<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 21, 1999
---------------------------
HORIZON PHARMACIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 000-22403 75-2441557
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
531 W. MAIN STREET
SUITE 100 75020
DENISON, TEXAS (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (903) 465-2397
NOT APPLICABLE
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED.
Filed herewith as a part of this report are the following financial
statements for Jones Low Priced Drugs, Inc.: (i) audited Balance Sheet at
December 31, 1998 and audited Statement of Income, Statement of Shareholders'
Equity and Statement of Cash Flows for the year ended December 31, 1998, 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, 1999, and unaudited Statements of Income, unaudited Statements
of Shareholders' Equity, and unaudited Statements of Cash Flows each for the
nine months ended September 30, 1999 and September 30, 1998. These financial
statements are being filed in accordance with Item 7(a)(4).
(b) PRO FORMA FINANCIAL INFORMATION.
Filed herewith as a part of this report are HORIZON Pharmacies,
Inc.'s Pro Forma Combined Condensed Balance Sheet at September 30, 1999 and
Pro Forma Combined Condensed Statement of Income for the nine months ending
September 30, 1999 and the year ended December 31, 1998, and the Adjustments
to Pro Forma Financial Statements applicable thereto. Those pro forma
financial statements are being filed in accordance with Item 7(a)(4).
(c) EXHIBITS.
2.1 -- Purchase Agreement, dated October 21, 1999, by and
among HORIZON Pharmacies, Inc., Ricker H. Jones,
Linda K. Garrelts and Jones Low Priced Drugs, Inc.
(incorporated herein by reference to Exhibit 2.1
of Horizon's Form 8-K dated October 29, 1999, File
No. 000-22403)
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
HORIZON PHARMACIES, INC.
By: /s/ John N. Stogner
---------------------------------
John N. Stogner
Chief Financial Officer
Date: December 28, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
2.1 -- Purchase Agreement, dated October 21, 1999, by and
among HORIZON Pharmacies, Inc., Ricker H. Jones,
Linda K. Garrelts and Jones Low Priced Drugs, Inc.
(incorporated herein by reference to Exhibit 2.1
of Horizon's Form 8-K dated October 29, 1999, File
No. 000-22403)
<PAGE>
JONES LOW PRICED DRUGS, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
The Board of Directors and Shareholders December 2, 1999
Jones Low Priced Drugs, Inc.
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Jones Low Priced Drugs,
Inc. as of December 31, 1998, 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 Jones Low Priced Drugs, Inc.
at December 31, 1998, 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>
JONES LOW PRICED DRUGS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 73,373 $ 6,809
Accounts receivable-trade 687,389 659,598
Prepaid expenses 4,132 5,316
Federal income tax receivable 7,108 36,882
Inventories, lower of cost or market 731,994 851,379
---------- ----------
Total current assets 1,503,996 1,559,984
Fixed assets:
Furniture, fixtures & equipment 139,688 139,688
Vehicles 73,763 73,763
Leasehold Improvements 150,594 150,594
Accumulated depreciation (140,725) (159,402)
---------- ----------
Total net fixed assets 223,320 204,643
Other assets:
Cash surrender value of life insurance 55,751 55,751
Covenant not to compete, net 625 0
Leasehold interests, net 3,079 (1,634)
Independent Pharmacies Litigation Trust 22,527 22,527
---------- ----------
Total other assets 81,982 76,644
---------- ----------
TOTAL ASSETS $1,809,298 $1,841,271
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade $ 280,556 $ 280,203
Accrued expenses 19,176 41,764
Current portion of long term debt 35,185 15,564
---------- ----------
Total current liabilities 334,917 337,531
Long term liabilities:
Notes payable 83,182 19,781
Current portion of long term debt (35,185) (15,564)
---------- ----------
Total long term liabilities 47,997 4,217
Shareholders' equity:
Common stock 6,690 6,690
Retained earnings 1,419,694 1,492,833
---------- ----------
Total shareholders' equity 1,426,384 1,499,523
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,809,298 $1,841,271
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
JONES LOW PRICED DRUGS, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------------
1998 1998 1999
------------ ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Net sales $6,928,946 $2,864,538 $5,363,522
Cost of sales 4,489,157 1,891,317 3,456,854
---------- ---------- ----------
Gross profit 2,439,789 973,221 1,906,668
---------- ---------- ----------
Operating expenses:
Selling, general and administrative 2,031,272 730,779 1,504,889
Depreciation 18,947 8,851 18,677
---------- ---------- ----------
Total operating expenses 2,050,219 739,630 1,523,566
Income (loss) from operations 389,570 233,591 383,102
Other income (expense):
Other income (expense) 22,713 (17,806) 22,535
Interest expense (9,073) (4,181) (2,858)
---------- ---------- ----------
Total other income (expense) 13,640 (21,987) 19,677
---------- ---------- ----------
Net income $ 403,210 $ 211,604 $ 402,779
========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
JONES LOW PRICED DRUGS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------------
1998 1998 1999
------------ ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $1,016,484 $1,016,484 $1,419,694
Distributions 0 0 (329,640)
Net income 403,210 211,604 402,779
---------- ---------- ----------
Balance, End of period $1,419,694 $1,228,088 $1,492,833
========== ========== ==========
See accompanying notes.
