Document
false--12-31Q220190000075252OWENS & MINOR INC/VA/0.0030680006800026620003641000270105000297297000P8Y19618000214560000.260.260.00250.002522200000000200000000622940006296400062294000629640002750000002750000002750000002750000000.038750.043750.038750.04375P5YP1YP1YP3Y0.00250.001251490002860006300012600000006000003300000 0000075252 2019-01-01 2019-06-30 0000075252 2019-07-31 0000075252 2018-01-01 2018-06-30 0000075252 2019-04-01 2019-06-30 0000075252 2018-04-01 2018-06-30 0000075252 us-gaap:ParentMember 2019-04-01 2019-06-30 0000075252 us-gaap:ParentMember 2018-04-01 2018-06-30 0000075252 us-gaap:ParentMember 2019-01-01 2019-06-30 0000075252 us-gaap:ParentMember 2018-01-01 2018-06-30 0000075252 2019-06-30 0000075252 2018-12-31 0000075252 2018-06-30 0000075252 2017-12-31 0000075252 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000075252 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000075252 us-gaap:RetainedEarningsMember 2018-06-30 0000075252 us-gaap:CommonStockMember 2018-12-31 0000075252 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000075252 2019-01-01 2019-03-31 0000075252 us-gaap:CommonStockMember 2017-12-31 0000075252 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000075252 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000075252 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000075252 us-gaap:CommonStockMember 2018-06-30 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000075252 us-gaap:RetainedEarningsMember 2017-12-31 0000075252 us-gaap:CommonStockMember 2019-03-31 0000075252 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000075252 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0000075252 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000075252 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000075252 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000075252 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000075252 2018-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000075252 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000075252 2018-01-01 2018-03-31 0000075252 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000075252 2019-03-31 0000075252 us-gaap:CommonStockMember 2019-06-30 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000075252 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000075252 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000075252 us-gaap:RetainedEarningsMember 2019-06-30 0000075252 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000075252 us-gaap:RetainedEarningsMember 2018-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000075252 us-gaap:RetainedEarningsMember 2019-03-31 0000075252 us-gaap:CommonStockMember 2018-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000075252 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000075252 us-gaap:RetainedEarningsMember 2018-12-31 0000075252 omi:HalyardsHealthAndITSystemMember 2019-06-30 0000075252 srt:RestatementAdjustmentMember omi:HalyardsHealthAndITSystemMember 2019-06-30 0000075252 srt:ScenarioPreviouslyReportedMember omi:HalyardsHealthAndITSystemMember 2017-08-01 0000075252 srt:MaximumMember omi:HalyardsHealthAndITSystemMember 2019-01-01 2019-06-30 0000075252 omi:HalyardsHealthAndITSystemMember 2018-04-30 0000075252 omi:HalyardsHealthAndITSystemMember 2018-01-01 2018-06-30 0000075252 omi:HalyardsHealthAndITSystemMember 2018-04-01 2018-06-30 0000075252 omi:HalyardsHealthAndITSystemMember 2018-04-30 2018-04-30 0000075252 srt:MinimumMember omi:HalyardsHealthAndITSystemMember 2019-01-01 2019-06-30 0000075252 us-gaap:OtherCurrentLiabilitiesMember 2019-06-30 0000075252 us-gaap:OtherCurrentLiabilitiesMember 2018-12-31 0000075252 us-gaap:OtherCurrentAssetsMember 2018-12-31 0000075252 us-gaap:OtherCurrentAssetsMember 2019-06-30 0000075252 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0000075252 us-gaap:OtherIntangibleAssetsMember 2019-06-30 0000075252 us-gaap:TradeNamesMember 2018-12-31 0000075252 us-gaap:TradeNamesMember 2018-01-01 2018-12-31 0000075252 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-06-30 0000075252 us-gaap:OtherIntangibleAssetsMember 2019-01-01 2019-06-30 0000075252 us-gaap:CustomerRelationshipsMember 2019-06-30 0000075252 us-gaap:CustomerRelationshipsMember 2018-12-31 0000075252 us-gaap:CustomerRelationshipsMember 2018-01-01 2018-12-31 0000075252 us-gaap:TradeNamesMember 2019-06-30 0000075252 us-gaap:TradeNamesMember 2019-01-01 2019-06-30 0000075252 us-gaap:OtherIntangibleAssetsMember 2018-01-01 2018-12-31 0000075252 omi:InternationalMember 2019-06-30 0000075252 omi:DomesticMember 2019-06-30 0000075252 omi:InternationalMember 2019-01-01 2019-06-30 0000075252 omi:DomesticMember 2018-12-31 0000075252 omi:DomesticMember 2019-01-01 2019-06-30 0000075252 omi:InternationalMember 2018-12-31 0000075252 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000075252 srt:MaximumMember omi:TransportationAndMaterialHandlingEquipmentMember 2019-06-30 0000075252 srt:MaximumMember 2019-06-30 0000075252 2018-01-01 2018-12-31 0000075252 srt:WarehouseMember srt:MaximumMember 2019-06-30 0000075252 srt:MinimumMember omi:TransportationAndMaterialHandlingEquipmentMember 2019-06-30 0000075252 srt:MinimumMember 2019-06-30 0000075252 srt:WarehouseMember srt:MinimumMember 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-01-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-04-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000075252 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-06-30 0000075252 us-gaap:OtherLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:OtherAssetsMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000075252 us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0000075252 us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0000075252 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000075252 us-gaap:InterestRateSwapMember 2019-01-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember 2019-04-01 2019-06-30 0000075252 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CostOfSalesMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000075252 us-gaap:InterestRateSwapMember 2019-04-01 2019-06-30 0000075252 us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember 2019-01-01 2019-06-30 0000075252 us-gaap:ForeignExchangeContractMember us-gaap:CostOfSalesMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000075252 us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2018-03-31 0000075252 omi:InformationSystemCostsMember 2018-01-01 2018-03-31 0000075252 omi:InformationSystemCostsMember 2019-04-01 2019-06-30 0000075252 omi:InformationSystemCostsMember 2019-01-01 2019-03-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2019-01-01 2019-03-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2018-06-30 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2018-04-01 2018-06-30 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2019-04-01 2019-06-30 0000075252 us-gaap:OtherRestructuringMember 2018-01-01 2018-03-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2019-03-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2018-01-01 2018-03-31 0000075252 us-gaap:OtherRestructuringMember 2019-01-01 2019-03-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2017-12-31 0000075252 omi:InformationSystemCostsMember 2018-04-01 2018-06-30 0000075252 us-gaap:OtherRestructuringMember 2019-04-01 2019-06-30 0000075252 us-gaap:OtherRestructuringMember 2018-04-01 2018-06-30 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2018-12-31 0000075252 omi:EmployeeSeveranceAndOtherCostMember 2019-06-30 0000075252 omi:GlobalProductsMember 2019-04-01 2019-06-30 0000075252 omi:GlobalSolutionsMember 2019-04-01 2019-06-30 0000075252 omi:GlobalSolutionsMember 2018-04-01 