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 $10.44 on net income available to common stockholders of $7.8 million for the fiscal year ended September 30, 2011. AMCON earned $3.62 per fully diluted share on net income available to common stockholders of $2.8 million for the fourth fiscal quarter ended September 30, 2011.

“We are making solid progress toward all our strategic goals and are pleased with the results for the year. The integration of our new branch in Crossville, Tennessee is proceeding according to plan. Our new customer base in the Mid South region now has full access to AMCON’s broad range of consumer products and services. In the coming year we are looking to work closely with these new customers to enhance their store presentation and bottom line,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. “One of the key reasons we were able to execute this transition so efficiently was the deep bench of talent we have on our management team. AMCON’s operational strength and flexibility is a critical asset and something we are looking to deploy more in the future as we continue on the acquisition trail,” noted Mr. Atayan.

Each of AMCON’s business segments reported excellent years. The wholesale distribution segment reported revenues of $1.0 billion and operating income before depreciation and amortization of $19.5 million for fiscal 2011 and revenues and operating income before depreciation and amortization of $307.0 million and $6.1 million, respectively, for the fourth fiscal quarter of fiscal 2011. The retail health food segment reported revenues of $37.8 million and operating income before depreciation and amortization of $3.8 million for fiscal 2011 and revenue of $9.3 million and operating income before depreciation and amortization of $0.8 million for the fourth fiscal quarter of 2011.

“Foodservice will continue to be the focus of our attention in the coming year across our entire distribution network. In fiscal 2011 we made substantial capital investments to increase our capacity and ability to serve our customers needs. In addition, we continue to emphasize our strong commitment to customer service as a differentiating competitive factor. In an uncertain economy this is an important asset for us,” said Kathleen Evans, President of AMCON’s wholesale distribution segment.

“Competition continues to increase in our Midwest markets,” said Eric Hinkefent, President of AMCON’s retail health food segment. “Our stores have the highest level of quality, customer service and variety of products at attractive prices in the industry and that is the basis on which we compete. This commitment to a first class retail experience served us well in 2011. We continue to carefully evaluate new locations and markets that are consistent with our business model,” added Mr. Hinkefent.

“We are pleased that we were able to maintain high levels of balance sheet liquidity while closing a significant acquisition and investing in foodservice equipment. We use our balance sheet to drive profitability for our customers which is a foundation of our strategy. At September 30, 2011, stockholders’ equity was $41.7 million, resulting in an adjusted book value per share of $58.44 and consolidated debt of $28.4 million,” said Andrew Plummer, AMCON’s Chief Financial Officer. “We anticipate continued investments in information technology for both internal and customer use for the foreseeable future,” commented 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, South Dakota, and Tennessee. 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

 

CONSOLIDATED BALANCE SHEETS

      September 30, 2011     2010 ASSETS Current assets: Cash $ 1,389,665 $ 356,735 Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.6 million in 2011 and 2010, respectively 32,963,693 27,903,689 Inventories, net 38,447,982 35,005,957 Deferred income taxes 1,707,889 1,905,974 Prepaid and other current assets   6,073,536   3,013,485 Total current assets 80,582,765 68,185,840   Property and equipment, net 13,713,238 11,855,669 Goodwill 6,349,827 6,149,168 Other intangible assets, net 5,550,978 4,807,644 Other assets   1,238,825   1,069,050 $ 107,435,633 $ 92,067,371 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 18,439,446 $ 16,656,257 Accrued expenses 7,153,672 6,007,900 Accrued wages, salaries and bonuses 2,460,558 3,161,817 Income taxes payable 2,100,180 2,366,667 Current maturities of long-term debt   1,384,625   893,291 Total current liabilities 31,538,481 29,085,932   Credit facility 20,771,613 18,816,709 Deferred income taxes 2,743,238 1,075,861 Long-term debt, less current maturities 6,194,195 5,226,586 Other long-term liabilities 429,513 587,479   Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, and a total liquidation preference of $2.5 million at both September 2011 and September 2010 2,500,000 2,500,000 Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized 62,000 shares outstanding at September 30, 2011 and 80,000 shares outstanding at September 30, 2010, and a total liquidation preference of $1.6 million and $2.0 million at September 2011 and September 2010 1,550,000 2,000,000     Shareholders’ equity: Preferred stock, $0.01 par value, 1,000,000 shares authorized, 162,000 and 180,000 shares outstanding and issued in Series A and B referred to above — — Common stock, $0.01 par value, 3,000,000 shares authorized, 609,320 shares outstanding at September 2011 and 577,432 shares outstanding at September 2010 6,093 5,774 Additional paid-in capital 9,981,055 8,376,640 Retained earnings   31,721,445   24,392,390 Total shareholders’ equity   41,708,593   32,774,804 $ 107,435,633 $ 92,067,371    

