SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
OR
/ / Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
------------------------------
COMMISSION FILE NUMBER 0-24708
------------------------------
AMCON DISTRIBUTING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of Incorporation)
10228 "L" Street
Omaha, NE 68127
(Address of principal executive offices)
(Zip Code)
47-0702918
(I.R.S. Employer Identification No.)
(402) 331-3727
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
------- -------
The Registrant had 2,738,211 shares of its $.01 par value common stock
outstanding as of April 30, 2001.
Form 10-Q
2nd Quarter
INDEX
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PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
---------------------
Condensed consolidated balance sheets at
March 31, 2001 and at September 30, 2000 3
Condensed consolidated statements of operations
for the three and six-month periods ended
March 31, 2001 and March 31, 2000 4
Condensed consolidated statements of cash flows
for the six-month periods ended March 31, 2001
and March 31, 2000 5
Notes to unaudited condensed consolidated
financial statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 18
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMCON Distributing Company
Condensed Consolidated Balance Sheets
March 31, 2001 and September 30, 2000
- ---------------------------------------------------------------------------------------
(Unaudited)
March 31, September 30,
2001 2000
------------ -------------
ASSETS
Current assets:
Cash $ 497,820 $ 613,158
Accounts receivable, less allowance for
doubtful accounts of $349,848 and $329,069 15,283,044 16,703,983
Inventories 16,024,393 22,122,674
Deferred income taxes 632,423 332,959
Current assets of discontinued operations - 10,709,284
Other 800,284 447,754
------------ ------------
Total current assets 33,237,964 50,929,812
Fixed assets, net 4,811,863 4,870,093
Notes receivable 750,000 350,000
Investments 1,026,936 509,162
Deferred income taxes 744,000 -
Non-current assets of discontinued operations - 3,902,433
Other assets 12,078,411 12,434,011
------------ ------------
$ 52,649,174 $ 72,995,511
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,833,624 $ 6,610,358
Accrued expenses 3,812,764 2,600,258
Income taxes payable - -
Dividends payable - -
Current liabilities of discontinued operations - 10,923,756
Current portion of long-term debt 1,099,053 2,860,030
Current portion of subordinated debt 893,108 912,694
------------ ------------
Total current liabilities 14,638,549 23,907,096
------------ ------------
Other liabilities 1,470,369 338,290
Non-current liabilities of discontinued operations - 1,145,868
Long-term debt, less current portion 12,407,411 22,004,116
Subordinated debt, less current portion 8,735,236 8,745,236
Commitments
Shareholders' equity (as restated):
Preferred stock, $.01 par value, 1,000,000
shares authorized, none outstanding - -
Common stock, $.01 par value, 15,000,000
shares authorized, 2,738,211 and 2,737,551
issued, respectively 27,382 27,376
Additional paid-in capital 4,122,949 4,121,981
Unrealized gain on investments available-for-sale,
net of $201,693 and $139,482 tax 332,612 228,924
Retained earnings 10,914,751 12,476,624
------------ ------------
15,397,694 16,854,905
Less treasury stock, 17 shares at cost (85) -
------------ ------------
Total shareholders' equity 15,397,609 16,854,905
------------ ------------
$ 52,649,174 $ 72,995,511
============ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
AMCON Distributing Company
Condensed Consolidated Statements of Operations
for the three and six-months ended March 31, 2001 and 2000
(Unaudited)
- ------------------------------------------------------------------------------------
For the three months For the six months
ended March 31 ended March 31
-------------------------- ---------------------------
2001 2000 2001 2000
------------ ----------- ------------- -----------
Sales (including excise taxes
of $15.4 million and $14.3
million, and $33.0 million
