<PAGE>
- -------------------------------------------------------------------------------
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): July 23, 1998
HORIZON PHARMACIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22403 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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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Filed herewith as a part of this report are the following combined
financial statements for Stirniminn, Inc. d/b/a Kirkwood Pharmacy, Martin
Drug Corporation d/b/a Interurban Pharmacy and Carlen Corporation d/b/a
Briargrove Pharmacy: (i) audited Combined Balance Sheet at December 31, 1997
and audited Combined Statements of Income, Statements of Shareholders' Equity
and Statements of Cash Flows for the year ended December 31, 1997, and the
report of Howard & Waltrip, P.C., certified public accountants, thereon,
together with the notes thereto; and (ii) unaudited Combined Balance Sheet at
June 30, 1998, and unaudited Combined Statements of Income, unaudited
Combined Statements of Shareholders' Equity, and unaudited Combined
Statements of Cash Flows each for the six months ended June 30, 1998 and June
30, 1997. 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,
1998 and Pro Forma Combined Condensed Statements of Income for the six months
ending June 30, 1998 and the year ended December 31, 1997, and the
Adjustments to Pro Forma Financial Statements applicable 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.
The following exhibits are filed with this report:
Exhibit No. Name of Exhibit
----------- ---------------
23 Consent of Howard & Waltrip, P.C., Independent Auditors
(filed electronically herewith).
-2-
<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: October 7, 1998 By: /s/ Ricky D. McCord
------------------------------------
Ricky D. McCord, President
-3-
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC-KIRKWOOD PHARMACY
COMBINED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
The Board of Directors and Shareholders September 24, 1998
Carlen Corporation-Briargrove Pharmacy
Martin Drug Corporation-Interurban Pharmacy
Stirniminn, Inc-Kirkwood Pharmacy
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying combined balance sheet of Carlen
Corporation-Briargrove Pharmacy, Martin Drug Corporation-Interurban Pharmacy,
and Stirniminn, Inc-Kirkwood Pharmacy as of December 31, 1997, and the
related combined 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 combined financial position of Carlen
Corporation-Briargrove Pharmacy, Martin Drug Corporation-Interurban Pharmacy,
and Stirniminn, Inc-Kirkwood Pharmacy at December 31, 1997, and the results
of its combined 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>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC-KIRKWOOD PHARMACY
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Summary of significant accounting policies
Organization
CARLEN CORPORATION-BRIARGROVE PHARMACY, MARTIN DRUG CORPORATION-INTERURBAN
PHARMACY, and STIRNIMINN, INC-KIRKWOOD PHARMACY, three Texas corporations
(the "Company"), own and operate retail pharmacies in Houston, Texas.
Carlen Corporation-Briargrove Pharmacy has a fiscal year ended February 28,
1998. Martin Drug Corporation-Interurban Pharmacy and Stirniminn,
Inc-Kirkwood Pharmacy each have a fiscal year ended December 31, 1997. The
three corporations are owned by the same shareholder and the financial
statements are combined for reporting purposes. The December 31, 1997
reporting period represents the majority of the combined entities.
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.
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC-KIRKWOOD PHARMACY
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. Leases
The Company leases the retail store facilities. Rent expense for the year
ended December 31, 1997 was $352,429. The leases were assumed or
renegotiated by HORIZON Pharmacies, Inc., see note 4.
3. Long term liabilities
<TABLE>
<S> <C>
Installment notes totaling approximately $ 560,765
$9,000 per month. Notes were paid
off at the time of purchase by HORIZON
Pharmacies, Inc. See note 4.
Notes payable to shareholder 64,565
Less current portion of long term debt (93,106)
----------
Total long term liabilities $ 532,224
----------
----------
</TABLE>
4. Subsequent events
On July 23, 24 and 25, 1998 the Company sold a majority of its assets to
HORIZON Pharmacies, Inc. and ceased operations.