AMCON Distributing Company and Subsidiaries

  CONSOLIDATED STATEMENTS OF OPERATIONS       Fiscal Years Ended September 2011     2010 Sales (including excise taxes of $340.6 million and $335.8 million, respectively) $ 1,041,631,892 $ 1,010,538,035 Cost of sales   967,467,852     938,830,204   Gross profit   74,164,040     71,707,831  

Selling, general and administrative expenses

56,374,612 54,445,189 Depreciation and amortization   2,234,814     1,736,817     58,609,426     56,182,006   Operating income 15,554,614 15,525,825  

Other expense (income):

Interest expense 1,433,790 1,504,899 Other (income), net   (225,212 )   (85,886 )   1,208,578     1,419,013   Income from operations before income tax expense 14,346,036 14,106,812 Income tax expense   6,282,000     5,141,000   Net income 8,064,036 8,965,812 Preferred stock dividend requirements   (286,397 )   (297,025 ) Net income available to common shareholders $ 7,777,639   $ 8,668,787  

 

Basic earnings per share available to common shareholders:

$ 13.09 $ 15.36

Diluted earnings per share available to common shareholders:

$ 10.44 $ 11.99   Basic weighted average shares outstanding 594,185 564,355 Diluted weighted average shares outstanding 772,589 747,862    

AMCON Distributing Company and Subsidiaries

  CONSOLIDATED STATEMENTS OF CASH FLOWS       Fiscal Years Ended September 2011     2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,064,036 $ 8,965,812 Adjustments to reconcile income from operations to net cash flows

from operating activities:

Depreciation 1,850,231 1,459,156 Amortization 384,583 277,661 Gain on sale of property and equipment (45,848 ) (32,996 ) Equity-based compensation 1,851,457 486,294 Net excess tax benefit on equity-based awards (139,686 ) (141,141 ) Deferred income taxes 1,865,462 (385,258 ) (Recoveries) provision for losses on doubtful accounts (437,757 ) 686,426 Provision for losses (recoveries) on inventory obsolescence 114,000 (74,083 ) Other (8,045 ) 75,083

Changes in assets and liabilities, net of effect of business acquisition:

Accounts receivable 4,259,181 (196,917 ) Inventories 1,015,604 1,535,651 Prepaid and other current assets (3,025,051 ) (1,289,549 ) Other assets (169,775 ) (42,655 ) Accounts payable 1,810,710 1,395,362 Accrued expenses and accrued wages, salaries and bonuses (1,256,553 ) (857,039 ) Income taxes payable   (126,801 )   (1,476,450 ) Net cash flows from operating activities   16,005,748     10,385,357  

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment (1,988,139 ) (1,920,655 ) Proceeds from sales of property and equipment 94,525 71,606 Acquisition   (13,368,057 )   (3,099,836 ) Net cash flows from investing activities   (15,261,671 )   (4,948,885 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net borrowings (payments) on bank credit agreements 1,954,904 (4,017,019 ) Principal payments on long-term debt (1,093,147 ) (931,722 ) Proceeds from exercise of stock options 22,391 131,753 Net excess tax benefit on equity-based awards 139,686 141,141 Dividends paid on convertible preferred stock (286,397 ) (297,025 ) Dividends on common stock   (448,584 )   (416,779 ) Net cash flow from financing activities   288,853     (5,389,651 )

Net change in cash

1,032,930 46,821 Cash, beginning of year   356,735     309,914   Cash, end of year $ 1,389,665   $ 356,735      