2018-06-30 0000075252 omi:GlobalSolutionsMember 2018-01-01 2018-06-30 0000075252 omi:GlobalProductsMember 2019-01-01 2019-06-30 0000075252 omi:GlobalProductsMember 2018-04-01 2018-06-30 0000075252 omi:GlobalSolutionsMember 2019-01-01 2019-06-30 0000075252 omi:GlobalProductsMember 2018-01-01 2018-06-30 0000075252 us-gaap:DomesticPlanMember 2018-01-01 2018-06-30 0000075252 us-gaap:DomesticPlanMember 2019-01-01 2019-06-30 0000075252 us-gaap:DomesticPlanMember 2019-04-01 2019-06-30 0000075252 us-gaap:DomesticPlanMember 2018-04-01 2018-06-30 0000075252 us-gaap:ForeignPlanMember 2019-04-01 2019-06-30 0000075252 us-gaap:ForeignPlanMember 2019-01-01 2019-06-30 0000075252 us-gaap:ForeignPlanMember 2018-01-01 2018-06-30 0000075252 us-gaap:ForeignPlanMember 2018-04-01 2018-06-30 0000075252 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000075252 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000075252 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000075252 us-gaap:RevolvingCreditFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2018-12-31 0000075252 omi:A4.375SeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:TermLoanMember us-gaap:EstimateOfFairValueFairValueDisclosureMember omi:TermLoanMember 2019-06-30 0000075252 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000075252 omi:A3.875SeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 omi:A4.375SeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 omi:TermBLoanMember us-gaap:EstimateOfFairValueFairValueDisclosureMember omi:TermLoanMember 2018-12-31 0000075252 omi:A3.875SeniorNotesMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:TermBLoanMember us-gaap:CarryingReportedAmountFairValueDisclosureMember omi:TermLoanMember 2019-06-30 0000075252 us-gaap:RevolvingCreditFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2018-12-31 0000075252 omi:A4.375SeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 omi:A3.875SeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 omi:TermBLoanMember us-gaap:EstimateOfFairValueFairValueDisclosureMember omi:TermLoanMember 2019-06-30 0000075252 omi:TermLoanMember us-gaap:CarryingReportedAmountFairValueDisclosureMember omi:TermLoanMember 2018-12-31 0000075252 omi:A3.875SeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:TermLoanMember us-gaap:EstimateOfFairValueFairValueDisclosureMember omi:TermLoanMember 2018-12-31 0000075252 omi:A4.375SeniorNotesMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:TermBLoanMember us-gaap:CarryingReportedAmountFairValueDisclosureMember omi:TermLoanMember 2018-12-31 0000075252 us-gaap:RevolvingCreditFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000075252 omi:TermLoanMember us-gaap:CarryingReportedAmountFairValueDisclosureMember omi:TermLoanMember 2019-06-30 0000075252 us-gaap:RevolvingCreditFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000075252 omi:TermBLoanMember us-gaap:EurodollarMember 2019-01-01 2019-06-30 0000075252 us-gaap:LetterOfCreditMember 2018-12-31 0000075252 omi:EuropeanLeaseAgreementMember omi:ReplacedLineOfCreditMember 2018-12-31 0000075252 us-gaap:RevolvingCreditFacilityMember us-gaap:EurodollarMember 2019-01-01 2019-06-30 0000075252 omi:EuropeanLeaseAgreementMember omi:ReplacedLineOfCreditMember 2019-06-30 0000075252 us-gaap:LetterOfCreditMember 2019-06-30 0000075252 omi:TermLoanMember 2019-01-01 2019-06-30 0000075252 omi:TermBLoanMember us-gaap:BaseRateMember 2019-01-01 2019-06-30 0000075252 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0000075252 omi:A3.875SeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:A4.375SeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000075252 omi:A4.375SeniorNotesMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 omi:A3.875SeniorNotesMember us-gaap:SeniorNotesMember 2019-06-30 0000075252 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember 2019-01-01 2019-06-30 0000075252 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember 2019-01-01 2019-06-30 0000075252 us-gaap:SeniorNotesMember 2019-01-01 2019-06-30 0000075252 omi:October2016ShareRepurchaseProgramMember 2019-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-01-01 2018-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-12-31 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2018-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2019-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 2019-06-30 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2018-04-01 2018-06-30 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-01 2018-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-04-01 2018-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-03-31 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2018-03-31 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-03-31 0000075252 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-06-30 0000075252 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-06-30 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-31 0000075252 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000075252 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-06-30 0000075252 us-gaap:MaterialReconcilingItemsMember 2018-12-31 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2018-12-31 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember 2018-12-31 0000075252 us-gaap:MaterialReconcilingItemsMember 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2018-12-31 0000075252 us-gaap:MaterialReconcilingItemsMember 2018-01-01 2018-06-30 0000075252 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2019-01-01 2019-06-30 0000075252 us-gaap:MaterialReconcilingItemsMember 2018-04-01 2018-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2018-01-01 2018-06-30 0000075252 us-gaap:IntersegmentEliminationMember omi:GlobalProductsMember 2019-04-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember 2018-01-01 2018-06-30 0000075252 us-gaap:IntersegmentEliminationMember 2018-04-01 2018-06-30 0000075252 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2018-01-01 2018-06-30 0000075252 us-gaap:CorporateNonSegmentMember 2019-04-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2018-04-01 2018-06-30 0000075252 us-gaap:IntersegmentEliminationMember omi:GlobalProductsMember 2018-01-01 2018-06-30 0000075252 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2019-01-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalSolutionsMember 2019-04-01 2019-06-30 0000075252 us-gaap:MaterialReconcilingItemsMember 2019-04-01 2019-06-30 0000075252 us-gaap:IntersegmentEliminationMember 2019-04-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2019-04-01 2019-06-30 0000075252 us-gaap:IntersegmentEliminationMember omi:GlobalProductsMember 2019-01-01 2019-06-30 0000075252 us-gaap:CorporateNonSegmentMember 2018-04-01 2018-06-30 0000075252 us-gaap:OperatingSegmentsMember omi:GlobalProductsMember 2018-04-01 2018-06-30 0000075252 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember 2019-01-01 2019-06-30 0000075252 us-gaap:IntersegmentEliminationMember 2018-01-01 2018-06-30 0000075252 us-gaap:IntersegmentEliminationMember omi:GlobalProductsMember 2018-04-01 2018-06-30 0000075252 us-gaap:OperatingSegmentsMember 2019-04-01 2019-06-30 0000075252 us-gaap:OperatingSegmentsMember 2018-04-01 2018-06-30 0000075252 us-gaap:NonUsMember 2018-01-01 2018-06-30 0000075252 country:US 2018-04-01 2018-06-30 0000075252 us-gaap:NonUsMember 2018-04-01 2018-06-30 0000075252 country:US 2018-01-01 2018-06-30 0000075252 us-gaap:NonUsMember 2019-04-01 2019-06-30 0000075252 country:US 2019-01-01 2019-06-30 0000075252 country:US 2019-04-01 2019-06-30 0000075252 us-gaap:NonUsMember 2019-01-01 2019-06-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD xbrli:pure omi:segment
Table of Contents

