<PAGE>
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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): December 10, 1997
HORIZON PHARMACIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-22403 75-2441557
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
275 W. 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 financial
statements for Mart Super Drug: (i) audited Balance Sheet at December
31, 1996 and audited Statement of Income, Statement of Partners'
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 September 30, 1997, and unaudited
Statements of Income, unaudited Statements of Partners' Equity and
unaudited Statements of Cash Flows, each for the nine months ended
September 30, 1997 and September 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
September 30, 1997 and Pro Forma Combined Condensed Statement of
Income for the nine months ended September 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.
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>
MART SUPER DRUG
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS OF MART SUPER DRUG.
Report of Independent Auditors ......................................... F-2
Balance Sheets at December 31, 1996 and September 30, 1997 (unaudited).. F-3
Statements of Income for the year ended December 31, 1996 and for the
nine months ended September 30, 1996 (unaudited) and September 30,
1997 (unaudited)....................................................... F-4
Statements of Partners' Equity for the year ended December 31, 1996
and for the nine months ended September 30, 1996 (unaudited) and
September 30, 1997 (unaudited)......................................... F-5
Statements of Cash Flows for the year ended December 31, 1996 and for
the nine months ended September 30, 1996 (unaudited) and September 30,
1997 (unaudited)....................................................... F-6
Notes to Financial Statements........................................... F-7
PRO FORMA COMBINED FINANCIAL DATA OF HORIZON PHARMACIES, INC............... F-8
Pro Forma Combined Condensed Balance Sheet at September 30, 1997........ F-9
Pro Forma Combined Condensed Statement of Income for the nine months
ended September 30, 1997............................................... F-10
Pro Forma Condensed Statement of Income for the year ended December 31,
1996................................................................... F-11
Adjustments to Pro Forma Financial Statements........................... F-12
<PAGE>
[LETTERHEAD]
The Partners of Mart Super Drug January 29, 1998
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Mart Super Drug as of
December 31, 1996, and the related statement of income, partners' 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 Mart Super Drug 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
F-2
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MART SUPER DRUG
BALANCE SHEETS
<TABLE>
DECEMBER 31, SEPTEMBER 30,
ASSETS 1996 1997
------------ -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 77,967 $ 88,773
Accounts receivable-trade 31,014 31,285
Inventories, lower of cost or market 164,567 155,095
Prepaid expenses 0 889
-------- --------
Total current assets 273,548 276,042
Fixed assets:
Furniture and Equipment 23,310 23,310
Automobile 9,528 9,528
Accumulated depreciation (18,331) (20,998)
-------- --------
Total net fixed assets 14,507 11,840
-------- --------
TOTAL ASSETS $288,055 $287,882
-------- --------
-------- --------
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable-trade 64,875 59,493
Payroll taxes payable 2,723 3,192
Accrued expenses 1,938 2,211
-------- --------
Total liabilities 69,536 64,896
Partners' equity 218,519 222,986
-------- --------
TOTAL LIABILITIES AND
PARTNERS' EQUITY $288,055 $287,882
-------- --------
-------- --------
</TABLE>
F-3
See accompanying notes.
<PAGE>
MART SUPER DRUG
STATEMENTS OF INCOME
<TABLE>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------------
1996 1996 1997
------------ ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Net sales $1,605,809 $1,184,826 $1,272,506
Cost of sales 1,236,862 930,062 977,105
---------- ---------- ----------
Gross profit 368,947 254,764 295,401
---------- ---------- ----------
Operating expenses:
Selling, general and administrative 287,413 211,899 232,851
Depreciation 2,365 1,654 2,667
---------- ---------- ----------
Total operating expenses 289,778 213,553 235,518
Income from operations 79,169 41,211 59,883
Other income (expense):
Other income 2,865 2,182 2,630
Contributions (87) (73) (600)
---------- ---------- ----------
Total other income (expense) 2,778 2,109 2,030
---------- ---------- ----------
Net income $ 81,947 $ 43,320 $ 61,913
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-4
See accompanying notes.
