<PAGE>
As filed with the Securities and Exchange Commission on __________, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
PHYSICIAN SALES & SERVICE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2280364
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4345 Southpoint Boulevard, Jacksonville, Florida 32216
(904) 332-3000
(Address, including zip code, and telephone number,
including area code, of registrant's executive offices)
PATRICK C. KELLY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
PHYSICIAN SALES & SERVICE, INC.
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
(904) 332-3000
(Name, address, including zip code, and telephone number
including area code, of agent for service)
The Commission is requested to send copies of all communications to:
J. VAUGHAN CURTIS, ESQ.
KIMBERLY A. KNIGHT, ESQ.
ALSTON & BIRD LLP
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same
offering. [_]______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_] ______
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED MAXIMUM AGGREGATE PROPOSED
TITLE OF SHARES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 70,275 shares $20.16 $1,416,744.00 $417.94
=========================================================================================================================
</TABLE>
/(1)/ Estimated solely for purposes of determining the registration fee. This
amount, calculated pursuant to Rule 457(c), was based on the average of the
high and low prices of the Registrant's Common Stock on February 19, 1998,
as reported on the Nasdaq National Market System.
________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+ REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH +
+ THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD +
+ NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+ STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN +
+ OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE +
+ ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, +
+ SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+ QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED __________, 1998
PROSPECTUS
70,275 SHARES
PHYSICIAN SALES & SERVICE, INC.
COMMON STOCK
This prospectus relates to 70,275 shares (the "Shares") of common stock,
$.01 par value per share (the "Common Stock"), of Physician Sales & Service,
Inc., a Florida corporation ("PSS" or the "Company"). All of these Shares are
being offered for sale by the holders of the Common Stock named herein under the
heading "Selling Shareholders" (the "Selling Shareholders"). None of the
proceeds from the sale of the Shares by the Selling Shareholders will be
received by the Company.
The shares of Common Stock of the Company are listed on the Nasdaq National
Market System ("Nasdaq") under the symbol PSSI. On February 21, 1998 the last
sales price for the shares of Common Stock as reported by Nasdaq was $20.1875
per share.
The Selling Shareholders named herein or any transferees or other
successors in interest, directly or through dealers or underwriters to be
designated, may sell the Common Stock from time to time in a single block to a
broker-dealer acting as principal, in one or more transactions on the Nasdaq
National Market or in the over-the-counter market and in negotiated
transactions, on terms to be determined at the time of sale. To the extent
required, the specific Common Stock to be sold, the respective purchase prices
and public offering prices, names of such agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in any accompanying Prospectus Supplement or, if appropriate, a post-
effective amendment to the Registration Statement of which this Prospectus is a
part. See "Plan of Distribution." By agreement, the Company will pay one-half
of the expenses of this registration and the Selling Shareholders will pay the
remaining one-half of such expenses pro rata based on the number of shares of
Common Stock being offered hereby. The Selling Shareholders will bear all
underwriting discounts and commissions and transfer taxes, if any. The expenses
to be borne by the Company are estimated at $23,000. The Company has agreed to
indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Selling Shareholders and any broker-dealer, agents or underwriters that
participate with the Selling Shareholders in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act and any commissions received by them and any profit on the resale of the
Common Stock purchased by them may be deemed underwriting commissions or
discounts under the Securities Act. See "Selling Shareholders" and "Plan of
Distribution" below.
_________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1998
<PAGE>
AVAILABLE INFORMATION
Additional information regarding the Company and the shares offered hereby
is contained in the Registration Statement on Form S-3 (of which this Prospectus
forms a part) and the exhibits relating thereto filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at
the Commission's Regional Offices located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants such as the Company, that file electronically with the Commission.
Such reports, proxy and information statements and other information may be
found at the Commission's site address: http://www.sec.gov. The Common Stock of
the Company is traded on the Nasdaq National Market under the symbol "PSSI," and
such reports, proxy statements and other information concerning the Company are
available for inspection at the office of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-23832) are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended March
28, 1997 (including those portions of the Company's definitive proxy
statement for the Annual Meeting of Shareholders held on July 22, 1997
incorporated by reference therein, but specifically excluding Items 6, 7
and 8 thereof, which have been superceded by the Company's Current Report
on Form 8-K filed with the Commission on December 23, 1997);
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
June 30, 1997, September 30, 1997, and December 31, 1997;
(c) The Company's Current Reports on Form 8-K filed September 9, 1997, November
6, 1997 (which has been superceded by the Company's Current Report on Form
8-K filed with he Commission on December 23, 1997), December 23, 1997 and
December 23, 1997;
(d) The Company's Registration Statement on Form S-4 initially filed with the
Commission on January 15, 1998 (Reg. No. 333-44323); and
(e) The description of Common Stock set forth in the Company's registration
statement filed pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such description.
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<PAGE>
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering registered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by
information and financial statements (including notes thereto) appearing in the
documents incorporated by reference herein, except to the extent set forth in
the immediately preceding statement.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon written or
oral request of such person, a copy of any or all of the documents incorporated
by reference herein (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into the information that the
Prospectus incorporates). Requests should be directed to the Assistant
Secretary of Physician Sales & Service, Inc., 4345 Southpoint Boulevard,
Jacksonville, Florida 32216, telephone number (904) 332-3000.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain "forward-
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act with respect to the Company. All statements
other than statements of historical facts included in or incorporated by
reference into this Prospectus, including those regarding market trends, the
Company's financial position, business strategy, projected costs and plans and
objectives of management for future operations, are forward-looking statements.
In general, such statement are identified by the use of forward-looking words or
phrases including, but not limited to, "intended," "will," "should," "may,"
"expects," "expected," and "anticipates" or the negative thereof or variations
thereon or similar terminology. These forward-looking statements are based on
the Company's current expectations. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, there
can be no assurance that such expectations will prove to be correct. Because
forward-looking statements involve risks and uncertainties, the Company's actual
results could differ materially. Important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed under "RISK FACTORS," and elsewhere, including,
without limitation, in conjunction with the forward-looking statements included
in or incorporated by reference to this Prospectus, and from time to time in the
Company's Commission report and other filings. These forward-looking statements
represent the judgment of the Company as of the date of this Prospectus. All
subsequent written and oral forward-looking statements attributable to the
Company are expressly qualified in their entirety by the Cautionary Statements.
The Company disclaims, however, any intent or obligation to update its forward-
looking statements.
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<PAGE>
THE COMPANY
Physician Sales & Service, Inc. ("PSS" or the "Company") is a specialty
marketer and distributor of medical products to physicians, other alternate-site
providers and hospitals. PSS is the leading distributor of medical supplies,
equipment and pharmaceuticals to office-based physicians in the United States
based on revenues, serving over 104,000 physician offices (representing
approximately 54% of all physician offices) in all 50 states (the "Physician
Supply Business"). The Company, which entered the imaging-supply market in
November 1996, has grown to be the second-largest distributor of imaging
supplies and equipment in the United States based on revenues, serving over
12,000 customer sites in 21 states (the "Imaging Business"). PSS also
distributes medical products to office-based physicians and hospitals in five
European countries (the "International Business"). PSS has grown rapidly in
recent years through acquisitions, same-center growth and new-center
development. Net revenues for the twelve months ended December 31, 1997 was
approximately $938.9 million up from $351.2 million in fiscal year 1994.
