UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



o☐	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 ~~(804)~~ (804) 723-7000

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. Yesx☒ 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). Yesx☒ 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	x☐	Accelerated filer	o☒
Non-accelerated filer	o☐ (Do not check if a smaller reporting company)	Smaller reporting company	o☒
Emerging growth company	o☐
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.			o☐

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 ~~October 27, 2017,~~April 30, 2020, was ~~61,249,613~~63,007,803 shares.

~~Table of Contents~~

Owens & Minor, Inc. and Subsidiaries

Index



Part I. Financial Information		Page

Item 1.	Financial Statements	3
	Consolidated Statements of ~~Income—~~Operations—Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	3
	Consolidated Statements of Comprehensive ~~Income—~~Loss—Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4
	Consolidated Balance Sheets—~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	5
	Consolidated Statements of Cash Flows—~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6
	Consolidated Statements of Changes in Equity—~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2318
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3125
Item 4.	Controls and Procedures	25
~~Item 4.~~		~~Controls and Procedures~~	31
Part II. Other Information

Item 1.	Legal Proceedings	~~Legal Proceedings~~25
Item 1A.	Risk Factors	3125
Item 6.	~~Item 1A.~~Exhibits	~~Risk Factors~~	31
~~Item 2.~~	~~Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities~~	32
~~Item 6.~~	~~Exhibits~~	3327

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of ~~Income~~Operations

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2017 2016 2017 2016
Net revenue $ 2,333,961
$ 2,415,601
$ 6,928,441
$ 7,355,069
Cost of goods sold 2,032,019
2,119,326
6,071,787
6,462,739
Gross margin 301,942
296,275
856,654

892,330
Distribution, selling, and administrative expenses 261,045
241,305
735,353
726,944
Acquisition-related and exit and realignment charges 9,299
2,739
21,134
19,974
Other operating (income) expense, net 1,927
(1,337 ) 2,143
(5,179 )
Operating earnings 29,671
53,568
98,024
150,591
Interest expense, net 8,737
6,770
22,218
20,324
Income before income taxes 20,934
46,798
75,806
130,267
Income tax provision 10,063
16,967
26,010
48,585
Net income $ 10,871
$ 29,831
$ 49,796
$ 81,682
Net income per common share:
Basic and diluted $ 0.18
$ 0.48
$ 0.82
$ 1.32
Cash dividends per common share $ 0.2575
$ 0.255
$ 0.7725
$ 0.765



	Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
Net revenue	$	2,122,693		$	2,350,840
Cost of goods sold	1,854,134			2,074,219
Gross margin	268,559			276,621
Distribution, selling and administrative expenses	254,048			255,112
Acquisition-related and exit and realignment charges	6,064			4,863
Other operating (income) expense, net	(2,309		)	42
Operating income	10,756			16,604
Interest expense, net	23,342			25,458
Other expense, net	4,846			2,734
Loss from continuing operations before income taxes	(17,432		)	(11,588		)
Income tax benefit	(8,523		)	(670		)
Loss from continuing operations, net of tax	(8,909		)	(10,918		)
Loss from discontinued operations, net of tax	(2,415		)	(3,178		)
Net loss	$	(11,324	)	$	(14,096	)

Loss from continuing operations per common share: basic and diluted	$	(0.15	)	$	(0.18	)
Loss from discontinued operations per common share: basic and diluted	(0.04		)	(0.05		)
Net loss per common share: basic and diluted	$	(0.19	)	$	(0.23	)

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Comprehensive ~~Income~~Loss

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016
Net income $ 10,871
$ 29,831
$ 49,796
$ 81,682
Other comprehensive income (loss), net of tax:
Currency translation adjustments (net of income tax of $0 in 2017 and 2016) 12,254
1,401
40,151
2,443
Change in unrecognized net periodic pension costs (net of income tax of $220 and $665 in 2017 and $194 and $532 in 2016) 236
218
702
701
Other (net of income tax of $0 in 2017 and 2016) 94
82
288
119
Total other comprehensive income (loss), net of tax 12,584
1,701
41,141
3,263
Comprehensive income $ 23,455
$ 31,532
$ 90,937
$ 84,945



	Three Months Ended March 31,
(in thousands)	2020			2019
Net loss	$	(11,324	)	$	(14,096	)
Other comprehensive loss, net of tax:
Currency translation adjustments (net of income tax of $0 in 2020 and 2019)	(28,178		)	(4,207		)
Change in unrecognized net periodic pension costs (net of income tax of $44 in 2020 and $69 in 2019)	170			197
Net unrealized loss on derivative instruments and other (net of income tax benefit of $4,302 in 2020 and $658 in 2019)	(11,397		)	(2,413		)
Other comprehensive loss	(39,405		)	(6,423		)
Comprehensive loss	$	(50,729	)	$	(20,519	)

Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


	September 30,			December 31,			March 31,			December 31,
(in thousands, except per share data)	2017			2016			2020			2019
Assets
Current assets
Cash and cash equivalents	$	98,415		$	185,488		$	92,315		$	67,030
Accounts receivable, net of allowances of $14,609 and $13,538	732,756			606,084
Accounts receivable, net of allowances of $23,971 and $21,015							667,607			674,706
Merchandise inventories	989,251			916,311			1,108,844			1,146,192
Other current assets	311,499			254,156			151,635			79,372
Current assets of discontinued operations							499,410			439,983
Total current assets	2,131,921			1,962,039			2,519,811			2,407,283
Property and equipment, net of accumulated depreciation of $224,970 and $201,399	203,587			191,718
Goodwill, net	690,230			414,936
Property and equipment, net of accumulated depreciation of $254,054 and $245,718							301,335			315,427
Operating lease assets							133,738			142,219
Goodwill							388,000			393,181
Intangible assets, net	231,886			82,511			271,513			285,018
Other assets, net	76,532			66,548			100,473			99,956
Total assets	$	3,334,156		$	2,717,752		$	3,714,870		$	3,643,084
Liabilities and equity
Current liabilities
Accounts payable	$	875,630		$	750,750		$	891,542		$	808,035
Accrued payroll and related liabilities	31,998			45,051			44,722			53,584
Other current liabilities	296,663			238,837			229,824			231,029
Current liabilities of discontinued operations							383,586			323,511
Total current liabilities	1,204,291			1,034,638			1,549,674			1,416,159
Long-term debt, excluding current portion	917,256			564,583			1,484,340			1,508,415
Operating lease liabilities, excluding current portion							109,381			117,080
Deferred income taxes	137,539			90,383			42,962			40,550
Other liabilities	71,286			68,110			112,175			98,726
Total liabilities	2,330,372			1,757,714			3,298,532			3,180,930
Commitments and contingencies
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 61,249 shares and 61,031 shares	122,499			122,062
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 62,885 shares and 62,843 shares							125,770			125,686
Paid-in capital	224,183			219,955			256,357			251,401
Retained earnings	683,444			685,504			126,323			137,774
Accumulated other comprehensive loss	(26,342		)	(67,483		)	(92,112		)	(52,707		)
Total equity	1,003,784			960,038			416,338			462,154
Total liabilities and equity	$	3,334,156		$	2,717,752		$	3,714,870		$	3,643,084

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
(in thousands)	2017			2016			2020			2019
Operating activities:
Net income	$	49,796		$	81,682
Adjustments to reconcile net income to cash provided by operating activities:
Net loss							$	(11,324	)	$	(14,096	)
Adjustments to reconcile net loss to cash provided by (used for) operating activities:
Depreciation and amortization	41,060			42,182			23,913			28,720
Share-based compensation expense	8,592			8,934			3,941			4,505
Impairment charges							9,080			—
Provision for losses on accounts receivable	1,158			(216		)	5,213			3,619
Deferred income tax (benefit) expense	(4,585		)	(3,233		)
Deferred income tax expense (benefit)							6,348			(8,613		)
Changes in operating lease right-of-use assets and lease liabilities							(714		)	(190		)
Changes in operating assets and liabilities:
Accounts receivable	(79,114		)	5,023			(7,942		)	(22,573		)
Merchandise inventories	(56,134		)	(5,066		)	39,340			80,194
Accounts payable	79,787			58,742			98,743			(120,480		)
Net change in other assets and liabilities	(40,634		)	(44,903		)	(77,178		)	(15,668		)
Other, net	5,719			1,366			4,034			3,678
Cash provided by operating activities	5,645			144,511
Cash provided by (used for) operating activities							93,454			(60,904		)
Investing activities:
Acquisition, net of cash acquired	(366,569		)	—
Additions to property and equipment	(24,963		)	(13,682		)	(4,771		)	(11,674		)
Additions to computer software and intangible assets	(12,826		)	(7,081		)
Additions to computer software							(942		)	(2,605		)
Proceeds from sale of property and equipment	780			4,497			33			271
Cash used for investing activities	(403,578		)	(16,266		)	(5,680		)	(14,008		)
Financing activities:
Change in bank overdraft	—			21,753
Proceeds from debt issuance	250,000			—
Borrowing under revolving credit facility	117,200			—
Proceeds from issuance of debt							150,000			—
(Repayments) borrowings under revolving credit facility							(6,200		)	72,100
Repayments of debt							(166,798		)	(12,394		)
Financing costs paid	(1,798		)	—			(5,785		)	(4,313		)
Cash dividends paid	(47,316		)	(47,802		)	(155		)	(4,764		)
Repurchases of common stock	(5,000		)	(48,654		)
Other, net	(7,363		)	(8,118		)	(2,468		)	(1,124		)
Cash provided by (used for) financing activities	305,723			(82,821		)
Cash (used for) provided by financing activities							(31,406		)	49,505
Effect of exchange rate changes on cash and cash equivalents	5,137			6,652			(62		)	(2,721		)
Net increase (decrease) in cash and cash equivalents	(87,073		)	52,076
Cash and cash equivalents at beginning of period	185,488			161,020
Cash and cash equivalents at end of period	$	98,415		$	213,096
Net increase (decrease) in cash, cash equivalents and restricted cash							56,306			(28,128		)
Cash, cash equivalents and restricted cash at beginning of period							84,687			103,367
Cash, cash equivalents and restricted cash at end of period							$	140,993		$	75,239
Supplemental disclosure of cash flow information:
Income taxes paid, net	$	26,917		$	57,996
Income taxes paid (received), net of refunds							$	2,695		$	(12,388	)
Interest paid	$	19,951		$	20,023		$	21,431		$	24,504

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, 2015 62,803
$ 125,606
$ 211,943
$ 706,866
$ (51,825 ) $ 992,590
Net income 81,682
81,682
Other comprehensive loss 3,263
3,263
Dividends declared ($0.765 per share) (47,671 ) (47,671 )
Shares repurchased and retired (1,378 ) (2,757 ) (45,896 ) (48,653 )
Share-based compensation expense, exercises and other 274
549
4,923
5,472
Balance September 30, 2016 61,699
$ 123,398
$ 216,866
$ 694,981
$ (48,562 ) $ 986,683

Balance December 31, 2016 61,031
$ 122,062
$ 219,955
$ 685,504
$ (67,483 ) $ 960,038
Net income 49,796
49,796
Other comprehensive income 41,141
41,141
Dividends declared ($0.7725 per share) (47,169 ) (47,169 )
Shares repurchased and retired (155 ) (310 ) (4,687 ) (4,997 )
Share-based compensation expense, exercises and other 373
747
4,228
4,975
Balance September 30, 2017 61,249
$ 122,499
$ 224,183
$ 683,444
$ (26,342 ) $ 1,003,784



(in thousands, except per share data)	Common Shares Outstanding	Common Stock ($2 par value )		Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
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

Balance, December 31, 2019	62,843	$	125,686	$	251,401	$	137,774		$	(52,707	)	$	462,154
Net loss						(11,324		)				(11,324		)
Other comprehensive loss									(39,405		)	(39,405		)
Dividends declared ($0.0025 per share)						(127		)				(127		)
Share-based compensation expense, exercises and other	42	84		4,956								5,040
Balance, March 31, 2020	62,885	$	125,770	$	256,357	$	126,323		$	(92,112	)	$	416,338

Owens & Minor, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, unless otherwise indicated)

Note 1—~~Basis~~Summary of ~~Presentation and Use of Estimates~~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, our or ~~our)~~the Company) 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 Movianto businessrepresents a component that met accounting requirements to be classified as discontinued operations and held for sale beginning December 31, 2019. In accordance with GAAP, the financial position and results of operations of the Movianto business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 3, the Notes to the Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. See Note 3 for additional information regarding discontinued operations. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. The Clinical & Procedural Solutions (CPS) business segment has been renamed "Proprietary Products" effective January 1, 2017. Byram Healthcare (Byram), acquired on August 1, 2017, is included in the Domestic segment. There have been no other changes to the segment composition or our method of measuring segment operating earnings.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 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.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash, cash equivalents and restricted cash are stated at cost. Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia. Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash. Restricted cash represents $16.3 million held in an escrow account as of March 31, 2020 as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows. The restricted cash presented below is classified as non-current in Other assets, net within the accompanying consolidated balance sheets.



	March 31, 2020		December 31, 2019
Cash and cash equivalents	$	92,315	$	67,030
Restricted cash included in Other assets, net	16,315		16,261
Cash of discontinued operations	32,363		1,396
Total cash, cash equivalents and restricted cash	$	140,993	$	84,687

Note 2—Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable ~~financing receivables,~~and accounts payable ~~and financing payables included~~reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The carrying amount of restricted cash also approximates fair value due to its nature. 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). ~~We determine~~See Note 6 for the fair value of ~~our derivatives, if any,~~debt. The fair value of interest rate swaps and foreign currency contracts is determined based on ~~estimated amounts that would be received or paid~~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 ~~terminate~~determine the ~~contracts at the reporting date based on current market prices for applicable currencies.~~present value of expected future cash flows. See Note 8 for the fair value of ~~long-term debt.~~derivatives.

Table of Contents

Note 3—~~Acquisition~~Discontinued Operations

On ~~August 1, 2017,~~January 16, 2020, we ~~completed~~announced our intention to sell our European logistics business, Movianto, to EHDH Holding Group (EHDH), a privately held French company, for cash consideration of $133 million. The Company concluded that the ~~acquisition~~Movianto business met the criteria for discontinued operations as of ~~Byram Healthcare,~~March 31, 2020 and December 31, 2019, as the intention to sell represented a ~~leading domestic distributor~~strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment. The transaction is expected to close in the first half of ~~reimbursable medical supplies sold directly to patients and home health agencies.~~2020.

~~The consideration was $367 million,~~Accordingly, the results of operations from our Movianto business are reported in the accompanying consolidated statements of operations as “Loss from discontinued operations, net of ~~cash acquired, which is subject to final working capital adjustments~~tax” for the quarters ended March 31, 2020 and 2019, and the related assets and liabilities are classified as held-for-sale as of March 31, 2020 and December 31, 2019 in the accompanying balance sheets. We recognized a loss of $9.1 million and $32.1 million in connection with the ~~seller. The purchase price was allocated on a preliminary basis to~~classification of the ~~underlying~~related assets ~~acquired~~ and liabilities ~~assumed based upon our current estimate~~as held-for-sale as of ~~their fair values at the date of acquisition. The purchase price exceeded the preliminary estimated fair value of the net tangible~~March 31, 2020 and ~~identifiable intangible assets by $263 million, which was allocated to goodwill.~~ December 31, 2019, respectively.

