DIT AMCON Distributing Co

AMCON Distributing Company (�AMCON�) (AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce record fully diluted earnings per common share of $6.26 on net income available to common shareholders of $4.9 million for the fiscal year ended September 30, 2008. �Our management team was able to deliver superior performance in a very difficult economic environment. We stuck with our conservative corporate strategy and it has worked,� said Christopher H. Atayan, AMCON�s Chairman and Chief Executive Officer. �We continue to believe that if we add economic value to our customers, our shareholders will benefit. This is a message we have been communicating throughout the course of the year in both of our business segments. Our customers have responded by participating jointly with us in the development of new ideas and promotions that further enhance profitability. While times are certainly tough we will continue to prudently move AMCON forward and continue our focused execution of our business plan. During the course of the year we had the opportunity to explore a number of acquisition opportunities and are once again on the acquisition trail. Additionally, we have enough confidence in our position in the market to increase our quarterly dividend 25% to $0.10 as previously reported.� Each of AMCON�s business segments reported excellent results for the year. The wholesale distribution segment reported revenues of $821.2 million and operating income before depreciation and amortization of $13.2 million for fiscal 2008. The retail health food segment reported revenues of $39.2 million and operating income before depreciation and amortization of $4.1 million for fiscal 2008. AMCON ended the year with shareholders� equity of $11.0 million. �Our customers and vendors place their trust in us every day. We strive to deliver performance beyond their expectations which is why we are able to maintain our position as an industry leader,� said Kathleen Evans, President of AMCON�s wholesale distribution segment. �The convenience store industry was challenged this year and conditions will remain that way for the near term. We look at this environment as one in which our tradition of excellence serves to differentiate us from the competition.� �Our commitment to delivering premium customer service at competitive prices drives the informed consumer into our stores. Further, we upgraded our website www.akins.com which has been of benefit to customers who prefer that form of retail channel,� said Eric Hinkefent, President of AMCON�s retail health food segment. �We realized that our customers faced a difficult economy and tailored nutritional solutions for both their health and pocket book. We believe the demographic trends for the natural foods industry over the long term are healthy, but the industry is not immune from short term economic conditions.� �One of our competitive advantages in these difficult times has been our strong position of liquidity. As previously reported, our bank group renewed our line of credit and term loans early,� said Andrew Plummer, AMCON�s Chief Financial Officer. �AMCON maintains an extremely conservative posture with respect to our day to day financial operations. We believe this inures to the benefit of our customers, as we are able to take advantage of opportunities to enhance their profitability. Further this stance enabled us to weather significant fuel increases during the course of the year. As we head into fiscal 2009 we are assuming a continuing recession for the course of the year.� 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. CONSOLIDATED BALANCE SHEETS � AMCON Distributing Company and Subsidiaries � � � September 30, 2008 � 2007 ASSETS Current assets: Cash $ 457,681 $ 717,554 Accounts receivable, less allowance for doubtful accounts of $0.8 million and $0.3 million in 2008 and 2007, respectively 27,198,414 27,848,938 Inventories, net 37,330,969 29,738,727 Deferred income taxes 1,260,609 1,446,389 Current assets of discontinued operations 18,947 18,897 Prepaid and other current assets � 3,519,650 � � 5,935,208 � Total current assets 69,786,270 65,705,713 � Property and equipment, net 10,907,541 11,190,768 Goodwill 5,848,808 5,848,808 Other intangible assets, net 3,373,269 3,400,070 Deferred income taxes 234,171 2,768,043 Non-current assets of discontinued operations 2,032,047 2,057,033 Other assets � 1,123,252 � � 1,093,150 � $ 93,305,358 � $ 92,063,585 � � LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,738,214 $ 15,253,562 Accrued expenses 5,275,697 5,293,923 Accrued wages, salaries and bonuses 2,636,699 2,202,594 Income taxes payable 313,021 367,773 Current liabilities of discontinued operations 4,041,837 4,035,863 Current maturities of credit facility 3,046,000 3,046,000 Current maturities of long-term debt � 787,128 � � 568,024 � Total current liabilities 30,838,596 30,767,739 � Credit facility, less current maturities 32,155,005 35,808,180 Long-term debt, less current maturities 6,525,881 7,123,453 Noncurrent liabilities of discontinued operations 6,542,310 6,542,310 � Series A cumulative, convertible preferred stock, $.01 par value 100,000 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 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 authorized and issued, liquidation preference $25.00 per share 1,982,372 1,982,372 Commitments and contingencies � Shareholders' equity: Preferred stock, $0.01 par value, 1,000,000 shares authorized, 260,000 shares outstanding and issued in Series A, B, and