UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended     September 27, 2002
                                            ------------------

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ___________ to ____________

                         Commission File Number 0-23832

                             PSS WORLD MEDICAL, INC.
             (Exact name of registrant as specified in its charter)



                Florida                                         59-2280364
                -------                                         ----------
      (State or other jurisdiction                            (IRS employer
           of incorporation)                              Identification number)

         4345 Southpoint Blvd.
         Jacksonville, Florida                                    32216
         ---------------------                                    -----
(Address of principal executive offices)                        (Zip code)


    Registrant's telephone number                            (904) 332-3000

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 [X] Yes [ ] No

         Indicate by check mark whether the registrant is an accelerated filer
(as defined by Rule 12b-2 of the Securities Exchange Act of 1934).

                                 [X] Yes [ ] No

         The number of shares of common stock, par value $.01 per share, of the
registrant outstanding as of November 4, 2002 was 68,489,585 shares.



<PAGE>


                    PSS WORLD MEDICAL, INC. AND SUBSIDIARIES

                               SEPTEMBER 27 , 2002

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>



  Item                                                                                                        Page

   <S>                                                                                                         <C>
           Information Regarding Forward-Looking Statements................................................     3

           Part I--Financial Information

   1.      Financial Statements:

               Consolidated Balance Sheets -- September 27, 2002 and March 29, 2002....................         4

               Consolidated Statements of Operations for the Three and Six Months Ended
                  September 27, 2002 and September 28, 2001............................................         5

               Consolidated Statements of Cash Flows for the Six Months Ended September 27, 2002 and
                  September 28, 2001...................................................................         6

               Notes to Consolidated Financial Statements..............................................         8

               Independent Accountants' Review Report..................................................        25

   2.      Management's Discussion and Analysis of Financial Condition and Results of Operations.......        26

   3.      Quantitative and Qualitative Disclosures About Market Risk..................................        43

   4.      Disclosure Controls and Procedures..........................................................        43

           Part II--Other Information

   1.      Legal Proceedings...........................................................................        43

   2.      Changes in Securities and Use of Proceeds...................................................        43

   3.      Defaults Upon Senior Securities.............................................................        43

   4.      Submission of Matters to a Vote of Security Holders.........................................        43

   5.      Other Information...........................................................................        44

   6.      Exhibits and Reports on Form 8-K............................................................        44

           Signatures..................................................................................        48

           Certifications..............................................................................        49

</TABLE>

                                       2
<PAGE>


                              CAUTIONARY STATEMENTS


Forward-Looking Statements

This Form 10-Q includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All statements regarding the Company's and its subsidiaries' expected
future financial position, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing plans, business strategy,
budgets, projected costs, capital expenditures, competitive positions, growth
opportunities, business divestiture plans, plans and objectives of management
for future operations, and statements that include words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," "may," "could," and other
similar expressions are forward-looking statements. Such forward-looking
statements are inherently uncertain, and stockholders must recognize that actual
results may differ from the Company's expectations.

Actual future results and trends for the Company may differ materially depending
on a variety of factors discussed in the Company's Annual Report on Form 10-K
for the year ended March 29, 2002, in this Form 10-Q, and elsewhere in the
Company's filings with the Securities and Exchange Commission. Factors that may
affect the plans or results of the Company include, without limitation, those
listed in the Company's Annual Report on Form 10-K for the year ended March 29,
2002 under the heading "Risk Factors," and (i) the ability of the Company to
successfully implement its strategic business plan; (ii) the availability of
sufficient capital to finance the Company's business plans on terms satisfactory
to the Company; (iii) competitive factors; (iv) the ability of the Company to
adequately defend or reach a settlement of outstanding litigations and
investigations involving the Company or its management; (v) changes in labor,
equipment and capital costs; (vi) changes in regulations affecting the Company's
business; (vii) changes in Medicare supplemental reimbursements for services
provided by long-term care providers; (viii) future acquisitions or strategic
partnerships; (ix) the disposition of the Company's Imaging Business; and (x)
general business and economic conditions. Many of these factors are outside the
control of the Company and its management. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements, which are
made pursuant to the private Securities Litigation Reform Act of 1995 and, as
such, speak only as of the date made. The Company undertakes no duty to update
such forward-looking statements.





                                       3
<PAGE>

PART I--FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                    PSS WORLD MEDICAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      SEPTEMBER 27, 2002 AND MARCH 29, 2002

             (Dollars in Thousands, Except Share and Per Share Data)


                                     ASSETS
<TABLE>
<CAPTION>


                                                                                                September 27,     March 29,
                                                                                                     2002            2002
                                                                                                ------------      -----------
                                                                                                 (Unaudited)
Current Assets:
   <S>                                                                                                 <C>             <C>
   Cash and cash equivalents..............................................................        $   33,006       $  53,574
   Accounts receivable, net...............................................................           154,804         148,340
   Inventories, net.......................................................................            89,215          83,854
   Employee advances......................................................................                58             118
   Prepaid expenses and other.............................................................            26,941          31,096
   Assets of discontinued operations......................................................           179,348         193,141
                                                                                                ------------      -----------
           Total current assets...........................................................           483,372         510,123

Property and equipment, net...............................................................            61,998          61,691
Other Assets:
   Goodwill...............................................................................            61,283          59,390
   Intangibles, net.......................................................................             5,847           4,023
   Employee advances......................................................................               184             282
   Deferred tax assets....................................................................            42,574           7,034
   Other..................................................................................            18,754          20,865
                                                                                                ------------      -----------
           Total assets...................................................................          $674,012        $663,408
                                                                                                ============      ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Accounts payable.......................................................................        $  104,923       $  94,383
   Accrued expenses.......................................................................            33,081          29,976
   Other..................................................................................             5,429           4,616
   Liabilities of discontinued operations and accrued loss on disposal....................           147,068          68,490
                                                                                                ------------      -----------
           Total current liabilities......................................................           290,501         197,465
Long-term debt............................................................................           106,000         125,000
Other.....................................................................................            15,843          16,495
                                                                                                ------------      -----------
           Total liabilities..............................................................           412,344         338,960
                                                                                                ------------      -----------
Shareholders' Equity:
   Preferred stock, $.01 par value; 1,000,000 shares authorized, no shares issued and
       outstanding........................................................................               --               --
   Common stock, $.01 par value; 150,000,000 shares authorized, 69,958,816 and 71,270,044
       shares issued and outstanding at September 27, 2002 and March 29, 2002, respectively              699             712
   Additional paid-in capital.............................................................           339,894         350,043
   Accumulated deficit....................................................................           (78,925)        (26,307)
                                                                                                ------------      -----------
           Total shareholders' equity.....................................................           261,668         324,448
                                                                                                ------------      -----------
           Total liabilities and shareholders' equity.....................................          $674,012        $663,408
                                                                                                ============      ===========
</TABLE>



The accompanying notes are an integral part of these consolidated statements.


                                       4
<PAGE>


                    PSS WORLD MEDICAL, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS

  FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 27, 2002 AND SEPTEMBER 28, 2001

                                   (Unaudited)

                  (Dollars in Thousands, Except Per Share Data)


<TABLE>
<CAPTION>
                                                               Three Months Ended                   Six Months Ended
                                                        ---------------------------------  ----------------------------------
                                                         September 27,     September 28,    September 27,     September 28,
                                                              2002             2001              2002              2001
                                                        ----------------  ---------------  ----------------  ----------------

<S>                                                         <C>               <C>              <C>               <C>
Net sales..........................................         $288,819          $271,826         $575,285          $538,958
Cost of goods sold.................................          206,659           197,708          412,569           392,685
                                                        ----------------  ---------------  ----------------  ----------------
               Gross profit........................           82,160            74,118          162,716           146,273
General and administrative expenses................           56,166            48,197          109,322            96,123
Selling expenses...................................           20,871            18,765           41,211            36,956
International business exit charge reversal........               --                --               --              (514)
                                                        ----------------  ---------------  ----------------  ----------------
               Income from operations..............            5,123             7,156           12,183            13,708
                                                        ----------------  ---------------  ----------------  ----------------
Other (expense) income:
      Interest expense.............................           (2,167)           (1,845)          (4,466)           (4,614)
      Interest and investment income (loss)........              176               (24)             397               164
      Other income.................................              408               356              810             1,135
                                                        ----------------  ---------------  ----------------  ----------------
                                                              (1,583)           (1,513)          (3,259)           (3,315)
                                                        ----------------  ---------------  ----------------  ----------------

Income from continuing operations before provision
      for income taxes.............................            3,540             5,643            8,924            10,393
Provision for income taxes.........................            1,293             2,049            3,327             3,750
                                                        ----------------  ---------------  ----------------  ----------------
Income from continuing operations before
      extraordinary loss...........................            2,247             3,594            5,597             6,643
                                                        ----------------  ---------------  ----------------  ----------------
Discontinued operations:
      Loss from discontinued operations (net of
         benefit (provision) for income taxes of
         $745, ($31), $1,209, and $129,
         respectively).............................           (1,109)             (191)          (1,907)             (552)
      Loss on disposal of discontinued operations
         (net of benefit for income taxes of
         $34,654)..................................          (55,642)               --          (55,642)               --
      Cumulative effect of accounting change (net
         of benefit for income taxes of $14,444)...               --                --               --           (90,045)
                                                        ----------------  ---------------  ----------------  ----------------
               Total loss from discontinued
               operations..........................          (56,751)             (191)         (57,549)          (90,597)
                                                        ----------------  ---------------  ----------------  ----------------
Extraordinary loss (net of benefit for income taxes
      of $424).....................................             (666)               --             (666)               --
                                                        ----------------  ---------------  ----------------  ----------------
Net (loss) income..................................        $ (55,170)       $    3,403        $ (52,618)        $ (83,954)
                                                        ================  ===============  ================  ================

Earnings (loss) per share - Basic:
      Income from continuing operations before
         extraordinary loss........................          $ 0.03             $0.05           $ 0.08            $ 0.09
      Total loss from discontinued operations......           (0.80)              --             (0.81)            (1.27)
      Extraordinary loss...........................           (0.01)              --             (0.01)              --
                                                        ----------------  ---------------  ----------------  ----------------
      Net (loss) income............................          $(0.78)            $0.05           $(0.74)           $(1.18)
                                                        ================  ===============  ================  ================

Earnings (loss) per share - Diluted:

      Income from continuing operations before
         extraordinary loss........................          $ 0.03             $0.05           $ 0.08            $ 0.09
      Total loss from discontinued operations......           (0.79)              --             (0.80)            (1.26)
      Extraordinary loss...........................           (0.01)              --             (0.01)              --
                                                        ----------------  ---------------  ----------------  ----------------
      Net (loss) income............................          $(0.77)            $0.05           $(0.73)           $(1.17)
                                                        ================  ===============  ================  ================

</TABLE>


The accompanying notes are an integral part of these consolidated statements.



                                       5
<PAGE>

                    PSS WORLD MEDICAL, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

       FOR THE SIX MONTHS ENDED SEPTEMBER 27, 2002 AND SEPTEMBER 28, 2001

                                   (Unaudited)

                             (Dollars in Thousands)


<TABLE>
<CAPTION>

                                                                                               Six Months Ended
                                                                                       --------------------------------
                                                                                        September 27,    September 28,
                                                                                             2002             2001
                                                                                       ----------------  --------------
<S>                                                                                         <C>               <C>

Cash Flows From Operating Activities:
   Net loss.......................................................................       $(52,618)         $(83,954)
    Adjustments to reconcile net loss to net cash provided by operating activities:
       Total loss from discontinued operations....................................         57,549            90,597
       Extraordinary loss.........................................................            666                --
       Depreciation...............................................................          5,827             3,583
       Amortization of intangible assets..........................................          1,188               719
       Amortization of debt issuance costs........................................            558               993
       Provision for doubtful accounts............................................          1,712             2,505
       Provision for notes receivables............................................          2,939                --
       (Benefit) provision for deferred income taxes..............................         (1,518)           11,635
       Loss on sales of property and equipment....................................             17                25
       Noncash compensation expense...............................................             --               325
       Loss on marketable securities..............................................             --               114
       International Business exit charge reversal................................             --              (514)
       Changes in operating assets and liabilities, net of effect of business
        combination and discontinued operations:
          Accounts receivable, net................................................         (6,947)           (2,579)
          Inventories, net........................................................         (4,690)              837
          Prepaid expenses and other current assets...............................          5,349             2,721
          Other assets............................................................         (3,846)          (16,430)
          Accounts payable........................................................          9,412            24,369
          Accrued expenses and other liabilities..................................          3,328            (4,085)
          Net cash provided by discontinued operations............................          1,639            25,162
                                                                                       ----------------  --------------
              Net cash provided by operating activities...........................         20,565            56,023
                                                                                       ----------------  --------------

Cash Flows From Investing Activities:
    Capital expenditures..........................................................         (6,160)          (10,266)
    Payments on noncompete agreements.............................................           (423)             (370)
    Payment for business combination..............................................         (4,464)               --
    Proceeds from sales of property and equipment.................................             10                42
    Proceeds from sale of International Business..................................             --               221
    Net cash used in discontinued operations......................................         (1,113)           (1,553)
                                                                                       ----------------  --------------
              Net cash used in investing activities...............................        (12,150)          (11,926)
                                                                                       ----------------  --------------
</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                                               Six Months Ended
                                                                                       --------------------------------
                                                                                        September 27,    September 28,
                                                                                             2002             2001
                                                                                       ----------------  --------------
<S>                                                                                         <C>               <C>
Cash Flows From Financing Activities:
    Repayment of Senior Subordinated Notes........................................        (19,000)               --
    Payment of premiums for retirement of Senior Subordinated Notes...............           (665)               --
    Purchase of treasury stock shares.............................................         (9,518)               --
    Proceeds from issuance of common stock........................................            200                11
    Net payments under revolving line of credit...................................             --           (54,195)
    Net cash used in discontinued operations......................................             --               (59)
                                                                                       ----------------  --------------
              Net cash used in financing activities...............................        (28,983)          (54,243)
                                                                                       ----------------  --------------
Net decrease in cash and cash equivalents.........................................        (20,568)          (10,146)

Cash and cash equivalents, beginning of period....................................         53,574            34,374
                                                                                       ----------------  --------------
Cash and cash equivalents, end of period..........................................       $ 33,006          $ 24,228
                                                                                       ================  ==============
</TABLE>


The accompanying notes are an integral part of these consolidated statements.



                                       7
<PAGE>

                      PSS WORLD MEDICAL, INC. SUBSIDIARIES


                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

      (Dollars in Thousands, Except Per Share Data, Unless Otherwise Noted)



  1. BACKGROUND AND BASIS OF PRESENTATION

     Background

     PSS World Medical, Inc. (the "Company" or "PSSWM") is a specialty marketer
     and distributor of medical products to physicians, alternate-site imaging
     centers, long-term care providers, home healthcare providers, and hospital
     radiology departments through 63 full-service centers to customers in all
     50 states.

     The Physician Sales & Service division ("PSS" or the "Physician Supply
     Business") is a distributor of medical supplies, equipment, and
     pharmaceuticals to primary care and other office-based physicians in the
     United States. At September 27, 2002, PSS operated 39 full-service centers
     distributing to physician office sites in all 50 states.

     The Gulf South Medical Supply, Inc. subsidiary ("Gulf South" or the
     "Long-Term Care Business") is a distributor of medical supplies and related
     products to nursing homes, home healthcare agencies, and other long-term
     care facilities. At September 27, 2002, Gulf South operated 13 full-service
     centers serving all 50 states.

     The Diagnostic Imaging, Inc. subsidiary ("DI" or the "Imaging Business") is
     a distributor of medical diagnostic imaging supplies, chemicals, equipment,
     and services to the acute and alternate-care markets in the United States.
     At September 27, 2002, DI operated 11 full-service centers, 32 distribution
     centers, and 16 break-freight locations distributing to customer sites in
     42 states. During the three months ended September 27, 2002, the Company's
     Board of Directors adopted a plan to dispose of the Imaging Business. As a
     result, DI's results of operations have been classified as discontinued
     operations for all periods presented. Refer to Note 2, Discontinued
     Operations, for a further discussion.

     After giving effect to the discontinuation of the Imaging Business, the
     Company divides its operations into two reportable operating segments: the
     Physician Supply Business and the Long-Term Care Business. A third segment,
     titled Other, includes unallocated corporate overhead and the Company's
     European operations (the "International Business"), which were sold during
     fiscal year 2002.

     Basis of Presentation

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with the rules and regulations of the United States
     Securities and Exchange Commission (the "SEC"). Accordingly, certain
     information and footnote disclosures normally included in financial
     statements prepared in accordance with accounting principles generally
     accepted in the United States have been omitted pursuant to SEC rules and
     regulations. The 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 consolidated balance sheet as of March 29, 2002 has been derived from
     the Company's audited consolidated financial statements for the fiscal year
     ended March 29, 2002. 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 29, 2002.

                                       8
<PAGE>

     The Company reports its quarter end financial position and results of
     operations and cash flows on the last Friday on or before June 30,
     September 30, December 31, and March 31. The three months ended September
     27, 2002 and September 28, 2001 each consist of 13 weeks.

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

     Reclassifications

     Certain amounts for prior periods have been reclassified to conform to the
     current period presentation.

