According to the Company’s FORM 10-Q for the quarterly period ended December 30, 2005, a hearing on the Joint Motion for Preliminary Approval of Class Action Settlement was held on October 7, 2005. The final fairness hearing was held on December 20, 2005. The Court entered the Final Judgment and Order of Dismissal with Prejudice on December 20, 2005. During the three months ended December 30, 2005, the Company made payments totaling $3.8 million to cover the uninsured losses and professional fees relating to this matter. As a result of these payments and the final fairness hearing, all obligations to the plaintiffs related to this litigation matter have been satisfied by the Company as of December 30, 2005.

In a press release dated September 12, 2005, PSS World Medical, Inc. announced that the Company, its subsidiary Gulf South Medical Supply, Inc. ("Gulf South"), and certain current and former officers and directors have reached an agreement in principle with the Plaintiff and the certified class of persons who held Company stock on March 26, 1998, to settle all claims in the shareholder securities class action litigation styled Jack Hirsch v. PSS World Medical, Inc., et. al., Case No. 3:98-CV-502-J-32TEM, pending in the United States District Court for the Middle District of Florida, Jacksonville Division. This litigation was originally filed in May 1998 and arose out of the Company's 1998 acquisition of Gulf South and the subsequent restatements of its financial results for previous years. The Company will establish a pre-tax reserve of $16.5 million to settle the litigation, of which $13.2 million will be recovered through existing insurance policies. The Company had previously established a $2.6 million pre-tax reserve to cover potential uninsured losses relating to this matter.

As summarized in the latest docket posted, on October 14, 1998, the Court entered the Order by U.S. District Judge Ralph W. Nimmons Jr. appointing lead plaintiff and lead counsel. On December 11, 1998, the plaintiffs filed an Amended Class Action Complaint and the defendants responded by filing motions to dismiss in January 1999. On February 10, 2000, the Court entered the Order granting the motions to dismiss the Amended Class Action Complaint with leave to amend. A Second Amended Class Action Complaint was filed by the plaintiffs on March 15, 2000. The defendants responded by filing motions to dismiss in May 2000. On December 18, 2002, the Court entered the Order by U.S. District Judge Timothy J. Corrigan granting in part and denying in part the motions to dismiss the Second Amended Complaint with prejudice. On January 17, 2003, the plaintiffs filed a Third Amended Complaint, terminating one of the individual defendants, and the defendants filed motions to dismiss the Third Amended Complaint. On May 21, 2003, the Court entered the Order denying the motions to dismiss the Third Amended Complaint. On September 16, 2003, the case was referred to mediation. On February 19, 2004, Judge Timothy J. Corrigan granted the motion for class certification.

The original Complaint charges PSSI and certain of its officers and directors with violating the federal securities laws. Plaintiff claims that defendants issued false and misleading statements. Plaintiff alleges that defendants' misstatements artificially inflated the price of PSSI.