DIT AMCON Distributing Co

AMCON Distributing Company (“AMCON”) (NYSE AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $3.67 for the third fiscal quarter ended June 30, 2010.

“We were able to post another solid quarter in both of our business segments,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. “Our focused business strategy is delivering results for our customers and shareholders. We are executing our corporate plan in a step-by-step fashion as we believe this fundamental approach will best position the enterprise for future growth. In addition, we are actively seeking acquisitions in both of our operating segments.”

AMCON’s wholesale distribution business reported revenues of $257.8 million and operating income before depreciation and amortization of $5.2 million in the third quarter of fiscal 2010. AMCON’s retail health food business reported revenues of $9.2 million and operating income before depreciation and amortization of $1.0 million for the same period.

Kathleen Evans, President of AMCON’s wholesale distribution business commented “We are working closely with our customers to develop product strategies to enhance their bottom line. This customer centric approach is mutually beneficial and the core of our growth strategy. We continue to expand the length and breadth of our food service program.”

Eric Hinkefent, President of AMCON’s retail health food business commented “We are pleased with the results of our new store opening in Tulsa. Our careful attention to the price value relationship of our product mix has enabled us to perform well in a challenging environment. We continue to seek additional growth opportunities where we can employ our profitable business model.”

“Our shareholders’ equity grew to $30.1 million during the period. We continue to maintain high levels of liquidity, as a central theme of our strategy is to use our balance sheet strength to develop profitable merchandising opportunities for our customers. Our Northwest Arkansas expansion is progressing according to plan,” said Andrew C. Plummer, AMCON’s Chief Financial Officer.

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with locations in Arkansas, Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin's Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate a total of 14 health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (5). The retail stores operate under the names Chamberlin's Market & Cafe and Akins Natural Foods Market.

This news release contains forward-looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. A number of factors could affect the future results of the Company and could cause those results to differ materially from those expressed in the Company's forward-looking statements including, without limitation, availability of sufficient cash resources to conduct its business and meet its capital expenditures needs. Moreover, past financial performance should not be considered a reliable indicator of future performance. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements.

Visit AMCON Distributing Company's web site at: www.amcon.com

    AMCON Distributing Company and Subsidiaries Condensed Consolidated Balance Sheets June 30, 2010 and September 30, 2009   June September 2010 2009 (Unaudited) ASSETS Current assets: Cash $ 365,362 $ 309,914 Accounts receivable, less allowance for doubtful accounts of $1.7 million and $0.9 million at June 2010 and September 2009 29,967,877 28,393,198 Inventories, net 41,308,413 34,486,027 Deferred income taxes 1,967,233 1,701,568 Prepaid and other current assets   4,554,137   1,728,576 Total current assets 78,163,022 66,619,283   Property and equipment, net 11,780,603 11,256,627 Goodwill 6,149,168 5,848,808 Other intangible assets 4,858,269 3,373,269 Other assets   1,062,245   1,026,395

 

$ 102,013,307 $ 88,124,382 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 18,647,475 $ 15,222,689 Accrued expenses 6,605,525 6,768,924 Accrued wages, salaries and bonuses 3,045,321 3,257,832 Income taxes payable 2,527,497 3,984,258 Current maturities of credit facility — 177,867 Current maturities of long-term debt   933,256   1,470,445 Total current liabilities 31,759,074 30,882,015   Credit facility, less current maturities 28,480,212 22,655,861 Deferred income taxes 1,141,803 1,256,713 Long-term debt, less current maturities 5,435,769 5,066,185 Other long-term liabilities 562,575 —  

Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, liquidation preference $25.00 per share

2,500,000 2,500,000 Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share 2,000,000 2,000,000  

Shareholders’ equity:

Preferred stock, $0.01 par, 1,000,000 shares authorized, 180,000 shares outstanding and issued in Series A and B referred to above — — Common stock, $.01 par value, 3,000,000 shares authorized, 577,266 shares outstanding at June 2010 and 573,232 shares outstanding at September 2009 5,773 5,732 Additional paid-in capital 8,250,974 7,617,494 Retained earnings   21,877,127   16,140,382 Total shareholders’ equity   30,133,874   23,763,608 $ 102,013,307 $ 88,124,382   AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three and nine months ended June 30, 2010 and 2009     For the three months For the nine months ended June ended June 2010   2009 2010   2009 Sales (including excise taxes of $87.9 million and $77.4 million, and $246.3 million and $171.0 million, respectively) $ 267,062,440 $ 242,817,927 $ 741,502,607 $ 655,637,536 Cost of sales   247,932,676     225,753,469     688,204,656     605,481,395   Gross profit   19,129,764     17,064,458     53,297,951     50,156,141   Selling, general and administrative expenses 14,070,483 12,800,612 41,215,024 38,625,335 Depreciation and amortization   440,466     273,650     1,243,307     884,972     14,510,949     13,074,262     42,458,331     39,510,307   Operating income   4,618,815     3,990,196     10,839,620     10,645,834     Other expense (income): Interest expense 370,873 368,048 1,144,543 1,265,834 Other (income), net   (32,758 )   (43,600 )   (69,184 )   (84,143 )   338,115     324,448     1,075,359     1,181,691   Income from continuing operations before income tax 4,280,700 3,665,748 9,764,261 9,464,143 Income tax expense   1,532,000     1,411,000     3,495,000     3,614,000   Income from continuing operations 2,748,700 2,254,748 6,269,261 5,850,143  