u
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________ 
FORM 10-Q
________________________________________________ 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-9810
_______________________________________________________
Owens & Minor, Inc.
(Exact name of Registrant as specified in its charter)
_______________________________________________________

Virginia
 
 
54-1701843
(State or other jurisdiction of
incorporation or organization)
 
 
(I.R.S. Employer
Identification No.)
 
 
 
 
9120 Lockwood Boulevard
Mechanicsville
Virginia
23116
(Address of principal executive offices)
(Zip Code)
 
 
 
 
Post Office Box 27626,
Richmond, Virginia
 
 
23261-7626
(Mailing address of principal executive offices)
 
 
(Zip Code)
Registrant’s telephone number, including area code (804723-7000
    
Securities registered pursuant to Section 12(b) of the Act:
Title of each class

 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $2 par value per share
 
OMI
 
New York Stock Exchange
_________________________________________________________
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 Web site, 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
  (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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 number of shares of Owens & Minor, Inc.’s common stock outstanding as of July 31, 2019, was 62,958,021 shares.
 
 
 
 
 


Table of Contents

Owens & Minor, Inc. and Subsidiaries
Index
 
Page
 
 
 
Item 1.
 

 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2.
Item 6.

2


Table of Contents

Part I. Financial Information
Item 1. Financial Statements
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Income (Loss)
(unaudited)
 
 
 
Three Months Ended 
 June 30,
 
Six Months Ended
June 30,
(in thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Net revenue
 
$
2,484,200

 
$
2,458,271

 
$
4,945,587

 
$
4,830,850

Cost of goods sold
 
2,115,773

 
2,133,277

 
4,218,736

 
4,181,170

Gross margin

368,427

 
324,994

 
726,851

 
649,680

Distribution, selling and administrative expenses
 
345,892

 
308,775

 
684,595

 
593,136

Goodwill and intangible asset impairment charges
 

 
165,447

 

 
165,447

Acquisition-related and exit and realignment charges
 
5,655

 
24,930

 
10,645

 
39,690

Other operating (income) expense, net
 
736

 
(2,107
)
 
775

 
(759
)
Operating income (loss)
 
16,144

 
(172,051
)
 
30,836

 
(147,834
)
Interest expense, net
 
27,682

 
18,571

 
56,783

 
28,824

Loss before income taxes
 
(11,538
)
 
(190,622
)
 
(25,947
)
 
(176,658
)
Income tax benefit
 
(1,062
)
 
(7,845
)
 
(1,375
)
 
(2,032
)
Net loss
 
$
(10,476
)
 
$
(182,777
)
 
$
(24,572
)
 
$
(174,626
)
 
 
 
 
 
