-----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, Co0RHzGGRTZmv1u9dmhbTy3Q4kdH6LBUqgejLSWnZn3gbzH8lvsfE18ZCHAJwVYa 6k/YjtIPoSjl/C1jqs+Txg== 0001047469-99-017450.txt : 19990503 0001047469-99-017450.hdr.sgml : 19990503 ACCESSION NUMBER: 0001047469-99-017450 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990430 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 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-22403 FILM NUMBER: 99607372 BUSINESS ADDRESS: STREET 1: 531 W MAIN STREET CITY: DENISON STATE: TX ZIP: 75020 BUSINESS PHONE: 9034652397 MAIL ADDRESS: STREET 1: 531 W MAIN STREET CITY: DENISON STATE: TX ZIP: 75020 10-K/A 1 FORM 10K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-K/A (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998, or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-22403 HORIZON PHARMACIES, INC. (Exact name of registrant as specified in the San Juan Basin Royalty Trust Indenture) DELAWARE 75-2441557 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 531 W. MAIN 75020 DENISON, TEXAS (Zip Code) (Address of principal executive officers) (903) 465-2397 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED - ------------------------------------ ------------------------------------ Common Stock, $.01 par value American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ There were 5,669,503 shares of HORIZON Pharmacies, Inc. common stock, par value $.01 per share, outstanding as of April 12, 1999. The aggregate market value of such common stock held by non-affiliates (based on the closing transaction price on the American Stock Exchange) was approximately $25,426,159. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information regarding the directors and executive officers of the company:
NAME AGE POSITION --- -------- Ricky D. McCord, R.Ph. 44 Chairman of the Board of Directors, President and Chief Executive Officer Robert D. Mueller 41 Chief Operating Officer and Director Charlie K. Herr, R.Ph. 59 Southern Regional Manager and Director Sy S. Shahid 48 Executive Vice President and Director John N. Stogner 55 Chief Financial Officer and Director Michael F. Loy 48 Director Philip H. Yeilding 39 Director
- -------------------- RICKY D. MCCORD has served as HORIZON's President and Chief Executive Officer since the company's inception. Mr. McCord, who has been a licensed pharmacist in the State of Texas since 1977, was employed by True Quality Pharmacies, Inc., from 1977 through 1993. During such time, Mr. McCord served as pharmacist and store manager from 1977 to 1981, as district manager from 1982 to 1992, and as a director from 1980 through 1990. Mr. McCord was first elected to the Board of Directors in 1992, and his term expires in 2000. ROBERT D. MUELLER has served as HORIZON's Western Regional Manager since inception, and has served as Chief Operating Officer since March 1999. Mr. Mueller has been a practicing pharmacist since 1980, and is licensed in New Mexico, Oklahoma and Texas. Mr. Mueller served as Pharmacy Manager of True Quality Pharmacies, Inc. from August 1983 through August 1996, and as Staff Pharmacist for Eastland Memorial Hospital from September 1994 to August 1996. Mr. Mueller was first elected to the Board of Directors in 1997, and his term expires in 1999. CHARLIE K. HERR has served as HORIZON's Southern Regional Manager since the company's inception. Mr. Herr has been a practicing pharmacist since 1963, serving as Pharmacist in Charge for True Quality Pharmacies, Inc. from July 1969 February 1994. Mr. Herr is licensed to practice in Colorado, Kansas, Missouri, New Mexico, Oklahoma, Texas and Virginia. Mr. Herr was first elected to the Board of Directors in 1992, and his term expires in 2000. SY S. SHAHID has served as HORIZON's Executive Vice President since the company's inception. From February 1989 to February 1994, Mr. Shahid served full-time as the Director of Management Information Systems of True Quality Pharmacies, Inc., and thereafter, until October 1996, he served part-time in the same capacity. Mr. Shahid served as Financial Systems Manager for 1st Texas Savings during 1988, and as Financial Systems Manager for Lomas and Nettleton during 1987. Mr. Shahid was first elected to the Board of Directors in 1997 and his term expires in 1999. JOHN N. STOGNER has served as the company's Chief Financial Officer since February 1998. From 1984 to 1998, he was a financial consultant and private investor. Mr. Stogner was an Executive Vice President and director of 1 FoxMeyer Drug Company from 1975 to 1984, and from 1968 to 1975, he was Vice President-Controller of Hardee's Food Systems, Inc. Mr. Stogner was first elected to the Board of Directors in 1999 and his term expires in 2001. MICHAEL F. LOY has served as managing partner of Mike Loy & Company, a firm of certified public accountants in Pittsburg, Kansas, since 1973. Since 1994, Mr. Loy has also served as president of Ag Service Centers, L.L.C. Mr. Loy