Purchase Business Combinations

12 Months Ended

Mar. 30, 2012

Business Combinations [Abstract]

PURCHASE BUSINESS COMBINATIONS

Acquisitions were accounted for under the purchase method of accounting;accordingly, the operations of the acquired companies 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 and independent valuations.

The fair value of contingent consideration was determined using projected achievement of the earnings targets. See Footnote 6, Fair Value Measurements, for further discussion.

During fiscal year 2012, the Company completed acquisitions that were individually immaterial but material in the aggregate (the “2012 acquisitions”). Net sales and net loss attributable to the 2012 acquisitions since their respective acquisition dates was approximately $16,566 and ($120), respectively. These amounts do not include net sales and net loss attributable to acquisitions that have been integrated as discrete information is impracticable to obtain. Payments totaling $66,623, net of cash received of $26 and outstanding checks of $415, were made during fiscal year 2012 related to these acquisitions, of which $1,525 was held in escrow to secure certain adjustments or claims. In addition, $3,401 was held by the Company to secure certain adjustments or claims. Contingent consideration ranging from $0 to $667 may be paid based on the achievement of future earnings targets over a two year period. Goodwill represents the future economic benefits and synergies arising from other assets acquired in a business combination that are not individually identified and separately recognized. A portion of the goodwill related to the 2012 acquisitions in the amount of $19,285 is tax deductible. As of March 30, 2012, the purchase accounting associated with the 2012 acquisitions was not complete given the recent acquisition dates.

During fiscal year 2011, the Physician Business acquired the assets of Linear Medical Solutions, Inc. (“Linear”) and all of the outstanding stock of Dispensing Solutions, Inc. (“DSI”), which market proprietary systems for dispensing medications to patients primarily within physician practices. Payments totaling $13,872, net of cash received of $359, were made related to the Linear acquisition during fiscal year 2011. Payments totaling $35,199, net of cash received of $801, were made related to the DSI acquisition during fiscal year 2011. During fiscal year 2012, the purchase accounting associated with these acquisitions was finalized and the fair value measurements of assets acquired and liabilities assumed as of the acquisition dates were revised.

Opening Balance Sheets

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the dates of the 2012 acquisitions, as adjusted:

		2012 acquisitions
						Opening
						Balance
		Opening		Measurement		Sheet
		Balance		Period		As Adjusted
(in thousands)		Sheet		Adjustment		March 30, 2012
Current assets (a)		$	20,458		(768)	$	19,690
Goodwill			37,858		8		37,866
Intangible assets			19,640		1,510		21,150
Noncurrent assets (b)			6,387		-		6,387
Accounts payable and other current liabilities			(12,060)		(387)		(12,447)
Noncurrent liabilities (c)			(1,842)		(679)		(2,521)
Contingent consideration			(490)		-		(490)
	Net assets acquired	$	69,951	$	(316)	$	69,635

• The following represents balances within Current assets as of March 30, 2012: accounts receivable, net of $13,103, inventory of $4,454, current deferred income taxes of $796, and other current assets of $1,337.
• The following represents balances within Noncurrent assets as of March 30, 2012:property and equipment, net of $1,674 and other noncurrent assets of $4,713.
• The following represents balances within Noncurrent liabilitiesas of March 30, 2012:noncurrent deferred tax liabilities of $2,381 and other noncurrent liabilities of $140.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the dates of the Linear and the DSI acquisitions, as adjusted:

		Linear						DSI
		Opening				Opening		Opening				Opening
		Balance				Balance		Balance				Balance
		Sheet		Measurement		Sheet		Sheet		Measurement		Sheet
		As Adjusted		Period		As Adjusted		As Adjusted		Period		As Adjusted
(in thousands)		April 1, 2011		Adjustment		March 30, 2012		April 1, 2011		Adjustment		March 30, 2012
Current assets(a)		$	12,711	$	-	$	12,711	$	6,458	$	431	$	6,889
Goodwill			3,816		61		3,877		26,747		(3,285)		23,462
Intangible assets			4,538		-		4,538		11,070		-		11,070
Noncurrent assets(b)			1,734		-		1,734		2,090		-		2,090
Accounts payable and other current liabilities			(5,068)		-		(5,068)		(2,226)		(50)		(2,276)
Noncurrent liabilities(c)			-		-		-		(2,639)		-		(2,639)
Contingent consideration			(3,500)		-		(3,500)		(5,500)		-		(5,500)
	Net assets acquired	$	14,231	$	61	$	14,292	$	36,000	$	(2,904)	$	33,096

