PSS World Medical, Inc. Announces Major Capital Structure Initiatives; Repurchases $19 Million of Senior Subordinated Notes and 1.3 Million Shares of Common Stock

Business Wire, Oct 28, 2002

Business Editors & Health/Medical Writers

JACKSONVILLE, Fla.--(BUSINESS WIRE)--Oct. 28, 2002

PSS World Medical, Inc. (Nasdaq/NM: PSSI) today announced initiatives to improve its capital structure and thereby reduce its cost of capital. The major components of the plan are the following:

-- The Company has started a process to arrange a receivables-based financing with the proceeds targeted to the retirement of the Company's 8 1/2% Senior Subordinated Notes, which currently have an outstanding balance of $106 million following a recent $19 million repayment. Based on current market rates, the Company believes this financing alternative can lower its cost of borrowing by up to approximately 500 basis points.

-- The anticipated $45 million of proceeds from the expected sale of the Imaging business, announced separately today, are targeted for potential uses including continuing repurchases of the Company's common stock, repayments of an anticipated future credit line and for general corporate purposes, including reinvestment in its core businesses.

-- The Company is also in the initial stages of evaluating a Line of Credit in the range of $50 million to $75 million, which will be used to replace the Company's current unutilized $150 million Line of Credit.

-- The Company noted that it has purchased 1.3 million shares of its common stock under a previously announced share repurchase program. The Company has been authorized by its Board of Directors to repurchase up to 5% of total outstanding shares or approximately 3.6 million shares.

David M. Bronson, Senior Vice President and Chief Financial Officer of PSS World Medical, commented, "We have launched a significant program to further improve our capital structure with the objective of optimizing the use of our assets. This new initiative will build on our significant results over the past two years to pay-off all of our bank debt, dramatically improve our cash conversion cycle in our Physician and Long-term care businesses, and generate strong cash flow from operations. Today we announced an agreement to sell the Imaging business, which will provide increased resources to leverage our already strong financial position. We are confident that our expectation for consistent improvements in operating results combined with these capital structure initiatives will generate increasing returns for our shareholders in the future."

PSS World Medical, Inc. is a specialty marketer and distributor of medical products to physicians, long-term care providers and imaging consumers through its three business units to customers in all 50 states. Since its inception in 1983, PSS has become a leader in all three market segments that it serves with a focused market approach to customer services, a consultative sales force, strategic acquisitions, strong arrangements with product manufacturers and a unique culture of performance.

All statements in this release 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; the receipt of approvals and third party consents in connection with the sale of the Imaging business and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission. Many of these factors are outside the control of the Company. 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. The Company also wishes to caution readers that it undertakes no duty and is under no obligation to update any forward-looking statements.