AMCON Distributing Company Reports Fully Diluted Earnings Of $11.99 Per Share For The Fiscal Year Ended September 30, 2010

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 )

Copyright Business Wire 2010

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