C referred to above - - Common stock, $0.01 par value, 3,000,000 shares authorized, 570,397 shares outstanding at September 2008 and 529,436 shares outstanding at September 2007 5,704 5,295 Additional paid-in capital 6,995,948 6,396,131 Retained earnings (deficit) � 3,963,542 � � (857,895 ) Total shareholders' equity � 10,965,194 � � 5,543,531 � $ 93,305,358 � $ 92,063,585 � CONSOLIDATED STATEMENTS OF OPERATIONS AMCON Distributing Company and Subsidiaries Fiscal Years Ended September 30 � 2008 � 2007 Sales (including excise taxes of $206.8 million and � � $208.2 million, respectively) $ 860,451,122 $ 853,566,512 � Cost of sales � 795,774,780 � � � 789,317,758 � Gross profit � 64,676,342 � � � 64,248,754 � � Selling, general and administrative expenses 51,631,324 50,963,645 Depreciation and amortization � 1,386,218 � � � 1,831,640 � � 53,017,542 � � � 52,795,285 � Operating income 11,658,800 11,453,469 � Other expense (income): Interest expense 2,986,215 4,816,324 Other (income), net � (114,613 ) � � (194,608 ) � 2,871,602 � � � 4,621,716 � Income from continuing operations before income tax expense 8,787,198 6,831,753 Income tax expense � 3,194,000 � � � 2,626,000 � Income from continuing operations 5,593,198 4,205,753 � 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 $0.2 million and $0.3 million, respectively � (260,952 ) � � (594,539 ) (Loss) income on discontinued operations � (260,952 ) � � 234,551 � Net income 5,332,246 4,440,304 Preferred stock dividend requirements � (419,839 ) � � (418,692 ) Net income available to common shareholders $ 4,912,407 � � $ 4,021,612 � Basic earnings (loss) per share available to common shareholders: Continuing operations $ 9.65 $ 7.19 Discontinued operations � (0.49 ) � � 0.44 � Net basic earnings per share available to common shareholders $ 9.16 � � $ 7.63 � Diluted earnings (loss) per share available to common shareholders: Continuing operations $ 6.57 $ 4.89 Discontinued operations � (0.31 ) � � 0.27 � Net diluted earnings per share available to common shareholders $ 6.26 � � $ 5.16 � � Weighted average shares outstanding: Basic 536,319 527,062 Diluted 851,298 860,121 CONSOLIDATED STATEMENTS OF CASH FLOWS AMCON Distributing Company and Subsidiaries Fiscal Years Ended September 30 � 2008 � 2007 CASH FLOWS FROM OPERATING ACTIVITIES: � � Net income $ 5,332,246 $ 4,440,304 Deduct: (Loss) income from discontinued operations, net of tax � (260,952 ) � � 234,551 � Income from continuing operations 5,593,198 4,205,753 � Adjustments to reconcile income from continuing operations to net cash flows from operating activities: Depreciation 1,359,417 1,791,907 Amortization 26,801 39,733 Loss (gain) on sale of property and equipment (39,619 ) 27,235 Stock based compensation 435,250 70,993 Excess tax benefit on exercise of stock options (16,592 ) - Deferred income taxes 2,719,652 2,621,261 Provision for losses on doubtful accounts 505,000 (250,196 ) Provision for losses on inventory obsolescence 101,998 52,242 � Changes in assets and liabilities, Accounts receivable 145,524 217,009 Inventories (7,694,240 ) (383,768 ) Prepaid and other current assets 2,415,558 (566,058 ) Other assets (30,102 ) 254,314 Accounts payable (515,348 ) 739,188 Accrued expenses and accrued wages, salaries and bonuses 415,879 1,574,429 Income taxes payable � (38,160 ) � � 198,837 � Net cash flows from operating activities - continuing operations 5,384,216 10,592,879 Net cash flows from operating activities - discontinued operations � (230,042 ) � � (1,929,323 ) Net cash flows from operating activities � 5,154,174 � � � 8,663,556 � � CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (845,156 ) (514,277 ) Proceeds from sales of property and equipment � 86,209 � � � 101,328 � Net cash flows from investing activities - continuing operations (758,947 ) (412,949 ) Net cash flows from investing activities - discontinued operations - � � � 3,965,394 � Net cash flows from investing activities (758,947 ) 3,552,445 � CASH FLOWS FROM FINANCING ACTIVITIES: Net payments on bank credit agreement (3,653,175 ) (9,969,248 ) Principal payments on long-term debt (656,092 ) (734,416 ) Proceeds from exercise of stock options 148,384 46,686 Excess tax benefit on exercise of stock options 16,592 - Debt issuance costs - (100,000 ) Dividends on preferred stock (419,839 ) (418,692 ) Dividends on common stock � (90,970 ) � - � Net cash flows from financing activities - continuing operations (4,655,100 ) (11,175,670 ) � Net cash flows from financing activities - discontinued operations - � � � (803,915 ) Net cash flow from financing activities � (4,655,100 ) � � (11,979,585 ) Net change in cash (259,873 ) 236,416 � Cash, beginning of year � 717,554 � � � 481,138 � Cash, end of year $ 457,681 � � $ 717,554 � � Fiscal Years � 2008 � 2007 Supplemental disclosure of cash flow information: � � Cash paid during the year for interest $ 3,116,098 $ 4,890,997 Cash paid during the year for income taxes 354,208 94,901 � Supplemental disclosure of non-cash information: � Acquisition of equipment through capital leases $ 277,624 68,422 Forgiveness of debt and related interest in connection with settlement of TSI litigation - $ (3,735,145 ) Forgiveness of water royalty in connection with settlement of TSI litigation - (2,807,000 ) Issuance of note payable in connection with TSI litigation - 5,000,000 Issuance of note payable in connection with settlement of TBG litigation - 763,983 Buyer's assumption of HNWC lease in connection with the sale of HNWC's assets - discontinued operations - (225,502 )