-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NZQzb1VjDDytWPmxdNteVBwYYQXe8ssQDyhRq6+dUfQs8Ic0wOG+VBkLewB0fBWO 8+Zt4Pp9IZLad0GguGaLuA== 0001047469-97-004390.txt : 19971113 0001047469-97-004390.hdr.sgml : 19971113 ACCESSION NUMBER: 0001047469-97-004390 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970830 ITEM INFORMATION: FILED AS OF DATE: 19971113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORIZON PHARMACIES INC CENTRAL INDEX KEY: 0001036260 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 752441557 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22403 FILM NUMBER: 97716381 BUSINESS ADDRESS: STREET 1: 275 W PRINCETON DR CITY: PRINCETON STATE: TX ZIP: 75407 BUSINESS PHONE: 9727362424 8-K/A 1 FORM 8-K/A =============================================================================== 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 30, 1997 HORIZON PHARMACIES, INC. (Exact name of registrant as specified in its charter) TEXAS 333-25257 75-2441557 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 275 WEST PRINCETON DRIVE PRINCETON, TEXAS 75407 (Address of Principal Executive Offices) (Zip Code) (972) 736-2424 (Registrant's telephone number, including area code) =============================================================================== 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 McCosh Drug, Inc. ("McCosh"): (i) audited Balance Sheet at June 30, 1997 and audited Statement of Income, Statement of Shareholders' Equity and Statement of Cash Flows each for the year ended June 30, 1997, and the report of Howard & Waltrip, P.C., certified public accountants, thereon, together with the notes thereto; and (ii) unaudited Balance Sheet at June 30, 1996, unaudited Statements of Income for the year ended June 30, 1996 and the six months ended June 30, 1996 and 1997, unaudited Statement of Shareholders' Equity for the year ended June 30, 1996, and unaudited Statement of Cash Flows for the year ended June 30, 1996. 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, 1997 and Pro Forma Combined Condensed Statements of Income for the six months ended June 30, 1997 and the year ended December 31, 1996, and the notes 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. Exhibit No. Name of Exhibit ----------- --------------- 23 Consent of Howard & Waltrip, P.C., Independent Auditors (filed electronically herewith). -2- MCCOSH DRUG, INC. FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1997 WITH REPORT OF INDEPENDENT AUDITORS [LETTERHEAD] The Board of Directors and Shareholders November 7, 1997 McCosh Drug, Inc. REPORT OF INDEPENDENT AUDITORS ------------------------------ We have audited the accompanying balance sheet of McCosh Drug, Inc. as of June 30, 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 McCosh Drug, Inc. at June 30, 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 McCOSH DRUG, INC. BALANCE SHEET JUNE 30, JUNE 30, 1997 1996 ----------- ----------- ASSETS (Unaudited) Current assets Cash $ 25,027 $ 24,942 Accounts receivable-trade 49,754 57,991 Other current assets 189 7,691 Inventories, lower of cost or market 530,526 547,036 ----------- ----------- Total current assets 605,496 637,660 Fixed assets Equipment 18,637 18,637 Furniture and fixtures 216,375 216,375 Vehicles 4,750 4,750 Leasehold improvements 16,087 16,087 Accumulated depreciation (131,907) (115,509) ----------- ----------- Total net fixed assets 123,942 140,340 ----------- ----------- TOTAL ASSETS $ 729,438 $ 778,000 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable-trade $ 58,162 $ 51,422 Taxes payable 5,097 9,952 Notes payable-shareholder 30,721 59,300 Current portion-long term debt 31,335 24,000 ----------- ----------- Total current liabilities 125,315 144,674 Long term liabilities Notes payable-bank 96,158 153,592 Less current portion long term debt (31,335) (24,000) ----------- ----------- Total long term liabilities 64,823 129,592 ----------- ----------- Total liabilities 190,138 274,266 Shareholders' equity Capital stock 46,000 46,000 Paid in capital 224 224 Retained earnings 493,076 457,510 ----------- ----------- Total shareholders' equity 539,300 503,734 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 729,438 $ 778,000 ----------- ----------- ----------- ----------- See accompanying notes. McCOSH DRUG, INC. STATEMENTS OF INCOME YEAR ENDED YEAR ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, 1997 1996 1997 1996 ------------ ------------ ----------- ----------- (Unaudited) (Unaudited) Net sales $ 2,096,344 $ 1,981,244 $ 996,812 $ 906,922 Cost of sales 1,493,976 1,384,579 710,386 620,757 ------------ ------------ ----------- ----------- Gross profit 602,368 596,665 286,426 286,165 ------------ ------------ ----------- ----------- Operating expenses: Selling, general and administrative 534,017 548,764 253,925 251,005 Depreciation 16,398 16,398 8,199 8,199 ------------ ------------ ----------- ----------- Total operating expenses 550,415 565,162 262,124 259,204 Income from operations 51,953 31,503 24,302 26,961 Other income (expense): Other income 3,294 2,315 1,566 1,646 Interest expense (11,871) (18,790) (5,645) (10,190) ------------ ------------ ----------- ----------- Total other income (expense) (8,577) (16,475) (4,079) (8,544) ------------ ------------ ----------- ----------- Net income before income tax 43,376 15,028 20,223 18,417 Income tax expense 7,810 4,068 3,714 (2,564) ------------ ------------ ----------- ----------- Net income $ 35,566 $ 10,960 $ 16,509 $ 20,981 ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
