DIT AMCON Distributing Co

AMCON Distributing Company (�AMCON�) (AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce its results for the third fiscal quarter and nine months ended June 30, 2007. �Our two core businesses continue to perform in line with our expectations.� said Christopher Atayan, AMCON�s Chief Executive Officer. �However, management continues to devote considerable time and resources toward residual litigation in connection with our discontinued operations. Thus, we are delighted to have been able to show a fully diluted profit for the quarter.� For the first nine months of fiscal 2007, AMCON reported revenues of $602.2 million in its Wholesale Distribution segment and operating income before depreciation and amortization of $9.1 million. AMCON�s retail health food business reported revenues of $28.4 million and operating income before depreciation and amortization of $2.4 million for the first nine months of fiscal 2007. Andrew Plummer, AMCON�s Chief Financial Officer said, �During the third quarter of fiscal 2007 we incurred legal and professional costs associated with our former beverage businesses of $1.0 million, or $1.21 per diluted share, which are accounted for in continuing operations. The producer price index published by the Bureau of Labor statistics continues to increase which ultimately increases the amount of the LIFO charge in our income statement. For the three months ended June 30, 2007, our wholesale division incurred a $0.3 million higher charge while retail health food incurred a $0.1 million higher charge as compared to the same period in the prior year. Our core operations have continued to decrease operating expenses, maximize excise tax increases and take advantage of promotional opportunities.� Kathleen Evans, President of AMCON�s wholesale division commented, �This quarter reflected well on the momentum we built at our trade show earlier this year. Market conditions remain competitive and we continue to emphasize our strong customer service as a competitive differentiation. Moreover, we are working closely with key vendors on several new promotions which we believe will enhance our customers� profitability.� �We believe the outlook for the natural foods category continues to be favorable,� said Eric Hinkefent President of AMCON�s retail health food subsidiary, �Our business model, which emphasizes high levels of customer service, is well received in the market. As such we are actively searching for opportunities to add new stores in our existing markets as well as to open new stores in selected new markets. We continue to invest in new equipment to enhance our customers� shopping experience.� 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 Subsidiaries Condensed Consolidated Balance Sheets June 30, 2007 and September 30, 2006 June 2007 September 2006 ASSETS Current assets: Cash $ 588,135 $ 481,138 Accounts receivable, less allowance for doubtful accounts of $0.4 million and $0.9 million, respectively 26,653,708 27,815,751 Inventories, net 24,369,429 24,443,063 Deferred income taxes 2,045,006 1,972,988 Current assets of discontinued operations 3,435 1,172,805 Prepaid and other current assets � 6,371,027 � 5,369,154 Total current assets 60,030,740 61,254,899 � Property and equipment, net 11,521,419 12,528,539 Goodwill 5,848,808 5,848,808 Other intangible assets 3,410,003 3,439,803 Deferred income taxes 5,386,739 6,772,927 Noncurrent assets from discontinued operations 2,057,033 3,774,106 Other assets � 1,151,044 � 1,247,464 $ 89,405,786 $ 94,866,546 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $ 12,323,037 $ 14,633,124 Accrued expenses 5,660,479 4,687,789 Accrued wages, salaries and bonuses 1,470,837 1,879,699 Income taxes payable 155,716 168,936 Current liabilities of discontinued operations 7,703,401 7,461,549 Current maturities of credit facility 3,346,000 3,896,000 Current maturities of long-term debt � 462,198 � 524,130 Total current liabilities � 31,121,668 � 33,251,227 Credit facility, less current maturities 42,521,181 44,927,429 Long-term debt, less current maturities 6,716,001 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 outstanding, liquidation preference $25.00 per share 2,438,355 2,438,355 � Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares outstanding, liquidation preference $25.00 per share 1,857,645 1,857,645 � Series C cumulative, convertible preferred stock, $.01 par value 80,000 shares outstanding, 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, 260,000 shares outstanding and issued in Series A, B and C referred to above - - Common stock, $.01 par value, 3,000,000 shares authorized, 527,062 shares outstanding 5,271 5,271 Additional paid-in capital 6,316,276 6,278,476 Accumulated deficit � (6,359,983 ) � (8,030,816 ) Total shareholders' deficiency � (38,436 ) � (1,747,069 ) $ 89,405,786 $ 94,866,546 AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three and nine months ended June 30, 2007 and 2006 For the three months For the nine months ended June ended June � 2007� � � 2006� � � 2007� � � 2006� � Sales (including excise taxes of $54.5 million and $52.5 million, and $152.5 million and $147.7 