DIT AMCON Distributing Co

AMCON Distributing Company (“AMCON”) (AMEX:DIT), a consumer products company is pleased to announce fully diluted earnings per share of $11.99 on net income available to common stockholders of $8.7 million for the fiscal year ended September 30, 2010.

“We are proud to have surpassed the $1 billion mark in sales for the first time in the history of the Company. This achievement is a testament to the high degree of collaboration between our management team, our loyal customer base, and the major branded consumer products companies whose products we distribute. Our organization is committed to enhancing our customers’ profitability. We believe this customer centric philosophy ultimately drives our bottom line,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. “Our acquisition in Northwest Arkansas is fully integrated into our operations and has been both a financial and operating success. Further, our new retail health food store in Tulsa has performed according to expectations,” noted Mr. Atayan.

Each of AMCON’s business segments reported excellent years. The wholesale distribution segment reported revenues of $973.8 million and operating income before depreciation and amortization of $18.6 million for all of fiscal 2010 and revenues and operating income before depreciation and amortization of $260.0 million and $5.2 million, respectively, for the fourth fiscal quarter of fiscal 2010. The retail health food segment reported revenues of $36.8 million and operating income before depreciation and amortization of $4.1 million for fiscal 2010 and revenue of $9.1 million and operating income before depreciation and amortization of $0.9 million for the fourth fiscal quarter of 2010.

“We will continue to focus on expanding our foodservice offerings in the coming year. Foodservice products offer attractive gross profits for our customers. In these difficult economic times our emphasis on premium service continues to differentiate us from the competition,” said Kathleen Evans, President of AMCON’s wholesale distribution segment.

“We continue to maintain a disciplined approach to new store openings,” said Eric Hinkefent President of AMCON’s retail health food segment. “We are looking for the right locations with proper demographics that will optimize our business model. Our stores stand for quality, service and a wide variety of products at attractive prices. We continue to upgrade and enhance our existing locations to deliver a first class retail experience,” added Mr. Hinkefent.

“From a financial perspective we continue to focus on maintaining balance sheet liquidity. We believe this strategy enables AMCON to take advantage of opportunities in the market place that will improve our customers’ profitability. Ultimately, this translates into profits for our shareholders. We ended the fiscal year with total stockholders equity of $32.8 million and we further reduced consolidated debt to $24.9 million,” said Andrew Plummer, AMCON’s Chief Financial Officer. “We are carefully evaluating various capital projects in information technology and foodservice equipment that will enhance our ability to compete in the market place,” added Mr. Plummer.

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, foodservice, frozen and chilled foods, and health and beauty care products with locations in Arkansas, Illinois, Missouri, Nebraska, North Dakota and South Dakota. AMCON also operates fourteen (14) health and natural product retail stores in the Midwest and Florida. The retail stores operate under the names Akin’s Natural Foods Market www.akins.com and Chamberlin's Market & Cafe www.chamberlins.com.

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   CONSOLIDATED BALANCE SHEETS   September 30, 2010     2009 ASSETS Current assets: Cash $ 356,735 $ 309,914 Accounts receivable, less allowance for doubtful accounts of $1.6 million and $0.9 million in 2010 and 2009, respectively 27,903,689 28,393,198 Inventories, net 35,005,957 34,486,027 Deferred income taxes 1,905,974 1,701,568 Prepaid and other current assets   3,013,485   1,728,576 Total current assets 68,185,840 66,619,283   Property and equipment, net 11,855,669 11,256,627 Goodwill 6,149,168 5,848,808 Other intangible assets, net 4,807,644 3,373,269 Other assets   1,069,050   1,026,395 $ 92,067,371 $ 88,124,382

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities: Accounts payable $ 16,656,257 $ 15,222,689 Accrued expenses 6,007,900 6,768,924 Accrued wages, salaries and bonuses 3,161,817 3,257,832 Income taxes payable 2,366,667 3,984,258 Current maturities of credit facility — 177,867 Current maturities of long-term debt   893,291   1,470,445 Total current liabilities 29,085,932 30,882,015   Credit facility, less current maturities 18,816,709 22,655,861 Deferred income taxes 1,075,861 1,256,713 Long-term debt, less current maturities 5,226,586 5,066,185 Other long-term liabilities 587,479 —   Series A cumulative, convertible preferred stock, $.01 par value 100,000 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 authorized and issued, liquidation preference $25.00 per share 2,000,000 2,000,000  