AMCON Distributing Company and Subsidiaries

  CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)       Fiscal Years 2011     2010 Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 1,419,636 $ 1,506,661 Cash paid during the year for income taxes 4,543,338 7,002,708  

Supplemental disclosure of non-cash information:

Conversion Series B Convertible Preferred Stock to common stock by holders $ 450,000 $ — Equipment acquisitions classified as accounts payable 10,685 38,206  

Business acquisition:

Accounts receivable $ 8,881,428 $ — Inventory 4,571,629 1,981,498 Property and equipment 1,795,859 122,978 Prepaid asset 35,000 — Fair value of non-competition agreement 500,000 — Customer relationships intangible asset 500,000 1,620,000 Goodwill 200,659 300,360 Accrued Expenses (120,000 ) — Note payable (2,552,090 ) (500,000 ) Amount due under non-competition agreement (444,428 ) — Contingent consideration — (425,000 )    

AMCON Distributing Company and Subsidiaries

  FISCAL YEAR 2011   (dollars in thousands, except per share data)     First     Second     Third     Fourth   Sales $ 244,957 $ 216,603 $ 263,828 $ 316,244

Gross profit

  17,608     16,369     18,218     21,969  

Income from operations before income tax expense

  3,061     2,734     3,619     4,932  

Net Income

1,832 1,584 1,828 2,820

Preferred stock dividend requirements

(75 ) (73 ) (71 ) (67 )

Net income available to common shareholders

$ 1,757   $ 1,511   $ 1,757   $ 2,753    

Basic earnings per share available to common shareholders

$ 3.04   $ 2.56   $ 2.93   $ 4.52  

Diluted earnings per share available to common shareholders

$ 2.41   $ 2.05   $ 2.36   $ 3.62    

FISCAL YEAR 2010

                (dollars in thousands, except per share data) First Second Third Fourth   Sales $ 243,941 $ 230,499 $ 267,062 $ 269,036

Gross profit

  17,228     16,940     19,130     18,410  

Income from operations before income tax expense

  2,670     2,813     4,281     4,343  

Net Income

1,729 1,791 2,749 2,697

Preferred stock dividend requirements

(75 ) (73 ) (74 ) (75 )

Net income available to common shareholders

$ 1,654   $ 1,718   $ 2,675   $ 2,622    

Basic earnings per share available to common shareholders

$ 2.95   $ 3.05   $ 4.72   $ 4.62  

Diluted earnings per share available to common shareholders

$ 2.32   $ 2.40   $ 3.67   $ 3.59    

The Company’s quarterly earnings per share are based on weighted average shares outstanding for the quarter, therefore the sum of the quarters may not equal the full year earnings per share amount.

AMCON Distributing Company and Subsidiaries

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Certain financial information included in this report (“Adjusted book value per share”) has been determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Management believes that this non-GAAP financial measurement reflects an additional way of viewing aspects of the Company’s business that, when viewed together with its financial results computed in accordance with GAAP, provides a more complete understanding of factors affecting historical financial performance of the Company. This non-GAAP financial measurement is not intended to be a substitute for the comparable GAAP measurements and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The Company has defined the non-GAAP financial measure of adjusted book value per share as follows:

• “Adjusted book value per share” is defined as total equity increased by the impact of proceeds from the exercise of all stock options, conversion of convertible preferred stock and vesting of restricted stock units divided by total common shares outstanding plus common shares issuable upon the exercise of all stock options, conversion of convertible preferred stock and vesting of restricted stock units. This measure is important to investors interested in determining the amount of book value per share if all potentially dilutive shares were exercised or converted.

   

September 2011

Number of common shares outstanding at September 30, 2011 609,320

Add: common shares potentially issuable for stock options, convertible preferred stock, and unvested restricted stock units /1/

  222,908   832,228   Total stockholders’ equity at September 30, 2011 $ 41,708,593 Equity impact if all potential common shares were converted /1/   6,928,869 $ 48,637,462   Adjusted book value per share at September 30, 2011 $ 58.44   /1/   Assumes the exercise of all vested and unvested stock options, conversion of all preferred stock, and vesting of all outstanding restricted stock units at September 30, 2011.