The following table ~~presents~~summarizes the ~~preliminary estimated fair value~~financial results of our discontinued operations for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31,
	2020			2019
Net revenue	$	122,342		$	110,548
Cost of goods sold	32,106			28,745
Gross margin	90,236			81,803
Distribution, selling, and administrative expenses	80,953			83,044
Asset impairment charges	9,080			—
Acquisition-related and exit and realignment charges	271			126
Other operating income, net	(461		)	(186		)
Operating income (loss)	393			(1,181		)
Interest expense, net	1,720			1,640
Loss from discontinued operations before income taxes	(1,327		)	(2,821		)
Income tax provision from discontinued operations	1,088			357
Loss from discontinued operations, net of tax	$	(2,415	)	$	(3,178	)

We suspended depreciation and amortization on assets ~~acquired and liabilities assumed recognized as~~that are held for sale, including right-of-use assets recorded in accordance with ASU No. 2016-02, for the three months ended March 31, 2020.

Table of ~~the acquisition date.~~ Contents

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. The allocation of purchase price to assets and liabilities ~~acquired is not yet complete.~~

~~Table of Contents~~

Preliminary Fair
Value Estimated as of
Acquisition Date
Assets acquired:
Current assets $ 62,902
Goodwill 263,155
Intangible assets 156,000
Noncurrent assets 3,615
Total assets 485,672
Liabilities assumed:
Current liabilities 72,397
Noncurrent liabilities 46,706
Total liabilities 119,103
Fair value of net assets acquired, net of cash $ 366,569

~~We are amortizing the preliminary fair value of acquired intangible assets, primarily customer relationships and a tradename, over their estimated remaining weighted average useful lives of 10 years.~~

Goodwill of $263 million, which we assigned to our Domestic segment, consists largely of expected opportunities to expand into the non-acute market with direct to patient distribution capabilities. None of the ~~goodwill recognized is expected~~discontinued Movianto business reflected on the consolidated balance sheets at March 31, 2020 and December 31, 2019, are as follows:



	March 31, 2020			December 31, 2019
Assets of discontinued operations
Cash and cash equivalents	$	32,363		$	1,396
Accounts receivable, net	78,193			78,643
Merchandise inventories	12,979			16,058
Other current assets	227,070			188,853
Current assets of discontinued operations	350,605			284,950
Property and equipment, net	70,730			70,976
Intangible assets, net	7,010			6,579
Other assets, net	27,248			22,165
Operating lease assets	84,202			87,425
Valuation allowance on disposal group classified as held for sale	(40,385		)	(32,112		)
Total assets of discontinued operations	$	499,410		$	439,983
Liabilities of discontinued operations
Accounts payable	$	68,058		$	53,981
Other current liabilities	191,728			182,980
Current liabilities of discontinued operations	259,786			236,961
Long-term debt, excluding current portion	2,781			5,523
Operating lease liabilities, excluding current portion	69,820			76,270
Other liabilities	51,199			4,757
Total liabilities of discontinued operations	$	383,586		$	323,511

Assets and liabilities held for sale as of March 31, 2020 and December 31, 2019 are classified as current since we expect the divestiture to be ~~deductible~~completed within one year of the balance sheet dates.

The following table provides operating and investing cash flow information for ~~income tax purposes.~~our discontinued operations:

~~Pro forma results of operations for Byram has not been presented because the effects on revenue and net income were not material to our historic consolidated financial statements.~~



	March 31, 2020		March 31, 2019
Operating Activities:
Depreciation and amortization	$	—	$	5,613
Asset impairment charges	9,080		—
Investing Activities:
Capital expenditures	1,664		8,035

Acquisition-related expenses in the current year consisted primarily of transaction costs incurred to perform due diligence and to analyze, negotiate and consummate the Byram acquisition, and costs to transition the acquired operations. We recognized pre-tax acquisition-related expenses of $3.1 million in 2017 related to these activities.

Note 4—~~Financing Receivables and Payables~~

At September 30, 2017 and December 31, 2016, we had financing receivables of $176.9 million and $156.5 million and related payables of $105.5 million and $110.0 million outstanding under our order-to-cash program and product financing arrangements, 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 ~~September 30, 2017:~~March 31, 2020:



	Global Solutions		Global Products			Consolidated
Carrying amount of goodwill, December 31, 2019	$	283,905	$	109,276		$	393,181
Currency translation adjustments	—		(5,181		)	(5,181		)
Carrying amount of goodwill, March 31, 2020	$	283,905	$	104,095		$	388,000

Domestic International Proprietary Products Consolidated
Carrying amount of goodwill, December 31, 2016 $ 180,006
$ 19,391
$ 215,539
$ 414,936
Acquisition (See Note 3) 263,155
—
—
263,155
Currency translation adjustments —
10,001
2,138
12,139
Carrying amount of goodwill, September 30, 2017 $ 443,161
$ 29,392
$ 217,677
$ 690,230

910

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Intangible assets at ~~September 30, 2017,~~March 31, 2020 and December 31, ~~2016,~~2019, were as follows:


	September 30, 2017						December 31, 2016						March 31, 2020									December 31, 2019
	Customer Relationships			Other Intangibles			Customer Relationships			Other Intangibles			Customer Relationships			Tradenames			Other Intangibles			Customer Relationships			Tradenames			Other Intangibles

Gross intangible assets	$	241,444		$	41,483		$	118,223		$	4,045		$	266,595		$	90,000		$	43,227		$	270,693		$	90,000		$	43,055
Accumulated amortization	(48,757		)	(2,284		)	(38,429		)	(1,328		)	(97,366		)	(18,611		)	(12,332		)	(92,947		)	(16,520		)	(9,263		)
Net intangible assets	$	192,687		$	39,199		$	79,794		$	2,717		$	169,229		$	71,389		$	30,895		$	177,746		$	73,480		$	33,792
Weighted average useful life													10 years			11 years			8 years			10 years			11 years			8 years

At ~~September 30, 2017, $163.5~~March 31, 2020, $76.1 million in net intangible assets were held in the ~~Domestic~~Global Solutions segment ~~$10.2~~and $195.4 million were held in the ~~International segment and $58.2 million were held in the Proprietary~~Global Products segment. Amortization expense for intangible assets was ~~$5.1~~$10.6 million and ~~$2.2~~$10.0 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 and $9.7 million and $6.6 million for the nine months ended September 30, 2017 and 2016.~~2019, respectively.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is ~~$11.6~~$31.1 million for the remainder of ~~2017, $24.6 million for 2018, $24.7 million for 2019, $24.7 million for~~ 2020, ~~$24.4~~$39.8 million for 2021, ~~and $23.5~~$38.9 million for ~~2022.~~2022, $38.7 million for 2023, $33.9 million for 2024 and $28.2 million for 2025.

Note 6—5—Exit and Realignment ~~Charges~~Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, ~~in the United States~~ and ~~Europe.~~IT restructuring charges. 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 nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Domestic segment $ 3,880
$ 1,224
$ 12,421
$ 14,194
International segment 574
457
1,406
3,284
Proprietary Products segment 592
465
1,015
1,574
Total exit and realignment charges $ 5,046
$ 2,146
$ 14,842
$ 19,052



	Three Months Ended March 31,
	2020		2019
Global Solutions segment	$	1,829	$	566
Global Products segment	—		138
Total exit and realignment charges	$	1,829	$	704

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The following table summarizes the activity related to exit and realignment cost accruals through ~~September 30, 2017~~March 31, 2020 and ~~2016:~~

2019:

Lease
Obligations

Severance and
Other
Total
Accrued exit and realignment costs, December 31, 2016 $ —
$ 2,238
$ 2,238
Provision for exit and realignment activities —
3,211
3,211
Change in estimate —
(304 ) (304 )
Cash payments —
(3,034 ) (3,034 )
Accrued exit and realignment costs, March 31, 2017 —
2,111
2,111
Provision for exit and realignment activities —
1,382
1,382
Change in estimate —
(18 ) (18 )
Cash payments —
(667 ) (667 )
Accrued exit and realignment costs, June 30, 2017 —
2,808
2,808
Provision for exit and realignment activities —
3,156
3,156
Cash payments —
(423 ) (423 )
Accrued exit and realignment costs, September 30, 2017 $ —
$ 5,541
$ 5,541

Accrued exit and realignment costs, December 31, 2015 $ 486
$ 1,840
$ 2,326
Provision for exit and realignment activities —
9,895
9,895
Cash payments, net of sublease income (486 ) (1,287 ) (1,773 )
Accrued exit and realignment costs, March 31, 2016 —
10,448
10,448
Provision for exit and realignment activities —
1,254
1,254
Cash payments, net of sublease income —
(7,087 ) (7,087 )
Accrued exit and realignment costs, June 30, 2016 —
4,615
4,615
Provision for exit and realignment activities —
725
725
Change in Estimate —
(268 ) (268 )
Cash payments, net of sublease income —
(2,066 ) (2,066 )
Accrued exit and realignment costs, September 30, 2016 $ —
$ 3,006
$ 3,006



	Total ⁽¹⁾
Accrued exit and realignment costs, December 31, 2019	$	8,162
Provision for exit and realignment activities:
Severance	1,391
Information system restructuring costs	183
Other	255
Change in estimate	—
Cash payments	(5,799		)
Accrued exit and realignment costs, March 31, 2020	$	4,192

Accrued exit and realignment costs, December 31, 2018	$	7,477
Provision for exit and realignment activities:
Severance	360
Information system restructuring costs	261
Other	83
Change in estimate	—
Cash payments	(2,206		)
Accrued exit and realignment costs, March 31, 2019	$	5,975

~~In addition to the~~⁽¹⁾The accrued exit and realignment ~~accruals in the preceding table, we also incurred $1.9 million of~~ costs ~~that were expensed as incurred for the three months ended September 30, 2017, including $1.7 million in~~at March 31, 2020 and 2019 related primarily to information system restructuring costs and ~~$0.2 million~~severance.

Acquisition-related and exit and realignment charges presented in ~~other costs. For the nine months ended September 30, 2017, we recognized $7.4 million~~our consolidated statements of ~~costs that were expensed as incurred, including $4.5 million in asset write-downs, $1.9 million in information system restructuring costs and $1.0 million in other costs.~~

~~We incurred $1.7 million~~operations includes acquisition-related charges of costs that were expensed as incurred for the three months ended September 30, 2016, including $0.7 million in other facility costs, $0.5 million in labor costs, $0.4 million in information systems costs, and $0.1 million in other costs. For the nine months ended September 30, 2016, we recognized $7.4 million of costs that were expensed as incurred, including $3.6 million in consulting costs, $1.8 million in information system costs, $0.7 million in other facility costs, $0.5 million in labor costs, and $0.8 million in other costs.

~~Table of Contents~~

~~Note 7—Retirement Plans~~

We have a noncontributory, unfunded retirement plan for certain officers and other key employees 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 nine months ended September 30, 2017 and 2016, were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Service cost $ 26
$ 27
$ 53
$ 70
Interest cost 474
508
1,422
1,523
Recognized net actuarial loss 456
412
1,367
1,236
Net periodic benefit cost $ 956
$ 947
$ 2,842
$ 2,829

~~Certain of our foreign subsidiaries have health and welfare plans covering substantially all of their respective employees. Our expense for these plans totaled $0.5 million and $0.4~~$4.2 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, respectively, and ~~$1.3 million~~consisted primarily of transition costs for the ~~nine months ended September 30, 2017 and 2016.~~Halyard acquisition.

Note 8—6—Debt

Debt consists of the following:



	March 31, 2020						December 31, 2019
	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
3.875% Senior Notes, due September 2021	$	231,764		$	223,367		$	236,234		$	229,356
4.375% Senior Notes, due December 2024	274,041			184,140			273,978			212,086
Term A Loans, due July 2022	217,924			221,906			377,420			383,050
Term B Loan, due April 2025	479,332			340,751			480,337			442,217
Revolver	171,700			171,700			177,900			177,900
Accounts Receivable Securitization Program	147,209			150,000			—			—
Finance leases and other	13,557			13,557			13,783			13,783
Total debt	1,535,527			1,305,421			1,559,652			1,458,392
Less current maturities	(51,187		)	(51,187		)	(51,237		)	(51,237		)
Long-term debt	$	1,484,340		$	1,254,234		$	1,508,415		$	1,407,155

We have ~~$275~~$233 million of 3.875% senior notes due 2021 (the “2021 Notes”) and $275 million of 4.375% senior notes due 2024 (the “2024 Notes”), with interest payable semi-annually. The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal with an effective yield of 4.422%. We have the option to redeem the 2021 Notes and 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the Treasury Rate plus 30 basis points. AsWe used $4.4 million of ~~September 30, 2017 and December 31, 2016, the estimated fair value~~cash to repurchase $4.6 million aggregate principal amount of the 2021 Notes ~~was $280.1~~during the first quarter of 2020.

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We have a Credit Agreement (amended February 2020) with a borrowing capacity of $400 million and ~~$274.5~~$697 million ~~and the estimated fair value of the 2024 Notes was $276.9 million and $270.0 million, respectively.~~

outstanding in term loans. On ~~July 27, 2017,~~February 13, 2020, we entered into a new Credit Agreement replacing the Amended Credit Agreement. The new agreement provides borrowing capacity of $600 million and a $250 million term loan. We make principal payments under the term loan on a quarterly basis with the remaining outstanding principal due in five years. The revolving credit facility has a five-year maturity. The proceeds from the new borrowing were primarily usedFifth Amendment to ~~fund the Byram acquisition which closed on August 1, 2017. Under~~ the Credit ~~Agreement, we have the ability to request two one-year extensions and to request an increase in aggregate commitments by up to $200 million.~~Agreement.

The interest rate on ~~the Credit Agreement, which is subject to adjustment quarterly,~~our revolving credit facility and Term A loans is based on the ~~London Interbank Offered~~Eurocurrency Rate, ~~(LIBOR),~~ the Federal Funds Rate or the Prime Rate, plus an adjustment based on ~~the better of~~ our ~~debt ratings or leverage ratio (Credit Spread)~~Consolidated Total Leverage Ratio as defined by the Credit Agreement. Our credit spread at March 31, 2020 was Eurocurrency Rate plus 4.25%. 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 ~~limit the amount of indebtedness that we may incur and require~~requires us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition. ~~Based~~

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 100% 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. The Fifth Amendment to the Credit Agreement included additional collateral requirements related to the parties secured on the Credit Agreement, including the obligation to pledge the Company's owned U.S. real estate and remaining equity interests in foreign subsidiaries. Our Credit Agreement has a “springing maturity date” with respect to the revolving loans and the Term A loans and the Term B loans. If as of the date 91 days prior to the maturity date of our ~~leverage ratio~~2021 Notes all outstanding amounts under the 2021 Notes have not been paid in full, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility and the Term A loans shall be the date that is 91 days prior to the maturity date of the 2021 Notes. Likewise, if as of the date 91 days prior to the maturity date of our 2024 Notes, all outstanding amounts under the 2024 Notes have not been paid in full, the Termination Date of the Term B loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.

