<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ------------ to --------------.
Commission file number 0-20348.
A. Full title of the plan and the address of the Plan, if different
from that of the issuer named below:
D & K Healthcare Resources, Inc. 401 (k) Profit Sharing Plan and
Trust
B. Name of the issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
D & K Healthcare Resources, Inc.
8000 Maryland Avenue, Suite 920
St. Louis, MO 63105
<PAGE> 2
D & K HEALTHCARE RESOURCES, INC.
FORM 11-K
REQUIRED INFORMATION
(a) Financial Statements. Filed as part of this Report on Form 11-K
--------------------
are the financial statements and the schedules thereto of the D & K
Healthcare Resources, Inc. 401 (k) Profit Sharing Plan and Trust as required
by Form 11-K together with the report thereon of Arthur Andersen LLP,
independent public accountants, dated June 28, 2000.
2
(b) Exhibits.
Exhibit 1 - Consent of Independent Public Accountants
---------
<PAGE> 3
D & K HEALTHCARE RESOURCES, INC.
FORM 11-K
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Trustee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
D & K HEALTHCARE RESOURCES, INC. 401 (K)
PROFIT SHARING PLAN AND TRUST
Date: June 28, 2000 By: /s/ Martin D. Wilson
----------------------------------------
Martin D. Wilson, Trustee
<PAGE> 4
D&K HEALTHCARE RESOURCES, INC.
401(K) PROFIT SHARING PLAN AND TRUST
Financial Statements and Schedules
As of December 31, 1999 and 1998
Together With Auditors' Report
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustee of the D&K Healthcare Resources, Inc.
401(k) Profit Sharing Plan and Trust:
We have audited the accompanying statements of net assets available for
benefits of the D&K Healthcare Resources, Inc. 401(k) Profit Sharing Plan and
Trust (the Plan) as of December 31, 1999 and 1998, and the related statement
of changes in net assets available for benefits for the year ended December
31, 1999. These financial statements and the schedules referred to below are
the responsibility of the Plan Administrator. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as
of December 31, 1999 and 1998, and the changes in net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes, reportable transactions and nonexempt
transactions are presented for purposes of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The information presented in the schedule of assets held for investment
purposes and schedule of reportable transactions does not disclose the
historical cost of certain investments. Disclosure of this information is
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
May 26, 2000
<PAGE> 6
<TABLE>
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
-----------------------------------------------
DECEMBER 31, 1999 AND 1998
--------------------------
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS:
Investments, at fair value $ 2,931,551 $ 2,188,970
----------- -----------
Receivables-
Participant contributions 36,754 58,135
Employer contributions 74,526 66,332
----------- -----------
Total receivables 111,280 124,467
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 3,042,831 $ 2,313,437
=========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 7
<TABLE>
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
<S> <C>
ADDITIONS:
Participant contributions $ 671,388
Employer contributions 74,526
Interest income 3,356
Net appreciation in the fair value of investments 402,908
-----------
Total additions 1,152,178
-----------
DEDUCTIONS:
Benefits paid to participants 421,683
Administrative expenses 1,101
-----------
Total deductions 422,784
-----------
Change in net assets available for benefits 729,394
NET ASSETS AVAILABLE FOR BENEFITS, December 31, 1998 2,313,437
-----------
NET ASSETS AVAILABLE FOR BENEFITS, December 31, 1999 $ 3,042,831
===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> 8
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
DECEMBER 31, 1999 AND 1998
--------------------------
1. DESCRIPTION OF THE PLAN:
------------------------
The following description of the D&K Healthcare Resources, Inc. 401(k) Profit
Sharing Plan and Trust (the Plan) is provided for financial statement
purposes only. Participants should refer to the Plan document for more
complete information.
General
-------
The Plan is a defined contribution plan established by D&K Healthcare
Resources, Inc. (D&K or the Company) under the provisions of Section 401(a)
of the Internal Revenue Code (IRC), which includes a qualified cash or
deferred arrangement as described in Section 401(k) of the IRC, for the
benefit of eligible employees of the Company. The Plan was established
January 1, 1995, to offer the employees of the Company a means of saving
funds, on a pretax basis, for retirement. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974.
