<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): May 30, 1998
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 Graham's Pharmacy and Home Health Center, Inc.: (i)
audited Balance Sheet at December 31, 1997 and audited Statement of
Income, Statement of Shareholders' Equity and Statement of Cash Flows
each 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 Balance Sheet at March 31, 1998,
and unaudited Statements of Income, unaudited Statements of
Shareholders' Equity, and unaudited Statements of Cash Flows each for
the three months ended March 31, 1998 and March 31, 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 March
31, 1998 and Pro Forma Combined Condensed Statement of Income for the
three months ending March 31, 1998 and the year ended December 31,
1997, 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:
<TABLE>
Exhibit No. Name of Exhibit
----------- ---------------
<S> <C>
23 Consent of Howard & Waltrip, P.C., Independent
Auditors (filed electronically herewith).
</TABLE>
-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: August 13, 1998 By: /s/ Ricky D. McCord
------------------------------
Ricky D. McCord, President
-3-
<PAGE>
GRAHAM'S PHARMACY AND
HOME HEALTH CENTER, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
The Board of Directors and Shareholders August 5, 1998
Graham's Pharmacy and Home Health Center, Inc.
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Graham's Pharmacy and Home
Health Center, Inc. as of December 31, 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 Graham's Pharmacy and Home
Health Center, Inc. at December 31, 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>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1997 1998
------------ -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 4,426 $ 12,061
Accounts receivable-trade 111,280 114,159
Inventories, lower of cost or market 193,541 196,486
Employee advances 595 400
--------- ---------
Total current assets 309,842 323,106
Fixed assets
Land 7,500 7,500
Buildings, equipment, automobiles 744,324 744,324
Accumulated depreciation (273,016) (294,049)
--------- ---------
Total net fixed assets 478,808 457,775
Other assets
Deposits 207 207
Patent/trademarks 2,375 2,375
Goodwill 24,027 24,027
Accumulated amortization (8,910) (9,075)
--------- ---------
Total other assets 17,699 17,534
--------- ---------
TOTAL ASSETS $ 806,349 $ 798,415
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable-trade $ 117,002 $ 110,890
Accrued expenses 7,531 8,856
Current portion of long term debt 6,360 4,749
--------- ---------
Total current liabilities 130,893 124,495
Long term liabilities
Notes payable 15,274 13,663
Current portion of long term debt (6,360) (4,749)
--------- ---------
Total long term liabilities 8,914 8,914
--------- ---------
Total liabilities 139,807 133,409
Shareholders' equity
Capital stock 17,071 17,071
Retained earnings 649,471 647,935
--------- ---------
Total shareholders' equity 666,542 665,006
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 806,349 $ 798,415
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
<PAGE>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -----------------------
1997 1997 1998
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
Net sales $2,272,023 $517,746 $532,498
Cost of sales 1,233,775 290,859 304,264
---------- -------- --------
Gross profit 1,038,248 226,887 228,234
---------- -------- --------
Operating expenses:
Selling, general and administrative 731,557 169,803 170,984
Depreciation and amortization 73,002 18,251 21,198
---------- -------- --------
Total operating expenses 804,559 188,054 192,182
Income(loss) from operations 233,689 38,833 36,052
Other income (expense):
Interest income 567 115 58
Interest expense (1,900) (504) (86)
---------- -------- --------
Total other income (expense) (1,333) (389) (28)
---------- -------- --------
Net income $ 232,356 $ 38,444 $ 36,024
---------- -------- --------
---------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -----------------------
1997 1997 1998
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $ 539,761 $539,761 $649,471
Net income 232,356 38,444 36,024
Distributions (122,646) (30,662) (37,560)
--------- -------- --------
Balance, End of Period $ 649,471 $547,543 $647,935
--------- -------- --------
--------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ---------------------
1997 1997 1998
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 232,356 $ 38,444 $ 36,024
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 73,002 18,251 21,198
Change in operating assets and liabilities:
Accounts receivable-trade (31,683) (17,622) (2,879)
Inventories (112,042) (40,064) (2,945)
Employee advances (195) (195) 195
Accounts payable-trade 4,519 1,319 (6,112)
Accrued expenses 4,435 1,110 1,325
--------- -------- --------
Net cash provided (used) by operating activities 170,392 1,243 46,806
Investing activities:
Purchase of fixed assets (159,085) (37,271) 0
Financing activities:
Borrowings on notes payable 14,933 0 0
Principal payments on notes payable (54,942) (12,736) (1,611)
Contributions from shareholders 35,817 0 0
Distributions to shareholders (122,646) (30,662) (37,560)
--------- -------- --------
Net cash (used) provided by financing activities (126,838) (43,398) (39,171)
Net increase (decrease) in cash (115,531) (79,426) 7,635
Cash at beginning of period 119,957 119,957 4,426
--------- -------- --------
Cash at end of period $ 4,426 $ 40,531 $ 12,061
--------- -------- --------
--------- -------- --------
Supplemental disclosure of interest paid $ 1,900 $ 504 $ 86
--------- -------- --------
--------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Summary of significant accounting policies
Organization
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC., A New Mexico corporation (the
"Company"), owns and operates a retail pharmacy in Las Vegas, 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 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 on a month to month basis from
a related party. Rent expense for fiscal year ended December 31, 1997 was
$18,685.
<PAGE>
GRAHAM'S PHARMACY AND HOME HEALTH CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
3. Long term liabilities
<TABLE>
<S> <C>
Installment notes totaling approximately $15,274
$375 per month at 8.25% interest,
maturing in 1998.
