Operating Earnings (defined below) for calendar years and (relative to the Company’s Operating Earnings in ):


Compounded Annual Growth in Operating Earnings for Calendar Years and		Performance Shares Earned

8.0% (Threshold)
10.0% - 12.0% (Target)
14.0% (Maximum)

If the compounded annual growth in the Company’s Operating Earnings for calendar years and is greater than the Threshold but less than the Target, then the additional number of Performance Shares earned by the Participant in excess of the Threshold level of Performance Shares will be determined based on a straight line interpolation of the growth rate in excess of the Threshold. If the compounded annual growth in the Company’s Operating Earnings for calendar years and is greater than the Target but less than the Maximum, then the additional number of Performance Shares earned by the Participant in excess of the Target level of Performance Shares will be determined based on a straight line interpolation of the growth rate in excess of the Target.

Operating Earnings shall be defined as the operating earnings presented in the Company’s consolidated audited income statement for the applicable year, adjusted to eliminate or exclude the effects of unusual or non-recurring items, including but not limited to, the effect of accounting and/or tax changes; tangible and intangible asset impairment charges; fees, expenses and charges associated with debt and/or equity financing transactions and merger and acquisition activity (including the purchase or sale of a business unit or its assets); gains/losses from asset sales not made in the ordinary course of business; retirement plan gains/losses; and gains/losses or charges associated with material litigation, regulatory, tax or insurance settlements. Adjustments to Operating Earnings for purposes of determining any Performance Shares earned hereunder shall be taken into account only to the extent that they are separately identified or quantified in the Company’s consolidated audited financial statements, the notes to the consolidated financial statements, “Management’s Discussion and Analysis” in the Company’s Annual Report on Form 10-K or in other Company filings with the Securities and Exchange Commission. In addition to and notwithstanding the foregoing, the Committee may make any adjustments in its discretion that would reduce Operating Earnings for purposes of determining the number of Performance Shares earned hereunder.

(b) Effect of Termination Prior to Issuance of Restricted Stock . Except as provided in subparagraphs (c), (d) and (e), no Performance Shares will be earned if the Participant’s employment with, and service to, the Company and its Affiliates terminates or is terminated before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b).

(c) Death or Disability . This subparagraph (c) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b), on account of the Participant’s death or permanent and total disability (as defined in Section 22(e)(3) of the Code). In the event of the Participant’s death prior to January 1, or the date on which Restricted Stock is issued as provided in Section 3(b), the number of Performance Shares earned by the Participant shall equal the number determined in accordance with subparagraph (a). In the event the Participant’s employment terminates before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b) due to permanent and total disability, the number of Performance Shares earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 24-month period beginning January 1, and ending December 31, (including any period that the Participant was absent from work for illness, injury or short term disability prior to termination of employment) and the denominator shall be 24.

(d) Retirement . This subparagraph (d) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b), on account of the Participant’s retirement (defined below). In the event of the Participant’s retirement before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b), the number of Performance Shares earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 24-month period beginning January 1, and ending December 31, and the denominator shall be 24. For purposes of this Section 2(d), retirement shall mean severance from the employment of the Company and its Affiliates (i) at or after the attainment of age 55 and after completing a number of years of service (the total years of service credited to Participant for purposes of determining vested or nontransferable interest in a defined benefit pension plan maintained by the Company or an Affiliate which satisfies the requirements of Section 401(a) of the Code) that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (ii) at or after the attainment of age 65.

(e) Change in Control . The Participant will earn the number of Performance Shares designated for Target level of compounded annual growth in Operating Earnings if there is a Change in Control before January 1, or the date on which Restricted Stock is issued as provided in Section 3(b).

3. Settlement of Performance Shares. The Performance Shares will be settled in accordance with this Section 3.

(a) Committee Certification. As soon as practicable after (but no later than March 15, ), the Committee will determine the number of Performance Shares that are earned under the provisions of Section 2. The Committee’s determination shall be set forth in writing, as part of the minutes of a meeting of the Committee, by unanimous consent or otherwise. Notwithstanding the preceding sentences, a written determination of the Committee shall not be required in the case of Performance Shares that are earned pursuant to the provisions of Section 2(d).