Participation is voluntary.
Full-time employees are eligible to participate in the Plan upon reaching age
21 and completing 30 days of regular service.
The Plan is administered by executives of D&K, with additional administrative
duties performed by Pension Associates of Wausau, Inc., a third-party plan
administrator. The assets of the Plan are held in a trust by Nationwide
Insurance Company (Nationwide).
Contributions
-------------
Plan participants may contribute up to 20% of their annual compensation,
subject to certain limitations. Contributions may be made prior to federal
and certain other income taxes pursuant to Section 401(k) of the IRC.
The Company contribution is discretionary and is currently equivalent to 25%
of employees' contributions up to a maximum contribution based on 6% of
eligible compensation and is invested in the D&K Common Stock Fund. In March
2000, the Company contribution to the Plan for 1999 was made in the form of
5,250 shares of D&K Healthcare Resources, Inc. common stock valued at
$74,526.
Investments
-----------
Participants direct contributions into any of seven investment funds.
Members may change their investment elections quarterly. A description of
each investment fund is provided below:
Dreyfus A Bonds Plus
--------------------
For investment of contributions in a fund which invests principally in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities, and major U.S. banking institutions. At least 80% of
the fund's portfolio is invested in bonds rated at least A by Moody's
Investor Services, Inc. or Standard and Poor's Corporation. The fund
seeks the maximum amount of current income to the extent consistent with
the preservation of capital and maintenance of liquidity.
<PAGE> 9
- 2 -
Fidelity Asset Manager
----------------------
For investment of contributions in a fund which diversifies across stocks,
bonds and short-term and money market instruments, both in the United
States and abroad. The fund has a neutral mix, which represents the way
the fund's investments will generally be allocated over the long term.
This mix will vary over short-term periods as fund management gradually
adjusts the fund's holdings, within defined ranges, based on the current
outlook for the different markets. Neutral mix: stocks 50% (can range
from 30-70%), bonds 40% (can range from 20-60%), and short term/money
market 10% (can range 0-50%). The fund seeks high total return with
reduced risk over the long term.
Neuberger & Berman Guardian Fund
--------------------------------
For investment of contributions in a fund that invests in stocks of
established, high quality companies considered to be undervalued in
comparison to stocks of similar companies. The fund seeks capital
appreciation and current income.
American Century: Twentieth Century Ultra
------------------------------------------
For investment of contributions in a fund that invests in the stocks of
companies that demonstrate accelerating, sustainable earnings growth. The
fund's management team evaluates companies based on earnings and revenue
trends. The fund intends to remain fully invested in the stock market at
all times. The fund seeks capital appreciation over time by investing
primarily in the common stocks of medium- and large-sized companies that
exhibit accelerating growth.
Oppenheimer Global Fund A
-------------------------
For investment of contributions in a fund that invests in foreign and U.S.
markets using a disciplined theme approach. The fund identifies key
worldwide trends in order to focus on areas that the fund management
believes offers some of the best opportunities for long-term growth.
These trends fall into three categories of change: technological change,
demographic/geopolitical change and changing resource need. The fund
utilizes techniques such as hedging, borrowing money for investment in
securities and short-term trading. The fund seeks capital appreciation and
does not consider current income as an objective.
Warburg Emerging Growth Fund
----------------------------
For investment of contributions in a fund that invests in a portfolio of
equity securities of domestic companies. The fund ordinarily will invest
at least 65% of its total assets in common stocks or warrants of emerging
growth companies that represent attractive opportunities for maximum
capital appreciation. Emerging growth companies are small- or
medium-sized companies that have passed their start-up phase and that show
positive earnings and prospects of achieving significant profits and gains
in a relatively short period of time. Emerging growth companies generally
stand to benefit from new products or services, technological developments
or changes in management and other factors and include smaller companies
experiencing unusual developments affecting their market value. The
Emerging Growth Fund seeks maximum capital appreciation.