On February 19, 2020, we entered into an accounts receivable securitization program (the “Receivables Securitization Program”). Pursuant to the Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $325 million outstanding at ~~September 30, 2017, the~~any time. The interest rate under the ~~credit facility~~Receivables Securitization Program is ~~LIBOR plus 1.375%.~~based on a spread over the London Interbank Offered Rate (LIBOR) dependent on the tranche period thereto and any breakage fees accrued. Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures on February 17, 2023. In February 2020, $150 million in proceeds from the sale of accounts receivable pursuant to the Receivables Securitization Program were used to repay higher interest indebtedness under our Term A loans.

At ~~September 30, 2017,~~March 31, 2020 and December 31, 2019, we had borrowings of ~~$117.2~~$171.7 million and $177.9 million, respectively, under the revolver and letters of credit of ~~approximately $5.1~~$11.7 million and $11.7 million, respectively, outstanding under the Credit Agreement ~~leaving $477.7~~along with $508.1 million and $512.7 million, respectively, in Senior Notes. At March 31, 2020 and December 31, 2019, we had $215.5 million and $209.3 million, respectively, available for ~~borrowing.~~borrowing, which reflected the letters of credit associated with discontinued operations of $1.1 million and $1.1 million, respectively, against our borrowing capacity. We also had ~~a letter~~letters of credit and bank guarantees outstanding for ~~$1.3~~$1.5 million as of ~~September 30, 2017~~March 31, 2020 and ~~$1.1 million at~~ December 31, ~~2016,~~2019, respectively, which supports ~~our~~certain facilities leased as well as other normal business activities in the United States and Europe.

The Credit Agreement and ~~senior notes~~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 ~~September 30, 2017.~~March 31, 2020.

As of March 31, 2020, scheduled future principal payments of debt were $37.2 million in 2020, $282.8 million in 2021, $320.5 million in 2022, $155.0 million in 2023, $280.0 million in 2024, and $468.8 million thereafter.

Note 7—Retirement Plans

We have a noncontributory, unfunded retirement plan for certain 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 for the three months ended March 31, 2020 and 2019, respectively, were as follows:

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	Three Months Ended March 31,
	2020		2019
Service cost	$	351	$	329
Interest cost	494		600
Recognized net actuarial loss	214		260
Net periodic benefit cost	$	1,059	$	1,189

Note 8—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 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 enter into interest rate swaps 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.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2020:



				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 May 2025	Other assets, net	$	—	Other liabilities	$	33,136

Economic (non-designated) hedges
Foreign currency contracts	$	21,000	April 2020	Other assets, net	$	280	Other liabilities	$	—

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 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 May 2025

Other assets, net

—

Other liabilities

17,436

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The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2020:



	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss			Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded			Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Interest rate swaps	$	(16,958	)	Interest expense, net	$	(23,342	)	$	(1,259	)

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

For the three months ended March 31, 2020 and 2019, we recognized a loss of $2.7 million and a gain of $0.5 million, respectively, associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating (income) expense, net for our foreign exchange contracts.

Note 9—Income Taxes

The effective tax rate was ~~48.1% and 34.3%~~48.9% for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~36.3% and 37.3%~~5.8% in the same ~~periods~~quarter of ~~2016.~~2019. The ~~changes in the effective tax rate compared to 2016 resulted primarily from a~~ change in ~~income mix among different tax rate jurisdictions and the effect of certain acquisition-related costs which were not deductible for tax purposes offset on a year to date basis by the release of~~these rates resulted from an income tax ~~valuation allowance~~benefit of $5.2 million recorded in ~~Europe for $3.4 million during~~ the ~~second~~first quarter of ~~2017.~~

2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax expense associated with the vesting of restricted stock. The liability for unrecognized tax benefits was ~~$13.3~~$11.7 million at ~~September 30, 2017,~~March 31, 2020 and ~~$10.7~~$11.5 million at December 31, ~~2016.~~2019. Included in the liability at ~~September 30, 2017~~March 31, 2020 and December 31, 2019 were ~~$5.0~~$3.1 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

Note 10—Net ~~Income~~Loss per Common Share

The following summarizes the calculation of net ~~income~~loss per common share attributable to common shareholders for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019:



	Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
Weighted average shares outstanding - basic and diluted	60,571			60,376

Loss from continuing operations	$	(8,909	)	$	(10,918	)
Basic and diluted per share	$	(0.15	)	$	(0.18	)

Loss from discontinued operations	$	(2,415	)	$	(3,178	)
Basic and diluted per share	$	(0.04	)	$	(0.05	)

Net loss	$	(11,324	)	$	(14,096	)
Basic and diluted per share	$	(0.19	)	$	(0.23	)

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2017 2016 2017 2016
Numerator:
Net income $ 10,871
$ 29,831
$ 49,796
$ 81,682
Less: income allocated to unvested restricted shares (279 ) (291 ) (738 ) (855 )
Net income attributable to common shareholders - basic 10,592
29,540
49,058
80,827
Add: undistributed income attributable to unvested restricted shares - basic —
80
16
216
Less: undistributed income attributable to unvested restricted shares - diluted —
(80 ) (16 ) (216 )
Net income attributable to common shareholders - diluted $ 10,592
$ 29,540
$ 49,058
$ 80,827
Denominator:
Weighted average shares outstanding - basic and diluted 59,849
61,015
60,010
61,405
Net income per share attributable to common shareholders:
Basic and diluted $ 0.18
$ 0.48
$ 0.82
$ 1.32

~~Note 11—Shareholders’ Equity~~

Our Board of Directors has 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 three-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. During the nine months ended September 30, 2017, we repurchased in open-market transactions and retired approximately 0.2 million shares of our common stock for an aggregate of $5.0 million, or an average price per share of $32.27. As of September 30, 2017, we have approximately $94.0 million remaining under the repurchase program. We have elected to allocate any excess of share repurchase price over par value to retained earnings.

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Note ~~12—~~11—Accumulated Other Comprehensive ~~Income (Loss)~~Loss

The following table shows the changes in accumulated other comprehensive ~~income (loss)~~loss by component for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019:

Retirement Plans
Currency
Translation
Adjustments
Other Total
Accumulated other comprehensive income (loss), June 30, 2017 $ (10,743 ) $ (28,348 ) $ 165
$ (38,926 )
Other comprehensive income (loss) before reclassifications —
12,254
94
12,348
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
12,254
94
12,348
Amounts reclassified from accumulated other comprehensive income (loss) 456
—
—
456
Income tax (220 ) —
—
(220 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 236
—
—
—
236
Other comprehensive income (loss) 236
12,254
94
12,584
Accumulated other comprehensive income (loss), September 30, 2017 $ (10,507 ) $ (16,094 ) $ 259
$ (26,342 )

Accumulated other comprehensive income (loss), June 30, 2016 $ (9,999 ) $ (40,186 ) $ (78 ) $ (50,263 )
Other comprehensive income (loss) before reclassifications —
1,401
82
1,483
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
1,401
82
1,483
Amounts reclassified from accumulated other comprehensive income (loss) 412
—
—
412
Income tax (194 ) —
—
(194 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 218
—
—
—
218
Other comprehensive income (loss) 218
1,401
82
1,701
Accumulated other comprehensive income (loss), September 30, 2016 $ (9,781 ) $ (38,785 ) $ 4
$ (48,562 )



	Retirement Plans			Currency Translation Adjustments			Derivatives and Other			Total
Accumulated other comprehensive loss, December 31, 2019	$	(14,691	)	$	(25,301	)	$	(12,715	)	$	(52,707	)
Other comprehensive loss before reclassifications	—			(28,178		)	(16,958		)	(45,136		)
Income tax	—			—			4,646			4,646
Other comprehensive loss before reclassifications, net of tax	—			(28,178		)	(12,312		)	(40,490		)
Amounts reclassified from accumulated other comprehensive income	214			—			1,259			1,473
Income tax	(44		)	—			(344		)	(388		)
Amounts reclassified from accumulated other comprehensive income, net of tax	170			—			915			1,085
Other comprehensive income (loss)	170			(28,178		)	(11,397		)	(39,405		)
Accumulated other comprehensive loss, March 31, 2020	$	(14,521	)	$	(53,479	)	$	(24,112	)	$	(92,112	)

Retirement Plans
Currency
Translation
Adjustments
Other Total
Accumulated other comprehensive income (loss), December 31, 2016 $ (11,209 ) $ (56,245 ) $ (29 ) $ (67,483 )
Other comprehensive income (loss) before reclassifications

40,151
288
40,439
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
40,151
288
40,439
Amounts reclassified from accumulated other comprehensive income (loss) 1,367
—
—
1,367
Income tax (665 ) —
—
(665 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 702
—
—
702
Other comprehensive income (loss) 702
40,151
288
41,141
Accumulated other comprehensive income (loss), September 30, 2017 $ (10,507 ) $ (16,094 ) $ 259
$ (26,342 )

Accumulated other comprehensive income (loss), December 31, 2015 $ (10,482 ) $ (41,228 ) $ (115 ) $ (51,825 )
Other comprehensive income (loss) before reclassifications —
2,443
119
2,562
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
2,443
119
2,562
Amounts reclassified from accumulated other comprehensive income (loss) 1,233
—
—
1,233
Income tax (532 ) —
—
(532 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 701
—
—
701
Other comprehensive income (loss) 701
2,443
119
3,263
Accumulated other comprehensive income (loss), September 30, 2016 $ (9,781 ) $ (38,785 ) $ 4
$ (48,562 )



	Retirement Plans			Currency Translation Adjustments			Derivatives and Other			Total
Accumulated other comprehensive loss, December 31, 2018	$	(8,146	)	$	(32,551	)	$	(4,915	)	$	(45,612	)
Other comprehensive loss before reclassifications	—			(4,207		)	(3,649		)	(7,856		)
Income tax	—			—			808			808
Other comprehensive loss before reclassifications, net of tax	—			(4,207		)	(2,841		)	(7,048		)
Amounts reclassified from accumulated other comprehensive income	266			—			578			844
Income tax	(69		)	—			(150		)	(219		)
Amounts reclassified from accumulated other comprehensive income, net of tax	197			—			428			625
Other comprehensive income (loss)	197			(4,207		)	(2,413		)	(6,423		)
Accumulated other comprehensive loss, March 31, 2019	$	(7,949	)	$	(36,758	)	$	(7,328	)	$	(52,035	)

We include amounts reclassified out of accumulated other comprehensive ~~income~~loss related to defined benefit pension plans as a component of net periodic pension ~~cost recorded in distribution, selling and administrative expenses.~~cost. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, we reclassified ~~$0.5~~$0.2 million and ~~$1.4~~$0.3 million, ~~of actuarial net losses. For the three and nine months ended September 30, 2016, we reclassified $0.4 million and $1.2 million~~respectively, of actuarial net losses.

Note ~~13—~~12—Segment Information

We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating decisions and assessing performance. We report our business under ~~three~~2 segments: ~~Domestic, International~~Global Solutions and ~~Proprietary~~Global Products. The ~~Domestic~~Global Solutions segment includes our United States distribution, outsourced logistics and value-added services business. ~~Byram, acquired on August 1, 2017, is included in the Domestic segment. The International segment consists of~~Global Products manufactures and sources medical surgical products through our ~~European distribution, logistics~~production and ~~value-added services business. Proprietary Products provides product-related solutions, including surgical and procedural~~ kitting ~~and sourcing.~~operations.

We evaluate the performance of our segments based on their operating ~~earnings~~income excluding intangible amortization, acquisition-related and exit and realignment charges, certain purchase price fair value adjustments, and other substantive items that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading orand not meaningful. We believe all inter-segment sales are at prices that approximate market.

1516

Table of Contents

The following tables present financial information by segment:



	Three Months Ended March 31,
	2020			2019
Net revenue:
Segment net revenue
Global Solutions	$	1,847,593		$	2,123,599
Global Products	391,192			347,085
Total segment net revenue	2,238,785			2,470,684
Inter-segment revenue
Global Products	(116,092		)	(119,844		)
Total inter-segment revenue	(116,092		)	(119,844		)
Consolidated net revenue	$	2,122,693		$	2,350,840

Operating income:
Global Solutions	$	7,691		$	21,642
Global Products	18,571			7,724
Inter-segment eliminations	1,169			1,746
Intangible amortization	(10,611		)	(10,026		)
Acquisition-related and exit and realignment charges	(6,064		)	(4,863		)
Other ⁽¹⁾	—			381
Consolidated operating income	$	10,756		$	16,604

Depreciation and amortization:
Global Solutions	$	10,636		$	10,500
Global Products	13,277			12,607
Discontinued operations	—			5,613
Consolidated depreciation and amortization	$	23,913		$	28,720

Capital expenditures:
Global Solutions	$	1,032		$	3,341
Global Products	3,017			2,903
Discontinued operations	1,664			8,035
Consolidated capital expenditures	$	5,713		$	14,279

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net revenue:
Segment net revenue
Domestic $ 2,194,143
$ 2,287,233
$ 6,518,571
$ 6,954,687
International 96,661
83,751
287,555
255,861
Proprietary Products 124,542
132,705
392,654
409,022
Total segment net revenue $ 2,415,346
$ 2,503,689
$ 7,198,780
$ 7,619,570
Inter-segment revenue

Proprietary Products (81,385 ) (88,088 ) (270,339 ) (264,501 )
Total inter-segment revenue (81,385 ) (88,088 ) (270,339 ) (264,501 )
Consolidated net revenue $ 2,333,961
$ 2,415,601
$ 6,928,441
$ 7,355,069

Operating earnings (loss):
Domestic $ 36,056
$ 41,034
$ 102,812
$ 126,202
International (2,163 ) 1,382
(754 ) 3,402
Proprietary Products 9,102
14,340
26,040
41,866
Inter-segment eliminations 416
(449 ) (266 ) (905 )
Acquisition-related and exit and realignment charges (9,299 ) (2,739 ) (21,134 ) (19,974 )
Other⁽¹⁾
(4,441 ) —
(8,674 ) —
Consolidated operating earnings $ 29,671
$ 53,568
$ 98,024
$ 150,591

Depreciation and amortization:
Domestic $ 9,602
$ 7,360
$ 23,233
$ 22,399
International 4,304
4,259
12,072
13,125
Proprietary Products 1,947
2,218
5,755
6,658
Consolidated depreciation and amortization $ 15,853
$ 13,837
$ 41,060
$ 42,182

Capital expenditures:
Domestic $ 9,572
$ 3,071
$ 23,376
$ 10,274
International 3,206
3,223
11,659
8,053
Proprietary Products 718
1,009
2,754
2,436
Consolidated capital expenditures $ 13,496
$ 7,303
$ 37,789
$ 20,763

September 30, 2017 December 31, 2016
Total assets:
Domestic $ 2,416,079
$ 1,778,481
International 418,331
352,898
Proprietary Products 401,331
400,885
Segment assets 3,235,741
2,532,264
Cash and cash equivalents 98,415
185,488
Consolidated total assets $ 3,334,156
$ 2,717,752

⁽¹⁾2019 included interest cost and net actuarial losses related to the U.S. Retirement Plan as well as Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.



