OWENS & MINOR 401 (K) SAVINGS AND RETIREMENT PLAN
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 11-K

 

 

FOR ANNUAL REPORTS OF EMPLOYEE STOCK

PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO

SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended: December 31, 2007

OR

 

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

For the transition period from              to             .

Commission file number 1-9810.

 

 

 

A. Full title of the plan:

Owens & Minor 401(k) Savings and Retirement Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Owens & Minor, Inc.

9120 Lockwood Blvd.

Mechanicsville, Virginia 23116

 

 

 


Table of Contents

OWENS & MINOR

401(k) SAVINGS AND RETIREMENT PLAN

Table of Contents

 

     Page

Report of Independent Registered Public Accounting Firm

   1

Statements of Net Assets Available for Benefits – December 31, 2007 and 2006

   2

Statements of Changes in Net Assets Available for Benefits – Years ended December 31, 2007 and 2006

   3

Notes to Financial Statements – December 31, 2007 and 2006

   4

Schedule

  

Schedule H, Line 4i - Schedule of Assets (Held at End of Year) – December 31, 2007

   9

Exhibit Index

   10


Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors

Owens & Minor, Inc.:

We have audited the accompanying statements of net assets available for benefits of the Owens & Minor 401(k) Savings and Retirement Plan (the Plan) as of December 31, 2007 and 2006, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Owens & Minor 401(k) Savings and Retirement Plan as of December 31, 2007 and 2006, and the changes in net assets available for benefits for the years then ended in conformity with U.S. generally accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

LOGO

Richmond, Virginia

June 26, 2008

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Statements of Net Assets Available for Benefits

December 31, 2007 and 2006

 

     2007    2006

Investments at fair value:

     

Mutual funds

   $ 119,718,758    $ 96,038,278

Common collective trust fund

     24,026,289      21,912,291

Common stock

     10,914,269      7,884,105

Participant loans

     4,986,083      4,129,760

Cash equivalents

     325,127      232,239
             

Total investments

     159,970,526      130,196,673
             

Receivables:

     

Participant contributions

     490,756      436,291

Employer contributions

     2,234,540      1,770,212

Dividends and interest

     975      3,669
             

Total receivables

     2,726,271      2,210,172
             

Assets available for benefits at fair value

     162,696,797      132,406,845
             

Liabilities:

     

Administrative expenses payable

     2,645      3,228

Investment payable

     112,479      63,158
             

Total liabilities

     115,124      66,386
             

Net assets available for benefits at fair value

     162,581,673      132,340,459
             

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

     261,106      220,234
             

Net assets available for benefits

   $ 162,842,779    $ 132,560,693
             

See accompanying notes to financial statements.

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2007 and 2006

 

     2007    2006

Additions to assets attributed to:

     

Investment income:

     

Net appreciation in fair value of investments

   $ 9,395,307    $ 4,264,960

Interest

     1,339,984      1,090,396

Dividends

     7,826,393      6,764,206
             
     18,561,684      12,119,562
             

Contributions:

     

Employer

     7,810,665      6,111,079

Participant

     14,224,504      12,076,656
             
     22,035,169      18,187,735
             

Total additions

     40,596,853      30,307,297
             

Deductions from assets attributed to:

     

Benefits paid to participants

     10,246,121      7,707,009

Administrative expenses

     68,646      51,993
             

Total deductions

     10,314,767      7,759,002
             

Net increase

     30,282,086      22,548,295

Net assets available for benefits:

     

Beginning of year

     132,560,693      110,012,398
             

End of year

   $ 162,842,779    $ 132,560,693
             

See accompanying notes to financial statements.

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Notes to Financial Statements

December 31, 2007 and 2006

 

(1) Description of the Plan

The following brief description of the Owens & Minor 401(k) Savings and Retirement Plan (the Plan) is provided for general information purposes only. Participants should refer to the plan document for more complete information.