 
 
 
 
Net loss per common share: basic and diluted
 
$
(0.18
)
 
$
(3.07
)
 
$
(0.41
)
 
$
(2.92
)


See accompanying notes to consolidated financial statements.
3

Table of Contents

Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
 
 
 
Three Months Ended 
 June 30,
 
Six Months Ended
June 30,
(in thousands)
 
2019

2018
 
2019
 
2018
Net loss
 
$
(10,476
)
 
$
(182,777
)
 
$
(24,572
)
 
$
(174,626
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Currency translation adjustments (net of income tax of $0 in 2019 and 2018)
 
7,452

 
(20,678
)
 
3,245

 
(11,757
)
Change in unrecognized net periodic pension costs (net of income tax of $63 and $126 in 2019 and $149 and $286 in 2018)
 
197

 
374

 
394

 
754

Net unrealized loss on derivative instruments and other (net of income tax of $2,662 and $3,641 in 2019 and $68 in 2018)
 
(5,262
)
 
(122
)
 
(7,675
)
 
(116
)
Total other comprehensive income (loss), net of tax
 
2,387

 
(20,426
)
 
(4,036
)
 
(11,119
)
Comprehensive loss
 
$
(8,089
)
 
$
(203,203
)
 
$
(28,608
)
 
$
(185,745
)


See accompanying notes to consolidated financial statements.
4

Table of Contents

Owens & Minor, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
 
 
June 30,
 
December 31,
(in thousands, except per share data)
2019
 
2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
91,339

 
$
103,367

Accounts receivable, net of allowances of $21,456 and $19,618
843,343

 
823,418

Merchandise inventories
1,237,713

 
1,290,103

Other current assets
302,234

 
321,690

Total current assets
2,474,629

 
2,538,578

Property and equipment, net of accumulated depreciation of $297,297 and $270,105
389,933

 
386,723

Operating lease assets
206,199

 

Goodwill
407,651

 
414,122

Intangible assets, net
311,027

 
321,764

Other assets, net
106,632

 
112,601

Total assets
$
3,896,071

 
$
3,773,788

Liabilities and equity
 
 

Current liabilities
 
 

Accounts payable
$
1,039,074

 
$
1,109,589

Accrued payroll and related liabilities
47,284

 
48,203

Other current liabilities
384,040

 
314,219

Total current liabilities
1,470,398

 
1,472,011

Long-term debt, excluding current portion
1,624,692

 
1,650,582

Operating lease liabilities, excluding current portion
161,785

 

Deferred income taxes
49,507

 
50,852

Other liabilities
92,788

 
81,924

Total liabilities
3,399,170

 
3,255,369

Commitments and contingencies

 

Equity
 
 
 
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 62,964 shares and 62,294 shares
125,928

 
124,588

Paid-in capital
244,756

 
238,773

Retained earnings
175,865

 
200,670

Accumulated other comprehensive loss
(49,648
)
 
(45,612
)
Total equity
496,901

 
518,419

Total liabilities and equity
$
3,896,071

 
$
3,773,788



See accompanying notes to consolidated financial statements.
5

Table of Contents

Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
 
 
Six Months Ended June 30,
(in thousands)
2019
 
2018
Operating activities:
 
 
 
Net loss
$
(24,572
)
 
$
(174,626
)
Adjustments to reconcile net loss to cash provided by operating activities:
 
 

Depreciation and amortization
58,902

 
43,813

Share-based compensation expense
8,093

 
6,140

Goodwill and intangible asset impairment charges

 
165,447

Provision for losses on accounts receivable
6,534

 
2,867

Deferred income tax benefit
(14,597
)
 
(6,172
)
Changes in operating lease right-of-use assets and lease liabilities

(616
)


Changes in operating assets and liabilities:
 
 

Accounts receivable
(23,346
)
 
(30,357
)
Merchandise inventories
52,346

 
5,211

Accounts payable
(71,704
)
 
47,260

Net change in other assets and liabilities
32,226

 
(14,629
)
Other, net
5,748

 
1,299

Cash provided by operating activities
29,014

 
46,253

Investing activities:
 
 
 
Acquisitions, net of cash acquired

 
(733,433
)
Additions to property and equipment
(21,020
)
 
(19,816
)
Additions to computer software
(4,511
)
 
(10,238
)
Proceeds from sale of property and equipment
339

 
12

Cash used for investing activities
(25,192
)
 
(763,475
)
Financing activities:
 
 
 
Proceeds from issuance of debt

 
695,750

Borrowings under revolving credit facility
19,900

 
101,000

Repayments of debt
(24,788
)
 
(6,250
)
Financing costs paid
(4,313
)
 
(27,697
)
Cash dividends paid
(4,918
)
 
(32,284
)
Other, net
(1,934
)
 
(3,670
)
Cash (used for) provided by financing activities
(16,053
)
 
726,849

Effect of exchange rate changes on cash and cash equivalents
203

 
4,039

Net (decrease) increase in cash and cash equivalents
(12,028
)
 
13,666

Cash and cash equivalents at beginning of period
103,367

 
104,522

Cash and cash equivalents at end of period
$
91,339

 
$
118,188

Supplemental disclosure of cash flow information:
 
 
 
Income taxes paid, net of refunds
$
(13,929
)
 
$
12,318

Interest paid
$
53,183

 
$
24,848




See accompanying notes to consolidated financial statements.
6

Table of Contents

Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
(unaudited)
 
(in thousands, except per share data)
Common
Shares
Outstanding
 
Common 
Stock
($2 par value )
 
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive Income
(Loss)
 
Total
Equity
Balance, December 31, 2017
61,476

 
$
122,952

 
$
226,937

 
$
690,674

 
$
(25,084
)
 
