DIT AMCON Distributing Co

AMCON Distributing Company (�AMCON�) (AMEX:DIT), an Omaha, Nebraska based consumer products company has announced results for the second fiscal quarter and first half ended March 31, 2007. �Our two core businesses are performing in line with our expectations� said Christopher Atayan, AMCON�s Chief Executive Officer. �However, we continue to devote considerable resources towards residual litigation in connection with our discontinued operations.� For the first half of fiscal 2007, AMCON reported revenues of $391.7 million in its Wholesale Distribution segment and operating income before depreciation and amortization of $4.7 million. AMCON�s retail health food business reported revenues of $18.9 million and operating income before depreciation and amortization of $1.7 million for the first half of fiscal 2007. �AMCON accounts for its inventory using the LIFO cost flow assumption� said Andrew Plummer AMCON�s Chief Financial Officer. �Our LIFO inventory valuation is driven by changes in the producer price index as published by the Bureau of Labor Statistics. During the second quarter of fiscal 2007, the increases in the applicable producer price index resulted in a $736,000 charge to earnings in our wholesale segment versus $49,000 in the prior year�s quarter and in the retail health food segment, the charge was $145,000 versus a benefit of $34,000 in the same period for the prior year. Additionally, our litigation related expenses are accounted for in continuing operations. During the second quarter of fiscal 2007 we incurred approximately $1.0 million of legal and professional costs. When all these charges were taken into effect, as well as the results of the discontinued operations, the Company reported a net loss of $0.97 per diluted share,� said Plummer. In March 2007 the Wholesale division held its annual trade show in Kansas City, Missouri. Kathleen Evans, President of the AMCON�s Wholesale division commented, �We were especially pleased with the results from our recent trade show. Our customers and vendors were very receptive to our new E-Click technology which we have designed to benefit our customers through both ease of use and efficiency. Market conditions remain competitive and we continue to emphasize our strong customer service as a competitive differentiation.� �We are selectively investing in certain store equipment to allow for a broader selection of natural cold and frozen items� said Eric Hinkefent President of AMCON�s Retail Health Food subsidiary, �Our business model, which emphasizes high levels of customer service, has been well received in the market. As such we are actively searching for opportunities to add new stores as we believe the outlook for the natural foods category continues to be favorable. Additionally AMCON conducted its annual meeting of shareholders on April 17th in St. Louis. All items on the agenda that were brought to the shareholders were approved. 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 distribution centers in 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 health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). 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 SubsidiariesCondensed Consolidated Balance SheetsMarch 31, 2007 and September 30, 2006 � March 2007 September 2006 ASSETS Current assets: Cash $ 561,851� $ 481,138� Accounts receivable, less allowance for doubtful accounts of $0.9 million and $0.9 million, respectively 26,579,473� 27,815,751� Inventories, net 22,018,639� 24,443,063� Deferred income taxes 1,847,894� 1,972,988� Current assets of discontinued operations 4,332� 1,172,805� Prepaid and other current assets � 5,365,424� � 5,369,154� Total current assets 56,377,613� 61,254,899� � Property and equipment, net 11,836,153� 12,528,539� Goodwill 5,848,808� 5,848,808� Other intangible assets 3,419,936� 3,439,803� Deferred income taxes 6,306,489� 6,772,927� Noncurrent assets from discontinued operations 2,063,393� 3,774,106� Other assets � 1,281,938� � 1,247,464� $ 87,134,330� $ 94,866,546� LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $ 11,682,815� $ 14,633,124� Accrued expenses 4,710,970� 4,687,789� Accrued wages, salaries and bonuses 1,784,919� 1,879,699� Income taxes payable 149,354� 168,936� Current liabilities of discontinued operations 7,531,674� 7,461,549� Current maturities of credit facility 3,646,000� 3,896,000� Current maturities of long-term debt � 477,190� � 524,130� Total current liabilities � 29,982,922� � 33,251,227� Credit facility, less current maturities 42,319,352� 44,927,429� Long-term debt, less current maturities 6,827,727� 7,069,357� Noncurrent liabilities of discontinued operations 2,807,000� 5,087,230� � Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, liquidation preference $25.00 per share 2,438,355� 2,438,355� � Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share 1,857,645� 1,857,645� � Series C cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share 1,982,372� 1,982,372� � Commitments and contingencies � Shareholders' equity (deficiency): Preferred stock, $0.01 par, 1,000,000 shares authorized, none outstanding -� -� Common stock, $.01 par value, 3,000,000 shares authorized, 527,062 shares outstanding 5,271� 5,271� Additional paid-in capital 6,284,476� 6,278,476� Accumulated deficit � (7,370,790) � (8,030,816) Total shareholders' deficiency � (1,081,043) � (1,747,069) $ 87,134,330� $ 94,866,546� AMCON Distributing Company and SubsidiariesCondensed Consolidated Unaudited