</TABLE>
<PAGE>
JONES LOW PRICED DRUGS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -----------------------
1998 1998 1999
------------ --------- ----------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 403,210 $ 211,604 $ 402,779
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 18,947 8,851 18,677
Change in operating assets and liabilities:
Accounts receivable-trade (111,129) (21,327) 27,791
Inventories (133,785) (214,327) (114,048)
Prepaid expenses 1,041 (2,728) (1,184)
Federal income tax receivable (7,108) 0 (29,774)
Cash surrender value of life insurance (20,533) (10,558) 0
Independent Pharmacies Litigation Trust (22,527) 0 0
Accounts payable-trade 34,504 104,829 (353)
Accrued expenses (17,870) 2,031 22,589
--------- -------- ---------
Net cash provided (used) by operating activities 144,750 78,375 326,477
Investing activities:
Purchase of fixed assets (91,329) (73,763) 0
--------- -------- ---------
Net cash used by investing activities (91,329) (73,763) 0
Financing activities:
Distributions 0 (329,640)
Principal payments on notes payable (11,544) (14,517) (63,401)
--------- -------- ---------
Net cash (used) provided by financing activities (11,544) (14,517) (393,041)
Net increase (decrease) in cash 41,877 (9,905) (66,564)
Cash at beginning of period 31,496 31,496 73,373
--------- -------- ---------
Cash at end of period $ 73,373 $ 21,591 $ 6,809
========= ========= =========
Supplemental disclosure of interest paid $ 9,073 $ 4,181 $ 2,858
========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
JONES LOW PRICED DRUGS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Summary of significant accounting policies
Organization
JONES LOW PRICED DRUGS, INC., a Washington S-corporation (the "Company"),
owns and operates two retail pharmacies in Spokane and Deer Park, Washington.
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.
Concentrations of credit risk
Financial instruments which potentially subject the company to concentrations
of credit risk consist principally of accounts receivable.
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.
Income taxes
No historical provisions for income taxes were included in the Company's
financial statements as income taxes, if any, were payable by the
shareholders under provisions of subchapter S of the Internal Revenue Code.
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>
JONES LOW PRICED DRUGS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
2. Leases
The Company rents its two retail store facilities. Future minimum lease
payments are:
<TABLE>
<S> <C>
1999 $94,800
2000 75,900
2001 69,600
2002 69,600
2003 69,600
2004 69,600
2005 69,600
2006 69,600
2007 69,600
2008 69,600
-------
$727,500
========
</TABLE>
3. Profit Sharing Plan
Effective January 1, 1993, the Company adopted a Salary Reduction Simplified
Employee Pension Plan for certain full-time employees. Annual contributions
to the plan are made by the company, at their discretion. Eligible employees
are allocated a portion of the contribution based on relative compensation
and become vested over time. The total contribution for 1998 was $13,095.
