<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 11-K
________________________________
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED] for the fiscal year ended April 3, 1997
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED] for the transition period from _________________
to _____________________
Commission File No. 0-23832
A. Full title and address of the plan, if different from that of the
issuer named below:
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
(904) 332-3000
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PHYSICIAN SALES & SERVICE, INC.
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
(904) 332-3000
<PAGE>
REQUIRED INFORMATION
The following financial statements and schedules have been prepared in
accordance with the financial reporting requirements of the Employee Retirement
Income Security Act of 1974, as amended:
1. Statements of Net Assets Available for Benefits, With Fund Information
- -- April 3, 1997 and March 28, 1996.
2. Statement of Changes in Net Assets Available for Benefits, With Fund
Information, for the Year Ended April 3, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Jacksonville, State of Florida, on
September 30, 1997.
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND
SAVINGS PLAN
NORTHWESTERN TRUST AND INVESTORS
ADVISORY COMPANY, TRUSTEE
By: /s/ Gerry Kelley
---------------------
Gerry Kelley
Vice President
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF APRIL 3, 1997 AND MARCH 28, 1996
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
APRIL 3, 1997 AND MARCH 28, 1996
TABLE OF CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION--
APRIL 3, 1997 AND MARCH 28, 1996
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION, FOR THE YEAR ENDED APRIL 3, 1997
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS
SCHEDULE I: ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--
APRIL 3, 1997
SCHEDULE II: ITEM 27D--SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR
ENDED APRIL 3, 1997
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE PLAN ADMINISTRATOR OF THE
PHYSICIAN SALES & SERVICE, INC. EMPLOYEE STOCK
OWNERSHIP AND SAVINGS PLAN:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of the PHYSICIAN SALES & SERVICE, INC. EMPLOYEE
STOCK OWNERSHIP AND SAVINGS PLAN as of April 3, 1997 and March 28, 1996 and the
related statement of changes in net assets available for benefits, with fund
information, for the year ended April 3, 1997. These financial statements and
the schedules referred to below are the responsibility of the Plan's
administrator. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Physician
Sales & Service, Inc. Employee Stock Ownership and Savings Plan as of April 3,
1997 and March 28, 1996 and the changes in net assets available for benefits for
the year ended April 3, 1997 in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes as of April 3, 1997 and reportable transactions for
the year then ended are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
benefits, with fund information, as of April 3, 1997 and March 28, 1996 and the
statement of changes in net assets available for benefits, with fund
information, for the year ended April 3, 1997 is presented for purposes of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated, in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
September 29, 1997
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
APRIL 3, 1997 AND MARCH 28, 1996
<TABLE>
<CAPTION>
1997
-------------------------------------------------------------------------------
PARTICIPANT - DIRECTED
------------------------------------------------------------------------------
NORTHWESTERN TRUST AND INVESTORS ADVISORY COMPANY
-------------------------------------------------------------------------------
MONEY
MARKET BOND BALANCED GROWTH AIM
FUND FUND FUND FUND FUND
-------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Shares of registered investment companies:
Fidelity Institutional Cash Domestic
Money Market Fund $ 0 $ 0 $ 0 $ 0 $ 0
Alex Brown Cash Reserve Fund 13,079 0 0 0 0
Bond Fund of America 0 114,785 0 0 0
American Balanced Fund 0 0 6,012,503 0 0
Growth Fund of America 0 0 0 1,090,445 0
AIM Constellation Fund 0 0 0 0 2,189,323
Kaufmann Fund 0 0 0 0 0
Physician Sales & Service, Inc. common stock 0 0 0 0 0
-------- -------- ----------- ---------- ----------
13,079 114,785 6,012,503 1,090,445 2,189,323
Pending transfers between funds 99,735 43,549 (1,843,188) 375,508 543,802
-------- -------- ----------- ---------- ----------