PSS employed over 800 highly trained sales representatives as of December
31, 1997, over 700 of which are focused on the physician-office market. This
large sales organization enables PSS to market medical products on a national
basis and has positioned the Company as a distributor of choice for
manufacturers whose products require consultative selling. PSS has established
exclusive or semi-exclusive distribution arrangements for certain products with
such leading manufacturers as Abbott Laboratories ("Abbott"), Siemens AG,
Hologic, Inc., C. R. Bard, Inc., HumaScan Inc. and F. Hoffman-La Roche Ltd. PSS
distributes over 39,000 medical products from 89 service centers, 64 of which
are focused on the physician-office market, located throughout the United States
and in Europe, enabling the Company to be highly responsive to local market
needs, including providing same-day delivery service to most customers on a
regular basis.
The Company believes that the United States medical-products distribution
market aggregates approximately $34 billion in annual revenues, of which
approximately $6.5 billion represents the physician-office market (of which
approximately $1 billion are imaging-related medical products) and the balance
represents the hospital, ambulatory surgery center, long term care and home
health care markets. The Company believes that the imaging-supply market is an
approximately $5 billion component of the overall medical-products distribution
industry, encompassing each of the hospital, physician and other provider
segments. Revenues of the medical-products distribution industry are estimated
to be growing as a result of a growing and aging population, increasing health
care awareness, and expanding third-party insurance coverage. In addition, the
physician market is benefiting from the shift of procedures and diagnostic
testing from hospitals to alternate sites, particularly physician offices.
The Company is incorporated under the laws of the State of Florida. The
address and telephone number of its principal executive offices are 4345
Southpoint Boulevard, Jacksonville, Florida, 32216, telephone number
(904) 332-3000.
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<PAGE>
RECENT DEVELOPMENTS
On October 7, 1997, PSS issued an aggregate principal amount of $125.0
million of its 8 1/2% senior subordinated notes due 2007 (the "Private Notes")
in a private offering under Rule 144A of the 1933 Act. The initial purchasers of
the Private Notes were BT Alex. Brown Incorporated, Salomon Brothers Inc. and
NationsBanc Montgomery Securities, Inc. (the "Initial Purchasers"). The Initial
Purchasers resold the Private Notes in the United States to qualified
institutional buyers under Rule 144A under the 1933 Act and to a limited number
of other institutional "accredited investors" as defined in Rule 501 of the 1933
Act. Net proceeds to PSS from the sale of the Private Notes was $120,831,250.
PSS closed its offer to exchange the Private Notes for senior subordinated notes
of PSS with substantially identical terms to the Private Notes (the "Notes")
(except that the Notes do not contain terms with respect to transfer
restrictions) on February 10, 1998. Interest on the Notes accrue from October
7, 1997 and will be payable semi-annually on April 1 and October 1 of each year,
commencing on April 1, 1998. The Notes are unconditionally guaranteed on a
senior subordinated basis by all of PSS' domestic subsidiaries.
On December 14, 1997, the Company entered into an Agreement and Plan of
Merger (the "Gulf South Merger Agreement") with Gulf South Medical Supply, Inc.
("Gulf South") and PSS Merger Corp., a wholly-owned subsidiary of the Company
("Merger Corp."). Gulf South is the largest distributor of medical supplies and
related products to the long-term care industry, operating 23 regional
distribution centers which serve 50 states. Subject to the terms and conditions
of the Gulf South Merger Agreement, Merger Corp. will merge with and into Gulf
South (the "Gulf South Merger"), with Gulf South surviving as a wholly-owned
subsidiary of the Company. Under the terms of the Gulf South Merger Agreement,
each share of common stock of Gulf South, $.01 par value per share ("Gulf South
Common Stock"), issued and outstanding will be exchanged for 1.75 shares of PSS
Common Stock and each option and warrant to purchase shares of Gulf South Common
Stock outstanding will become options and warrants to purchase shares of PSS
Common Stock. Assuming exercise of all options and warrants to purchase Gulf
South Common Stock, the maximum number of shares of PSS Common Stock to be
issued in the Gulf South Merger is approximately 31,027,008. Consummation of the
proposed Gulf South Merger is subject to approval by the shareholders of both
the Company and Gulf South and various state and federal regulatory agencies and
other customary conditions. The Company believes that if the proposed Gulf
South Merger is consummated, the combined company will be the leading
distributor of medical products to the physician office, imaging-supply and
long-term care markets in the United States. See "Risk Factors - Risks that
Gulf South Merger Will Not Close."
On January 30, 1998, the Company completed the acquisition of Southwest
Radiographics, Inc. of Albuquerque, New Mexico, a medical imaging distributor.
The acquired company reported revenues of approximately $26.7 million for the
twelve months ended December 31, 1997.
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<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
ACQUISITION STRATEGY
PSS has grown through, and anticipates that it will continue to grow
through, the acquisition of medical-products distributors. PSS has historically
grown through acquisitions and plans to enter new lines of business and new
geographic areas through acquisitions. Acquisitions, including the proposed Gulf
South Merger, may expose PSS to particular risks, including, without limitation,
diversion of management's attention, the inability to integrate acquired
companies' operations into PSS' operations, the inability to integrate acquired
companies' information systems into PSS' information systems, assumption of
liabilities and amortization of goodwill and other acquired intangible assets,
entry into markets in which PSS has little or no direct prior experience, and
the potential loss of key employees of the acquired company, some or all of
which could have a material adverse effect on the financial condition or results
of operations of PSS. There can be no assurance that the Company's systems,
procedures, controls and existing space will be adequate to support extension of
the Company's operations. The Company's future operating results will also
substantially depend on the ability of its officers and key employees to manage
changing business conditions and to implement and improve its technical,
administrative, financial control and reporting systems. If the Company is
unable to respond to and manage changing business conditions, then the quality
of the Company's services, its ability to retain key personnel and its results
of operations could be materially adversely affected.
Depending on the value and nature of the consideration paid by PSS for
acquisitions, such acquisitions, including the proposed Gulf South Merger, may
adversely affect PSS' liquidity. In making acquisitions in the future, PSS
anticipates that it may compete for acquisitions with other companies, many of
which are larger and have greater financial resources than PSS. There can be no
assurance that PSS will be successful in consummating acquisitions and
integrating them into PSS' operations. PSS has financed acquisitions, and
anticipates that it will finance future acquisitions, through cash on hand, the
issuance of common stock and borrowings. Such financing may result in
potentially dilutive issuances of equity securities and the incurrence of
additional debt, either of which could have a material adverse effect on PSS'
financial condition and results of operations. Such acquisitions could also be
dilutive to the earnings per share of PSS before giving effect to certain
expected potential costs savings and synergies. PSS has taken, and in the
future may take, charges in connection with acquisitions, including the proposed
Gulf South Merger. There can be no assurance that the costs and expenses
incurred will not exceed the estimates upon which such charges are based. The
indenture governing PSS' Notes (the "Indenture") and PSS' credit facility limits
acquisitions and contain financial covenants which may further limit PSS'
ability to make acquisitions.
