<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 6, 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 Borger Pharmacy, Inc. d/b/a Moore's Pharmacy and Moore's Home
Health Care, Inc.: (i) audited Combined Balance Sheet at August 31, 1997 and
audited Combined Statement of Income, Combined Statement of Shareholders'
Equity and Combined Statement of Cash Flows for the year ended August 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 ten 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
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:
<TABLE>
<CAPTION>
Exhibit No. Name of Exhibit
----------- ---------------
<S> <C>
23 Consent of Howard & Waltrip, P.C., Independent Auditors (filed
electronically herewith).
</TABLE>
<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 19, 1998 By: /s/ Ricky D. McCord
---------------------------
Ricky D. McCord, President
<PAGE>
BORGER PHARMACY, INC
MOORE HOME HEALTH CARE, INC
YEAR ENDED AUGUST 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
The Board of Directors and Shareholders October 9, 1998
Borger Pharmacy, Inc
Moore Home Health Care, Inc
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying combined balance sheet of Borger Pharmacy,
Inc and Moore Home Health Care, Inc as of August 31, 1997, and the related
combined statements 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 Borger Pharmacy,
Inc and Moore Home Health Care, Inc at August 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>
BORGER PHARMACY INC
MOORE HOME HEALTH CARE, INC
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31, JUNE 30,
1997 1998
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 142,798 $ 68,492
Accounts receivable-trade 223,958 257,932
Inventories, lower of cost or market 507,597 537,346
--------- ---------
Total current assets 874,353 863,770
Fixed assets:
Furniture and equipment 500,219 504,777
Automobiles 130,579 175,390
Accumulated depreciation (535,928) (554,190)
--------- ---------
Total net fixed assets 94,870 125,977
Other assets:
Intangibles 37,500 37,500
Accumulated amortization (37,500) (37,500)
--------- ---------
Total other assets 0 0
--------- ---------
TOTAL ASSETS $ 969,223 $ 989,747
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
<PAGE>
BORGER PHARMACY INC
MOORE HOME HEALTH CARE, INC
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31, JUNE 30,
1997 1998
---------- ----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable-trade $ 153,918 $ 148,249
Accrued expenses 17,506 22,884
Current portion-long term liabilities 63,240 60,588
--------- ---------
Total current liabilities 234,664 231,721
Long term liabilities
Notes payable 181,519 142,709
Current portion-long term liabilities (63,240) (60,588)
--------- ---------
Total long term liabilities 118,279 82,121
--------- ---------
Total liabilities 352,943 313,842
--------- ---------
Shareholders' equity
Capital stock 6,336 6,336
Retained earnings 750,243 809,868
Treasury stock (140,299) (140,299)
--------- ---------
Total shareholders' equity 616,280 675,905
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 969,223 $ 989,747
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
<PAGE>
BORGER PHARMACY INC
MOORE HOME HEALTH CARE, INC
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Ten Months Ended
Year Ended June 30,
August 31, -----------------------
1997 1997 1998
---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Net sales $3,696,230 $2,622,942 $2,864,802
Cost of sales 2,291,816 1,645,668 1,787,715
---------- ---------- ----------
Gross profit 1,404,414 977,274 1,077,087
---------- ---------- ----------
Operating expenses:
Selling, general and administrative 1,145,076 861,625 941,075
Depreciation and amortization 23,075 13,957 15,244
---------- ---------- ----------
Total operating expenses 1,168,151 875,582 956,319
---------- ---------- ----------
