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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) JULY 20, 1999 (JUNE 1, 1999)
--------------------------------
D&K HEALTHCARE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-20348 43-1465483
(Commission File Number) (IRS Employer Identification No.)
8000 MARYLAND AVENUE, SUITE 920, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices) (Zip Code)
(314) 727-3485
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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D&K HEALTHCARE RESOURCES, INC.
FORM 8-K/A
D&K Healthcare Resources, Inc. (the "Company") hereby files Amendment No. 1
to its Form 8-K filed on June 14, 1999 in which the Company reported its
purchase of all of the outstanding capital stock of Jewett Drug Co. ("Jewett").
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Jewett Drug Co.
The Financial Statements of Jewett Drug Co., together with the related
Report of Independent Public Accountants, were previously filed with
the Company's Form 8-K on June 14, 1999.
(b) Pro Forma Financial Information
(i) Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1999.
(ii) Pro Forma Condensed Consolidated Statement of Operations for
the Year Ended June 30, 1998.
(iii) Pro Forma Condensed Consolidated Statement of Operations for
the Nine Months Ended March 31, 1999.
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UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Pro Forma Unaudited Condensed Consolidated Balance Sheet of the
Company as of March 31, 1999 and the Pro Forma Unaudited Condensed Consolidated
Statements of Operations of the Company for the year ended June 30, 1998 and
nine months ended March 31, 1999 have been prepared to give effect to the June
1, 1999 acquisition of all of Jewett. The acquisition of Jewett was consummated
pursuant to the terms and conditions of the Purchase Agreement dated June 1,
1999, whereby Jewett was acquired for an aggregate of $21.5 million in cash and
555,556 shares of the Company's common stock. The $21.5 million in cash utilized
was borrowed under the Company's revolving credit facility with Fleet Capital
Corporation. The acquisition is accounted for by the Company under the purchase
method of accounting.
The Pro Forma Unaudited Balance Sheet of the Company as of March 31,
1999 has been prepared to give effect to the Jewett acquisition as though the
transaction occurred on March 31, 1999. The Pro Forma Unaudited Condensed
Consolidated Statements of Operations of the Company for the year ended June 30,
1998 and the nine months ended March 31, 1999 have been prepared as though the
transaction occurred on July 1, 1997 and July 1, 1998, respectively.
Under the purchase method of accounting, allocations of the purchase
price for Jewett have been determined based upon preliminary appraisals and
other estimates of fair value and are subject to change. Differences between the
amounts included herein and the final allocations of purchase price are not
expected to have a material effect on the pro forma financial information. The
Unaudited Pro Forma Financial Information should be read in conjunction with the
audited historical financial statements of Jewett previously filed with the
Company's Form 8-K on June 14, 1999.
The Unaudited Pro Forma Financial Information does not purport to be
indicative of the results of operations or financial position of the Company had
this transaction been completed as of the assumed dates or which may be obtained
in the future.
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D&K HEALTHCARE RESOURCES, INC.
Pro Forma Condensed Consolidated Balance Sheet As of March 31, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
============================ ==================================
Purchase As
Assets D&K Jewett Adjustments Adjusted
------ ----------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Cash $ 456 $ 6,921 $ (6,647) (1) $ 730
Receivables 36,508 8,264 0 44,772
Notes receivable 0 109 0 109
Inventories 104,856 23,829 1,285 (2) 129,970
Other current assets 583 6 0 589
------------ -------------- --------------- ------------
Total current assets 142,403 39,129 (5,362) 176,170
------------ -------------- --------------- ------------
Net property and equipment 5,042 938 142 (3) 6,122
Investment in PBI 4,074 0 0 4,074
Deferred income taxes 2,842 0 0 2,842
Other assets 720 404 (200) (4) 924
Intangible assets 13,244 0 30,464 (5) 43,708
------------ -------------- --------------- ------------
Total assets $ 168,325 $ 40,471 $ 25,044 $ 233,840
============ ============== =============== ============
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $ 103,446 $ 23,744 $ 0 $ 127,190
Accrued expense 6,439 762 1,500 (6) 8,701
Customer deposit 0 4,000 0 4,000
Current maturities of long-term debt 280 12 0 292
Deferred income taxes 2,906 0 0 2,906
------------ -------------- --------------- ------------
Total current liabilities 113,071 28,518 1,500 143,089
------------ -------------- --------------- ------------
Revolving line of credit 33,137 0 21,500 (7) 54,637
Long-term debt 31 794 356 (3) 1,181
Other long-term liabilities 0 200 (200) (4) 0
------------ -------------- --------------- ------------
Total liabilities 146,239 29,512 23,156 198,907
------------ -------------- --------------- ------------
Stockholders' equity:
Common stock 39 169 (164)(8,9) 44
Paid-in capital 16,640 208 12,634 (8,9) 29,482
Retained earnings 5,407 10,582 (10,582) (9) 5,407
------------ -------------- --------------- ------------
Total stockholders' equity 22,086 10,959 1,888 34,933
------------ -------------- --------------- ------------
Total liabilities and stockholders' equity $ 168,325 $ 40,471 $ 25,044 $ 233,840
============ ============== =============== ============
</TABLE>
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
1. Represents adjustment to record certain distributions made to former
shareholder from cash.
