AMCON Distributing Company Announces Fully Diluted Earnings Per Share Of $3.67 For The Third Fiscal Quarter Ended June 30, 2010

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 )

Copyright Business Wire 2010

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