and $28.8 million, respectively) $101,239,555 $99,555,974 $202,262,059 $200,172,070
Cost of sales 91,740,189 88,194,893 182,136,166 177,780,938
------------ ----------- ------------ ------------
Gross profit 9,499,366 11,361,081 20,125,893 22,391,132
Selling, general and
administrative expenses 8,912,414 8,379,443 17,435,334 16,846,448
Depreciation and amortization 597,236 664,761 1,115,853 1,176,449
------------ ----------- ------------ ------------
9,509,650 9,044,204 18,551,187 18,022,897
------------ ----------- ------------ ------------
Income (loss) from operations (10,284) 2,316,877 1,574,706 4,368,235
Other expense (income):
Interest expense 633,256 621,734 1,347,316 1,226,572
Other income, net (38,030) (135,492) (48,224) (151,286)
------------ ----------- ------------ ------------
595,226 486,242 1,299,092 1,075,286
------------ ----------- ------------ ------------
Income (loss) from continuting
operations before income taxes (605,510) 1,830,635 275,614 3,292,949
Income tax expense (benefit) (227,066) 664,529 103,356 1,216,740
------------ ----------- ------------ ------------
Income (loss) from
continuing operations (378,444) 1,166,106 172,258 2,076,209
Income (loss) from
discontinued operations,
net of income tax (benefit)
expense of $(306,518), $23,286,
$(551,298) and $83,272 (506,527) 39,648 (894,435) 141,788
Loss on disposal of discontinued
operations, net of income tax
benefit of $411,350 (675,416) - (675,416) -
------------ ----------- ------------ ------------
Net income (loss) $ (1,560,387) $ 1,205,754 $ (1,397,593) $ 2,217,997
============ =========== ============ ============
Earnings (loss) per share
from continuing operations:
Basic $ (0.14) $ 0.43 $ 0.06 $ 0.76
Diluted $ (0.14) $ 0.41 $ 0.06 $ 0.72
Earnings (loss) per share
from discontinued operations:
Basic $ (0.43) $ 0.01 $ (0.57) $ 0.05
Diluted $ (0.43) $ 0.01 $ (0.55) $ 0.05
Net earnings (loss) per share:
Basic $ (0.57) $ 0.44 $ (0.51) $ 0.81
Diluted $ (0.57) $ 0.42 $ (0.49) $ 0.77
Weighted average shares
outstanding:
Basic 2,738,031 2,736,481 2,737,859 2,732,264
Diluted 2,738,031 2,864,775 2,823,479 2,864,526
The accompanying notes are an integral part of these condensed consolidated
financial statements.
AMCON Distributing Company
Condensed Consolidated Statements of Cash Flows
for the six months ended March 31, 2001 and 2000
(Unaudited)
- ---------------------------------------------------------------------------------
2001 2000
------------ ------------
Net cash provided by operating activities $ 10,285,816 $ 4,309,868
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets (693,938) (401,692)
Advances under notes receivable (400,000) -
Purchase of common stock in HNWC (300,000) -
Proceeds from sales of fixed assets 1,350 133,369
Proceeds from sales of available-for-sale
securities - 38,691
Proceeds from disposal of discontinued
operations, net of cash expenditures 8,200,641 -
------------ ------------
Net cash (used in) investing activities 6,808,053 (229,632)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) on bank credit agreement (14,571,253) (1,597,272)
Payments on long-term debt and
subordinated debt (2,474,563) (2,563,053)
Dividends paid (164,280) (125,921)
Proceeds from exercise of stock options 974 20,301
Purchase of treasury stock (85) -
------------ ------------
Net cash (used in) financing activities (17,209,207) (4,265,945)
------------ ------------
Net increase (decrease) in cash (115,338) (185,709)
Cash, beginning of period 613,158 1,646,133
------------ ------------
Cash, end of period $ 497,820 1,460,424
============ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
AMCON Distributing Company
Notes to Condensed Consolidated Financial Statements
March 31, 2001 and 2000
- -----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements
include the accounts of AMCON Distributing Company and its subsidiaries
("AMCON" or the "Company"). As more fully described in Note 2 to the
unaudited condensed consolidated financial statements, the Company completed
the sale of its health food distribution business effective March 23, 2001.