Income from operations 236,263 101,692 120,768
Other income (expense):
Other income 1,883 891 4,647
Interest expense (8,970) (3,237) (14,872)
---------- ---------- ----------
Total other income (expense) (7,087) (2,346) (10,225)
---------- ---------- ----------
Net income $ 229,176 $ 99,346 $ 110,543
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
<PAGE>
BORGER PHARMACY INC
MOORE HOME HEALTH CARE, INC
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED JUNE 30,
AUGUST 31, -----------------------
1997 1997 1998
---------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $ 621,330 $621,330 $750,243
Net income 229,176 99,346 110,543
Shareholder distributions (100,263) (86,500) (50,918)
--------- -------- --------
Balance, End of Period $ 750,243 $634,176 $809,868
--------- -------- --------
--------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
BORGER PHARMACY INC
MOORE HOME HEALTH CARE, INC
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED JUNE 30,
AUGUST 31, -------------------
1997 1997 1998
---------- ------- --------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 229,176 $ 99,346 $110,543
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 23,075 13,957 15,244
Change in operating assets and liabilities:
Accounts receivable-trade (45,808) (22,598) (33,974)
Inventories (40,097) (18,602) (29,749)
Accounts payable-trade (11,163) (5,896) (5,669)
Accrued expenses (1,063) 586 5,378
--------- -------- --------
Net cash provided by operating activities 154,120 66,793 61,773
Investing activities:
Purchase of fixed assets (73,052) (25,189) (46,351)
Financing activities:
Borrowings on notes payable 143,022 107,332 0
Payments on notes payable (59,621) (30,574) (38,810)
Shareholder distributions (100,263) (86,500) (50,918)
--------- -------- --------
Net cash used by financing activities (16,862) (9,742) (89,728)
Net increase (decrease) in cash 64,206 31,862 (74,306)
Cash at beginning of period 78,592 78,592 142,798
--------- -------- --------
Cash at end of period $142,798 $110,454 $ 68,492
--------- -------- --------
--------- -------- --------
Supplemental disclosure of interest paid $ 8,970 $ 3,237 $ 14,872
--------- -------- --------
--------- -------- --------
</TABLE>
See accompanying notes.
<PAGE>
BORGER PHARMACY, INC
MOORE HOME HEALTH CARE, INC
NOTES TO COMBINED FINANCIAL STATEMENTS
AUGUST 31, 1997
1. Summary of significant accounting policies
Organization
BORGER PHARMACY, INC and MOORE HOME HEALTH CARE, INC, two Texas corporations
(the "Company"), own and operate a retail pharmacy in Borger, Texas. Borger
Pharmacy, Inc has a fiscal year ended August 31, 1997 and Moore Home Health
Care, Inc has a fiscal year ended December 31, 1997. The two corporations
are owned by the same shareholder and the financial statements are combined
for reporting purposes.
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>
BORGER PHARMACY, INC
MOORE HOME HEALTH CARE, INC
NOTES TO COMBINED FINANCIAL STATEMENTS
AUGUST 31, 1997
2. Long term liabilities
<TABLE>
<S> <C>
Installment notes totaling approximately $ 181,519
$5,500 per month. Notes were paid
off or assumed at the time of purchase
by HORIZON Pharmacies, Inc. See note 4.
Less current portion of long term debt (63,240)
----------
Total long term liabilities $ 118,279
----------
----------
</TABLE>
3. Leases
The Company leases the retail store facilities on a month to month basis from
a related party. Rent expense for fiscal year ended August 31, 1997 was
$78,000.
4. Income Taxes
The Company, with the consent of its shareholders, has elected to have its
income taxed under Section 1372 of the Internal Revenue Code, which provides
that, in lieu of corporation income taxes, the shareholders are taxed on
their proportionate share of the company's taxable income. Therefore, no
provisions or liability for federal income taxes is reflected in these
statements.
