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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 2, 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 Sun Country Drug, Inc. ("Sun Country"): (i) audited
Balance Sheet at December 31, 1996 and audited Statement of Income,
Statement of Shareholders' Equity and Statement of Cash Flows each for
the year ended December 31, 1996 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, 1997, unaudited
Statement of Income for the six months ended June 30, 1997 and 1996,
and unaudited Statement of Cash Flows for the six months ended June 30,
1997 and 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 as of
June 30, 1997 and Pro Forma Combined Condensed Statement of Income for
the six months ending June 30, 1997 and the Registrant's Pro Forma
Combined Condensed Statement of Income for 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.
None.
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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: October 16, 1997 By: /s/ Ricky D. McCord
----------------------------
Ricky D. McCord, President
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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 the Company, adjusted to
give effect to the acquisition of the Moriarty, New Mexico Store (the
Moriarty 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 Moriarty 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
Combinded 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 Moriarty Store.
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HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
ASSETS
Company Moriarty
Historical Store (Note) Pro Forma
-------------------------------------
Current assets:
Cash $ 229 $ 229
Accounts receivable 2,463 2,463
Inventories 3,893 $283 4,176
Prepaid expenses 41 41
-------------------------------------
Total current assets 6,626 283 6,909
Deferred offering costs 345 345
Property and equipment, net 813 20 833
Intangibles, net 1,308 132 1,440
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Total assets $9,092 $435 $9,527
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 206 $175 $ 381
Accounts payable 2,918 62 2,980
Accrued liabilities 257 257
Notes payable 2,105 2,105
Current portion of long-term obligations 397 33 430
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Total current liabilities 5,883 270 6,153
Long-term obligations 1,291 165 1,456
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 $435 $9,527
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-------------------------------------
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Note: The Moriarty Store was acquired in August 1997 for a total
consideration of $435 financed by a note payable of $198, cash of
$175, and accounts payable of $62 and is included herein at the values
allocated to assets acquired.
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HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDING JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Historical
-------------------
Moriarty Pro Forma
Company Store Adjustments Pro Forma
------------------------------ -----------
<S> <C> <C> <C> <C>
Net sales $11,060 $1,124 $12,184
Cost and expenses:
Cost of sales 7,583 858 8,441
Depreciation and amortization 125 13 $(13)(1) 132
7 (1)
Selling, general and administrative 2,890 212 (25)(3) 3,077
---------------------------- -----------
Total costs and expenses 10,598 1,083 (31) 11,650
---------------------------- -----------
Income from operations 462 41 31 534
Interest expense and other, net 144 5 (5)(2) 152
8 (2)
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Income before income taxes 318 36 28 382
Pro forma provision for income taxes 111 13 10 (4) 134
---------------------------- -----------
Pro forma net income $ 207 $ 23 $ 18 $ 248
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-------------------------------------------
Pro forma net income per share $ 0.22
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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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Moriarty Pro Forma
Company Store Adjustments Pro Forma
--------------------------------- ---------
<S> <C> <C> <C> <C>
Net sales $13,136 $1,938 $15,074
Cost and expenses:
Cost of sales 8,942 1,448 10,390
Depreciation and amortization 172 22 ($22) (1) 187
15 (1)
Selling, general and administrative 3,471 384 (49) (3) 3,806
----------------------------- ---------
Total costs and expenses 12,585 1,854 (56) 14,383
----------------------------- ---------
Income from operations 551 84 56 691
Interest expense and other, net 249 17 (17) (2) 265
16 (2)
----------------------------- ---------
Income before income taxes 302 67 57 426
Pro forma provision for income taxes 106 23 20 (4) 149
----------------------------- ---------
Pro forma net income $ 196 $ 44 $37 $ 277
--------------------------------------------
--------------------------------------------
Pro forma net income per share $ 0.26
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Shares used in computation 1,074,246
---------
---------
</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:
Year ended December 31, 1996 $ 22,000
Six months ended June 30, 1997 13,000
Provide depreciation and amortization on acquired bases
in equipment and intangibles:
Equipment - 7 year life - purchase price allocated 20,000
Intangibles - 5 to 20 year life - purchase price allocated 131,500
Year ended December 31, 1996:
Depreciation of equipment 2,000
Amortization of intangibles 13,000
--------
Total 15,000
Six months ended June 30, 1997:
Depreciation of equipment 1,000
Amortization of intangibles 6,000
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Total 7,000
(2) Adjust interest expense:
Eliminate historical interest expense:
Year ended December 31, 1996 17,000
Six months ended June 30, 1997 5,000
Provide for interest expense on debt issued in acquisition:
Debt 198,000
Interest Rate 9.00%
Year ended December 31, 1996: 16,000
Six months ended June 30, 1997: 8,000
(3) Adjust compensation to remove previous Officer Salary who is not on
Horizon's payroll:
Year ended December 31, 1996: 49,000
Six months ended June 30, 1997: 25,000
(4) Adjust pro forma income taxes (at a rate of 35%) for acquistion
adjustments:
Year ended December 31, 1996: 20,000
Six months ended June 30, 1997: 10,000
<PAGE>
The Board of Directors and Shareholders October 1, 1997
Sun Country Drug, Inc.