(b) Issuance of Restricted Stock. As soon as practicable after the Committee’s certification under subparagraph (a) (but no later than March 15, ), the Committee shall issue shares of Restricted Stock under the Plan in settlement of the Performance Shares earned by the Participant. The number of shares of Restricted Stock issued shall equal the number of Performance Shares earned by the Participant. Notwithstanding the preceding sentences, (i) if the Performance Shares are earned pursuant to the provisions of Section 2(c) or 2(d), such Performance Shares shall be settled in shares of Common Stock that are not subject to the restrictions set forth in Section 4 and (ii) if the Performance Shares are earned pursuant to the provisions of Section 2(e), the number of shares of Restricted Stock indicated in Section 2(e) shall be issued to the Participant on the Control Change Date, and such shares of Restricted Stock shall otherwise be treated as provided in Section 4(c)(vi).

(c) Registration, etc. Shares of Restricted Stock issued in settlement of the Performance Shares shall be registered in the name of the Participant on the stock transfer books of the Company but shall be held by the Company (or its transfer agent) during the Restricted Period (defined below). The Company’s Secretary and its General Counsel shall serve as attorney-in-fact for Participant during the Restricted Period with full power and authority in Participant’s name to assign and convey to the Company any shares of Restricted Stock that Participant forfeits under Section 4(c) or that are recovered under Section 5. Each certificate representing shares of Restricted Stock may bear a legend referring to the risk of forfeiture of the shares and stating that such shares are nontransferable until all restrictions have been satisfied and the legend has been removed.

(d) Dividends. Upon issuance of shares of Restricted Stock in settlement of the Performance Shares earned by the Participant, the Company shall pay Participant in cash the amount of any dividends that would have been paid on the Performance Shares prior to settlement if the Performance Shares had been actual shares of Restricted Stock outstanding during the period from January 1, through December 31, . No dividends will be paid on the Performance Shares if Restricted Stock is not earned and issued hereunder.

4. Terms of Restricted Stock. The shares of Restricted Stock issued in settlement of the Performance Shares are subject to the following terms and conditions:

(a) Restricted Period . Until , (the “Restricted Period”) or the lapse of restrictions as provided in subparagraph (c) hereof, the Restricted Stock shall be subject to the following restrictions:

(i) Participant shall not be entitled to receive the certificate or certificates evidencing the Restricted Stock;

(ii) Shares of Restricted Stock may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of; and

(iii) Shares of Restricted Stock may be forfeited immediately as provided in subparagraph (c) hereof.

(b) Distribution of Restricted Stock . If Participant remains in the continuous employment of the Company or an Affiliate during the entire Restricted Period and otherwise does not forfeit such shares pursuant to subparagraph (c) hereof, all restrictions applicable to the shares of Restricted Stock shall lapse upon expiration of the Restricted Period and a certificate or certificates representing the shares of Common Stock that were granted to Participant in the form of shares of Restricted Stock shall be delivered to Participant.

(i)

Death . If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the Restricted Period by reason of Participant’s death, all restrictions applicable to the shares of Restricted Stock shall immediately lapse on the date of Participant’s death and the certificate or certificates representing the shares of Common Stock shall be delivered to Participant’s estate.

(ii)

Disability . If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the Restricted Period by reason of “total and permanent disability” (as such term is defined in Section 22(e)(3) of the Code), all restrictions on a pro rata number of shares of Restricted Stock shall lapse. The “pro rata number” shall be the number of shares of Restricted Stock multiplied by a fraction, the numerator of which is the number of months (including a fractional month) of Participant’s employment after the Date of Grant and the denominator of which is 36. The certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be delivered to Participant.

(iii)

Retirement . If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the Restricted Period by reason of retirement (defined below), all shares of Restricted Stock shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company. Notwithstanding the foregoing, if Participant’s service to the Company or an Affiliate continues from and after the date of retirement through (i) membership on the Board, (ii) a written consulting services arrangement with the Company or an Affiliate or (iii) at the Company’s discretion, a written confidentiality and non-solicitation agreement with the Company (“Post-Retirement Service”), shares of Restricted Stock shall not be forfeited but shall continue to be held by the Company until the earlier of (i) the end of the Restricted Period at which time such shares shall be delivered to the Participant or (ii) the date Participant ceases to provide Post-Retirement Service at which time such shares shall be forfeited. For purposes of this subparagraph 4(c)(iii), retirement shall mean severance from the employment of the Company and its Affiliates (i) at or after the attainment of age 55 and after completing a number of years of service (the total years of service credited to Participant for purposes of determining vested or nontransferable interest in a defined benefit pension plan maintained by the Company or an Affiliate which satisfies the requirements of Section 401(a) of the Code) that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (ii) at or after the attainment of age 65.