$
1,015,479

Net income
 
 
 
 
 
 
8,151

 
 
 
8,151

Other comprehensive income
 
 
 
 
 
 
 
 
9,307

 
9,307

Dividends declared ($0.26 per share)
 
 
 
 
 
 
(16,027
)
 
 
 
(16,027
)
Share-based compensation expense, exercises and other
336

 
672

 
1,336

 

 
 
 
2,008

Balance, March 31, 2018
61,812

 
$
123,624

 
$
228,273

 
$
682,798

 
$
(15,777
)
 
$
1,018,918

Net income
 
 
 
 
 
 
(182,777
)
 
 
 
(182,777
)
Other comprehensive loss
 
 
 
 
 
 
 
 
(20,426
)
 
(20,426
)
Dividends declared ($0.26 per share)
 
 
 
 
 
 
(16,175
)
 
 
 
(16,175
)
Share-based compensation expense, exercises and other
529

 
1,057

 
1,611

 
 
 
 
 
2,668

Balance, June 30, 2018
62,341

 
$
124,681

 
$
229,884

 
$
483,846

 
$
(36,203
)
 
$
802,208

 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
62,294

 
$
124,588

 
$
238,773

 
$
200,670

 
$
(45,612
)
 
$
518,419

Net loss
 
 
 
 
 
 
(14,096
)
 
 
 
(14,096
)
Other comprehensive loss
 
 
 
 
 
 
 
 
(6,423
)
 
(6,423
)
Dividends declared ($0.0025 per share)
 
 
 
 
 
 
(119
)
 
 
 
(119
)
Share-based compensation expense, exercises and other
642

 
1,284

 
2,774

 
 
 
 
 
4,058

Balance, March 31, 2019
62,936

 
$
125,872

 
$
241,547

 
$
186,455

 
$
(52,035
)
 
$
501,839

Net loss
 
 
 
 
 
 
(10,476
)
 
 
 
(10,476
)
Other comprehensive income
 
 
 
 
 
 
 
 
2,387

 
2,387

Dividends declared ($0.0025 per share)
 
 
 
 
 
 
(114
)
 
 
 
(114
)
Share-based compensation expense, exercises and other
28

 
56

 
3,209

 
 
 
 
 
3,265

Balance, June 30, 2019
62,964

 
$
125,928

 
$
244,756

 
$
175,865

 
$
(49,648
)
 
$
496,901



See accompanying notes to consolidated financial statements.
7

Table of Contents

Owens & Minor, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
(in thousands, unless otherwise indicated)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.
Reclassifications
Certain prior year amounts have been reclassified to conform to current year presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Actual results may differ from these estimates.
Note 2—Fair Value
The carrying amounts of cash and cash equivalents, accounts receivable, financing receivables, accounts payable and financing payables included in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The fair value of 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). The fair value of interest rate swaps and foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows.
Note 3—Acquisition
On April 30, 2018 (the Acquisition Date), we completed the acquisition of substantially all of Avanos Medical, Inc.'s (Avanos, previously Halyard Health, Inc.) Surgical and Infection Prevention (S&IP) business, the name “Halyard Health” (and all variations of that name and related intellectual property rights) and its information technology (IT) systems in exchange for $758 million, net of cash acquired. The Halyard business is a leading global provider of medical supplies and solutions for the prevention of healthcare associated infections across acute care and non-acute care markets. This business is reported as part of the Global Products segment.
The following table presents the fair value of the assets acquired and liabilities assumed recognized as of the Acquisition Date. The fair value of intangibles from this acquisition was primarily determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 inputs.

8


Table of Contents

 
Preliminary Fair Value
Originally Estimated as of
Acquisition Date
(1)
 
Differences Between Prior and Current Period Fair Value
 
Fair Value as of Acquisition Date
Assets acquired:
 
 
 
 
 
Current assets
$
330,870

 
$

 
$
330,870

Goodwill
130,217

 
(4,675
)
 
125,542

Intangible assets
191,230

 
13,000

 
204,230

Other noncurrent assets
218,387

 
5,616

 
224,003

Total assets
870,704

 
13,941

 
884,645

Liabilities assumed:
 
 
 
 
 
Current liabilities
92,438

 
741

 
93,179

Noncurrent liabilities
20,217

 
13,200

 
33,417

Total liabilities
112,655

 
13,941

 
126,596

Fair value of net assets acquired, net of cash
$
758,049

 
$

 
$
758,049

(1) As previously reported in our 2018 Form 10-K.
We are amortizing the fair value of acquired intangible assets, primarily customer relationships, a trade name and other intellectual property, over their estimated weighted average useful lives of eight to 12 years.
Goodwill of $126 million, which we assigned to our Global Products segment, consists largely of expected opportunities to expand into new markets and further develop a presence in the medical products segment. None of the goodwill recognized is expected to be deductible for income tax purposes.
The unaudited pro forma results of net revenue for the three and six months ended June 30, 2018 as if Halyard was acquired on January 1, 2018 were $2,528,271 and $5,110,850, respectively. The pro forma results of net loss and net loss per common share have not been represented because the effects were not material to our historic consolidated financial statements. Accordingly, the pro forma results noted above are not necessarily indicative of the results that would have been if the acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future.
Note 4—Financing Receivables and Payables
At June 30, 2019 and December 31, 2018, we had financing receivables of $194.7 million and $183.3 million, respectively, and related payables of $92.0 million and $100.3 million, respectively, outstanding under our order-to-cash program, which were included in other current assets and other current liabilities, respectively, in the consolidated balance sheets.
Note 5—Goodwill and Intangible Assets
The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through June 30, 2019:
 