	March 31, 2020		December 31, 2019
Total assets:
Global Solutions	$	2,168,358	$	2,205,134
Global Products	954,787		930,937
Segment assets	3,123,145		3,136,071
Discontinued operations	499,410		439,983
Cash and cash equivalents	92,315		67,030
Consolidated total assets	$	3,714,870	$	3,643,084

~~Note 14—Condensed Consolidating Financial Information~~

The following ~~tables present condensed consolidating financial information for: Owens & Minor, Inc. (O&M);~~table presents net revenue by geographic area, which were attributed based on the guarantors of Owens & Minor, Inc.’s 2021 Notes and 2024 Notes, on a combined basis; and the non-guarantor subsidiaries of the 2021 Notes and 2024 Notes, on a combined basis. The guarantor subsidiaries are 100% owned by Owens & Minor, Inc. Separate financial statements of the guarantor subsidiaries are not presented because the guarantees by our guarantor subsidiaries are full and unconditional, as well as joint and several, andlocation from which 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.~~

Three Months Ended September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 2,113,450
$ 264,765
$ (44,254 ) $ 2,333,961
Cost of goods sold —
1,919,049
157,439
(44,469 ) 2,032,019
Gross margin —
194,401
107,326
215
301,942
Distribution, selling and administrative expenses (117 ) 159,108
102,054
—
261,045
Acquisition-related and exit and realignment charges —
6,960
2,339
—
9,299
Other operating (income) expense, net —
448
1,479
—
1,927
Operating earnings (loss) 117
27,885
1,454
215
29,671
Interest expense (income), net 7,018
(1,184 ) 2,903
—
8,737
Income (loss) before income taxes (6,901 ) 29,069
(1,449 ) 215
20,934
Income tax (benefit) provision —
7,881
2,182
—
10,063
Equity in earnings of subsidiaries 17,772
—
—
(17,772 ) —
Net income (loss) 10,871
21,188
(3,631 ) (17,557 ) 10,871
Other comprehensive income (loss) 12,584
330
12,254
(12,584 ) 12,584
Comprehensive income (loss) $ 23,455
$ 21,518
$ 8,623
$ (30,141 ) $ 23,455
ship products or provide services.

Three Months Ended September 30, 2016
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 2,287,335
$ 168,216
$ (39,950 ) $ 2,415,601
Cost of goods sold —
2,070,639
89,192
(40,505 ) 2,119,326
Gross margin —
216,696
79,024
555
296,275
Distribution, selling and administrative expenses (52 ) 169,451
71,906
—
241,305
Acquisition-related and exit and realignment charges —
2,237
502
—
2,739
Other operating income, net —
(1,205 ) (132 ) —
(1,337 )
Operating earnings (loss) 52
46,213
6,748
555
53,568
Interest expense (income), net 7,403
(1,345 ) 712
—
6,770
Income (loss) before income taxes (7,351 ) 47,558
6,036
555
46,798
Income tax (benefit) provision —
14,131
2,836
—
16,967
Equity in earnings of subsidiaries 37,182
—
—
(37,182 ) —
Net income (loss) 29,831
33,427
3,200
(36,627 ) 29,831
Other comprehensive income (loss) 1,701
299
1,402
(1,701 ) 1,701
Comprehensive income (loss) $ 31,532
$ 33,726
$ 4,602
$ (38,328 ) $ 31,532

Table of Contents

Nine Months Ended September 30, 2017 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 6,436,599
$ 635,900
$ (144,058 ) $ 6,928,441
Cost of goods sold —
5,845,789
369,596
(143,598 ) 6,071,787
Gross margin —
590,810
266,304
(460 ) 856,654
Distribution, selling and administrative expenses 434
480,765
254,154
—
735,353
Acquisition-related and exit and realignment charges —
17,084
4,050
—
21,134
Other operating (income) expense, net —
1,481
662
—
2,143
Operating earnings (loss) (434 ) 91,480
7,438
(460 ) 98,024
Interest expense (income), net 20,756
(2,777 ) 4,239
—
22,218
Income (loss) before income taxes (21,190 ) 94,257
3,199
(460 ) 75,806
Income tax (benefit) provision —
23,303
2,707
—
26,010
Equity in earnings of subsidiaries 70,986
—
—
(70,986 ) —
Net income (loss) 49,796
70,954
492
(71,446 ) 49,796
Other comprehensive income (loss) 41,141
990
40,151
(41,141 ) 41,141
Comprehensive income (loss) $ 90,937
$ 71,944
$ 40,643
$ (112,587 ) $ 90,937



	Three Months Ended March 31,
	2020		2019
Net revenue:
United States	$	2,033,454	$	2,303,913
International	89,239		46,927
Consolidated net revenue	$	2,122,693	$	2,350,840

Nine Months Ended September 30, 2016 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 6,954,983
$ 516,131
$ (116,045 ) $ 7,355,069
Cost of goods sold —
6,305,489
273,927
(116,677 ) 6,462,739
Gross margin —
649,494
242,204
632
892,330
Distribution, selling and administrative expenses 838
504,984
221,122
—
726,944
Acquisition-related and exit and realignment charges —
15,888
4,086
—
19,974
Other operating income, net —
(3,952 ) (1,227 ) —
(5,179 )
Operating earnings (loss) (838 ) 132,574
18,223
632
150,591
Interest expense (income), net 21,134
(2,808 ) 1,998
—
20,324
Income (loss) before income taxes (21,972 ) 135,382
16,225
632
130,267
Income tax (benefit) provision —
40,237
8,348
—
48,585
Equity in earnings of subsidiaries 103,654
—
—
(103,654 ) —
Net income (loss) 81,682
95,145
7,877
(103,022 ) 81,682
Other comprehensive income (loss) 3,263
821
2,442
(3,263 ) 3,263
Comprehensive income (loss) $ 84,945
$ 95,966
$ 10,319
$ (106,285 ) $ 84,945

September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-
guarantor
Subsidiaries
Eliminations Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents $ 11,456
$ 1,145
$ 85,814
$ —
$ 98,415
Accounts receivable, net 30,770
595,202
114,563
(7,779 ) 732,756
Merchandise inventories —
909,406
82,065
(2,220 ) 989,251
Other current assets 193
117,403
193,903
—
311,499
Total current assets 42,419
1,623,156
476,345
(9,999 ) 2,131,921
Property and equipment, net —
103,765
99,822
—
203,587
Goodwill, net —
180,006
510,224
—
690,230
Intangible assets, net —
10,100
221,786
—
231,886
Due from O&M and subsidiaries —
645,264
—
(645,264 ) —
Advances to and investment in consolidated subsidiaries 2,094,759
—
—
(2,094,759 ) —
Other assets, net —
43,521
33,011
—
76,532
Total assets $ 2,137,178
$ 2,605,812
$ 1,341,188
$ (2,750,022 ) $ 3,334,156
Liabilities and equity
Current liabilities
Accounts payable $ —
$ 768,780
$ 114,644
$ (7,794 ) $ 875,630
Accrued payroll and related liabilities —
18,615
13,383
—
31,998
Other current liabilities 7,127
110,580
178,956
—
296,663
Total current liabilities 7,127
897,975
306,983
(7,794 ) 1,204,291
Long-term debt, excluding current portion 545,830
6,743
364,683
—
917,256
Due to O&M and subsidiaries 580,437
—
65,002
(645,439 ) —
Intercompany debt —
138,890
—
(138,890 ) —
Deferred income taxes —
69,722
67,817
—
137,539
Other liabilities —
61,142
10,144
—
71,286
Total liabilities 1,133,394
1,174,472
814,629
(792,123 ) 2,330,372
Equity
Common stock 122,499
—
—
—
122,499
Paid-in capital 224,183
174,613
583,872
(758,485 ) 224,183
Retained earnings (deficit) 683,444
1,267,294
(41,539 ) (1,225,755 ) 683,444
Accumulated other comprehensive income (loss) (26,342 ) (10,567 ) (15,774 ) 26,341
(26,342 )
Total equity 1,003,784
1,431,340
526,559
(1,957,899 ) 1,003,784
Total liabilities and equity $ 2,137,178
$ 2,605,812
$ 1,341,188
$ (2,750,022 ) $ 3,334,156

December 31, 2016 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents $ 38,015
$ 61,266
$ 86,207
$ —
$ 185,488
Accounts receivable, net —
526,170
90,016
(10,102 ) 606,084
Merchandise inventories —
856,566
61,505
(1,760 ) 916,311
Other current assets 106
86,907
167,143
—
254,156
Total current assets 38,121
1,530,909
404,871
(11,862 ) 1,962,039
Property and equipment, net —
97,725
93,993
—
191,718
Goodwill, net —
180,006
234,930
—
414,936
Intangible assets, net —
11,655
70,856
—
82,511
Due from O&M and subsidiaries —
573,395
—
(573,395 ) —
Advances to and investments in consolidated subsidiaries 2,044,963
—
—
(2,044,963 ) —
Other assets, net —
49,887
16,661
—
66,548
Total assets $ 2,083,084
$ 2,443,577
$ 821,311
$ (2,630,220 ) $ 2,717,752
Liabilities and equity
Current liabilities
Accounts payable $ —
$ 683,189
$ 75,512
$ (7,951 ) $ 750,750
Accrued payroll and related liabilities —
32,814
12,237
—
45,051
Other current liabilities 7,106
93,327
138,404
—
238,837
Total current liabilities 7,106
809,330
226,153
(7,951 ) 1,034,638
Long-term debt, excluding current portion 544,838
3,219
16,526
—
564,583
Due to O&M and subsidiaries 571,102
—
48,044
(619,146 ) —
Intercompany debt —
138,890
—
(138,890 ) —
Deferred income taxes —
70,280
20,103
—
90,383
Other liabilities —
60,578
7,532
—
68,110
Total liabilities 1,123,046
1,082,297
318,358
(765,987 ) 1,757,714
Equity —
Common stock 122,062
—
—
—
122,062
Paid-in capital 219,955
174,614
583,872
(758,486 ) 219,955
Retained earnings (deficit) 685,504
1,196,341
(42,032 ) (1,154,309 ) 685,504
Accumulated other comprehensive income (loss) (67,483 ) (9,675 ) (38,887 ) 48,562
(67,483 )
Total equity 960,038
1,361,280
502,953
(1,864,233 ) 960,038
Total liabilities and equity $ 2,083,084
$ 2,443,577
$ 821,311
$ (2,630,220 ) $ 2,717,752

Nine Months Ended September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss) $ 49,796
$ 70,954
$ 492
$ (71,446 ) $ 49,796
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries (70,986 ) —
—
70,986
—
Depreciation and amortization —
23,281
17,779
—
41,060
Share-based compensation expense —
8,592
—
—
8,592
Provision for losses on accounts receivable —
(377 ) 1,535
—
1,158
Deferred income tax expense (benefit) —
(1,208 ) (3,377 ) —
(4,585 )
Changes in operating assets and liabilities:
Accounts receivable —
(68,655 ) (8,047 ) (2,412 ) (79,114 )
Merchandise inventories —
(52,840 ) (3,753 ) 459
(56,134 )
Accounts payable —
85,591
(8,217 ) 2,413
79,787
Net change in other assets and liabilities (65 ) (25,431 ) (15,138 ) —
(40,634 )
Other, net (1 ) 5,716
4
—
5,719
Cash provided by (used for) operating activities (21,256 ) 45,623
(18,722 ) —
5,645
Investing activities:

Acquisitions, net of cash acquired —
—
(366,569 ) —
(366,569 )
Additions to property and equipment —
(17,884 ) (7,079 ) —
(24,963 )
Additions to computer software and intangible assets —
(5,333 ) (7,493 ) —
(12,826 )
Proceeds from the sale of property and equipment —
198
582
—
780
Cash used for investing activities —
(23,019 ) (380,559 ) —
(403,578 )
Financing activities:
Change in intercompany advances 50,452
(87,278 ) 36,826
—
—
Proceeds from debt issuance —
—
250,000
—
250,000
Borrowing under revolving credit facility —
6,013
111,187
—
117,200
Financing costs paid —
—
(1,798 ) —
(1,798 )
Cash dividends paid (47,316 ) —
—
—
(47,316 )
Repurchases of common stock (5,000 ) —
—
—
(5,000 )
Other, net (3,439 ) (1,460 ) (2,464 ) —
(7,363 )
Cash provided by (used for) financing activities (5,303 ) (82,725 ) 393,751
—
305,723
Effect of exchange rate changes on cash and cash equivalents
—
—
5,137
—
5,137
Net increase (decrease) in cash and cash equivalents (26,559 ) (60,121 ) (393 ) —
(87,073 )
Cash and cash equivalents at beginning of period 38,015
61,266
86,207
—
185,488
Cash and cash equivalents at end of period $ 11,456
$ 1,145
$ 85,814
$ —
$ 98,415

Nine Months Ended September 30, 2016
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss) $ 81,682
$ 95,145
$ 7,877
$ (103,022 ) $ 81,682
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries (103,654 ) —
—
103,654
—
Depreciation and amortization —
22,497
19,685
—
42,182
Share-based compensation expense —
8,934
—
—
8,934
Provision for losses on accounts receivable —
(84 ) (132 ) —
(216 )
Deferred income tax expense (benefit) —
(3,233 ) —
—
(3,233 )
Changes in operating assets and liabilities:
Accounts receivable —
14,107
(9,385 ) 301
5,023
Merchandise inventories —
(3,662 ) (771 ) (633 ) (5,066 )
Accounts payable —
55,060
3,982
(300 ) 58,742
Net change in other assets and liabilities 2,277
(512 ) (46,668 ) —
(44,903 )
Other, net 1,321
319
(274 ) —
1,366
Cash provided by (used for) operating activities (18,374 ) 188,571
(25,686 ) —
144,511
Investing activities:
Additions to property and equipment —
(7,337 ) (6,345 ) —
(13,682 )
Additions to computer software and intangible assets —
(2,937 ) (4,144 ) —
(7,081 )
Proceeds from the sale of property and equipment —
78
4,419
—
4,497
Cash used for investing activities —
(10,196 ) (6,070 ) —
(16,266 )
Financing activities:
Change in intercompany advances 172,057
(162,206 ) (9,851 ) —
—
Change in bank overdraft —
—
21,753
—
21,753
Cash dividends paid (47,802 ) —
—
—
(47,802 )
Repurchases of common stock (48,654 ) —
—
—
(48,654 )
Other, net (4,027 ) (1,782 ) (2,309 ) —
(8,118 )
Cash provided by (used for) financing activities 71,574
(163,988 ) 9,593
—
(82,821 )
Effect of exchange rate changes on cash and cash equivalents
—
—
6,652
—
6,652
Net increase (decrease) in cash and cash equivalents 53,200
14,387
(15,511 ) —
52,076
Cash and cash equivalents at beginning of period 103,284
5,614
52,122
—
161,020
Cash and cash equivalents at end of period $ 156,484
$ 20,001
$ 36,611
$ —
$ 213,096

Note ~~15—~~13—Recent Accounting Pronouncements

~~On January~~In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 ~~2017, we~~and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). We adopted ASU No. ~~2016-09,~~ ~~Improvements~~2018-13 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other (Topic 350): Internal-Use Software. This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to ~~Employee Share-Based Payment Accounting.~~ ~~The amendments in this updated guidance included changes to simplify~~develop or obtain internal-use software. We adopted ASU No. 2018-15 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.