RISKS RELATING TO PROPOSED GULF SOUTH MERGER
Integration of Operations. The success of the proposed Gulf South Merger will
be determined by various factors, including the performance of the combined
company's operations after the proposed Gulf South Merger and management's
ability to effectively integrate the operations of PSS and Gulf South. Among
other matters, the successful combination of PSS and Gulf South will require
integration of the two companies' sales, marketing and distribution resources,
purchasing activities, management information systems, and management and other
key personnel. The integration of the operations of PSS and Gulf South may be
negatively affected if, among other things: (i) customers, particularly large
chains upon which Gulf South's business depends to a significant degree (See
"--Dependence on Customer Relationships"), are
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<PAGE>
not retained or do not react positively to the proposed Gulf South Merger or to
some of the planned changes to integrate the businesses; (ii) unanticipated
integration costs are incurred; (iii) costs or difficulties related to the
integration of the businesses of PSS and Gulf South are greater than expected;
or (iv) key employees, managers and sales personnel are not retained and
effectively assimilated. The difficulties of such integration may be increased
by the necessity of coordinating geographically separated organizations. In
addition, the integration of operations following the Merger will require the
dedication of management and other personnel, which may distract their attention
from the day-to-day business of the combined company. There can be no assurance
that the anticipated benefits of the proposed Gulf South Merger will be realized
or that the proposed Gulf South Merger will not adversely affect the future
business, financial condition and results of operations of PSS.
Possible Dilutive Effects of Proposed Gulf South Merger on Earnings. Financial
analyses prepared in contemplation of the proposed Gulf South Merger indicated
that the proposed Gulf South Merger could be dilutive to the earnings per share
of PSS in calendar years 1998 and 1999 before giving effect to certain expected
cost savings and synergies. Although PSS and Gulf South have entered into the
Gulf South Merger Agreement with the expectation that the proposed Gulf South
Merger will achieve such cost savings and synergies, the actual operating or
financial results achieved by the combined company may vary from expected
results. Such variations may result from, among other factors, business and
operational difficulties involved in integrating sales, marketing and
distribution resources and purchasing activities, the timing and amount of
synergies actually realized, the costs associated with achieving such synergies
and other factors. There can be no assurance that the anticipated benefits of
the proposed Gulf South Merger will be realized or that the proposed Gulf South
Merger will not adversely affect the business, financial condition and results
of the operations of PSS.
Substantial Expenses Resulting from the Proposed Gulf South Merger. PSS and
Gulf South estimated that they will incur direct transaction costs relating
primarily to regulatory filing costs, and the fees of financial advisors,
attorneys, accountants, financial printers and proxy solicitors associated with
the proposed Gulf South Merger, which will be charged to operations upon
consummation of the proposed Gulf South Merger. PSS and Gulf South also expect
PSS to incur an additional significant charge to operations to reflect
anticipated costs associated with integrating the two companies. Such charges
are not currently estimable with a reasonable degree of accuracy but preliminary
estimates indicate that the total of these charges, together with the direct
transaction costs, may range between $35 to $45 million. There can be no
assurance that actual costs will not substantially exceed such estimates, that
unanticipated expenses associated with the integration of the two companies will
not arise, or that PSS will not incur additional material charges in subsequent
quarters to reflect additional costs associated with the integration of the two
companies.
Dilution of Ownership Interest of Current PSS Stockholders and Potential
Adverse Market Effect of PSS Common Stock in Proposed Gulf South Merger.
Following the proposed Gulf South Merger, the current stockholders of PSS will
own approximately 58.9% of the outstanding shares of PSS Common Stock. This
represents substantial dilution of the ownership interest in PSS Common Stock by
PSS' current stockholders. Additionally, if the proposed Gulf South Merger is
consummated, PSS will issue to stockholders of Gulf South an aggregate of
approximately 28,621,187 shares of PSS Common Stock. Immediately upon
consummation of the proposed Gulf South Merger, approximately 25,545,378 of such
shares will be freely tradeable. As a result, substantial sales of PSS Common
Stock could occur after the proposed Gulf South Merger. Future sales of a
substantial number of shares of PSS Common Stock could adversely affect or cause
substantial fluctuations in the market price of PSS Common Stock.
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<PAGE>
RISKS THAT THE PROPOSED GULF SOUTH MERGER WILL NOT CLOSE
Consummation of the proposed Gulf South Merger is subject to various
conditions, including, without limitation: (i) approval by the stockholders of
Gulf South of the Gulf South Merger Agreement; (ii) approval by the stockholders
of PSS of the issuance of shares of PSS Common Stock pursuant to the Gulf South
Merger Agreement; (iii) approval by the stockholders of PSS of an amendment to
the Amended and Restated Articles of Incorporation, as amended, of PSS to
increase the authorized capital stock of PSS; (iv) receipt by PSS and Gulf South
of an opinion of Alston & Bird LLP dated as of the effective date of the Gulf
South Merger relating to certain tax matters; and (v) satisfaction of certain
other usual and customary closing conditions. PSS cannot predict whether the
Gulf South Merger Agreement will be acceptable to Gulf South's or PSS'
stockholders. In addition, pursuant to the Gulf South Merger Agreement, Gulf
South and PSS agreed to use their reasonable best efforts to obtain all
consents, waivers, approvals, authorizations or orders required in connection
with the consummation of the proposed Gulf South Merger. Although PSS and Gulf
South are seeking such consents, it is uncertain whether such consents will be
obtained. If the parties have not satisfied all required conditions to the
proposed Gulf South Merger the consummation of the proposed Gulf South Merger
may be delayed until that time when such requirements have been met. There can
be no assurance that such delay would not have a material adverse effect on the
business, prospects, financial condition or results of operations of PSS and
Gulf South on a combined basis. In addition, if the parties have not obtained
all requisite consents at such time as all other material conditions to the
proposed Gulf South Merger have been satisfied or waived, PSS and Gulf South may
nonetheless determine to consummate the proposed Gulf South Merger. If PSS and
Gulf South determine to consummate the proposed Gulf South Merger without having
obtained such consents, no assurance can be given that any resulting loss of
that portion of Gulf South's business to which the consents relate will not have
a material adverse effect on the business, prospects, financial condition or
results of operations of PSS and Gulf South on a combined basis. There can be no
assurance that the conditions to closing the proposed Gulf South Merger will be
fulfilled or that the Company will complete the proposed Gulf South Merger on
the terms currently contemplated or at all.
Pursuant to a Stock Option Agreement dated December 14, 1997 by and between
PSS, as issuer, and Gulf South (the "PSS Stock Option Agreement"), PSS has
granted Gulf South an irrevocable option (the "PSS Option") to purchase from
PSS, under certain circumstances, up to 8,098,523 authorized and unissued shares
of PSS Common Stock (equal to 19.9% of the issued and outstanding shares of PSS
Common Stock as of December 12, 1997), at a price of $23.00 per share, subject
to adjustment upon certain changes in PSS' capitalization. Certain aspects of
the PSS Stock Option Agreement (including the fact that the exercise of the PSS
Option would render PSS ineligible for "pooling of interests" accounting
treatment for any busines combination that would trigger exercisability of the
PSS Option) may have the effect of discouraging persons who might now or prior
to the effective time of the Gulf South Merger be interested in acquiring all of
or a significant interest in, or otherwise effecting a business combination
with, PSS, from considering or proposing such a transaction.
Because the consummation of the proposed Gulf South Merger is subject to
various conditions, all references to Gulf South and the Gulf South Merger in
this Prospectus assume the consummation of the proposed Gulf South Merger. If
the proposed Gulf South Merger is not consummated, the references to Gulf South
and the Gulf South Merger may not be applicable. In the event the proposed Gulf
South Merger is consummated, certain Risk Factors which follow refer to specific
risks which are applicable to Gulf South.