<PAGE>
MART SUPER DRUG
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -----------------------
1996 1996 1997
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $189,894 $189,894 $218,519
Partner withdrawals (53,322) (43,329) (57,446)
Net income 81,947 43,320 61,913
-------- -------- --------
Balance, End of Period $218,519 $189,885 $222,986
-------- -------- --------
-------- -------- --------
</TABLE>
F-5
See accompanying notes.
<PAGE>
MART SUPER DRUG
STATEMENTS OF CASH FLOWS
<TABLE>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ---------------------
1996 1996 1997
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 81,947 $ 43,320 $ 61,913
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,365 1,654 2,667
Change in operating assets and liabilities:
Accounts receivable-trade (6,518) (21,187) (271)
Inventories (18,662) 0 9,472
Prepaid expenses 0 0 (889)
Accounts payable-trade 16,124 6,562 (5,382)
Payroll taxes payable 716 331 469
Accrued expenses (214) (891) 273
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Net cash provided by operating activities 75,758 29,788 68,252
Investing activities:
Purchase of fixed assets (6,688) 0 0
Financing activities:
Partner withdrawals (53,322) (43,329) (57,446)
-------- -------- --------
Net increase (decrease) in cash 15,748 (13,541) 10,806
Cash at beginning of period 62,219 62,219 77,967
-------- -------- --------
Cash at end of period $ 77,967 $ 48,678 $ 88,773
-------- -------- --------
-------- -------- --------
Supplemental disclosure of interest paid $ 0 $ 0 $ 0
-------- -------- --------
-------- -------- --------
</TABLE>
F-6
See accompanying notes.
<PAGE>
MART SUPER DRUG
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Summary of significant accounting policies
Organization
MART SUPER DRUG, a partnership between Scott S. Spencer and Jacques Jett, (the
"Company"), owns and operates a retail pharmacy in Brookfield, Missouri.
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 fixed assets 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 under an operating lease which
is scheduled to expire November 30, 1998. The monthly lease payments are $650
and the annual rent for 1996 was $7,800.
3. Subsequent events
On December 10, 1997 the Company sold a majority of its assets to HORIZON
Pharmacies, Inc. and ceased operations.
F-7
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA
The following unaudited Pro Forma Combined Condensed Statements of
Income for the year ended December 31, 1996 and the nine months ended
September 30, 1997 reflect the historical results of operations of the
Company, adjusted to give effect to the acquisition of Mart Super Drug
(the "Brookfield Store") in December 1997 as though such store was
acquired January 1, 1996. The Pro Forma Combined Condensed Balance Sheet
as of September 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 Brookfield Store as if it had occurred as of September 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 Brookfield Store.
F-8
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
ASSETS
Company Brookfield
Historical Store (Note) Pro Forma
--------------------------------------
<S> <C> <C> <C>
Current assets:
Cash $ 1,272 $ 1,272
Accounts receivable 3,087 $ 30 3,117
Inventories 6,435 208 6,643
Prepaid expenses 93 0 93
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Total current assets 10,887 238 11,125
Property and equipment, net 1,069 20 1,089
Intangibles, net 1,782 68 1,850
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Total assets $ 13,738 $ 326 $ 14,064
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank Overdraft $ 0 $ 120 $ 120
Accounts payable 2,132 2,132
Accrued liabilities 549 549
Notes payable 347 347
Current portion of long-term
obligations
575 23 598
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Total current liabilities 3,603 143 3,746
Long-term obligations 2,764 183 2,947
Deferred income taxes 149 149
Shareholders' equity:
Common stock 25 25
Additional paid-in capital 7,061 7,061
Retained earnings 136 136
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Total shareholders' equity 7,222 7,222
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Total liabilities and shareholders'
equity $ 13,738 $ 326 $ 14,064
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--------------------------------------
</TABLE>
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Note: The Brookfield Store was acquired in December 1997 for a total
consideration of $326 financed by a note payable of $206 and cash
of $120 and is included herein at the values allocated to assets
acquired.