In December 2019, the ~~Codification~~FASB issued ASU No. 2019-12, Simplifying the Accounting for ~~several~~Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the ~~accounting~~current guidance to promote consistency among reporting entities. ASU No. 2019-12 is effective for ~~share-based payment transactions, including~~fiscal years beginning after December 15, 2020. Most amendments within the ~~income tax consequences, classification~~standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the potential impact of ~~awards as either equity or liabilities,~~adopting this guidance on its consolidated financial statements and classification on the statement of cash flows. As a result of this adoption, we recognized $0.1 million and $0.3 million in excess tax benefits in the income statement for the three and nine months ended September 30, 2017. disclosures.

In addition, we recorded these tax benefits related to stock based compensation for the nine month period in operating activities in the statements of cash flows and reclassified $0.7 million from financing activities in the prior period to conform to this presentation.

~~In May 2014,~~March 2020, the FASB issued an ASU ~~Revenue from Contracts~~No. 2020-03, Codification Improvements to Financial Instruments. The Standard is part of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application. The items addressed are not expected to significantly affect current practice or create a significant administrative cost for most entities. The amendment is divided into issues 1 to 7 with ~~Customers~~.different effective dates as follows: The ~~amended~~amendments related to Issue 1, Issue 2, Issue 4, and Issue 5 are conforming amendments. The amendments are effective upon issuance of this update. The amendment related to Issue 3 is a conforming amendment that affects the guidance ~~eliminates industry specific~~related to the amendments in ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The effective date of this update for the amendments to ASU No. 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments related to Issue 6 and Issue 7 affect the guidance in the amendments in ASU No. 2016-13, Financial 5 Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. For entities that have not yet adopted the amendments related to ASU No. 2016-13, the effective dates and ~~applies to all companies. Revenue~~the transition requirements for these amendments are the same as the effective date and transition requirements in ASU No. 2016-13, which will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. Amended guidance was issued on: principal versus agent considerations, shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good, clarification on how an entity should evaluate the collectibility threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The amended guidance also requires additional quantitative and qualitative disclosures. These amended standards are all effective for usfiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We adopted ASU No. 2020-03 effective beginning January 1, ~~2018~~2020 for Issues 1 through 5. Its adoption did not have a material impact on our consolidated financial statements. We are currently evaluating the potential impact of adopting this guidance for Issues 6 and ~~allow for either full retrospective adoption or modified retrospective adoption (cumulative effect). We have substantially completed our evaluation~~7 on its consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the ~~amended guidance, including identification~~Effects of ~~revenue streams~~Reference Rate Reform on Financial Reporting, which provides optional expedients and ~~customer contract reviews. Our revenue is primarily distribution revenue, which we recognize at the time shipment is completed~~exceptions for applying GAAP to contracts, hedging relationships, and ~~title passes~~other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to ~~the customer. Although we~~contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are ~~continuing to assess~~effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the amended guidance, including impact on financial disclosures, we generally anticipate that the timing of recognition of distribution revenue will be substantially unchanged under the amended guidance. We intend to use the modified retrospective method of adoption. We are finalizing our evaluation of how thethis guidance may ~~require changes to~~have on our ~~business processes, systems~~consolidated financial statements and ~~controls to support the additional required~~ disclosures.

There ~~has~~have been no ~~change~~further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

~~Note 16—Subsequent Events~~

~~On October 31, 2017, we entered into a Purchase Agreement to acquire the Surgical and Infection Prevention (“S&IP”) business~~

Table of Halyard Health, Inc. ("Halyard") for $710 million in cash, subject to certain adjustments as provided in the Purchase Agreement. Halyard’s S&IP business is a leading global provider of medical supplies and solutions for the prevention of healthcare-associated infections across the acute and alternate site channels. The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2018, subject to customary closing conditions and regulatory approvals, including Hart-Scott-Rodino.Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis describes results of operations and material changes in the financial condition of Owens & Minor, Inc. and its subsidiaries since December 31, ~~2016.~~2019. Trends of a material nature are discussed to the extent known and considered relevant. This discussion should be read in conjunction with the consolidated financial statements, related notes thereto, and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

Overview

Owens & Minor, Inc., along with its subsidiaries, (we, us, or our) is a leading global healthcare solutions company. On January 16, 2020, we announced our intention to sell our European logistics business, Movianto, to EHDH Holding Group (EHDH), a privately held French company. The divestiture is intended to provide us with a greater ability to focus on and invest in our differentiated products, services ~~company that connects the world of medical products to the point of care. We report under three business units: Domestic, International~~ and ~~Proprietary Products (formerly Clinical & Procedural Solutions (CPS) which has been renamed "Proprietary Products" effective January 1, 2017). Domestic is our~~ U.S. distribution ~~logistics and value-added services business. Byram, acquired on August 1, 2017, is included in~~businesses. See Note 3, “Discontinued Operations,” of the Domestic segment. International is our European distribution, logistics and value-added services business. Proprietary Products provides product-related solutions, including surgical and procedural kitting and sourcing. Segment financial information is provided in Note 13 of Notes to Consolidated Financial Statements ~~included in this quarterly report.~~

~~Financial highlights.~~ ~~The~~for further information. Unless otherwise indicated, the following ~~table provides a reconciliation of reported operating earnings, net income and net income per diluted common share~~information relates to non-GAAP measures used by management. In the second quarter of 2017 we began to exclude acquisition-related intangible amortization from our non-GAAP measures, along with the previously excluded items. Intangible amortization amounts are highly dependent on the size and frequency of acquisitions and are being excluded to

~~allow for a more consistent comparison with forecasted, current and historical results and the results of our peers. Prior period amounts have been recast on the same basis.~~

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands except per share data) 2017 2016 2017 2016
Operating earnings, as reported (GAAP) $ 29,671
$ 53,568
$ 98,024
$ 150,591
Acquisition-related and exit and realignment charges ⁽¹⁾
9,299
2,739
21,134
19,974
Acquisition-related intangible amortization ⁽²⁾
5,071
2,489
9,737
7,552
Other ⁽³⁾
4,441
—
8,674
—
Operating earnings, adjusted (non-GAAP) (Adjusted Operating Earnings) $ 48,482
$ 58,796
$ 137,569
$ 178,117

Net income, as reported (GAAP) $ 10,871
$ 29,831
$ 49,796
$ 81,682
Acquisition-related and exit and realignment charges ⁽¹⁾
9,299
2,739
21,134
19,974
Income tax expense (benefit) ⁽⁴⁾
(2,854 ) (1,015 ) (7,367 ) (6,615 )
Acquisition-related intangible amortization ⁽²⁾
5,071
2,489
9,737
7,552
Income tax expense (benefit) ⁽⁴⁾
(1,601 ) (645 ) (2,993 ) (1,956 )
Other ⁽³⁾
4,441
—
8,674
—
Income tax expense (benefit) ⁽⁴⁾
(973 ) —
(2,465 ) —
Net income, adjusted (non-GAAP) (Adjusted Net Income) $ 24,254
$ 33,399
$ 76,516
$ 100,637

Net income per diluted common share, as reported (GAAP) $ 0.18
$ 0.48
$ 0.82
$ 1.32
Acquisition-related and exit and realignment charges, per diluted common share ⁽¹⁾
0.11
0.03
0.23
0.21
Acquisition-related intangible amortization, per diluted common share ⁽²⁾
0.06
0.03
0.11
$ 0.09
Other, per diluted common share ⁽³⁾
0.05
—
0.10
—
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS) $ 0.40
$ 0.54
$ 1.26
$ 1.62

continuing operations.

Net ~~income~~loss per diluted share was ~~$0.18 and $0.82~~$(0.15) for the three ~~and nine~~ months ended ~~September 30, 2017, a decrease of $0.30 and $0.50 when~~March 31, 2020, as compared to ~~the~~$(0.18) for same ~~periods~~period of ~~2016. Adjusted EPS (non-GAAP)~~2019. Global Solutions segment operating income was ~~$0.40 and $1.26~~$7.7 million for the three ~~and nine~~ months ended ~~September 30, 2017, a decrease of $0.14 and $0.36~~March 31, 2020, compared to prior year. Net income in the year to date period of 2017 benefitted by $3.4 million or $0.06 per share from the release of an income tax valuation allowance in Europe during the second quarter. Domestic segment operating earnings were $36.1 million in the quarter and $102.8$21.6 million for ~~the year to date period compared to $41.0 million and $126.2 million in the prior year comparative periods.~~2019. The declines were largely a result of provider margin compression, the exit of a large customer in 2016 and lower income from manufacturer product price changes on a year to date basis. We expect the current trend of increased gross margin pressure to continue. The International segment operating losses were $2.2 million for the quarter and $0.8 million year to date, compared to operating earnings of $1.4 million and $3.4 million in the prior year. The change compared to prior year resulted primarily from increased costs to support new business. Proprietary Products operating earnings were $9.1 million and $26.0 million, reflecting decreases of $5.2 million and $15.8 million as a result of lower revenues and continued pressure on distribution margins as compared to prior ~~year and increased production costs.~~

~~Use of Non-GAAP Measures~~

~~Adjusted~~year. Global Products segment operating ~~earnings, adjusted net~~ income and adjusted EPS are an alternative view of performance used by management, and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. In general, the measures exclude items and charges that (i) management does not believe reflect our core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate our performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results and in comparing our performance to that of our

~~competitors. However, the non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.~~

The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

~~(1) Acquisition-related charges were $4.3 million and $6.3~~was $18.6 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020, compared to $0.6 million and $0.9 million for the same periods of 2016. Current year charges were primarily transaction and transition costs associated with the acquisition of Byram and the upcoming Halyard S&IP transaction. The prior year amounts related primarily to costs incurred to settle certain obligations and address other on-going matters associated with the acquisitions of ArcRoyal and Medical Action.

~~Exit and realignment charges were $5.0 million and $14.8~~$7.7 million for the three ~~and nine~~ months ended ~~September 30, 2017. Current year charges were associated with severance~~March 31, 2019, largely reflecting an increase in revenues from reduction in force and other employee costs associated with the establishment of our new client engagement centers, the write-down of information system assets which are no longer used and other IT restructuring charges. Expenses associated with the establishment of the client engagement center will continue to be recorded throughout 2017. Exit and realignment charges were $2.1 million and $19.1 millionhigher market demand for ~~the three and nine months ended September 30, 2016. These included severance activities (including our voluntary employee separation program~~personal protective equipment in the first quarter of ~~2016),~~2020 compared to 2019.

COVID-19 Update

We are impacted by the global pandemic and other costs associated with our strategic organizational realignment which include certain professional fees and costs to streamline administrative functions and processes in the United States and Europe. More information about these charges is provided in Note 6 of Notes to Consolidated Financial Statements included in this quarterly report.

(2) Acquisition-related intangible amortization includes amortization of certain intangible assets established during purchase accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results and the results of our peers. We have begun to exclude these charges from our non-GAAP results in the second quarter of 2017 and thus prior year amounts have been recast on the same basis.

~~(3) Includes software as a service (SaaS) implementation costs~~related effects associated with the ~~upgrading~~coronavirus (COVID-19). As a result, we updated our risk factors, which can be found in Item 1A “Risk Factors” in this document.

We are closely monitoring the impact of COVID-19 on all aspects of our global ~~IT platforms~~business, including how it impacts our customers, teammates, suppliers, vendors and distribution channels. We have taken actions to protect our teammates while maintaining business continuity as we respond to the needs from this global pandemic. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our teammates, customers, suppliers and shareholders.

Revenue in the first quarter of 2020 of $2.1 billion includes a nominal overall impact from COVID-19 as a greater demand for personal protective equipment (PPE) during the quarter, was partially offset by reduced surgical procedures beginning in mid-March.

We are evaluating various government-sponsored COVID-response stimulus, relief, and productions initiatives such as under the Defense Production Act (DPA) and recent Coronavirus Aid, Relief and Economic Security (CARES) Act. In April 2020, under the DPA, the U.S. Department of Defense initiated a technology investment agreement with us involving up to $30 million of anticipated funding of assets to expand capacity to supply N-95 respirator masks to the U.S. government. The nature of the agreement provides a program of expedited partial funding to begin expansion while final terms are completed. In addition, as allowed under the CARES Act, we have filed for a $13 million income tax refund with the IRS related to the carryback of net operating losses (NOL) incurred in 2018. This refund was included in other current assets on our balance sheet as of March 31, 2020. In connection with ~~the redesign of our global information system strategy.~~

~~(4) These charges have been tax effected in the preceding table by determining~~this NOL carryback, we recorded a $5.2 million benefit to the income tax ~~rate depending~~benefit for the three months ended March 31, 2020. This benefit was considered a non-GAAP item, and excluded from adjusted income from continuing operations.

We are unable to predict with certainty the full impact that COVID-19 will have on ~~the amount~~our financial position and operating results due to numerous variables.

Table of ~~charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.~~Contents

Results of Operations

Net revenue.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Domestic $ 2,194,143
$ 2,287,233
$ (93,090 ) (4.1 )%
International 96,661
83,751
12,910
15.4 %
Proprietary Products 124,542
132,705
(8,163 ) (6.2 )%
Inter-segment (81,385 ) (88,088 ) 6,703
(7.6 )%
Net revenue $ 2,333,961
$ 2,415,601
$ (81,640 ) (3.4 )%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Domestic $ 6,518,571
$ 6,954,687
$ (436,116 ) (6.3 )%
International 287,555
255,861
31,694
12.4 %
Proprietary Products 392,654
409,022
(16,368 ) (4.0 )%
Inter-segment (270,339 ) (264,501 ) (5,838 ) 2.2 %
Net revenue $ 6,928,441
$ 7,355,069
$ (426,628 ) (5.8 )%

~~Consolidated~~



	Three Months Ended March 31,						Change
(Dollars in thousands)	2020			2019			$			%
Global Solutions	$	1,847,593		$	2,123,599		$	(276,006	)	(13.0	)%
Global Products	391,192			347,085			44,107			12.7	%
Inter-segment	(116,092		)	(119,844		)	3,752			3.1	%
Net revenue	$	2,122,693		$	2,350,840		$	(228,147	)	(9.7	)%

The change in net revenue ~~declined~~ for ~~both~~ the ~~three and nine months ended September 30, 2017, primarily~~quarter reflected the impact of lower distribution revenues as a result of customer non-renewals that occurred in 2019 and a reduction in elective surgical procedures, primarily due to the ~~exit~~impact of ~~a large domestic customer~~COVID-19, which we expect to continue through the second quarter. These were partially offset by revenue growth in ~~2016, lower growth with existing domestic customers and one less sales day~~Global Products from increased demand for personal protective equipment. Foreign currency translation had an unfavorable impact on Net revenue of $2.1 million compared to prior year. ~~Byram contributed $80.3 million in revenue to the Domestic segment for the quarter and year to date. The~~

increase in the International segment was driven by growth with existing customers and new business as well as a favorable foreign currency translation impact of $2.8 million for the quarter but offset by an unfavorable impact of $12.4 million year to date. A decrease in sales of our sourced products contributed to the year over year change in the Proprietary Products segment.