Total investments 112,814 158,334 4,169,315 1,465,953 2,733,125
-------- -------- ----------- ---------- ----------
PARTICIPANTS' CONTRIBUTIONS RECEIVABLE 4,293 5,221 53,222 28,022 50,732
-------- -------- ----------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $117,107 $163,555 $ 4,222,537 $1,493,975 $2,783,857
======== ======== =========== ========== ==========
<CAPTION>
1997
------------------------------------------------------------------
NONPARTICIPANT-
DIRECTED
-----------
PSS PSS
KAUFMANN STOCK COMMON
FUND FUND STOCK TOTAL
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Shares of registered investment companies:
Fidelity Institutional Cash Domestic
Money Market Fund $ 0 $ 396,615 $ 48,073 $ 444,688
Alex Brown Cash Reserve Fund 0 0 0 13,079
Bond Fund of America 0 0 0 114,785
American Balanced Fund 0 0 0 6,012,503
Growth Fund of America 0 0 0 1,090,445
AIM Constellation Fund 0 0 0 2,189,323
Kaufmann Fund 1,203,644 0 0 1,203,644
Physician Sales & Service, Inc. common stock 0 8,475,123 21,047,279 29,522,402
---------- ---------- ----------- -----------
1,203,644 8,871,738 21,095,352 40,590,869
Pending transfers between funds 524,383 310,225 (54,014) 0
---------- ---------- ----------- -----------
Total investments 1,728,027 9,181,963 21,041,338 40,590,869
---------- ---------- ----------- -----------
PARTICIPANTS' CONTRIBUTIONS RECEIVABLE 54,531 251,295 0 447,316
---------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $1,782,558 $9,433,258 $21,041,338 $41,038,185
========== ========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Printing Group
1996
--------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------
Schwab
--------------------------------------------------------------------------------
Money Money
Market Bond Balanced Growth Market Bond
Fund Fund Fund Fund Fund Fund
------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Shares of registered
investment companies:
Schwab Money Market Fund $92,899 $ 1,265 $ 3,472 $ 9,799 $ 0 $ 0
Strong Short-Term Bond Fund 0 126,189 0 0 0 0
INVESCO Industrial Income Fund 0 0 284,485 0 0 0
Berger 100 Fund 0 0 0 759,133 0 0
Alex Brown Cash Reserve Fund 0 0 0 0 38,556 0
Bond Fund of America 0 0 0 0 0 56,301
American Balanced Fund 0 0 0 0 0 0
Growth Fund of America 0 0 0 0 0 0
AIM Constellation 0 0 0 0 0 0
Kaufmann Fund 0 0 0 0 0 0
Physician Sales & Service, Inc. common stock 0 0 0 0 0 0
------- -------- -------- -------- ------- -------
Total investments 92,899 127,454 287,957 768,932 38,556 56,301
------- -------- -------- -------- ------- -------
PARTICIPANTS' CONTRIBUTIONS RECEIVABLE 0 0 0 0 2,143 998
------- -------- -------- -------- ------- -------
NET ASSETS AVAILABLE FOR BENEFITS $92,899 $127,454 $287,957 $768,932 $40,699 $57,299
======= ======== ======== ======== ======= =======
<CAPTION>
Financial Printing Group
1996
----------------------------------------------------------------------------------
Alex Brown & Sons
----------------------------------------------------------------------------------
PSS
Balanced Growth AIM Kaufmann Stock
Fund Fund Fund Fund Fund
---------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Shares of registered
investment companies:
Schwab Money Market Fund $ 0 $ 0 $ 0 $ 0 $ 0
Strong Short-Term Bond Fund 0 0 0 0 0
INVESCO Industrial Income Fund 0 0 0 0 0
Berger 100 Fund 0 0 0 0 0
Alex Brown Cash Reserve Fund 0 0 0 0 0
Bond Fund of America 0 0 0 0 0
American Balanced Fund 6,021,439 0 0 0 0
Growth Fund of America 0 810,838 0 0 0
AIM Constellation 0 0 1,725,347 0 0
Kaufmann Fund 0 0 0 730,591 0
Physician Sales & Service, Inc. common stock 0 0 0 0 11,821,959
---------- -------- ---------- -------- -----------
Total investments 6,021,439 810,838 1,725,347 730,591 11,821,959
---------- -------- ---------- -------- -----------
PARTICIPANTS' CONTRIBUTIONS RECEIVABLE 15,696 10,559 11,103 0 0
---------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $6,037,135 $821,397 $1,736,450 $730,591 $11,821,959
========== ======== ========== ======== ===========
<CAPTION>
---------------------------
Nonparticipant-
Directed
-----------
-----------
PSS
Common
Stock Total
----------- -----------
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Shares of registered
investment companies:
Schwab Money Market Fund $ 0 $ 107,435
Strong Short-Term Bond Fund 0 126,189
INVESCO Industrial Income Fund 0 284,485
Berger 100 Fund 0 759,133
Alex Brown Cash Reserve Fund 9,617 48,173
Bond Fund of America 0 56,301
American Balanced Fund 0 6,021,439
Growth Fund of America 0 810,838
AIM Constellation 0 1,725,347
Kaufmann Fund 0 730,591