has also been a director and shareholder of Southeast Kansas Bankshares since 1989. Mr. Loy was first elected to the Board of Directors in 1998, and his term expires in 1999. PHILIP H. YEILDING is a board certified physician's assistant. He has served as a physician's assistant and a director of the Wilson and Jones Health Center since January 1995. From August 1991 through December 1994, Mr. Yeilding was employed by the Farmersville Medical Center, from October 1989 to August 1991 he was employed by the Mitchell Family Care Center and from August 1988 to October 1989 he was employed by the McKellar Clinic, serving as a physician's assistant for each center and as a director of the Farmersville Medical Center. Mr. Yeilding was first elected to the Board of Directors in 1997, and his term expires in 2001. All executive officers are elected annually by the Board of Directors to serve until the next annual meeting of the Board of Directors and until their respective successors are chosen and qualified. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Based upon a review of the original and amended Forms 3 and 4 furnished to HORIZON during fiscal 1998, HORIZON does not know of any person who failed to file on a timely basis any reports required by Section 16(a) of the Exchange Act. ITEM 11. EXECUTIVE COMPENSATION AND OTHER MATTERS SUMMARY COMPENSATION TABLE. The following information summarizes the annual and long-term compensation for services rendered to the company in all capacities for the fiscal years ended December 31, 1998, 1997 and 1996 of Mr. McCord, the company's President and Chief Executive Officer, and for the company's other four most highly compensated executive officers for the fiscal years ended December 31, 1998 and 1997. During 1996 no executive officer was paid compensation in excess of $100,000.
LONG-TERM COMPENSATION AWARDS ------------ ANNUAL COMPENSATION (1) SECURITIES ---------------------------------------- UNDERLYING NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) - --------------------------- ---- ---------- ---------- -------------- Ricky D. McCord 1998 133,333 30,000 67,500 Chairman, President and Chief Executive Officer 1997 94,362 21,000 86,742 1996 64,172 25,334 -- Robert D. Mueller 1998 108,353 24,380 57,500 Chief Operating Officer 1997 75,399 17,252 68,187 Charlie K. Herr 1998 108,353 24,380 57,500 Southern Regional Manager 1997 75,187 17,252 71,508 Sy S. Shahid 1998 118,355 27,407 62,500 Executive Vice President and Secretary 1997 88,526 19,757 79,247 John N. Stogner 1998 87,995 10,000 65,000 Chief Financial Officer
- ------------------------ 2 (1) None of the named executive officers received any perquisites or other personal benefits in fiscal 1996, fiscal 1997 or fiscal 1998 that in the aggregate exceeded the lesser of $50,000 or 10% of such named executive officer's salary and bonus for such year. OPTION GRANTS TABLE. The following table provides information regarding options granted during fiscal 1998 to the named executive officers:
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF NUMBER OF STOCK PRICE SECURITIES % OF TOTAL OPTIONS APPRECIATION UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM OPTIONS EMPLOYEES BASE PRICE EXPIRATION -------------------- NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) - ---- ----------- ------------------ ----------- ---------- ------- --------- Ricky D. McCord 67,500(1) 15.7 8.25 2/2/2008 27,844 55,688 Robert D. Mueller 57,500(1) 13.4 8.25 2/2/2008 23,719 47,438 Charlie K. Herr 57,500(1) 13.4 8.25 2/2/2008 23,719 47,438 Sy S. Shahid 62,500(1) 14.5 8.25 2/2/2008 25,781 51,563 John N. Stogner 30,000(1) 7.0 8.25 2/2/2008 12,375 24,750 35,000(2) 5.8 8.88 11/25/2008 15,540 31,080
- --------------------- (1) Options were granted February 2, 1998 and each option becomes exercisable with respect to one-third of the shares of common stock underlying the option on each of the three anniversary dates of the grant of the options. The HORIZON Pharmacies, Inc. 1998 Stock Option Plan (the "1998 Plan") allows for the payment of the exercise price of an option with shares of HORIZON common stock, upon the approval of the Compensation Committee. In addition, the 1998 Plan permits an optionee under certain circumstances to cause the company to withhold shares issued upon the exercise of an option granted under that plan in payment of the taxes due upon the exercise of such option. (2) Options were granted November 25, 1998 and each option becomes exercisable with respect to one-third of the shares of common stock underlying the option on each of the three anniversary dates of the grant of the option. Such shares were granted under the 1998 Plan. OPTION EXERCISES AND YEAR END VALUE TABLE. The following table shows information regarding stock options exercised during the last fiscal year by the named executive officers, and the estimated value of unexercised options held by such persons at December 31, 1998.