F-9
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Historical
------------------------
Brookfield Pro Forma
Company Store Adjustments Pro Forma
--------------------------------------- ---------
<S> <C> <C> <C> <C>
Net sales $17,940 $1,273 $ 19,213
Cost and expenses:
Cost of sales 12,177 977 13,154
Depreciation and amortization 205 3 $ (3)(1) 213
8 (1)
Selling, general and administrative 4,869 231 (45)(3) 5,058
3 (5)
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Total costs and expenses 17,251 1,211 (37) 18,425
--------------------------------- ---------
Income from operations 689 62 37 788
Interest expense and other, net 176 12 (3) 188
--------------------------------- ---------
Income before income taxes 513 62 25 600
Provision for income taxes:
Current 59 59
Deferred 149 149
Pro forma provision for income taxes 111 0 30 (6) 144
--------------------------------- ---------
Net income $ 194 $ 62 $ (5) $ 251
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Net income per share $ 0.11
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Shares used in computation (A) 2,321,265
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</TABLE>
(A) Weighted average shares outstanding have been adjusted to show the 3 for 2
stock split which occurred on November 24, 1997.
F-10
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Historical
-----------------------
Brookfield Pro Forma
Company Store Adjustments Pro Forma
------------------------------------- ----------
<S> <C> <C> <C> <C>
Net sales $ 13,136 $ 1,606 $ 14,742
Cost and expenses:
Cost of sales 8,942 1,237 10,179
Depreciation and amortization 172 2 $ (2)(1) 182
10 (1)
Selling, general and administrative 3,471 285 (52)(3) 3,707
3 (5)
--------------------------------- ----------
Total costs and expenses 12,585 1,524 (41) 14,068
--------------------------------- ----------
Income from operations 551 82 41 674
Interest expense and other, net 249 0 16 (2) 265
--------------------------------- ----------
Income before income taxes 302 82 25 409
Pro forma provision for income taxes 106 0 37 (6) 143
--------------------------------- ----------
Pro forma net income $ 196 $ 82 $(12) $ 266
--------------------------------------------------
--------------------------------------------------
Pro forma net income per share $ 0.17
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----------
Shares used in computation (A) 1,611,369
----------
----------
</TABLE>
(A) Weighted average shares outstanding have been adjusted to show the 3 for 2
stock split which occurred on November 24, 1997.
F-11
<PAGE>
ADJUSTMENTS TO PRO FORMA FINANCIAL STATEMENTS
<TABLE>
(1) Adjust depreciation and amortization of acquired equipment and intangibles
to reflect new basis in the acquired store:
<S> <C>
Eliminate historical depreciation:
Twelve months ended December 31, 1996: $ 2,000
Nine months ended September 30, 1997: 3,000
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 68,000
Twelve months ended December 31, 1996:
Depreciation of equipment 4,000
Amortization of intangibles 6,000
--------
Total 10,000
Nine months ended September 30, 1997:
Depreciation of equipment 3,000
Amortization of intangibles 5,000
--------
Total 8,000
(2) Adjust interest expense:
Eliminate historical interest expense:
Twelve months ended December 31, 1996: 0
Nine months ended September 30, 1997: 0
Provide for interest expense on debt issued in acquisition:
Debt 206,000
Interest Rate 8.00%
Twelve months ended December 31, 1996: 16,000
Nine months ended September 30, 1997: 12,000
(3) Decrease previous Officer Salary to new contract with Horizon:
Twelve months ended December 31, 1996: 52,000
Nine months ended September 30, 1997: 45,000
(5) Eliminate investment income:
Twelve months ended December 31, 1996: 3,000
Nine months ended September 30, 1997: 3,000
(6) Adjust pro forma income taxes (at a rate of 35%) for acquistion adjustments
and historical income:
Twelve months ended December 31, 1996: 37,000
Nine months ended September 30, 1997: 34,000
</TABLE>
F-12
<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: February 18, 1998 By: /s/ Ricky D. McCord
------------------------------------
Ricky D. McCord, President
<PAGE>
INDEX TO EXHIBITS
Appears at
Exhibit Sequentially
Number Description Numbered Page
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23 Consent of Howard & Waltrip, P.C., Independent 5
Auditors (filed electronically herewith).
<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, 1996 of Mart Super Drug dated January 29, 1998 in the
Form 8-K/A of HORIZON Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
February 17, 1998
