<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): August 15, 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 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 R-D Pharmacy & Books, a sole proprietorship: (i) audited
Balance Sheet at December 31, 1997 and audited Statement of Income,
Statement of Owners' Equity and Statement 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
Balance Sheet at June 30, 1998, and unaudited Statements of Income,
unaudited Statements of Shareholders' Equity, and unaudited 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 Statement of Income for the six months
ended 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:
<TABLE>
<CAPTION>
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: October 27, 1998 By: /s/ Ricky D. McCord
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Ricky D. McCord, President
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R-D PHARMACY & BOOKS
YEAR ENDED DECEMBER 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
[LETTERHEAD]
The Owners October 23, 1998
R-D Pharmacy & Books
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of R-D Pharmacy & Books as of
December 31, 1997, and the related statement of income, owners' 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 R-D Pharmacy & Books 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>
R-D PHARMACY & BOOKS
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1997 1998
----------------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 40,934 $ 43,193
Accounts receivable-trade 53,935 63,394
Inventories, lower of cost or market 178,401 181,034
---------- ---------
Total current assets 273,270 287,621
Fixed assets:
Improvements 8,281 8,281
Furniture and Equipment 126,548 126,548
Automobile 27,300 27,300
Accumulated depreciation (134,819) (138,874)
---------- ---------
Total net fixed assets 27,310 23,255
Other assets:
Goodwill 12,000 12,000
Accumulated amortization (12,000) (12,000)
---------- ---------
Total other assets 0 0
TOTAL ASSETS $ 300,580 $ 310,876
---------- ---------
---------- ---------
LIABILITIES AND OWNERS' EQUITY
Current Liabilities:
Accounts payable-trade $ 46,853 $ 45,330
Payroll taxes payable 0 63
---------- ---------
Total current liabilities 46,853 45,393
Owners' equity 253,727 265,483
---------- ---------
TOTAL LIABILITIES AND
OWNERS' EQUITY $ 300,580 $ 310,876
---------- ---------
---------- ---------
</TABLE>
See accompanying notes.
<PAGE>
R-D PHARMACY & BOOKS
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------
1997 1997 1998
----------------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Net sales $1,356,143 $646,153 $702,339
Cost of sales 911,196 456,196 469,508
---------- -------- --------
Gross profit 444,947 189,957 232,831
Operating expenses:
Selling, general and administrative 265,769 106,651 129,844
Depreciation 13,569 6,785 4,055
---------- -------- --------
Total operating expenses 279,338 113,436 133,899
---------- -------- --------
Income from operations 165,609 76,521 98,932
Other income (expense):
Other income 2,213 1,230 1,137
---------- -------- --------
Net income $ 167,822 $ 77,751 $100,069
---------- -------- --------
---------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
R-D PHARMACY & BOOKS
STATEMENTS OF OWNERS' EQUITY
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------
1997 1997 1998
----------------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $ 233,249 $ 233,249 $ 253,727
Owner draws (147,344) (93,694) (88,313)
Net income 167,822 77,751 100,069
---------- --------- ---------
Balance, End of Period $ 253,727 $ 217,306 $ 265,483
---------- --------- ---------
---------- --------- ---------
</TABLE>
See accompanying notes.
<PAGE>
R-D PHARMACY & BOOKS
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -------------------
1997 1997 1998
----------------- ---- ----
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 167,822 $ 77,751 $100,069
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 13,569 6,785 4,055
Change in operating assets and liabilities:
Accounts receivable-trade 7,256 22,881 (9,459)
Inventories (48,587) (14,268) (2,633)
Accounts payable-trade (1,911) (9,036) (1,523)
Payroll taxes payable (912) 0 63
---------- -------- --------
Net cash provided by operating activities 137,237 84,113 90,572
Investing activities:
Purchase of fixed assets (2,132) (2,132) 0
Financing activities:
Owner Draws (147,344) (93,694) (88,313)
---------- -------- --------
Net increase (decrease) in cash (12,239) (11,713) 2,259
Cash at beginning of period 53,173 53,173 40,934
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Cash at end of period $ 40,934 $ 41,460 $ 43,193
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---------- -------- --------
Supplemental disclosure of interest paid none none none
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</TABLE>
See accompanying notes.
<PAGE>
R-D PHARMACY & BOOKS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Summary of significant accounting policies
Organization
R-D PHARMACY & BOOKS, a sole proprietorship (the "Company"), owns and
operates a retail pharmacy in Douglas, Wyoming.
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 December 31, 1997 was
$7,800.
3. Income Taxes
The Company is a sole proprietorship for income tax purposes. The net
taxable income of the Company is included in the personal income taxes of the
owner. Therefore, no provisions or liability for federal income taxes is
reflected in these statements.