NUMBER OF VALUE OF UNEXERCISED SECURITIES UNDERLYING IN-THE-MONEY UNEXERCISED OPTIONS OPTIONS AT SHARES AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1) ACQUIRED ON VALUE --------------------------- --------------------------- NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------- ----------- ------------ ----------- ------------- ----------- ------------- Ricky D. McCord 15,000 142,395 (2) 71,742 67,500 488,742 459,844 Robert D. Mueller 15,000 142,395 (2) 53,187 57,500 362,336 391,719 Charlie K. Herr 15,000 142,395 (2) 56,508 57,500 384,961 391,719 Sy S. Shahid 15,000 142,395 (2) 64,247 62,500 437,683 425,781 John N. Stogner 0 0 30,000 35,000 204,375 238,438
- ------------------- (1) Based on the difference between $10.8125, the closing price of the Common Stock on the American Stock Exchange on December 31, 1998, and the exercise price of $4.00 per share. 3 (2) Based on the difference between $10.493, the closing price of the Common Stock on the American Stock Exchange on the date of exercise, and the exercise price of $4.00 per share. COMPENSATION OF DIRECTORS During the last fiscal year, HORIZON paid non-employee directors $1,000 for every meeting of the Board of Directors attended plus reimbursement for all ordinary and necessary expenses incurred in attending any such meeting. During such period, HORIZON also entered into an agreement with Carson A. McDonald which provided for his early resignation as a director and the payment to him of $12,000 and the grant of 3,000 stock options with an exercise price of $14.38 per share. HORIZON does not pay directors who are also officers or employees of the company for their services as directors. The HORIZON Pharmacies, Inc. 1997 Stock Option Plan provides for the grant of 10-year, non-qualified or incentive stock options to key employees, and the 1998 Plan provides for the grant of 10-year, non-qualified or incentive stock options to employees, employee-directors and non-employee directors. EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS HORIZON is a party to employment agreements with each of Messrs. Herr, McCord, Mueller, Shahid and Stogner, each of which agreements extends through June 1, 2000. Each of the agreements automatically renews for additional three year terms unless terminated by either HORIZON or the respective employee. HORIZON may terminate each of the agreements without cause by giving the employee 90 days' written notice. Under the respective agreements Mr. McCord receives an annual salary of $120,000 and an annual bonus of $24,000; Mr. Shahid receives an annual salary of $112,568 and an annual bonus of $22,514; Messrs. Herr and Mueller each receive an annual salary of $97,518 and an annual bonus of $19,503; and Mr. Stogner receives an annual salary of $120,000 and an annual bonus of $20,000. For a period of two years following the termination of an employee, the employee is prohibited from engaging in or assisting in any business which is identical, competitive with or comparable to, HORIZON's business within any area in which the employee rendered services to HORIZON. Each agreement also includes a confidentiality clause which prohibits the employee subsequent to termination of employment from disclosing to third parties proprietary information relating to HORIZON. A state court charged with enforcing any of the referenced employment agreements may determine that such non-competition provisions are not enforceable in whole or in part. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS Messrs. Loy and Yeilding served on the Compensation Committee during the last fiscal year, and during such time neither had any relationship with HORIZON or any other corporation of which disclosure was required. CHANGES IN CONTROL. The company knows of no arrangements (including the pledge by any person of securities of the company), the operation of which may result at a subsequent date in a change in control of the company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the beneficial ownership of shares of HORIZON's common stock as of April 12, 1999, by each stockholder known to be a beneficial owner of more than 5% of the common stock, by each of the executive officers named in the Summary Compensation Table, by each of HORIZON's directors and nominees, and by all of its directors and executive officers as a group. 4