Global Solutions
 
Global Products
 
Consolidated
Carrying amount of goodwill, December 31, 2018
$
283,905

 
$
130,217

 
$
414,122

Currency translation adjustments

 
(1,796
)
 
(1,796
)
Acquisition

 
(4,675
)
 
(4,675
)
Carrying amount of goodwill, June 30, 2019
$
283,905

 
$
123,746

 
$
407,651



9


Table of Contents

Intangible assets at June 30, 2019 and December 31, 2018, were as follows:
 
June 30, 2019
 
December 31, 2018
 
Customer
Relationships
 
Tradenames
 
Other
Intangibles
 
Customer
Relationships
 
Tradenames
 
Other
Intangibles
 
 
 
 
 
 
 
 
 
 
 
 
Gross intangible assets
$
284,452

 
$
90,000

 
$
45,685

 
$
267,510

 
$
97,000

 
$
42,930

Accumulated amortization
(89,713
)
 
(12,338
)
 
(7,059
)
 
(72,947
)
 
(8,544
)
 
(4,185
)
Net intangible assets
$
194,739

 
$
77,662

 
$
38,626

 
$
194,563

 
$
88,456

 
$
38,745

Weighted average useful life
10 years

 
11 years

 
8 years

 
10 years

 
11 years

 
8 years


At June 30, 2019, $96.9 million in net intangible assets were held in the Global Solutions segment and $214.1 million were held in the Global Products segment. Amortization expense for intangible assets was $13.1 million and $9.4 million for the three months ended June 30, 2019 and 2018 and $23.5 million and $15.8 million for the six months ended June 30, 2019 and 2018, respectively.
Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $22.0 million for the remainder of 2019, $43.0 million for 2020, $41.3 million for 2021, $40.4 million for 2022, $39.2 million for 2023 and $35.3 million for 2024.
Note 6—Leases
We adopted ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019. We elected to use the adoption date as our date of initial application and thus have not restated comparative prior periods. We elected the ‘package of practical expedients’, which permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs under the new standard. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us.
The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize right-of-use assets or lease liabilities, and this includes not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.
The adoption of the new standard resulted in the recording of operating lease assets and lease liabilities of approximately $197 million and $201 million, respectively, as of January 1, 2019. The standard did not materially impact our consolidated net loss and had no impact on cash flows.
We enter into non-cancelable agreements to lease most of our office and warehouse facilities with remaining terms generally ranging from one to 20 years. Certain leases include renewal options, generally for one to five-year increments. The exercise of lease renewal options is at our sole discretion. Our lease terms may include those options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We also lease some of our transportation and material handling equipment for terms generally ranging from three to 10 years. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The depreciable life of right-of-use assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. We use the implicit rate when readily determinable. The operating lease asset also includes adjustments for any lease payments made and lease incentives.

10


Table of Contents

The components of lease expense were as follows:
 
Classification
 
Three months ended June 30, 2019
 
Six months ended June 30, 2019
Operating lease cost
Distribution, selling and administrative expenses
 
$
16,802

 
$
34,239

Finance lease cost:
 
 
 
 
 
Amortization of lease assets
Distribution, selling and administrative expenses
 
455

 
1,211

Interest on lease liabilities
Interest expense, net
 
299

 
633

Total finance lease cost
 
 
754

 
1,844

Total lease cost
 
 
$
17,556

 
$
36,083

Short-term lease costs and variable lease costs are immaterial.
Supplemental balance sheet information is as follows:
 
Classification
 
As of June 30, 2019
Assets:
 
 
 
Operating lease assets
Operating lease assets
 
$
206,199

Finance lease assets
Property and equipment, net
 
13,084

Total lease assets
 
 
$
219,283

Liabilities:
 
 
 
Current
 
 

Operating
Other current liabilities
 
$
48,892

Finance
Other current liabilities
 
2,679

Noncurrent
 
 
 
Operating
Operating lease liabilities, excluding current portion
 
161,785

Finance
Long-term debt, excluding current portion
 
14,704

Total lease liabilities
 
 
$
228,060


Other information related to leases was as follows:
 
Six months ended June 30, 2019
 
Supplemental cash flow information
 
 
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating and finance leases
$
34,742

 
Financing cash flows from finance leases
$
1,143

 
 
 
 
Right-of-use assets obtained in exchange for new operating and finance lease liabilities
$
28,694

 
 
 
 
Weighted average remaining lease term (years)
 
 
Operating leases
6.1

 
Finance leases
8.1

 
 
 
 
Weighted average discount rate
 
 
Operating leases
12.0
%
 
Finance leases
9.3
%
 


11


Table of Contents

Maturities of lease liabilities as of June 30, 2019 were as follows:
 
Operating Leases
 
Finance Leases
 
Total
2019 (remainder)
$
40,239

 
$
2,262

 
$
42,501

2020
63,545

 
3,186

 
66,731

2021
54,918

 
2,631

 
57,549

2022
34,568

 
2,436

 
37,004

2023
23,968

 
2,314

 
26,282

Thereafter
86,009

 
11,455

 
97,464

Total lease payments
303,247

 
24,284

 
327,531

Less: Interest
(92,570
)
 
(6,901
)
 
(99,471
)
Present value of lease liabilities
$
210,677

 
$
17,383

 
$
228,060


At December 31, 2018, future minimum annual payments under non-cancelable lease agreements with original terms in excess of one year, and including payments required under operating leases for facilities we have vacated, were as follows:
 