Physician Sales & Service, Inc. Common Stock 40,502,645 52,324,604
----------- -----------
Total investments 40,512,262 62,994,535
----------- -----------
PARTICIPANTS' CONTRIBUTIONS RECEIVABLE 0 40,499
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $40,512,262 $63,035,034
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION,
FOR THE YEAR ENDED APRIL 3, 1997
<TABLE>
<CAPTION>
Participant-Directed
----------------------------------------------------------------------------
SCHWAB
------------------------------------------------------------- --------
MONEY MONEY
MARKET BOND BALANCED GROWTH MARKET
FUND FUND FUND FUND FUND
-------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
CHANGE IN NET ASSETS
ATTRIBUTED TO:
Net appreciation (depreciation) in fair
value of investments $ 0 $ (1,195) $ (16,850) $ (68,789) $ 0
Investment income 1,479 2,859 2,303 3 3,038
Contributions:
Participant (including rollover) 1,515 102 318 788 39,938
Employer, net of forfeitures 0 0 0 0 0
Interfund transfers (95,893) (128,412) (273,728) (691,601) (65,846)
-------- --------- --------- --------- --------
(92,899) (126,646) (287,957) (759,599) (22,870)
-------- --------- --------- --------- --------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 0 808 0 9,333 457
-------- --------- --------- --------- --------
NET (DECREASE) INCREASE (92,899) (127,454) (287,957) (768,932) (23,327)
PENDING TRANSFERS BETWEEN FUNDS 0 0 0 0 99,735
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 92,899 127,454 287,957 768,932 40,699
-------- --------- --------- --------- --------
End of year $ 0 $ 0 $ 0 $ 0 $117,107
======== ========= ========= ========= ========
<CAPTION>
-----------------------------------------------------------------------------
ALEX BROWN & SONS/NORTHWESTERN TRUST AND INVESTORS ADVISORY COMPANY
-----------------------------------------------------------------------------
PSS
BOND BALANCED GROWTH AIM KAUFMANN STOCK
FUND FUND FUND FUND FUND FUND
-------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CHANGE IN NET ASSETS
ATTRIBUTED TO:
Net appreciation (depreciation) in fair
value of investments $ (2,595) $ 105,493 $ 29,422 $ (58,102) $ (143,879) $(6,258,370)
Investment income 6,216 581,565 59,539 76,697 48,156 2,101
Contributions:
Participant (including rollover) 54,490 738,934 225,399 459,982 582,647 2,587,580
Employer, net of forfeitures 0 0 0 0 0 0
Interfund transfers 4,908 (237,966) 73,209 96,011 86,905 1,248,928
-------- ----------- ---------- ---------- ---------- -----------
63,019 1,188,026 387,569 574,588 573,829 (2,419,761)
-------- ----------- ---------- ---------- ---------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 312 1,159,436 90,499 70,983 46,245 279,165
-------- ----------- ---------- ---------- ---------- -----------
NET (DECREASE) INCREASE 62,707 28,590 297,070 503,605 527,584 (2,698,926)
PENDING TRANSFERS BETWEEN FUNDS 43,549 (1,843,188) 375,508 543,802 524,383 310,225
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 57,299 6,037,135 821,397 1,736,450 730,591 11,821,959
-------- ----------- ---------- ---------- ---------- -----------
End of year $163,555 $ 4,222,537 $1,493,975 $2,783,857 $1,782,558 $ 9,433,258
======== =========== ========== ========== ========== ===========
<CAPTION>
Nonparticipant-
Directed
------------
------------
PSS
COMMON
STOCK TOTAL
------------ ------------
<S> <C> <C>
CHANGE IN NET ASSETS
ATTRIBUTED TO:
Net appreciation (depreciation) in fair $(16,788,611) $(23,203,476)
value of investments
Investment income 924 784,880
Contributions:
Participant (including rollover) 0 4,691,693
Employer, net of forfeitures 120,000 120,000
Interfund transfers (16,515) 0
------------ ------------
(16,684,202) (17,606,903)
------------ ------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 2,732,708 4,389,946
------------ ------------
NET (DECREASE) INCREASE (19,416,910) (21,996,849)
PENDING TRANSFERS BETWEEN FUNDS (54,014) 0
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 40,512,262 63,035,034
------------ ------------
End of year $ 21,041,338 $ 41,038,185
============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
APRIL 3, 1997 AND MARCH 28, 1996
1. DESCRIPTION OF PLAN
AMENDMENT AND RESTATEMENT OF THE PHYSICIAN SALES & SERVICE, INC. EMPLOYEE
STOCK OWNERSHIP AND SAVINGS PLAN
Effective January 1, 1996, the Physician Sales & Service, Inc. Employee Stock
Ownership and Savings Plan (the "Plan") was amended and restated. The Plan
was amended to incorporate new investment options and to conform with
applicable requirements of the Internal Revenue Code (the "IRC").
DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all employees
of Physician Sales & Service, Inc. and its subsidiaries (the "Company"). The
Plan was created under the provisions of Section 401(a) of the IRC, which
includes a qualified deferred arrangement as described in Section 401(k) of
the IRC, for the benefit of eligible employees of the Company. The Plan also
has the features of an employee stock ownership plan ("ESOP"), whereby
employee and employer contributions are invested in the Company's common
stock. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974.
Effective December 31, 1996, custody of the Plan's assets was transferred
from Alex Brown & Sons to Northwestern Trust and Investors Advisory Company.
Effective January 2, 1997, the plan trustee was changed to Northwestern Trust
and Investors Advisory Company (See Note 6).
<PAGE>
-2-
CONTRIBUTIONS
The Plan is funded through voluntary employee salary deferrals and employer
contributions. Participants can defer up to 20% but not less than 1% of
compensation, as defined by the Plan, limited by requirements of the IRC.
Employer contributions are made at the discretion of the Company's board of
directors and are allocated based on the ratio of each eligible participant's
total salary to the total of all eligible participants' total salaries.
Employer contributions may be made in the form of company stock or cash. The
Company's discretionary contributions are allocated to eligible participants
on the last day of the plan year. Forfeitures of approximately $83,000 were
used to satisfy company contributions for the year ended April 3, 1997.
VESTING
Participants are fully vested in their contributions and the earnings
thereon. Vesting in employer matching is based on years of continuous
service, as defined in the Plan, according to the following schedule:
<TABLE>
<S> <C>
Less than three years of service 0%
Three years but less than four years 20
Four years but less than five years 40
Five years but less than six years 60
Six years but less than seven years 80
Seven years or more 100
</TABLE>
Forfeitures are used to reduce the Company's contributions.
BENEFITS
Upon retirement, death, disability, or other severance of employment, a
participant or his/her beneficiary may elect to receive an amount equal to
the value of the participant's vested interest in his/her account. Balances
in participant accounts are paid in a single lump sum or in equal annual
installments over a period not extending past the participant's life
expectancy or the joint life expectancy of the participant and his/her
designated beneficiary. Balances in the ESOP accounts are generally
distributed in shares of company stock (with fractional shares paid in cash)
to the participant or by direct transfer to the participant's individual
retirement account or to the plan of the participant's new employer in a
single lump-sum payment.
PARTICIPANT ACCOUNTS
Individual accounts are maintained for each of the Plan's participants to
reflect the participant's share of the Plan's income, the Company's
contribution, and the participant's contribution. Allocations are based on
participant account balances, as defined.
<PAGE>
-3-
INVESTMENT OPTIONS
Prior to January 2, 1996, participants were offered five investment options,
including a nonparticipant-directed employer stock fund, in which they could
invest their contributions. On November 21, 1995, the trustee directed the
investment manager to sell 640,061 shares of the nonparticipant-directed
stock fund for $10,391,390, which was then invested in high-quality short-
term investments until participants made elections to invest their individual
shares of the proceeds into seven new investment funds established in January
1996.
During fiscal 1997, all investments in the four funds invested by Charles
Schwab were transferred to the Alex Brown investment funds.