RISKS OF BUSINESS GROWTH AND MARGIN PRESSURES DUE TO CHANGING MARKET CONDITIONS
A key element of Gulf South's and PSS' growth strategies are to increase
sales to existing and new customers, including large chains and independent
operators and provider groups, by adding one or more new strategic distribution
centers or expanding existing distribution centers and by hiring additional
direct sales or other personnel and through national account sales efforts. Such
efforts will result in
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increased operating expenses. There can be no assurance that the establishment
of new distribution centers, the expansion of existing distribution centers, the
addition of new sales or other personnel or national account sales efforts will
result in additional revenues or operating income. The expansion of Gulf South's
business with large chains and PSS' business with consolidating provider groups
has in the past resulted in competitive pricing pressures and lower operating
margins and such pressure on margins may continue in the future. As a result of
changes occurring in the long-term care market, physician and alternate site
markets, both the nature of Gulf South's and PSS' customer base as well as the
products and services required by its customers are changing. The failure by
management to effectively respond to and manage changing business conditions,
including changes in customer requirements and changes to Gulf South's and PSS'
overall product mix, could have an adverse effect on Gulf South's and PSS'
business and results of operations and on operating margins.
PSS has grown through, and PSS anticipates that it will continue to grow
through, the opening of start-up service centers. PSS anticipates that each
start-up service center opened will generally incur operating losses for a
period of time which has historically been approximately 18 months. Accordingly,
PSS' planned expansion creates numerous risks, including the risk that the
expansion may have an adverse effect on working capital and earnings during the
expansion period, and that substantial indebtedness may be incurred in
connection with, and significant losses could result from, unsuccessful start-
ups.
EXPANSION INTO NEW LINES OF BUSINESS
PSS recently has expanded into new product areas, including distributing
imaging equipment, chemicals and supplies and providing technical service to
physicians, other alternate-site providers and hospitals through its Imaging
Business. Since PSS has not historically distributed medical equipment and
supplies to the long-term care market, the proposed Gulf South Merger would
expand PSS into another new market. The integration and operation of these new
business may place significant demands on PSS' management and other resources.
There can be no assurance that there will be any operating efficiencies between
these businesses or that these businesses can be operated profitably. PSS has
pursued, and anticipates that it will continue to aggressively pursue, expansion
opportunities in these and other medical equipment and supplies distribution
markets; however, there can be no assurance that PSS will be successful in
acquiring, integrating or operating additional businesses. In addition,
although PSS is restricted by the terms of the Indenture from engaging in any
business other than those previously engaged in and certain reasonably related
businesses, PSS may in the future, enter into other lines of business, which may
have the same or additional risks as its existing businesses. There can be no
assurance that if PSS were to enter into any additional lines of business that
it would be able to operate such businesses successfully. See "--Acquisition
Strategy."
DEPENDENCE ON VENDOR RELATIONSHIPS
PSS distributes over 39,000 medical products manufactured by approximately
3,000 vendors and is dependent on these vendors for the manufacture and supply
of products. PSS has entered into a contract with Abbott which accounted for
approximately 14% and 16% of PSS' revenues in fiscal years 1996 and 1997,
respectively, and which may be terminated by Abbott if PSS does not meet certain
sales levels (the "Abbot Agreement"). PSS and Abbott have in the past
renegotiated such sales levels. Sales pursuant to a distribution agreement with
F. Hoffman-La Roche Ltd. accounted for approximately four percent of PSS' sales
in fiscal year 1997. In addition, PSS has entered into other separate exclusive
distribution agreements, including agreements for certain products manufactured
by Siemens AG, Hologic, Inc., C. R. Bard, Inc., Tanita Corporation of America,
Inc. and HumaScan Inc. PSS' ability to maintain good relations with these
vendors will affect the profitability of its business. Currently, PSS relies on
vendors to provide: (i) field sales representatives' technical and selling
support; (ii) agreeable purchasing and delivery terms; (iii) sales performance
incentives; (iv) financial support of sales and marketing programs; and (v)
promotional materials. There can be no assurance that PSS will maintain good
relations with its vendors.
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DEPENDENCE ON CUSTOMER RELATIONSHIPS
Gulf South depends on a limited number of large customers for a significant
portion of its net sales. Consolidation among long-term care providers including
several national hospital and drug wholesale distributors and health care
manufacturers, and the expansion of Gulf South's business with large chains
could increase such dependence, result in the loss of customers as a result of
acquisitions and result in competitive pricing pressures and lower operating
margins. In fiscal year 1996 and the nine months ended September 30, 1997, Gulf
South's largest five customers accounted for approximately for 32.2% and 12.6%,
respectively, of net sales. Beverly Enterprises accounted for 19.6% and 27.4%
of net sales for fiscal year 1996 and for the nine months ended September 30,
1997, respectively. As is customary in its industry, Gulf South does not have
any long-term contracts with its customers and sells on a purchase order basis
only. The loss of, or significant declines in the level of purchases by, one or
more of these customers would have a material adverse effect on Gulf South's
business and results of operations. Although Gulf South has not to date
experienced any failure to collect accounts receivable from its largest
customers, an adverse change in the financial condition of any of these
customers, including as a result of a change in governmental or private
reimbursement programs, could have a material adverse effect upon Gulf South's
results of operations or financial condition.
LITIGATION AND LIABILITY EXPOSURE
Gulf South and certain of its current and former officers and directors,
among others, are named as defendants in two purported securities class action
lawsuits entitled Ernest Klein v. Gulf South Medical Supply, Inc., et al., Civil
Action No. 3:97cv526WS, and Ann Krupnick v. Gulf South Medical Supply, Inc., et
al., Civil Action No. 3:97cv525BN. Both actions, which were filed on July 21,
1997, are pending in the United States District Court for the Southern District
of Mississippi. The plaintiff in the Klein action alleges, for himself and for a
purported class of similarly situated stockholders that allegedly purchased
stock in Gulf South's June 1996 public offering of three million shares of its
common stock (the "June 1996 Offering"), that the defendants engaged in
violations of certain provisions of the Securities Act of 1933 and Mississippi
state law. The plaintiff in the Krupnick action alleges for herself and for a
purported class of similarly situated stockholders who purchased Gulf South's
stock between May 2, 1996 and July 22, 1996, that the defendants engaged in
certain violations of the Exchange Act, Rule 10b-5 promulgated thereunder and
Mississippi state law. Both lawsuits relate to disclosures made in the
prospectus issued by Gulf South in connection with its June 1996 Offering.
Plaintiffs seek damages, including costs and expenses. Gulf South believes that
the allegations contained in the complaints are without merit and intends to
defend vigorously against the claims. However, the lawsuits are in their
earliest stages, and there can be no assurances that this litigation will
ultimately be resolved on terms that are favorable to Gulf South.
Although neither PSS nor Gulf South is a manufacturer, the distribution of
medical supplies and equipment entails risks of product liability. Despite the
fact that neither PSS nor Gulf South has experienced any significant product
liability claim to date and currently maintains liability insurance coverage,
such insurance is expensive, difficult to obtain and may be unobtainable in the
future on acceptable terms, if at all. PSS operates approximately 620 vans to
deliver medical products on a same-day delivery basis. PSS has experienced
various claims regarding motor vehicle accidents, all of which have been covered
by insurance, subject to applicable retentions and deductibles. PSS believes
that it maintains adequate insurance coverage for such claims. Nevertheless, the
amount and scope of any coverage may be inadequate in the event that a product
liability or motor vehicle accident claim is successfully asserted against PSS.