Discontinued operations

Gain on asset disposal and debt settlement, net of income tax expense of $2.7 million — 4,666,264 — 4,666,264 Income (loss) from discontinued operations, net of income tax expense (benefit) of $0.01 million and ($0.1) million, respectively   —     13,105     —     (186,370 ) Income on discontinued operations — 4,679,369 — 4,479,894   Net income 2,748,700 6,934,117 6,269,261 10,330,037   Preferred stock dividend requirements   (74,052 )   (74,052 )   (222,158 )   (493,786 )   Net income available to common shareholders $ 2,674,648   $ 6,860,065   $ 6,047,103   $ 9,836,251    

Basic earnings per share available to common shareholders:

Continuing operations $ 4.72 $ 3.97 $ 10.73 $ 9.78 Discontinued operations   —     8.52     —     8.17   Net basic earnings per share available to common shareholders $ 4.72   $ 12.49   $ 10.73   $ 17.95     Diluted earnings per share available to common shareholders: Continuing operations $ 3.67 $ 3.11 $ 8.39 $ 7.37 Discontinued operations   —     6.46     —     5.65   Net diluted earnings per share available to common shareholders $ 3.67   $ 9.57   $ 8.39   $ 13.02     Weighted average shares outstanding: Basic 566,224 549,397 563,505 547,859 Diluted 749,350 724,833 747,035 793,610  

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Cash Flows

for the nine months ended June 30, 2010 and 2009

    2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,269,261 $ 10,330,037 Deduct: Income from discontinued operations, net of tax   —     4,479,894   Income from continuing operations 6,269,261 5,850,143   Adjustments to reconcile net income from continuing operations to net cash flows from operating activities: Depreciation 1,043,186 884,972 Amortization 200,121 — (Gain) loss on sale of property and equipment (31,843 ) 26,468 Stock based compensation 376,422 398,700 Net excess tax (benefit) deficiency on equity-based awards (130,126 ) 16,592 Deferred income taxes (380,575 ) 893,851 Provision for losses on doubtful accounts 750,489 489,038 Provision for losses on inventory obsolescence 82,778 331,319 Other 77,094 —   Changes in assets and liabilities: Accounts receivable (2,325,168 ) (1,797,340 ) Inventories (4,923,666 ) 1,714,017 Prepaid and other current assets (2,830,201 ) 312,759 Other assets (35,850 ) 59,277 Accounts payable 3,388,920 (365,711 ) Accrued expenses and accrued wages, salaries and bonuses (375,910 ) 2,625,568 Income tax payable   (1,326,635 )   4,713,677   Net cash flows from operating activities — continuing operations (171,703 ) 16,153,330 Net cash flows from operating activities — discontinued operations   —     (2,673,712 ) Net cash flows from operating activities (171,703 ) 13,479,618   CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1,423,912 ) (784,221 ) Proceeds from sales of property and equipment 62,406 102,406 Acquisition   (3,099,836 )   —   Net cash flows from investing activities (4,461,342 ) (681,815 )   CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (payments) on bank credit agreements 5,646,484 (8,955,236 ) Principal payments on long-term debt (682,574 ) (604,975 ) Proceeds from exercise of stock options 126,973 — Net excess tax (benefit) deficiency on equity-based awards 130,126 (16,592 ) Redemption of Series C convertible preferred stock — (2,000,000 ) Dividends paid on convertible preferred stock (222,158 ) (272,158 ) Dividends on common stock   (310,358 )   (171,119 ) Net cash flows from financing activities — continuing operations 4,688,493 (12,020,080 ) Net cash flows from financing activities — discontinued operations   —     (825,000 ) Net cash flows from financing activities   4,688,493     (12,845,080 ) Net change in cash 55,448 (47,277 )

Cash, beginning of period

  309,914     457,681   Cash, end of period $ 365,362   $ 410,404     Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 1,141,934 $ 1,347,690 Cash paid during the period for income taxes 5,202,208 612,473   Supplemental disclosure of non-cash information: Equipment acquisitions classified as accounts payable 35,866 108,546 Constructive dividends on Series A, B, and C Convertible Preferred Stock — 221,628 Acquisition of equipment through capital leases 14,969 12,333   Business acquisition: Inventory 1,981,498 — Property and equipment 122,978 — Customer relationships intangible asset 1,620,000 — Goodwill 300,360 — Note payable 500,000 — Contingent consideration 425,000 —   TSI disposition — discontinued operations Property and equipment, net — (2,032,047 ) Accrued expenses — (925,452 ) Long-term debt — (6,945,548 ) Deferred gain on CPH Settlement — (1,542,312 )