 

  (a) General

The Plan is a defined contribution plan that is available to substantially all full-time and part-time plus (24+ hours per week) teammates of Owens & Minor, Inc. (the Employer) and certain of its subsidiaries, who have completed one month of service and have attained age 18. It is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

 

  (b) Contributions

The Plan allows participants to contribute up to 50% of their eligible compensation, with the Employer matching 100% of the first 4% of compensation that a participant contributes to the Plan. Also under the Plan, the Employer contributes 1% of compensation (subject to certain limitations as defined in the plan document) to each participant employed on the last day of the plan year who has worked at least 1,000 hours during the year. The Employer may increase or decrease its matching contributions at its discretion, on a prospective basis.

 

  (c) Participant Accounts

Each participant’s account is credited with the participant’s contribution, the Employer’s matching contribution, and an allocation of earnings thereon. Allocations are based on account balances as defined by the Plan. Forfeited balances of terminated participants’ nonvested accounts are used to reduce current year employer contributions. Employer contributions were reduced by $34,932 and $70,000 from forfeited nonvested accounts in 2007 and 2006, respectively. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

  (d) Investment Options

Participants in the Plan currently have 22 options available to them with respect to how their participant and employer contributions are invested. Participants can elect to have contributions allocated in 1% increments to the following investments: Owens & Minor, Inc. common stock fund, one collective trust fund, and twenty mutual funds. These options provide for a range of investment objectives, including growth, growth and income, and income and capital stability. Investment in the Owens & Minor, Inc. common stock fund is limited to 20% of the employee’s account balance.

 

  (e) Vesting and Withdrawals

Participants are immediately vested in their voluntary contributions and employer matching contributions plus actual earnings thereon. Effective January 2, 2007, future and prior unvested employer 1% contributions are fully vested after three years of credited service. The Plan allows certain terminated participants to become 100% vested in their accounts.

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Notes to Financial Statements

December 31, 2007 and 2006

 

On termination of service due to death, disability or retirement, a participant may elect to receive either a lump-sum amount equal to the value of his or her vested account or payment in annual installments not to extend past the lives or life expectancies of the participant and spouse as determined in accordance with Internal Revenue Code (IRC) Section 401(a)(9)(A). In the case of hardship, a participant may apply for a distribution as described in the plan agreement.

 

  (f) Participant Loans

Participants may borrow from their vested interests in the Plan for a minimum of $1,000 and a maximum of 50% of their vested balance or $50,000, whichever is less.

A loan’s term may not exceed five years, or fifteen years if the proceeds are used exclusively to purchase a principal residence. The interest rate charged is the Prime Rate plus 1%.

 

  (g) Interfund Transfers

Under the provisions of the Plan, a participant may elect to have the value of his or her participant account attributable to a particular investment fund liquidated and transferred to any of the other available investment funds in 1% increments.

 

  (h) Plan Termination

Although it has not expressed any intent to do so, the Employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants will become 100% vested in their accounts.

 

(2) Summary of Significant Accounting Policies

The following are the significant accounting policies followed by the Plan:

 

  (a) Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting, except for benefit distributions, which are recorded when paid. Contributions to the Plan and interest and dividend income are recognized as earned; administrative expenses are recognized when incurred; and realized gains and losses and unrealized appreciation and depreciation of investments are recognized as they occur.

 

  (b) New Accounting Pronouncement

As of December 31, 2006, the Plan adopted Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP). The Plan invests in a common collective trust fund, which holds fully benefit-responsive investment contracts. As described in the FSP, investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Notes to Financial Statements

December 31, 2007 and 2006

 

a defined contribution plan attributable to fully benefit-responsive investment contracts, because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As required by the FSP, the statements of net assets available for benefits present the fair value of the investment contracts, as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statements of changes in net assets available for benefits are prepared on a contract value basis. Adoption of the FSP had no effect on the statement of changes in net assets available for benefits or the total of net assets available for benefits for any period presented.