Total
2019
$
64,082

2020
53,138

2021
42,480

2022
26,445

2023
19,895

Thereafter
45,708

Total minimum payments
$
251,748


Rent expense for all operating leases for the year ended December 31, 2018 was $78.3 million.
Note 7—Derivatives
We are directly and indirectly affected by changes in foreign currency, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.
We use a layered hedging program to hedge select anticipated foreign currency cash flows to reduce volatility in cash flows. We account for the designated foreign exchange forward contracts as cash flow hedges. These foreign exchange forward contracts generally have maturities up to 12 months and the counterparties to the transactions are typically large international financial institutions.
We enter into foreign currency contracts to manage our foreign exchange exposure related to certain balance sheet items that do not meet the requirements for hedge accounting. These derivative instruments are adjusted to fair value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.
We pay interest under our Credit Agreement which fluctuates based on changes in our benchmark interest rates. In order to mitigate the risk of increases in benchmark rates, we entered into interest rate swaps during the third quarter of 2018 whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable amounts calculated by reference to the notional amount. The interest rate swaps were designated as cash flow hedges. Cash flows related to the interest rate swap agreements are included in interest expense.
We determine the fair value of our foreign currency derivatives and our interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. Our derivatives are over-the-counter instruments with liquid markets. All derivatives are carried at fair value in our consolidated balance sheets in other assets and other liabilities. We consider the risk of counterparty default to be minimal. We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.


12


Table of Contents

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of June 30, 2019:
 
 
 
 
 
Derivative Assets
 
Derivative Liabilities
 
Notional Amount
 
Maturity Date
 
Classification
 
Fair Value
 
Classification
 
Fair Value
Cash flow hedges
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
$
450,000

 
May 2022 and 2025
 
Other assets, net
 
$

 
Other liabilities
 
$
18,770

Foreign currency contracts
$
4,515

 
September 2019 to December 2019
 
Other assets, net
 
$
258

 
Other liabilities
 
$

 
 
 
 
 
 
 
 
 
 
 
 
Economic (non-designated) hedges
 
 
 
 
 
 
 
 
 
 
 
Foreign currency contracts
$
15,874

 
July 2019 to August 2019
 
Other assets, net
 
$
342

 
Other liabilities
 
$


The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of income (loss) for the three and six months ended June 30, 2019:
 
Amount of Gain/(Loss) Recognized in Other Comprehensive Income (Loss)
Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Income in Which the Effects are Recorded
Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
 
Three Months Ended June 30, 2019
Six Months Ended June 30, 2019
 
Three Months Ended June 30, 2019
Six Months Ended June 30, 2019
Three Months Ended June 30, 2019
Six Months Ended June 30, 2019
Interest rate swaps
$
(8,162
)
$
(12,577
)
Interest expense, net
$
(27,682
)
$
(56,783
)
$
(361
)
$
(682
)
Foreign currency contracts
$
191

$
636

Cost of goods sold
$
(2,115,773
)
$
(4,218,736
)
$
314

$
57


The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

For the three and six months ended June 30, 2019, we recognized gains of $0.5 million and $1.0 million, respectively, associated with our economic (non-designated) foreign currency contracts.
The total notional values of derivatives that were designated and qualified for our foreign currency cash flow hedging program was $12.6 million as of June 30, 2018. We record the change in fair value of derivative instruments and the remeasurement adjustment on the foreign currency denominated asset or liability in acquisition-related and exit and realignment charges for contracts assumed with the Halyard acquisition and in other operating expense, net for all other foreign exchange contracts.

13


Table of Contents

Note 8—Exit and Realignment Costs
We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and logistics centers, administrative offices and warehouses in the United States and Europe. These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes.

Exit and realignment charges by segment for the three and six months ended June 30, 2019 and 2018 were as follows:
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Global Solutions segment
$
1,902

 
$
1,737

 
$
2,595

 
$
4,444

Global Products segment
80

 

 
214

 
(29
)
Total exit and realignment charges
$
1,982

 
$
1,737

 
$
2,809

 
$
4,415


The following table summarizes the activity related to exit and realignment cost and related accruals through June 30, 2019 and 2018:
 
 
Total (1)
Accrued exit and realignment costs, December 31, 2018
 
$
8,214

Provision for exit and realignment activities:
 


Severance
 
360

Information system restructuring costs
 
515

Other
 
83

Change in estimate
 
(127
)
Cash payments
 
(3,079
)
Accrued exit and realignment costs, March 31, 2019
 
$
5,966

Provision for exit and realignment activities:
 
 
Severance
 
1,008

Information system restructuring costs
 
948

Other
 
27

Cash payments
 
(2,569
)
Accrued exit and realignment costs, June 30, 2019
 
$
5,380

 
 
 
Accrued exit and realignment costs, December 31, 2017
 
$
11,972

Provision for exit and realignment activities:
 


Severance
 
2,295

Information system restructuring costs
 
177

Other
 
230

Change in estimate
 
(23
)
Cash payments
 
(6,886
)
Accrued exit and realignment costs, March 31, 2018
 
$
7,765

Provision for exit and realignment activities:
 
 
Severance
 
(415
)
Information system restructuring costs
 
1,079

Other
 
1,072

Cash payments
 
(6,358
)
Accrued exit and realignment costs, June 30, 2018
 
$
3,143


(1)The accrued exit and realignment costs at June 30, 2019 and 2018 related primarily to accrued information system restructuring costs and accrued severance.