     Recent Accounting Pronouncements

     In April 2002, the Financial Accounting Standards Board (the "FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 145, Rescission of
     FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
     Technical Corrections ("SFAS 145"). Among other things, SFAS 145 rescinds
     SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt. As
     such, gains and losses from extinguishment of debt shall not be reported as
     extraordinary items unless the extinguishment qualifies as an extraordinary
     item under the criteria of Accounting Principles Board ("APB") Opinion No.
     30, Reporting the Results of Operation-Reporting the Effects of Disposal of
     a Segment of a Business, and Extraordinary, Unusual and Infrequently
     Occurring Events and Transactions ("APB 30"). Gains or losses from
     extinguishment of debt that do not meet the criteria of APB 30 should be
     reclassified to income from continuing operations for all prior periods
     presented. The Company will adopt the provisions of SFAS 145 on March 29,
     2003, the first day of fiscal year 2004. Upon adoption, the Company will
     reclassify any gains or losses on early extinguishment of debt and related
     taxes recorded as an extraordinary loss during fiscal year 2003 to other
     (expense) income and provision for income taxes in the consolidated
     statements of operations.

     During June 2002, the FASB issued SFAS No. 146, Accounting for Costs
     Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146
     addresses the financial accounting and reporting for costs associated with
     exit or disposal activities, and eliminates the definition and requirements
     for recognition of exits costs in Emerging Issues Task Force ("EITF") Issue
     No. 94-3, Liability Recognition for Certain Employee Termination Benefits
     and Other Costs to Exit an Activity (including Certain Costs Incurred in a
     Restructuring). SFAS 146 will require that a liability for a cost
     associated with an exit or disposal activity be recognized when the
     liability is incurred and that fair value is the objective for initial
     measurement of a liability. The Company will apply the provisions of SFAS
     146 for exit or disposal activities that are initiated after December 31,
     2002, the effective date of this statement.

2.   DISCONTINUED OPERATIONS

     On September 26, 2002, the Company's Board of Directors adopted a plan to
     dispose of the Imaging Business. The plan to dispose of the Imaging
     Business reflects a strategic decision by management to focus the Company's
     efforts on its Physician Supply and Long-Term Care Businesses, which offer
     attractive opportunities for growth and profitability. On October 28, 2002,
     the Company announced a definitive agreement to sell the Imaging Business
     to a subsidiary of Platinum Equity, LLC in a capital stock transaction for
     approximately $45.0 million in cash and the assumption of approximately
     $67.9 million of liabilities. The purchase price is subject to adjustment
     based on the net assets sold and net cash held by DI as of the closing
     date. The closing of the transaction is subject to the satisfaction of
     customary closing conditions, including the execution of a transition
     services agreement. The transaction is expected to close no later than the
     end of February 2003.

     The results of operations of the Imaging Business and the estimated loss on
     disposal have been classified as "discontinued operations" in accordance
     with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets. The
     estimated loss on disposal is subject to change based on the final purchase
     price and any adjustments will be recorded in the period in which they
     become known. The accompanying financial statements have been reclassified
     to conform to discontinued operations treatment for all historical periods
     presented.

                                       9
<PAGE>

     Net sales and total loss from discontinued operations of the Imaging
     Business are as follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended               Six Months Ended
                                                ----------------------------   -----------------------------
                                                September 27,  September 28,   September 27,   September 28,
                                                     2002           2001           2002             2001
                                                -------------  -------------   -------------   -------------
      <S>                                            <C>            <C>            <C>             <C>
      Net sales............................      $175,704       $176,544       $352,469        $356,152
      Pretax loss from operations..........        (1,854)          (160)        (3,116)           (681)
      Pretax loss on disposal of
         discontinued operations...........       (90,296)            --        (90,296)             --
      Benefit (provision) for income taxes.        35,399            (31)        35,863             129
      Cumulative effect of accounting
         change (net of income tax benefit
         of $14,444) ......................            --             --             --         (90,045)
                                                -------------  -------------   -------------   -------------
      Total loss from discontinued
         operations........................      $(56,751)      $   (191)      $(57,549)       $(90,597)
                                                =============  =============   =============   =============
</TABLE>


     In accordance with EITF Issue No. 87-24, Allocation of Interest to
     Discontinued Operations ("EITF 87-24"), a portion of the Company's interest
     expense that is not directly attributable to or related to other operations
     of the Company has been allocated to discontinued operations based upon the
     ratio of net assets to be sold to the sum of consolidated net assets plus
     consolidated debt. In addition, in accordance with EITF 87-24, general
     corporate overhead was not allocated to discontinued operations. Interest
     expense allocated to discontinued operations was $873 and $1,091 for the
     three months ended September 27, 2002 and September 28, 2001, respectively,
     and $1,703 and $2,569 for the six months ended September 27, 2002 and
     September 28, 2001, respectively. Income taxes related to continuing
     operations have been calculated for each of the periods presented. The
     difference between this amount and the total tax provision, as previously
     reported, has been allocated to discontinued operations.

     The  cumulative  effect  of  accounting  change  for the six  months  ended
     September 28, 2001  primarily  related to a goodwill  impairment  charge of
     $90,045, net of a benefit for income taxes of $14,444, recorded as a result
     of adopting  SFAS No. 142,  Goodwill  and Other  Intangible  Assets  ("SFAS
     142").

     The following table summarizes the carrying amounts of the major classes of
     assets and liabilities classified as discontinued operations in the
     accompanying balance sheets.

<TABLE>
<CAPTION>
                                                                                      As of
                                                                          --------------------------
                                                                          September 27,    March 29,
                                                                               2002           2002
                                                                          -------------  -----------

      <S>                                                                       <C>            <C>
      Accounts receivable, net.......................................     $  83,120      $  78,615
      Inventories, net...............................................        63,880         69,069
      Prepaid expenses and other current assets......................         8,355          7,655
      Property and equipment, net....................................        21,716         23,149
      Goodwill and intangibles.......................................            --         12,425
      Other noncurrent assets........................................         2,277          2,228
                                                                          -------------  -----------
          Assets of discontinued operations..........................      $179,348       $193,141

      Accounts payable...............................................     $  52,281        $52,311
      Accrued expenses...............................................         6,200          5,815
      Other current liabilities......................................         9,399         10,364
                                                                          -------------  -----------
          Liabilities of discontinued operations.....................        67,880         68,490
      Accrued loss on disposal.......................................        79,188             --
                                                                          -------------  -----------
          Liabilities of discontinued operations and accrued loss on
             disposal................................................      $147,068      $  68,490
                                                                          =============  ===========
</TABLE>

                                       10
<PAGE>


3.   ACCRUED RESTRUCTURING COSTS AND EXPENSES

     Physician  Supply Business Plan Adopted During the Fourth Quarter of Fiscal
     Year 2002.

     During the quarter ended March 29, 2002, management and the Board of
     Directors approved and committed to a plan to restructure the Physician
     Supply Business. This plan was implemented in order to reduce overhead
     costs, improve customer satisfaction, and improve the distribution
     infrastructure.

     During the three months ended September 27, 2002, management reevaluated
     its estimates of the total costs related to this plan and made necessary
     adjustments. The original total estimated costs of $6,505 related to this
     plan have been revised to be approximately $5,753, of which approximately
     $4,174 and $1,042 was recognized during fiscal year 2002 and the six months
     ended September 27, 2002, respectively. Approximately $537 will be expensed
     as incurred during the remaining six months of fiscal year 2003. Management
     anticipates that this plan will be completed by the end of the fourth
     quarter of fiscal year 2003. As a result of the plan, approximately 75
     employees, including operations leaders, administrative and warehouse
     personnel, will be involuntarily terminated. As of September 27, 2002, 43
     employees had been terminated.

     To improve the distribution infrastructure, certain administrative
     functions, such as accounts receivable billing and collections and
     inventory management, at 13 service center locations will be consolidated
     into larger existing facilities within a geographic location. The
     operations in the affected facilities will be reduced to receiving and
     distributing inventory, customer service, and sales support. Such locations
     will be referred to as "break-freight" locations. As of September 27, 2002,
     certain administrative functions at 7 of the 13 service center locations
     were consolidated into existing facilities. To improve the inventory
     purchasing structure and to leverage purchasing volumes, the purchasing
     function for 33 service locations will be centralized to the corporate
     office located in Jacksonville, Florida. As of September 27, 2002, the
     purchasing function for 19 of the 33 service center locations was
     centralized to Jacksonville, Florida.

     Accrued restructuring costs and expenses related to the Physician Supply
     Business plan, classified as accrued expenses in the accompanying
     consolidated balance sheets, were $2,730 and $3,666 at September 27, 2002
     and March 29, 2002, respectively. The following is a summary of the
     restructuring activity related to the plan described above:

<TABLE>
<CAPTION>
                                                      Involuntary
                                                        Employee        Lease         Branch
                                                      Termination    Termination     Shutdown
                                                         Costs          Costs         Costs         Total
                                                      -----------    -----------     --------     --------
            <S>                                            <C>           <C>             <C>        <C>
           Balance at March 29, 2002.............         $783         $2,535           $348       $3,666
                 Additions.......................          174             --             --          174
                 Utilized........................         (106)           (51)           (18)        (175)
                                                      -----------    -----------     --------     --------
           Balance at June 28, 2002..............          851          2,484            330        3,665
                 Adjustments.....................         (464)            --           (317)        (781)
                 Additions.......................           29             15             --           44
                 Utilized........................         (103)           (98)             3         (198)
                                                      -----------    -----------     --------     --------
           Balance at September 27, 2002.........         $313         $2,401            $16       $2,730
                                                      ===========    ===========     ========     ========
</TABLE>


     During the three months ended September 27, 2002, management reevaluated
     the plan and adjusted certain estimates related to involuntary employee
     termination costs and branch shutdown costs. Certain employees, who were
     previously identified to be involuntarily terminated, either ceased
     employment prior to the distribution center closure or were transferred
     within the Company. Therefore, these employees were not entitled to
     severance. In addition, accrued branch shutdown costs are estimated to be
     less than previous estimates as the Company was able to sell the warehouse
     racking for more than what was originally estimated. As a result, the
     Company reversed approximately $781 of restructuring costs and expenses
     during the three months ended September 27, 2002.

     The amount of severance that involuntarily terminated employees receive is
     based on the number of months of service. Employees earn additional
     severance during the period from March 30, 2002 until closure of their
     service center. This additional severance is being accrued when earned


                                       11
<PAGE>

     throughout fiscal year 2003. The Physician Supply Business accrued an
     additional $29 and $203 of involuntary employee termination costs during
     the three and six months ended September 27, 2002, respectively.

     Prior Fiscal Years

     During the prior fiscal years, management and the Board of Directors
     approved and committed to several plans to restructure the Physician Supply
     and the Long-Term Care Businesses. Accrued restructuring costs and expenses
     related to plans adopted in the prior fiscal years, classified as accrued
     expenses in the accompanying consolidated balance sheets, totaled $857 and
     $1,399 at September 27, 2002 and March 29, 2002, respectively. The
     following is a summary of the restructuring activity related to the plans
     adopted in prior fiscal years:

<TABLE>
<CAPTION>
                                                     Involuntary
                                                       Employee        Lease
                                                     Termination   Termination
                                                        Costs         Costs        Total
                                                     -----------   -----------    ---------
           <S>                                           <C>            <C>            <C>
           Balance at March 29, 2002............       $1,385         $  14         $1,399
                 Adjustments....................           --           (14)           (14)
                 Utilized.......................         (258)           --           (258)
                                                     -----------   -----------    ---------
           Balance at June 28, 2002.............        1,127            --          1,127
                 Utilized.......................         (270)           --           (270)
                                                     -----------   -----------    ---------
           Balance at September 27, 2002........      $   857        $   --         $  857
                                                     ===========   ===========    =========
</TABLE>

     The accrued involuntary employee termination costs at September 27, 2002
     and March 29, 2002 relate to Plan E that was adopted during the third
     quarter of fiscal year 2001. The remaining $857 will be paid to the
     terminated employees in fiscal year 2003 in accordance with the severance
     agreements.

4.   PURCHASE BUSINESS COMBINATION

     On September 16, 2002, the Company acquired certain assets and assumed
     certain liabilities of a long-term care medical supply distributor. The
     acquisition was accounted for under the purchase method of accounting in
     accordance with SFAS No. 141, Business Acquisitions, and accordingly the
     operations of the acquired company have been included in the Company's
     results of operations subsequent to the date of acquisition. The assets
     acquired and liabilities assumed were recorded at their estimated fair
     values at the date of the acquisition as determined by management based on
     information currently available. Supplemental unaudited pro forma
     information, assuming this acquisition was made at the beginning of the
     immediate preceding period, is not presented as the results would not
     differ materially from the amounts reported in the accompanying
     consolidated statements of operations.

     The aggregate purchase price was $4,464. The Company is in the process of
     obtaining independent valuations of certain intangible assets; thus, the
     allocation of the purchase price is subject to revision. The following
     table summarizes the estimated fair values of the assets acquired and
     liabilities assumed at the date of acquisition.


        Accounts receivable.......................................$1,230
        Inventory.................................................   671
        Goodwill ................................................. 1,893
        Intangibles............................................... 1,694
                                                                  ------
             Total assets acquired................................ 5,488
        Current liabilities....................................... 1,024
                                                                  ------
             Net assets acquired..................................$4,464
                                                                  ======

     The $1,893 of goodwill was assigned to the Long-Term Care Business and is
     expected to be deductible for tax purposes. Of the $1,694 of acquired
     intangible assets, $265, $538, and $891 was assigned to noncompete
     agreements, customer contracts, and customer relationships, respectively.
     The acquired intangible assets have a weighted-average useful life of
     approximately 5.6 years.

                                       12
<PAGE>

5.   GOODWILL

     In accordance  with SFAS 142 the changes in the carrying  value of goodwill
     for the six months ended September 27, 2002 are as follows:

<TABLE>
<CAPTION>


                                                  Physician   Long-Term
                                                    Supply       Care
                                                   Business    Business     Total
                                                  ---------   ---------   ---------
     <S>                                             <C>         <C>        <C>
     Balance as of March 29, 2002................ $  9,788    $49,602     $  59,390
          Purchase business combination..........       --      1,893         1,893
                                                  ---------   ---------   ---------
     Balance as of September 27, 2002............ $  9,788    $51,495     $  61,283
                                                  =========   =========   =========
</TABLE>

     The Company performs its annual  impairment test for each reporting unit on
     the last day of each fiscal year.


6.   INTANGIBLES

     The following table summarizes the gross carrying amount and accumulated
     amortization for existing intangible assets subject to amortization, by
     business segment and major asset class.

<TABLE>
<CAPTION>
                                                 As of September 27, 2002              As of March 29, 2002
                                            ----------------------------------   ---------------------------------
                                              Gross                               Gross
                                            Carrying   Accumulated               Carrying   Accumulated
                                             Amount    Amortization     Net       Amount    Amortization    Net
                                            ---------  ------------    -------   --------   ------------   -------

  <S>                                          <C>         <C>            <C>      <C>        <C>          <C>
 Noncompetition Agreements:
    Physician Supply Business..........      $  4,628    $(3,374)       $1,254   $  4,053   $  (3,073)   $     980
    Long-Term Care Business............         2,035       (892)        1,143      2,070        (876)       1,194
                                            ---------  ------------    -------   --------   ------------   -------
                                                6,663     (4,266)        2,397      6,123      (3,949)       2,174
                                            ---------  ------------    -------   --------   ------------   -------
 Signing Bonuses:
    Physician Supply Business..........         1,770       (836)          934      1,027        (426)         601
    Long-Term Care Business............           200       (170)           30        200        (150)          50
                                            ---------  ------------    -------   --------   ------------   -------
                                                1,970     (1,006)          964      1,227        (576)         651
                                            ---------  ------------    -------   --------   ------------   -------
 Other Intangibles:
    Physician Supply Business..........         2,993     (1,916)        1,077      2,993      (1,795)       1,198
    Long-Term Care Business............         1,429        (20)        1,409         --          --           --
                                            ---------  ------------    -------   --------   ------------   -------
                                                4,422     (1,936)        2,486      2,993      (1,795)       1,198
                                            ---------  ------------    -------   --------   ------------   -------
                Total..................       $13,055    $(7,208)       $5,847    $10,343     $(6,320)      $4,023
                                            =========  ============    =======   ========   ============   =======
</TABLE>

     The weighted-average  amortization period, in total and by major intangible
     asset class, is as follows:

<TABLE>
<CAPTION>
                                                               September 27,     March 29,
                                                                    2002           2002
                                                               -------------    -----------
                   (in years)

                     <S>                                           <C>             <C>
                   Noncompetition Agreements............            6.8             7.1
                   Signing Bonuses......................            3.2             3.5
                   Other Intangibles....................           10.4            12.4
                                                               -------------    -----------
                      Total Weighted-Average Period.....            7.5             8.2
                                                               =============    ===========
</TABLE>

                                       13
<PAGE>

     Total amortization expense for intangible assets for the three months ended
     September 27, 2002 and September 28, 2001 was $570 and $381, respectively.
     Total amortization expense for intangible assets for the six months ended
     September 27, 2002 and September 28, 2001 was $1,188 and $719,
     respectively. The estimated amortization expense for the next five fiscal
     years and thereafter is as follows:

        Fiscal Year:
           2003 (remaining 6 months)...................      $  1,078
           2004........................................         1,511
           2005........................................         1,107
           2006........................................           778
           2007........................................           648
           Thereafter..................................           725
                                                             ---------
                    Total..............................      $  5,847
                                                             =========

     Total payments made under noncompetition agreements during the six months
     ended September 27, 2002 were $423. Future minimum payments required under
     noncompetition agreements at September 27, 2002 are as follows:

        Fiscal Year:
           2003 (remaining 6 months)...................          $215
           2004........................................           245
           2005........................................           100
           2006........................................            36
           2007........................................            35
           Thereafter..................................           142
                                                              --------
                    Total..............................          $773
                                                              ========

7.   NOTES RECEIVABLE

     The Company has three notes receivables (the "Loans") outstanding from its
     former Chairman and Chief Executive Officer, which bear interest at the
     applicable Federal rate for long-term obligations. These Loans were issued
     to the former Chairman and Chief Executive Officer in order to consolidate
     debt incurred in relation to certain real estate activities, as well as to
     provide the cash needed to pay-off personal debt. One of the Loans is
     unsecured and the other two Loans are secured by common stock of the
     Company and a split-dollar life insurance policy. As part of the Company's
     ongoing review of the realization of the Loans, the Company determined that
     an allowance for doubtful accounts was required for the unsecured loan. As
     a result, during the three months ended September 27, 2002, the Company
     recorded an allowance for doubtful accounts of $2,939 against the unsecured
     Loan. This allowance does not represent a forgiveness of debt.