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RISKS OF LEVERAGE
In connection with the issuance in October 1997 of 8 1/2% Senior
Subordinated Notes due 2007, PSS incurred $125.0 million in indebtedness. As a
result of this increased leverage, PSS' principal and interest obligations have
increased substantially. The level of its indebtedness could adversely affect
PSS' ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions or other purposes and could limit its
flexibility in reacting to changes in the industry and economic conditions
generally. PSS' increased leverage could also adversely affect its liquidity, as
a substantial portion of cash flow from operations must be dedicated to debt
service and will not be available for other purposes. PSS believes, based on
current circumstances, that its cash flow, together with available borrowings
under its credit facility, will be sufficient to permit it to meet its operating
expenses and to service its debt requirements as they become due for the
foreseeable future. This belief assumes, among other things, that PSS will
succeed in implementing its business strategy and that there will be no material
adverse developments in its business, liquidity or capital requirements.
However, if PSS is unable to generate sufficient cash flow from operations to
service its indebtedness, it will be forced to adopt an alternative strategy
that may include options such as reducing or delaying acquisitions and capital
expenditures, selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital. There can be no assurance that any of these
strategies could be effected on satisfactory terms, if at all.
DEPENDENCE ON KEY MANAGEMENT
The success of PSS is dependent upon the efforts and abilities of its
senior management, including senior Gulf South management retained through the
proposed Gulf South Merger. The loss of one or more of such individuals may
adversely affect PSS' business. Because of PSS' decentralized operating
structure, PSS is also dependent upon its operations and sales managers for each
of its service areas. There can be no assurance that PSS will be able to retain
such key personnel or attract qualified personnel in the future.
DEPENDENCE ON SALES REPRESENTATIVES AND SERVICE SPECIALISTS
PSS believes that to be successful it must continue to hire, train and
retain highly qualified sales representatives and service specialists. PSS'
sales growth has resulted largely from hiring and developing new sales
representatives and adding, through acquisitions, established sales
representatives whose existing customers generally have become customers of PSS.
Due to the relationships developed between PSS' sales representatives and its
customers, upon the departure of a sales representative PSS faces the risk of
losing the representative's customers, especially if the representative were to
act as a representative of PSS' competitors. PSS generally requires its sales
representatives and service specialists to execute a non-competition agreement
as a condition of their employment, however PSS has not obtained non-competition
agreements from certain of the sales representatives and service specialists
hired through acquisitions. Although courts have generally upheld the terms of
PSS' non-competition agreements in the past, there can be no assurance that such
agreements will be upheld in the future. In addition, the radiology and imaging
equipment market served by the Imaging Business is reliant on the hiring and
retention of skilled service specialists to maintain such equipment. There is a
current shortage of these skilled specialists, which may result in intense
competition and increasing salaries. Any inability of PSS to hire or retain such
skilled specialists could limit its ability to expand its Imaging Business and
adversely affect its business, financial condition and results of operations.
There can be no assurance that PSS will be able to retain or attract qualified
personnel in the future.
COMPETITION
The distribution and marketing of medical products is highly competitive.
PSS' competitors include full-line, full-service medical supply companies, some
of which are national in scope, local and regional distributors and
manufacturers who distribute their products directly to users. These companies
have sales representatives competing directly with PSS. There are also several
mail order firms which
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distribute medical products on a national or regional basis. Some of these
competitors are substantially larger in size and have substantially greater
financial resources than PSS. In addition, consolidation within the healthcare
industry has resulted in increased competition by large national distributors
and drug wholesalers. In response to competitive pressures, PSS has in the past
lowered, and may in the future lower, selling prices in order to maintain or
increase market share, which has resulted, and may in the future result, in
lower gross margins. PSS could encounter additional competition because many of
the products it sells are readily obtainable by others from various sources of
supply and such competitors could consolidate into regional or national
networks. In addition, a competitor of PSS could obtain exclusive rights to
market a certain product to the exclusion of PSS. There can be no assurance that
PSS will not face increased competition in the future.
Gulf South's competitors include a variety of regional, local and national
distributors, including several mail order firms which distribute medical
products. Barriers to entry in the long-term care distribution industry are
relatively low, and the risk of new competitors entering the market,
particularly on a local level, is high. In addition, consolidation within the
long-term care distribution industry has resulted in increased competition by
large national distributors. In response to competitive pressure, Gulf South has
in the past lowered, and may in the future lower, selling prices in order to
maintain or increase market share, which has resulted, and may in the future
result, in lower gross margins. Although several national hospital and drug
wholesale distributors and health care manufacturers presently sell to the long-
term care market, to date the long-term care market has not been a primary focus
for such distributors and manufacturers. However, such distributors and
manufacturers may focus their efforts more directly on the long-term care
market. Hospitals that form alliances with long-term care facilities to create
integrated healthcare networks may look to hospital distributors and
manufacturers to furnish products to their long-term care affiliates. Because
certain of Gulf South's competitors have cost advantages over Gulf South due to
their ability to purchase products in large volumes, the Company may experience
significant pricing pressures from these and other competitors.
MANAGEMENT OF INTERNATIONAL BUSINESS
Through its WorldMed International, Inc. subsidiary, PSS has recently
acquired medical supply distributors serving physicians in Belgium, France,
Germany, Luxembourg and the Netherlands and plans to increase its presence in
European markets. As PSS expands internationally, it will need to hire, train
and retain qualified personnel in countries where language, cultural or
regulatory impediments may exist. PSS has encountered and expects to encounter
significant expense and delay in expanding its international operations because
of language and cultural differences, and staffing, communications and related
issues. There can be no assurance that PSS' services and business practices will
be accepted by vendors, physicians or other involved parties in foreign markets.
The cost of medical care in many European countries is funded by the government,
which may significantly impact spending budgets in certain markets.
International revenues are subject to inherent risks, including political and
economic instability, difficulties in staffing and managing foreign operations
and in accounts receivable collection, fluctuating currency exchange rates,
costs associated with localizing service offerings in foreign countries,
unexpected changes in regulatory requirements, difficulties in the repatriation
of earnings and burdens of complying with a wide variety of foreign laws and
labor practices.
IMAGING BUSINESS TECHNOLOGY
The development of new technology may change the manner in which
diagnostic imaging services are provided. Recently, certain manufacturers have
developed digital radiology equipment that does not rely on film and film
products, which currently constitute a substantial percentage of the products
distributed by the Imaging Business. No assurance can be given that the
introduction and proliferation of digital radiology or other technological
changes will not result in a material adverse change in the Imaging Business.
While PSS anticipates that it will distribute new imaging technology, there can
be no assurance that PSS will obtain distribution agreements or develop vendor
relationships to distribute such
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new technology. In addition, there can be no assurance that PSS would be able to
distribute any such new technology profitably.
RELIANCE ON THIRD-PARTY SHIPPERS
Because Gulf South believes that its success to date is dependent in part
upon its ability to provide prompt, accurate and complete service to its
customers on a price-competitive basis, any material increases in its costs of
procuring and delivering products could have an adverse effect on its results of
operations. Strikes or other service interruptions affecting United Parcel
Service ("UPS") or other common carriers used by Gulf South to ship its
products, such as the strike by UPS workers in 1997, could impair Gulf South's
ability to deliver products on a timely and cost-effective basis. In addition,
because Gulf South typically bears the cost of shipment to its customers, any
increase in shipping rates could have an adverse effect on Gulf South's
operating results.
RISKS ASSOCIATED WITH INVENTORY MANAGEMENT
In order to provide prompt and complete service to its customers, Gulf
South maintains a significant investment in product inventory (approximately
$27.2 million and $31.7 million at December 31, 1996 and September 30, 1997,
respectively) at its 23 warehouse locations. Although Gulf South closely
monitors its inventory exposure through a variety of inventory control
procedures and policies, there can be no assurance that such procedures and
policies will continue to be effective or that unforeseen product development or
price changes will not adversely affect Gulf South's business or results of
operations. In addition, Gulf South may assume the inventory of distributors
that it acquires which includes product lines or operating assets not normally
carried or used by Gulf South. These product lines or assets may be difficult to
sell, resulting in Gulf South writing off any such unsold inventory or unused
assets in future periods.