As a result, the Company's September 30, 2000 balance sheet and fiscal 2000
results have been restated to reflect the health food distribution business
as discontinued operations. All significant intercompany transactions and
balances have been eliminated in consolidation. In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to fairly present the financial
information included therein, such adjustments consisting of normal recurring
items. It is suggested that these financial statements be read in conjunction
with the audited financial statements and notes thereto for the fiscal year
ended September 30, 2000, which are included in the Company's Annual Report
to Stockholders filed with Form 10-K. Results for the interim period are not
necessarily indicative of results to be expected for the entire year.
AMCON's fiscal second quarters ended on March 30, 2001 and March 24, 2000,
respectively. For convenience, the fiscal quarters have been indicated as
March 31. Each quarter and each six-month period ended comprised 13 weeks
and 26 weeks, respectively.
2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES:
Effective March 23, 2001, the Company's subsidiary, Food For Health Co.,
Inc., completed the sale of the assets of its health food distribution
business for $10.3 million, subject to certain adjustments. The purchase
price was paid in cash and the assumption by the purchaser of approximately
$2.1 million in indebtedness. The sale resulted in a pre-tax loss of
approximately $1.1 million ($675,000 after taxes). This loss includes an
accrual for estimated costs, including rent and related expenses associated
with the remaining lease commitments on the two distribution facilities that
were retained by the Company of $2.5 million and contractual consulting
agreements of $445,000, which will provide no future economic benefit to the
Company. The Company is actively seeking tenants to sublease the facilities
for the remainder of the lease terms. Any differences between these expense
estimates and their actual settlement will change the loss accordingly. In
connection with the sale of the health food distribution business, the
Company also entered into a 5 year supply agreement with the purchaser
underwhich the purchaser will supply products to the Company's retail health
food stores at market prices.
The sale of the Company's health food distribution business has been
reflected as discontinued operations in the unaudited condensed consolidated
financial statements in accordance with APB No. 30. Revenues from the
discontinued operations, which have been excluded from income from continuing
operations in the accompanying unaudited condensed consolidated statements of
operations for the three and six month periods ended March 31, 2001 and 2000,
are presented below. The effects of the discontinued operations on net
income (loss) and per share data are reflected within the accompanying
unaudited condensed consolidated statements of operations.
Three months ended Six months ended
March 31, March 31,
-------------------------- ---------------------------
2001 2000 2001 2000
----------- ------------ ------------ ------------
Revenue $ 7,964,084 $ 12,180,140 $ 16,192,858 $ 23,607,804
On February 8, 2001, the Company entered into an agreement to purchase
substantially all of the distribution business and assets of Merchants
Wholesale, Inc. ("Merchants") located in Quincy, IL. In addition, the
Company has agreed to a 206,000 square foot building currently occupied by
Merchants. The transaction is scheduled to close in May 2001 pending bank
financing approvals. The purchase price will be based on assets held at the
closing date and is estimated to be between $40 and $45 million, including
the real estate. The transaction will be accounted for using the purchase
method of accounting. Merchants operates through eight states as a wholesale
distributor of consumers products consistent with the Company's current
distribution business. Merchant's distribution territory is within and
contiguous to the Company's current distribution business territory.
It is anticipated that funding for the Merchants acquisition will be provided
through borrowings under a revolving credit facility, which is in the process
of being negotiated to accommodate the additional business. Funding for the
real estate and building will be provided by a term loan from a bank, which
is also being negotiated.
In November 2000, the Company entered into a merger agreement with Hawaiian
Natural Water Company, Inc. (OTC: HNWC), pursuant to which HNWC would be
merged with and into, and thereby become, a wholly-owned subsidiary of the
Company. As a result, the Company will issue between 358,168 and 477,558
shares of its common stock to HNWC shareholders, representing between 11.6%
and 14.9% of the Company's outstanding shares after giving effect to the
merger. The ultimate purchase price will be determined based on the Company's
stock price at the closing of the transaction. Based on the Company's
closing stock price on April 30, 2001, the maximum purchase price would be
$3.2 million (excluding the $750,000 advanced to HNWC through March 31, 2001
and recorded as notes receivable in the accompanying unaudited condensed
consolidated balance sheet at March 31, 2001).