                                       14
<PAGE>

8.   EARNINGS PER SHARE

     In accordance with SFAS No. 128, Earnings Per Share, the calculation of
     basic earnings per common share and diluted earnings per common share is
     presented below (amounts in thousands, except per share data):

<TABLE>
<CAPTION>
                                                            Three Months Ended                Six Months Ended
                                                      ------------------------------   ------------------------------
                                                       September 27,   September 28,   September 27,    September 28,
                                                           2002             2001            2002            2001
                                                      --------------   -------------   -------------    -------------


     <S>                                                   <C>               <C>             <C>             <C>
     Income from continuing operations before
        extraordinary loss......................      $    2,247           $3,594      $    5,597       $   6,643
     Total loss from discontinued operations
        (net of benefit (provision) for income
        taxes of $35,399, $(31), $35,863, and
        $129)                                            (56,751)            (191)        (57,549)        (90,597)

     Extraordinary loss (net of benefit for
        income taxes of $424)...................            (666)              --            (666)             --

                                                      --------------   -------------   -------------    -------------
     Net (loss) income..........................        $(55,170)          $3,403        $(52,618)       $(83,954)
                                                      ==============   =============   =============    =============

     Earnings (loss) per share - Basic:

        Income from continuing operations
         before extraordinary loss..............           $0.03            $0.05           $0.08           $0.09
        Total loss from discontinued operations.           (0.80)              --           (0.81)          (1.27)
        Extraordinary loss......................           (0.01)              --           (0.01)             --
                                                      --------------   -------------   -------------    -------------
        Net (loss) income.......................          $(0.78)           $0.05          $(0.74)         $(1.18)
                                                      ==============   =============   =============    =============

     Earnings (loss) per share - Diluted:

        Income from continuing operations
         before extraordinary loss..............           $0.03            $0.05           $0.08           $0.09
        Total loss from discontinued operations.           (0.79)              --           (0.80)          (1.26)
        Extraordinary loss......................           (0.01)              --           (0.01)             --
                                                      --------------   -------------   -------------    -------------
        Net (loss) income.......................          $(0.77)           $0.05          $(0.73)         $(1.17)
                                                      ==============   =============   =============    =============

     Weighted average shares outstanding:
        Common shares...........................          70,913           71,165          71,092          71,165
        Assumed exercise of stock options.......             623              667             861             483
                                                      --------------   -------------   -------------    -------------
        Diluted shares outstanding..............          71,536           71,832          71,953          71,648
                                                      ==============   =============   =============    =============
</TABLE>

     Diluted  earning per share  assumes  options to  purchase  shares of common
     stock have been  exercised  using the  treasury  stock  method.  Options to
     purchase  approximately  5.1 million and 4.5 million shares of common stock
     that were  outstanding  during the three and six months ended September 27,
     2002 were not included in the computation of diluted earnings per share for
     each  of the  respective  periods  because  the  options'  exercise  prices
     exceeded the fair market value of the Company's common stock.

     On July 30,  2002,  the  Company's  Board  of  Directors  approved  a stock
     repurchase   program   authorizing  the  Company,   depending  upon  market
     conditions  and other  factors,  to repurchase up to a maximum of 5% of its
     common stock,  or  approximately  3.6 million  common  shares,  in the open
     market, in privately negotiated transactions, or otherwise. As of September
     27, 2002, the Company  repurchased  approximately  1.3 million shares under
     this  program.  Such  repurchases  are expected to continue over the next 9
     months and will be made in compliance with applicable rules and regulations
     and  the  terms  of the  Company's  debt  agreements.  However,  the  stock
     repurchase program may be discontinued at any time.

9.   SEGMENT INFORMATION

     The Company's reportable segments are strategic businesses that offer
     different products and services to different segments of the healthcare
     industry, and are the basis for which management regularly evaluates the
     Company. These segments are managed separately because of different
     customers and products. The Company primarily evaluates the operating
     performance of its segments based on net sales and income from operations.
     The following table presents financial information about the Company's
     business segments:

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                                               Three Months Ended              Six Months Ended
                                                          ----------------------------   -----------------------------
                                                          September 27,  September 28,   September 27,   September 28,
                                                              2002            2001           2002            2001
                                                          -------------  -------------   -------------   -------------
     <S>                                                          <C>           <C>            <C>              <C>
     NET SALES:
         Physician Supply Business....................       $ 184,118     $  176,115     $  366,991       $  347,458
         Long-Term Care Business......................         104,701         95,711        208,294          191,069
         Other........................................              --             --             --              431
                                                          -------------  -------------   -------------   -------------
              Total net sales.........................        $288,819     $  271,826     $  575,285       $  538,958
                                                          =============  =============   =============   =============
     INCOME FROM OPERATIONS:
         Physician Supply Business....................       $   5,697     $    6,399     $   11,219       $   12,133
         Long-Term Care Business......................           4,749          2,255          8,572            4,029
         Other........................................          (5,323)        (1,498)        (7,608)          (2,454)
                                                          -------------  -------------   -------------   -------------
              Total income from operations............       $   5,123     $    7,156     $   12,183       $   13,708
                                                          =============  =============   =============   =============

     DEPRECIATION:
         Physician Supply Business....................       $   2,191     $    1,152     $    4,240       $    2,297
         Long-Term Care Business......................             392            461            858              923
         Other........................................             369            231            729              363
                                                          -------------  -------------   -------------   -------------
              Total depreciation......................       $   2,952     $    1,844     $    5,827       $    3,583
                                                          =============  =============   =============   =============

     AMORTIZATION OF INTANGIBLE ASSETS:
         Physician Supply Business....................       $     434     $      277     $      832       $      512
         Long-Term Care Business......................             136            104            356              207
                                                          -------------  -------------   -------------   -------------
              Total amortization of intangible assets.       $     570     $      381     $    1,188       $      719
                                                          =============  =============   =============   =============

     PROVISION FOR DOUBTFUL ACCOUNTS:
         Physician Supply Business....................       $     402     $      289     $      451       $      609
         Long-Term Care Business......................             588            951          1,261            1,896
                                                          -------------  -------------   -------------   -------------
              Total provision for doubtful accounts...       $     990     $    1,240     $    1,712       $    2,505
                                                          =============  =============   =============   =============

     INTEREST EXPENSE:
         Physician Supply Business....................       $     996     $      189     $    1,970       $      467
         Long-Term Care Business......................           1,226          1,268          2,458            2,645
         Other........................................             (55)           388             38            1,502
                                                          -------------  -------------   -------------   -------------
              Total interest expense..................       $   2,167     $    1,845     $    4,466       $    4,614
                                                          =============  =============   =============   =============

     INTEREST AND INVESTMENT INCOME (LOSS):
         Physician Supply Business....................       $      --     $        1     $       24       $        2
         Long-Term Care Business......................               1             --              1               --
         Other........................................             175            (25)           372              162
                                                          -------------  -------------   -------------   -------------
              Total interest and investment income....       $     176     $      (24)    $      397       $      164
                                                          =============  =============   =============   =============

     PROVISION FOR INCOME TAXES:
         Physician Supply Business....................       $   1,972     $    2,809     $    3,829       $    5,094
         Long-Term Care Business......................           1,389            451          2,379              682
         Other........................................          (2,068)        (1,211)        (2,881)          (2,026)
                                                          -------------  -------------   -------------   -------------
              Total provision for income taxes........       $   1,293     $    2,049     $    3,327       $    3,750
                                                          =============  =============   =============   =============

     CAPITAL EXPENDITURES:
         Physician Supply Business....................       $   2,843     $    2,222     $    4,867       $    5,514
         Long-Term Care Business......................             107             37            313              220
         Other........................................             358          2,778            980            4,532
                                                          -------------  -------------   -------------   -------------
              Total capital expenditures..............       $   3,308     $    5,037     $    6,160       $   10,266
                                                          =============  =============   =============   =============
</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>

                                                                   September 27,       March 29,
                                                                       2002              2002
                                                                   -------------      ----------
                               <S>                                      <C>               <C>
                        ASSETS:
                            Physician Supply Business.........       $232,120          $223,216
                            Long-Term Care Business...........        161,728           155,038
                            Other.............................        100,816            92,013
                            Discontinued Operations...........        179,348           193,141
                                                                   -------------      ----------
                                 Total assets.................       $674,012          $663,408
                                                                   =============      ==========
</TABLE>

     As of September 27, 2002, the federal income tax receivable or payable is
     now recorded on the balance sheet of the Other segment; therefore, for
     comparability purposes, certain reclassification entries are reflected in
     the March 29, 2002 amounts above.


10.  COMMITMENTS AND CONTINGENCIES

     Litigation

     The Company, through its Long-Term Care Business, its Physician Supply
     Business, and/or predecessor companies, has been named as one of many
     defendants in latex glove product liability claims in various Federal and
     state courts. The defendants are primarily distributors of certain brands
     of latex gloves. Currently, state litigation exists in New Hampshire,
     Massachusetts, and California, while Federal and/or Federal multidistrict
     litigation are present in Washington, Georgia, Pennsylvania, and Ohio.
     Defense costs are currently allocated by agreement between a consortium of
     insurers on a pro rata basis for each case depending upon policy years and
     alleged years of exposure. All of the insurance carriers are defending
     subject to a reservation of rights. Ultimately, the manufacturers from
     which the gloves were purchased may assume the defense and liability
     obligations. The Company intends to vigorously defend the proceedings;
     however, there can be no assurance that this litigation will be ultimately
     resolved on terms that are favorable to the Company.

     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. 3:98-CV
     502-J-21TEM. 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, Jacksonville Division. An amended complaint was filed on December
     11, 1998. The plaintiff alleges, for himself and for a purported class of
     similarly situated stockholders who allegedly purchased the Company's stock
     between December 23, 1997 and May 8, 1998 that the defendants engaged in
     violations of certain provisions of the Exchange Act, and Rule 10b-5
     promulgated thereunder. The allegations are based upon a decline in the
     Company's stock price following announcement by the Company in May 1998
     regarding the Gulf South Merger, which resulted in earnings below analyst's
     expectations. The plaintiff seeks indeterminate damages, including costs
     and expenses. The Company filed a motion to dismiss the first amended
     complaint on January 25, 1999. The court granted that motion without
     prejudice by order dated February 9, 2000. Plaintiffs filed their second
     amended complaint on March 15, 2000. The Company filed a motion to dismiss
     the second amended complaint on May 1, 2000, which is pending. Oral
     arguments on the Company's motion to dismiss are scheduled to take place on
     November 15, 2002. The Company believes that the allegations contained in
     the complaint are without merit and intends to defend vigorously against
     the claims. There can be no assurance that this litigation will be
     ultimately resolved on terms that are favorable to the Company.

     The Company has been named as a defendant in ten, related class action
     complaints, the first of which was filed on July 13, 2001 and all of which
     had been filed in the United States District Court for the Middle District
     of Florida. By Order of the Court dated January 14, 2002, those ten actions
     were consolidated into a single action under the caption "In Re PSS World
     Medical Inc. Securities Litigation." Following that consolidation, on March
     22, 2002, lead plaintiffs served their Amended Class Action Complaint for
     Violation of Securities Laws. On May 14, 2002, defendants filed their
     motion to dismiss the Amended Complaint, and, on August 1, 2002, the Court
     entered an Order denying that motion and directing the Company to answer
     the Amended Complaint by August 12, 2002. The Company and the other
     defendants served their answer to the Amended Complaint on August 12, 2002,
     and the parties are now engaged in discovery. The Amended Complaint named
     the Company along with certain present and former directors and officers.


                                       17
<PAGE>

     The Amended Complaint was filed as a purported class action on behalf of
     persons who purchased or acquired PSS World Medical, Inc. common stock at
     various times during the period between October 26, 1999 and October 3,
     2000. The Amended Complaint alleges, among other things, violations of
     Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
     10b-5 promulgated thereunder, and seeks unspecified damages. The plaintiffs
     allege that the Company issued false and misleading statements and failed
     to disclose material facts concerning, among other things, the Company's
     financial condition. The plaintiffs further allege that because of the
     issuance of false and misleading statements and/or failure to disclose
     material facts, the price of PSS World Medical, Inc. common stock was
     artificially inflated during the class period. The Company believes that
     the allegations contained in the Amended Complaint are without merit and
     intends to defend vigorously against the claims. There can be no assurance
     that this litigation will be ultimately resolved on terms that are
     favorable to the Company.

     The Company has been named as a defendant in a suit brought by three former
     and present employees of the Company, entitled Angione, et al. v. PSS World
     Medical Inc., which was filed on or about June 4, 2002 in the U.S. District
     Court for the Central District of California, Santa Ana Division (Case No.
     CV SA 02-533 AHS (ANx)). In response to the Motion to Transfer Venue filed
     by the Company, the plaintiffs stipulated that venue of the case is proper
     in the United States District Court in Jacksonville, Florida. The Court
     approved the transfer and the case is now pending in the United States
     Court for the Middle District of Florida, Jacksonville Division, Case
     Number 02-CV-854. The plaintiffs allege that the Company wrongfully
     classifies its Purchasers, Operations Leader Trainees, and Accounts
     Receivable Representatives as exempt from the overtime requirements imposed
     by the Fair Labor Standards Act and the California Wage Orders. The
     plaintiffs seek court approval to proceed as a collective action under the
     Fair Labor Standards Act, a representative action under California's Unfair
     Competition Act, and/or a class action on behalf of all persons in the
     United States who have occupied any one of the three positions within the
     pertinent limitations period. PSSWM opposed this motion. It is unknown
     whether the Court will tentatively approve a collective action and allow
     discovery on the issue of who is eligible to participate in the collective
     action. The Plaintiffs seek to recover back pay, interest, costs of suit,
     declaratory and injunctive relief, and applicable statutory penalties. In
     addition, two of the three named plaintiffs bring individual claims for
     gender discrimination and retaliation under Title VII of the Civil Rights
     Act of 1964 and the Equal Pay Act of 1963. The Company is vigorously
     defending against the claims and is working with human resource personnel
     to collect personnel and payroll information necessary to determine (i) the
     employees who are potentially eligible to participate in the suit and (ii)
     the extent of overtime liability, if any. There can be no assurance that
     this litigation will be ultimately resolved on terms that are favorable to
     the Company.

     On December 7, 2001, the Company has filed an arbitration proceeding with
     the American Arbitration Association against Candela Corporation (PSS World
     Medical, Inc. d/b/a Physician Sales & Service, Claimant, v. Candela
     Corporation, Respondent) for breach of contract, promissory estoppel,
     intentional interference with contractual/advantageous relations, and
     violation of the Massachusetts Unfair Business Practices Act, arising out
     of Candela's termination of the distribution agreement between the two
     companies. Candela has filed counterclaims in the arbitration for breach of
     contract, seeking payment of $2,350 in outstanding invoices and alleged
     trademark infringement and violation of the Massachusetts Unfair Business
     Practices Act. Final ruling by the arbitration panel is presently expected
     to be rendered by January 31, 2003. The Company believes that Candela's
     counterclaims are without merit and intends to defend vigorously against
     the claims, however, there can be no assurance that this litigation will be
     ultimately resolved on terms that are favorable to the Company. The
     accompanying consolidated balance sheets include the inventory and
     associated liability for the $2,350 of outstanding invoices.

     The Company is also a party to various other legal and administrative
     proceedings and claims arising in the normal course of business. While any
     litigation contains an element of uncertainty, the Company, after
     consultation with outside legal counsel, believes that the outcome of such
     other 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.

     The Company has various insurance policies, including product liability
     insurance, covering risks and in amounts it considers adequate. In many
     cases in which the Company has been sued in connection with products
     manufactured by others, the Company is provided indemnification by the
     manufacturer. There can be no assurance that the insurance coverage
     maintained by the Company is sufficient or will be available in adequate
     amounts or at a reasonable cost, or that indemnification agreements will
     provide adequate protection for the Company.

                                       18
<PAGE>

     Commitments and Other Contingencies

     The Company has employment agreements with certain executive officers which
     provide that in the event of their termination or resignation, under
     certain conditions, the Company may be required to continue salary payments
     and provide insurance for a period ranging from 3 to 12 months for certain
     executives and to repurchase a portion or all of the shares of common stock
     held by the executives upon their demand at the fair market value at the
     time of repurchase. The period of salary and insurance continuation and the
     level of stock repurchases are based on the conditions of the termination
     or resignation.

     During fiscal 2000, the Board of Directors approved and adopted the PSS
     World Medical, Inc. Officer Retention Bonus Plan and a Corporate Office
     Employee Retention Bonus Plan. As part of the Company's strategic
     alternatives process, management adopted these plans to retain certain
     officers and key employees during the strategic alternatives transition
     period. The total cash compensation costs related to these plans is
     approximately $7,996, of which $6,807 was expensed in prior fiscal years
     and $737 was expensed during the six months ended September 27, 2002. An
     additional $452 will be expensed during the remaining six months of fiscal
     year 2003.

11.  LONG-TERM DEBT

     During fiscal year 1998, the Company issued $125,000 in debt securities
     ("Senior Subordinated Notes") under a registration statement filed with the
     Securities and Exchange Commission. During the three months ended September
     27, 2002, the Company retired $19,000 principal amount of its Senior
     Subordinated Notes. An extraordinary loss of $666 was incurred as a result
     of the early extinguishment of debt, consisting of $665 of redemption
     premiums, $425 of accelerated amortization of debt issuance costs, net of a
     benefit for income taxes of $424.