Effective December 31, 1996, custody of the Plan's assets was transferred
from Alex Brown to Northwestern Trust and Investors Advisory Company.
Investment options available to plan participants were not affected by the
change in the custody of the plan assets.
Participants may change their investment elections quarterly. A description
of each investment option is provided below:
SCHWAB MONEY MARKET FUND
This fund may consist of a portfolio invested in commercial paper, U.S.
government or federal agency obligations, short-term corporate
obligations, bank certificates of deposit, savings accounts, and/or
comparable investments designed to provide maximum protection of capital
with a conservative rate of return.
STRONG SHORT-TERM BOND FUND
This fund may consist of a portfolio invested primarily in governmental
and corporate bonds, notes and bills, fixed rate annuity contracts,
mortgages, savings accounts, and/or comparable investments designed to
provide for a moderate rate of return based primarily on interest income
and consistent with minimum fluctuation and principal value and current
liquidity.
INVESCO INDUSTRIAL INCOME FUND
This fund may consist of common and preferred stocks, governmental and
corporate bonds, and other securities or investment opportunities
designed to provide for a balanced return based on long-term
appreciation of stocks and income derived from interest and dividends.
BERGER 100 FUND
This fund may consist of a portfolio invested primarily in common stocks
and such other securities or investment opportunities providing for
long-term capital appreciation.
<PAGE>
-4-
ALEX BROWN CASH RESERVE FUND
This fund may consist of a portfolio invested in commercial paper, U.S.
government or federal agency obligations, short-term corporate
obligations, bank certificates of deposit, savings accounts, and/or
comparable investments designed to provide maximum protection of capital
with a conservative rate of return.
BOND FUND OF AMERICA
This fund may consist of a portfolio invested in marketable corporate
debt securities, mortgage-related securities, other asset-backed
securities, and cash or money market instruments designed to provide a
level of current income consistent with the preservation of capital by
investing primarily in bonds.
AMERICAN BALANCED FUND
This fund may consist of a portfolio invested in securities, including
common stocks, preferred stocks, corporate bonds, and U.S. government
securities designed to provide conservation of capital, current income,
and long-term growth of capital and income.
GROWTH FUND OF AMERICA
This fund may consist of a portfolio invested primarily in common stock
and other securities convertible into common stocks, cash or cash
equivalents, straight debt securities, or nonconvertible preferred
stocks providing for growth of capital.
AIM CONSTELLATION FUND (THE "AIM FUND")
This fund may consist of a portfolio invested in common stocks, with
emphasis on medium-sized and smaller emerging-growth companies,
designated to provide capital appreciation.
KAUFMANN FUND
This fund may consist of a portfolio invested in common stocks and
convertible preferred stocks and bonds, including convertible bonds,
designated to provide capital appreciation.
PHYSICIAN SALES & SERVICE, INC. STOCK FUND
This fund is a participant-directed account in which contributions are
invested in the stock of the employer.
Contributions to the nonparticipant-directed employer stock accounts,
including employer contributions, are invested principally in employer common
stock.
<PAGE>
-5-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared using the accrual
method of accounting.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the accompanying financial statements and disclosures. Actual
results could differ from those estimates.
INCOME RECOGNITION
Investment income is recorded as earned on the accrual basis.
VALUATION OF INVESTMENTS
Investments of the Plan are stated at fair value. Securities traded in
public markets are valued at their quoted market prices. Company common
stock as of April 3, 1997 and March 28, 1996 is valued at its quoted market
price as listed on the NASDAQ National Market under the ticker symbol "PSSI."
Purchases and sales of securities are reflected on a trade-date basis. The
difference between cost and market value from one period to the next is
recognized as net appreciation (depreciation) in fair value of investments in
the accompanying statement of changes in net assets available for benefits,
with fund information.
ADMINISTRATIVE EXPENSES
All administrative expenses of the Plan are paid by the Company.
3. INVESTMENTS
The fair market values of individual assets that represent 5% or more of the
Plan's net assets as of April 3, 1997 and March 28, 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Physician Sales & Service, Inc. common
stock $29,522,402 $52,324,604
American Balanced Fund 6,012,503 6,021,439
Aim Constellation Fund 2,189,323 N/A
</TABLE>
<PAGE>
-6-
4. TAX STATUS
On June 3, 1997, the Plan, as amended and restated, received a favorable
determination letter from the Internal Revenue Service. The plan
administrator and management believe that the Plan, as amended and restated,
is designed and operated in compliance with the applicable requirements of
the IRC. Therefore, they believe that the Plan is qualified and the related
trust continues to be tax-exempt.