The Company has provided HNWC with certain interim debt financing pending the
consummation of the merger. HNWC is currently experiencing recurring
operating losses and negative cash flows from operations; therefore, the
Company loaned HNWC $350,000 in September 2000 and $400,000 in October 2000
for a total of $750,000 to be used for working capital and other general
corporate purposes, including redemption of outstanding preferred stock. The
loan is evidenced by promissory notes, bearing interest at the rate of 10%
per annum, due on May 31, 2001, which are secured by substantially all of
HNWC's assets. In the event that the merger agreement is terminated for any
reason or HNWC defaults on its obligations under the notes, the Company will
be entitled to convert the notes into Series C Convertible Preferred Stock
which, among other things, would entitle the Company to elect a majority of
HNWC's Board of Directors. The notes are also convertible upon 61 days'
advance notice from the Company into HNWC common stock at the same exchange
ratio as in the merger. Due to the anticipated acquisition of HNWC and
management's belief that the notes will not be paid within the next 12
months, the notes have been classified as noncurrent as of March 31, 2001.
In January 2001, the Company invested an additional $300,000 in HNWC in
exchange for 750,000 shares of common stock at substantially the same
exchange ratio as provided for in the merger agreement. The investment
represents an ownership interest of approximately 9.5% in HNWC and,
accordingly, has been accounted for under the cost method. In addition, in
February 2001, the Company agreed to obtain, and placed orders for, certain
water bottling equipment to be utilized by HNWC in order to increase
production capacity to achieve its growth targets. The estimated commitment
under this operating lease is approximately $2.4 million over 8 years. The
Company will sublease this equipment to HNWC under similar terms. While
there is no commitment to do so, the Company may consider negotiating future
financing needs as they arise.
The merger is expected to qualify as a tax-free reorganization and to be
recorded on the Company's books using the purchase method of accounting. The
merger is subject to various conditions, including the effectiveness of a
registration statement covering the AMCON shares to be issued in the merger,
the listing of such shares on AMEX and the approval of the HNWC stockholders.
It is expected that the merger will be consummated in the fourth quarter of
fiscal 2001.
The Company anticipates that the interest rate spread on its revolving credit
facilities will increase as a result of higher level of borrowings related to
these acquisitions.
3. INVENTORIES:
Inventories consist of finished products purchased in bulk quantities to be
redistributed to the Company's customers. Effective in fiscal 1999, the
Company changed the method of accounting for inventory from the first-in,
first-out ("FIFO") method to the last-in, first-out ("LIFO") method. LIFO
inventories at March 31, 2001 were approximately $3.2 million less than the
amount of such inventories valued on a FIFO basis.
4. DIVIDENDS:
The Company paid cash dividends totaling $0.06 per share during the quarter
ended March 31, 2001, representing dividends of $0.03 per share for the first
and second quarters of fiscal 2001.
5. EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share is calculated by dividing income (loss) from
continuing operations, income (loss) from discontinued operations and net
income (loss) by the weighted average common shares outstanding for each
period. Diluted earnings (loss) per share is calculated by dividing income
(loss)from continuing operations, income (loss) from discontinued operations
and net income (loss) by the sum of the weighted average common shares
outstanding and the weighted average dilutive options, using the treasury
stock method. Stock options outstanding at March 31, 2001 and 2000,
respectively, which were not included in the computations of diluted earnings
per share because the option's exercise price was greater than the average
market price of the common shares totaled 172,380 with an average exercise
price of $7.25 and 96,880 with an average exercise price of $8.44 for the
three and six month periods ended March 31, 2001 and 2000, respectively.