Less current portion of long term debt (6,360)
-------
Total long term liabilities $ 8,914
-------
-------
</TABLE>
4. Subsequent events
On May 30, 1998 the Company sold a majority of its assets to HORIZON
Pharmacies, Inc. and ceased operations.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
Company Las Vegas
ASSETS Historical Store (Note) Pro Forma
---------- ------------ ---------
<S> <C> <C> <C>
Current assets:
Cash $ 2,388 ($450) $1,938
Accounts receivable 5,029 5,029
Inventories 9,828 150 9,978
Other 187 187
---------- ------------ ---------
Total current assets 17,432 (300) 17,132
Property and equipment, net 2,112 341 2,453
Intangibles, net 3,871 559 4,430
---------- ------------ ---------
Total assets $23,415 $600 $24,015
---------- ------------ ---------
---------- ------------ ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,000 $4,000
Accrued liabilities 675 675
Notes payable 320 320
Current portion of long-term
obligations 879 $ 85 964
---------- ------------ ---------
Total currrent liabilities 5,874 85 5,959
Long-term obligations 4,686 415 5,101
Deferred income taxes 157 157
Shareholder's equity:
Common stock 45 45
Additional paid-in capital 12,100 100 12,200
Retained earnings 553 553
---------- ------------ ---------
<PAGE>
Total shareholders' equity 12,698 100 12,798
---------- ------------ ---------
Total liabilities and shareholders'
equity $23,415 $600 $24,015
---------- ------------ ---------
---------- ------------ ---------
</TABLE>
Note: The Las Vegas Store was acquired in May 1998 for a total
consideration of $1,050 financed by a note payable of $500,
stock of $100 and cash of $450 and is included herein at the
values allocated to assets acquired.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Historical
------------------------
Las Vegas Pro Forma
Company Store Adjustments Pro Forma
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $12,822 $532 $13,354
Cost and expenses:
Cost of sales and services 8,850 304 9,154
Depreciation and amortization 151 21 $(21)(1) 169
18 (1)
Selling, general and administrative 3,310 171 (16)(3) 3,465
------- ----- ----- ---------
Total costs and expenses 12,311 496 (19) 12,788
------- ----- ---- ---------
Income from operations 511 36 19 566
Interest expense and other, net 53 0 9 (2) 62
------- ----- ---- ---------
Income before income taxes 458 36 10 504
Provision for income taxes 183 0 19 (4) 202
------- ----- ---- ---------
Net income $275 $36 ($9) $302
------- ----- ---- ---------
------- ----- ---- ---------
Basic earnings per share $0.07
---------
---------
Shares used in computation of basic earnings
per share 4,500,958
---------
---------
Diluted earnings per share $0.06
---------
---------
Shares used in computation of diluted earnings
per share 4,760,179
---------
---------
</TABLE>
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Historical
-----------------------
Las Vegas Pro Forma
Company Store Adjustments Pro Forma
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,430 $2,272 $30,702
Cost and expenses:
Cost of sales and services 19,132 1,234 20,366
Depreciation and amortization 330 73 $ (73)(1) 404
74 (1)
Selling, general and administrative 7,943 732 (75)(3) 8,600
------- ------ ----- ----------
Total costs and expenses 27,405 2,039 (74) 29,370
------- ------ ----- ----------
Income from operations 1,025 233 74 1,332
Interest expense and other, net 218 1 33 (2) 252
------- ------ ----- ----------
Income before income taxes 807 232 41 1,080
Provision for income taxes 480* 100 (4) 580
------- ------ ----- ----------
Net income $ 327 $ 232 $ (59) $ 500
------- ------ ----- ----------
------- ------ ----- ----------
Basic earnings per share $ 0.18
----------
----------
Shares used in computation of basic earnings
per share 2,777,618
----------
----------
Diluted earnings per share $0.17
----------
----------
Shares used in computation of diluted earnings
per share 2,873,186
----------
----------
</TABLE>
* Includes $170 deferred income taxes resulting from change in tax status.
<PAGE>
ADJUSTMENTS TO PRO FORMA FINANCIAL STATEMENTS
(Dollars in Thousands)
(1) Adjust depreciation and amortization of acquired equipment and
intangibles to reflect new basis in the acquired store:
<TABLE>
<S> <C>
Eliminate historical depreciation and amortization:
Twelve months ended December 31, 1997: $ 73
Three months ended March 31, 1998: 21
Provide depreciation and amortization on acquired bases in equipment
and intangibles:
Equipment - 7 to 10 year life - purchase price allocated 341
Intangibles - 5 to 40 year life - purchase price allocated 559
Twelve months ended December 31, 1997:
Depreciation of equipment 49
Amortization of intangibles 25
----
Total 74
Three months ended March 31, 1998:
Depreciation of equipment 12
Amortization of intangibles 6
----
Total 18
(2) Adjust interest expense:
Provide for interest expense on debt issued in acquisition:
Debt 500
Interest rate 8.00%
Twelve months ended December 31, 1997: 33
Three months ended March 31, 1998: 9
(3) Decrease previous Officer Salary to new contract with Horizon:
Twelve months ended December 31, 1997: 75
Three months ended March 31, 1998: 16
<PAGE>
(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: 100
Three months ended March 31, 1998: 19
</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 Graham's Pharmacy and Home Health Center, Inc., in
the Form 8-K/A dated May 30, 1998 of HORIZON Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
August 5, 1998