REGULATION OF AND CHANGES IN THE PRACTICE OF MEDICINE
The health care industry is subject to extensive government regulation,
licensure and operating procedures. Neither PSS nor Gulf South can predict the
impact that present or future regulations may have on operations of PSS or Gulf
South or on their plans to expand business activities. In addition, as
consolidation among physician provider groups, long-term care facilities and
other alternate-site providers continues and provider networks are created,
purchasing decisions may shift to individuals with whom neither PSS nor Gulf
South has had prior selling relationships. PSS and Gulf South are increasingly
focusing on national accounts where the purchasing decision may not be made by
their traditional customers. There can be no assurance that PSS or Gulf South
will be able to maintain their customer relationships in such circumstances or
that such provider consolidation will not result in reduced operating margins.
In addition, national health care reform has been the subject of a number of
legislative initiatives by Congress. Due to uncertainties regarding the ultimate
features of health care reform initiatives and their enactment and
implementation, neither PSS nor Gulf South can predict which, if any, of such
reform proposals will be adopted, when they may be adopted or what impact they
may have on PSS or Gulf South or their respective customers. The actual
announcement of reform proposals and the investment community's reaction to such
proposals, announcements by competitors of their strategies to respond to reform
initiatives and general industry conditions could produce volatility in the
training and market price of PSS Common Stock.
DEPENDENCE ON THIRD-PARTY REIMBURSEMENT
The cost of a significant portion of medical care in the United States is
funded by government and private insurance programs, such as Medicare, Medicaid
and corporate health insurance plans. In recent years, government-imposed limits
on reimbursement of hospitals and other health care providers have significantly
impacted spending budgets in certain markets within the medical-products
industry. Private third-party reimbursement plans are also developing
increasingly sophisticated methods of
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controlling health care costs through redesign of benefits and exploration of
more cost-effective methods of delivering health care. Accordingly, there can be
no assurance that reimbursement for purchase and use of medical products will
not be limited or reduced and thereby adversely affect future sales by PSS.
TWO-TIER PRICING
As a result of the Non-Profit Act of 1944, the medical-products industry
is subject to a two-tier pricing structure. Under this structure, certain
institutions, originally limited to non-profit hospitals, can obtain more
favorable prices for medical products than PSS. The two-tiered pricing structure
continues to expand as many large integrated health care providers and others
with significant purchasing power demand more favorable pricing terms. Although
PSS is seeking to obtain similar terms from its manufacturers, there can be no
assurance that such terms can be obtained. Such a pricing structure, should it
persist, may place PSS at a competitive disadvantage.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
Net sales and operating results may fluctuate quarterly as a result of
demand for PSS' products and services, the introduction of new products and
services by PSS and its competitors, acquisitions or investments, changes in
manufacturers' prices or pricing policies, changes in the level of operating
expenses, product supply shortages, inventory adjustments, changes in product
mix and general competitive and economic conditions. In addition, a substantial
portion of PSS' net sales in each quarter result from orders booked in such
quarter. Accordingly, PSS believes that period-to-period comparisons of its
operating results should not be relied upon as an indication of future
performance. It is possible that in certain future periods, PSS' operating
results may be below the expectations of analysts and investors, which could
materially and adversely affect the trading price of the Common Stock.
RELIANCE ON DATA PROCESSING
PSS' and Gulf South's businesses are dependent upon their ongoing ability
to obtain, process, analyze and manage data, and to maintain and upgrade its
data processing capabilities. PSS typically receives rebates from manufacturers
for the purchase of certain products for its Imaging Business and needs
sophisticated systems to carefully track and apply for such rebates.
Interruption or failure of data processing capabilities for any extended length
of time, the failure to upgrade data services, the inability of PSS' data
processing system to support the expanded scope of PSS' or Gulf South's
businesses or to adequately track PSS' Imaging Business rebates, difficulties in
converting data and information systems after acquisitions, loss of stored data,
programming errors or other computer problems could adversely affect PSS' and
Gulf South's ability to receive and process customer orders and ship products on
a timely basis and otherwise have a material adverse effect on PSS' business,
financial condition and results of operations.
ENVIRONMENTAL LIABILITIES AND REGULATIONS
The past and present business operations of PSS and Gulf South and the
past and present ownership and leasing of real property by PSS are subject to
extensive and changing federal, state, local and foreign environmental laws and
regulations, including those relating to the use, handling, storage, discharge
and disposal of hazardous substances. Certain of the products distributed and
serviced by PSS' Imaging Business contain chemicals and byproducts which require
proper disposal under applicable environmental law. Neither PSS nor Gulf South
can predict what environmental legislation or regulations will be enacted in the
future, how existing or future laws or regulations will be administered or
interpreted or what environmental conditions may be found to exist on its
properties. Compliance with more stringent laws or regulations, as well as more
vigorous enforcement policies of applicable regulatory agencies or stricter
interpretations of existing laws, and discovery of new conditions, may require
additional expenditures by PSS, some of which may be material.
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Anti-Takeover Provisions; Possible Issuance of Preferred Stock
PSS' Amended and Restated Articles of Incorporation, as amended, and
Amended and Restated Bylaws contain various provisions that may make it more
difficult for a third party to acquire, or may discourage acquisition bids for,
PSS and could limit the price that certain investors might be willing to pay in
the future for shares of the Common Stock. In addition, the rights of the
holders of PSS Common Stock will be subject to, and may be adversely affected
by, the rights of any holders of preferred stock of PSS that may be issued in
the future and that may be senior to the rights of the holders of PSS Common
Stock. Furthermore, PSS has not opted out of certain provisions of the Florida
Business Corporation Act, including the provisions relating to control-share
acquisitions, which could have the effect of delaying, deferring or preventing a
change in control of PSS without further action by its stockholders.
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MERGERS AND ACQUISITIONS
On October 17, 1997, the Company acquired Alexander Surgical Supply
Company, Inc. ("Alexander"), a company organized under the laws of the State of
California, pursuant to a merger by which the shareholders of Alexander received
shares of Common Stock in exchange for their shares of stock in Alexander (the
"Alexander Merger"). In connection with the Alexander Merger, the Company
granted the former shareholders of Alexander the right to register for resale
the shares of Common Stock held by such shareholders. The former shareholders of
Alexander who are offering shares of Common Stock pursuant to the Registration
Statement of which this Prospectus is a part are referred to herein as the
"Selling Shareholders."
The Selling Shareholders have acquired the 70,275 shares of Common Stock
offered hereby pursuant to the above-referenced merger and acquisition
transaction.
Pursuant to certain demand registration rights granted in connection with
such merger, the Company agreed to register the shares of Common Stock offered
by the Selling Shareholders hereunder, and to use its best efforts to maintain
such registration statement in effect until the Shares are sold hereunder or up
to 60 days following the date of this Prospectus. This Prospectus may not be
used by the Selling Shareholders following the earlier of (i) the date all
shares of Common Stock offered hereby have been sold, or (ii) 60 days following
the date of this Prospectus.