4. Subsequent events
On October 21, 1999 the shareholders of the company sold all of their
outstanding shares of stock to HORIZON Pharmacies, Inc.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
Company Jone's Stock
Historical Drug Purchase Pro Forma
---------- ------ -------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,617 $ 7 $(1,650) $ (26)
Accounts receivable 11,062 660 11,722
Inventories 23,279 851 24,130
Other 523 42 565
------- ------ ------- -------
Total current assets 36,481 1,560 (1,650) 36,391
Debt issue costs, net 603 603
Property and equipment, net 5,140 205 5,345
Intangibles, net 14,233 76 (76) 16,160
1,927
------- ------ ------- -------
Total assets $56,457 $1,841 $ 201 $58,499
======= ====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,060 $ 280 $ 9,340
Accrued liabilities 1,777 42 1,819
Notes payable 4,100 $ 284 4,384
Current portion of long-term
obligations 2,491 2,491
------- ------ ------- -------
Total currrent liabilities 17,428 322 284 18,034
Long-term obligations 16,083 20 1,416 17,519
Deferred income taxes 0
Shareholder's equity:
Common stock 59 7 (7) 59
Additional paid-in capital 24,710 24,710
Retained earnings (accumulated deficit) (1,753) 1,492 (1,492) (1,753)
Treasury stock (70) (70)
------- ------ ------- -------
Total shareholders' equity 22,946 1,499 (1,499) 22,946
------- ------ ------- -------
Total liabilities and shareholders'
equity $56,457 $1,841 $ 201 $58,499
======= ====== ======= =======
</TABLE>
Note: The stock in the Spokane, Washington stores was acquired in October
1999 for a total consideration of $3,350 financed by a note payable of
$1,700 and cash of $1,650.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
-----------------
Jone's Pro Forma
Company Drug Adjustments Pro Forma
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $95,255 $5,364 $ 100,619
Cost and expenses:
Cost of sales and services 68,074 3,457 71,531
Depreciation and amortization 1,186 19 36 (1) 1,241
Selling, general and administrative 24,722 1,505 (77)(2) 26,150
------- ------ ---- ---------
Total costs and expenses 93,982 4,981 (41) 98,922
------- ------ ---- ---------
Income from operations 1,273 383 41 1,697
Interest expense and other, net 1,125 (20) 108 (1) 1,213
------- ------ ---- ---------
Income (loss) before income taxes 148 403 (67) 484
Provision for income taxes 0
------- ------ ---- ---------
Net income (loss) $ 148 $ 403 $(67) $ 484
======= ====== ==== =========
Basic earnings per share 0.08
=========
Shares used in computation of basic earnings per share 5,756,407
=========
Diluted earnings per share 0.08
=========
Shares used in computation of diluted earnings per share 5,888,073
=========
</TABLE>
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
-----------------
Jone's Pro Forma
Company Drug Adjustments Pro Forma
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $74,737 $6,929 $ 81,666
Cost and expenses:
Cost of sales and services 54,511 4,489 59,000
Depreciation and amortization 867 19 48 (1) 934
Selling, general and administrative 21,292 2,031 (102)(2) 23,221
------- ------ ---- ---------
Total costs and expenses 76,670 6,539 (54) 83,155
------- ------ ---- ---------
Income (loss) from operations (1,933) 390 54 (1,489)
Interest expense and other, net 606 (13) 145 (1) 738
------- ------ ---- ---------
Income (loss) before income taxes (2,539) 403 (91) (2,227)
Provision for income taxes (360) (360)
------- ------ ---- ---------
Net income (loss) $(2,179) $ 403 $(91) $ (1,867)
======= ====== ==== =========
Basic earnings (loss) per share (0.37)
=========
Shares used in computation of basic earnings per share 5,065,545
=========
Diluted earnings (loss) per share (0.37)
=========
Shares used in computation of diluted earnings per share 5,065,545
=========
</TABLE>
<PAGE>
Adjustments to Pro Forma Financial Statements (in thousands)
<TABLE>
<S> <C>
(1)
Provide for interest expense on debt issued:
Debt 1,700
Interest rate 8.50%
Twelve months ended December 31, 1998: 145
Nine months ended September 30, 1999: 108
Provide for amortization of goodwill incurred in acquisition: 1,927
40 years
Twelve months ended December 31, 1998: 48
Nine months ended September 30, 1999: 36
(2) Decrease previous Officer Salary to new contract with
Horizon:
Twelve months ended December 31, 1998: 102
Nine months ended September 30, 1999: 77
</TABLE>
