Background and Basis of Presentation

6 Months Ended

Sep. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND AND BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance withgenerally accepted accounting principles in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to the SEC rules and regulations. The unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations for the periods indicated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of PSS World Medical, Inc. and its wholly-owned subsidiaries (the “Company”).The Company holds interests in variable interest entities (“VIE”) that are consolidated by the Company. See Footnote 4, Variable Interest Entity, for additional information. All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited condensed consolidated balance sheet as of March 30, 2012 has been derived from the Company's audited consolidated financial statements for the fiscal year ended March 30, 2012, adjusted for discontinued operations. The financial statements and related notes included in this report should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2012 and are reported as of the most recent quarter end, September 28, 2012 excluding the impact of the Company's merger with McKesson Corporation, as discussed below and further in Footnote 15, Subsequent Events.

The Company reports its year-end and quarter-end financial position, results of operations, and cash flows as of the Friday closest to calendar month end, determined using the number of business days. Fiscal years 2013and 2012 each consist of 52 weeks or 253 selling days. The three and six months ended September 28, 2012 and September 30, 2011each consisted of 63 selling days, respectively.

The results of operations for the interim periods covered by this report may not be indicative of operating results for the full fiscal year or any other interim periods.

On October 24, 2012, the Company entered into an Agreement and Plan of Merger (“the Merger Agreement”) under which McKesson Corporation will acquire all of PSS World Medical Inc.'s outstanding shares for $29.00 per share in cash. The transaction, which has been approved by the boards of directors of both companies, is subject to customary closing conditions, including all necessary regulatory clearances and the approval of the Company's shareholders. See Footnote 15, Subsequent Events, for additional information.

During the three months ended June 29, 2012, the Company's Board of Directors approved a strategic restructuring plan (“the restructuring plan”) designed to transform the Company. The restructuring plan includes the sale of two businesses serving skilled nursing facilities within the Extended Care Business and specialty dental practices within the Physician Business. Additionally, the plan includes the integration of all distribution operations into one common distribution infrastructure,and the redesign of the Company's shared services segment. As of September 28, 2012, the Company determined the two businesses being sold met the held for sale criteria, and therefore, the results are presented separately as discontinued operationswithin the accompanying Unaudited Condensed Consolidated Balance Sheets, Unaudited Condensed Consolidated Statements of Operations, and the Unaudited Condensed Consolidated Statements of Cash Flows. See Footnote 3, Discontinued Operations, for additional information.

As part of the restructuring plan, the previously reported segments, Physician Business and Extended Care Business, have been aligned intofour operating segments:Physician, Laboratory, Dispensing, and Home Care & Hospice, which serve a diverse customer base.A fifth reporting segment, Shared Services, consists of departments that support the operating segments through the delivery of standardized service.

The Physician business provides products and services to primary care and front line caregivers, including those affiliated with or owned by health systems. The Laboratory business provides laboratory equipment, supplies and services to individual physician office laboratories, clinics and small hospital laboratories. The Dispensing business provides dispensing solutions to physician business practices which include repackaging of pharmaceutical products, dispensing management solutions, and claims processing services to allow such practices to dispense medical products to their patients on-site. The Home Care & Hospice business provides products and services to caregivers to allow them to efficiently deliver care to patients in the home or hospice settings.

Reclassification

Certain items previously reported in financial statement captions and in the unaudited notes to the condensed consolidated financial statements have been reclassified to conform to the current financial statement presentation.

Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board (“FASB”) issued amended guidance to simplify how entities test indefinite-lived intangible assets for impairment. The objective of the amendments in this Accounting Standards Update (“ASU”) is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. This ASU permits an entity to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. The amendments in this update are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after September 15, 2012, or the Company's fiscal year 2014. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this update.

During the six months ended September 28, 2012, the Company adopted an ASU that provides new guidance on the presentation of comprehensive income and requires changes in stockholders' equity to be presented either (i) in a single continuous statement of comprehensive income, or (ii) in two separate consecutive statements. The ASU requires retrospective application. In December 2011, the FASB indefinitely deferred the effective date for amendments pertaining to the presentation of reclassification adjustments by component. The adoption of this standard did not have an effect on the Company's statements of financial condition or results of operations, as the Company has no other comprehensive income items to disclose.

During the six months ended September 28, 2012, the Company adopted an ASU that amends guidance to simplify the method in which entities test goodwill for impairment. This ASU allows an entity to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Additional disclosure is required by this update, including an explanation of qualitative factors used in the goodwill analysis. The adoption of this standard did not have an effect on the Company's statements of financial condition or results of operations.

Stock Repurchase Program

From time to time, the Company's Board of Directors authorizes the purchase of its outstanding common shares. The Company is authorized to repurchase a determined amount of its total common stock, which can be made in the open market, privately negotiated transactions, and other transactions publicly disclosed through filings with the SEC.

The following table summarizes the common stock repurchases and Board of Directors authorizations during the period from March 30, 2012 to September 28, 2012:

(in thousands)	Shares
Shares available for repurchase as of March 30, 2012	437
Shares repurchased	(382)
Shares available for repurchase as of September 28, 2012	55

During the six months ended September 28, 2012, the Company repurchased approximately 0.4millionshares of common stock at an average price of $20.26per common share for $7,740, which reduced common stock and additional paid-in capitalby approximately $4and $7,736, respectively.

During fiscal year ended March 30, 2012, the Company's additional paid-in capital balance was reduced to zero as a result of share repurchases. In accordance with ASC 505, Equity, retirements of the Company's shares may be recorded to additional paid-in capital to the extent that previous net gains from sales or retirements of the same class of stock remain, and otherwise should be recorded to retained earnings. As of September 28, 2012 and March 30, 2012, retained earnings was reduced by $5,541and $7,154, respectively, which represented share repurchases occurring after the additional paid-in capital balance had been reduced to zero.