DIT AMCON Distributing Co

AMCON Distributing Company (“AMCON”) (NYSE AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $2.41 on net income available to common stockholders of $1.8 million for the first fiscal quarter ended December 31, 2010.

“We were pleased with the performance this quarter. Management is steadfastly focused on delivering a premium level of service to our customers. We believe this philosophy enhances our customer’s bottom line which ultimately benefits our shareholders,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer.

Each of AMCON’s business segments had solid quarters. The wholesale distribution segment reported revenues of $236.0 million and operating income before depreciation and amortization of $5.3 million in the first quarter of fiscal 2011. The retail health food segment reported revenues of $9.1 million and operating income before depreciation and amortization of $0.9 million for the same period.

“We are working closely with our customers on a wide variety of initiatives designed to enhance their profitability and efficiency. This close level of interaction is mutually beneficial and is the platform that drove our performance again this quarter,” said Kathleen Evans, President of AMCON’s wholesale distribution segment.

“The natural foods segment is particularly sensitive to economic trends. We have been careful to maintain a high level of customer service during the downturn because we believe this posture fosters consumer loyalty and positions us well as the economy recovers,” said Eric Hinkefent, President of AMCON’s retail health food segment.

“Our financial focus continues to be centered on balance sheet liquidity. We ended the quarter with total stockholders’ equity of $35.5 million and consolidated debt of $23.0 million. We are carefully evaluating a number of capital projects related to information technology and foodservice that are designed to enhance our competitive position in the markets we serve,” said Andrew Plummer, AMCON’s Chief Financial Officer.

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 Chamberlin's Market & Cafe www.chamberlins.com and Akin’s Natural Foods Market www.akins.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 and the other factors described under Item 1.A. of the Company’s Annual Report on Form 10-K. 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 December 31, 2010 and September 30, 2010     December September 2010 2010 (Unaudited) ASSETS Current assets: Cash $ 300,920 $ 356,735 Accounts receivable, less allowance for doubtful accounts of $1.0 million and $1.6 million at December 2010 and September 2010, respectively 22,245,824 27,903,689 Inventories, net 36,060,248 35,005,957 Deferred income taxes 1,542,599 1,905,974 Prepaid and other current assets   4,772,035   3,013,485 Total current assets 64,921,626 68,185,840   Property and equipment, net 11,712,178 11,855,669 Goodwill 6,149,168 6,149,168 Other intangible assets, net 4,757,019 4,807,644 Other assets   1,075,563   1,069,050 $ 88,615,554 $ 92,067,371 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 14,698,370 $ 16,656,257 Accrued expenses 6,506,609 6,007,900 Accrued wages, salaries and bonuses 2,085,776 3,161,817 Income taxes payable 1,100,779 2,366,667 Current maturities of long-term debt   851,153   893,291 Total current liabilities 25,242,687 29,085,932   Credit facility 17,169,003 18,816,709 Deferred income taxes 1,135,311 1,075,861 Long-term debt, less current maturities 5,018,717 5,226,586 Other long-term liabilities 73,072 587,479

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, 590,232 shares

outstanding at December 2010 and 577,432 shares outstanding at September 2010

5,902 5,774 Additional paid-in capital 9,425,208 8,376,640 Retained earnings   26,045,654   24,392,390 Total shareholders’ equity   35,476,764   32,774,804 $ 88,615,554 $ 92,067,371     AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three months ended December 31, 2010 and 2009     2010 2009 Sales (including excise taxes of $81.3 million and $81.6 million, respectively) $ 244,957,161 $ 243,941,038 Cost of sales   227,349,439   226,713,025 Gross profit   17,607,722   17,228,013   Selling, general and administrative expenses 13,687,371 13,778,739 Depreciation and amortization   497,583   387,269   14,184,954   14,166,008 Operating income   3,422,768   3,062,005 Other expense (income): Interest expense 384,583 405,245 Other (income), net   (22,881 )   (13,380 )   361,702   391,865 Income from operations before income taxes 3,061,066 2,670,140 Income tax expense   1,229,000   941,000 Net income 1,832,066 1,729,140 Preferred stock dividend requirements   (74,867 )   (74,867 ) Net income available to common shareholders $ 1,757,199 $ 1,654,273     Basic earnings per share available to common shareholders $ 3.04 $ 2.95 Diluted earnings per share available to common shareholders $ 2.41 $ 2.32   Basic weighted average shares outstanding 578,636 560,119 Diluted weighted average shares outstanding 758,692 745,223     AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Cash Flows for the three months ended December 31, 2010 and 2009     2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 1,832,066 $ 1,729,140

Adjustments to reconcile net income from operations to net cash flows from operating activities:

Depreciation 418,565 338,099 Amortization 79,018 49,170 Gain on sale of property and equipment (2,315 ) (16,935 ) Stock based compensation 1,166,833 163,364 Net excess tax benefit on equity-based awards (79,863 ) (107,048 ) Deferred income taxes 422,825 10,104 Provision for (recoveries) losses on doubtful accounts (625,000 ) 16,426 Provision for losses on inventory obsolescence 81,416 76,703 Other (2,011 ) —   Changes in assets and liabilities: Accounts receivable 6,282,865 4,695,589 Inventories (1,135,707 ) 3,442,508 Prepaid and other current assets (1,758,550 ) (2,679,354 ) Other assets (6,513 ) 519 Accounts payable (1,949,184 ) (1,329,456 ) Accrued expenses and accrued wages, salaries and bonuses (1,316,121 ) (2,127,887 ) Income tax payable   (1,186,025 )   (2,973,111 ) Net cash flows from operating activities 2,222,299 1,287,831   CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (293,037 ) (596,612 ) Proceeds from sales of property and equipment 11,575 34,306 Acquisition   —   (3,099,836 ) Net cash flows from investing activities (281,462 ) (3,662,142 )  

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (payments) borrowings on bank credit agreements (1,647,706 ) 2,769,851 Principal payments on long-term debt (250,007 ) (182,901 ) Proceeds from exercise of stock options — 66,411 Net excess tax benefit on equity-based awards 79,863 107,048 Dividends paid on convertible preferred stock (74,867 ) (74,867 ) Dividends on common stock   (103,935 )   (103,181 ) Net cash flows from financing activities   (1,996,652 )   2,582,361 Net change in cash (55,815 ) 208,050  

Cash, beginning of period

  356,735   309,914 Cash, end of period $ 300,920 $ 517,964   Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 372,376 $ 381,746 Cash paid during the period for income taxes 1,992,200 3,903,998   Supplemental disclosure of non-cash information: Equipment acquisitions classified as accounts payable 29,503 21,512   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