Cost of goods sold.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Cost of goods sold $ 2,032,019
$ 2,119,326
$ (87,307 ) (4.1 )%


	Nine Months Ended September 30,				Change					Three Months Ended March 31,			Change
(Dollars in thousands)	2017		2016		$			%		2020		2019	$			%
Cost of goods sold	$	6,071,787	$	6,462,739	$	(390,952	)	(6.0	)%	$	1,854,134	2,074,219	$	(220,085	)	(10.6	)%

Cost of goods sold includes the cost of the product (net of supplier incentives and cash discounts) and all costs incurred for shipments of products from manufacturers to our distribution centers for all customer arrangements where we are the primary obligor and bear risk of general and physical inventory ~~loss and carry all credit risk associated with sales.~~loss. These are sometimes referred to as distribution ~~including products sold through Byram, or buy/sell~~ contracts. Cost of goods sold also includes direct and certain indirect labor, material and overhead costs associated with our ~~Proprietary~~Global Products business. There is no cost of goods sold associated with our fee-for-service ~~business. As a result~~arrangements. Cost of ~~the decrease~~goods sold compared to prior year reflects changes in sales activity, ~~through our distribution business, cost of goods sold decreased from prior year by $87.3 million and $391.0 million for the three and nine months ended September 30, 2017, respectively.~~including sales mix.

Gross margin.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Gross margin $ 301,942
$ 296,275
$ 5,667
1.9 %
As a % of net revenue 12.94 % 12.27 %


	Nine Months Ended September 30,						Change					Three Months Ended March 31,						Change
(Dollars in thousands)	2017			2016			$			%		2020			2019			$			%
Gross margin	$	856,654		$	892,330		$	(35,676	)	(4.0	)%	$	268,559		$	276,621		$	(8,062	)	(2.9	)%
As a % of net revenue	12.36		%	12.13		%						12.65		%	11.77		%

Gross margin ~~for~~in the ~~quarter included positive contribution~~three months ended March 31, 2020 was impacted by lower distribution revenues and unfavorable impact from Byram and a change in revenue mix offset by the impact of overall lower revenues, a decline in provider margin and lower income from manufacturer product price changes (on a year to date basis). The impact of foreign currency translation ~~was favorable for the quarter by $2.3 million and unfavorable by $6.1 million for the year to date. With increasing customer cost pressures and competitive dynamics~~of $3.3 million. The increase in ~~healthcare, we believe the current trend of increased~~ gross margin ~~pressure will continue.~~as a percentage of revenue reflected strong revenue growth from an overall improved sales mix, as the Global Products revenues constitute a higher percentage of revenue.

Operating expenses.


	Three Months Ended September 30,						Change				Three Months Ended March 31,						Change
(Dollars in thousands)	2017			2016			$		%		2020			2019			$			%
Distribution, selling and administrative expenses	$	261,045		$	241,305		$	19,740	8.2	%	$	254,048		$	255,112		$	(1,064	)	(0.4	)%
As a % of net revenue	11.18		%	9.99		%					11.97		%	10.85		%
Acquisition-related and exit and realignment charges											$	6,064		$	4,863		$	1,201		24.7	%
Other operating (income) expense, net	$	1,927		$	(1,337	)	$	3,264	(244.1	)%	$	(2,309	)	$	42		$	(2,351	)	(5,597.6	)%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Distribution, selling and administrative expenses $ 735,353
$ 726,944
$ 8,409
1.2 %
As a % of net revenue 10.61 % 9.88 %
Other operating (income) expense, net $ 2,143
$ (5,179 ) $ 7,322
(141.4 )%

Distribution, selling and administrative (DS&A) expenses include labor and warehousing costs associated with our distribution and outsourced logistics services and all costs associated with our fee-for-service arrangements. Shipping and handling costs are primarily included in DS&A expenses and include costs to store, move, and prepare products for shipment, as well as costs to deliver products to customers. ~~The costs to convert new customers to our information systems are~~

Table of Contents

Overall DS&A expenses were affected by changes in sales mix and investments in the business, partially offset by operational efficiencies. DS&A expenses also included ~~in DS&A and are generally incurred prior to the recognition~~favorable impacts for foreign currency translation of ~~revenues from the new customers.~~

~~Excluding Byram, DS&A as a percentage of revenue was 10.55% and 10.40%~~$0.3 million for the three ~~and nine~~ months ended ~~September 30, 2017. Overall expenses reflected decreased sales activity~~March 31, 2020.

Acquisition-related charges were $4.2 million and $4.2 million for the three months ended March 31, 2020 and 2019, respectively, and consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $1.8 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively. Exit and realignment charges in the first quarter of 2020 were associated with severance from reduction in force and ~~year to date, benefits of cost control and productivity initiatives, and a favorable foreign currency translation impact of $6.2 million year to date. These were offset in part by increased~~other costs ~~to support new business and unfavorable foreign currency translation impacts of $2.3 million in the quarter. As a percentage of net revenue, the increases~~ related to the ~~large customer loss~~reorganization of the U.S. commercial, operations and executive teams. Exit and realignment charges in ~~2016.~~the first quarter of 2019 were associated with severance from reduction in force and other employee costs associated with the establishment of our client engagement center and other IT restructuring charges.

The ~~changes~~change in other operating (income) expense, net ~~were~~was attributed primarily to higher foreign currency transaction gains in the quarter compared to prior year and lower software as a service implementation expenses ~~which were not incurred~~due to the adoption of ASU No. 2018-15 as of January 1, 2020. See Note 13 in ~~2016.~~Notes to Consolidated Financial Statements.

~~A discussion of the acquisition-related and exit and realignment charges is included above in the Overview section.~~

Interest expense, ~~net.~~net.


	Three Months Ended September 30,						Change				Three Months Ended March 31,						Change
(Dollars in thousands)	2017			2016			$		%		2020			2019			$			%
Interest expense, net	$	8,737		$	6,770		$	1,967	29.1	%	$	23,342		$	25,458		$	(2,116	)	(8.3	)%
Effective interest rate	4.15		%	4.76		%					7.17		%	6.30		%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Interest expense, net $ 22,218
$ 20,324
$ 1,894
9.3 %
Effective interest rate 4.52 % 4.79 %

~~The~~Interest expense decreased year over year primarily due to a reduction in debt, which was partially offset by an increase in ~~interest expense and change in~~our effective interest rate ~~for~~and the ~~three and nine months ended September 30, 2017 were~~amortization of additional deferred financing costs as a result of the ~~borrowings under our new~~Fifth Amendment to the Credit Agreement ~~entered~~ in ~~July 2017.~~February 2020. See Note 6 in Notes to Consolidated Financial Statements.

~~Income taxes.~~Other expense, net.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Income tax provision $ 10,063
$ 16,967
$ (6,904 ) (40.7 )%
Effective tax rate 48.1 % 36.3 %



	Three Months Ended March 31,				Change
(Dollars in thousands)	2020		2019		$		%
Other expense, net	$	4,846	$	2,734	$	2,112	77.2	%

Other expense, net in 2020 includes the write-off of deferred financing costs associated with the paydown of our Term A loans of $2.1 million and third party fees incurred as a result of the Fifth Amendment to the Credit Agreement in February 2020 of $2.2 million, which was offset by a gain on extinguishment of debt related to the partial repurchase of our 2021 Notes in March 2020 of $0.2 million, and interest cost and net actuarial losses related to the U.S. Retirement Plan of $0.7 million. Other expense, net in 2019 includes the write-off of deferred financing costs associated with the revolving credit facility as a result of the Fourth Amendment to the Credit Agreement in February 2019 of $2.0 million and interest cost and net actuarial losses related to the U.S. Retirement Plan of $0.7 million.

Income taxes.


	Nine Months Ended September 30,						Change					Three Months Ended March 31,						Change
(Dollars in thousands)	2017			2016			$			%		2020			2019			$			%
Income tax provision	$	26,010		$	48,585		$	(22,575	)	(46.5	)%
Income tax benefit												$	(8,523	)	$	(670	)	$	(7,853	)	(1,172.1	)%
Effective tax rate	34.3		%	37.3		%						48.9		%	5.8		%

The ~~changes~~change in the effective tax ~~rate~~rates compared to ~~2016~~2019 resulted ~~primarily~~ from a change in income mix among different tax rate jurisdictions and the effect of certain acquisition-related costs which were not deductible for tax purposes offset on a year to date basis by the release of an income tax ~~valuation allowance~~benefit of $5.2 million recorded in ~~Europe for $3.4 million during~~ the ~~second~~first quarter of ~~2017.~~2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax expense associated with the vesting of restricted stock.

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Financial Condition, Liquidity and Capital Resources

Financial condition. We monitor operating working capital through days sales outstanding (DSO) and merchandise inventory turnover. We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our revolving credit facility, or a combination thereof of approximately ~~$25~~$23 million.

The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the United States, Europe, and ~~Europe or invested in high-quality, short-term liquid investments.~~Asia. Changes in our working capital can vary in the normal course of business based upon the timing of inventory purchases, ~~collection~~collections of accounts receivable, and ~~payment~~payments to suppliers. ~~Changes in shipping terms with certain of our suppliers have contributed to increased inventory and accounts payable and had an unfavorable impact on inventory turnover.~~


	September 30, 2017		December 31, 2016				Change						March 31, 2020				December 31, 2019		Change
(Dollars in thousands)	September 30, 2017					$				%						$			%
Cash and cash equivalents	$	98,415	December 31, 2016	$	185,488			$	(87,073	)		(46.9	March 31, 2020	)%	$	92,315	December 31, 2019		$	67,030		$	25,285	37.7	%
Accounts and notes receivable, net of allowances	$	732,756	$	606,084			$	126,672			20.9	%
Accounts receivable, net of allowances													$	667,607			$	674,706	$	(7,099	)	(1.1	)%
Consolidated DSO ⁽¹⁾	27.6		23.1										27.5				27.1
Merchandise inventories	$	989,251	$	916,311			$	72,940			8.0	%	$	1,108,844			$	1,146,192	$	(37,348	)	(3.3	)%
Consolidated inventory turnover ⁽²⁾	8.1		9.2										6.6				6.6
Accounts payable	$	875,630	$	750,750			$	124,880			16.6	%	$	891,542			$	808,035	$	83,507		10.3	%

(1) Based on period end accounts receivable and net revenue for the quarter

(2) Based on average ~~annual~~ inventory and annualized ~~cost~~costs of goods sold for the quarter ended ~~September 30, 2017~~March 31, 2020 and year ended December 31, ~~2016~~2019

Liquidity and capital expenditures. The following table summarizes our consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019, which relates to continuing operations and discontinued operations:


(Dollars in thousands)	2017			2016			2020			2019
Net cash provided by (used for):
Operating activities	$	5,645		$	144,511		$	93,454		$	(60,904	)
Investing activities	(403,578		)	(16,266		)	(5,680		)	(14,008		)
Financing activities	305,723			(82,821		)	(31,406		)	49,505
Effect of exchange rate changes	5,137			6,652			(62		)	(2,721		)
Increase (decrease) in cash and cash equivalents	$	(87,073	)	$	52,076
Net increase (decrease) in cash, cash equivalents and restricted cash							$	56,306		$	(28,128	)

Cash provided by operating activities ~~was $5.6 million~~ in the first ~~nine~~three months of ~~2017, compared to $144.5 million~~2020 reflected fluctuations in ~~the same period of 2016. The decrease in cash from operating activities for the first nine months of 2017 compared to the same period in 2016 was primarily due to~~net income along with unfavorable changes in working ~~capital including inventory and accounts receivable balances.~~capital.

Cash used for investing activities ~~was $403.6 million~~ in the first ~~nine~~three months of ~~2017, compared to $16.3~~2020 included capital expenditures of $5.7 million for our strategic and operational efficiency initiatives associated with property and equipment, investments for increased manufacturing capacity in the ~~same period of 2016. Investing~~Americas, and capitalized software. Cash used for investing activities in ~~2017 and 2016 related to~~2019 included capital expenditures for our strategic and operational efficiency initiatives ~~particularly initiatives relating to information technology enhancements~~associated with property and ~~optimizing our distribution network.~~ equipment and capitalized software.

Cash used for ~~investing activities in 2017 also includes the acquisition of Byram Healthcare for $367 million.~~

~~Cash provided by~~ financing activities in the first ~~nine~~three months of ~~2017 was $305.7~~2020 included dividend payments of $0.2 million and repayments of $6.2 million under our revolving credit facility, compared to ~~cash used~~dividend payments of ~~$82.8~~$4.8 million and proceeds from borrowings of $72.1 million for the same period of 2019. We also had proceeds from borrowings of $150.0 million related to the Accounts Receivable Securitization Program. Financing activities also included repayments of $166.8 million in the first three months of 2020 compared to $12.4 million in the same period of ~~2016. During~~2019 on our term loans (under the Credit Agreement) and 2021 Notes. We used $4.4 million of cash to repurchase $4.6 million aggregate principal amount of the 2021 Notes during the first ~~nine months~~quarter of ~~2017, we~~2020. We also paid ~~dividends of $47.3 million (compared to $47.8~~$5.8 million in ~~2016), repurchased common stock under a share repurchase program for $5.0 million (compared~~financing costs related to ~~$48.7~~the Fifth Amendment to the Credit Agreement in February 2020 and $4.3 million in ~~2016) and borrowed on our new~~financing costs related to the Fourth Amendment to the Credit Agreement ~~($250 million term loan and $117.2 million on our revolving credit facility). There were no borrowings~~ in ~~the prior year period.~~February 2019.

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Capital resources. Our sources of liquidity include cash and cash equivalents and a revolving credit ~~facility. On July 27, 2017, we entered into a new Credit Agreement replacing the Amended~~facility under our Credit Agreement with Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Bank of America, N.A. and a syndicate of financial institutions (the Credit Agreement). The Credit Agreement provides a borrowing capacity of ~~$600~~$400 million and ~~a $250~~$697 million outstanding in term loan. We make principal payments under the term loan on a quarterly basis with the remaining outstanding principal due in five years. The revolving credit facility has a five-year maturity. Under the Credit Agreement, we have the ability to request two one-year extensions and to request an increase in aggregate commitments by up to $200 million.loans. The interest rate on ~~the Credit Agreement, which is subject to~~

~~adjustment quarterly,~~our revolving credit facility and Term A loans is based on the ~~London Interbank Offered~~Eurocurrency Rate, ~~(LIBOR),~~ the Federal Funds Rate or the Prime Rate, plus an adjustment based on ~~the better of~~ our ~~debt ratings or leverage ratio (Credit Spread)~~Consolidated Total Leverage Ratio as defined by the Credit Agreement. Our credit spread at March 31, 2020 was Eurocurrency Rate plus 4.25%. 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 ~~limit the amount of indebtedness that we may incur and require~~requires us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition.