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC.-KIRKWOOD PHARMACY
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
---------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 100,412 $ 124,428
Accounts receivable-trade 407,376 432,689
Inventories, lower of cost or market 1,442,056 1,450,420
---------- ----------
Total current assets 1,949,844 2,007,537
Fixed assets:
Furniture and equipment 502,214 502,214
Automobiles 108,640 108,640
Leasehold improvements 156,461 156,461
Accumulated depreciation (415,512) (491,512)
---------- ----------
Total net fixed assets 315,803 275,803
Other assets:
Deposits 2,801 2,801
Intangibles 71,078 71,078
Accumulated amortization (22,100) (24,600)
---------- ----------
Total other assets 51,779 49,279
---------- ----------
TOTAL ASSETS $2,317,426 $2,332,619
---------- ----------
---------- ----------
</TABLE>
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC.-KIRKWOOD PHARMACY
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
---------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable-trade $ 676,757 $ 693,676
Accrued expenses 46,039 47,190
Current portion-long term liabilities 93,106 95,700
---------- ----------
Total current liabilities 815,902 836,566
Long term liabilities
Notes payable 560,765 518,708
Shareholder payable 64,565 64,081
Current portion-long term liabilities (93,106) (95,700)
---------- ----------
Total long term liabilities 532,224 487,088
---------- ----------
Total liabilities 1,348,126 1,323,654
---------- ----------
Shareholders' equity
Capital stock 3,000 3,000
Paid in capital 158,000 158,000
Retained earnings 808,300 847,965
---------- ----------
Total shareholders' equity 969,300 1,008,965
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,317,426 $2,332,619
---------- ----------
---------- ----------
</TABLE>
See accompanying notes.
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC.-KIRKWOOD PHARMACY
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, ----------------------
1997 1997 1998
---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Net sales $9,232,167 $4,626,335 $4,806,992
Cost of sales 6,532,946 3,273,727 3,401,565
---------- ---------- ----------
Gross profit 2,699,221 1,352,608 1,405,427
---------- ---------- ----------
Operating expenses:
Selling, general and administrative 2,469,368 1,234,684 1,285,747
Depreciation and amortization 83,230 41,615 42,500
---------- ---------- ----------
Total operating expenses 2,552,598 1,276,299 1,328,247
Income from operations 146,624 76,309 77,180
Other income (expense):
Other income 3,005 1,503 1,485
Interest expense (57,805) (28,903) (32,000)
---------- ---------- ----------
Total other income (expense) (54,800) (27,400) (30,515)
---------- ---------- ----------
Income before taxes 91,824 48,909 46,665
Federal income taxes 38,164 7,336 7,000
---------- ---------- ----------
Net income $53,660 $41,572 $39,665
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC.-KIRKWOOD PHARMACY
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, --------------------
1997 1997 1998
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $754,641 $754,641 $808,300
Net income 53,660 41,572 39,665
-------- -------- --------
Balance, End of Period $808,300 $796,213 $847,965
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
CARLEN CORPORATION-BRIARGROVE PHARMACY
MARTIN DRUG CORPORATION-INTERURBAN PHARMACY
STIRNIMINN, INC.-KIRKWOOD PHARMACY
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, --------------------
1997 1997 1998
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 53,660 $ 41,572 $ 39,665
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 83,230 41,615 42,500
Change in operating assets and liabilities:
Accounts receivable-trade 27,642 13,856 (25,312)
Inventories (72,103) (42,580) (8,364)
Prepaid income tax 13,065 7,000 0
Accounts payable-trade 43,669 18,689 16,919
Accrued expenses (43,280) (23,586) 1,151
-------- -------- --------
Net cash provided by operating activities 105,883 56,566 66,559
Investing activities:
Purchase of fixed assets (50,065) (38,325) 0
Financing activities:
Payments on notes/shareholder payable (99,244) (36,750) (42,543)
-------- -------- --------
Net increase (decrease) in cash (43,426) (18,509) 24,016
Cash at beginning of period 143,838 143,838 100,412
-------- -------- --------
Cash at end of period $100,412 $125,329 $124,428
-------- -------- --------
-------- -------- --------
Supplemental disclosure of interest paid $ 57,805 $ 28,903 $32,000
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Company Houston
ASSETS Historical Stores (Note) Pro Forma
---------- ------------- ---------
<S> <C> <C> <C>
Current assets:
Cash $ 6,517 ($1,115) $ 5,402
Accounts receivable 5,805 5,805
Inventories 11,504 1,443 12,947
Other 302 302
------- ------ -------
Total current assets 24,128 328 24,456
Property and equipment, net 2,731 115 2,846
Intangibles, net 5,036 864 5,900
------- ------ -------
Total assets $31,895 $1,307 $33,202
------- ------ -------
