Pss World Medical : PSS World Medical Reports Results for Fiscal 2007 Second Quarter

PSS World Medical, Inc. (NASDAQ GS:PSSI):

Fiscal 2007 Second Quarter Highlights:

• Consolidated net sales growth of 10.7%
  • Physician Business net sales growth of 17.9%
  • Elder Care Business net sales decreased by 3.2%
• Consolidated operating margin of 5.1%
• Consolidated net income of $12.8 million, growth of 18.5%
• Consolidated operating cash flow of $29.9 million, growth of 33.2%
• Consolidated return on committed capital of 27.5%
• Repurchased approximately 628,000 common shares at an average price per share of $19.47

PSS World Medical, Inc. (NASDAQ GS:PSSI) announced today its results for the fiscal 2007 second quarter and six months ended September 29, 2006.

David A. Smith, President and Chief Executive Officer, commented, ?We are proud of our team's results for the quarter. The physician business' growth was driven by a focus on our global Select? medical products and pharmaceuticals. The elder care business had its second solid quarter in a row, improving margins while transitioning away from national chain nursing home business.

?We are on track to achieve our goals for fiscal year 2007, including earnings per diluted share of $0.76 - $0.78. We have successfully completed the first half of our fiscal years 2006 ? 2008 three-year plan, which targeted a goal of a 23% average annual increase in earnings.?

Net sales for the three months ended September 29, 2006, were $427.3 million, an increase of 10.7%, compared with net sales of $385.8 million for the three months ended September 30, 2005. Net sales for the three months ended September 29, 2006, for the Physician Business increased by 17.9% (including $15.4 million of flu vaccine sales), while net sales for the Elder Care Business decreased by 3.2%. Income from operations for the three months ended September 29, 2006, increased by 28.4% to $21.6 million compared with income from operations for the three months ended September 30, 2005, of $16.8 million. Net income for the three months ended September 29, 2006, increased by 18.5% to $12.8 million, or $0.18 per diluted share, compared with net income for the three months ended September 30, 2005, of $10.8 million, or $0.16 per diluted share, achieving 12.5% growth in earnings per diluted share.

Net sales for the six months ended September 29, 2006, were $840.6 million, an increase of 8.8%, compared with net sales of $772.9 million for the six months ended September 30, 2005. Net sales for the six months ended September 29, 2006, for the Physician Business increased by 15.7%, while net sales for the Elder Care Business decreased by 4.5%. Income from operations for the six months ended September 29, 2006, increased by 29.4% to $40.3 million compared with income from operations for the six months ended September 30, 2005, of $31.2 million. Net income for the six months ended September 29, 2006, increased by 25.4% to $23.7 million, or $0.34 per diluted share, compared with net income for the six months ended September 30, 2005, of $18.9 million, or $0.29 per diluted share, achieving 17.2% growth in earnings per diluted share.

David M. Bronson, Executive Vice President and Chief Financial Officer, commented, ?Each of our businesses made progress this quarter in improving profitability, with operating margin increasing both sequentially and over the prior year. Consolidated operating margin exceeded five percent of sales for the first time since our team began rebuilding the business in 2000. Operating cash flow of almost $30 million for the quarter exceeded our internal expectations and is on track for our full-year target of $58 - $60 million. About $12 million of this cash flow was returned to shareholders as we repurchased over 600,000 shares during the quarter.?

A listen-only simulcast and 90-day replay of PSS World Medical's fiscal 2007 second quarter conference call can be found in the Investor Relations section of the Company's website, www.pssworldmedical.com, under the heading ?investor events,? or www.opencompany.info on October 25, 2006, beginning at 8:30 a.m. Eastern time.

PSS World Medical, Inc. is a national distributor of medical products to physicians and elder care providers through its two business units. Since its inception in 1983, PSS has become a leader in the two 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.

Additional financial information pertaining to PSS World Medical financial results may be found by visiting the Company's website at www.pssworldmedical.com, and selecting ?Investor Relations? and ?Additional Financial Information.? If you should need assistance accessing the information, please call Investor Relations at 904-332-3000.

All statements in this release that are not historical facts, including, but not limited to, statements regarding anticipated growth in revenue, gross and operating margins, and earnings, statements regarding the Company's current business strategy, the Company's ability to complete and integrate acquired businesses and generate acceptable rates of return, the Company's projected sources and uses of cash, and the Company's plans for future development and operations, are based upon current expectations. Specifically, forward-looking statements in this Press Release include, without limitation, the Company's expected results in GAAP EPS, revenue, operating incomes and operating margins for continuing operations for both the consolidated company and for each of its businesses in fiscal years 2007 - 2009; the expected operational cash flow in fiscal years 2007- 2009; the ability to sustain revenue growth and expected growth rates of the marketing programs in its Physician and Elder Care Businesses; expected flu vaccine sales during fiscal years 2007, 2008 and 2009; expected pharmaceutical product sales in Florida and all other of the 50 U.S. states in fiscal years 2007- 2009; and expected sales growth from durable medical equipment, housekeeping, revenues derived from home care, hospice and assisted living customers, for revenue, operating income, operating margin, cash flow from operations and earnings per share for fiscal years 2007, 2008 and 2009, as well as other expectations of growth and financial and operational performance. 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: pricing and customer credit quality pressures; the loss of any of our distributorship agreements and our reliance on relationships with our suppliers and vendors; our reliance on a limited number of chain business elder care customers; the availability of sufficient capital to finance the Company's business plans on terms satisfactory to the Company; lower revenue and earnings that may result from competition; the ability of the Company to adequately defend or reach a settlement on outstanding litigation matters and investigations involving the Company or its management; changes in labor, equipment and capital costs; changes in legislation and regulations affecting the Company's business, such as the Medicare cliffs, changes in malpractice insurance rates and tort reform; future acquisitions or strategic partnerships; general business, competitive and economic factors and conditions; 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 or is under no obligation to update or revise any forward-looking statements.