<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER __, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
PSS WORLD MEDICAL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-3500595
(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
PSS WORLD MEDICAL, 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>
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PROPOSED MAXIMUM PROPOSED
TITLE OF SHARES AMOUNT TO BE AGGREGATE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 787,500 shares $16.625 $13,092,188 $3,862.20
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</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 September 17, 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
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PROSPECTUS
787,500 SHARES
PSS WORLD MEDICAL, INC.
COMMON STOCK
This prospectus relates to the resale of up to 787,500 shares (the
"Shares") of common stock, $.01 par value per share (the "Common Stock"), of PSS
World Medical, Inc., a Florida corporation ("PSS" or the "Company") by Deutsche
Morgan Grenfell, Inc. or its assignees (the "Selling Shareholder") acquired
pursuant to warrants to purchase Common Stock of the company (the "Warrants").
This Prospectus does not relate to the issuance of the Shares upon exercise of
the Warrants but relates to the resale of such Shares by the "Selling
Shareholder". None of the proceeds from the sale of the Shares by the Selling
Shareholder will be received by the Company.
On December 2, 1997, the Selling Shareholder acquired warrants to purchase
shares of common stock of Gulf South Medical Supply, Inc. ("Gulf South") from
NatWest Securities Corporation ("NatWest"). The warrants had been issued to
NatWest in connection with the acquisition by Gulf South of all of the
outstanding capital stock and capital of Gateway Healthcare Corporation in
November 1996. On March 26, 1998, the Company and Gulf South consummated a
merger pursuant to the Agreement and Plan of Merger dated December 14, 1997, by
and among the Company, PSS Merger Corp., and Gulf South. Under the terms of the
merger, the warrants to purchase Gulf South common stock became warrants to
purchase shares of the Company's common stock, par value $.01 per share and the
Company assumed each warrant in accordance with the terms of the warrant
agreement by which it is evidenced. The number of shares of PSS Common Stock
subject to each warrant became equal to the number of shares of Gulf South
Common Stock that were subject to such warrant, multiplied by 1.75. The
Warrants are immediately exercisable and remain exercisable until January 2,
2001. As of the date of this Prospectus, none of the Warrants has been
exercised.
The shares of Common Stock of the Company are listed on the Nasdaq National
Market System ("Nasdaq") under the symbol PSSI. On December ___, 1998 the last
sales price for the shares of Common Stock as reported by Nasdaq was $________
per share.
The Selling Shareholder 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 all of the expenses
of this registration, which are estimated at $34,000. The Company has agreed to
indemnify the Selling Shareholder against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Selling Shareholder and any broker-dealer, agents or underwriters that
participate with the Selling Shareholder 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 Shareholder" 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 December ___, 1998
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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
of 1933 (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 at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. 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 April 3,
1998;
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended June 30, 1998 and September 30, 1998; and
(c) 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.
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.
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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 PSS World Medical, 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
contained herein or incorporated herein by reference that are not historical
facts, including, but not limited to, statements regarding anticipated growth in
revenue, gross margins and earnings, statements regarding the Company's current
business strategy, the Company's projected sources and uses of cash, and the
Company's plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause results to differ materially are the following:
the availability of sufficient capital to finance the Company's business plans
on terms satisfactory to the Company; competitive factors; the ability of the
Company to adequately defend or reach a settlement of outstanding litigations
and investigations involving the Company or its management; changes in labor,
equipment and capital costs; changes in regulations affecting the Company's
business; future acquisitions or strategic partnerships; general business and
economic conditions; successful implementation of the Company's year 2000
compliance plan; and other factors described under "Risk Factors" herein and
from time to time in the Company's reports filed with the Securities and
Exchange Commission. The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which statements are made
pursuant to the Private Securities Litigation Reform Act of 1995 and, as such,
speak only as of the date made.
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THE COMPANY
Unless otherwise indicated, all references herein to "PSS" or "the Company"
mean PSS and its consolidated subsidiaries.