Virtuoso Guaranteed Interest Fund
---------------------------------
For investment of contributions in a guaranteed return contract with a
quarterly interest rate that is indexed to the Treasury Note yield. The
interest earned in this contract can change quarterly if the yield on the
Treasury Note index changes. The assets invested in this contract are a
part of the general assets of Nationwide. In 1999, the return on this
fund was 4.1%.
<PAGE> 10
- 3 -
D&K Common Stock Fund
---------------------
Company contributions to this fund are invested in the common stock of D&K.
The fund may have cash on hand to meet current needs. Accounts are valued
as of the last day of the plan year. This fund is not an investment
option for employee contributions.
Vesting
-------
Participants are always 100% vested in the value of their contributions and
the earnings thereon. Vesting of company contributions and the earnings
thereon is determined based on participants' years of vesting service.
Vesting service is any calendar year in which a participant was credited with
one thousand hours. The vesting schedule is as follows:
<TABLE>
<CAPTION>
Percentage
Years of Vesting Service Vested
---------------------------- --------------
<S> <C>
0-1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
Death, disability or retirement 100%
</TABLE>
Payments of Benefits
--------------------
Amounts in a participant's account and the vested portion of a participant's
employer contributions are distributed upon retirement, death, disability or
other termination of employment. Distributions from the D&K Common Stock
Fund are made in cash. Forfeitures of the nonvested amounts are used to
reduce company discretionary contributions.
Loans to Employees
------------------
Participants of the Plan may borrow funds from their accounts up to $50,000
or 50% of their vested balances, whichever is less. Loans are repayable
through payroll deductions. The interest rate is determined by the prime
rate on the day the loan is processed. At December 31, 1999, the range is
8.25-9.67%. The outstanding balance of loans to participants was $31,687 and
$14,605 as of December 31, 1999 and 1998, respectively.
Plan Member Accounts
--------------------
Individual accounts are maintained for each plan participant to reflect the
plan participant's share of the Plan's income, the Company's contribution and
the plan participant's contribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Definition of the Plan Year
---------------------------
The Plan year is a calendar year ending December 31.
Basis of Presentation
---------------------
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting.
<PAGE> 11
- 4 -
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 reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported additions to and deductions from net assets available for
benefits during the reporting period. Actual results could differ from those
estimates.
Administrative Expenses
-----------------------
The Company pays substantially all administrative expenses of the Plan.
Valuation of Investments
------------------------
Investments in mutual funds and D&K stock are valued using publicly stated
quotes as of the close of business on the last day of the plan year. All
investments of the Plan are listed at unit value, as determined by
Nationwide. Unit value is calculated as the appreciation/depreciation of
each mutual fund based on an original index of $1.00 per unit in relation to
the net asset value per each fund's market listing.
The Plan's guaranteed interest fund is included in the financial statements
at December 31, 1999, at contract value, which approximates market value as
reported to the Plan by Nationwide. Contract value represents the deposits
less withdrawals made under the contract plus interest earned through the end
of the plan year. The guaranteed interest fund has an average yield
approximating the guaranteed rate of return. The guaranteed interest fund
has a quarterly interest guarantee which is based on the five-year U.S.
Treasury Note yield. The interest earned in this fund can change quarterly
if the yield on the five-year U.S. Treasury Note index changes. Interest is
credited to each participant's account.
Newly Adopted Accounting Pronouncement
--------------------------------------
The Accounting Standards Executive Committee issued Statement of Position
(SOP) 99-3 Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters. This SOP eliminates the
requirement for a defined contribution plan to disclose participant-directed
investment funds, to disclose the total number of units and the net asset
value per unit during the period and at the end of the period if the plan
assigns units to participants, and to disclose benefit-responsive investment
contracts by investment fund option. The SOP also requires a defined
contribution plan to identify nonparticipant-directed investments that
represent 5% or more of net assets available for benefits. The SOP was
adopted for the 1999 financial statements. The 1998 financial statements
have been reclassified accordingly.