     The following tables present condensed consolidating financial information
     for the parent or issuer of the debt, the guarantor subsidiaries, and the
     nonguarantor subsidiaries of the Senior Subordinated Notes. The
     nonguarantor subsidiary was the International Business, which was divested
     during the three months ended June 29, 2001. Separate financial statements
     of the guarantor subsidiaries are not presented because the guarantors are
     jointly, severally and unconditionally liable under the guarantees and the
     Company believes the condensed consolidating financial information is more
     meaningful in understanding the financial position, results of operations,
     and cash flows of the guarantor subsidiaries. In addition, the guarantor
     subsidiaries are 100% owned subsidiaries of the Company.

                                       19
<PAGE>

                            Condensed Balance Sheets
                      September 27, 2002 and March 29, 2002

<TABLE>
<CAPTION>

                                                                As of September 27, 2002
                                                --------------------------------------------------------
                                                                Guarantor
                                                  Parent      Subsidiaries   Eliminations   Consolidated
                                                ----------    ------------   ------------   ------------
Current Assets:
<S>                                              <C>            <C>             <C>              <C>
      Cash and cash equivalents............      $ 23,654       $  9,352            --        $ 33,006
      Accounts receivable, net.............        79,739         75,065            --         154,804
      Inventories, net.....................        54,000         35,215            --          89,215
      Intercompany receivables.............        84,275        (84,275)           --              --
      Other current assets.................         9,687         17,312            --          26,999
      Assets of discontinued operations....            --        179,348            --         179,348
                                                ----------    ------------   ------------   ------------
               Total current assets........       251,355        232,017            --         483,372
Property and equipment, net................        56,346          5,652            --          61,998
Other Assets:
      Goodwill.............................         9,788         51,495            --          61,283
      Intangibles, net.....................         3,264          2,583            --           5,847
      Investment in subsidiary.............           286         28,083      $(28,369)             --
      Deferred tax assets..................        40,601          1,973            --          42,574
      Other................................         1,052         17,886            --          18,938
                                                ----------    ------------   ------------   ------------
               Total assets................      $362,692       $339,689      $(28,369)       $674,012
                                                ==========    ============   ============   ============
Current Liabilities:
      Accounts payable.....................      $ 63,545       $ 41,378      $     --        $104,923
      Other current liabilities............        25,137         13,373            --          38,510
      Liabilities of discontinued operations
         and accrued loss on disposal......            --        147,068            --         147,068
                                                ----------    ------------   ------------   ------------
               Total current liabilities...        88,682        201,819            --         290,501

Long-term debt.............................       106,000             --            --         106,000
Other......................................        13,450          2,393            --          15,843
                                                ----------    ------------   ------------   ------------
               Total liabilities...........       208,132        204,212            --         412,344

Shareholders' Equity:
      Common stock.........................           699            330          (330)            699
      Additional paid-in capital...........       181,417        150,151         8,326         339,894
      Accumulated deficit..................       (27,556)       (15,004)      (36,365)        (78,925)
                                                ----------    ------------   ------------   ------------
               Total shareholders' equity..       154,560        135,477       (28,369)        261,668
                                                ----------    ------------   ------------   ------------
               Total liabilities and
               shareholders' equity........      $362,692       $339,689      $(28,369)       $674,012
                                                ==========    ============   ============   ============
</TABLE>



                                       20
<PAGE>


                      Condensed Balance Sheets (Continued):

<TABLE>
<CAPTION>

                                                                  As of March 29, 2002
                                                --------------------------------------------------------
                                                               Guarantor
                                                  Parent      Subsidiaries   Eliminations   Consolidated
                                                ----------    ------------   ------------   ------------

Current Assets:
<S>                                              <C>          <C>                 <C>          <C>
      Cash and cash equivalents............       $ 39,531      $ 14,043            --         $ 53,574
      Accounts receivable, net.............         78,911        69,429            --          148,340
      Inventories, net.....................         48,706        35,148            --           83,854
      Intercompany receivables.............        134,418      (134,418)           --               --
      Other current assets.................         14,242        16,972            --           31,214
      Assets of discontinued operations....             --       193,141            --          193,141
                                                ----------    ------------   ------------   ------------
               Total current assets........        315,808       194,315            --          510,123
Property and equipment, net................         55,449         6,242            --           61,691
Other Assets:
      Goodwill.............................          9,788        49,602            --           59,390
      Intangibles, net.....................          2,777         1,246            --            4,023
      Investment in subsidiary.............            286        28,083      $(28,369)              --
      Deferred tax assets..................          5,326         1,708            --            7,034
      Other................................          4,039        17,108            --           21,147
                                                ----------    ------------   ------------   ------------
               Total assets................       $393,473      $298,304      $(28,369)        $663,408
                                                ==========    ============   ============   ============

Current Liabilities:
      Accounts payable.....................       $ 62,181      $ 32,202      $     --         $ 94,383
      Other current liabilities............         24,439        10,153            --           34,592
      Liabilities of discontinued operations
         and accrued loss on disposal......             --        68,490            --           68,490
                                                ----------    ------------   ------------   ------------
               Total current liabilities...         86,620       110,845            --          197,465

Long-term debt.............................        125,000            --            --          125,000
Other......................................         13,845         2,650            --           16,495
                                                ----------    ------------   ------------   ------------
               Total liabilities...........        225,465       113,495            --          338,960

Shareholders' Equity:
      Common stock.........................            713           329          (330)             712
      Additional paid-in capital...........        191,568       150,149         8,326          350,043
      Accumulated (deficit) earnings.......        (24,273)       34,331       (36,365)         (26,307)
               Total shareholders' equity..        168,008       184,809       (28,369)         324,448
                                                ----------    ------------   ------------   ------------
               Total liabilities and
               shareholders' equity........       $393,473      $298,304      $(28,369)        $663,408
                                                ==========    ============   ============   ============
</TABLE>

                                       21
<PAGE>

                       Condensed Statements of Operations
  For the Three and Six Months Ended September 27, 2002 and September 28, 2001


<TABLE>
<CAPTION>

                                                             Three Months Ended September 27, 2002
                                                             --------------------------------------
                                                                         Guarantor
                                                               Parent   Subsidiaries   Consolidated
                                                             ---------  ------------   ------------

<S>                                                          <C>           <C>            <C>
Net sales..............................................      $156,739      $132,080       $288,819
Cost of goods sold.....................................       108,702        97,957        206,659
                                                             ---------  ------------   ------------
               Gross profit............................        48,037        34,123         82,160
General and administrative expenses....................        34,827        21,339         56,166
Selling expenses.......................................        15,196         5,675         20,871
                                                             ---------  ------------   ------------
               (Loss) income from operations...........        (1,986)        7,109          5,123
Other expense..........................................          (150)       (1,433)        (1,583)
                                                             ---------  ------------   ------------
(Loss) income from continuing operations before
   provision for income taxes..........................        (2,136)        5,676          3,540
(Benefit) provision for income taxes...................           (96)        1,389          1,293
                                                             ---------  ------------   ------------
(Loss) income from continuing operations before
   extraordinary loss..................................        (2,040)        4,287          2,247
Total loss from discontinued operations................            --       (56,751)       (56,751)
                                                             ---------  ------------   ------------
Extraordinary loss.....................................          (666)           --           (666)
                                                             ---------  ------------   ------------
Net loss...............................................      $ (2,706)     $(52,464)      $(55,170)
                                                             =========  ============   ============
</TABLE>


<TABLE>
<CAPTION>
                                                             Three Months Ended September 28, 2001
                                                             --------------------------------------
                                                                         Guarantor
                                                              Parent    Subsidiaries   Consolidated
                                                             --------   ------------   ------------

<S>                                                          <C>           <C>            <C>
Net sales..............................................      $148,193      $123,633       $271,826
Cost of goods sold.....................................       104,840        92,868        197,708
                                                             ---------  ------------   ------------
               Gross profit............................        43,353        30,765         74,118
General and administrative expenses....................        28,040        20,157         48,197
Selling expenses.......................................        13,340         5,425         18,765
                                                             ---------  ------------   ------------
               Income from operations..................         1,973         5,183          7,156
Other expense..........................................           (65)       (1,448)        (1,513)
                                                             ---------  ------------   ------------
Income from continuing operations before provision for
   income taxes........................................         1,908         3,735          5,643
Provision for income taxes.............................         1,597           452          2,049
                                                             ---------  ------------   ------------
Income from continuing operations......................           311         3,283          3,594
Total loss from discontinued operations................            --          (191)          (191)
                                                             ---------  ------------   ------------
Net income.............................................      $    311      $  3,092       $  3,403
                                                             =========  ============   ============
</TABLE>


                                       22
<PAGE>




                 Condensed Statements of Operations (continued)

<TABLE>
<CAPTION>


                                                               Six Months Ended September 27, 2002
                                                             ---------------------------------------
                                                                         Guarantor
                                                               Parent   Subsidiaries    Consolidated
                                                             ---------  ------------    ------------

<S>                                                          <C>           <C>            <C>
Net sales..............................................      $311,654      $263,631       $575,285
Cost of goods sold.....................................       216,440       196,129        412,569
                                                             ---------  ------------    ------------
               Gross profit............................        95,214        67,502        162,716
General and administrative expenses....................        66,629        42,693        109,322
Selling expenses.......................................        29,844        11,367         41,211
                                                             ---------  ------------    ------------
               (Loss) income from operations...........        (1,259)       13,442         12,183
Other expense..........................................          (410)       (2,849)        (3,259)
                                                             ---------  ------------    ------------
(Loss) income from continuing operations before
   provision for income taxes..........................        (1,669)       10,593          8,924
Provision for income taxes.............................           948         2,379          3,327
                                                             ---------  ------------    ------------
(Loss) income from continuing operations before
   extraordinary loss..................................        (2,617)        8,214          5,597
Total loss from discontinued operations................            --       (57,549)       (57,549)
Extraordinary loss.....................................          (666)           --           (666)
                                                             ---------  ------------    ------------
Net loss...............................................      $ (3,283)     $(49,335)      $(52,618)
                                                             =========  ============    ============
</TABLE>


<TABLE>
<CAPTION>

                                                                      Six Months Ended September 28, 2001
                                                             ------------------------------------------------------
                                                                         Guarantor     Nonguarantor
                                                              Parent    Subsidiaries    Subsidiary     Consolidated
                                                             --------   ------------   ------------    ------------
<S>                                                          <C>            <C>              <C>           <C>
Net sales..............................................      $292,288      $246,239         $ 431         $538,958
Cost of goods sold.....................................       207,463       184,927           295          392,685
                                                             --------   ------------   ------------    ------------
               Gross profit............................        84,825        61,312           136          146,273
General and administrative expenses....................        55,247        40,823            53           96,123
Selling expenses.......................................        26,148        10,795            13           36,956
International Business exit charge.....................            --            --          (514)            (514)
                                                             --------   ------------   ------------    ------------
               Income from operations..................         3,430         9,694           584           13,708
Other expense..........................................          (398)       (2,903)          (14)          (3,315)
                                                             --------   ------------   ------------    ------------
Income from continuing operations before provision for
   income taxes........................................         3,032         6,791           570           10,393
Provision for income taxes.............................         3,067           683            --            3,750
                                                             --------   ------------   ------------    ------------
(Loss) income from continuing operations...............           (35)        6,108           570            6,643
Total loss from discontinued operations................            --       (90,597)           --          (90,597)
                                                             --------   ------------   ------------    ------------
Net (loss) income......................................      $    (35)     $(84,489)        $ 570         $(83,954)
                                                             ========   ============   ============    ============

</TABLE>

                                       23
<PAGE>



                       Condensed Statements of Cash Flows
       For the Six Months Ended September 27, 2002 and September 28, 2001

<TABLE>
<CAPTION>

                                                               Six Months Ended September 27, 2002
                                                              ---------------------------------------
                                                                           Guarantor
                                                                Parent    Subsidiaries   Consolidated
                                                              ----------  ------------   ------------

<S>                                                             <C>        <C>            <C>
Net loss...............................................         $(3,283)   $(49,335)      $(52,618)
                                                              ----------  ------------   ------------
Net cash provided by operating activities..............           8,107      12,458         20,565
                                                              ----------  ------------   ------------
Cash Flows From Investing Activities:
      Capital expenditures.............................          (5,773)       (387)        (6,160)
      Payments on noncompete agreements................            (410)        (13)          (423)
      Payment for business combination.................              --      (4,464)        (4,464)
      Proceeds from sales of property and equipment....              13          (3)            10
      Net cash used in discontinued operations.........              --      (1,113)        (1,113)
                                                              ----------  ------------   ------------
               Net cash used in investing activities...          (6,170)     (5,980)       (12,150)
                                                              ----------  ------------   ------------
Cash Flows From Financing Activities:
      Repayment of Senior Subordinated Notes...........         (19,000)         --        (19,000)
      Payment of premiums for retirement of Senior
         Subordinated Notes............................            (665)         --           (665)
      Purchase of treasury stock shares................          (9,518)         --         (9,518)
      Proceeds from issuance of common stock...........             200          --            200
      Inter-company borrowings.........................          11,169     (11,169)            --
      Net cash used in discontinued operations.........              --          --             --
                                                              ----------  ------------   ------------
               Net cash used in financing activities...         (17,814)    (11,169)       (28,983)
                                                              ----------  ------------   ------------
Net decrease in cash and cash equivalents..............         (15,877)     (4,691)       (20,568)
Cash and cash equivalents, beginning of period.........          39,531      14,043         53,574
                                                              ----------  ------------   ------------
Cash and cash equivalents, end of period...............         $23,654    $  9,352       $ 33,006
                                                              ==========  ============   ============
</TABLE>


<TABLE>
<CAPTION>

                                                                       Six Months Ended September 28, 2001
                                                              -------------------------------------------------------
                                                                           Guarantor     Nonguarantor
                                                                Parent    Subsidiaries    Subsidiary     Consolidated
                                                              ----------  ------------   ------------    ------------

<S>                                                            <C>         <C>                 <C>        <C>
Net (loss) income......................................        $    (35)   $(84,489)           $570       $(83,954)
                                                              ----------  ------------   ------------    ------------
Net cash provided by (used in) operating activities....          17,026      39,551            (554)        56,023
                                                              ----------  ------------   ------------    ------------
Cash Flows From Investing Activities:
      Capital expenditures.............................          (9,887)       (379)             --        (10,266)
      Payments on noncompete agreements................            (332)        (38)             --           (370)
      Proceeds from sale of property and equipment.....           1,888      (1,846)             --             42
      Proceeds from sale of International Business.....              --          --             221            221
      Net cash used in discontinued operations.........              --      (1,553)             --         (1,553)
                                                              ----------  ------------   ------------    ------------
               Net cash used in (provided by) investing
               activities..............................          (8,331)     (3,816)            221        (11,926)
                                                              ----------  ------------   ------------    ------------
Cash Flows From Financing Activities:
      Net borrowings...................................         (54,195)         --              --        (54,195)
      Inter-company borrowings.........................          34,356     (24,690)         (9,666)            --
      Investment in Sub................................          (9,999)         --           9,999             --
      Transfer of equity...............................             611        (611)             --             --
      Proceeds from issuance of common stock...........              --          11              --             11
      Net cash used in discontinued operations.........              --         (59)             --            (59)
                                                              ----------  ------------   ------------    ------------
               Net cash (used in) provided by financing
               activities..............................         (29,227)    (25,349)            333        (54,243)
                                                              ----------  ------------   ------------    ------------
Net (decrease) increase in cash and cash equivalents...         (20,532)     10,386              --        (10,146)
Cash and cash equivalents, beginning of period.........          31,725       2,649              --         34,374
                                                              ----------  ------------   ------------    ------------
Cash and cash equivalents, end of period...............        $ 11,193    $ 13,035              --       $ 24,228
                                                              ==========  ============   ============    ============
</TABLE>




                                       24
<PAGE>

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT




The Board of Directors and Shareholders
PSS World Medical, Inc.:

We have reviewed the consolidated balance sheet of PSS World Medical, Inc. and
subsidiaries as of September 27, 2002, and the related consolidated statements
of operations and cash flows for the three and six-month periods ended September
27, 2002. These consolidated financial statements are the responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the United
States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of PSS
World Medical, Inc. and subsidiaries as of March 29, 2002, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated May 22,
2002, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of March 29, 2002, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.


                                                           /s/ KPMG LLP

Jacksonville, Florida
November 8, 2002




                                       25
<PAGE>

ITEM 2.   Management's  Discussion  and  Analysis  Of  Financial  Condition  and
          Results of Operations


GENERAL

PSS World Medical, Inc. (the "Company" or "PSSWM"), a Florida corporation, is a
specialty marketer and distributor of medical products to physician offices,
alternate-site and acute imaging providers, and long-term care and home care
providers through 63 full-service centers to customers in all 50 states. Since
its inception in 1983, the Company has become a leader in the three market
segments it serves as a result of a focused and differentiated approach to
customer service, a consultative sales force, unique arrangements with product
manufacturers, innovative information systems, and a culture of performance.

Physician Sales & Service ("PSS" or the "Physician Supply Business"), a division
of the Company, is a leading distributor of medical supplies, equipment, and
pharmaceuticals to primary care office-based physicians in the United States
based on revenues, number of physician-office customers, number and quality of
sales representatives, and number of products distributed under unique
arrangements. PSS currently operates 39 full-service centers with 708 sales
representatives serving physician offices in all 50 states.

Gulf South Medical Supply, Inc. ("Gulf South" or the "Long-Term Care Business"),
a wholly owned subsidiary, is a leading national distributor of medical supplies
and related products to the long-term care industry in the United States based
on revenues and number of sales representatives. Gulf South currently operates
13 full-service centers with approximately 115 sales representatives serving
long-term care accounts in all 50 states. The Long-Term Care Business' primary
markets are independent, regional, and national skilled nursing facilities,
assisted living centers, and home care providers.

