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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): August 30, 1997
HORIZON PHARMACIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 333-25257 75-2441557
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
275 WEST PRINCETON DRIVE
PRINCETON, TEXAS 75407
(Address of Principal Executive Offices) (Zip Code)
(972) 736-2424
(Registrant's telephone number, including area code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Filed herewith as a part of this report are the following
financial statements for McCosh Drug, Inc. ("McCosh"): (i)
audited Balance Sheet at June 30, 1997 and audited Statement of
Income, Statement of Shareholders' Equity and Statement of Cash
Flows each for the year ended June 30, 1997, and the report of
Howard & Waltrip, P.C., certified public accountants, thereon,
together with the notes thereto; and (ii) unaudited Balance Sheet
at June 30, 1996, unaudited Statements of Income for the year
ended June 30, 1996 and the six months ended June 30, 1996 and
1997, unaudited Statement of Shareholders' Equity for the year
ended June 30, 1996, and unaudited Statement of Cash Flows for
the year ended June 30, 1996. These financial statements are
being filed in accordance with and within the time provided for
in Item 7(a)(4).
(b) PRO FORMA FINANCIAL INFORMATION.
Filed herewith as a part of this report are HORIZON Pharmacies,
Inc.'s (the "Registrant") Pro Forma Combined Condensed Balance
Sheet at June 30, 1997 and Pro Forma Combined Condensed
Statements of Income for the six months ended June 30, 1997 and
the year ended December 31, 1996, and the notes thereto. These
pro forma financial statements are being filed in accordance with
and within the time provided for in Item 7(a)(4).
(c) EXHIBITS.
Exhibit No. Name of Exhibit
----------- ---------------
23 Consent of Howard & Waltrip, P.C., Independent
Auditors (filed electronically herewith).
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MCCOSH DRUG, INC.
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1997
WITH REPORT OF INDEPENDENT AUDITORS
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[LETTERHEAD]
The Board of Directors and Shareholders November 7, 1997
McCosh Drug, Inc.
REPORT OF INDEPENDENT AUDITORS
------------------------------
We have audited the accompanying balance sheet of McCosh Drug, Inc. as of
June 30, 1997, and the related statement of income, shareholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McCosh Drug, Inc. at June 30,
1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
<PAGE>
McCOSH DRUG, INC.
BALANCE SHEET
JUNE 30, JUNE 30,
1997 1996
----------- -----------
ASSETS (Unaudited)
Current assets
Cash $ 25,027 $ 24,942
Accounts receivable-trade 49,754 57,991
Other current assets 189 7,691
Inventories, lower of cost or market 530,526 547,036
----------- -----------
Total current assets 605,496 637,660
Fixed assets
Equipment 18,637 18,637
Furniture and fixtures 216,375 216,375
Vehicles 4,750 4,750
Leasehold improvements 16,087 16,087
Accumulated depreciation (131,907) (115,509)
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Total net fixed assets 123,942 140,340
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TOTAL ASSETS $ 729,438 $ 778,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable-trade $ 58,162 $ 51,422
Taxes payable 5,097 9,952
Notes payable-shareholder 30,721 59,300
Current portion-long term debt 31,335 24,000
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Total current liabilities 125,315 144,674
Long term liabilities
Notes payable-bank 96,158 153,592
Less current portion long term debt (31,335) (24,000)
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Total long term liabilities 64,823 129,592
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Total liabilities 190,138 274,266
Shareholders' equity
Capital stock 46,000 46,000
Paid in capital 224 224
Retained earnings 493,076 457,510
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Total shareholders' equity 539,300 503,734
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 729,438 $ 778,000
----------- -----------
----------- -----------
See accompanying notes.
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McCOSH DRUG, INC.
STATEMENTS OF INCOME
<TABLE>
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
------------ ------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 2,096,344 $ 1,981,244 $ 996,812 $ 906,922
Cost of sales 1,493,976 1,384,579 710,386 620,757
------------ ------------ ----------- -----------
Gross profit 602,368 596,665 286,426 286,165
------------ ------------ ----------- -----------
Operating expenses:
Selling, general and administrative 534,017 548,764 253,925 251,005
Depreciation 16,398 16,398 8,199 8,199
------------ ------------ ----------- -----------
Total operating expenses 550,415 565,162 262,124 259,204
Income from operations 51,953 31,503 24,302 26,961
Other income (expense):
Other income 3,294 2,315 1,566 1,646
Interest expense (11,871) (18,790) (5,645) (10,190)
------------ ------------ ----------- -----------
Total other income (expense) (8,577) (16,475) (4,079) (8,544)
------------ ------------ ----------- -----------
Net income before income tax 43,376 15,028 20,223 18,417
Income tax expense 7,810 4,068 3,714 (2,564)
------------ ------------ ----------- -----------
Net income $ 35,566 $ 10,960 $ 16,509 $ 20,981
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</TABLE>
See accompanying notes.