See accompanying notes. McCOSH DRUG, INC. STATEMENT OF SHAREHOLDERS' EQUITY YEAR ENDED YEAR ENDED JUNE 30, JUNE 30, 1997 1996 ----------- ----------- (Unaudited) Balance, Beginning of period $ 457,511 $ 446,550 Net income 35,566 10,960 ----------- ----------- Balance, End of Period $ 493,076 $ 457,510 ----------- ----------- ----------- ----------- See accompanying notes. McCOSH DRUG, INC. STATEMENTS OF CASH FLOWS YEAR ENDED YEAR ENDED JUNE 30, JUNE 30, 1997 1996 ---------- ----------- (Unaudited) Operating activities: Net income $ 35,566 $ 10,960 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 16,398 16,398 Change in operating assets and liabilities: Accounts receivable-trade 8,237 9,254 Other current assets 7,503 25,470 Inventories 16,510 (27,898) Accounts payable-trade 6,740 (30,816) Taxes payable (4,855) 7,287 -------- -------- Net cash provided by operating activities 86,099 10,655 Financing activities: Borrowings on notes payable 30,000 0 Principal payments-notes payable-s/h (28,580) 0 Principal payments on notes payable (87,434) (21,407) -------- -------- Net cash used by financing activities (86,014) (21,407) Net increase (decrease) in cash 85 (10,752) Cash at beginning of period 24,942 35,694 -------- -------- Cash at end of period $ 25,027 $ 24,942 -------- -------- -------- -------- Supplemental disclosure of income taxes paid $ 3,424 $ 4,725 -------- -------- -------- -------- Supplemental disclosure of interest paid $ 11,871 $ 18,790 -------- -------- -------- -------- See accompanying notes. McCOSH DRUG, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 1. Summary of significant accounting policies Organization McCOSH DRUG, INC., a Nebraska corporation (the "Company"), owns and operates a retail pharmacy in Gering, Nebraska. 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. 2. Leases The Company leases the retail store facilities on a month to month basis from a related party. Rent expense for fiscal year ended June 30, 1997 was $52,500. McCOSH DRUG, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 3. Long term liabilities Installment note totaling approximately $ 96,158 $3,100 per month at 8.5% interest, maturing in March 2000. Less current portion of long term debt (31,335) -------- Total long term liabilities $ 64,823 -------- -------- 4. Subsequent events On August 30, 1997 the Company sold a majority of its assets to HORIZON Pharmacies, Inc. and ceased operations. PRO FORMA COMBINED FINANCIAL DATA The following unaudited Pro Forma Combined Condensed Statements of Income for the year ended December 31, 1996 and the six months ended June 30, 1997 reflect the historical results of operations of Horizon Pharmacies, Inc. (the "Company") adjusted to give effect to the acquisition of the Gering, Nebraska store (the "Gering Store") in August 1997 as though such store was acquired January 1, 1996. The Pro Forma Combined Condensed Balance Sheet as of June 30, 1997 reflects the historical financial position of the Company as of that date, adjusted to give pro forma effect to the acquisition of the Gering Store as if it had occurred as of June 30, 1997. The pro forma adjustments are based upon available information and assumptions that management of the Company believes are reasonable and fairly reflect all expenses associated with the acquired business. The Pro Forma Combined Financial Data do not purport to represent the financial position or results of operations which would have occurred had such transactions been consummated on the dates indicated or the Company's financial position or results of operations for any future date or period. These Pro Forma Combined Condensed Financial Statements and notes thereto should be read in conjunction with the historical financial statements and notes of the Company and the financial statements of the Gering Store. HORIZON PHARMACIES, INC. PRO FORMA COMBINED CONDENSED BALANCE SHEET JUNE 30, 1997 (IN THOUSANDS) ASSETS Company Gering Historical Store (Note) Pro Forma ----------------------------------- Current assets: Cash $ 229 $ 229 Accounts receivable 2,463 $ 47 2,510 Inventories 3,893 612 4,505 Prepaid expenses 41 4 45 ------------------------------ Total current assets 6,626 663 7,289 Deferred offering costs 345 345 Property and equipment, net 813 75 888 Intangibles, net 1,308 133 1,441 ------------------------------ Total assets $9,092 $871 $9,963 ------------------------------ ------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank overdraft $ 206 $250 $ 456 Accounts payable 2,918 2,918 Accrued liabilities 257 257 Notes payable 2,105 2,105 