5. Subsequent events
On August 6, 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 Borger
ASSETS Historical Store (Note) Pro Forma
---------- ------------ ---------
<S> <C> <C> <C>
Current assets:
Cash $6,517 ($800) $5,717
Accounts receivable 5,805 206 6,011
Inventories 11,504 567 12,071
Other 302 302
------- ----- -------
Total current assets 24,128 (27) 24,101
Property and equipment, net 2,731 69 2,800
Intangibles, net 5,036 901 5,937
------- ----- -------
Total assets $31,895 $943 $32,838
------- ----- -------
------- ----- -------
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 $170 1,224
------- ----- -------
Total currrent liabilities 6,031 170 6,201
Long-term obligations 5,345 573 5,918
Deferred income taxes 157 157
Shareholder's equity:
Common stock 54 54
Additional paid-in capital 19,608 200 19,808
Retained earnings 770 770
Treasury stock (70) (70)
------- ----- -------
Total shareholders' equity 20,362 200 20,562
------- ----- -------
Total liabilities and shareholders' equity $31,895 $943 $32,838
------- ----- -------
------- ----- -------
</TABLE>
Note: The Borger Store was acquired in August 1998 for a total consideration
of $1,743 financed by a note payable of $690, stock of $200, note assumed of
$53 and cash of $800 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
------------------
Borger Pro Forma
Company Store Adjustments Pro Forma
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,689 $1,647 $ 30,336
Cost and expenses:
Cost of sales and services 19,648 1,000 20,648
Depreciation and amortization 330 9 ($ 9) (1) 347
17 (1)
Selling, general and administrative 7,744 568 (12) (3) 8,279
(21) (4)
------- ------ ---- ---------
Total costs and expenses 27,722 1,577 (25) 29,274
------- ------ ---- ---------
Income from operations 967 70 25 1,062
Interest expense and other, net 153 12 (12) (2) 178
25 (2)
------- ------ ---- ---------
Income before income taxes 814 58 12 884
Provision for income taxes 322 32 (5) 354
------- ------ ---- ---------
Net income $ 492 $ 58 ($20) $ 530
------- ------ ---- ---------
------- ------ ---- ---------
Basic earnings per share $ 0.12
---------
---------
Shares used in computation of basic
earnings per share 4,603,183
---------
---------
Diluted earnings per share $ 0.11
---------
---------
Shares used in computation of diluted
earnings per share 4,876,120
---------
---------
</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
-----------------------
Borger Pro Forma
Company Store Adjustments Pro Forma
--------- ------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenues $28,430 $3,511 $31,941
Cost and expenses:
Cost of sales and services 19,132 2,138 21,270
Depreciation and amortization 330 19 ($19) (1) 364
34 (1)
Selling, general and administrative 7,943 1,189 (23) (3) 9,067
(42) (4)
------- ------ ----- ----------
Total costs and expenses 27,405 3,346 (50) 30,701
------- ------ ----- ----------
Income from operations 1,025 165 50 1,240
Interest expense and other, net 218 8 (8) (2) 268
50 (2)
------- ------ ----- ----------
Income before income taxes 807 157 8 972
Provision for income taxes 480 * 59 (5) 539
------- ------ ----- ----------
Net income $327 $157 ($51) $433
------- ------ ----- ----------
------- ------ ----- ----------
Basic earnings per share $0.16
----------
----------
Shares used in computation of basic earnings per share 2,785,554
----------
----------
Diluted earnings per share $0.15
----------
----------
Shares used in computation of diluted earnings per share 2,881,122
----------
----------
</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: $19
Six months ended June 30, 1998: 9
Provide depreciation and amortization on acquired bases in equipment
and intangibles:
Equipment - 7 year life - purchase price allocated 69
Intangibles - 6 to 40 year life - purchase price allocated 901
Twelve months ended December 31, 1997:
Depreciation of equipment 10
Amortization of intangibles 24
-------
Total 34
Six months ended June 30, 1998:
Depreciation of equipment 5
Amortization of intangibles 12
-------
Total 17
(2) Adjust interest expense:
Eliminate historical interest expense
Twelve months ended December 31, 1997: 8
Six months ended June 30, 1998: 12
Provide for interest expense on debt issued in acquisition:
Debt 690
Interest rate 8.00%
Twelve months ended December 31, 1997: 50
Six months ended June 30, 1998: 25
(3) Decrease previous Officer Salary to new contract with Horizon:
Twelve months ended December 31, 1997: 23
Six months ended June 30, 1998: 12
(4) Decrease in previous rent paid to new contract with Horizon:
Twelve months ended December 31, 1997: 42
Six months ended June 30, 1998: 21
(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: 59
Six months ended June 30, 1998: 32
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the use of our report on the financial statements for the year
ended August 31, 1997 of Borger Pharmacy, Inc. and Moore Home Health Care,
Inc., in the Form 8-K/A dated August 6, 1998 of HORIZON Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
October 19, 1998