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McCOSH DRUG, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
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(Unaudited)
Balance, Beginning of period $ 457,511 $ 446,550
Net income 35,566 10,960
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Balance, End of Period $ 493,076 $ 457,510
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----------- -----------
See accompanying notes.
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McCOSH DRUG, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
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(Unaudited)
Operating activities:
Net income $ 35,566 $ 10,960
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 16,398 16,398
Change in operating assets and liabilities:
Accounts receivable-trade 8,237 9,254
Other current assets 7,503 25,470
Inventories 16,510 (27,898)
Accounts payable-trade 6,740 (30,816)
Taxes payable (4,855) 7,287
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Net cash provided by operating activities 86,099 10,655
Financing activities:
Borrowings on notes payable 30,000 0
Principal payments-notes payable-s/h (28,580) 0
Principal payments on notes payable (87,434) (21,407)
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Net cash used by financing activities (86,014) (21,407)
Net increase (decrease) in cash 85 (10,752)
Cash at beginning of period 24,942 35,694
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Cash at end of period $ 25,027 $ 24,942
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Supplemental disclosure of income taxes paid $ 3,424 $ 4,725
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Supplemental disclosure of interest paid $ 11,871 $ 18,790
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See accompanying notes.
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McCOSH DRUG, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1. Summary of significant accounting policies
Organization
McCOSH DRUG, INC., a Nebraska corporation (the "Company"), owns and operates
a retail pharmacy in Gering, Nebraska.
Basis of accounting
The accompanying financial statements are prepared on the accrual basis of
accounting and accordingly reflect revenues at the time products are sold or
services rendered. Expenses are recognized when the products are received or
the services are performed.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results may differ from those estimates, and such differences
may be material to the financial statements.
Depreciation
Depreciation of equipment is provided on a straight-line basis over the
estimated useful lives of the assets.
Unaudited financial statements
The accompanying unaudited financial statements include all adjustments,
consisting of normal, recurring accruals, which the Company considers
necessary for a fair presentation of the financial position and the results
of operations for the indicated periods.
2. Leases
The Company leases the retail store facilities on a month to month basis from
a related party. Rent expense for fiscal year ended June 30, 1997 was
$52,500.
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McCOSH DRUG, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
3. Long term liabilities
Installment note totaling approximately $ 96,158
$3,100 per month at 8.5% interest,
maturing in March 2000.
Less current portion of long term debt (31,335)
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Total long term liabilities $ 64,823
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4. Subsequent events
On August 30, 1997 the Company sold a majority of its assets to HORIZON
Pharmacies, Inc. and ceased operations.
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PRO FORMA COMBINED FINANCIAL DATA
The following unaudited Pro Forma Combined Condensed Statements of Income
for the year ended December 31, 1996 and the six months ended June 30, 1997
reflect the historical results of operations of Horizon Pharmacies, Inc. (the
"Company") adjusted to give effect to the acquisition of the Gering, Nebraska
store (the "Gering Store") in August 1997 as though such store was acquired
January 1, 1996. The Pro Forma Combined Condensed Balance Sheet as of June
30, 1997 reflects the historical financial position of the Company as of that
date, adjusted to give pro forma effect to the acquisition of the Gering
Store as if it had occurred as of June 30, 1997.