For the three-month period ended March 31,
-------------------------------------------------------
2001 2000
------------------------- -------------------------
Basic Diluted Basic Diluted
----------- ----------- ----------- -----------
1. Weighted average common
shares outstanding 2,738,033 2,738,033 2,736,481 2,736,481
2. Weighted average treasury
shares outstanding (2) (2) - -
3. Weighted average of net
additional shares outstanding
assuming dilutive options and
warrants exercised and proceeds
used to purchase treasury stock - 88,973 - 128,294
4. Exclusion of the weighted average
of net additional shares
outstanding assuming dilutive
options and warrants exercised
and proceeds used to purchase
treasury stock as their
inclusion would be anti-dilutive - (88,973) - -
----------- ----------- ----------- -----------
5. Weighted average number of
shares outstanding 2,738,031 2,738,031 2,736,481 2,864,775
=========== =========== =========== ===========
6. Income (loss) from
continuing operations $ (378,444) $ (378,444) $ 1,166,106 $ 1,166,106
=========== =========== =========== ===========
7. Income (loss) from
discontinued operations $ (506,527) $ (506,527) $ 39,648 $ 39,648
=========== =========== =========== ===========
8. Loss on disposal of
discontinued operations $ (675,416) $ (675,416) $ - $ -
=========== =========== =========== ===========
9. Net income (loss) $(1,560,387) $(1,560,387) $ 1,205,754 $ 1,205,754
=========== =========== =========== ===========
10. Earnings (loss) per share
from continuing operations $ (0.14) $ (0.14) $ 0.43 $ 0.41
=========== =========== =========== ===========
11. Earnings (loss)per share
from discontinued operations $ (0.43) $ (0.43) $ 0.01 $ 0.01
=========== =========== =========== ===========
12. Net earnings (loss) per share $ (0.57) $ (0.57) $ 0.44 $ 0.42
=========== =========== =========== ===========
For the six-month period ended March 31,
-------------------------------------------------------
2001 2000
------------------------- -------------------------
Basic Diluted Basic Diluted
----------- ----------- ----------- -----------
1. Weighted average common
shares outstanding 2,737,860 2,737,860 2,732,310 2,732,310
2. Weighted average treasury
shares outstanding (1) (1) (46) (46)
3. Weighted average of net
additional shares outstanding
assuming dilutive options and
warrants exercised and proceeds
used to purchase treasury stock - 85,620 - 132,262
----------- ----------- ----------- -----------
4. Weighted average number of
shares outstanding 2,737,859 2,823,479 2,732,264 2,864,526
=========== =========== =========== ===========
5. Income from continuing
operations $ 172,258 $ 172,258 $ 2,076,209 $ 2,076,209
=========== =========== =========== ===========
6. Income (loss) from
discontinued operations $ (894,435) $ (894,435) $ 141,788 $ 141,788
=========== =========== =========== ===========
7. Loss on disposal of
discontinued operations $ (675,416) $ (675,416) $ - $ -
=========== =========== =========== ===========
8. Net income (loss) $(1,397,593 $(1,397,593) $ 2,217,997 $ 2,217,997
=========== =========== =========== ===========
9. Earnings (loss) per share
from continuing operations $ (0.06) $ (0.06) $ 0.76 $ 0.72
=========== =========== =========== ===========
10. Earnings (loss) per share
from discontinued operations $ (0.57) $ (0.55) $ 0.05 $ 0.05
=========== =========== =========== ===========
11. Net earnings (loss) per share $ (0.51) $ (0.49) $ 0.81 $ 0.77
=========== =========== =========== ===========
6. COMPREHENSIVE INCOME (LOSS):
The following is a reconciliation of net income (loss) per the accompanying
consolidated statements of operations to comprehensive income (loss) for the
periods indicated:
For the three months For the six months
ended March 31 ended March 31
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net income (loss) $(1,560,387) $ 1,205,754 $(1,397,593) $ 2,217,997
Other comprehensive income:
Unrealized holding gain (losses)
from investments arising during
the period, net of income taxes
of $65,625, ($22,229), $62,211
and $(6,666) respectively 109,375 (21,083) 103,688 4,854
----------- ----------- ----------- -----------
Comprehensive income (loss) $(1,451,012) $ 1,184,671 $(1,293,905) $ 2,222,851
=========== =========== =========== ===========
7. BUSINESS SEGMENTS:
AMCON has two reportable business segments; the wholesale distribution of
consumer products and the retail sale of health and natural food products.
