<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): November 8, 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.)
531 W. MAIN STREET
DENISON, TEXAS 75020
(Address of Principal Executive Offices) (Zip Code)
(903) 465-2397
(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 Holland's Drug Store, Inc.: (i) audited Balance Sheet at
December 31, 1997 and audited Statement of Income, Statement of Shareholders'
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
September 30, 1998, and unaudited Statements of Income, unaudited Statements
of Shareholders' Equity, and unaudited Statements of Cash Flows each for the
nine months ended September 30, 1998 and September 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
September 30, 1998 and Pro Forma Combined Condensed Statement of Income for
the nine months ending September 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: January 22, 1999 By: /s/ Ricky D. McCord
---------------------------
Ricky D. McCord, President
<PAGE>
HOLLAND'S DRUG STORE, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
The Board of Directors and Shareholders January 20, 1999
Holland's Drug Store, Inc.
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Holland's Drug Store, 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 Holland's Drug Store, 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>
HOLLAND'S DRUG STORE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
----------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash $ 222,496 $ 152,940
Accounts receivable-trade, net of allowance
for uncollectible accounts of $4,000 27,968 18,839
Prepaid expenses 8,623 5,576
Inventories, lower of cost or market 898,341 973,602
----------- -----------
Total current assets 1,157,428 1,150,957
Fixed assets:
Equipment 400,944 400,944
Furniture & fixtures 48,143 48,143
Vehicles 35,981 35,981
Leasehold Improvements 149,284 149,284
Accumulated depreciation (486,929) (498,337)
----------- -----------
Total net fixed assets 147,423 136,015
----------- -----------
TOTAL ASSETS $ 1,304,851 $ 1,286,972
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade $ 173,269 $ 198,675
Accrued expenses 67,261 24,986
Shareholder payable 7,800 0
----------- -----------
Total current liabilities 248,330 223,661
Shareholders' equity:
Common stock, $100 par value,
authorized 1,000 shares; issued 900 shares 90,000 90,000
Paid in capital 1,214 1,214
Retained earnings 965,307 972,097
----------- -----------
Total shareholders' equity 1,056,521 1,063,311
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,304,851 $ 1,286,972
=========== ===========
</TABLE>
See accompanying notes
<PAGE>
HOLLAND'S DRUG STORE, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended September 30,
December 31, --------------------------
1997 1997 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Net sales $ 6,003,035 $ 4,419,876 $ 5,112,532
Cost of sales 4,567,977 3,363,281 3,893,308
----------- ----------- -----------
Gross profit 1,435,058 1,056,595 1,219,224
----------- ----------- -----------
Operating expenses:
Selling, general and administrative 1,211,571 876,120 947,832
Depreciation 18,017 13,513 11,407
----------- ----------- -----------
Total operating expenses 1,229,588 889,633 959,239
Income from operations 205,470 166,962 259,985
Other income (expense):
Other income (expense) 3,778 1,997 1,817
Interest expense (979) (6) (12)
----------- ----------- -----------
Total other income 2,799 1,991 1,805
----------- ----------- -----------
Net income $ 208,269 $ 168,953 $ 261,790
=========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
HOLLAND'S DRUG STORE, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended September 30,
December 31, --------------------------
1997 1997 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Balance, Beginning of period $ 869,938 $ 869,938 $ 965,307
Distributions ($112,900) ($108,000) ($255,000)
Net income 208,269 168,953 261,790
--------- --------- ---------
Balance, End of Period $ 965,307 $ 930,891 $ 972,097
========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
HOLLAND'S DRUG STORE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended September 30,
December 31, ----------------------
1997 1997 1998
------------ --------- ---------
(Unaudited)
<S> <C> <C> <C>
Operating activities:
Net income $ 208,269 $ 168,953 $ 261,790
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 18,017 13,513 11,407
Change in operating assets and liabilities:
Accounts receivable-trade 42,856 42,425 9,129
Inventories (23,312) (46,950) (75,261)
Prepaid expenses 5,165 5,494 3,047
Accounts payable-trade (23,288) 12,590 25,405
Accrued expenses 14,539 (12,071) (42,273)
--------- --------- ---------
Net cash provided by operating activities 242,246 183,954 193,244
Investing activities:
Purchase of fixed assets (21,019) (19,765) 0
--------- --------- ---------
Net cash used by investing activities (21,019) (19,765) 0
Financing activities:
Distributions (112,900) (108,000) (255,000)
Principal payments on shareholder payable (39,068) (200) (7,800)
--------- --------- ---------
Net cash (used) provided by financing activities (151,968) (108,200) (262,800)
Net increase (decrease) in cash 69,259 55,989 (69,556)
Cash at beginning of period 153,237 153,237 222,496
--------- --------- ---------
Cash at end of period $ 222,496 $ 209,226 $ 152,940
========= ========= =========
Supplemental disclosure of interest paid $ 245 $ 1,208 $ 749
========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
HOLLAND'S DRUG STORE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Summary of significant accounting policies
Organization
HOLLAND'S DRUG STORE, INC., an Illinois S-corporation (the "Company"), owns
and operates retail pharmacies in Yorkville and Sandwich, Illinois and a
variety store in Yorkville, Illinois.
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.
Cash equivalents
Cash equivalents include money-market investments with maturities of three
months or less when purchased.
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.
<PAGE>
HOLLAND'S DRUG STORE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Summary of significant accounting policies (continued)
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 from a related party on a
month-to-month basis. Total rent for the year ended December 31, 1997 was
$106,146.