• The following represents balances within Current assets as of March 30, 2012: Linear – accounts receivable, net of $8,939, inventory of $3,182, and other current assets of $590; and DSI – accounts receivable, net of $2,615, inventory of $2,361, current deferred income taxes of $180, and other current assets of $1,733.
• The following represents balances within Noncurrent assets as of March 30, 2012: Linear – property and equipment, net of $1,690 and other noncurrent assets of $44; and DSI – property and equipment, net of $2,055 and other noncurrent assets of $35.
• The following represents balances within Noncurrent liabilities as of March 30, 2012: DSI – noncurrent deferred tax liabilities of $2,639.

During fiscal year 2012, the Company recorded a $3,500 reduction in the purchase price of DSI related to circumstances outstanding at the acquisition date, as well as a working capital adjustment of $596.  As of March 30, 2012, the purchase accounting related to DSI and Linear was finalized.

Unaudited Pro Forma Information

The following table presents unaudited pro forma financial information as if the closing of the 2012 acquisitions had occurred on the first day of fiscal year 2011, or April 3, 2010, and the acquisitions of Linear and DSI had occurred on the first day of fiscal year 2010, or March 28, 2009, after giving effect to certain purchase accounting adjustments.

Pro forma information is not necessarily indicative of the results of operations that actually would have resulted had the acquisitions occurred on the dates indicated above or that may result in the future, and does not reflect potential synergies, integration costs or other such costs and savings. Supplemental net sales and supplemental net income figures are not comparable year over year as only pre-acquisition amounts are shown. Subsequent to acquisition, net sales and net income are included in the “as reported” figure.

(in thousands)			2012		2011		2010
Net sales:
	PSS World Medical, Inc. (as reported)		$	2,102,002	$	2,034,789	$	2,055,171
	Supplemental net sales - 2012 acquisitions			57,891		88,029		N/A
	Supplemental net sales - Linear			-		53,339		70,633
	Supplemental net sales - DSI			-		24,543		22,067
		Total pro forma net sales	$	2,159,893	$	2,200,700	$	2,147,871
Net income attributable to PSS World Medical, Inc.:
	PSS World Medical, Inc. (as reported)		$	74,319	$	74,485	$	69,363
	Supplemental net income - 2012 acquisitions			(1,525)		(3,022)		N/A
	Supplemental net income - Linear			-		2,711		2,744
	Supplemental net income - DSI			-		892		(623)
		Total pro forma net income	$	72,794	$	75,066	$	71,484
Net income per common share:
	Basic		$	1.40	$	1.36	$	1.23
	Diluted		$	1.35	$	1.33	$	1.21

Contingent Consideration

During fiscal year 2012, the fair value of contingent consideration associated with the Linear, DSI, and other acquisitions completed prior to fiscal year 2012 was decreased by $594, $42, and $17, respectively, with the change in value reflected as a reduction in General and administrative expenseson the Consolidated Statements of Operations. During fiscal year 2012, the Company paid final contingent consideration payments of $3,000 for Linear and $1,000 for other acquisitions. The Company also made a final contingent consideration payment related to DSI of $5,500, which was reduced by the purchase price adjustment of $3,500 discussed above.

Other Acquisitions

During fiscal years 2011 and 2010, the Company made cash payments of $16,777 and $13,609, respectively, related to other acquisitions not significant for additional disclosure individually or in the aggregate. During fiscal years 2012,2011, and 2010,the Company made cash payments of $1,351, $85, and $1,193 for holdback payments and working capital adjustments related to prior year acquisitions.During fiscal year2011, the Company recognized goodwill, including acquisition-related adjustments, of approximately $12,183.