The Company disposed of its health food distribution segment during the
second quarter of fiscal 2001. Prior period segment data has been restated to
conform to the current presentation. The segments are evaluated on revenues,
operating income and income before taxes.
Wholesale
Distribution Retail Consolidated
------------- ------------ -------------
Quarter ended March 31, 2001:
Revenues $ 92,663,785 $ 8,575,770 $ 101,239,555
Operating income (loss) 130,594 (140,878) (10,284)
Income (loss) before taxes (37,781) (567,729) (605,510)
Total assets 31,942,823 20,706,351 52,649,174
Quarter ended March 31, 2000:
Revenues $ 91,019,044 $ 8,536,930 $ 99,555,974
Operating Income 1,867,877 449,000 2,316,877
Income before taxes 1,743,066 87,569 1,830,635
Total assets, excluding
discontinued operations 39,937,570 20,706,351 60,643,921
Six months ended March 31, 2001:
Revenues $ 186,219,528 $ 16,042,531 $ 202,262,059
Operating income (loss) 2,008,776 (434,070) 1,574,706
Income (loss) before taxes 1,549,122 (1,273,508) 275,614
Total assets 31,942,823 20,706,351 52,649,174
Six months ended March 31, 2000:
Revenues $ 183,357,631 $ 16,814,439 $ 200,172,070
Operating Income 3,467,428 900,807 4,368,235
Income before taxes 3,128,026 164,923 3,292,949
Total assets, excluding
discontinued operations 39,937,570 20,706,351 60,643,921
There are no intersegment sales between the two operating segments.
Operating income (loss) and income (loss) before taxes from the retail
segment include general corporate overhead expenses, which were previously
allocated to the discontinued health food distribution operations but were
not eliminated as a result of the sale.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
As more fully described in Note 2 to the unaudited condensed consolidated
financial statements, the Company completed the sale of its health food
distribution business effective March 23, 2001. As a result, the Company's
September 30, 2000 balance sheet and fiscal 2000 results have been restated
to reflect the health food distribution business as discontinued operations.
The discussions and figures below are based on the restated presentation.
Comparison of the three month and six month periods ended March 31, 2001 and
March 31, 2000
Sales for the three months ended March 31, 2001 increased 1.7% to $101.2
million, compared to $99.6 million for the second quarter in prior fiscal
year. Sales increase by business segment is as follows:
Wholesale distribution $ 1.6 million
Retail health food stores 0.0 million
-----
$ 1.6 million
=====
Sales from the wholesale distribution business increased by $1.6 million
during the Q2 2001 over Q2 2000. Despite a 13% decline in carton volume,
cigarette sales increased approximately $0.7 million over Q2 2000 as a result
of two price increases. Sales of tobacco, confectionery and other products
were higher than Q2 2000 by $0.9 or 4.3%. Sales growth during Q2 2001 was
slowed by severe winter weather in the Midwest that inhibited travel and
other outdoor activities, as well as by pricing strategies implemented by
several competitors since the prior year.
Sales from the retail health food segment increased by $38,000 when compared
to Q2 2000 primarily due to the addition of a new store in late fiscal 2000.
Same store sales were down approximately 5.0% compared to Q2 2000. Increased
competition by national chains who have opened stores in the same markets as
the Company's stores and an overall softening of the natural food retail
market over the past year as few new products have been developed have
negatively impacted sales growth in the retail health food segment.