3. INVESTMENTS:
------------
The following presents investments that represent 5% or more of the Plan's
net assets:
<TABLE>
<CAPTION>
December 31
--------------------------------
1999 1998
--------------- ------------
<S> <C> <C>
Fidelity Asset Manager $ 318,526 $127,671
Neuberger & Berman Guardian Fund 424,182 416,078
American Century: Twentieth Century Ultra 1,090,832 662,138
Oppenheimer Global Fund 513,683 344,893
D&K Common Stock Fund 261,016<F*> 465,580<F*>
<FN>
<F*>Nonparticipant-directed.
</TABLE>
<PAGE> 12
- 5 -
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in
value as follows:
<TABLE>
<CAPTION>
Gains/
(Losses)
---------
<S> <C>
Mutual Funds $ 621,970
Common Stock (219,062)
---------
$ 402,908
=========
</TABLE>
4. NONPARTICIPANT-DIRECTED INVESTMENTS:
------------------------------------
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is
as follows:
<TABLE>
<CAPTION>
December 31
--------------------------
1999 1998
-------- --------
<S> <C> <C>
Net assets:
Common stock $335,840 $531,912
<CAPTION>
Year Ended
December 31,
1999
------------
<S> <C>
Changes in net assets:
Contributions $ 74,526
Net depreciation (219,062)
Participation termination and
withdrawal payments (51,536)
---------
$(196,072)
=========
</TABLE>
5. TAX STATUS:
-----------
The Plan has not obtained a determination letter from the IRS, however, the
Plan administrator and the Plan's counsel believe that the Plan is currently
being operated in compliance with the applicable requirements of the IRC and
was tax exempt through the year ended December 31, 1999.
6. DISTRIBUTION OF ASSETS UPON TERMINATION OF THE PLAN:
----------------------------------------------------
D&K reserves the right to terminate the Plan, in whole or in part, at any
time. In the event of termination, all amounts credited to the participant
accounts will become 100% vested. If the Plan is terminated at any time or
contributions are completely discontinued and D&K determines that the Trust
shall be terminated, all accounts shall be revalued as if the termination
date were a valuation date and such accounts shall be distributed to
participants. If the Plan is terminated or contributions completely
discontinued but D&K determines that the Trust shall be continued pursuant to
the terms of the trust agreement, no further contributions shall be made by
participants or the Company, but the trust shall be administered as though
the Plan were otherwise in effect.
7. RECONCILIATION TO FORM 5500:
----------------------------
For the year ended December 31, 1999, the Plan had approximately $43,921 of
pending distributions to participants who elected either a withdrawal or
final payment of their benefits from the Plan. These amounts are recorded as
a liability in the Plan's Form 5500; however, these amounts are not recorded
as a liability in accordance with generally accepted accounting principles.
<PAGE> 13
- 6 -
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by D&K for the year ended
December 31, 1999:
<TABLE>
<CAPTION>
Participant
Termination
Benefits and Net Assets
Payable to Withdrawal Available for
Participants Payments Benefits
------------ ----------- -------------
<S> <C> <C> <C>
Per financial statements $ -- $ 421,683 $ 3,042,831
Accrued benefit payments - December 31, 1999 43,921 43,921 (43,921)
Accrued benefit payments - December 31, 1998 -- (27,984) --
-------- --------- -----------
Per Form 5500 $ 43,921 $ 437,620 $ 2,998,910
======== ========= ===========
</TABLE>
8. MERGER OF TYKON PLAN:
---------------------
The Tykon, Incorporated Simplified 401(k) Plan was established on December
12, 1995. Effective March 25, 1999, this plan was merged with the D&K
Healthcare Resources, Inc. 401(k) Profit Sharing Plan. All participants were
fully vested in the assets comprising their account balance prior to the
merger.