Commitments and contingencies

  Shareholders’ equity: Preferred stock, $0.01 par value, 1,000,000 shares authorized, 180,000 shares outstanding and issued in Series A and B at September 2010 and 2009 — — Common stock, $0.01 par value, 3,000,000 shares authorized, 577,432 shares outstanding at September 2010 and 573,232 shares outstanding at September 2009 5,774 5,732 Additional paid-in capital 8,376,640 7,617,494 Retained earnings   24,392,390   16,140,382 Total shareholders’ equity   32,774,804   23,763,608 $ 92,067,371 $ 88,124,382     AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF OPERATIONS   Fiscal Years Ended September 2010     2009 Sales (including excise taxes of $335.8 million and $263.7 million, respectively) $ 1,010,538,035 $ 907,953,044 Cost of sales   938,830,204     839,813,225   Gross profit   71,707,831     68,139,819   Selling, general and administrative expenses 54,445,189 51,539,775 Depreciation and amortization   1,736,817     1,216,089     56,182,006     52,755,864   Operating income 15,525,825 15,383,955  

Other expense (income):

Interest expense 1,504,899 1,627,373 Other (income), net   (85,886 )   (104,259 )   1,419,013     1,523,114   Income from continuing operations before income tax expense 14,106,812 13,860,841 Income tax expense   5,141,000     5,367,000   Income from continuing operations 8,965,812 8,493,841  

Discontinued operations

Gain on asset disposal and debt settlement, net of income tax expense of $2.7 million — 4,666,264 Loss from discontinued operations, net of income tax benefit of $0.1 million   —     (186,370 ) Income on discontinued operations   —     4,479,894    

Net income

8,965,812 12,973,735  

Preferred stock dividend requirements

  (297,025 )   (568,653 )  

Net income available to common shareholders

$ 8,668,787   $ 12,405,082    

Basic earnings per share available to common shareholders:

Continuing operations $ 15.36 $ 14.45 Discontinued operations   —     8.16   Net basic earnings per share available to common shareholders $ 15.36   $ 22.61    

Diluted earnings per share available to common shareholders:

Continuing operations $ 11.99 $ 10.87 Discontinued operations   —     5.74   Net diluted earnings per share available to common shareholders $ 11.99   $ 16.61    

Weighted average shares outstanding:

Basic 564,355 548,616 Diluted 747,862 781,265     AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS   Fiscal Years Ended September 2010     2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,965,812 $ 12,973,735 Deduct: Income from discontinued operations, net of tax   —     4,479,894   Income from continuing operations 8,965,812 8,493,841  

Adjustments to reconcile income from continuing operations to net cash flows from operating activities:

Depreciation 1,459,156 1,216,089 Amortization 277,661 — (Gain) loss on sale of property and equipment (32,996 ) 24,915 Stock based compensation 486,294 531,600 Net excess tax benefit on equity-based awards (141,141 ) (2,245 ) Deferred income taxes (385,258 ) 1,049,925 Provision for losses on doubtful accounts 686,426 124,574 Provision for (recoveries) losses on inventory obsolescence (74,083 ) 299,155 Other 75,083 —  

Changes in assets and liabilities:

Accounts receivable (196,917 ) (1,319,358 ) Inventories 1,535,651 2,545,787 Prepaid and other current assets (1,289,549 ) 1,791,074 Other assets (42,655 ) 96,857 Accounts payable 1,395,362 (80,446 ) Accrued expenses and accrued wages, salaries and bonuses (857,039 ) 2,113,154 Income taxes payable   (1,476,450 )   3,673,482   Net cash flows from operating activities - continuing operations 10,385,357 20,558,404 Net cash flows from operating activities - discontinued operations   —     (2,673,712 ) Net cash flows from operating activities   10,385,357     17,884,692    

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment (1,920,655 ) (1,673,432 ) Proceeds from sales of property and equipment 71,606 107,255 Acquisition   (3,099,836 )   —   Net cash flows from investing activities   (4,948,885 )   (1,566,177 )  

CASH FLOWS FROM FINANCING ACTIVITIES:

Net payments on bank credit agreements (4,017,019 ) (12,367,277 ) Principal payments on long-term debt (931,722 ) (788,712 ) Proceeds from exercise of stock options 131,753 87,729 Net excess tax benefit on equity-based awards 141,141 2,245 Redemption of Series C convertible preferred stock — (2,000,000 ) Dividends paid on convertible preferred stock (297,025 ) (347,025 ) Dividends on common stock   (416,779 )   (228,242 ) Net cash flows from financing activities - continuing operations (5,389,651 ) (15,641,282 ) Net cash flows from financing activities - discontinued operations   —     (825,000 ) Net cash flow from financing activities   (5,389,651 )   (16,466,282 ) Net change in cash 46,821 (147,767 )  

Cash, beginning of year

  309,914     457,681   Cash, end of year $ 356,735   $ 309,914       AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)  

 

Fiscal Years 2010     2009 Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 1,506,661 $ 1,719,895 Cash paid during the year for income taxes 7,002,708 3,249,594  

Supplemental disclosure of non-cash information:

Acquisition of equipment through capital leases $ 14,969 $ 12,333 Equipment acquisitions classified as accounts payable 38,206 11,580 Constructive dividends on Series A, B and C Convertible Preferred Stock — 221,628  

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 )