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 $2.05 on net income available to common stockholders of $1.5 million for the second fiscal quarter ended March 31, 2011. In addition, the Company has extended and expanded its revolving credit agreement with its bank group. The new facility is expandable to $80.0 million and has improved terms.

“Our management team did a good job this quarter, especially given the challenging environment our customers faced because of the higher level of energy prices. We are delighted to have an enhanced credit facility that we believe will give us additional flexibility to take advantage of potential acquisitions and merchant opportunities,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer.

Each of AMCON’s business segments had solid quarters. The wholesale distribution segment reported revenues of $206.7 million and operating income before depreciation and amortization of $3.6 million in the second quarter of fiscal 2011. The retail health food segment reported revenues of $9.9 million and operating income before depreciation and amortization of $1.2 million for the same period.

“We are taking a long range view as we continue to make investments in foodservice, technology and related value added propositions designed to increase our customers’ bottom line. Our customers appreciate this partnership approach as they build their businesses,” said Kathleen Evans, President of AMCON’s Wholesale segment.

“We are carefully evaluating new store locations in both of the regions we operate in. Our recent store opening in Tulsa, Oklahoma has met our expectations. Our niche in the retail market is well defined and we believe there is room to prudently expand,” said Eric Hinkefent, President of AMCON’s Retail Health Food segment.

“Our stockholders’ equity grew to $36.9 million and consolidated debt decreased to $20.6 million. Our focused strategy of maintaining high liquidity levels has allowed us to successfully renew our credit agreement with significantly enhanced terms. We continue to carefully evaluate growth opportunities including a number of capital projects related to information technology and foodservice that are designed to enhance our competitive position in the markets we serve,” said Andrew Plummer, AMCON’s Chief Financial Officer.

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 Chamberlin's Market & Cafe www.chamberlins.com and Akin’s Natural Foods Market www.akins.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 and the other factors described under Item 1.A. of the Company’s Annual Report on Form 10-K. 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

March 31, 2011 and September 30, 2010

    March September 2011 2010 (Unaudited) ASSETS Current assets: Cash $ 398,982 $ 356,735

Accounts receivable, less allowance for doubtful accounts of $0.8 million and $1.6 million at March 2011 and September 2010, respectively

24,800,880 27,903,689 Inventories, net 33,939,682 35,005,957 Deferred income taxes 1,518,492 1,905,974 Prepaid and other current assets   4,154,742   3,013,485 Total current assets 64,812,778 68,185,840   Property and equipment, net 11,919,797 11,855,669 Goodwill 6,149,168 6,149,168 Other intangible assets, net 4,706,394 4,807,644 Other assets   1,177,614   1,069,050 $ 88,765,751 $ 92,067,371   LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 16,307,547 $ 16,656,257 Accrued expenses 6,569,164 6,007,900 Accrued wages, salaries and bonuses 2,080,139 3,161,817 Income taxes payable 531,884 2,366,667 Current maturities of long-term debt   745,177   893,291 Total current liabilities 26,233,911 29,085,932   Credit facility 14,980,497 18,816,709 Deferred income taxes 1,145,250 1,075,861 Long-term debt, less current maturities 4,902,732 5,226,586 Other long-term liabilities 71,061 587,479

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 value, 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, 590,232 shares outstanding at March 2011 and 577,432 shares outstanding at September 2010

5,902 5,774 Additional paid-in capital 9,482,317 8,376,640 Retained earnings   27,444,081   24,392,390 Total shareholders’ equity   36,932,300   32,774,804 $ 88,765,751 $ 92,067,371  

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Operations

for the three and six months ended March 31, 2011 and 2010

    For the three months For the six months ended March ended March 2011   2010 2011   2010

Sales (including excise taxes of $70.8 million and $76.9 million, and $152.1 million and $158.4 million, respectively)

$ 216,603,039 $ 230,499,129 $ 461,560,200 $ 474,440,167 Cost of sales   200,233,927     213,558,955     427,583,366     440,271,980   Gross profit   16,369,112     16,940,174     33,976,834     34,168,187    

Selling, general and administrative expenses

12,909,642 13,365,802 26,597,013 27,144,541 Depreciation and amortization   507,133     415,572     1,004,716     802,841     13,416,775     13,781,374     27,601,729     27,947,382   Operating income   2,952,337     3,158,800     6,375,105     6,220,805     Other expense (income): Interest expense 263,872 368,425 648,455 773,670 Other (income), net   (45,211 )   (23,046 )   (68,092 )   (36,426 )   218,661     345,379     580,363     737,244   Income from operations before income tax 2,733,676 2,813,421 5,794,742 5,483,561 Income tax expense   1,149,000     1,022,000     2,378,000     1,963,000   Net income 1,584,676 1,791,421 3,416,742 3,520,561 Preferred stock dividend requirements   (73,239 )   (73,239 )   (148,106 )   (148,106 ) Net income available to common shareholders $ 1,511,437   $ 1,718,182   $ 3,268,636   $ 3,372,455       Basic earnings per share available to common shareholders: $ 2.56 $ 3.05 $ 5.60 $ 6.00 Diluted earnings per share available to common shareholders: $ 2.05 $ 2.40 $ 4.47 $ 4.72   Basic weighted average shares outstanding 589,454 564,216 583,986 562,145 Diluted weighted average shares outstanding 771,738 746,873 765,067 745,773  

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Cash Flows

for the six months ended March 31, 2011 and 2010

    2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,416,742 $ 3,520,561

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

Depreciation 845,120 678,860 Amortization 159,596 123,981 Gain on sale of property and equipment (8,722 ) (16,935 ) Stock based compensation 1,514,567 267,464 Net excess tax benefit on equity-based awards (125,904 ) (130,126 ) Deferred income taxes 456,871 (34,196 ) Provision for (recoveries) losses on doubtful accounts (843,000 ) 178,367 Provision for losses on inventory obsolescence 26,538 16,393 Other (4,022 ) —   Changes in assets and liabilities: Accounts receivable 3,945,809 491,271 Inventories 1,039,737 1,125,441 Prepaid and other current assets (1,141,257 ) (519,415 ) Other assets (108,564 ) (47,087 ) Accounts payable (319,457 ) 1,144,665 Accrued expenses and accrued wages, salaries and bonuses (1,625,822 ) (1,878,536 ) Income tax payable   (1,708,879 )   (2,977,213 ) Net cash flows from operating activities 5,519,353 1,943,495   CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (957,254 ) (1,102,929 ) Proceeds from sales of property and equipment 27,475 42,905 Acquisition   —     (3,099,836 ) Net cash flows from investing activities (929,779 ) (4,159,860 )   CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on bank credit agreements (3,836,212 ) 3,025,076 Principal payments on long-term debt (471,968 ) (433,443 ) Proceeds from exercise of stock options — 68,965 Net excess tax benefit on equity-based awards 125,904 130,126 Dividends paid on convertible preferred stock (148,106 ) (148,106 ) Dividends on common stock   (216,945 )   (206,759 ) Net cash flows from financing activities   (4,547,327 )   2,435,859   Net change in cash 42,247 219,494  

Cash, beginning of period

  356,735     309,914   Cash, end of period $ 398,982   $ 529,408       2011 2010 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 668,389 $ 760,727 Cash paid during the period for income taxes 3,630,007 4,974,408   Supplemental disclosure of non-cash information: Equipment acquisitions classified as accounts payable 8,953 85,939   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