PSS is a specialty marketer and distributor of medical products to
physicians, alternate-site imaging centers, long-term care providers, and
hospitals through 105 service centers to customers in all 50 states and 5
European countries. Since its inception in 1983, the Company has become a
leader in all three market segments it serves with a focused, market specific
approach to customer services, a consultative sales force, strategic
acquisitions, strong arrangements with product manufacturers, and a unique
culture of performance.
The Company, through its Physician Sales & Service division, is the leading
distributor of medical supplies, equipment and pharmaceuticals to office-based
physicians in the United States based on revenues, number and quality of sales
representatives, number of service centers, and exclusively distributed
products. Physician Sales & Service currently operates 56 medical supply
distribution service centers with over 700 sales representatives ("Physician
Supply Business") serving over 100,000 physician offices (representing
approximately 50% of all physician offices) in all 50 states. The Physician
Supply Business' primary market is the approximately 400,000 physicians who
practice medicine in approximately 200,000 office sites throughout the United
States.
The Company, through its wholly owned subsidiary Diagnostic Imaging, Inc.
("DI"), is the leading distributor of medical diagnostic imaging supplies,
chemicals, equipment, and service to the acute care and alternate-care markets
in the United States based on revenues, number of service specialists, number of
distribution centers, and number of sales representatives. DI currently
operates 33 imaging distribution service centers with over 500 service
specialists and 100 sales representatives ("Imaging Business") serving over
13,000 customer sites in 32 states. The Imaging Business' primary market is the
approximately 5,000 hospitals and other alternate-site imaging companies
operating approximately 50,000 office sites throughout the United States.
Through its wholly owned subsidiary Gulf South Medical Supply, Inc. ("Gulf
South"), the Company has become a leading national distributor of medical
supplies and related products to the long-term care industry in the United
States based on revenues, number of sales representatives, and number of service
centers. Gulf South currently operates 13 distribution service centers with
over 100 sales representatives ("Long-Term Care Business") serving over 10,000
long-term care facilities in all 50 states. The Long-Term Care Business'
primary market is comprised of a large number of independent operators, small to
mid-sized local and regional chains, and several national chains representing
over 10,000 long-term care facilities.
In addition to its operations in the United States, the Company, through
its wholly owned subsidiary WorldMed International, Inc., operates three
European service centers ("International Business"), distributing medical
products to the physician office and hospital markets in Belgium, France,
Germany, Luxembourg, and the Netherlands.
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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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 PSS Common Stock offered by this Prospectus. See "Cautionary Notice
Regarding Forwarding-Looking Statements."
RISKS OF RAPID GROWTH THROUGH ACQUISITIONS
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 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 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. 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' senior
subordinated notes and PSS' credit facility limits acquisitions and contain
financial covenants which may further limit PSS' ability to make acquisitions.
Such financial covenants include, among other things, a limitation on the
Company's ability to incur additional indebtedness unless the Company maintains
a consolidated fixed coverage ratio, after giving effect to such additional
indebtedness, of greater than 2.0 to 1.0.
RISKS OF LEVERAGE AND SIGNIFICANT INDEBTEDNESS
In connection with the issuance in October 1997 of 8 1/2% Senior
Subordinated Notes due 2007 ("Notes"), PSS incurred $125.0 million in
indebtedness and entered into an Indenture among the Company, all of its
domestic subsidiaries and SunTrust Bank, Central Florida, National Association,
as Trustee (the "Indenture"). At September 30, 1998, the Company's consolidated
long-term indebtedness was $131.9 million. For fiscal year 1999, the Company is
scheduled to make payments on its indebtedness and capitalized leases in the
aggregate amount of approximately $14.0 million. In addition, the Company is
currently negotiating a credit facility with a syndicate of lenders which the
Company believes will provide additional commitments of approximately $115.0
million. A default under any indebtedness of PSS results in a default under the
terms of the Indenture and it is expected that a similar provision will be
included in any credit facility negotiated by the Company.