The pro forma adjustments are based upon available information and
assumptions that management of the Company believes are reasonable and fairly
reflect all expenses associated with the acquired business. The Pro Forma
Combined Financial Data do not purport to represent the financial position or
results of operations which would have occurred had such transactions been
consummated on the dates indicated or the Company's financial position or
results of operations for any future date or period. These Pro Forma
Combined Condensed Financial Statements and notes thereto should be read in
conjunction with the historical financial statements and notes of the Company
and the financial statements of the Gering Store.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
ASSETS
Company Gering
Historical Store (Note) Pro Forma
-----------------------------------
Current assets:
Cash $ 229 $ 229
Accounts receivable 2,463 $ 47 2,510
Inventories 3,893 612 4,505
Prepaid expenses 41 4 45
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Total current assets 6,626 663 7,289
Deferred offering costs 345 345
Property and equipment, net 813 75 888
Intangibles, net 1,308 133 1,441
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Total assets $9,092 $871 $9,963
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 206 $250 $ 456
Accounts payable 2,918 2,918
Accrued liabilities 257 257
Notes payable 2,105 2,105
Current portion of long-term obligations 397 67 464
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Total current liabilities 5,883 317 6,200
Long-term obligations 1,291 554 1,845
Shareholders' equity:
Common stock 11 11
Additional paid-in capital 1,760 1,760
Retained earnings 147 147
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Total shareholders' equity 1,918 1,918
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Total liabilities and shareholders' equity $9,092 $871 $9,963
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Note: The Gering Store was acquired in August 1997 for a total consideration
of $871 financed by a note payable of $621 and cash of $250 and is included
herein at the values allocated to assets acquired.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
HISTORICAL
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GERING PRO FORMA
COMPANY STORE ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
Net sales $11,060 $997 $12,057
Cost and expenses:
Cost of sales 7,583 710 8,293
Depreciation and amortization 125 8 $ (8) (1) 136
11 (1)
Selling, general and administrative 2,890 253 11 (3) 3,138
(11) (4)
(5) (5)
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Total costs and expenses 10,598 971 (2) 11,567
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Income from operations 462 26 2 490
Interest expense and other, net 144 6 (6) (2) 171
27 (2)
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Income before income taxes 318 20 (19) 319
Pro forma provision for income taxes 111 4 (3) (6) 112
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Pro forma net income $ 207 $ 16 $(16) $ 207
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Pro forma net income per share $ 0.18
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Shares used in computation 1,142,424
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</TABLE>
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HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
HISTORICAL
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GERING PRO FORMA
COMPANY STORE ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
Net sales $13,136 $2,006 $15,142
Cost and expenses:
Cost of sales 8,942 1,405 10,347
Depreciation and amortization 172 16 $(16) (1) 194
22 (1)
Selling, general and administrative 3,471 527 21 (3) 3,985
(23) (4)
(11) (5)
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Total costs and expenses 12,585 1,948 (7) 14,526
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Income from operations 551 58 7 616
Interest expense and other, net 249 16 (16) (2) 302
53 (2)
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Income before income taxes 302 42 (30) 314
Pro forma provision for income taxes 106 2 2 (6) 110
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Pro forma net income $ 196 $ 40 $(32) $ 204
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Pro forma net income per share $ 0.19
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Shares used in computation 1,074,246
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</TABLE>
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ADJUSTMENTS TO PRO FORMA FINANCIAL STATEMENTS
(1) Adjust depreciation and amortization of acquired equipment and intangibles
to reflect new basis in the acquired store:
Eliminate historical depreciation:
Twelve months ended December 31, 1996: $ 16,000
Six months ended June 30, 1997: 8,000
Provide depreciation and amortization on acquired bases in equipment
and intangibles:
Equipment - 7 year life - purchase price allocated 75,000
Intangibles - 5 to 20 year life - purchase price allocated 133,000
Twelve months ended December 31, 1996:
Depreciation of equipment 11,000
Amortization of intangibles 11,000
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Total 22,000
Six months ended June 30, 1997:
Depreciation of equipment 5,000
Amortization of intangibles 6,000
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Total 11,000
(2) Adjust interest expense:
Eliminate historical interest expense:
Twelve months ended December 31, 1996: 16,000
Six months ended June 30, 1997 6,000
Provide for interest expense on debt issued in acquisition:
Debt 621,000
Interest Rate 9.00%
Twelve months ended December 31, 1996: 53,000
Six months ended June 30, 1997: 27,000
(3) Increase previous officer salary to new contract with Horizon:
Twelve months ended December 31, 1996: 21,000
Six months ended June 30, 1997: 11,000
(4) Reduce rent expense to new rental agreement:
Twelve months ended December 31, 1996: 23,000
Six months ended June 30, 1997: 11,000
(5) Eliminate retirement expense:
Twelve months ended December 31, 1996: 11,000
Six months ended June 30, 1997: 5,000
(6) Adjust pro forma income taxes (at a rate of 35%) for acquistion
adjustments and historical tax rates:
Twelve months ended December 31, 1996: 2,000
Six months ended June 30, 1997: (3,000)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
REGISTRANT:
HORIZON PHARMACIES, INC.
Date: November 12, 1997 By: /s/ Ricky D. McCord
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Ricky D. McCord, President
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Exhibit 23
Consent of Independent Auditors
We consent to the use of our report on the financial statements for the year
ended December 31, 1996 of McCosh Drug, Inc., dated November 7, 1997 in the Form
8-K/A for HORIZON Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