Current portion of long-term obligations 397 67 464 ------------------------------ Total current liabilities 5,883 317 6,200 Long-term obligations 1,291 554 1,845 Shareholders' equity: Common stock 11 11 Additional paid-in capital 1,760 1,760 Retained earnings 147 147 ------------------------------ Total shareholders' equity 1,918 1,918 ------------------------------ Total liabilities and shareholders' equity $9,092 $871 $9,963 ------------------------------ ------------------------------ - ------------------------- Note: The Gering Store was acquired in August 1997 for a total consideration of $871 financed by a note payable of $621 and cash of $250 and is included herein at the values allocated to assets acquired. HORIZON PHARMACIES, INC. PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME SIX MONTHS ENDED JUNE 30, 1997 (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) HISTORICAL ------------------ GERING PRO FORMA COMPANY STORE ADJUSTMENTS PRO FORMA ------------------------------- ---------- Net sales $11,060 $997 $12,057 Cost and expenses: Cost of sales 7,583 710 8,293 Depreciation and amortization 125 8 $ (8) (1) 136 11 (1) Selling, general and administrative 2,890 253 11 (3) 3,138 (11) (4) (5) (5) ---------------------------- ------------- Total costs and expenses 10,598 971 (2) 11,567 ---------------------------- ------------- Income from operations 462 26 2 490 Interest expense and other, net 144 6 (6) (2) 171 27 (2) -------------------------------------------- Income before income taxes 318 20 (19) 319 Pro forma provision for income taxes 111 4 (3) (6) 112 -------------------------------------------- Pro forma net income $ 207 $ 16 $(16) $ 207 -------------------------------------------- -------------------------------------------- Pro forma net income per share $ 0.18 --------- --------- Shares used in computation 1,142,424 --------- ---------
HORIZON PHARMACIES, INC. PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1996 (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) HISTORICAL ------------------ GERING PRO FORMA COMPANY STORE ADJUSTMENTS PRO FORMA ------------------------------- ---------- Net sales $13,136 $2,006 $15,142 Cost and expenses: Cost of sales 8,942 1,405 10,347 Depreciation and amortization 172 16 $(16) (1) 194 22 (1) Selling, general and administrative 3,471 527 21 (3) 3,985 (23) (4) (11) (5) ---------------------------- ------------- Total costs and expenses 12,585 1,948 (7) 14,526 ---------------------------- ------------- Income from operations 551 58 7 616 Interest expense and other, net 249 16 (16) (2) 302 53 (2) ---------------------------- ------------- Income before income taxes 302 42 (30) 314 Pro forma provision for income taxes 106 2 2 (6) 110 ---------------------------- ------------- Pro forma net income $ 196 $ 40 $(32) $ 204 -------------------------------------------- -------------------------------------------- Pro forma net income per share $ 0.19 --------- --------- Shares used in computation 1,074,246 --------- ---------
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: Twelve months ended December 31, 1996: $ 16,000 Six months ended June 30, 1997: 8,000 Provide depreciation and amortization on acquired bases in equipment and intangibles: Equipment - 7 year life - purchase price allocated 75,000 Intangibles - 5 to 20 year life - purchase price allocated 133,000 Twelve months ended December 31, 1996: Depreciation of equipment 11,000 Amortization of intangibles 11,000 -------- Total 22,000 Six months ended June 30, 1997: Depreciation of equipment 5,000 Amortization of intangibles 6,000 -------- Total 11,000 (2) Adjust interest expense: Eliminate historical interest expense: Twelve months ended December 31, 1996: 16,000 Six months ended June 30, 1997 6,000 Provide for interest expense on debt issued in acquisition: Debt 621,000 Interest Rate 9.00% Twelve months ended December 31, 1996: 53,000 Six months ended June 30, 1997: 27,000 (3) Increase previous officer salary to new contract with Horizon: Twelve months ended December 31, 1996: 21,000 Six months ended June 30, 1997: 11,000 (4) Reduce rent expense to new rental agreement: Twelve months ended December 31, 1996: 23,000 Six months ended June 30, 1997: 11,000 (5) Eliminate retirement expense: Twelve months ended December 31, 1996: 11,000 Six months ended June 30, 1997: 5,000 (6) Adjust pro forma income taxes (at a rate of 35%) for acquistion adjustments and historical tax rates: Twelve months ended December 31, 1996: 2,000 Six months ended June 30, 1997: (3,000) 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: November 12, 1997 By: /s/ Ricky D. McCord ---------------------------------- Ricky D. McCord, President -3- EX-23 2 EXHIBIT 23 Exhibit 23 Consent of Independent Auditors We consent to the use of our report on the financial statements for the year ended December 31, 1996 of McCosh Drug, Inc., dated November 7, 1997 in the Form 8-K/A for HORIZON Pharmacies, Inc. Howard & Waltrip, P.C. Certified Public Accountants Dallas, Texas -----END PRIVACY-ENHANCED MESSAGE-----