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As a result of this increased leverage, PSS' principal and interest
obligations have increased significantly. 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, 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.
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, and the long-term care
market. The integration and operation of these new business will 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, as determined by the Board of Directors of the Company, 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.
RISKS RELATING TO INTEGRATION OF GULF SOUTH
Integration of Operations and Accounting Charges
On March 26, 1998, the Company closed its merger with Gulf South pursuant
to which Gulf South became a wholly owned subsidiary of the Company (the "Gulf
South Merger"). Among other matters, the successful combination of PSS and Gulf
South requires integration of the two companies' sales, marketing and
distribution resources, purchasing activities, management information systems,
and management and other key personnel. To date, as part of its integration of
operations, the Company has closed ten of Gulf South's distribution centers
which PSS believes were unnecessary or duplicative, has realigned regional and
corporate functions and reduced personnel. In connection with such integration,
PSS incurred a $4.4 million charge to operations for the fiscal year ended April
3, 1998. In addition, GSMS recorded a charge of $11.4 million in connection with
such integration during the three months ended April 3, 1998. This quarter was
not consolidated with the PSS statement of income; rather, it was recorded as an
adjustment to retained earnings on April 4, 1998. In addition, the Company
announced in May 1998 that it would adjust earnings related to the Gulf South
merger due to its decision to accelerate and increase integration and
infrastructure spending and to conform Gulf South's accounting practices to
those of the Company. GSMS recorded $2.8 million of tax accruals primarily
related to nonrecurring state and local tax compliance matters during the three
months ended April 3, 1998 which is reflected as an adjustment to PSS' retained
earnings on April 4, 1998. The difficulties of continuing integration may be
increased by the necessity of coordinating geographically separated
organizations. In addition, the integration of operations requires the
dedication of
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<PAGE>
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 Gulf South Merger will not adversely affect the future business, financial
condition and results of operations of PSS.
Substantial Expenses Resulting from the Gulf South Merger. PSS and GSMS
incurred 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 Gulf South Merger in the aggregate
amount of approximately $15.8 million. Such costs were charged to operations
upon consummation of the Gulf South Merger. There can be no assurance 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.
RISKS OF BUSINESS GROWTH AND MARGIN PRESSURES DUE TO CHANGING MARKET CONDITIONS
A key element of PSS' growth strategy is 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 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 may result in competitive pricing pressures.
Historically, because of vendor agreements, customer volume and service
specifications, gross margins on these large group chains are 300 to 600 basis
points lower than the division gross margin averages. As a result of changes
occurring in the long-term care market, physician and alternate site markets,
the nature of 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 PSS' overall product mix, could have an adverse
effect on PSS' business and results of operations and on operating margins.
The Company has grown through, and anticipates that it will continue to
grow through, the opening of start-up imaging and long-term care service
centers. The Company 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, the Company's 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.
DEPENDENCE ON EXCLUSIVE DISTRIBUTION AGREEMENTS
PSS distributes over 45,000 medical products manufactured by approximately
5,000 vendors and is dependent on these vendors for the manufacture and supply
of products. During the 12-month period ended April 3, 1998, no vendor
relationship accounted for more than 10% of the Company's inventory purchases.
PSS has entered into a contract with Abbott which may be terminated by Abbott if
PSS does not meet certain sales levels (the "Abbott Agreement"). PSS and Abbott
have in the past renegotiated such sales levels. In addition, PSS has entered
into other separate exclusive distribution agreements, including agreements for
certain products manufactured by F. Hoffman-La Roche, Ltd., 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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<PAGE>
DEPENDENCE ON LARGE CUSTOMERS
Gulf South's business 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. 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 and
the Company'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
or the Company's results of operations or financial condition.