3. Subsequent events
On November 9, 1998 the Company sold a majority of its assets to HORIZON
Pharmacies, Inc. and ceased operations of the two drug stores.
<PAGE>
HORIZON PHARMACIES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Company Holland's
ASSETS Historical Drug Pro Forma
---------- ---- ---------
<S> <C> <C> <C>
Current assets:
Cash $ 2,796 ($ 450) $ 2,346
Accounts receivable 7,760 7,760
Inventories 17,164 1,000 18,164
Other 515 515
-------- -------- --------
Total current assets 28,235 550 28,785
Property and equipment, net 3,371 67 3,438
Intangibles, net 8,620 583 9,203
-------- -------- --------
Total assets $ 40,226 $ 1,200 $ 41,426
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,840 $ 6,840
Accrued liabilities 1,207 1,207
Notes payable 1,632 1,632
Current portion of long-term obligations 1,205 $ 154 1,359
-------- -------- --------
Total currrent liabilities 10,884 154 11,038
Long-term obligations 6,084 746 6,830
Deferred income taxes 156 156
Shareholder's equity:
Common stock 56 56
Additional paid-in capital 22,013 300 22,313
Retained earnings 1,103 1,103
Treasury stock (70) (70)
-------- -------- --------
Total shareholders' equity 23,102 300 23,402
-------- -------- --------
Total liabilities and shareholders' equity $ 40,226 $ 1,200 $ 41,426
======== ======== ========
</TABLE>
Note: The Holland's Drug Stores were acquired in November 1998 for a total
consideration of $1,649 financed by a note payable of $899, stock of $300
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
NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
-----------------
Holland's Pro Forma
Company Drug Adjustments Pro Forma
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $49,011 $5,113 ($156)(5) $53,968
Cost and expenses:
Cost of sales and services 33,370 3,893 (68)(5) 37,195
Depreciation and amortization 560 11 (11)(1) 581
21 (1)
Selling, general and administrative 13,476 948 29 (3) 14,398
(55)(5)
------- ------ ----- ---------
Total costs and expenses 47,406 4,852 (84) 52,174
------- ------ ----- ---------
Income from operations 1,605 261 (72) 1,794
Interest expense and other, net 246 (1) 49 (2) 294
------- ------ ----- ---------
Income before income taxes 1,359 262 (121) 1,500
Provision for income taxes 534 66 (4) 600
------- ------ ----- ---------
Net income $ 825 $ 262 ($187) $ 900
======= ====== ===== =========
Basic earnings per share -- -- -- 0.18
=========
Shares used in computation of basic earnings per share -- -- -- 4,929,961
=========
Diluted earnings per share -- -- -- 0.16
=========
Shares used in computation of diluted earnings per share -- -- -- 5,500,589
=========
</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
-----------------
Holland's Pro Forma
Company Drug Adjustments Pro Forma
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $28,430 $6,003 ($187)(5) $ 34,246
Cost and expenses:
Cost of sales and services 19,132 4,568 (87)(5) 23,613
Depreciation and amortization 330 18 (18)(1) 357
27 (1)
Selling, general and administrative 7,943 1,212 (39)(3) 9,040
(76)(5)
------ ------ ------ -----------
Total costs and expenses 27,405 5,798 (193) 33,010
------ ------ ------ -----------
Income from operations 1,025 205 6 1,236
Interest expense and other, net 218 (3) (1)(2) 279
65 (2)
Income before income taxes 807 208 (58) 957
Provision for income taxes 480* 54 534
------- ------ ------ -----------
Net income $ 327 $ 208 ($112) $ 423
======= ====== ====== ===========
Basic earnings per share -- -- -- 0.15
===========
Shares used in computation of basic earnings per share -- -- -- 2,810,946
===========
Diluted earnings per share -- -- -- 0.15
===========
Shares used in computation of diluted earnings per share -- -- -- 2,906,514
===========
</TABLE>
* Includes $170 deferred income taxes resulting from change in tax status.
<PAGE>
<TABLE>
<S> <C>
Adjustments to Pro Forma Financial Statements
(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: $ 18
Nine months ended September 30, 1998: 11
Provide depreciation and amortization on acquired bases in equipment and
intangibles:
Equipment - 7 year life - purchase price allocated 67
Intangibles - 6 to 40 year life - purchase price allocated 583
Twelve months ended December 31, 1997:
Depreciation of equipment 10
Amortization of intangibles 17
----
Total 27
Nine months ended September 30, 1998:
Depreciation of equipment 8
Amortization of intangibles 13
----
Total 21
(2) Adjust interest expense:
Eliminate historical interest expense
Twelve months ended December 31, 1997: 1
Nine months ended September 30, 1998: 0
Provide for interest expense on debt issued in acquisition:
Debt 899
Interest rate 8.00%
Twelve months ended December 31, 1997: 65
Nine months ended September 30, 1998: 49
(3) Adjust previous Officer Salary to new contract with Horizon:
Twelve months ended December 31, 1997: 39
Nine months ended September 30, 1998: 29
(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: 54
Nine months ended September 30, 1998: 66
(5) Adjust for unrelated operations not purchased by Horizon:
Twelve months ended December 31, 1997:
Net revenues 187
Cost of sales and services 87
Selling, general and administrative 76
Nine months ended September 30, 1998:
Net revenues 156
Cost of sales and services 68
Selling, general and administrative 55
</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 Holland's Drug Store, Inc., in the Form 8-K/A
dated November 8, 1998 of HORIZON Pharmacies, Inc.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
January 20, 1999