14


Table of Contents

Note 9—Retirement Plans
We have a noncontributory, unfunded retirement plan for certain officers and retirees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective employees.
The components of net periodic benefit cost, which are included in distribution, selling and administrative expenses, for the three and six months ended June 30, 2019 and 2018, were as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Service cost
$
387

 
$
18

 
$
761

 
$
38

Interest cost
600

 
419

 
1,200

 
838

Recognized net actuarial loss
260

 
522

 
520

 
1,044

Net periodic benefit cost
$
1,247

 
$
959

 
$
2,481

 
$
1,920


Certain of our foreign subsidiaries have health and welfare plans covering substantially all of their respective employees. Our expense for these plans totaled $0.6 million for the three months ended June 30, 2019 and 2018 and $1.2 million and $1.1 million for the six months ended June 30, 2019 and 2018, respectively.
Note 10—Debt
Debt consists of the following:
 
June 30, 2019
 
December 31, 2018
 
Carrying Amount
 
Estimated Fair Value
 
Carrying Amount
 
Estimated Fair Value
3.875% Senior Notes, $275 million par value, due September 2021
$
273,835

 
$
237,738

 
$
273,577

 
$
207,001

4.375% Senior Notes, $275 million par value, due December 2024
273,141

 
203,808

 
272,972

 
174,859

Term A Loans, due July 2022
398,615

 
405,337

 
422,422

 
422,422

Term B Loan, due April 2025
481,579

 
419,331

 
483,327

 
385,284

Revolver
230,000

 
230,000

 
210,100

 
210,100

Finance leases and other
21,792

 
21,792

 
18,774

 
18,774

Total debt
1,678,962

 
1,518,006

 
1,681,172

 
1,418,440

Less current maturities
(54,270
)
 
(54,270
)
 
(30,590
)
 
(30,590
)
Long-term debt
$
1,624,692

 
$
1,463,736

 
$
1,650,582

 
$
1,387,850


We have a Credit Agreement (amended February 2019) with a borrowing capacity of $400 million and term loans. The interest rate on our revolving credit facility and Term A loans is based on the Eurocurrency Rate, the Federal Funds Rate or the Prime Rate, plus an adjustment based on our Consolidated Total Leverage Ratio as defined by the Credit Agreement. Our credit spread at June 30, 2019 was Eurocurrency Rate plus 3.5%. Our Term B loan accrues interest based on the Eurocurrency Rate, the Federal Funds Rate or the Prime Rate, plus interest rate margin of 3.50% per annum with respect to Base Rate Loans (as defined in the Credit Agreement), and 4.50% per annum with respect to Eurocurrency Rate Loans (as defined in the Credit Agreement). We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the facility. The terms of the Credit Agreement requires us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition.
We also have a Security and Pledge Agreement (the Security Agreement) pursuant to which we granted collateral on behalf of the holders of the 2021 Notes and the 2024 Notes and parties secured on the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries (limited, in the case of controlled foreign corporations, to a pledge of 65% of the voting capital stock of each first-tier foreign subsidiary of each Credit Party) and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions. Our Credit Agreement has a “springing maturity date” with respect to the revolving loans and the Term A loans and the Term B loan, if as of the date that is 91 days prior to the maturity date of the Company’s 2021 Notes or the 2024 Notes, respectively, all outstanding amounts owing under the 2021 Notes or the 2024 Notes, respectively, have not been paid in full then the Termination Date (as defined in the Credit

15


Table of Contents

Agreement) of the revolving credit facility, Term A loans and Term B loan shall be the date that is 91 days prior to the maturity date of the 2021 Notes.
At June 30, 2019 and December 31, 2018, we had letters of credit of $11.7 million and $15.2 million, respectively, outstanding under the Credit Agreement. We also had letters of credit and bank guarantees outstanding for $6.1 million and $7.7 million as of June 30, 2019 and December 31, 2018, respectively, which supports certain facilities leased as well as other normal business activities in the United States and Europe.
The Credit Agreement 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 June 30, 2019.
As of June 30, 2019, scheduled future principal payments of debt were $24.8 million in 2019, $49.6 million in 2020, $324.7 million in 2021, $528.8 million in 2022, $5.0 million in 2023, and $748.8 million thereafter.
Note 11—Income Taxes

The effective tax rate was 9.2% and 5.3% for the three and six months ended June 30, 2019, compared to 4.1% and 1.2% in the same periods of 2018. The change in these rates resulted from the mixture of income and losses in jurisdictions in which the company operates, including those of which require a full valuation allowance, and the incremental income tax expense associated with the vesting of restricted stock. The liability for unrecognized tax benefits was $11.5 million at June 30, 2019 and $9.6 million at December 31, 2018. Included in the liability at June 30, 2019 and December 31, 2018 were $3.4 million and $1.9 million, respectively, of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
Note 12—Net Loss per Common Share
The following summarizes the calculation of net income per common share attributable to common shareholders for the three and six months ended June 30, 2019 and 2018:
 
Three Months Ended 
 June 30,
 
Six Months Ended
June 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic and diluted
$
(10,476
)
 
$
(182,777
)
 
$
(24,572
)
 
$
(174,626
)
Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
59,805

 
59,750

 
60,403

 
60,022

Net loss per share attributable to common shareholders:
 
 
 
 
 
 
 
Basic and diluted
$
(0.18
)
 
$
(3.07
)
 
$
(0.41
)
 
$
(2.92
)

Note 13—Shareholders’ Equity
Our Board of Directors authorized a share repurchase program of up to $100 million of our outstanding common stock to be executed at the discretion of management over a 3-year period, expiring in December 2019. The timing of repurchases and the exact number of shares of common stock to be purchased will depend upon market conditions and other factors and may be suspended or discontinued at any time. Purchases under the share repurchase program are made either pursuant to 10b5-1 plans entered into by the company from time to time and/or during the company’s scheduled quarterly trading windows for officers and directors. Our Credit Agreement contains restrictions on the amount and timing