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT (1) - -------------------------------------- ---------------- ----------- White Rock Capital Management, L.P.(2) 1,098,338 19.4 3131 Turtle Creek Blvd., Suite 800 Dallas, Texas 75219 Ricky D. McCord, R.Ph.(3) 415,461 (4) 7.2 Robert D. Mueller, R.Ph. 107,006 (5) 1.9 Charlie K. Herr, R.Ph.(3) 373,647 (6) 6.2 Sy S. Shahid(3) 378,869 (7) 6.3 John N. Stogner 31,800 (8) * Philip H. Yeilding 6,766 (9) * Michael F. Loy 10,200 * Directors and executive officers as a group 1,322,249 (10) 22.2 (seven persons)
- ------------- * Less than 1% (1) Unless otherwise noted, the company believes that each person named in the table has sole voting and investment power with respect to all shares beneficially owned by such person. (2) Based on information set forth in the Schedule 13G dated February 5, 1999, filed with the SEC by White Rock Capital Management, L.P. ("White Rock Management"), White Rock Capital Partners, L.P. ("White Rock Partners"), White Rock Capital, Inc. ("White Rock Inc."), Joseph U. Barton and Thomas U. Barton, White Rock Inc., White Rock Management, Thomas U. Barton and Joseph U. Barton, as a group, were the beneficial owners of 1,098,338 shares of common stock, which number consists of (1) 901,000 shares held for the accounts of clients of White Rock Management (assumes the conversion of 33,700 warrants into 33,700 shares), (2) 185,500 shares held for the account of White Rock Partners (assumes the conversion of 6,600 warrants into 6,600 shares) and (3) 11,838 shares held for the account of White Rock Management (assumes the conversion of 700 warrants into 700 shares). White Rock Partners is the beneficial owner of the 185,500 shares held for its account (assumes the conversion of 6,600 warrants into 6,600 shares). White Rock Capital Management is the general partner of White Rock Partners. White Rock Inc. is the general partner of White Rock Management. Thomas U. Barton and Joseph U. Barton are the shareholders of White Rock Inc. (3) Address is c/o HORIZON Pharmacies, Inc., 531 W. Main St., Denison, Texas 75020. (4) Includes 71,742 shares of Common Stock subject to currently exercisable stock options. (5) Includes 53,187 shares of Common Stock subject to currently exercisable stock options. (6) Includes 56,508 shares of Common Stock subject to currently exercisable stock options. (7) Includes 64,247 shares of Common Stock subject to currently exercisable stock options. (8) Includes 30,000 shares of Common Stock subject to currently exercisable stock options. (9) Includes 1,500 shares of Common Stock subject to currently exercisable stock options. (10) Includes 275,684 shares of Common Stock subject to currently exercisable stock options. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS HORIZON has adopted a policy that all transactions between it and related parties are subject to approval by a majority of all disinterested directors and must be on terms no less favorable than those that could be obtained from unrelated third parties. 5 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. HORIZON PHARMACIES, INC. Date: April 30, 1999 By: /s/ Ricky D. McCord ---------------------------------- Ricky D. McCord Chairman of the Board, President and Chief Executive Officer
Signature Title Date /s/ Ricky D. McCord Chairman of the Board, President April 30, 1999 - ------------------------- and Chief Executive Officer Ricky D. McCord (Principal Executive Officer /s/ John N. Stogner Chief Financial Officer, April 30, 1999 - ------------------------- Director (Principal Financial John N. Stogner Officer and Principal Accounting Officer) /s/ Robert D. Mueller Chief Operating Officer, Director April 29, 1999 - ------------------------- Robert D. Mueller /s/ Sy S. Shahid Executive Vice President, April 29, 1999 - ------------------------- Director Sy S. Shahid /s/ Charlie K. Herr Director April 29, 1999 - ------------------------- Charlie K. Herr /s/ Michael F. Loy Director April 30, 1999 - ------------------------- Michael F. Loy Director - ------------------------- Philip H. Yeilding
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