LITIGATION AND LIABILITY EXPOSURE
The Company and certain of its current officers and directors are named as
defendants in a purported securities class action lawsuit entitled Jack Hirsch
v. PSS World Medical, Inc., et al., Civil Action No. 98-502-cv-5-20A. The
action, which was filed on or about May 28, 1998, is pending in the United
States District Court for the Middle District of Florida. The plaintiff
alleges, for himself and for a purported class of similarly situated
stockholders that allegedly purchased the Company's stock between December 27,
1997 and May 8, 1998, that the defendants engaged in violations of certain
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 10b-5 promulgated thereunder. The allegations are based upon a
decline in the PSS stock price following an announcement by PSS in May 1998
regarding the Gulf South Merger which resulted in earnings below analysts'
expectations. The plaintiff seeks damages, including costs and expenses. The
Company believes that the allegations contained in the complaint are without
merit and intends to defend vigorously against the claims. However, the lawsuit
is in the earliest stages, and there can be no assurance that this litigation
will be ultimately resolved on terms that are favorable to the Company.
Gulf South, a wholly owned subsidiary of the Company, 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,
Jackson Division. 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 its common stock
(the "June 1996 Offering"), that the defendants engaged in violations of certain
provisions of the Securities Act of 1933, as amended, and Mississippi state
law. Plaintiffs allege that the defendants artificially inflated the price of
Gulf South stock by representing that Gulf South was "well positioned" to grow
by increasing its sales to existing customers, including one of its largest
customers Living Centers of America ("Living Centers'), after defendants had
been informed by Living Centers that its distribution arrangement with Gulf
South was being terminated in favor of a rival medical supply distributor. On
August 21, 1998, the court filed an Order dismissing all the allegations in the
Krupnick action. The same Order also dismissed the claims against Defendants
Hixon, Piper, Tibbitts, Pritchard, Boyer, and Gulf South under Section 15 of the
Securities Act and Miss. Code Ann. Sections 75-71-717(a)(2) and 75-71-719 in the
Klein action. Plaintiffs' claims against defendants Bogetz, Hecktman, and
McInnes under Section 11 of the Securities Act and against Underwriter
Defendants under Sections 12(2) and 15 of the Securities Act, and the
corresponding state law claims, remain pending in the Klein case. Plaintiffs
seek damages, including costs and expenses. The Company believes that the
allegations contained in the remaining complaints are also without merit and
intends to defend vigorously against the claims. However, there can be no
assurance that this litigation will ultimately be resolved on terms that are
favorable to the Company.
-8-
<PAGE>
The Company has been named in a purported patent infringement suit filed by
Bayer Corp. ("Bayer") in the United States District Court for the Middle
District of Florida (No. 98-235 Civ. J-21A). In this lawsuit, Bayer alleges
that certain of the urinalysis test strips sold under the Penny Saver name
infringe four Bayer patents. The products are made by YeongDong Pharmaceuticals
("YD") which has agreed in writing to indemnify and defend the Company against
infringement claims. YD denies the products infringe the patents. In addition,
the Company has indemnity rights against the U.S. distributor of the product,
BioSys Laboratories"", pursuant to its vendor agreement. To date, YD has
fulfilled its defense obligations in the case. Chemical analysis testing of the
products conducted under the joint supervision of the parties, however,
indicates that some representations YD made to the Company about the technology
used by YD in one of the tests on the strip were incorrect. The Company
continues to vigorously contest Bayer's claims, but has agreed to remove those
Penny Saver urinalysis test strip products containing a test pad for leukocytes.
There can be no assurance that this litigation will ultimately be resolved on
terms that are favorable to the Company
Although the Company does not manufacture products. the distribution of
medical supplies and equipment entails inherent risks of product liability. The
Company has not experienced any significant product liability claims and
maintains product liability insurance coverage. In addition, the Company is a
party to various legal and administrative legal proceedings and claims arising
in the normal course of business. While any litigation contains an element of
uncertainty, management believes that, other than as discussed above, the
outcome of any proceedings or claims which are pending or known to be threatened
will not have a material adverse effect on the Company's consolidated financial
position, liquidity, or results of operations.
DEPENDENCE ON KEY MANAGEMENT
The success of PSS is dependent upon the efforts and abilities of its
senior management, particularly its Chief Executive Officer and Chief Financial
Officer. 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.