 

  (c) Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

 

  (d) Investments

The Plan’s investments are stated at fair value except for the fully benefit-responsive contracts held in the common collective trust fund, which are stated at contract value. Contract value is equal to principal balance plus accrued interest. The fair value of the common collective trust fund is valued at the net asset value as determined by using estimated fair value of the underlying assets held in the fund. Quoted market prices are used to value investments stated at fair value, except for participant loans receivable, which are valued at cost, which approximates fair value.

Purchases and sales are recorded on a settlement date basis. The recording of these transactions on a trade date basis would not have a material impact on the accompanying financial statements. Cost of investments sold is determined on the first-in, first-out (FIFO) method.

The Plan’s investments, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks. In addition, due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits.

 

  (e) Administrative Expenses

Substantially all of the Plan’s administrative expenses are paid by the Plan.

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Notes to Financial Statements

December 31, 2007 and 2006

 

(3) Investments

The following presents investments that represent 5% or more of the Plan’s assets:

 

     December 31,

Description

   2007    2006

Mutual funds:

     

Fidelity Contrafund

   $ 49,800,018    $ 42,525,501

Ranier Small-Mid Cap Equity Fund

     10,354,408      8,165,523

Fidelity Diversified International

     10,144,892      7,832,110

Common collective trust fund:

     

Fidelity Managed Income Portfolio

     24,026,289      21,912,291

Common stock:

     

Owens & Minor, Inc.

     10,914,269      7,884,105

During 2007 and 2006, the Plan’s investments (including investments bought, sold, as well as held during these years) appreciated in value as follows:

 

     Years Ended December 31,
   2007    2006

Mutual funds

   $ 6,553,394    $ 3,341,492

Common stock

     2,841,913      923,468
             

Net appreciation in fair value of investments

   $ 9,395,307    $ 4,264,960
             

 

(4) Federal Income Taxes

In a determination letter dated October 15, 2002, the Internal Revenue Service (IRS) has ruled that the Plan is a qualified trust under Sections 401(a) and 401(k) of the IRC and is exempt from taxation under the provisions of Section 501(a). The Plan has been amended since that date; however, the plan administrator believes that the Plan continues to operate in accordance with applicable requirements of the IRC.

Under present federal income tax laws and regulations, participants are not taxed on employer contributions allocated to their accounts, on investment earnings on such contributions, or on investment earnings on their own contributions at the time such contributions and investment earnings are received by the trustee under the Plan, but they may be subject to tax thereon at such time as they receive actual distributions from the Plan. Under normal circumstances, the Plan will not be taxed on dividend and interest income, any capital gains realized, or any unrealized appreciation on investments.

 

(5) Related Party Transactions

The Plan owned 257,230 shares of Owens & Minor, Inc. common stock as of December 31, 2007, with a cost basis of $4,650,792 and a fair value of $10,914,269. During 2007, 16,600 shares of Owens & Minor, Inc. common stock were purchased at a total cost of $629,624, and 11,500 shares, with a cost basis of $199,876, were sold for $441,375.

 

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Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Notes to Financial Statements

December 31, 2007 and 2006

 

As of December 31, 2006, the Plan owned 252,130 shares of Owens & Minor, Inc. common stock, with a cost basis of $4,221,044 and a fair value of $7,884,105. During 2006, 25,400 shares of Owens & Minor, Inc. common stock were purchased at a total cost of $782,032, and 15,600 shares, with a cost basis of $246,112, were sold for $492,736. Because Owens & Minor, Inc. is the plan sponsor, the transactions qualify as party-in-interest transactions.

Certain plan investments are units of a common collective trust fund and mutual funds managed by Fidelity Investments (Fidelity). As defined by the Plan, these transactions qualify as party-in-interest transactions. Fees paid by the Plan for investment management services amounted to $48,046 and $33,493 for the years ended December 31, 2007 and 2006, respectively.