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SELLING SHAREHOLDERS
The following table sets forth (i) the name of the Selling Shareholders,
(ii) the number of shares of Common Stock beneficially owned by the Selling
Shareholders prior to the offering and being offered hereby, and (iii) the
number of shares of Common Stock beneficially owned by the Selling Shareholders
after completion of the offering.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Shares Being Owned After
Selling Shareholders Offering/(1)/ Offered Offering(1)(2)
-------------------- ------------------- ------------ -------------------
<S> <C> <C> <C>
Moussa Lavi(2)(3) 85,393 34,435 15,118
Fariba Lavi(2)(3) 85,393 35,840 15,118
</TABLE>
- -----------------------
(1) Assumes that all of the Shares held by the Selling Shareholders and being
offered hereby are sold, and that the Selling Shareholders acquire no
additional shares of Common Stock prior to completion of this offering.
Each Selling Shareholder beneficially owns less than 1% of the total number
of shares of Common Stock outstanding.
(2) For Mr. Moussa Lavi, includes 35,840 shares held of record by Ms. Fariba
Lavi, his spouse. For Ms. Fariba Lavi, includes 34,435 shares held of
record by Mr. Moussa Lavi, her spouse. Also, includes 7,408 shares for Mr.
Moussa Lavi and 7,710 shares for Ms. Fariba Lavi, being held in escrow
pursuant to an Escrow Agreement dated October 10, 1997, which may be used
to indemnify the Company against certain claims in connection with the
Alexander Merger.
(3) Mr. Moussa Lavi served as President and Treasurer of Alexander prior to the
Alexander Merger. Ms. Fariba Lavi served as Secretary of Alexander prior
to the Alexander Merger.
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PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "PSSI." The Common Stock offered hereby will be sold by the Selling
Shareholders for their own account and the Company will not receive any of the
proceeds from the sale by the Selling Shareholders of the Common Stock offered
hereby. Any or all of the shares of Common Stock may be sold from time to time
(i) to or through underwriters or dealers, (ii) directly to one or more other
purchasers, (iii) through agents on a best-efforts basis, or (iv) through a
combination of any such methods of sale.
The shares of Common Stock offered hereby may be sold from time to time by
the Selling Shareholders, or by transferees or other successors in interest.
Such sales may be made in the over-the-counter market, or otherwise at prices
and at terms then prevailing or at prices related to the then current market
price or in negotiated transactions. Any or all of the shares of Common Stock
may be sold by one or more of the following: (i) a block trade in which the
broker or dealer so engaged will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (ii) purchases by a broker or dealer or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus;
(iii) an exchange distribution in accordance with the rules of such exchange;
and (iv) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In affecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to participate.
Brokers and dealers will receive commission or discounts from the Selling
Shareholders in amounts to be negotiated prior to the sale.
The Selling Shareholders and any such underwriters, dealers or agents that
participate in the distribution of the Common Stock may be deemed to be
underwriters within the meaning of the Securities Act, and any profit on the
sale of the Common Stock by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Common Stock may be sold from time to time in one
or more transactions at a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the Company and/or the Selling Shareholders and any
underwriters or dealers. Brokers or dealers acting in connection with the sale
of Common Stock contemplated by this Prospectus may receive fees or commissions
in connection therewith.
At the time a particular offer of Common Stock is made, to the extent
required a supplement to this Prospectus will be distributed which will identify
and set forth the aggregate number of shares of Common Stock being offered and
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for Common Stock
purchased from the Selling Shareholders, any discounts, commissions and other
items constituting compensation from the Selling Shareholders and/or the Company
and any discounts, commissions or concessions allowed or reallowed or paid to
dealers, including the proposed selling price to the public. Such supplement to
this Prospectus and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part, will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Common Stock.
The Selling Shareholders will pay all applicable stock transfer taxes,
transfer fees and brokerage commissions or discounts. The Company has agreed to
bear one-half of all expenses in connection with the registration of the shares
being offered by the Selling Shareholders and the Selling Shareholders shall
bear the remaining one-half of all expenses on a pro rata basis. The Company
has agreed to indemnify the Selling Shareholders against certain liabilities,
including liabilities under the Securities Act as underwriters or otherwise.
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LEGAL MATTERS
A legal opinion to the effect that the Shares offered hereby by the
Selling Shareholders are validly issued, fully paid and non-assessable has been
rendered by Fred Elefant, P.A., Jacksonville, Florida, general counsel to the
Company.
EXPERTS
The consolidated financial statements of PSS incorporated by reference in
this registration statement have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
The consolidated financial statements of Gulf South for the years ended
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, appearing in the Joint Proxy Statement/Prospectus of PSS and
Gulf South that is made a part of the Registration Statement (Amendment No. 1 to
Form S-4) filed with the Securities and Exchange Commission on February 26, 1998
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Gateway Healthcare Corporation as
of December 31, 1995 and 1994 and for the years then ended, incorporated by
reference into this registration statement from Gulf South's Current Report on
Form 8-K/A dated December 26, 1996 filed with the Commission on March 11, 1997
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, as set forth in their report included therein, and are incorporated
by reference herein in reliance upon the authority of said firm as experts in
accounting and auditing.
-19-
<PAGE>
===============================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representation must the
Company or the Selling Shareholders. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, to any person in any
jurisdiction in which such offer to sell or solicitation is not authorized, or
in which the person making such offer or solicitation is not qualified to do so,
or to any person to whom it is unlawful to make such offer or solicitation.
-------------------
TABLE OF CONTENTS
Page
----
Available Information................................................... 2
Incorporation of Certain
Documents by Reference.............................................. 2
Cautionary Notice Regarding
Forward-Looking Statements.......................................... 3
The Company............................................................. 4
Recent Developments..................................................... 5
Risk Factors............................................................ 6
Mergers and Acquisitions................................................ 16
Selling Shareholders.................................................... 17
Plan of Distribution.................................................... 18
Legal Matters........................................................... 19
Experts................................................................. 19
===============================================================================
===============================================================================
70,275 SHARES
PHYSICIAN SALES &
SERVICE, INC.
COMMON STOCK
P R O S P E C T U S
, 1998
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration fee to Securities and Exchange Commission....... $417.94
Accounting fees and expenses................................. 30,000
Legal fees and expenses...................................... 10,000
Miscellaneous expenses....................................... 5,000
Total................................................ $45,417.94
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. The Company has agreed to bear one-half of
all expenses in connection with the registration of the shares being offered by
the Selling Shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Articles of Incorporation, as amended, and the
Amended and Restated Bylaws of the Registrant set forth the extent to which the
Registrant's directors and officers may be indemnified against liabilities they
may incur while serving in such capacities. Such indemnification will be
provided to the fullest extent allowed by the Florida Business Corporation Act,
as amended from time to time, and judicial or administrative decisions. Under
these indemnification provisions, the Registrant is required to indemnify any of
its directors and officers against any reasonable expenses (including attorneys'
fees) incurred by him in the defense of any action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which he was made a party,
or in defense of any claim, issue or matter therein, by reason of the fact that
he is or was a director or officer of the Registrant or who, while a director or
officer of the Registrant, is or was serving at the Registrant's request as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise to
the extent that such director or officer has been successful, on the merits or
otherwise, in such defense. The Registrant also may indemnify any of its
directors or officers against any liability incurred in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Registrant, in which event, additional determinations must be made
before indemnification is provided) by reason of the fact that he is or was a
director or officer of the Registrant who, while a director or officer of the
Registrant, is or was serving at the Registrant's request as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, if
such director or officer acted in good faith and in a manner he believed to be
in, or not opposed to, the best interests of the Registrant, and with respect to
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. The Registrant may also provide advancement of expenses incurred by a
director or officer in defending any such action, suit or proceeding upon
receipt of a written affirmation of such officer or director that he has met
certain standards of conduct and an understanding by or on behalf of such
officer or director to repay such advances unless it is ultimately determined
that he is entitled to indemnification by the Registrant. Notwithstanding the
foregoing, the Amended and Restated Bylaws of the Registrant provide that the
Registrant shall not be required to indemnify any of its directors or officers
in connection with a proceeding initiated by such person unless such
authorization for such proceeding was not denied by the Board of Directors of
the Registrant prior to sixty (60) days after receipt of notice thereof from
such person stating his or her intent to initiate such proceeding and only upon
such terms and conditions as the Board of Directors may deem appropriate.