Diagnostic Imaging, Inc. ("DI" or the "Imaging Business"), a wholly owned
subsidiary, is a leading distributor of medical diagnostic imaging supplies,
chemicals, equipment, and services to the acute and alternate-care markets in
the United States based on consumable revenues, number of service specialists,
and number of sales representatives. DI currently operates 11 full-service
centers, 32 distribution centers, and 16 break-freight locations with
approximately 800 service specialists and approximately 200 sales
representatives serving customer sites in 42 states. The Imaging Business'
primary markets are acute-care radiology departments, free-standing imaging
centers, private practice physicians, veterinarians, and chiropractors. During
the three months ended September 27, 2002, the Company's Board of Directors
adopted a plan to dispose of the Imaging Business. As a result, its results of
operations have been classified as discontinued operations for all periods
presented. Refer to Note 2, Discontinued Operations, of the consolidated
financial statements for a further discussion.


INDUSTRY

According to industry estimates, the United States medical supply and equipment
segment of the healthcare industry represents approximately a $34 billion market
comprised of medical products and equipment which are distributed to alternate
site healthcare providers, including physician offices, long-term care and
assisted living facilities, home healthcare agencies, dental offices, and other
alternate site providers, such as outpatient surgery and care centers,
podiatrists, and veterinarians. The Company's primary focus is the distribution
of medical products to physician offices, long-term care, assisted living, and
home care providers as well as other alternate site healthcare providers.
Approximately 65% of the products in this market come through the distributor
channel, representing a $22 billion market potential for the Company.

Revenues of the medical products distribution industry are estimated to be
growing as a result of a growing and aging population, increased healthcare
awareness, the proliferation of medical technology and testing, and expanding
third-party insurance coverage. In addition, the physician market continues to
benefit from the shift of procedures and diagnostic testing from hospitals to
alternate sites, particularly physician offices, despite a migration of
significantly lower hospital medical product pricing into the physician office
market. Also, as the cosmetic surgery and elective procedure markets continue to
grow, physicians are increasingly performing more procedures in their offices.

                                       26
<PAGE>

The  healthcare  industry  is  subject  to  extensive   government   regulation,
licensure,  and operating  procedures.  National  healthcare reform has been the
subject  of a number  of  legislative  initiatives  by  Congress.  Additionally,
government and private insurance programs fund the cost of a significant portion
of medical care in the United States. In recent years, government-imposed limits
on reimbursement of hospitals,  long-term care facilities,  and other healthcare
providers have affected  spending  budgets in certain markets within the medical
products industry.  During 1997, the Balanced Budget Act passed by Congress made
significant changes to reimbursements for nursing homes and home care providers.
The industry continues to be impacted by these changes.  Currently, the industry
is being  impacted  by the  October  1,  2002  expiration  of  certain  Medicare
supplemental reimbursements for services provided by operators of long-term care
facilities. There are no assurances that such Medicare reimbursement relief will
be provided by  Congress,  which may have a  financial  impact on the  Company's
customers that provide long-term care healthcare services.

Over the past few years, the healthcare industry has undergone significant
consolidation. Physician provider groups, long-term care facilities, and other
alternate-site providers, along with hospitals, continue to consolidate,
creating new and larger customers. The majority of the market serviced by the
Company continues to include small customers, with no single customer exceeding
10% of the consolidated Company's net sales. However, the Long-Term Care
Business depends on a limited number of large customers for a significant
portion of its net sales, and approximately 32% of Long-Term Care Business'
revenues for the six months ended September 27, 2002 represented sales to its
top five customers.


RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections ("SFAS 145"). Among other things, SFAS 145 rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debt. As such, gains and
losses from extinguishment of debt shall not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the criteria
of Accounting Principles Board ("APB") Opinion No. 30, Reporting the Results of
Operation-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB
30"). Gains or losses from extinguishment of debt that do not meet the criteria
of APB 30 should be reclassified to income from continuing operations for all
prior periods presented. The Company will adopt the provisions of SFAS 145 on
March 29, 2003, the first day of fiscal year 2004. Upon adoption, the Company
will reclassify any gains or losses on early extinguishment of debt and related
taxes recorded as an extraordinary loss during fiscal year 2003 to other
(expense) income and provision for income taxes in the consolidated statements
of operations.

During June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities ("SFAS 146"). SFAS 146 addresses the financial
accounting and reporting for costs associated with exit or disposal activities,
and eliminates the definition and requirements for recognition of exits costs in
Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). SFAS 146 will require
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred and that fair value is the objective
for initial measurement of a liability. The Company will apply the provisions of
SFAS 146 for exit or disposal activities that are initiated after December 31,
2002, the effective date of this statement.


                                       27
<PAGE>

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The consolidated financial statements require us to make estimates and judgments
that affect the reported amounts of assets, liabilities,  revenues, expenses and
related  disclosure of contingent assets and liabilities.  Management  evaluates
the  estimates,  judgments  and the  policies  underlying  these  estimates on a
periodic basis as situations change, and regularly  discusses  financial events,
policies,  and issues with members of our audit  committee  and our  independent
accountants. The significant accounting policies, which management and the audit
committee  believe are the most  critical to fully  understand  and evaluate the
Company's  financial position and results of operations,  include those detailed
in the  Company's  Annual  Report on Form 10-K for the year ended March 29, 2002
under the heading  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations".  During the three months ended  September 27, 2002,
management  determined  that  accounting for  discontinued  operations is also a
critical accounting policy.

Accounting for Discontinued Operations. On September 26, 2002, the Company's
Board of Directors adopted a plan to dispose of the Imaging Business. The plan
to dispose of the Imaging Business reflects a strategic decision by management
to focus the Company's efforts on its Physician Supply and Long-Term Care
Businesses, which offer attractive opportunities for growth and profitability.
On October 28, 2002, the Company announced a definitive agreement to sell the
Imaging Business to a subsidiary of Platinum Equity, LLC in a capital stock
transaction for approximately $45.0 million in cash and the assumption of
approximately $67.9 million of liabilities. The purchase price is subject to
adjustment based on the net assets sold and net cash held by DI as of the
closing date. The closing of the transaction is subject to the satisfaction of
customary closing conditions, including the execution of a transition services
agreement. The transaction is expected to close no later than the end of
February 2003.

The results of operations of the Imaging Business and the estimated loss on
disposal have been classified as "discontinued operations" in accordance with
SFAS No. 144, Accounting for the Impairment of Long-Lived Assets. The estimated
loss on disposal is subject to change based on the final purchase price and any
adjustments will be recorded in the period in which they become known. The
accompanying financial statements have been reclassified to conform to
discontinued operations treatment for all historical periods presented.


THREE MONTHS ENDED SEPTEMBER 27, 2002 VERSUS THREE MONTHS ENDED
        SEPTEMBER 28, 2001

Net Sales.

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                      -----------------------------
                                                      September 27,   September 28,     Increase        Percent
          (dollars in millions)                            2002            2001         (Decrease)       Change
                                                      -------------   -------------    -----------     ---------

            <S>                                          <C>              <C>             <C>             <C>
          Physician Supply Business..............         $184.1           $176.1          $  8.0          4.5%
          Long-Term Care Business................          104.7             95.7             9.0          9.4%
                                                      -------------   -------------    -----------     ---------
                         Total Company...........         $288.8           $271.8           $17.0          6.3%
                                                      =============   =============    ===========     =========
</TABLE>


Physician Supply Business--The change in net sales is primarily attributable to
an increase in medical disposables sales of approximately $10.6 million, of
which private label and pharmaceuticals sales represented approximately 40% of
this growth, offset by a $2.6 million decrease in equipment sales. The launch of
the new pediatrics and surgeon SRxSM modules contributed to the increase in
medical disposables sales and the discontinuance of the marketing and
distribution of a product line was the primary reason for the decrease in
equipment sales. Net sales also decreased approximately $1.1 million as a result
of a manufacturer product recall. The Physician Supply Business added 7 new
sales representatives, which also contributed to the growth in overall net
sales.

Long-Term Care Business--The increase in net sales is primarily attributable to
the success of the ANSWERS(TM) marketing program that aligns improved business
processes ("best practices"), typically in the ordering process of nursing home
operations and purchasing, with efficient distribution activities. To date, over
230 customers have adopted the program, which generated approximately $3.5
million of incremental revenue during the three months ended September 27, 2002.
In addition, net sales increased due to (i) growth initiatives focused on


                                       28
<PAGE>

regional accounts and product line expansion and (ii) growth associated with the
overall increase in prices. During the three months ended September 27, 2002,
the Long-Term Care Business completed an acquisition, which had negligible
impact on net sales for the three months ended September 27, 2002.

Gross Profit. Gross profit for the three months ended September 27, 2002 totaled
$82.2 million, an increase of $8.1 million, or 10.9%, from gross profit of $74.1
million for the three months ended September 28, 2001. Gross profit as a
percentage of net sales was 28.4% and 27.3% for the three months ended September
27, 2002 and September 28, 2001, respectively. The increase in gross profit is
attributable to (i) the overall increase in net sales described above, (ii) a
change in sales mix to higher gross profit consumable products in the Physician
Supply Business, (iii) a strong focus from the sales representatives to enhance
margins, (iv) an increase in manufacturer incentive rebates earned by the
Long-Term Care Business due to the increase in sales levels and positive changes
to the vendor incentive agreements, (v) an increase in purchasing incentive
rebates earned by the Physician Supply Business, and (vi) improved purchase
economies resulting from the centralization of the purchasing function and the
consolidation of vendors in the Physician Supply and Long-Term Care Businesses.

General and Administrative Expenses.

                               Three Months Ended
                      September 27, 2002 September 28, 2001
<TABLE>
<CAPTION>

                                                          % of Net               % of Net
       (dollars in millions)                    Amount      Sales      Amount      Sales      Increase
                                                -------   --------    -------    --------     --------
<S>                                              <C>        <C>         <C>        <C>          <C>
       Physician Supply Business..........       $33.3      18.1%       $29.8      16.9%        $3.5
       Long-Term Care Business............        17.5      16.8%        16.9      17.7%         0.6
       Other..............................         5.4      --            1.5       --           3.9
                                                -------   --------    -------    --------     --------
                      Total Company.......       $56.2      19.4%       $48.2      17.7%        $8.0
                                                =======   ========    =======    ========     ========
</TABLE>

During fiscal year 2002, the Company initiated and invested in programs to
support future profitability and growth. The cost associated with these programs
include (i) additional depreciation expense for completed phases of its
Enterprise Resource Planning ("ERP") system, electronic commerce platforms
(including myPSS.com), and supply chain integration, (ii) employee and
consulting fees incurred for the rollout of ERP and electronic commerce
platforms, (iii) consulting fees for assistance in the validation of its
strategic plan and other expenses for business process improvements, and (iv)
investments in enterprise-wide learning initiatives to increase employee
competencies and knowledge and to ensure consistent business practices. The
additional costs associated with these programs are continuing into fiscal year
2003.

Physician Supply Business--The change in general and administrative expenses is
primarily attributable to (i) an increase in salary and travel expenses as a
result of the conversion to the new ERP system and the restructuring plan that
was adopted during the fourth quarter of fiscal year 2002 ("Rationalization
Programs"), (ii) an increase in warehouse salary expenses at consolidated
full-service centers during the transition period, offset by the savings from
closed centers, (iii) additional depreciation for completed phases of its ERP
system, myPSS.com electronic commerce platform, and supply chain initiatives,
and (iv) temporarily increased freight expenses as a result of the
Rationalization Programs.

Long-Term Care Business--The change in general and administrative expenses is
primarily attributable to an overall increase in expenses due to the growth in
net sales and a corresponding increase in salary expense from the regional
accounts team and employee incentive compensation, offset by a decrease in the
provision for doubtful accounts due to improved accounts receivable collections.
The decrease in general and administrative expenses as a percent of net sales is
due to Gulf South's focus on leveraging its existing capacity to effectively
service the increase in net sales.

Other--General and administrative expenses that could not be directly
attributable to discontinued operations were $0.7 million and $0.8 million for
the three months ended September 27, 2002 and September 28, 2001, respectively,
and were allocated to this segment. Otherwise, the increase in general and
administrative expenses is primarily attributable to (i) an increase in salary
expense as a result of the supply chain initiative and two executive positions
filled during fiscal year 2002, (ii) an increase in depreciation expense for the
supply chain initiative and leasehold improvements related to the centralization
of certain administrative functions to the corporate headquarters located in


                                       29
<PAGE>

Jacksonville, Florida, and (iii) an increase in business insurance expense due
to rate increases on the corporate umbrella and director and officer policies.

General and administrative expenses also include charges related to
restructuring activity, merger activity, and other items. These charges
increased approximately $3.2 million during the three months ended September 27,
2002 compared to the same period of the prior fiscal year. The following table
summarizes charges that are included in general and administrative expenses in
the accompanying consolidated statements of operations (in millions):
<TABLE>
<CAPTION>

                                                    Three Months Ended September 27, 2002
                                             ---------------------------------------------------
                                             Physician        Long-
                                               Supply       Term Care
                                             Business        Business        Other       Total
                                             ---------      ---------       --------    --------

     <S>                                        <C>            <C>               <C>         <C>
    Restructuring costs and expenses..         $(0.2)        $ --            $  --       $(0.2)
    Merger costs and expenses.........            --           --              0.4         0.4
    Reversal of operational tax charge            --           --             (0.1)       (0.1)
    Other.............................           0.2           --              2.9         3.1
                                             ---------      ---------       --------    --------
                   Total................       $ --          $ --            $ 3.2        $3.2
                                             =========      =========       ========    ========
</TABLE>

<TABLE>
<CAPTION>

                                                    Three Months Ended September 28, 2001
                                             ---------------------------------------------------

                                             Physician        Long-
                                               Supply       Term Care
                                             Business         Business        Other      Total
                                             ---------      ---------       --------    --------

     <S>                                          <C>            <C>           <C>         <C>
    Restructuring costs and expenses..           $0.4           $--          $  --        $0.4
    Merger costs and expenses.........            --             --            0.6         0.6
    Reversal of operational tax charge            --             --           (1.0)       (1.0)
                                             ---------      ---------       --------    --------
                  Total................          $0.4           $--          $(0.4)       $ --
                                             =========      =========       ========    ========
</TABLE>

         Restructuring Costs and Expenses

         Restructuring costs and expenses for the three months ended September
         27, 2002 and September 28, 2001 primarily include (i) costs expensed as
         incurred related to the Physician Supply Business restructuring plan
         that was adopted during the fourth quarter of fiscal year 2002 and (ii)
         costs expensed as incurred related to various restructuring plans that
         were adopted in prior fiscal years.

         Physician Supply Business Plan Adopted During the Fourth Quarter of
         Fiscal Year 2002. During the three months ended September 27, 2002,
         management reevaluated its estimates of the total costs related to this
         plan and made necessary adjustments. The original total estimated costs
         of $6.5 million have been revised to be approximately $5.7 million, of
         which approximately $4.2 million and $1.0 million was recognized during
         fiscal year 2002 and the six months ended September 27, 2002,
         respectively. Approximately $0.5 million will be expensed as incurred
         during the remaining six months of fiscal year 2003. The revision to
         the estimated total costs related to involuntary employee termination
         costs and branch shutdown costs. Certain employees, who were previously
         identified to be involuntarily terminated, either ceased employment
         prior to the distribution center closure or were transferred within the
         Company. Therefore, these employees were not entitled to severance. In
         addition, accrued branch shutdown costs are estimated to be less than
         previous estimates as the Company was able to sell the warehouse
         racking for more than what was originally estimated.

         Management anticipates that this plan will be completed by the end of
         the fourth quarter of fiscal year 2003. Management is also currently
         evaluating whether to extend its branch rationalization program, which
         may result in recording additional restructuring charges during the
         fourth quarter of fiscal year 2003. If a restructuring plan is adopted
         subsequent to December 31, 2002, such charges will be recorded in
         accordance with SFAS 146.

                                       30
<PAGE>

         During the three months ended September 27, 2002, the Physician Supply
         Business recorded charges of $0.5 million, which includes branch shut
         down costs of $0.2 million, employee relocation costs of $0.2 million,
         and other costs of $0.1 million. Management revaluated its previous
         estimates and reversed approximately $0.7 million, which includes
         involuntary employee termination costs of $0.4 million and branch
         shutdown costs of $0.3 million. Refer to Note 3, Accrued Restructuring
         Costs and Expenses, for a discussion of the status of this plan.

         Various Restructuring Plans Adopted in Prior Fiscal Years. During the
         three months ended September 28, 2001, the Company recorded $0.5
         million of restructuring costs as incurred. These costs resulted from
         the involuntary termination of 26 employees, branch shutdown costs and
         lease termination costs for the merger of two Physician Supply
         Businesses into existing locations. During the three months ended
         September 28, 2001, the Company reversed approximately $0.1 million of
         restructuring costs, which primarily relate to lease termination costs.

         Merger Costs and Expenses

         Merger costs and expenses for the three months ended September 27, 2002
         and September 28, 2001 include costs related to employee retention
         bonuses. Effective February 1, 2000, the Board of Directors approved
         and adopted an Officer Retention Bonus Plan and a Corporate Office
         Employee Retention Bonus Plan (collectively the "Retention Plans"). As
         part of the Company's strategic alternatives process, management
         adopted these plans to retain certain officers and key employees during
         the strategic alternatives transition period. The total cash
         compensation costs related to these plans is approximately $8.0
         million, of which $6.8 million was expensed in prior fiscal years and
         $0.4 million was expensed during the three months ended June 28, 2002.
         Approximately $0.4 million and $0.6 million were recognized during the
         three months ended September 27, 2002 and September 28, 2001,
         respectively. An additional $0.4 million will be expensed during the
         remaining six months of fiscal year 2003.