5. PLAN TERMINATION
The Company anticipates that the Plan will continue without interruption but
reserves the right to terminate the Plan at its discretion. In the event of
the Plan's termination, all amounts credited to participants' accounts shall
become 100% vested.
6. RELATED PARTIES
During periods prior to January 1, 1997, nonparticipant-directed company
common stock was held by a transfer agent and managed by the trustees, who
are participants in the Plan. Effective January 2, 1997, trustee
responsibilities were transferred to Northwestern Trust and Investors
Advisory Company, a company not affiliated with the Plan.
7. RECONCILIATION TO FORM 5500
As of April 3, 1997, the Plan had approximately $1,333,000 of pending
distributions to participants who elected distributions from the Plan. These
amounts are recorded as a liability in the Plan's Form 5500; however, these
amounts are not recorded as a liability in the accompanying statements of
net assets available for benefits in accordance with generally accepted
accounting principles. There were no pending distributions as of March 28,
1996.
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the year
ended April 3, 1997:
Benefits Net Assets
Payable to Benefits Available
Participants Paid for Benefits
------------ ---------- ------------
Per financial statements $ 0 $4,389,946 $41,038,185
1997 amounts pending
distribution to
participants 1,333,000 1,333,000 (1,333,000)
---------- ---------- -----------
Per Form 5500 $1,333,000 $5,722,946 $39,705,185
========== ========== ===========
8. SUBSEQUENT EVENTS
Subsequent to the Plan's year end, the Plan was amended and restated
effective January 1, 1997, to conform with applicable requirements of the
IRC.
<PAGE>
SCHEDULE I
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
APRIL 3, 1997
<TABLE>
<CAPTION>
FAIR
DESCRIPTION OF MARKET
IDENTITY OF PARTY INVOLVED INVESTMENT COST VALUE
- -------------------------------------------------------------- -------------------- ---------- -----------
<S> <C> <C> <C> <C>
* PHYSICIAN SALES & SERVICE, INC. Common stock $ 8,993,068 $29,522,402
FIDELITY INSTITUTIONAL CASH DOMESTIC MONEY
MARKET FUND Money market fund 444,688 444,688
* ALEX BROWN CASH RESERVE FUND Money market fund 13,079 13,079
BOND FUND OF AMERICA Bond mutual fund 117,820 114,785
AMERICAN BALANCED FUND Balanced mutual fund 5,915,376 6,012,503
GROWTH FUND OF AMERICA Growth mutual fund 1,048,795 1,090,445
AIM CONSTELLATION FUND Growth mutual fund 2,188,545 2,189,323
KAUFMANN FUND Growth mutual fund 1,247,168 1,203,644
---------- -----------
$19,968,539 $40,590,869
=========== ===========
</TABLE>
*Represents a party-in-interest.
The accompanying notes are an integral part of this schedule.
<PAGE>
SCHEDULE II
PHYSICIAN SALES & SERVICE, INC.
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
ITEM 27D--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED APRIL 3, 1997
<TABLE>
<CAPTION>
GAIN
TYPE OF PURCHASE SELLING COST OF (LOSS) ON
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS TRANSACTION PRICE PRICE ASSET TRANSACTION
------------------------------- ------------------------ ------------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
* PHYSICIAN SALES & SERVICE, INC. Company common stock Purchase/sale $3,688,718 $ 150,821 $ 171,563 $(20,742)
AMERICAN BALANCED FUND Mutual fund Purchase/sale 2,060,345 2,153,985 2,120,541 33,444
* ALEX BROWN CASH RESERVE FUND Money market fund Purchase/sale 6,340,266 6,123,993 6,123,993 0
</TABLE>
*Represents a party-in-interest transaction.
The accompanying notes are an integral part of this schedule.
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountants, we hereby consent to the
incorporation of our report dated September 29, 1997, included in this
Form 11-K, into the Plan's previously filed Registration File No. 33-80657.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
September 30, 1997