NEED TO HIRE AND RETAIN QUALIFIED 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 AND PRESSURES RELATED TO INDUSTRY CONSOLIDATION
-9-
<PAGE>
The Company operates in a highly competitive environment. The Company's
principal competitors are the few multimarket medical distributors that are
full-line, full-service medical supply companies, most of which are national in
scope. These national companies have sales representatives competing directly
with PSS, are substantially larger in size and have substantially greater
financial resources than the Company. There are also numerous local dealers
and mail order firms that distribute medical supplies and equipment within the
same market as the Company. Most local dealers are privately owned and operate
within limited product lines. There are several mail order firms that
distribute medical supplies on a national or regional basis. The Company also
competes with certain manufacturers that sell their products both to
distributors and directly to users, including office-based physicians.
In addition, consolidation within the health care 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. 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 health
care networks may look to hospital distributors and manufacturers to furnish
products to their long-term care affiliates. 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 PSS has not had prior selling relationships. PSS is
increasingly focusing on national accounts where the purchasing decision may not
be made by its traditional customers. There can be no assurance that PSS will be
able to maintain its customer relationships in such circumstances or that such
provider consolidation will not result in reduced operating margins. There can
be no assurance that PSS will not face increased competition and significant
pricing pressure in the future.
RISKS OF MANAGING AND EXPANDING OPERATIONS IN FOREIGN COUNTRIES
Through its WorldMed International, Inc. subsidiary, PSS has acquired
medical supply distributors serving physicians in Belgium, France, Germany,
Luxembourg and the Netherlands and plans to increase its presence in European
markets. As of September 30, 1998, the Company had invested approximately $13
million in its European operations. The expansion efforts in Europe have slowed
due to (i) internal competition for investment resources from the Company's new
imaging and long-term care divisions, (ii) language barriers to effective
communication of business prospects and goals, and (iii) development of key
personnel necessary for expansion. As PSS expands internationally, it will need
to hire, train and retain qualified personnel in countries where language,
cultural or regulatory impediments may exist.. 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.
RISKS OF TECHNOLOGICAL CHANGES IN THE IMAGING BUSINESS
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
-10-
<PAGE>
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 new technology. In addition, there can be no
assurance that PSS would be able to distribute any such new technology
profitably.
SIGNIFICANT INVESTMENT IN INVENTORY
In order to provide prompt and complete service to its customers, Gulf
South maintains a significant investment in product inventory 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.
PRICING PRESSURES DUE TO REDUCED SPENDING BUDGETS BY HEALTH CARE PROVIDERS
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 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 STRUCTURE WHICH FAVORS NON-PROFIT ORGANIZATIONS
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.
NEED FOR SOPHISTICATED DATA PROCESSING SYSTEMS
-11-
<PAGE>
PSS' business is dependent upon its 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' 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.
COSTS OF YEAR 2000 COMPLIANCE AND RISK OF NON-COMPLIANCE
The Company is currently replacing a majority of its internal information
systems hardware and software with new systems ("New Systems") that are year
2000 compliant. These New Systems will be used in several key areas of the
Company's business, including inventory management, purchasing, order
processing, shipping, receiving, accounts payable, accounts receivable, and
financial reporting. The Company expects to incur internal payroll costs,
consulting fees, and hardware and software costs for preparation and
implementation of these New Systems. The total expected cost of implementation
is estimated to be approximately $15.0 million through fiscal 2000, with $5.0
million incurred through September 30, 1998. The anticipated impact and costs
of the project is based on management's best estimates using information
currently available. There can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Based on
its current estimates and information currently available, the Company does not
anticipate that the costs associated with this project will have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows in future periods.
Concurrent with the New System's implementation, the Company has developed
a preliminary contingency plan that consists of modifications and replacement of
existing information system software and hardware for year 2000 compliance.
Management has proceeded to implement this contingency plan in order to reduce
year 2000 compliance risk and expects to complete this plan by the fourth
quarter of fiscal 1999.