         Reversal of Operational Tax Charge

         During the three months ended September 27, 2002 and September 28,
         2001, the Company performed an analysis and reversed approximately $0.1
         million and $1.0 million, respectively, of a previously recorded
         operating tax charge reserve.

         Other

          As part of the  Company's  ongoing  review of the  realization  of the
          three notes receivables outstanding from the Company's former Chairman
          and Chief Executive Officer,  the Company determined that an allowance
          for doubtful  accounts was required for the unsecured note receivable.
          As a result,  during the three months ended  September  27, 2002,  the
          Company  recorded an allowance  for doubtful  accounts of $2.9 million
          against  the  unsecured  note  receivable.  This  allowance  does  not
          represent a forgiveness of debt.

          The  Physician   Supply  Business   incurred  $0.2  million  of  lease
          termination costs during the three months ended September 27, 2002 for
          locations  that were  previously  vacated  in  connection  with  prior
          restructuring plans.

Selling Expenses.

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                           ------------------------------------------
                                           September 27, 2002     September 28, 2001
                                           ------------------     -------------------
                                                     % of Net                % of Net
        (dollars in millions)              Amount      Sales      Amount      Sales     Increase
                                           -------   --------     -------    --------   --------
         <S>                                <C>         <C>        <C>         <C>         <C>
        Physician Supply Business.....      $17.8       9.7%       $15.9       9.0%        $1.9
        Long-Term Care Business.......        3.1       2.9%         2.9       3.0%         0.2
                                           -------   --------     -------    --------   --------
                       Total Company..      $20.9       7.2%       $18.8       6.9%        $2.1
                                           =======   ========     =======    ========   ========
</TABLE>

                                       31
<PAGE>

Physician Supply Business--The change in selling expenses is primarily
attributable to an increase in commission expense due to (i) the increased sales
volume discussed above, (ii) the addition of 7 new sales representatives, and
(iii) the sales representatives' strong focus on enhancing overall margins.
Commissions are generally paid to sales representatives based on gross profit as
a percentage of net sales.

Long-Term Care Business--Although net sales increased, selling expenses remained
relatively constant from period to period. Commissions are generally paid to
sales representatives based on gross profit as a percentage of net sales.

Income from Operations.
<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                       --------------------------------
                                                        September 27,    September 28,      Increase
         (dollars in millions)                               2002            2001          (Decrease)
                                                       ---------------- --------------- -----------------

         <S>                                                 <C>              <C>            <C>
         Physician Supply Business.................        $5.7             $6.4           $(0.7)
         Long-Term Care Business...................         4.7              2.3             2.4
         Other.....................................        (5.3)            (1.5)           (3.8)
                                                        ---------------- --------------- -----------------
                       Total Company..............        $5.1             $7.2           $(2.1)
                                                        ================ ==============  =================
</TABLE>

Income from operations for the three months ended September 27, 2002 for the
Other segment was negatively impacted by (i) the allowance of $2.9 million that
was recorded against the note receivable from the former Chairman and Chief
Executive Officer of the Company and (ii) general and administrative expenses of
approximately $0.7 million that was not allocated to discontinued operations.
General and administrative expenses that was not allocated to discontinued
operations during the three months ended September 28, 2001 was approximately
$0.8 million. Otherwise, income from operations for each business segment
changed due to the factors discussed above.


Interest Expense. Interest expense for the three months ended September 27, 2002
totaled $2.2 million, a decrease of $0.4 million, or 17.5%, from interest
expense of $1.8 million for the three months ended September 28, 2001. In
accordance with EITF Issue No. 87-24, Allocation of Interest to Discontinued
Operations, a portion of the Company's interest expense that is not directly
attributable to or related to other operations of the Company has been allocated
to discontinued operations based upon the ratio of net assets to be sold to the
sum of consolidated net assets plus consolidated debt. Interest expense
allocated to discontinued operations was $0.9 million and $1.1 million for the
three months ended September 27, 2002 and September 28, 2001, respectively. In
addition, during the three months ended September 28, 2001, approximately $0.5
million was capitalized in connection with the Company's purchase and
development of its ERP systems. Excluding the effects of the allocation of
interest to discontinued operations and the capitalized interest, the decrease
in interest expense is primarily attributable to lower outstanding debt balances
under the Company's revolving credit agreement and Senior Subordinated Notes
over the prior period.

Interest and Investment Income. Interest and investment income totaled $0.2
million for the three-month period ended September 27, 2002. Although cash and
cash equivalents have increased slightly from period to period, interest and
investment income remained unchanged primarily due to a general reduction in
interest rates.

Other  Income.  Other income for the three months ended  September  27, 2002 and
September 28, 2002 totaled $0.4 million.

Provision for Income Taxes. Provision for income taxes was $1.3 million for the
three months ended September 27, 2002, a change of $0.7 million from the
provision for income taxes of $2.0 million for the three months ended September
28, 2001. The effective income tax rate was approximately 36.5% and 36.3% for
the three months ended September 27, 2002 and September 28, 2001, respectively.
The increase in the effective rate is primarily attributable to (i) an increase
in unfavorable permanent items and (ii) a decrease in the income from continuing
operations before provision for income taxes, excluding the effect of the
International Business, offset by a valuation allowance recorded during fiscal
year 2002 against certain deferred tax assets resulting from capital loss
carryforwards generated from the sale of the International Business.

                                       32
<PAGE>

The Company is currently under an Internal Revenue Service audit for the fiscal
years ended March 31, 2000 and March 30, 2001. Fieldwork is anticipated to be
completed during the fourth quarter of fiscal year 2003, with anticipated final
audit results by the first quarter of fiscal year 2004. Management does not
anticipate the results of the audit to have a material impact on the financial
condition or consolidated results of operations of the Company.

Total Loss from Discontinued Operations.

Net sales for the Imaging Business were $175.7 million for the three months
ended September 27, 2002, a decrease of $0.8 million from net sales of $176.5
million for the three months ended September 28, 2001. The change in net sales
is primarily attributable to a decline in analog film and chemistry product
sales as a result of customer conversions from wet x-ray film handling to dry
lasers that eliminate the need for certain consumable products such as film
chemistry. Equipment sales were relatively consistent from period to period.
General radiographic and advanced technology equipment sales declined, however,
equipment sales from the Women's Health strategic business unit ("SBU")
increased.

The pretax loss from operations was $1.9 million for the three months ended
September 27, 2002, an increase of $1.7 million from a pretax loss from
operations of $0.2 million for the three months ended September 28, 2001. This
increase in the loss from operations is primarily related to a reduction in
gross profit as a result of the continued impact of analog to digital customer
conversions, partially offset by a reduction in general and administrative
expenses due to DI's focus on operating efficiencies and cost minimization
within the distribution network.

The Company expects to generate an approximate  $40.0 million income tax benefit
and a corresponding  income tax net operating loss ("NOL") carry forward related
to the disposal of the Imaging Business and its operations for fiscal year 2003.
During the three months ended September 27, 2002, approximately $35.4 million of
the $40.0 million income tax benefit has been recorded.  Management  anticipates
that this NOL will be carried  forward and applied  against  taxable  income for
fiscal years 2004,  2005,  and 2006.  The NOL carry  forward is  classified as a
deferred  tax  asset  in  other   noncurrent   assets  in  the  Other  segment's
accompanying  balance sheet. In future  periods,  the provision for income taxes
will be recorded in the  statements of operations at the  appropriate  effective
tax rate based on income generated by the Company. However, the Company does not
expect to make any cash  payments for income taxes during the years that the NOL
is available to offset any taxable income.

In addition, the Company also expects to record a restructuring charge related
to the exit of the Imaging Business. If the details of the plan are finalized
and adopted by management prior to December 31, 2002, any charges will be
recorded in accordance with EITF 94-3. If the details of the plan are not
finalized and adopted by management until subsequent to December 31, 2002, any
charges will be recorded in accordance with SFAS 146.

Extraordinary Loss. During the three months ended September 27, 2002, the
Company retired $19.0 million principal amount of its $125.0 million Senior
Subordinated Notes. An extraordinary loss of $0.7 million was incurred as a
result of the early extinguishment of debt, consisting of $0.7 million
redemption premiums and the accelerated amortization of associated debt issuance
costs of $0.4 million, net of an income tax benefit of $0.4 million.

Net Income. Net loss for the three months ended September 27, 2002 totaled $55.2
million compared to net income of $3.4 million for the three months ended
September 28, 2001. The net loss for the three months ended September 27, 2002
included a charge of $56.8 million for the total loss from discontinued
operations and $0.7 extraordinary loss on early extinguishment of debt.
Otherwise, variances are due to the factors discussed above.

                                       33
<PAGE>


SIX MONTHS ENDED SEPTEMBER 27, 2002 VERSUS SIX MONTHS ENDED SEPTEMBER 28, 2001

Net Sales.
<TABLE>
<CAPTION>

                                                            Six Months Ended
                                                      -----------------------------
                                                      September 27,   September 28,      Increase       Percent
          (dollars in millions)                            2002            2001         (Decrease)       Change
                                                      -------------   -------------     -----------     --------

            <S>                                          <C>              <C>           <C>               <C>
          Physician Supply Business..............         $367.0           $347.5        $19.5             5.6%
          Long-Term Care Business................          208.3            191.1         17.2             9.0%
          Other..................................           --                0.4         (0.4)          100.0%
                                                      -------------   -------------     -----------     --------
                         Total Company...........         $575.3           $539.0        $36.3             6.7%
                                                      =============   =============     ===========     ========
</TABLE>

Physician Supply Business--The change in net sales is primarily attributable to
an increase in medical disposables sales of approximately $22.4 million, of
which private label and pharmaceuticals sales represented approximately 30% of
this growth, offset by a $2.9 million decrease in equipment sales. The launch of
the new pediatrics and surgeon SRxSM modules contributed to the increase in
medical disposables sales and the discontinuance of the marketing and
distribution of a product line was the primary reason for the decrease in
equipment sales. Net sales also decreased approximately $1.1 million as a result
of a product recall. The Physician Supply Business added 33 new sales
representatives, which also contributed to the growth in overall net sales.

Long-Term Care Business--The increase in net sales is primarily attributable to
the growth generated by the ANSWERS(TM) marketing program. To date, over 230
customers have adopted the program, which generated approximately $6.8 million
of incremental revenue during the six months ended September 27, 2002. In
addition, net sales increased due to (i) growth initiatives focused on regional
accounts and product line expansion and (ii) growth associated with the overall
increase in prices.

Gross Profit. Gross profit for the six months ended September 27, 2002 totaled
$162.7 million, an increase of $16.4 million, or 11.2%, from gross profit of
$146.3 million for the six months ended September 28, 2001. Gross profit as a
percentage of net sales was 28.3% and 27.1% for the six months ended September
27, 2002 and September 28, 2001, respectively. The increase in gross profit is
attributable to (i) the overall increase in net sales described above, (ii) a
change in sales mix to higher gross profit consumable products in the Physician
Supply Business, (iii) a strong focus from the sales representatives to enhance
margins, (iv) an increase in manufacturer incentive rebates earned by the
Long-Term Care Business due to the increase in sales levels and positive changes
to the vendor incentive agreements, (v) an increase in purchasing incentive
rebates earned by the Physician Supply Business, and (vi) improved purchase
economies resulting from the centralization of the purchasing function and the
consolidation of vendors in the Physician Supply and Long-Term Care Businesses.

General and Administrative Expenses.
<TABLE>
<CAPTION>

                                                           Six Months Ended
                                                 September 27, 2002 September 28, 2001
                                              ---------------------------------------------
                                                          % of Net               % of Net
       (dollars in millions)                    Amount      Sales      Amount      Sales      Increase
                                              ---------- ----------- ---------- ----------- ------------
<S>                                              <C>        <C>         <C>        <C>          <C>
       Physician Supply Business..........       $66.6      18.1%       $58.8      16.9%        $7.8
       Long-Term Care Business............        35.1      16.9%        34.3      17.9%         0.8
       Other..............................         7.6      --            3.0      --            4.6
                                              ---------- ----------- ---------- ----------- ------------
                      Total Company.......      $109.3      19.0%       $96.1      17.8%       $13.2
                                              ========== =========== ========== =========== ============
</TABLE>

Physician Supply Business--The change in general and administrative expenses is
primarily attributable to (i) an increase in salary and travel expenses as a
result of the Rationalization Programs, (ii) an increase in warehouse salary
expenses at consolidated full-service centers during the transition period,
offset by the savings from closed centers, (iii) additional depreciation for
completed phases of its ERP system, myPSS.com electronic commerce platform, and
supply chain initiatives, (iv) additional amortization expense as a result of
the signing bonuses given to new sales representatives, and (v) temporarily
increased freight expenses as a result of the Rationalization Programs.

                                       34
<PAGE>

Long-Term Care Business--The change in general and administrative expenses is
primarily attributable to (i) an overall increase in expenses due to the growth
in net sales, (ii) a corresponding increase in salary expense and employee
incentive compensation, (iii) an increase in amortization expense for an
impaired noncompete intangible asset, and (iv) an increase in fees charged by
Direct Supply Systems, Inc ("DSSI") as a result of more customers using the DSSI
network to purchase products, offset by a decrease in the provision for doubtful
accounts due to improved accounts receivable collections. The decrease in
general and administrative expenses as a percent of net sales is due Gulf
South's focus on leveraging its existing capacity to effectively service the
increase in net sales.

Other--General and administrative expenses that could not be directly
attributable to discontinued operations were $1.4 million and $1.7 million for
the six months ended September 27, 2002 and September 28, 2001, respectively,
and were allocated to this segment. Otherwise, the increase in general and
administrative expenses is primarily attributable to (i) an increase in salary
expense as a result of the supply chain initiative and two executive positions
filled during fiscal year 2002 and (ii) an increase in depreciation expense for
the supply chain initiative and leasehold improvements related to the
centralization of certain administrative functions to the corporate headquarters
located in Jacksonville, Florida, and (iii) an increase in business insurance
expense due to rate increases on the corporate umbrella and director and officer
policies.

General and administrative expenses also include charges related to
restructuring activity, merger activity, and other items. These charges
increased approximately $4.0 million during the six months ended September 27,
2002 compared to the same period of the prior fiscal year. The following table
summarizes charges that are included in general and administrative expenses in
the accompanying consolidated statements of operations (in millions):
<TABLE>
<CAPTION>

                                                    Six Months Ended September 27, 2002
                                             ------------------------------------------------
                                             Physician        Long-
                                               Supply       Term Care
                                             Business        Business       Other      Total
                                             ---------      ---------     ----------  -------

<S>                                              <C>           <C>           <C>       <C>
    Restructuring costs and expenses..           $0.5          $--           $ --      $ 0.5
    Merger costs and expenses.........             --           --            0.7        0.7
    Accelerated depreciation..........            0.1           --             --        0.1
    Reversal of operational tax charge             --           --           (0.1)      (0.1)
    Other.............................            0.3           --            2.9        3.2
                                             ---------      ---------     ----------  -------
                   Total................         $0.9          $--           $3.5       $4.4
                                             =========      =========     ==========  =======
</TABLE>


<TABLE>
<CAPTION>
                                                    Six Months Ended September 28, 2001
                                             ------------------------------------------------
                                             Physician        Long-
                                               Supply       Term Care
                                             Business        Business       Other      Total
                                             ---------      ---------     ----------  -------


     <S>                                          <C>           <C>         <C>         <C>
    Restructuring costs and expenses..          $0.5          $0.2          $ --      $ 0.7
    Merger costs and expenses.........            --            --           1.1        1.1
    Reversal of operational tax charge            --            --          (1.4)      (1.4)
                                             ---------      ---------     ----------  -------
                   Total................        $0.5          $0.2         $(0.3)     $ 0.4
                                             =========      =========     ==========  =======
</TABLE>

         Restructuring Costs and Expenses

         Physician Supply Business Plan Adopted During the Fourth Quarter of
         Fiscal Year 2002. During the six months ended September 27, 2002, the
         Physician Supply Business recorded charges of $1.0 million, which
         include branch shut down costs of $0.5 million, involuntary employee
         termination costs of $0.1 million, employee relocation costs of $0.3
         million, and other costs of $0.1 million. Management revaluated its
         previous estimates and reversed approximately $0.7 million, which
         includes involuntary employee termination costs of $0.4 million and
         branch shutdown costs of $0.3 million. (Refer to Note 3, Accrued
         Restructuring Costs and Expenses, for a discussion of the status of
         this plan.)

                                       35
<PAGE>

         Various Restructuring Plans Adopted in Prior Fiscal Years. During the
         six months ended September 27, 2002 and September 28, 2001, the Company
         recorded $0.2 million and $0.8 million, respectively, of restructuring
         costs as incurred. These costs primarily resulted from the involuntary
         termination of 26 employees, branch shutdown costs and lease
         termination costs for the merger of three Physician Supply Businesses
         into existing locations. During the six months ended September 28,
         2001, the Company reversed approximately $0.1 million of restructuring
         costs, which primarily relate to lease termination costs.

         Merger Costs and Expenses

         As a result of the Retention Plans, approximately $0.7 million and $1.1
         million was recognized during the six months ended September 27, 2002
         and September 28, 2001, respectively.

         Accelerated Depreciation

         The Physician Supply Business identified certain assets that would be
         replaced or disposed of as a result of the restructuring plan that was
         implemented during the fourth quarter of fiscal year 2002. Pursuant to
         SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to Be
         Disposed Of, the Company evaluated the recoverability of the assets and
         determined that impairment did not exist at the division level.
         Therefore, management revised the estimated useful lives of certain
         assets in accordance with APB No. 20, Accounting Changes. As a result
         of shortening the useful lives during the fourth quarter of fiscal year
         2002 to coincide with the planned disposal date, the Company recorded
         $0.1 million of accelerated depreciation during the six months ended
         September 27, 2002. This change in estimate decreased basic and diluted
         earnings per share by less than $0.01 for the six months ended
         September 27, 2002.