The Florida Business Corporation Act contains a provision which limits the
personal liability for monetary damages to the corporation or any other person
for any statement, vote, decision, or failure to act, regarding corporate
management or policy, by a director, unless the director breached or failed to
perform his duties as a director and such breach constitutes (i) a violation of
criminal law, unless the director has reasonable cause to believe his conduct
was unlawful; (ii) a transaction from which the
II-1
<PAGE>
director received an improper personal benefit; (iii) an unlawful distribution
under Florida law, (iv) in a proceeding by or in the right of a corporation to
procure a judgment in its favor or by or in the right of a shareholder,
conscious disregard for the best interest of the corporation, or willful
misconduct; or (v) in a proceeding by or in the right of someone other that the
corporation or a shareholder, recklessness or an act or omission which was
committed in bad faith or with malicious purpose or in a manner exhibiting
wanton or willful disregard of human rights, safety or property. The Registrant
maintains an insurance policy insuring the Registrant and directors and officers
of the Registrant against certain liabilities, including liabilities under the
Securities Act of 1933.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Articles of Incorporation, as amended, of
the Registrant (incorporated by reference from Registrant's
Registration Statement on Form S-3, effective November 13, 1995,
Registration No. 33-97524).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference from Registrant's Registration Statement on Form S-1,
Registration No. 33-76580).
5.1 Opinion of Fred Elefant, P.A. as to the legality of the
securities being offered by the Selling Shareholders.
23.1 Consent of Fred Elefant, P.A. (included in the opinion filed as
Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent Ernst & Young LLP.
23.4 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included as part of the signature page
hereto).
ITEM 17. UNDERTAKINGS.
(a) The Undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
II-2
<PAGE>
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
Section do not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3 and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on February 23, 1998.
PHYSICIAN SALES & SERVICE, INC.
By: /s/ PATRICK C. KELLY
-------------------------------------
Name: Patrick C. Kelly
Title: Chairman and Chief Executive
Officer
II-4
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Patrick
C. Kelly and David A. Smith, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them, for him or her and in his or her name, place and stead, and in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-3 of Physician Sales &
Service, Inc. or a registration statement filed pursuant to Rule 462(b), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or either of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 23, 1998.
SIGNATURE TITLE
- --------- -----
/s/ PATRICK C. KELLY Chairman of the Board and Chief Executive
- ----------------------------- Officer (Principal Executive Officer)
Patrick C. Kelly
/s/ DAVID A. SMITH Executive Vice President, Chief Financial
- ----------------------------- Officer and Director (principal financial
David A. Smith and accounting officer)
/s/ JOHN F. SASEN, SR. Director
- -----------------------------
John F. Sasen, Sr.
/s/ DELMER W. DALLAS Director
- -----------------------------
Delmer W. Dallas
/s/ WILLIAM C. MASON Director
- -----------------------------
William C. Mason
/s/ T. O'NEAL DOUGLAS Director
- -----------------------------
T. O'Neal Douglas
/s/ FRED ELEFANT Director
- -----------------------------
Fred Elefant
/s/ DELORES KESLER Director
- -----------------------------
Delores Kesler
/s/ JAMES L.L. TULLIS Director
- -----------------------------
James L.L. Tullis
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<C> <S> <C>
4.1 Amended and Restated Articles of Incorporation, as amended, of
the Registrant (incorporated by reference from Registrant's
Registration Statement on Form S-3, effective November 13,
1995, Registration No. 33-97524).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference from Registrant's Registration Statement on Form
S-1, Registration No. 33-76580).
5.1 Opinion of Fred Elefant, P.A. as to the legality of the shares
being offered by the Selling Shareholders.
23.1 Consent of Fred Elefant, P.A. (including in the opinion filed
as Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included as part of the signature page
hereto).
</TABLE>
<PAGE>
EXHIBIT 5.1
FRED ELEFANT, P.A.
1650 PRUDENTIAL DRIVE, SUITE 105
JACKSONVILLE, FLORIDA 32207
February 19, 1998
Physician Sales & Service, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Ladies and Gentlemen:
This opinion is given in connection with the filing by Physician Sales
& Service, Inc., a corporation organized and existing under the laws of the
State of Florida (the "Company"), of a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission with
respect to the registration under the Securities Act of 1933, as amended, of
70,275 shares of Common Stock (the "Offering Shares") being sold by selling
stockholders of the Company.
In the capacity described above, I have considered such matters of law
and of fact, including the examination of originals or copies, certified or
otherwise identified to my satisfaction, of such records and documents of the
Company, certificates of public officials and such other documents as I have
deemed appropriate as a basis for the opinions hereinafter set forth. In
conducting my examination, I have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such documents. The opinions set forth herein
are limited to the laws of the State of Florida.
Based upon the foregoing, it is my opinion that the Offering Shares
have been duly authorized and are validly issued, fully paid, and non-assessable
by the Company under the Business Corporation Act of the State of Florida as in
effect on the date hereof.
This opinion is provided to you for your benefit and for the benefit
of the Commission, in each case, solely with regard to the Registration
Statement, may be relied upon by you and the Commission only in connection with
the Registration Statement, and may not be relied upon by any other person or
for any other purpose without my prior written consent.
I consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference made to my firm under the caption "Legal Matters"
in the Prospectus constituting part of the Registration Statement.
FRED ELEFANT, P.A.
By: /s/ FRED ELEFANT
-----------------------------
Fred Elefant
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
December 18, 1997, and to all references to our Firm included in or made a part
of this registration statement.
/s/ Arthur Andersen LLP
Jacksonville, Florida
February 17, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-3 and related Prospectus of Physician Sales &
Service, Inc. for the registration of 70,275 shares of its common stock and to
the incorporation by reference therein of our report dated February 7, 1997,
except for Note 8, as to which the date is December 4, 1997, with respect to the
consolidated financial statements of Gulf South Medical Supply, Inc. for the
year ended December 31, 1996, included in the Joint Proxy Statement/Prospectus
of Physician Sales and Service, Inc. and Gulf South Medical Supply, Inc. that is
made a part of the Registration Statement on Form S-4 filed with Securities
Exchange Commission on January 15, 1998.
/s/ ERNST & YOUNG LLP
Jackson, Mississippi
February 20, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Gulf South Medical Supply:
We consent to the incorporation by reference in the Prospectus of Physician
Sales & Service, Inc. that is made part of this registration statement
(No. ) on Form S-3, of our report dated April 10, 1996, with respect to
the consolidated balance sheets of Gateway Healthcare Corporation and
subsidiary, a then majority-owned subsidiary of North American Fund II, as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, changes in stockholder's equity, and cash flows for the years then
ended, which report appears in the Form 8-K/A of Gulf South Medical Supply, Inc.
dated March 11, 1997, and to the reference to our firm under the caption
"Experts."
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
February 20, 1998