(iv)

Termination of Employment by Company or Affiliate .

(a)

With Cause . If the Company or an Affiliate terminates Participant’s employment with the Company and its Affiliates with “cause,” all shares of Restricted Stock shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company. For purposes of this Agreement, “cause” means: (i) misappropriation, theft or embezzlement of funds or property from the Company or an Affiliate or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or an Affiliate, (ii) conviction of, or entry of a plea of “ nolo contendere ” with respect to, a felony which, in the reasonable opinion of the Company, is likely to cause material harm to the Company’s or an Affiliate’s business, customer or supplier relations, financial condition or prospects, (iii) violation of the Company’s Code of Honor or any successor code of conduct; or (iv) failure to substantially perform (other than by reason of illness or temporary disability, regardless of whether such temporary disability is or becomes a total and permanent disability (as defined in subparagraph 4(c)(ii) above), or by reason of approved leave of absence) the duties of Participant’s job.

(b)

Without Cause . If Participant’s employment with the Company and its Affiliates is terminated by the Company or an Affiliate without “cause,” all restrictions on a pro rata number of shares of Restricted Stock shall lapse. The “pro rata number” shall be the number of shares of Restricted Stock multiplied by a fraction, the numerator of which is the number of months (including a fractional month) of Participant’s employment after the Date of Grant and the denominator of which is 36. The certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be delivered to Participant.

(v)

Termination of Employment by Participant . If Participant resigns from employment with the Company and its Affiliates before the expiration of the Restricted Period, without regard to the reason for such resignation (other than death, disability or retirement as provided in subsections (i), (ii) and (iii) above), all of the shares of Restricted Stock shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company.

(vi)

Change in Control .

(a)

If, upon a Change in Control, (i) the Restricted Stock is assumed by, or a substitute award granted by, the surviving entity (together with its Related Entities, the “Surviving Entity”) in the Change in Control (such assumed or substituted award to be of the same type of award as this Restricted Stock with a value as of the Control Change Date substantially equal to the value of this Restricted Stock) and (ii) within 24 months of the Control Change Date, Participant’s employment with the Surviving Entity is terminated by the Surviving Entity without Cause (defined below) or by Participant for Good Reason (defined below), all restrictions applicable to the shares of Restricted Stock shall immediately lapse on the date of employment termination and the certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be delivered to Participant.

(b)

For purposes of this subsection 4(c)(vi), “Cause” shall mean (i) the willful and continued failure by Participant to substantially perform his or her duties with the Surviving Entity (other than any such failure resulting from Participant’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Participant by the Surviving Entity, which demand specifically identifies the manner in which the Surviving Entity believes that Participant has not substantially performed his or her duties, or (ii) the willful engaging by Participant in conduct which is demonstrably and materially injurious to the Surviving Entity, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on Participant’s part shall be deemed “willful” unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Surviving Entity.

(c)

For purposes of this subparagraph 4(c)(vi), “Good Reason” shall have the meaning given to such term in the Executive Severance Agreement between Participant and the Company effective January 1, , as such agreement from time to time may be amended, modified, extended or replaced by a successor agreement or plan.

(d)

If, upon a Change in Control, the Restricted Stock is not assumed by, or a substitute award granted by, the Surviving Entity in the Change in Control as provided in subparagraph 4(c)(vi)(a) above, all restrictions applicable to the shares of Restricted Stock shall immediately lapse on the Control Change Date and the certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be delivered to Participant.

5. Recoupment Policy . Notwithstanding any other provision in this Agreement to the contrary, the Stock Award and underlying Restricted Stock granted under this Agreement are subject to recoupment by the Company in accordance with the Company’s Policy on Recoupment of Executive Incentive Compensation in effect on the date of this Agreement, as such policy is interpreted and applied by the Company’s board of directors.

6. Nontransferability. The Performance Shares are nontransferable except by will or by the laws of descent and distribution. Shares of Restricted Stock issued in settlement of the Performance Shares cannot be transferred before the Restricted Period lapses except by will or by the laws of descent and distribution.