         Reversal of Operational Tax Charge

         During the six months ended September 27, 2002 and September 28, 2001,
         the Company performed an analysis and reversed approximately $0.1
         million and $1.4 million, respectively, of a previously recorded
         operating tax charge reserve.

         Other

          As part of the  Company's  ongoing  review of the  realization  of the
          three notes receivables outstanding from the Company's former Chairman
          and Chief Executive Officer,  the Company determined that an allowance
          for doubtful  accounts was required for the unsecured note receivable.
          As a result,  during the six months ended  September  27, 2002,  the
          Company  recorded an allowance  for doubtful  accounts of $2.9 million
          against  the  unsecured  note  receivable.  This  allowance  does  not
          represent a forgiveness of debt.

          During the six months ended  September 27, 2002, the Physician  Supply
          Business   incurred  $0.3  million  of  lease  termination  costs  for
          locations  that were  previously  vacated  in  connection  with  prior
          restructuring plans.

Selling Expenses.
<TABLE>
<CAPTION>

                                                       Six Months Ended
                                           ------------------------------------------
                                           September 27, 2002     September 28, 2001
                                           -------------------    -------------------
                                                      % of Net               % of Net
        (dollars in millions)              Amount      Sales      Amount      Sales     Increase
                                           -------    --------    -------    --------   --------
<S>                                         <C>         <C>        <C>         <C>         <C>
        Physician Supply Business.....      $35.1       9.6%       $31.1       8.9%        $4.0
        Long-Term Care Business.......        6.1       2.9%         5.9       3.1%         0.2
                                           -------    --------    -------    --------   --------
                       Total Company..      $41.2       7.2%       $37.0       6.9%        $4.2
                                           =======    ========    =======    =========  ========
</TABLE>

                                       36
<PAGE>

Physician Supply Business--The change in selling expenses is primarily
attributable to an increase in commission expense due to (i) the increased sales
volume discussed above, (ii) the addition of 33 new sales representatives, and
(iii) the sales representatives' strong focus on enhancing overall margins.
Commissions are generally paid to sales representatives based on gross profit as
a percentage of net sales.

Long-Term Care Business--Although net sales increased, selling expenses remained
relatively constant from period to period. Commissions are generally paid to
sales representatives based on gross profit as a percentage of net sales.

International Business Exit Charge Reversal. During fiscal year 2001, the
Company adopted a plan for divesting the International Business and recorded a
charge of approximately $14.9 million. The sale of the International Business
was completed during the three months ended June 29, 2001. Upon completion of
the sale, the Company recorded a reversal of $0.5 million of the previously
established charge due to lower than expected costs to exit the operations.

Income from Operations.
<TABLE>
<CAPTION>

                                                               Six Months Ended
                                                       --------------------------------
                                                        September 27,    September 28,      Increase
         (dollars in millions)                               2002            2001          (Decrease)
                                                       ---------------- --------------- -----------------

<S>                                                       <C>              <C>             <C>
         Physician Supply Business.................       $11.2            $12.1           $(0.9)
         Long-Term Care Business...................         8.6              4.0             4.6
         Other.....................................        (7.6)            (2.4)           (5.2)
                                                       ---------------- --------------- -----------------
                        Total Company..............       $12.2            $13.7           $(1.5)
                                                       ---------------- --------------- -----------------
</TABLE>

Income from operations for the six months ended September 27, 2002 for the Other
segment was negatively impacted by (i) the allowance of $2.9 million that was
recorded against the note receivable from the former Chairman and Chief
Executive Officer of the Company and (ii) general and administrative expenses of
approximately $1.4 million that was not allocated to discontinued operations.
General and administrative expenses that was not allocated to discontinued
operations during the six months ended September 28, 2001 was approximately $1.7
million. Otherwise, income from operations for each business segment changed due
to the factors discussed above.

Interest Expense. Interest expense for the six months ended September 27, 2002
totaled $4.5 million, a decrease of $0.1 million, or 3.2%, from interest expense
of $4.6 million for the six months ended September 28, 2001. Interest expense
allocated to discontinued operations was $1.7 million and $2.6 million for the
six months ended September 27, 2002 and September 28, 2001, respectively. In
addition, during the six months ended September 28, 2001, approximately $1.0
million was capitalized in connection with the Company's purchase and
development of its ERP systems. Excluding the effects of the allocation of
interest to discontinued operations and the capitalized interest, the decrease
in interest expense is primarily attributable to lower outstanding debt balances
under the Company's revolving credit agreement and Senior Subordinated Notes
over the prior period partially offset by the accelerated amortization of
approximately $0.4 million of debt issuance costs as a result of refinancing the
prior credit facility on May 24, 2001.

Interest and Investment Income. Interest and investment income for the six
months ended September 27, 2002 totaled $0.4 million, an increase of $0.2
million, or 142.1%, from interest and investment income of $0.2 for the six
months ended September 28, 2001. The change is attributable to an increase in
the amount of invested cash and cash equivalents over the prior period.

Other Income. Other income for the six months ended September 27, 2002 totaled
$0.8 million, a decrease of $0.3 million, or 28.6%, from other income of $1.1
million for the six months ended September 28, 2001. The decrease in other
income is primarily attributable to a decrease in finance charge income on
Long-Term Care customer accounts.

Provision for Income Taxes. Provision for income taxes was $3.3 million for the
six months ended September 27, 2002, a change of $0.5 million from the provision


                                       37
<PAGE>

for income taxes of $3.8 million for the six months ended September 28, 2001.
The effective income tax rate was approximately 37.3% and 36.1% for the six
months ended September 27, 2002 and September 28, 2001, respectively. The
increase in the effective rate is primarily attributable to (i) an increase in
unfavorable permanent items and (ii) an decrease in the income before provision
for income taxes, excluding the effect of the International Business, offset by
a valuation allowance recorded during fiscal year 2002 against certain deferred
tax assets resulting from capital loss carryforwards generated from the sale of
the International Business.

Total Loss from Discontinued Operations.

Net sales for the Imaging Business were $352.5 million for the six months ended
September 27, 2002, a decrease of $3.7 million from net sales of $356.2 million
for the six months ended September 28, 2001. The change in net sales is
primarily attributable to a decline in analog film and chemistry product sales
as a result of customer conversions from wet x-ray film handling to dry lasers
that eliminate the need for certain consumable products such as film chemistry.
General radiographic and advanced technology equipment sales have declined. This
decline has been offset by an increase in equipment sales from the Women's
Health SBU.

The pretax loss from operations was $3.1 million for the six months ended
September 27, 2002, an increase of $2.4 million from a pretax loss from
operations of $0.7 million for the six months ended September 28, 2001. This
increase in the loss from operations is primarily related to a reduction in
gross profit as a result of the continued impact of analog to digital customer
conversions, partially offset by a reduction in general and administrative
expenses due DI's focus on operating efficiencies and cost minimization within
the distribution network.

The Company expects to generate an approximate $40.0 million income tax benefit
and a corresponding income tax NOL carry forward related to the disposal of the
Imaging Business and its operations for fiscal year 2003. During the six months
ended September 27, 2002, approximately $35.4 million of the $40.0 million
income tax benefit has been recorded. Management anticipates that this NOL will
be carried forward and applied against taxable income for fiscal years 2004,
2005, and 2006. The NOL carry forward is classified as a deferred tax asset in
other noncurrent assets in the Other segment's accompanying balance sheet.

Extraordinary Loss. During the six months ended September 27, 2002, the Company
retired $19.0 million principal amount of its $125.0 million Senior Subordinated
Notes. An extraordinary loss of $0.7 million was incurred as a result of the
early extinguishment of debt, consisting of $0.7 million redemption premiums and
the accelerated amortization of associated debt issuance costs of $0.4 million,
net of an income tax benefit of $0.4 million.

Net Loss. Net loss for the six months ended September 27, 2002 totaled $52.6
million compared to a net loss of $84.0 million for the six months ended
September 28, 2001. The net loss for the six months ended September 27, 2002
included a charge of $56.8 million for the total loss from discontinued
operations and $0.7 extraordinary loss on early extinguishment of debt. The net
loss for the six months ended September 28, 2001 primarily related to a goodwill
impairment charge of $90.0 million, net of a benefit for income taxes of $14.4
million, recorded as a cumulative effect of an accounting change due to the
implementation of SFAS 142. Otherwise, variances are due to the factors
discussed above.

LIQUIDITY AND CAPITAL RESOURCES

As the Company's business grows, its cash and working capital requirements will
also continue to increase as a result of the anticipated growth of the Company's
operations. This growth will be funded through a combination of cash flows from
operating activities, revolving credit borrowings, and other financing
arrangements.

Statement of Cash Flows Discussion

Net cash provided by operating activities was $20.6 million and $56.0 million
for the six months ended September 27, 2002 and September 28, 2001,
respectively. During the six months ended September 27, 2002, cash flows from
operating activities were positively impacted by noncash items of $10.6 million
related to depreciation, amortization of intangible assets, amortization of debt
issuance costs, provision for doubtful accounts, and benefit for deferred income
taxes. Cash flows from operating activities were also positively impacted by the
continued implementation of working capital reduction initiatives that started


                                       38
<PAGE>

in the last half of fiscal year 2001 and continued into fiscal year 2003. During
the six months ended September 27, 2002, accounts payable increased
approximately $9.4 million, accounts receivable increased approximately $6.9
million, and inventories decreased approximately $4.7 million, resulting in a
net $7.2 million decrease in operating working capital, which positively
impacted operating cash flows. The decrease in net cash provided by operating
activities from period to period was primarily attributable to the decrease in
net cash provided by discontinued operations. During the six months ended
September 28, 2001, the Imaging Business reduced working capital employed in the
business through supply chain initiatives that reduced inventory balances while
extending the timing of accounts payable disbursements. During the six months
ended September 27, 2002, the Imaging Business maintained inventory and accounts
payable balances at normalized levels and did not experience the same reduction
in working capital.

Net cash used in investing activities was $12.2 million and $11.9 million for
the six months ended September 27, 2002 and September 28, 2001, respectively.
During the six months ended September 27, 2002 and September 28, 2001, capital
expenditures totaled $6.2 million and $10.3 million, respectively. Capital
expenditures related to the continued development of the Company's ERP system,
electronic commerce platforms, and supply chain integration were approximately
$0.6 million and $7.0 million during the six months ended September 27, 2002 and
September 28, 2001. During the six months ended September 27, 2002,
approximately $3.5 million of the capital expenditures relate to the
distribution center expansions and software development for centralizing the
purchasing function as a result of the Rationalization Programs. In addition,
during the three months ended September 27, 2002, the Long-Term Care Business
purchased a business for approximately $4.5 million. During fiscal year 2003,
the Company is focusing on reducing overall capital expenditures and expects
reduced levels of capital expenditures with the planned completion of the ERP
system conversions at the Physician Supply Business during the first quarter of
fiscal year 2004.

Net cash used in financing activities was $29.0 million for the six months ended
September 27, 2002 compared to net cash used in financing activities of $54.2
million for the six months ended September 28, 2001. During the three months
ended September 27, 2002, the Company paid $19.7 million to retire a portion of
the Company's $125.0 million Senior Subordinated Notes (the "Notes") and $9.5
million to repurchase 1.3 million shares of the Company's common stock under an
approved stock repurchase program. During fiscal year 2002, the Company repaid a
significant amount of debt outstanding under the revolving line of credit
agreement using cash flows from operating activities.

Operating Trends

Excluding the assets and liabilities of discontinued operations, the Company had
working capital of $160.6 million and $188.0 million as of September 27, 2002
and March 29, 2002, respectively. Accounts receivable, net of allowances, were
$154.8 million and $148.3 million at September 27, 2002 and March 29, 2002,
respectively. The average number of days sales in accounts receivable
outstanding was approximately 47.4 and 46.8 days for the three months ended
September 27, 2002 and March 29, 2002, respectively. For the three months ended
September 27, 2002, the Company's Physician Supply and Long-Term Care Businesses
had days sales in accounts receivable outstanding of approximately 44.6 and 52.4
days, respectively.

Inventories were $89.2 million and $83.9 million as of September 27, 2002 and
March 29, 2002, respectively. The Company had inventory turnover of 9.5x for the
three months ended September 27, 2002 and March 29, 2002. For the three months
ended September 27, 2002, the Company's Physician Supply and Long-Term Care
Businesses had inventory turnover of 8.7x and 11.2x, respectively.

The following table presents Adjusted EBITDA and other financial data for the
three and six months ended September 27, 2002 and September 28, 2001 (in
thousands):

                                       39
<PAGE>

         Other Financial Data:

<TABLE>
<CAPTION>
                                                         Three Months Ended                 Six Months Ended
                                                   ------------------------------    -----------------------------
                                                   September 27,    September 28,    September 27,   September 28,
                                                       2002             2001             2002             2001
                                                   -------------    -------------    -------------   -------------

<S>                                                  <C>              <C>             <C>              <C>
Income from operations........................       $5,123           $7,156          $12,183          $13,708
Plus:  Other income...........................          408              356              810            1,135
Plus:  Depreciation and amortization of
   intangible assets..........................        3,522            2,225            7,015            4,302
Plus:  Charges included in general and
   administrative expenses (d)................        3,160               30            4,259              400
Plus:  International Business exit charge                --               --
   reversal                                                                                --             (514)
                                                   -------------    -------------    -------------   -------------
Adjusted EBITDA (a)...........................      $12,213           $9,767          $24,267          $19,031

Interest expense..............................      $ 2,167           $1,845          $ 4,466          $ 4,614
Interest coverage (b).........................          5.6x             5.3x             5.4x             4.1x
Adjusted EBITDA Margin (c)....................          4.2%             3.6%             4.2%             3.5%

Net cash provided by operating activities.....                                       $ 20,565         $ 56,023
Net cash used in investing activities.........                                       $(12,150)        $(11,926)
Net cash used in financing activities.........                                       $(28,983)        $(54,243)
</TABLE>


<TABLE>
<CAPTION>
                                                                                        As of
                                                                            ------------------------------
                                                                            September 27,    September 28,
                                                                               2002             2001
                                                                            -------------    -------------

<S>                                                                              <C>             <C>
        Return on committed capital (e) (d)...........................          18.6%           14.1%
        Ratio of debt to capitalization (f)...........................          28.8%           29.7%
</TABLE>

(a)      Adjusted EBITDA represents income from operations, plus other income,
         depreciation and amortization of intangible assets, charges included in
         general and administrative expenses, and International Business exit
         charge reversal. Adjusted EBITDA excludes interest expense and
         provision for income taxes. Adjusted EBITDA is not a measure of
         performance or financial condition under generally accepted accounting
         principles ("GAAP").

         Adjusted EBITDA is not intended to represent cash flows from operations
         and should not be considered as an alternative measure to income from
         operations or net income computed in accordance with GAAP, as an
         indicator of the Company's operating performance, as an alternative to
         cash flows from operating activities, or as a measure of liquidity. In
         addition, Adjusted EBITDA does not provide information regarding cash
         flows from investing and financing activities which are integral to
         assessing the effects on the Company's financial position and liquidity
         as well as understanding the Company's historical growth. The Company
         believes that Adjusted EBITDA is a standard measure of liquidity
         commonly reported and widely used by analysts, investors, and other
         interested parties in the financial markets. However, not all companies
         calculate Adjusted EBITDA using the same method and the Adjusted EBITDA
         numbers set forth above may not be comparable to Adjusted EBITDA
         reported by other companies.

(b)      Interest coverage  represents the ratio of Adjusted EBITDA to interest
         expense.

(c)      Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to net
         sales.

(d)      Charges included in general and administrative expenses for the three
         and six months ended September 27, 2002 excludes $54 and $138 of
         accelerated depreciation, respectively. Accelerated depreciation is
         included in depreciation and amortization in the Adjusted EBITDA
         calculation.

(e)      Return on committed capital equals Adjusted EBITDA less depreciation
         divided by the average of the two most recent fiscal quarters of total
         assets less the sum of cash and cash equivalents, goodwill, net
         intangibles, accounts payable, accrued expenses, and other current and
         noncurrent liabilities. The deferred tax asset of $34,654 generated


                                       40
<PAGE>

         from the estimated loss on disposal of the Imaging Business is excluded
         from this calculation. The result of this calculation is then
         annualized.

(f)      Ratio of debt to capitalization is calculated as long-term debt plus
         current portion of long-term debt divided by the sum of long-term debt,
         current portion of long-term debt, and shareholders' equity.

Senior Subordinated Notes

The Company's Notes are unconditionally guaranteed on a senior subordinated
basis by all of the Company's domestic subsidiaries. Interest on the Notes
accrues from the date of original issuance and is payable semiannually on April
1 and October 1 of each year, commencing on April 1, 1998, at a rate of 8.5% per
annum. The semiannual payments of approximately $5.3 million are expected to be
funded by the cash flows from operating activities of the Company. The Notes
mature on October 1, 2007, and contain certain restrictive covenants that, among
other things, limit the Company's ability to incur additional indebtedness. The
Company may incur indebtedness up to certain specified levels and, provided that
no event of default exists, additional indebtedness may be incurred if the
Company maintains a consolidated fixed charge coverage ratio, after giving
effect to such additional indebtedness, of greater than 2 to 1.

During the three months ended September 27, 2002, the Company retired $19.0
million principal amount of its Notes in a privately negotiated transaction. An
extraordinary loss of $0.7 million was incurred as a result of the early
extinguishment of debt, consisting of $0.7 million of redemption premiums, $0.4
million of accelerated amortization of debt issuance costs, net of a benefit for
income taxes of $0.4 million.