We ~~may utilize~~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 100% 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. The Fifth Amendment to the Credit Agreement included additional collateral requirements related to the parties secured on the Credit Agreement, including the obligation to pledge the Company's owned U.S. real estate and remaining equity interests in foreign subsidiaries. Our Credit Agreement has a “springing maturity date” with respect to the revolving loans and the Term A loans and the Term B loans. If as of the date 91 days prior to the maturity date of our 2021 Notes all outstanding amounts under the 2021 Notes have not been paid in full, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility ~~for long-term strategic growth, capital expenditures, working capital~~ and ~~general corporate purposes. If we were unable~~the Term A loans shall be the date that is 91 days prior to ~~access~~ the ~~revolving credit facility, it could impact~~maturity date of the 2021 Notes. Likewise, if as of the date 91 days prior to the maturity date of our ~~ability to fund these needs. Based on our leverage ratio at September 30, 2017, the interest rate~~2024 Notes, all outstanding amounts under the ~~credit facility~~2024 Notes have not been paid in full, the Termination Date of the Term B loan shall be the date that is ~~LIBOR plus 1.375%.~~91 days prior to the maturity date of the 2024 Notes.

At ~~September 30, 2017,~~March 31, 2020 and December 31, 2019, we had borrowings of ~~$117.2~~$171.7 million and $177.9 million, respectively, under the revolver and letters of credit of ~~approximately $5.1~~$11.7 million and $11.7 million, respectively, outstanding under the Credit Agreement ~~leaving $477.7~~along with $508.1 million ~~available for borrowing. We also have a $1.3~~and $512.7 million, ~~letter of credit outstanding as of September 30, 2017~~respectively, in Senior Notes. At March 31, 2020 and December 31, ~~2016~~2019, we had $215.5 million and $209.3 million, respectively, available for borrowing, which reflected the letters of credit associated with discontinued operations of $1.1 million and $1.1 million, respectively, against our borrowing capacity. We also had letters of credit and bank guarantees outstanding for $1.5 million as of March 31, 2020 and December 31, 2019, respectively, which supports ~~our~~certain facilities leased as well as other normal business activities in the United States and Europe.

~~We have $275 million~~From time to time, we may enter into transactions to repay, repurchase or redeem our outstanding indebtedness (including by means of 3.875% senior notes due 2021 (the “2021 Notes”) and $275 million of 4.375% senior notes due 2024 (the “2024 Notes”). The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. Interest on the 2021 Notes and 2024 Notes is payable semiannually in arrears, which commenced on March 15, 2015 and December 15, 2014, respectively. We have the option to redeem the 2021 Notes and 2024 Notes in partopen market purchases, privately negotiated repurchases, tender or ~~in whole prior to maturity at a redemption price equal~~exchange offers and/or repayments or redemptions pursuant to the ~~greater of 100% of the principal amount~~debt’s terms). Our ability to consummate any such transaction will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We cannot provide any assurance as to if or when we will consummate any such transactions or the ~~present value~~terms of ~~the remaining scheduled payments discounted at the Treasury Rate plus 30 basis points.~~any such transaction.

~~In the third~~The first quarter dividend of ~~2017, we paid cash dividends on our outstanding common stock at the rate of $0.2575~~$0.0025 per share ~~which represents a 1.0% increase over the rate of $0.255 per share~~was paid in ~~the third quarter of 2016. We anticipate continuing to pay quarterly cash dividends in the future. However, the~~March 2020. 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, current and future limitations under our Credit Agreement (as amended) and other factors.

In October 2016, the 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 three-year period, expiring in December 2019. The program is intended to offset shares issued in conjunction with our stock incentive plan and return capital to shareholders, and may be suspended or discontinued at any time. During the first nine months of 2017, we repurchased approximately 0.2 million shares for $5.0 million under this program. At September 30, 2017, the remaining amount authorized for repurchase under this program was $94.0 million.

We earn a portion of our operating earnings in foreign jurisdictions outside the U.S., which we consider to be indefinitely reinvested. Accordingly, no U.S. federal and state income taxes and withholding taxes have been provided on these earnings. Our cash, cash-equivalents, short-term investments, and marketable securities held by our foreign subsidiaries totaled $60.7 million and $82.1 million as of September 30, 2017 and December 31, 2016. We do not intend, nor do we foresee a need, to repatriate these funds or other assets held outside the U.S. In the future, should we require more capital to fund discretionary activities in the U.S. than is generated by our domestic operations and is available through our borrowings, we could elect to repatriate cash or other assets from foreign jurisdictions that have previously been considered to be indefinitely reinvested.

We believe available financing sources, including cash generated by operating activities and borrowings under the Credit Agreement, ~~and other committed financing,~~ 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 and debt 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.

We earn a portion of our operating income in foreign jurisdictions outside the United States. Our cash and cash equivalents held by our foreign subsidiaries totaled $71.7 million and $52.9 million at March 31, 2020 and December 31, 2019, respectively. We continue to remain permanently reinvested in our foreign subsidiaries, with the exception of a subsidiary in Thailand. We have no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiary located in Thailand as of March 31, 2020. As such, we have recorded withholding tax liabilities that would be incurred upon future distribution to the U.S. There are no unrecognized deferred taxes as there is no outside basis difference unrelated to unremitted earnings for Thailand. We will continue to evaluate our foreign earnings repatriation policy in 2020 for all our foreign subsidiaries.

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Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 and Note 1513 in the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the quarterly period ended on ~~September 30, 2017.~~

March 31, 2020.

Forward-looking Statements

Certain statements in this discussion constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, all forward-looking statements involve risks and uncertainties and, as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including, but not limited to:

our ability to achieve revenue and operating income goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, a decrease in revenue ultimately resulting in less cash flow, longer duration in receivables collection, the need to expedite payments to important suppliers may grow, shifts in demand away from certain products we manufacture and distribute, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, or temporary production and distribution center and office closures due to reduced workforces or government mandates, potential resulting labor negotiations or disputes, changes in the types and numbers of businesses that compete with us, including non-traditional competitors, and the aggressiveness of that competition, and trends in elective surgeries and other healthcare spending not directly associated with COVID-19;

our ability to successfully close the sale of our European logistics business, Movianto, to EHDH Holding Group (EHDH);

competitive pressures in the marketplace, including intense pricing pressure;

our ability to retain existing and attract new customers in a market characterized by significant customer consolidation and intense cost-containment initiatives;

our dependence on sales to certain customers or the loss or material reduction in purchases by key customers;

our dependence on distribution of product of certain suppliers;

our ability to successfully identify, manage or integrate acquisitions;

our ability to successfully manage our international operations, including risks associated with changes in international trade regulations, foreign currency volatility, changes in regulatory conditions, deteriorating economic conditions, adverse tax consequences, and other risks of operating in international markets;

uncertainties related to and our ability to adapt to changes in government regulations, including healthcare laws and ~~regulations (including the Affordable Care Act);~~regulations;

risks arising from possible violations of legal, regulatory or licensing requirements of the markets in which we operate;

uncertainties related to general economic, regulatory and business conditions;

our ability to successfully implement our strategic initiatives;

the availability of and modifications to existing supplier funding programs and our ability to meet the terms to qualify for certain of these programs;

the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices;

our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;

the ability of customers and suppliers to meet financial commitments due to us;

changes in manufacturer preferences between direct sales and wholesale distribution;

changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services;

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our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles;

our ability to meet performance targets specified by customer contracts under contractual commitments;

availability of and our ability to access special inventory buying opportunities;

the ability of business partners and financial institutions to perform their contractual responsibilities;

~~the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices;~~

our ability to continue to obtain financing, obtain financing at reasonable rates and to manage financing costs and interest rate ~~risk;~~risk, and our ability to refinance, extend or repay our substantial indebtedness;

the risk that information systems are interrupted or damaged or fail for any extended period of time, that new information systems are not successfully implemented or integrated, or that there is a data security breach in our information systems;

the risk that a decline in business volume or profitability could result in an impairment of goodwill or other long-lived assets;

our ability to timely or adequately respond to technological advances in the medical supply industry;

the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims;

adverse changes in U.S. and foreign tax laws and the outcome of outstanding tax contingencies and legislative and tax proposals;

our ability to successfully implement the expense reduction and productivity and efficiency increasing initiatives;

our ability to continue to comply with the terms and conditions of Byram Healthcare’s Corporate Integrity Agreement;

the potentially adverse impact of the United Kingdom’s withdrawal from the European Union; and

other factors ~~described~~detailed from time to time in ~~“Item 1A. Risk Factors” of our Annual Report on Form 10-K for~~ the ~~year ended December 31, 2016.~~reports we file with the SEC.

We undertake no obligation to update or revise any forward-looking statements, except as required by applicable law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to price risk for our raw materials, the most significant of which relates to the cost of polypropylene and nitrile used in the manufacturing processes of our Global Products segment. Prices of the commodities underlying these raw materials are volatile and have fluctuated significantly in recent years and in the future may contribute to fluctuations in our results of operations. The ability to hedge these commodity prices is limited.

In the normal course of business, we are exposed to foreign currency translation and transaction risks. Our business transactions outside of the United States are primarily denominated in the euro, British pound and Thai baht. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign currency fluctuations.

We are exposed to market risk from changes in interest rates related to our borrowing under our Credit Agreement. However, we enter into interest rate swap agreements to manage our exposure to interest rate changes. We had $697 million in borrowings under our term loans, $172 million in borrowings under our revolving credit ~~facility. We had $117.2~~facility, $147 million in ~~outstanding~~ borrowings under our accounts receivable securitization program, and ~~approximately $5.1~~$12 million in letters of credit under the ~~revolving credit facility~~Credit Agreement at ~~September 30, 2017. A hypothetical~~March 31, 2020. After considering the effects of interest rate swap agreements outstanding as of March 31, 2020, we estimate an increase in interest rates of 100 basis points would result in a potential reduction in future pre-tax earnings of approximately ~~$0.1~~$6 million per year ~~for every $10 million of~~based on our borrowings outstanding ~~borrowings under the revolving credit facility.~~at March 31, 2020.

Due to the nature and pricing of our ~~Domestic~~Global Solutions segment distribution services, we are exposed to potential volatility in fuel prices. Our strategies for helping to mitigate our exposure to changing domestic fuel prices ~~has~~have included ~~entering into leases for~~using trucks with improved fuel efficiency. We benchmark our domestic diesel fuel purchase prices against the U.S. Weekly Retail On-Highway Diesel Prices (benchmark) as quoted by the U.S. Energy Information Administration. The benchmark averaged ~~$2.58~~$2.88 and $3.02 per gallon in the first ~~nine~~three months of ~~2017, a increase from $2.25 per gallon in the first nine months of 2016.~~2020 and 2019, respectively. Based on our fuel consumption in the first ~~nine~~three months of ~~2017,~~2020, we estimate that every 10 cents per gallon increase in the benchmark would reduce our ~~Domestic~~Global Solutions segment operating ~~earnings~~income by approximately ~~$0.3~~$0.2 million on an annualized basis.

In the normal course of business, we are exposed to foreign currency translation and transaction risks. Our business transactions outside of the United States are primarily denominated in the Euro and British Pound. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign currency fluctuations. However, we believe that our foreign currency transaction risks are low since our revenues and expenses are typically denominated in the same currency.

Item 4. 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 ~~September 30, 2017.~~March 31, 2020. There ~~has been~~was no change in our internal control over financial reporting that occurred during the ~~quarter ended September 30, 2017,~~period of this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and procedures as they relate to the internal control over financial reporting for an acquired business during the year of an acquisition. In the third quarter of 2017, we acquired Byram Healthcare. This acquisition represented $477 million of total assets and $80.3 million of revenues as of and for the three months ended September 30, 2017. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company's disclosure controls and procedures as of and for the period covered by this report excludes any evaluation of the internal control over financial reporting of these acquisitions.

Part II. Other Information

Item 1. Legal Proceedings

Certain legal proceedings pending against us are described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. Through ~~September 30, 2017,~~March 31, 2020, there have been no material developments in any legal proceedings reported in such Annual Report.

Item 1A. Risk Factors

~~Certain~~

The following description of risk factors includes any material changes to, and supersedes the description of, risk factors associated with our business previously disclosed in Part I, Item 1A of the 2019 Form 10-K, under the heading “Risk Factors.” Set forth below is a certain risk factor that we currently believe could materially and adversely affect our business, financial condition, results of operations and cash flows. This risk factor is in addition to those mentioned in other parts of this report and are not all of the risks that we face. We could also be affected by risks that we currently are not aware of or that we currently do not consider material to our business.

We are subject to risks related to public health crises such as the global pandemic associated with the 2019 novel coronavirus (COVID-19).

As a global healthcare solutions company, we are impacted by public health crises such as the global pandemic associated with COVID-19. The outbreak has significantly increased uncertainty and unpredictability of global economic conditions and the demand for and supply of raw materials and finished goods required for our operations. In addition, public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions

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and the adoption of remote working, have impacted our operations. In these challenging and dynamic circumstances, we are working to protect our employees and the public, maintain business continuity and sustain our operations, including ensuring the safety and protection of the people who work in our production and distribution centers across the world, many of whom support the manufacturing and delivery of products that are critical in response to the global pandemic. We may restrict the operations of our production and distribution centers if we deem it necessary or if recommended or mandated by governmental authorities which would have an adverse impact on us. There is a risk that revenues will decrease ultimately resulting in less cash flow, we may see longer duration in receivables collection, and the need to expedite payments to important suppliers may grow. COVID-19 may impact our supply chains relative to global demand for our facial protection and protective apparel products. COVID-19 may also affect the ability of suppliers and vendors to provide products and services to us. Some of these factors could increase the demand for our products, while others could decrease demand or make it more difficult for us to serve customers. Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. For example, in recent weeks, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. Due to the speed with which the situation is developing and the uncertainty of its duration and the timing of recovery, we are not able at this time to predict the extent to which the COVID-19 pandemic may have a material effect on our financial or operational results, but the following adverse risks exist:

Actions by the United States government or other foreign government could affect our business. These actions include purchasing products that we make or sell, imposing new product standards or allowing the use of alternative products, instituting regulatory requirements to purchase only locally manufactured products, exercising control over manufacturing or distribution operations, taking trade actions including the imposition or removal of tariffs or import / export controls, subsidizing the supply of products, or other actions;

Quarantine decisions by public or private entities may influence our ability to operate or our ability to ship or receive products. For example, if shipping companies cease or reduce land or sea freight channels, raw material and finished good deliveries may be slowed or stopped;

Our customers may change their payment patterns or lose their ability to pay invoices, which could have a material adverse impact on our cash flow;

Our suppliers may increase pricing or impose new purchasing requirements, such as minimum purchase quantities or pay-in-advance payment terms, which could have a material adverse impact on our cash flow;

Raw materials or finished goods that we require for our operations may not be available, or pricing for such items may increase beyond the willingness of our customers to pay;

New competitors may enter our market, including both small and large scale suppliers;

COVID-19 illness among our workers in manufacturing or distribution operations could impact our operations or compel the closure of one or more facilities for an unknown period of time. Labor relations in our facilities related to COVID-19 could also negatively impact our operations;

We may invest in additional manufacturing capacity for which demand slows in the future, which could have a material adverse impact on our cash flow; and

Technology infrastructure failures could materially inhibit our operations that currently include a substantial portion of remote work. For example, voice or data line failures resulting from natural, manmade or cyber-attack could impair our ability to operate.