2. Represents adjustment to record inventories at estimated fair market value.
3. Represents adjustment to record property and debt at its estimated fair
market value.
4. Adjustment represents the transfer of an asset and liability pertaining to
a life insurance policy from Jewett to an officer of Jewett, not assumed in
the purchase transaction.
5. Adjustment represents the excess of the purchase price over the fair
value of the net assets acquired.
6. Represents adjustment to accrue transaction fees and expenses of the
acquisition.
7. Represents borrowings under the Company's revolving credit facility for
the cash portion of the acquisition.
8. Represents the issuance of 555,556 shares of the Company's common stock
(par value $.01) to Jewett shareholder for the stock portion of the
acquisition at the closing price on June 1, 1999, of $23.13.
9. Represents the elimination of Jewett's stockholder's equity accounts.
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D&K HEALTHCARE RESOURCES, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended June 30, 1998
(In thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
================================= =====================================
Purchase As
D&K Jewett Adjustments Adjusted
---------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 612,427 $ 194,887 $ 0 $ 807,314
Cost of sales 582,765 188,176 0 770,941
----------------- --------------- --------------- ----------------
Gross profit 29,662 6,711 0 36,373
Depreciation and amortization 1,468 173 1,221 (1) 2,862
Operating expenses 19,639 3,263 0 22,902
----------------- --------------- --------------- ----------------
Income (loss) from operations 8,555 3,275 (1,221) 10,609
Other income (expense):
Interest expense, net (3,584) 58 (1,350) (2) (4,876)
Other, net 530 (117) 0 413
----------------- --------------- --------------- ----------------
(3,054) (59) (1,350) (4,463)
Income (loss) before income tax
provision 5,501 3,216 (2,571) 6,146
Income tax provision 2,174 0 (255) (3) 2,429
----------------- --------------- --------------- ----------------
Net income (loss) $ 3,327 $ 3,216 $ (2,826) $ 3,717
================= =============== =============== ================
Basic earnings per common share: $ 0.99 $ 0.97
Diluted earnings per share $ 0.90 $ 0.88
Basic common shares outstanding 3,345,261 555,556 (4) 3,900,817
Diluted shares outstanding 3,766,352 555,556 (4) 4,321,908
</TABLE>
1. Primarily represents the 25 year amortization of the excess purchase
price over the fair value of net assets acquired of $30,464.
2. Represents pro forma interest expense assuming the transaction was
complete at the beginning of the period (7/1/97). Pro forma interest
expense consists of the interest on the Company's revolving credit
facility for the cash portion of the acquisition. The impact of each
one-eighth change in the interest rate would be equal to approximately
$27 of interest expense.
3. Represents a tax provision at the Company's effective rate of 39.5%.
Jewett was a Subchapter S corporation and, as such, did not record a
tax provision.
4. Represents shares of common stock issued to Jewett shareholder.
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D&K HEALTHCARE RESOURCES, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended March 31, 1999
(In thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
=============================== ====================================
Purchase As
D&K Jewett Adjustments Adjusted
-------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 591,703 $ 205,994 $ 0 $ 797,697
Cost of sales 561,318 200,389 0 761,707
-------------- --------------- ---------------- --------------
Gross profit 30,385 5,605 0 35,990
Depreciation and amortization 1,149 139 916 (1) 2,204
Operating expenses 18,512 2,497 0 21,009
-------------- --------------- ---------------- --------------
Income (loss) from operations 10,724 2,969 (916) 12,777
Other income (expense):
Interest expense, net (3,602) 177 (1,012) (2) (4,437)
Other, net 363 (33) 0 330
-------------- --------------- ---------------- --------------
(3,239) 144 (1,012) (4,107)
-------------- --------------- ---------------- --------------
Income (loss) before income tax
provision 7,485 3,113 (1,928) 8,670
Income tax provision 2,919 0 (462) (3) 3,381
-------------- --------------- ---------------- --------------
Net income (loss) $ 4,566 $ 3,113 $ (2,390) $ 5,289
============== =============== ================ ==============
Basic earnings per common share: $ 1.21 $ 1.23
Diluted earnings per share $ 1.11 $ 1.13
Basic common shares outstanding 3,785,259 555,556 (4) 4,340,815
Diluted shares outstanding 4,162,421 555,556 (4) 4,717,977
</TABLE>
1. Primarily represents the 25 year amortization of the excess purchase
price over the fair value of net assets acquired of $30,464.
2. Represents pro forma interest expense assuming the transaction was
complete at the beginning of the period (7/1/98). Pro forma interest
expense consists of the interest on the Company's revolving credit
facility for the cash portion of the acquisition. The impact of each
one-eighth change in the interest rate would be equal to approximately
$27 of interest expense.
3. Represents a tax provision at the Company's effective rate of 39%.
Jewett was a Subchapter S corporation and, as such, did not record a
tax provision.
4. Represents shares of common stock issued to Jewett shareholder.
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SIGNATURE
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 hereunto duly authorized.
D & K HEALTHCARE RESOURCES, INC.
Dated: July 19, 1999 By: /s/ LEONARD R. BENJAMIN
---------------------------------
Leonard R. Benjamin
Vice President, General Counsel
and Secretary
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