Statements of Operationsfor the three and six months ended March 31, 2007 and 2006 For the three months For the six months ended March ended March 2007� 2006� � 2007� 2006� Sales (including excise taxes of $48.4 million and $46.9 million, and $98.0 million and $95.1 million, respectively) $ 201,176,501� $ 195,803,790� $ 410,542,650� $ 394,020,871� � Cost of sales � 186,809,844� � 181,164,019� � 381,134,862� � 365,353,770� Gross profit � 14,366,657� � 14,639,771� � 29,407,788� � 28,667,101� Selling, general and admini-strative expenses 13,045,926� 12,581,580� 25,451,009� 25,231,796� Depreciation and amortization � 456,204� � 482,861� � 914,047� � 961,587� � 13,502,130� � 13,064,441� � 26,365,056� � 26,193,383� Operating income � 864,527� � 1,575,330� � 3,042,732� � 2,473,718� Other expense (income): Interest expense 1,237,976� 1,109,885� 2,506,638� 2,267,350� Other (income), net � (32,225) � (28,810) � (63,307) � (49,591) � 1,205,751� � 1,081,075� � 2,443,331� � 2,217,759� (Loss) income from continuing operations before income tax (benefit) expense (341,224) 494,255� 599,401� 255,959� Income tax (benefit) expense � (125,000) � 205,000� � 238,000� � 126,000� (Loss) income from continuing operations (216,224) 289,255� 361,401� 129,959� � Discontinued operations � (Loss) gain on disposal of discontinued operations, net of income tax (benefit) expense of ($0.04) million and $0.6 million, respectively (66,498) -� 829,090� -� � Loss from discontinued operations, net of income tax (benefit) of ($0.1) million and ($0.4) million, and ($0.2) million and ($1.0) million, respectively � (124,283) � (789,067) � (321,693) � (1,816,705) (Loss) income on discontinued operations � (190,781) � (789,067) � 507,397� � (1,816,705) Net (loss) income (407,005) (499,812) 868,798� (1,686,746) Preferred stock dividend requirements � (103,239) � (81,239) � (208,772) � (156,106) Net (loss) income available to common shareholders $ (510,244) $ (581,051) $ 660,026� $ (1,842,852) Basic (loss) earnings per share available to common share-holders: Continuing oper-ations $ (0.61) $ 0.39� $ 0.29� $ (0.05) Discon-tinued oper-ations � (0.36) � (1.49) � 0.96� � (3.45) Net basic (loss) earnings per share available to common shareholders $ (0.97) $ (1.10) $ 1.25� $ (3.50) Diluted (loss) earnings per share available to common share-holders: Continuing oper-ations $ (0.61) $ 0.37� $ 0.28� $ (0.05) Discon-tinued oper-ations � (0.36) � (1.35) � 0.93� � (3.45) Net diluted (loss) earnings per share available to common shareholders $ (0.97) $ (0.98) $ 1.21� $ (3.50) Weighted average shares outstanding: Basic 527,062� 527,062� 527,062� 527,062� Diluted 527,062� 584,517� 546,131� 527,062� AMCON Distributing Company and SubsidiariesCondensed Consolidated Unaudited Statements of Cash Flowsfor the six months ended March 31, 2007 and 2006 2007� 2006� CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 868,798� $ (1,686,746) Deduct: income (loss) from discontinued operations, net of tax � 507,397� � (1,816,705) Income from continuing operations 361,401� 129,959� � Adjustments to reconcile net income from continuing operations to net cash flows from operating activities: Depreciation 894,180� 941,722� Amortization 19,867� 19,865� (Gain) loss on sale of property and equipment (8,129) 5,171� Stock based compensation 6,000� 30,000� Deferred income taxes 591,532� (830,226) Provision for losses on doubtful accounts (50,195) 319,987� Provision for losses on inventory obsolescence 11,650� 136,762� Changes in assets and liabilities: Accounts receivable 1,286,473� 1,673,877� Inventories 2,412,774� (965,064) Prepaid and other current assets 3,730� 550,967� Other assets (34,474) 90,840� Accounts payable (2,950,309) (1,553,341) Accrued expenses and accrued wages, salaries and bonuses (71,599) (446,058) Income taxes payable and receivable � (19,582) � (118,798) Net cash flows from operating activities - continuing operations 2,453,319� (14,337) Net cash flows from operating activities - discontinued operations � (1,999,042) � (104,783) Net cash flows from operating activities 454,277� (119,120) � CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (211,340) (377,249) Proceeds from sales of property and equipment 17,675� 31,898� Purchase of trademark -� � (15,000) Net cash flows from investing activities - continuing operations (193,665) (360,351) Net cash flows from investing activities - discontinued operations � 3,965,394� � (1,021) Net cash flows from investing activities 3,771,729� (361,372) � CASH FLOWS FROM FINANCING ACTIVITIES: Net principal payments on bank credit agreements (2,858,077) (1,620,228) Net proceeds from preferred stock issuance -� 1,982,372� Proceeds from borrowings of long-term debt -� 109,811� Dividends paid on preferred stock (208,772) (156,106) Principal payments on long-term debt � (288,570) � (334,508) Net cash flows from financing activities - continuing operations (3,355,419) (18,659) Net cash flows from financing activities - discontinued operations � (789,874) � 558,679� Net cash flows from financing activities � (4,145,293) � 540,020� Net change in cash 80,713� 59,528� � Cash, beginning of period � 481,138� � 546,273� Cash, end of period $ 561,851� $ 605,801� Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 2,530,779� $ 2,130,593� Cash paid during the period for income taxes 99,050� 1,024� � Supplemental disclosure of non-cash information: Buyer's assumption of HNWC lease in connection with the sale of HNWC's assets - discontinued operations 225,502� -