We have incurred additional costs to ensure we meet the needs of our customers, including increasing our workforce in order to produce or distribute certain essential products for our customers, providing personal protective equipment to our workforce, incremental shipping and transportation costs, incremental technology costs, and additional cleaning costs throughout our facilities. We expect to continue to incur additional costs, which may be significant as we continue to implement operational changes in response to this pandemic. Further, our management is focused on mitigating COVID-19, which has required and will continue to require, a large investment of time and resources across our enterprise and will delay other value added services and strategic initiatives. Additionally, currently some of our teammates are working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and ~~prospects are described~~impair our ability to manage our business. If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate for the United States or our international markets, we could suffer damage to our reputation and our brands, which could adversely affect our business.

The impact of COVID-19 may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K, for the year ended December 31, 2016. Through September 30, 2017, we have added the following risk factors. There have been no other material changes in the risk factors described in such Annual Report.

~~Table of Contents~~

~~We are subject to stringent regulatory and licensing requirements~~

We are required to comply with extensive and complex laws and regulations at the federal, state and local government levels. Among these laws are the federal Anti-kickback Statute, the federal Stark Law, the False Claims Act and similar state laws relating to healthcare fraud and abuse. The requirements of these laws are complex and subject to varying interpretations, and it is possible that regulatory authorities could challenge our policies and practices. If we fail to comply with these laws, we could be subject to federal or state government investigations or ~~qui tam~~ actions (false claims cases initiated by private parties purporting to act on behalf of federal or state governments), which could result in civil or criminal sanctions, including the loss of licenses or the ability to participate in Medicare, Medicaid and other federal and state healthcare programs. Such sanctions and damages could adversely affect our results of operations and financial condition.

Our Byram business is a Medicare-certified supplier and participates in state Medicaid programs. Failure to comply with applicable standards and regulations could result in civil or criminal sanctions, including the loss of our ability to participate in Medicare, Medicaid and other federal and state healthcare programs.

We collect, handle and maintain patient-identifiable health information and other sensitive personal and financial information, which are subject to federal, state and foreign laws that regulate the use and disclosure of such information. Regulations currently in place continue to evolve, and new laws in this area could further restrict our ability to collect, handle and maintain personal or patient information, or could require us to incur additional compliance costs, eitherany of which could have ~~an adverse impact~~a material effect on ~~our results~~us. This situation is changing rapidly and additional impacts may arise that we are not aware of operations. Violations of federal, state or foreign laws concerning privacy and data protection could subject us to civil or criminal penalties, breach of contract claims, costs for remediation and harm to our reputation.currently.

Compliance with the terms and conditions of Byram’s Corporate Integrity Agreement requires significant resources and, if we fail to comply, we could be subject to penalties or excluded from participation in government healthcare programs, which could seriously harm our results of operations, liquidity and financial results.

Prior to its acquisition by Owens & Minor, Byram entered into a five-year Corporate Integrity Agreement beginning April 2016 with the Office of Inspector General of the United States Department of Health and Human Services (“OIG”). The Corporate Integrity Agreement provides that Byram shall, among other things, establish and maintain a compliance program, including a corporate compliance officer and committee, a code of conduct, comprehensive compliance policies and procedures, training and monitoring, a review process for certain arrangements between Byram and referral sources, a compliance hotline, an open door policy and a disciplinary process for compliance violations. The Corporate Integrity Agreement further provides that Byram shall provide periodic reports to the OIG, complete certain regular certifications and engage an Independent Review Organization to perform reviews of certain arrangements between Byram and referral sources.

Failing to meet the Corporate Integrity Agreement obligations could have material adverse consequences for Byram including monetary penalties for each instance of non-compliance. In addition, in the event of an uncured material breach or deliberate violation of the Corporate Integrity Agreement, we could be excluded from participation in Federal healthcare programs, or other significant penalties, which could seriously harm our results of operations, liquidity and financial results.

~~Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities~~

In October 2016, our Board of Directors authorized a share repurchase program of up to $100 million of the company’s outstanding common stock to be executed at the discretion of management over a three-year period. 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. We did not repurchase any shares for the three months ended September 30, 2017.

3226

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Item 6. Exhibits


(a)	Exhibits




31.1		Certification of Chief Executive Officer 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.

31.2		Certification of Chief Financial Officer 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.

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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

		* Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish copies of such omitted materials supplementally upon request by the SEC.
		** Management contract or compensatory plan or arrangement

3327

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Owens & Minor, Inc.
		(Registrant)

Date:	~~November 1, 2017~~May 6, 2020	/s/ ~~Paul C. Phipps~~Edward A. Pesicka
		~~Paul C. Phipps~~Edward A. Pesicka
		President & Chief Executive Officer

Date:	~~November 1, 2017~~May 6, 2020	/s/ ~~Richard A. Meier~~Andrew G. Long
		~~Richard A. Meier~~Andrew G. Long
		Executive Vice President & Chief Financial Officer ~~& President, International~~

3428




(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, 2015	62,803		$	125,606		$	211,943	$	706,866		$	(51,825	)	$	992,590
Net income								81,682						81,682
Other comprehensive loss											3,263			3,263
Dividends declared ($0.765 per share)								(47,671		)				(47,671		)
Shares repurchased and retired	(1,378	)	(2,757		)			(45,896		)				(48,653		)
Share-based compensation expense, exercises and other	274		549			4,923								5,472
Balance September 30, 2016	61,699		$	123,398		$	216,866	$	694,981		$	(48,562	)	$	986,683

Balance December 31, 2016	61,031		$	122,062		$	219,955	$	685,504		$	(67,483	)	$	960,038
Net income								49,796						49,796
Other comprehensive income											41,141			41,141
Dividends declared ($0.7725 per share)								(47,169		)				(47,169		)
Shares repurchased and retired	(155	)	(310		)			(4,687		)				(4,997		)
Share-based compensation expense, exercises and other	373		747			4,228								4,975
Balance September 30, 2017	61,249		$	122,499		$	224,183	$	683,444		$	(26,342	)	$	1,003,784



	Preliminary Fair Value Estimated as of Acquisition Date
Assets acquired:
Current assets	$	62,902
Goodwill	263,155
Intangible assets	156,000
Noncurrent assets	3,615
Total assets	485,672
Liabilities assumed:
Current liabilities	72,397
Noncurrent liabilities	46,706
Total liabilities	119,103
Fair value of net assets acquired, net of cash	$	366,569



	Domestic		International		Proprietary Products		Consolidated
Carrying amount of goodwill, December 31, 2016	$	180,006	$	19,391	$	215,539	$	414,936
Acquisition (See Note 3)	263,155		—		—		263,155
Currency translation adjustments	—		10,001		2,138		12,139
Carrying amount of goodwill, September 30, 2017	$	443,161	$	29,392	$	217,677	$	690,230



	Lease Obligations			Severance and Other			Total
Accrued exit and realignment costs, December 31, 2016	$	—		$	2,238		$	2,238
Provision for exit and realignment activities	—			3,211			3,211
Change in estimate	—			(304		)	(304		)
Cash payments	—			(3,034		)	(3,034		)
Accrued exit and realignment costs, March 31, 2017	—			2,111			2,111
Provision for exit and realignment activities	—			1,382			1,382
Change in estimate	—			(18		)	(18		)
Cash payments	—			(667		)	(667		)
Accrued exit and realignment costs, June 30, 2017	—			2,808			2,808
Provision for exit and realignment activities	—			3,156			3,156
Cash payments	—			(423		)	(423		)
Accrued exit and realignment costs, September 30, 2017	$	—		$	5,541		$	5,541

Accrued exit and realignment costs, December 31, 2015	$	486		$	1,840		$	2,326
Provision for exit and realignment activities	—			9,895			9,895
Cash payments, net of sublease income	(486		)	(1,287		)	(1,773		)
Accrued exit and realignment costs, March 31, 2016	—			10,448			10,448
Provision for exit and realignment activities	—			1,254			1,254
Cash payments, net of sublease income	—			(7,087		)	(7,087		)
Accrued exit and realignment costs, June 30, 2016	—			4,615			4,615
Provision for exit and realignment activities	—			725			725
Change in Estimate	—			(268		)	(268		)
Cash payments, net of sublease income	—			(2,066		)	(2,066		)
Accrued exit and realignment costs, September 30, 2016	$	—		$	3,006		$	3,006



Three Months Ended September 30, 2017	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	2,113,450		$	264,765		$	(44,254	)	$	2,333,961
Cost of goods sold	—			1,919,049			157,439			(44,469		)	2,032,019
Gross margin	—			194,401			107,326			215			301,942
Distribution, selling and administrative expenses	(117		)	159,108			102,054			—			261,045
Acquisition-related and exit and realignment charges	—			6,960			2,339			—			9,299
Other operating (income) expense, net	—			448			1,479			—			1,927
Operating earnings (loss)	117			27,885			1,454			215			29,671
Interest expense (income), net	7,018			(1,184		)	2,903			—			8,737
Income (loss) before income taxes	(6,901		)	29,069			(1,449		)	215			20,934
Income tax (benefit) provision	—			7,881			2,182			—			10,063
Equity in earnings of subsidiaries	17,772			—			—			(17,772		)	—
Net income (loss)	10,871			21,188			(3,631		)	(17,557		)	10,871
Other comprehensive income (loss)	12,584			330			12,254			(12,584		)	12,584
Comprehensive income (loss)	$	23,455		$	21,518		$	8,623		$	(30,141	)	$	23,455



Three Months Ended September 30, 2016	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	2,287,335		$	168,216		$	(39,950	)	$	2,415,601
Cost of goods sold	—			2,070,639			89,192			(40,505		)	2,119,326
Gross margin	—			216,696			79,024			555			296,275
Distribution, selling and administrative expenses	(52		)	169,451			71,906			—			241,305
Acquisition-related and exit and realignment charges	—			2,237			502			—			2,739
Other operating income, net	—			(1,205		)	(132		)	—			(1,337		)
Operating earnings (loss)	52			46,213			6,748			555			53,568
Interest expense (income), net	7,403			(1,345		)	712			—			6,770
Income (loss) before income taxes	(7,351		)	47,558			6,036			555			46,798
Income tax (benefit) provision	—			14,131			2,836			—			16,967
Equity in earnings of subsidiaries	37,182			—			—			(37,182		)	—
Net income (loss)	29,831			33,427			3,200			(36,627		)	29,831
Other comprehensive income (loss)	1,701			299			1,402			(1,701		)	1,701
Comprehensive income (loss)	$	31,532		$	33,726		$	4,602		$	(38,328	)	$	31,532



Nine Months Ended September 30, 2017	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	6,436,599		$	635,900	$	(144,058	)	$	6,928,441
Cost of goods sold	—			5,845,789			369,596		(143,598		)	6,071,787
Gross margin	—			590,810			266,304		(460		)	856,654
Distribution, selling and administrative expenses	434			480,765			254,154		—			735,353
Acquisition-related and exit and realignment charges	—			17,084			4,050		—			21,134
Other operating (income) expense, net	—			1,481			662		—			2,143
Operating earnings (loss)	(434		)	91,480			7,438		(460		)	98,024
Interest expense (income), net	20,756			(2,777		)	4,239		—			22,218
Income (loss) before income taxes	(21,190		)	94,257			3,199		(460		)	75,806
Income tax (benefit) provision	—			23,303			2,707		—			26,010
Equity in earnings of subsidiaries	70,986			—			—		(70,986		)	—
Net income (loss)	49,796			70,954			492		(71,446		)	49,796
Other comprehensive income (loss)	41,141			990			40,151		(41,141		)	41,141
Comprehensive income (loss)	$	90,937		$	71,944		$	40,643	$	(112,587	)	$	90,937



Nine Months Ended September 30, 2016	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	6,954,983		$	516,131		$	(116,045	)	$	7,355,069
Cost of goods sold	—			6,305,489			273,927			(116,677		)	6,462,739
Gross margin	—			649,494			242,204			632			892,330
Distribution, selling and administrative expenses	838			504,984			221,122			—			726,944
Acquisition-related and exit and realignment charges	—			15,888			4,086			—			19,974
Other operating income, net	—			(3,952		)	(1,227		)	—			(5,179		)
Operating earnings (loss)	(838		)	132,574			18,223			632			150,591
Interest expense (income), net	21,134			(2,808		)	1,998			—			20,324
Income (loss) before income taxes	(21,972		)	135,382			16,225			632			130,267
Income tax (benefit) provision	—			40,237			8,348			—			48,585
Equity in earnings of subsidiaries	103,654			—			—			(103,654		)	—
Net income (loss)	81,682			95,145			7,877			(103,022		)	81,682
Other comprehensive income (loss)	3,263			821			2,442			(3,263		)	3,263
Comprehensive income (loss)	$	84,945		$	95,966		$	10,319		$	(106,285	)	$	84,945



	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands except per share data)	2017			2016			2017			2016
Operating earnings, as reported (GAAP)	$	29,671		$	53,568		$	98,024		$	150,591
Acquisition-related and exit and realignment charges ⁽¹⁾	9,299			2,739			21,134			19,974
Acquisition-related intangible amortization ⁽²⁾	5,071			2,489			9,737			7,552
Other ⁽³⁾	4,441			—			8,674			—
Operating earnings, adjusted (non-GAAP) (Adjusted Operating Earnings)	$	48,482		$	58,796		$	137,569		$	178,117

Net income, as reported (GAAP)	$	10,871		$	29,831		$	49,796		$	81,682
Acquisition-related and exit and realignment charges ⁽¹⁾	9,299			2,739			21,134			19,974
Income tax expense (benefit) ⁽⁴⁾	(2,854		)	(1,015		)	(7,367		)	(6,615		)
Acquisition-related intangible amortization ⁽²⁾	5,071			2,489			9,737			7,552
Income tax expense (benefit) ⁽⁴⁾	(1,601		)	(645		)	(2,993		)	(1,956		)
Other ⁽³⁾	4,441			—			8,674			—
Income tax expense (benefit) ⁽⁴⁾	(973		)	—			(2,465		)	—
Net income, adjusted (non-GAAP) (Adjusted Net Income)	$	24,254		$	33,399		$	76,516		$	100,637

Net income per diluted common share, as reported (GAAP)	$	0.18		$	0.48		$	0.82		$	1.32
Acquisition-related and exit and realignment charges, per diluted common share ⁽¹⁾	0.11			0.03			0.23			0.21
Acquisition-related intangible amortization, per diluted common share ⁽²⁾	0.06			0.03			0.11			$	0.09
Other, per diluted common share ⁽³⁾	0.05			—			0.10			—
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS)	$	0.40		$	0.54		$	1.26		$	1.62