5. Subsequent events
On August 15, 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
JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Company Douglas
ASSETS Historical Store (Note) Pro Forma
---------- ------------ ---------
<S> <C> <C> <C>
Current assets:
Cash $ 6,517 $(200) $ 6,317
Accounts receivable 5,805 5,805
Inventories 11,504 188 11,692
Other 302 302
------- ------ --------
Total current assets 24,128 (12) 24,116
Property and equipment, net 2,731 20 2,751
Intangibles, net 5,036 353 5,389
------- ------ --------
Total assets $31,895 $ 361 $32,256
------- ------ --------
------- ------ --------
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 $ 29 1,083
------- ------ --------
Total currrent liabilities 6,031 29 6,060
Long-term obligations 5,345 232 5,577
Deferred income taxes 157 157
Shareholder's equity:
Common stock 54 54
Additional paid-in capital 19,608 100 19,708
Retained earnings 770 770
Treasury stock (70) (70)
------- ------ --------
Total shareholders' equity 20,362 100 20,462
------- ------ --------
Total liabilities and shareholders' equity $31,895 $ 361 $32,256
------- ------ --------
------- ------ --------
</TABLE>
Note: The Douglas Store was acquired in August 1998 for a total
consideration of $561 financed by a note payable of $261, stock of
$100 and cash of $200 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, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
-----------------------
Douglas Pro Forma
Company Store Adjustments Pro Forma
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,689 $702 $29,391
Cost and expenses:
Cost of sales and services 19,648 469 20,117
Depreciation and amortization 330 4 $ (4) (1) 339
9 (1)
Selling, general and administrative 7,744 130 36 (3) 7,912
2 (4)
------- ---- ----- ---------
Total costs and expenses 27,722 603 43 28,368
------- ---- ----- ---------
Income from operations 967 99 (43) 1,023
Interest expense and other, net 153 (1) 14 (2) 166
------- ---- ----- ---------
Income before income taxes 814 100 (57) 857
Provision for income taxes 322 21 (5) 343
------- ---- ----- ---------
Net income $ 492 $100 $(78) $ 514
------- ---- ----- ---------
------- ---- ----- ---------
Basic earnings per share $ 0.11
---------
---------
Shares used in computation of basic earnings
per share 4,595,719
---------
---------
Diluted earnings per share $ 0.11
---------
---------
Shares used in computation of diluted
earnings per share 4,868,656
---------
---------
</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
----------------------
Douglas Pro Forma
Company Store Adjustments Pro Forma
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,430 $1,356 $ 29,786
Cost and expenses:
Cost of sales and services 19,132 910 20,042
Depreciation and amortization 330 14 $ (14) (1) 346
16 (1)
Selling, general and administrative 7,943 266 72 (3) 8,284
3 (4)
------- ------ ------ ----------
Total costs and expenses 27,405 1,190 77 28,672
------- ------ ------ ----------
Income from operations 1,025 166 (77) 1,114
Interest expense and other, net 218 (2) 20 (2) 236
------- ------ ------ ----------
Income before income taxes 807 168 (97) 878
Provision for income taxes 480 * 24 (4) 504
------- ------ ------ ----------
Net income $ 327 $ 168 $(121) $ 374
------- ------ ------ ----------
------- ------ ------ ----------
Basic earnings per share $ 0.13
----------
----------
Shares used in computation of basic earnings
per share 2,778,090
----------
----------
Diluted earnings per share $ 0.13
----------
----------
Shares used in computation of diluted earnings
per share 2,873,658
----------
----------
</TABLE>
* Includes $170 deferred income taxes resulting from change in tax status.
<PAGE>
Adjustments to Pro Forma Financial Statements
<TABLE>
<S> <C>
(1) Adjust depreciation and amortization of acquired
equipment and intangibles to reflect new basis in the
acquired store:
Eliminate historical depreciation and amortization:
Twelve months ended December 31, 1997: $ 14
Six months ended June 30, 1998: 4
Provide depreciation and amortization on acquired bases in
equipment and intangibles:
Equipment - 7 year life - purchase price allocated 20
Intangibles - 6 to 40 year life - purchase price allocated 353
Twelve months ended December 31, 1997:
Depreciation of equipment 3
Amortization of intangibles 13
---
Total 16
Six months ended June 30, 1998:
Depreciation of equipment 2
Amortization of intangibles 7
---
Total 9
(2) Adjust interest expense:
Provide for interest expense on debt issued in acquisition:
Debt 261
Interest rate 8.00%
Twelve months ended December 31, 1997: 20
Six months ended June 30, 1998: 14
(3) Increase previous Officer Salary/Compensation to new
contract with Horizon:
Twelve months ended December 31, 1997: 72
Six months ended June 30, 1998: 36
(4) Increase rent expense to new contract with Horizon:
Twelve months ended December 31, 1997: 3
Six months ended June 30, 1998: 2
(5) 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: 24
Six months ended June 30, 1998: 21
</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 R-D Pharmacy & Books, a sole proprietorship, in
the Form 8-K/A dated August 15, 1998 of HORIZON Pharmacies, Inc.
/s/ Howard & Waltrip, P.C.
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Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
October 27, 1998