------- ------ -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,006 $ 4,006
Accrued liabilities 738 738
Notes payable 233 233
Current portion of long-term obligations 1,054 $ 100 1,154
------- ------ -------
Total currrent liabilities 6,031 100 6,131
Long-term obligations 5,345 5,345
Deferred income taxes 157 157
Shareholder's equity:
Common stock 54 54
Additional paid-in capital 19,608 1,207 20,815
Retained earnings 770 770
Treasury stock (70) (70)
------- ------ -------
Total shareholders' equity 20,362 1,207 21,569
------- ------ -------
Total liabilities and shareholders' equity $31,895 $1,307 $33,202
------- ------ -------
------- ------ -------
</TABLE>
Note: The three Houston Stores were acquired in July 1998 for a total
consideration of $2,422 financed by a note payable of $100, stock
of $1,207 and cash of $1,115 and are 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, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
----------------------
Houston Pro Forma
Company Stores Adjustments Pro Forma
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,689 $4,807 $ 33,496
Costs and expenses:
Cost of sales and services 19,648 3,402 23,050
Depreciation and amortization 330 43 (43) (1) 356
26 (1)
Selling, general and administrative 7,744 1,285 (10) (3) 9,019
------- ------ ---- ----------
Total costs and expenses 27,722 4,730 (27) 32,425
------- ------ ---- ----------
Income from operations 967 77 27 1,071
Interest expense and other, net 153 30 (32) (2) 153
2 (2)
------- ------ ---- ----------
Income before income taxes 814 47 57 918
Provision for income taxes 322 7 38 (4) 367
------- ------ ---- ----------
Net income $ 492 $ 40 $ 19 $ 551
------- ------ ---- ----------
------- ------ ---- ----------
Basic earnings per share $ 0.12
----------
----------
Shares used in computation of basic earnings per share 4,671,635
----------
----------
Diluted earnings per share $ 0.11
----------
----------
Shares used in computation of diluted earnings per share 4,944,572
----------
----------
</TABLE>
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
-----------------------
Houston Pro Forma
Company Stores Adjustments Pro Forma
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,430 $9,232 $ 37,662
Costs and expenses:
Cost of sales and services 19,132 6,533 25,665
Depreciation and amortization 330 83 (83) (1) 382
52 (1)
Selling, general and administrative 7,943 2,469 (20) (3) 10,392
------- ------ ---- ----------
Total costs and expenses 27,405 9,085 (51) 36,439
------- ------ ---- ----------
Income from operations 1,025 147 51 1,223
Interest expense and other, net 218 55 (58) (2) 221
6 (2)
------- ------ ---- ----------
Income before income taxes 807 92 103 1,002
Provision for income taxes 480 * 38 33 (4) 551
------- ------ ---- ----------
Net income $ 327 $ 54 $ 70 $ 451
------- ------ ---- ----------
------- ------ ---- ----------
Basic earnings per share $ 0.16
----------
----------
Shares used in computation of basic earnings per share 2,854,006
----------
----------
Diluted earnings per share $ 0.15
----------
----------
Shares used in computation of diluted earnings per share 2,949,574
----------
----------
</TABLE>
* Includes $170 deferred income taxes resulting from change in tax status.
<PAGE>
ADJUSTMENTS TO PRO FORMA FINANCIAL STATEMENTS
(Dollars in Thousands)
<TABLE>
<S> <C>
(1) Adjust depreciation and amortization of acquired equipment and
intangibles to reflect new basis in the acquired stores:
Eliminate historical depreciation and amortization:
Twelve months ended December 31, 1997: $ 83
Six months ended June 30, 1998: 43
Provide depreciation and amortization on acquired bases in equipment
and intangibles:
Equipment - 7 year life - purchase price allocated 115
Intangibles - 6 to 40 year life - purchase price allocated 864
Twelve months ended December 31, 1997:
Depreciation of equipment 16
Amortization of intangibles 36
----
Total 52
Six months ended June 30, 1998:
Depreciation of equipment 8
Amortization of intangibles 18
----
Total 26
(2) Adjust interest expense:
Eliminate historical interest expense
Twelve months ended December 31, 1997: 58
Six months ended June 30, 1998: 32
Provide for interest expense on debt issued in acquisition:
Debt 100
Interest rate 8.00%
Twelve months ended December 31, 1997: 6
Six months ended June 30, 1998: 2
(3) Decrease previous Officer Salary to new contract with Horizon:
Twelve months ended December 31, 1997: 20
Six months ended June 30, 1998: 10
(4) Adjust pro forma taxes (at a rate of 38% for 1997 and 40% for 1998) for
acquisition adjustments and historical income:
Twelve months ended December 31, 1997: 33
Six months ended June 30, 1998: 38
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the use of our report on the financial statements for the year
ended December 31, 1997 of Stirniminn, Inc. d/b/a Kirkwood Pharmacy, Martin
Drug Corporation d/b/a Interurban Pharmacy and Carlen Corporation d/b/a
Briargrove Pharmacy, in the Form 8-K/A dated July 23, 1998 of HORIZON
Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
October 7, 1998