Under the Notes Indenture, beginning October 1, 2002, the Company has the right
to call the Notes at a call premium of 4.25% of face value. The Company is
currently evaluating the economic feasibility of calling the Notes using a
combination of cash flows from operations, availability under the Revolving
Credit Agreement, or cash from obtaining an alternate financing facility.

Revolving Credit Agreement

On May 24, 2001, the Company entered into a credit agreement (the "Credit
Agreement"), by and among the Company, as borrower thereunder (the "Borrower"),
the subsidiaries of the Borrower party thereto, the lenders from time to time
party thereto (the "Lenders"), Bank of America, N.A., as Agent for the Lenders
(in such capacity, the "Agent", or the "Bank") and Banc of America Securities
LLC, as Arranger.

The Credit Agreement provides for a four-year credit facility consisting of an
aggregate $120 million revolving line of credit and letters of credit (the
"Credit Facility"). Availability of borrowings under the Credit Facility depends
upon (a) the amount of a borrowing base consisting of accounts receivable and,
upon satisfaction of certain requirements, inventory and (b) compliance with
certain debt incurrence tests under the Company's Indenture, dated as of October
7, 1997, relating to the Notes. The Credit Facility bears interest at the Bank's
prime rate plus a margin of between 0.25% and 1.0% based on the Company's ratio
of funded debt to EBITDA (as defined in the Agreement) or at LIBOR plus a margin
of between 1.75% and 3.5% based on the Company's ratio of funded debt to EBITDA.
Under the Credit Agreement, the Company and its subsidiaries are subject to
certain covenants, including but not limited to, limitations on (a) paying
dividends and repurchasing stock, (b) repurchasing its Notes, (c) selling or
transferring assets, (d) making certain investments (including acquisitions) and
(e) incurring additional indebtedness and liens. Initial proceeds from the
Credit Facility were used to refinance existing indebtedness outstanding under
the Company's prior credit agreement, and future proceeds will be used to issue
letters of credit, finance ongoing working capital requirements and general
corporate purposes of the Company. The Credit Facility matures on May 24, 2005.

On June 28, 2001, the Company entered into a First Amendment to the Credit
Agreement (the "Amendment"), by and among the Company, as borrower thereunder,
the subsidiaries of the Company party thereto, the Lenders and the Agent for the
Lenders. The Amendment amended the Credit Agreement to increase the maximum
available borrowings under the Credit Agreement from $120 million to $150
million. The Amendment also, among other things, increased the percentage of
Lenders whose consent was required for an amendment of the Credit Agreement from
more than 50% to more than 55% and amended certain provisions relating to


                                       41
<PAGE>

protective advances, limitations on issuances of letters of credit,
indemnification, and landlord consents.

Effective August 12, 2002, the Company received a consent from the Lenders and
the Agent for the Lenders for the repurchase of up to $35.0 million of its
common stock through June 30, 2003.

Effective October 24, 2002, the Company received a consent from the Lenders and
the Agent for the Lenders for the sale of all the outstanding capital stock of
DI.

As of September 27, 2002, the Company has not entered into any material working
capital commitments that require funding. The Company believes that the expected
cash flows from operations, borrowing availability under the credit facility,
and capital markets are sufficient to meet the Company's anticipated future
requirements for working capital, capital expenditures, and acquisitions for the
foreseeable future.

The Company may from time to time seek to retire its outstanding debt through
cash purchases and/or exchanges for equity securities, in open market purchases,
privately negotiated transactions or otherwise. Such repurchases or exchanges,
if any, will depend on prevailing market conditions, the Company's liquidity
requirements, contractual restrictions and other factors. The amounts involved
may be material.

Future Minimum Obligations

In the normal course of business, the Company enters into obligations and
commitments that require future contractual payments. The commitments primarily
result from repayment obligations for borrowings under the Notes and Credit
Facility, as well as contractual lease payments for facility, vehicle, and
equipment leases, and contractual payments under noncompetition agreements and
employment agreements. As of September 27, 2002, the Company had no borrowings
outstanding under the credit facility. The following table presents, in
aggregate, scheduled payments under contractual obligations for the Physician
Supply Business, the Long-Term Care Business, and Other (in thousands):

<TABLE>
<CAPTION>

                                                       Fiscal Years
                                 ---------------------------------------------------------
                                 (remaining
                                  6 months)
                                    2003        2004        2005       2006        2007     Thereafter     Total
                                 ----------  ---------  ----------  ----------  ----------  ----------    ---------
<S>                                <C>         <C>         <C>         <C>         <C>       <C>          <C>
Long-term debt................     $    --     $    --     $   --      $   --      $   --    $106,000     $106,000
Operating leases:
    Restructuring.............         287         485         325        186          19          --        1,302
    Operating.................       9,652      16,445      11,985      7,682       5,493       6,290       57,547
Noncompetition agreements.....         215         245         100         36          35         142          773
Employment agreements.........       2,288          --          --         --          --          --        2,288
                                 ----------  ---------  ----------  ----------  ----------  ----------    ---------
         Total................     $12,442     $17,175     $12,410     $7,904      $5,547    $112,432     $167,910
                                 ==========  =========  ==========  ==========  ==========  ===========   =========
</TABLE>

Other

On July 30, 2002, the Company's Board of Directors approved a stock repurchase
program authorizing the Company, depending upon market conditions and other
factors, to repurchase up to a maximum of 5% of its common stock, or
approximately 3.6 million common shares, in the open market, in privately
negotiated transactions, or otherwise. As of September 27, 2002, the Company
repurchased approximately 1.3 million shares under this program. Such
repurchases are expected to continue over the next 9 months and will be made in
compliance with applicable rules and regulations and the terms of the Company's
debt agreements. However, the stock repurchase program may be discontinued at
any time.

                                       42
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes there has been no material change in its exposure to market
risk from that discussed in Item 7A in the Annual Report on Form 10-K for the
fiscal year ended March 29, 2002.


ITEM 4.  DISCLOSURE CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures. The Company's Principal
     Executive Officer and Principal Financial Officer have reviewed and
     evaluated the effectiveness of the Company's disclosure controls and
     procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c))
     as of a date within ninety days before the filing date of this quarterly
     report (the "Evaluation Date"). Based on that evaluation, the Principal
     Executive Officer and the Principal Financial Officer have concluded that
     the Company's current disclosure controls and procedures are effective,
     providing them with material information relating to the Company, including
     its consolidated subsidiaries, as required to be disclosed in the reports
     the Company files or submits under the Exchange Act on a timely basis.

(b)  Changes in internal controls. There were no significant changes in the
     Company's internal controls or in other factors that could significantly
     affect those controls subsequent to the Evaluation Date.


PART II--OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

Refer to Note 10, Commitments and Contingencies, of this Form 10-Q and Item 3 of
the Company's Annual Report on Form 10-K for the year ended on March 29, 2002.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)  The 2002 Annual Meeting of Stockholders was held on August 21, 2002.

(b)  The following directors were elected to serve a three-year term of office
     until the 2005 Annual Meeting of Stockholders or until their successors
     have been duly elected and qualified. Of the 65,911,155 shares (1 vote per
     share) of common stock represented at the meeting, the directors were
     elected by the following votes:

<TABLE>
<CAPTION>
                                                Number of Votes Received
                                               -------------------------                 Broker
        Name                                      For           Against   Abstentions  Non-votes
                                               ----------      ---------  -----------  ---------

<S>                                            <C>                <C>        <C>         <C>
        Charles E. Adair...................    64,849,407      1,061,748      --           --
        Hugh M. Brown......................    64,141,461      1,769,694      --           --
        Charles R. Scott...................    64,163,074      1,748,081      --           --
</TABLE>

                                       43
<PAGE>

     Immediately following the meeting, the directors of the Company consisted
of the following:

        Name

        T. O'Neal Douglas
        Clark A. Johnson
        Melvin L. Hecktman
        Delores P. Kesler
        David A. Smith
        Charles E. Adair
        Hugh M. Brown
        Charles R. Scott

ITEM 5.  OTHER INFORMATION

Not applicable.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits required by Item 601 of Regulation S-K:
<TABLE>
<CAPTION>

  Exhibit
  Number              Description

<S>                <C>
  3.1           Amended and Restated Articles of Incorporation, dated as of March 15, 1994.  (8)

  3.1a          Articles of Amendment to Articles of Incorporation, dated as of September 24, 2001.  (17)

  3.1b          Articles of Amendment to Articles of Incorporation, dated as of November 9, 2001.  (17)

  3.2           Amended and Restated Bylaws, dated as of March 15, 1994.  (3)

  4.1           Form of  Indenture,  dated  as of  October 7,  1997,  by and  among  the  Company,  the  Subsidiary
                Guarantors named therein,  and SunTrust Bank, Central Florida,  National  Association,  as Trustee.
                (6)

  4.1a          Supplemental Indenture, dated as of February 15, 2001, by and
                among the New Subsidiary Guarantors named therein and SunTrust
                Bank (formerly known as SunTrust Bank, Central Florida, National
                Association), as Trustee. (12)

  4.2           Registration  Rights  Agreement,  dated as of  October 7,  1997,  by and  among  the  Company,  the
                Subsidiary  Guarantors  named  therein,  BT Alex.  Brown  Incorporated,  Salomon  Brothers Inc. and
                NationsBanc Montgomery Securities, Inc.  (6)

  4.3           Form of 8 1/2% Senior Subordinated Notes due 2007, including Form of Guarantee (Exchange Notes).  (6)

  4.4           Shareholder  Protection  Rights  Agreement,  dated as of  April 20,  1998,  between the Company and
                Continental Stock Transfer & Trust Company, as Rights Agent.  (9)

  4.4a          Amendment to  Shareholder  Protection  Rights  Agreement,  dated as of June 21,  2000,  between the
                Company and Continental Stock Transfer & Trust Company as Rights Agent.  (11)

  4.4b          Amendment to Shareholder  Protection  Rights  Agreement,  dated as of April 12,  2002,  between the
                Company and First Union National Bank, as Successor Rights Agent.  (19)
</TABLE>

                                       44
<PAGE>
<TABLE>
<CAPTION>

<S>                    <C>
  10.1          Incentive Stock Option Plan, dated as of May 14, 1986.  (1)

  10.2          Amended and Restated Directors Stock Plan.  (5)

  10.3          Amended and Restated 1994 Long-Term Incentive Plan.  (5)

  10.4          Amended and Restated 1994 Long-Term Stock Plan.  (5)

  10.5          1994 Employee Stock Purchase Plan.  (4)

  10.6          1994 Amended Incentive Stock Option Plan.  (1)

  10.7          1999 Long-term Incentive Plan.  (10)

  10.8          Distributorship  Agreement  between Abbott  Laboratories and the Company (Portions omitted pursuant
                to a request for confidential treatment - Separately filed with the SEC).  (2)

  10.9          Amended and Restated Savings Plan.  (20)

  10.9a         First Amendment to the Amended and Restated Savings Plan.

  10.10         Agreement and Plan of Merger,  dated as of December 14,  1997, by and among the Company, PSS Merger
                Corp. and Gulf South Medical Supply, Inc.  (7)

  10.11         Credit Agreement, dated as of May 24, 2001, by and among the Company, each of the Company's
                subsidiaries therein named, the Lenders from time to time party thereto, Bank of America, N.A., as
                Agent, and Banc of America Securities LLC, as Arranger.  (13)

  10.11a        Amendment No. 1 to Credit Agreement, dated as of June 28, 2001,
                by and among the Company, each of the Company's subsidiaries
                therein named, the Lenders from time to time party thereto, Bank
                of America, N.A., as Agent, and Banc of America Securities LLC,
                as Arranger. (15)

  10.12         Employment Agreement, dated as of March 4, 1998, by and between the Company and David A. Smith.
                (14)

  10.12a        Amendment to Employment Agreement, dated as of April 17, 2000, by and between the Company and
                David A. Smith.  (14)

  10.13         Employment Agreement, dated as of April 1, 1998, by and between the Company and John F. Sasen,
                Sr.  (14)

  10.13a        Amendment to Employment Agreement, dated as of April 17, 2000, by and between the Company and John
                F. Sasen, Sr.  (14)

  10.14         Consulting Agreement, dated as of June 13, 2002, by and between the Company and Douglas J.
                Harper.  (20)

  10.15         Employment Agreement, dated as of April 1, 1998, by and between the Company and Gary A. Corless.
                (16)

  10.15a        Amendment to Employment Agreement, dated as of April 17, 2000, by and between the Company and
                Gary A. Corless.  (16)

  10.16         Employment Agreement, dated as of April 1, 1998, by and between the Company and Kevin P. English.
                (16)

  10.16a        Amendment to Employment Agreement, dated as of April 17, 2000, by and between the Company and
                Kevin P. English.  (16)
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>

<S>                                                       <C>
  10.17         Employment Agreement, dated as of January 7, 2002, by and between the Company and David M.
                Bronson.  (18)

  10.18         Severance Agreement, dated as of October 11, 2000, by and between the Company and Frederick E.
                Dell.  (14)

  10.19         Severance Agreement, dated as of February 1, 2001, by and between the Company and Kirk A.
                Zambetti.  (14)

  10.20         Severance Agreement, dated as of March 21, 2001, by and between the Company and Patrick C. Kelly.
                (14)

  10.21         Stock Purchase  Agreement,  dated as of October 28,  2002, among PSS World Medical,  Inc.,  Imaging
                Acquisition Corporation, and Platinum Equity, LLC.  (21)

  15            Awareness Letter from KPMG LLP

  21            List of Subsidiaries of the Company.  (19)

                (1)    Incorporated by Reference to the Company's Registration Statement on Form S-1,
                       Registration No. 33-76580.
                (2)    Incorporated by Reference to the Company's Annual Report on Form 10-K for the year ended
                       March 30, 1995.
                (3)    Incorporated by Reference to the Company's Registration Statement on Form S-3,
                       Registration No. 33-97524.
                (4)    Incorporated by Reference to the Company's Registration Statement on Form S-8,
                       Registration No. 33-80657.
                (5)    Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended June 30, 1996.
                (6)    Incorporated by Reference to the Company's Registration Statement on Form S-4,
                       Registration No. 333-39679.
                (7)    Incorporated by Reference from Annex A to the Company's Registration Statement on
                       Form S-4, Registration No. 333-44323.
                (8)    Incorporated by Reference to the Company's Current Report on Form 8-K, filed April 8,
                       1998.
                (9)    Incorporated by Reference to the Company's Current Report on Form 8-K, filed April 22,
                       1998.
                (10)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended September 30, 1999.
                (11)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended June 30, 2000.
                (12)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended December 29, 2000.
                (13)   Incorporated by Reference to the Company's Current Report on Form 8-K, filed June 5, 2001.
                (14)   Incorporated by Reference to the Company's Annual Report on Form 10-K for the year ended
                       March 30, 2001.
                (15)   Incorporated by Reference to the Company's Current Report on Form 8-K, filed July 3, 2001.
                (16)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended June 29, 2001.
                (17)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended September 28, 2001.
                (18)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended December 28, 2001.
                (19)   Incorporated by Reference to the Company's Annual Report on Form 10-K for the year ended
                       March 29, 2002.
                (20)   Incorporated by Reference to the Company's Quarterly Report on Form 10-Q for the quarter
                       ended June 28, 2002.
                (21)   Incorporated by Reference to the Company's Current Report on Form 8-K, filed October 30,
                       2002.
</TABLE>

                                       46
<PAGE>

(b)      Reports on Form 8-K:

     The following current reports on Form 8-K were filed during the quarter
     ended September 27, 2002:
<TABLE>
<CAPTION>

              Date of Report                Items Reported
         ----------------------------- --------------------------------------------------------
           <S>                                   <C>
              August 12, 2002               Filing of the written certifications of the Chief
                                            Executive Officer and Chief Financial Officer
                                            regarding the Quarterly Report on Form 10-Q for
                                            the quarter ended June 28, 2002.
         ----------------------------- --------------------------------------------------------
              August 14, 2002               Filing of the Chief Executive Officer and Chief
                                            Financial Officer's sworn statements as required
                                            by the Securities and Exchange Commission
                                            Order 4-460.
         ----------------------------- --------------------------------------------------------
              August 26, 2002               Filing announcing that the Company had entered
                                            into an amendment to the distribution agreement
                                            with Abbott Laboratories entered into in December
                                            2000.
         ----------------------------- --------------------------------------------------------
              September 3, 2002             Filing announcing that the Company's Board of
                                            Directors has authorized the Company, depending
                                            upon market conditions and other factors, to
                                            repurchase up to 5% of the Company's outstanding
                                            common stock.

</TABLE>



                                       47
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Jacksonville, State of
Florida, on November 12, 2002.

                             PSS WORLD MEDICAL, INC

                    By:      /s/ David M. Bronson
                             -----------------------------------
                             David M. Bronson
                             Senior Vice President and Chief Financial Officer
                             (Duly Authorized Officer and Principal Financial
                             and Accounting Officer)




                                       48
<PAGE>



                                  CERTIFICATION


I, David A. Smith, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of PSS World Medical
         , Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a.    Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being presented;

         b.    Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

         c.    Presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent):

         a.    All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

         b.    Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



November 8, 2002

                                 /s/ David A. Smith
                                 -----------------------------------
                                     David A. Smith
                                     President and Chief Executive Officer




                                       49
<PAGE>



                                  CERTIFICATION


I, David M. Bronson, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of PSS World Medical
         , Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a.    Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being presented;

         b.    Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

         c.    Presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent):

         d.    All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

         e.    Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



November 8, 2002

                                 /s/ David M. Bronson
                                 -----------------------------------
                                 David M. Bronson
                                 Senior Vice President and
                                 Chief Financial Officer