 

(6) Reconciliation to Form 5500

Net assets available for benefits in the Form 5500 for the Plan include a reduction in net assets for deemed distributions of certain participant loans. The accompanying financial statements do not include the reduction in net assets for deemed distributions as the participants to which the deemed distributions relate continue to retain their assets within the Plan.

The following reconciles net assets available for benefits and benefits paid to participants from the Form 5500 to the Plan’s financial statements:

 

     December 31,
   2007    2006

Net assets available for benefits per Form 5500

   $ 162,555,072    $ 132,309,298

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

     261,106      220,234

Cumulative deemed distributions

     26,601      31,161
             

Net assets available for benefits per statements of net assets available for benefits

   $ 162,842,779    $ 132,560,693
             

 

     Years Ended December 31,
     2007     2006

Net increase in net assets per Form 5500

   $ 30,245,775     $ 22,326,332

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

     40,872       220,234

Change in the amount of deemed distributions

     (4,561 )     1,729
              

Net increase in net assets per statements of changes in net assets available for benefits

   $ 30,282,086     $ 22,548,295
              

 

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Schedule

Owens & Minor

401(k) SAVINGS AND RETIREMENT PLAN

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

December 31, 2007

 

Identity of issue, borrower,

lessor, or similar party

  

Description of investment,

including rate of interest,

collateral, par, or maturity

value (face amount, number

of shares, or units)

   Fair Value

*Common stock – Owens & Minor, Inc.

  

257,230 shares of common stock

   $ 10,914,269

  Mutual funds:

     

*Fidelity

  

681,166 units of Contrafund

     49,800,018

  Ranier

  

263,069 units of Ranier Small-Mid Cap

     10,354,408

*Fidelity

  

254,258 units of Diversified International

     10,144,892

*Fidelity

  

524,469 units of Freedom 2025

     6,912,501

*Fidelity

  

429,713 units of Freedom 2020

     6,793,759

  PIMCO

  

567,567 units of Total Return II Fund

     5,772,153

*Fidelity

  

310,902 units of Freedom 2030

     5,136,099

*Fidelity

  

400,314 units of Freedom 2015

     4,991,919

*Fidelity

  

236,389 units of Freedom 2010

     3,503,281

  Spartan

  

66,293 units of US Equity Index

     3,440,624

*Fidelity

  

344,530 units of Freedom 2040

     3,352,279

*Fidelity

  

220,012 units of Freedom 2035

     3,009,765

  T. Rowe Price

  

70,291 units of T. Rowe Price Equity Income

     1,975,169

  American Beacon

  

101,413 units of Small Cap Value PA

     1,746,339

*Fidelity

  

88,971 units of Freedom 2005

     1,048,968

*Fidelity

  

72,984 units of Freedom Income

     835,672

  American Freedom

  

14,542 units of Growth Fund Amer R4

     490,922

*Fidelity

  

19,643 units of Freedom 2000

     242,982

*Fidelity

  

8,561 units of Freedom 2045

     97,169

*Fidelity

  

6,110 units of Freedom 2050

     69,839

  Common collective trust fund:

     

*Fidelity

  

Managed Income Portfolio

     24,026,289

*Cash equivalents - Fidelity

  

325,127 units of Money Market I Fund

     325,127

*Participant loans

  

Notes receivable, interest rates ranging from 5.00% – 10.50%

     4,986,083
         
      $ 159,970,526
         

 

* Party-in-interest

See accompanying report of independent registered public accounting firm.

 

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Form 11-K

Exhibit Index

 

Exhibit

  

Description

23

   Consent of Independent Registered Public Accounting Firm

 

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SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the administrators of the employee benefit plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Owens & Minor 401(k) Savings and Retirement Plan
Date June 26, 2008   /s/ Erika T. Davis
  Erika T. Davis
  Senior Vice President, Human Resources
  Plan Administrator

 

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