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Sun Country Drug, Inc. (an
S Corporation) as of December 31, 1996, 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 Sun Country Drug, Inc. at
December 31, 1996, 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>
SUN COUNTRY DRUG, INC.
BALANCE SHEETS
DECEMBER 31, JUNE 30,
ASSETS 1996 1997
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(Unaudited)
Current assets:
Cash $ 3,640 $ 8,654
Accounts receivable-trade 21,095 13,884
Accounts receivable-other 1,660 2,031
Inventories, lower of cost or market 280,650 281,313
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Total current assets 307,045 305,882
Fixed assets:
Furniture & fixtures 112,391 113,023
Office Equipment 30,843 30,843
Computer equipment 10,000 10,000
Leasehold improvements 3,932 3,932
Accumulated depreciation (45,022) (57,948)
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Total net fixed assets 112,144 99,850
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TOTAL ASSETS $419,189 $405,732
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 17,319 $ 0
Accounts payable-trade 152,647 164,731
Payroll taxes payable 6,860 1,614
Notes payable-shareholder 40,370 39,370
Gross receipts taxes payable 9,682 6,829
Current portion of long term debt 31,607 31,607
-------- --------
Total current liabilities 258,485 244,151
Long term liabilities:
Notes payable 109,803 88,823
Current portion of long term debt (31,607) (31,607)
-------- --------
Total long term liabilities 78,196 57,216
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Total liabilities 336,681 301,367
Shareholders' equity
Capital stock 1,000 1,000
Paid in capital 24,571 24,571
Retained earnings 56,937 78,794
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Total shareholders' equity 82,508 104,365
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $419,189 $405,732
-------- --------
-------- --------
See accompanying notes.
<PAGE>
SUN COUNTRY DRUG, INC.
STATEMENTS OF INCOME
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------
1996 1996 1997
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(Unaudited)
Net sales $1,938,106 $887,345 $1,123,699
Cost of sales 1,447,958 642,857 858,386
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Gross profit 490,148 244,488 265,313
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Operating expenses:
Selling, general and administrative 391,912 188,690 211,300
Depreciation 22,294 14,479 12,926
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Total operating expenses 414,206 203,169 224,226
Income from operations 75,942 41,319 41,087
Other income (expense):
Other income 7,657 0 0
Interest expense (16,508) (7,836) (5,096)
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Total other income (expense) (8,851) (7,836) (5,096)
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Net income $ 67,091 $ 33,483 $ 35,991
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See accompanying notes.
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SUN COUNTRY DRUG, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------
1996 1996 1997
------------ -------- ----------
(Unaudited)
Balance, Beginning of period $ 1,673 $ 1,673 $ 56,937
Net income 67,091 33,483 35,991
Distributions to shareholders (11,827) 0 (14,134)
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Balance, End of Period $ 56,937 $35,156 $ 78,794
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-------- ------- --------
See accompanying notes.
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SUN COUNTRY DRUG, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ----------------
1996 1996 1997
------------ ------ ------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 67,091 $ 33,483 $ 35,991
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 22,294 14,479 12,926
Change in operating assets and liabilities:
Accounts receivable-trade (4,274) (15) 7,211
Accounts receivable-other 25,087 (3,894) (371)
Inventories (151,985) (55,797) (663)
Bank overdraft 3,306 (3,179) (17,319)
Accounts payable-trade 57,958 (18,361) 12,084
Payroll taxes payable 2,085 2,219 (5,246)
Gross receipts taxes payable 4,554 762 (2,853)
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Net cash provided (used) by operating activities 26,116 (30,303) 41,760
Investing activities:
Purchase of fixed assets (83,063) (81,571) (632)
Financing activities:
Borrowings on notes payable 118,297 135,047 20,000
Principal payments on notes payable (50,031) (25,876) (41,980)
Distributions to shareholders (11,827) 0 (14,134)
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Net cash provided (used) by financing activities 56,439 109,171 (36,114)
Net increase (decrease) in cash (508) (2,703) 5,014
Cash at beginning of period 4,148 4,148 3,640
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Cash at end of period $ 3,640 $1,445 $ 8,654
--------- -------- --------
--------- -------- --------
Supplemental disclosure of interest paid $ 16,508 $7,836 $ 5,096
--------- -------- --------
--------- -------- --------
</TABLE>
See accompanying notes.
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SUN COUNTRY DRUG, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Summary of significant accounting policies
Organization
SUN COUNTRY DRUG, INC., A New Mexico corporation (the "Company"), owns and
operates a retail pharmacy in Moriarty, New Mexico.
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.
Income taxes
No provision for income taxes has been included in the accompanying financial
statements as income taxes, if any, are payable by the shareholders under
provisions of Subchapter S of the Internal Revenue Code.
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. Long term liabilities
Installment notes due in varying installments $ 109,803
totaling approximately $2,600 per month
maturing on various dates from 1997- 2003.
Less current portion of long term debt (31,607)
----------
Total long term liabilities $ 78,196
----------
----------
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SUN COUNTRY DRUG, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
3. Leases
The Company leases the retail store facilities on a month to month basis. Rent
expense for 1996 was $37,248.
4. Subsequent events
On August 2, 1997 the Company sold a majority of its assets to HORIZON
Pharmacies, Inc. and ceased operations.