million, respectively) $ 220,072,350 $ 222,190,246 $ 630,615,000 $ 616,211,117 � Cost of sales � 203,519,915 � � 206,587,430 � � 584,654,778 � � 571,941,200 � Gross profit � 16,552,435 � � 15,602,816 � � 45,960,222 � � 44,269,917 � Selling, general and administrative expenses 12,950,797 12,855,727 38,401,805 38,087,524 Depreciation and amortization � 450,901 � � 469,352 � � 1,364,949 � � 1,430,938 � � 13,401,698 � � 13,325,079 � � 39,766,754 � � 39,518,462 � Operating income � 3,150,737 � � 2,277,737 � � 6,193,468 � � 4,751,455 � Other expense (income): Interest expense 1,174,440 1,215,463 3,682,951 3,482,814 Other (income), net � (79,636 ) � (44,424 ) � (144,816 ) � (94,016 ) � 1,094,804 � � 1,171,039 � � 3,538,135 � � 3,388,798 � Income from continuing operations before income tax expense 2,055,933 1,106,698 2,655,333 1,362,657 Income tax expense � 809,000 � � 434,000 � � 1,047,000 � � 560,000 � Income from continuing operations 1,246,933 672,698 1,608,333 802,657 Discontinued operations Gain on disposal of discontinued operations, net of income tax expense of $0.6 million - - 829,090 - � Loss from discontinued operations, net of income tax (benefit) of ($0.1) million and ($0.2) million, and ($0.2) million and ($1.2) million, respectively � (131,740 ) � (326,447 ) � (453,432 ) � (2,143,152 ) (Loss) income on discontinued operations � (131,740 ) � (326,447 ) � 375,658 � � (2,143,152 ) Net income (loss) 1,115,193 346,251 1,983,991 (1,340,495 ) Preferred stock dividend requirements � (104,386 ) � (104,386 ) � (313,158 ) � (260,492 ) Net income (loss) available to common shareholders $ 1,010,807 � $ 241,865 � $ 1,670,833 � $ (1,600,987 ) � Basic earnings (loss) per share available to common shareholders: Continuing operations $ 2.17 $ 1.08 $ 2.46 $ 1.03 Discontinued operations � (0.25 ) � (0.62 ) � 0.71 � � (4.07 ) Net basic earnings (loss) per share available to common shareholders $ 1.92 � $ 0.46 � $ 3.17 � $ (3.04 ) Diluted earnings (loss) per share available to common shareholders: Continuing operations $ 1.44 $ 0.79 $ 1.87 $ 0.95 Discontinued operations � (0.15 ) � (0.38 ) � 0.44 � � (3.53 ) Net diluted earnings (loss) per share available to common shareholders $ 1.29 � $ 0.41 � $ 2.31 � $ (2.58 ) Weighted average shares outstanding: Basic 527,062 527,062 527,062 527,062 Diluted 862,598 854,187 858,085 606,660 AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Cash Flows for the nine months ended June 30, 2007 and 2006 � 2007� � 2006� CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 1,983,991 $ (1,340,495 ) Deduct: income (loss) from discontinued operations, net of tax � 375,658 � (2,143,152 ) Income from continuing operations 1,608,333 802,657 � Adjustments to reconcile net income from continuing operations to net cash flows from operating activities: Depreciation 1,335,149 1,401,140 Amortization 29,800 29,798 (Gain) loss on sale of property and equipment (16,667 ) 11,570 Stock based compensation 37,800 45,000 Deferred income taxes 1,314,170 (563,234 ) Provision (benefit) for losses on doubtful accounts (93,192 ) 430,489 Provision for losses on inventory obsolescence 148,568 188,602 Changes in assets and liabilities: Accounts receivable 1,255,235 (2,784,964 ) Inventories (74,934 ) (6,743,551 ) Prepaid and other current assets (1,001,873 ) 345,108 Other assets 96,420 171,950 Accounts payable (2,310,087 ) (1,160,812 ) Accrued expenses and accrued wages, salaries and bonuses 563,828 (488,713 ) Income taxes payable and receivable � (13,220 ) � (118,798 ) Net cash flows from operating activities - continuing operations 2,879,330 (8,433,758 ) Net cash flows from operating activities - discontinued operations � (1,951,797 ) � (806,978 ) Net cash flows from operating activities 927,533 (9,240,736 ) � CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (345,637 ) (595,489 ) Proceeds from sales of property and equipment 34,275 34,199 Purchase of trademark - � (15,000 ) Net cash flows from investing activities - continuing operations (311,362 ) (576,290 ) Net cash flows from investing activities - discontinued operations � 3,965,394 � (69 ) Net cash flows from investing activities 3,654,032 (576,359 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net principal (payments) borrowings on bank credit agreements (2,956,248 ) 7,538,006 Net proceeds from preferred stock issuance - 1,982,372 Proceeds from borrowings of long-term debt - 109,811 Dividends paid on preferred stock (313,158 ) (260,492 ) Principal payments on long-term debt � (415,288 ) � (499,359 ) Net cash flows from financing activities - continuing operations (3,684,694 ) 8,870,338 Net cash flows from financing activities - discontinued operations � (789,874 ) � 484,504 Net cash flows from financing activities � (4,474,568 ) � 9,354,842 Net change in cash 106,997 (462,253 ) � Cash, beginning of period � 481,138 � 546,273 Cash, end of period $ 588,135 $ 84,020 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 3,729,280 $ 3,488,161 Cash paid (refunded) during the period for income taxes 99,050 (1,577 ) � 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 - � Issuance of note payable in exchange for accounts payable - discontinued operations - 362,716