9. SUBSEQUENT EVENT:
-----------------
Effective January 1, 2000, the Plan was amended. Participants will now be
vested 25% after two years of service, 50% after three years, 75% after four
years and 100% after five years of service. Participants will share in the
Employer Match Contributions provided they were employed on the last day of
the plan year quarter for which the matching contribution is made.
Participants can also change the investment direction on the first day of
each plan year quarter and May 1, 2000, and there will be three new
investment options for the 2000 Plan Year. The employer match percentage
increased to 50%, and the Plan will pay all administrative expenses.
<PAGE> 14
<TABLE>
SCHEDULE I
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
SCHEDULE H, ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
---------------------------------------------------------------------
DECEMBER 31, 1999
-----------------
<CAPTION>
Fair
Cost <Fa> Value
------------- ----------
<S> <C> <C>
Dreyfus A Bond Plus $ <Fa> $ 67,146
Fidelity Asset Manager <Fa> 318,526
Neuberger & Berman Guardian <Fa> 424,182
Twentieth Century Ultra <Fa> 1,090,832
Oppenheimer Global Fund A <Fa> 513,683
Warburg Emerging Growth <Fa> 139,758
Virtuoso Guaranteed Interest<F*> <Fa> 84,721
Participant loans, 8.25% to 9.67% 31,687 31,687
D&K Common Stock<F*> 172,703 261,016
----------
$2,931,551
==========
<FN>
<Fa> The Plan's record keeper does not provide historical cost information.
<F*>Also a party-in-interest.
The accompanying notes are an integral part of this schedule.
</TABLE>
<PAGE> 15
<TABLE>
SCHEDULE II
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
SCHEDULE H, ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS <Fa>
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
<CAPTION>
Purchases Sales
------------------- -----------------------------------------------
No. of No. of Sales Gain/
Trans. Cost Trans. Cost<Fb> Price (Loss)<Fb>
------ -------- ------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Neuberger & Berman Guardian 20 $123,476 11 <Fb> $126,559 <Fb>
Twentieth Century Ultra 23 237,930 15 <Fb> 106,193 <Fb>
<FN>
<Fa> Represents transactions or a series of transactions in excess of 5% of
the fair value of plan assets at the beginning of the year.
<Fb> The Plan's record keeper does not provide historical cost information.
The accompanying notes are an integral part of this schedule.
</TABLE>
<PAGE> 16
<TABLE>
SCHEDULE III
D&K HEALTHCARE RESOURCES, INC.
------------------------------
401(k) PROFIT SHARING PLAN AND TRUST
------------------------------------
SCHEDULE H, ITEM 4d - SCHEDULE OF NONEXEMPT TRANSACTIONS
--------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
<CAPTION>
Relationship to
Plan, Employer Description of Transaction, Including Interest
Identity of Or Other Maturity Date, Rate of Interest, Collateral Amount Incurred
Party Involved Party-in-Interest and Par or Maturity Value Loaned on Loan
-------------- ----------------- ------------------------------------------- ------ --------
<C> <C> <S> <C> <C>
D&K Healthcare Sponsor Lending of monies from the Plan to the employer
Resources, Inc. (contributions not timely remitted to the Plan),
as follows:
Deemed loan dated February 22, 1999, maturity
February 24, 1999, with interest at 6.0% per annum $39,133 $ 19
Deemed loan dated March 22, 1999, maturity May 6, 1999,
with interest at 6.0% per annum 34,513 187
Deemed loan dated April 24, 1999, maturity May 6, 1999,
with interest at 6.0% per annum 33,916 56
Deemed loan dated May 22, 1999, maturity June 14, 1999,
with interest at 6.0% per annum 26,886 80
Deemed loan dated May 22, 1999, maturing June 16, 1999,
with interest at 6.0% per annum 18,876 62
The accompanying notes are an integral part of this schedule.
</TABLE>
<PAGE> 17
EXHIBIT 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated May 26, 2000, included in this Form 11-K for the year ended
December 31, 1999, into D&K Healthcare Resources, Inc.'s previously filed
Registration Statement on Form S-8 (No. 333-24263).
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
June 28, 2000