The potential risks associated with the year 2000 issues include, but are
not limited to, temporary disruption of the Company's operations in the areas of
inventory management, purchasing, order processing, shipping, receiving,
accounts payable, accounts receivable, and financial reporting. In addition,
communications with customers, vendors, and other outside parties may be
disrupted. Implementation of the New System entails contacting suppliers to
ensure compatibility with the Company's information systems and to discuss year
2000 compliance issues. There can be no assurance that the systems of other
companies which the Company's systems rely upon will be timely converted, or
that such failure to convert by another company would not have a material
adverse effect on the Company's systems and results of operations.
Although the Company anticipates that minimal business disruption will
occur as a result of the year 2000 issues, based upon currently available
information, incomplete or untimely resolution of year 2000 issues by either the
Company or significant suppliers, customers and critical business partners could
have a material adverse impact on the Company's consolidated financial position,
results of operations and/or cash flows in future periods.
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
-12-
<PAGE>
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. On April 20, 1998, the
Company's Board of Directors approved a Shareholder Protection Rights Agreement
(the "Rights Plan"), which provides for one preferred stock purchase right in
respect of each share of the Company's Common Stock (the "Rights"). The Rights
become exercisable upon a person or group of affiliated persons acquiring 15% or
more of the Company's then-outstanding shares of Common Stock by all persons
other than such 15% stockholder. Furthermore, PSS has not opted out of certain
provisions of the Florida Business Corporation Act, including the provisions
relating to control-share acquisitions. The foregoing could have the effect of
delaying, deferring or preventing a change in control of PSS without further
action by its stockholders.
-13-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholder. The company will, however, receive proceeds
from the exercise of the Warrants in an aggregate amount of $11,655,000. The
exercise price for each warrant is $14.80 per share (subject to adjustment upon
the occurrence of certain events) and is payable in cash. Cash proceeds
received by the Company for the exercise of any Warrants will be used for
general corporate purposes.
SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
Shares held by the Selling Shareholder. The Shares may be offered from time to
time by the Selling Shareholder. See "Plan of Distribution."
<TABLE>
<CAPTION>
Shares Beneficially Owned
Prior to Offering (1) Shares Offered
Pursuant to
-------------------------
this
Name Number Percent Prospectus
---- ------ ------- --------------
<S> <C> <C> <C>
Deutsche Morgan Grenfell, Inc. 787,500 * 787,500
</TABLE>
- -----------------------------------
* Less than 1% of the outstanding Common Stock of the Company.
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
Shareholder for their own account and the Company will not receive any of the
proceeds from the sale by the Selling Shareholder 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 Shareholder, 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 Shareholder may arrange for other brokers or dealers to participate.
Brokers and dealers will receive commission or discounts from the Selling
Shareholder in amounts to be negotiated prior to the sale.
The Selling Shareholder 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
-14-
<PAGE>
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 Shareholder 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 Shareholder, any discounts, commissions and other
items constituting compensation from the Selling Shareholder 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 Shareholder will pay all applicable stock transfer taxes,
transfer fees and brokerage commissions or discounts. The Company has agreed to
bear all expenses in connection with the registration of the shares being
offered by the Selling Shareholder. The Company has agreed to indemnify the
Selling Shareholder against certain liabilities, including liabilities under the
Securities Act as underwriters or otherwise.
LEGAL MATTERS
A legal opinion to the effect that the Shares offered hereby by the Selling
Shareholder 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 included in the Form 10-K for
the year ended April 3, 1998 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 as of December 31, 1997
and 1996, and for each of the three years in the period ended December 31, 1997,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included in PSS's Annual Report on Form 10-K for the fiscal
year ended April 3, 1998 and incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
-15-
<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 NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SHAREHOLDER. 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>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
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
USE OF PROCEEDS....................................................... 14
SELLING SHAREHOLDER................................................... 14
PLAN OF DISTRIBUTION.................................................. 14
LEGAL MATTERS......................................................... 15
EXPERTS............................................................... 15
</TABLE>
================================================================================
================================================================================
787,500 SHARES
PSS WORLD MEDICAL, INC.