7. Shareholder Rights. Except as otherwise specifically provided herein, the Participant shall not have any rights as a shareholder of the Company with respect to the Performance Shares. Upon the issuance of shares of Restricted Stock in settlement of the Performance Shares, the Participant shall have all of the rights of a shareholder of the Company with respect to those shares, including the right to vote the shares and to receive, free of all restrictions, ordinary cash dividends. Stock received as a dividend on, or in connection with a stock split of any shares of Restricted Stock issued in settlement of the Performance Shares shall be subject to the same vesting restrictions as the underlying shares of Restricted Stock. The Participant’s right to receive any extraordinary dividends or distributions with respect to shares of Restricted Stock issued in settlement of the Performance Shares shall be at the sole discretion of the Committee, but in the event of any such extraordinary event, the Committee shall take action appropriate to preserve the value of, and to prevent the unintended enhancement of value in, such shares of Restricted Stock.

8. Withholding. The Participant shall pay the Company any amount of taxes as may be necessary in the opinion of the Company to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions. In lieu thereof, the Company shall have the right to retain, from the shares of Restricted Stock to be issued under Section 3, the number of shares of Restricted Stock with Fair Market Value equal to the minimum amount required to be withheld. In any event, the Company shall have the right to deduct from all amounts paid to a Participant in cash (whether under the Plan or otherwise) any taxes required to be withheld. The Participant shall promptly notify the Company of any election made pursuant of Section 83(b) of the Code.

9. No Right to Continued Employment. The award and settlement of the Performance Shares does not give Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his or her employment at any time.

10. Change in Capital Structure. The number of Performance Shares and the performance criteria in Section 2 (or, after any settlement of the Performance Shares, the number of shares of Restricted Stock) shall be adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups subdivisions or consolidations of shares, other similar changes in capitalization or such other events as are described in the Plan.

11. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

12. Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the plan as in effect on the Date of Grant.

13. Participant Bound by Plan. Participant hereby acknowledges that a copy of the Plan has been made available to him or her and he or she agrees to be bound by all the terms and provisions of the Plan.

14. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon Participant and his or her successors in interest and the successors of the Company.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.


OWENS & MINOR, INC.

By:



Participant

26333.000083 RICHMOND 2199118v1

Exhibit 21.1

Subsidiaries of Registrant


Subsidiary	State of Incorporation/ Organization	Country	Assumed Name
Owens & Minor Medical, Inc.	Virginia	USA
O&M Funding Corp.	Virginia	USA
Owens & Minor Distribution, Inc.	Virginia	USA	OM HealthCare Solutions
OM Solutions International, Inc.	Virginia	USA
Owens & Minor Canada, Inc.	Virginia	USA
Owens & Minor Healthcare Supply, Inc.	Virginia	USA
Access Diabetic Supply, LLC	Florida	USA	AOM HealthCare Solutions
Access Respiratory Supply, Inc.	Florida	USA
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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Owens & Minor, Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 33-32497, 33-41402, 33- 58337, 333-58341, 333-61550, 333-106361, 333-124965, and 333-142716) on Form S-8 of Owens & Minor, Inc. of our reports dated February 25, 2011, with respect to the consolidated balance sheets of Owens & Minor, Inc. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2010, and the effectiveness of internal control over financial reporting as of December 31, 2010, which reports appear in the December 31, 2010 annual report on Form 10- K of Owens & Minor, Inc.

LOGO

Richmond, Virginia

February 25, 2011

Exhibit 31.1

CERTIFICATION PURSUANT TO

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig R. Smith, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2010, 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: February 25, 2011

Craig R. Smith

Chief Executive Officer

Owens & Minor, Inc.

Exhibit 31.2

CERTIFICATION PURSUANT TO

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James L. Bierman, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2010, of Owens & Minor, Inc.;

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: February 25, 2011

James L. Bierman

Chief Financial Officer

Owens & Minor, Inc.

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Owens & Minor, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig R. Smith, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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.

Craig R. Smith

Chief Executive Officer

Owens & Minor, Inc.

February 25, 2011

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Owens & Minor, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James L. Bierman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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.

James L. Bierman

Chief Financial Officer

Owens & Minor, Inc.

February 25, 2011