COMMON STOCK
P R O S P E C T U S
DECEMBER ___, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration fee to Securities and Exchange Commission.. $ 3,862
Accounting fees and expenses............................ 20,000
Legal fees and expenses................................. 5,000
Miscellaneous expenses.................................. 5,138
-------
Total.............................................. $34,000
</TABLE>
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. The Company has agreed to bear all expenses
in connection with the registration of the shares being offered by the Selling
Shareholder.
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 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
II-1
<PAGE>
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 the Registrant's Current
Report on Form 8-K filed with the Commission on April 7, 1998).
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).
4.3 Form of Specimen Certificate of PSS World Medical, Inc. Common Stock
(incorporated by reference from the Registrant's Current Report on
Form 8-K filed with the Commission on April 7, 1998).
5.1 Opinion of Fred Elefant, P.A. as to the legality of the securities
being offered by the Selling Shareholder.
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.
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
II-2
<PAGE>
more than 20% change in the 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 December ___,
1998.
PSS WORLD MEDICAL, INC.
By:/s/ Patrick C. Kelly
--------------------
Name: Patrick C. Kelly
Title: Chairman and Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities indicated on December ___, 1998.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
* Chairman of the Board and Chief Executive Officer
- ---------------------------------------------------- (principal executive officer)
Patrick C. Kelly
* Executive Vice President, Chief Financial Officer
- ---------------------------------------------------- and Director (principal financial and accounting
David A. Smith officer)
- ---------------------------------------------------- Director
Thomas G. Hixon
- ---------------------------------------------------- Director
Hugh M. Brown
*
- ---------------------------------------------------- Director
T. O'Neal Douglas
*
- ---------------------------------------------------- Director
Melvin L. Hecktman
- ---------------------------------------------------- Director
Delores Kesler
- ---------------------------------------------------- Director
Charles R. Scott
*
- ---------------------------------------------------- Director
James L.L. Tullis
*
- ---------------------------------------------------- Director
Donna C. E. Williamson
</TABLE>
*By:
_______________________________
David A. Smith
Power of Attorney
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Articles of Incorporation, as amended,
of the Registrant (incorporated by reference from the
Registrant's Current Report on Form 8-K filed with the
Commission on April 8, 1998).
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).
4.3 Form of Specimen Certificate of PSS World Medical, Inc.
Common Stock (incorporated by reference from the
Registrant's Current Report on Form 8-K filed with the
Commission on April 8, 1998).
5.1 Opinion of Fred Elefant, P.A. as to the legality of the
Shares being offered by the Selling Shareholder.
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.
24.1 Power of Attorney (included as part of the signature page
hereto).
<PAGE>
EXHIBIT 5.1
FRED ELEFANT, P.A.
1650 PRUDENTIAL DRIVE, SUITE 105
JACKSONVILLE, FLORIDA 32207
September 18, 1998
PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Ladies and Gentlemen:
This opinion is given in connection with the filing by PSS World Medical,
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 up
to 787,500 shares of Common Stock (the "Offering Shares") that may be sold by
certain 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 reports dated
June 30, 1998 included in the Form 10-K of PSS World Medical, Inc. for the year
ended April 3, 1998 and to all references to our Firm included in this
registration statement.
Arthur Andersen LLP
Jacksonville, Florida
January 8, 1999
<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
Amendment No. 1 to the Registration Statement on Form S-3 and related Prospectus
of PSS World Medical, Inc. for the registration of 787,500 shares of its common
stock and to the incorporation by reference therein of our report dated June 30,
1998, with respect to the consolidated financial statements of Gulf South
Medical Supply, Inc. for the year ended December 31, 1997, included in PSS World
Medical, Inc.'s Annual Report on Form 10-K for the fiscal year ended April 3,
1998.
Ernst & Young LLP
Jackson, Mississippi
January 7, 1999