Sales for the six months ended March 31, 2001 increased 1.0% to $202.3
million, compared to $200.2 million for the same period in the prior fiscal
year. Sales increase by business segment is as follows:
Wholesale distribution $ 2.9 million
Retail health food stores (0.8) million
-----
$ 2.1 million
=====
Sales from the wholesale distribution business increased by $2.9 million for
the six months ended March 31, 2001 as compared to the same period in the
prior year. Despite an 8% decline in carton volume, cigarette sales
increased approximately $2.3 million due to the impact of three price
increases. Sales of tobacco, confectionery and other products were higher
than the prior year by approximately $0.6 million or 1.4%. Sales growth for
the first six months of the year was negatively impacted by the severe winter
in the Midwest which inhibited traffic in customers' retail stores. In
addition, pricing strategies implemented by several competitors since the
prior year has also had a negative impact on sales.
Sales from the retail health food segment decreased by $0.8 million when
compared to the prior year due to increased competition by national chains
who have opened stores in the same markets as the Company's stores and an
overall softening of the natural food retail market over the past year as few
new products have been developed have negatively impacted sales growth in the
retail health food segment.
Gross profit decreased 16.4% to $9.5 million for Q2 2001 from $11.4 million
for Q2 2000. Gross profit as a percent of sales declined to 9.4% for Q2 2001
compared to 11.4% for Q2 2000. Gross profit by business segment is as
follows (dollars in millions):
Quarter ended
March 31,
---------------- Incr/
2001 2000 (Decr)
------ ------ -----
Wholesale distribution $ 6.0 $ 7.7 $(1.7)
Retail health food stores 3.5 3.7 (0.2)
------ ------ -----
$ 9.5 $ 11.4 $(1.9)
====== ====== =====
The decreases in gross profit dollars and gross profit percentage in the
wholesale distribution segment were primarily due to (1) a decrease in
cigarette carton volume, which was partially offset by a price increase in Q2
2000 and two price increases subsequent to Q2 2000, (2) a favorable margin
impact of approximately $0.7 million in Q2 2000 resulting from inventory
levels at the time of the Q2 2000 price increase turning at a lower cost
relative to the new sales price; and (3) a charge to cost of sales of $0.8
million to account for the increase in the LIFO reserve due to a significant
increase in the Producer Price index utilized by the Company to compute its
LIFO reserve.
The retail health food segment experienced a reduction in gross margin due to
an overall decline in same store sales as compared to Q2 2000. Management is
actively reviewing strategies to improve sales and gross profit in the retail
segment, including evaluation of retail locations and promotional activities.
For the six months ended March 31, 2001, gross profit decreased 10.1% to
$20.1 million from $22.4 million for the same period during the prior fiscal
year. Gross profit as a percent of sales declined to 10.0% for the six month
period ended March 31, 2001 compared to 11.2% for the six month period ended
March 31, 2000. Gross profit by business segment is as follows (dollars in
millions):
Six months ended
March 31,
---------------- Incr/
2001 2000 (Decr)
------ ------ -----
Wholesale distribution $ 13.6 $ 15.0 $(1.4)
Retail health food stores 6.5 7.4 (0.9)
------ ------ -----
$ 20.1 $ 22.4 $(2.3)
====== ====== =====
The decrease in gross profit was primarily the result of (1) a Q2 2001 charge
to cost of sales of $0.8 million to account for the increase in the LIFO
reserve, which reduced margin by approximately $0.7 million relative to Q2
2000 and (2) reductions in incentive allowances from manufacturers due to a
decline in cigarette carton volume over the first six months of the fiscal
year as compared to the prior fiscal year. The retail health food segment
experienced an overall decline in same store sales as compared to the same
period of the prior fiscal year, which negatively impacted profits.
Management is actively reviewing strategies to improve sales and gross profit
in the retail health food segment, including evaluation of retail locations
and promotional activities.
The reduction in the gross profit percentage was primarily attributable to
the three price increases in cigarettes since Q2 2000 combined with the
disproportional increase in the selling prices to our customers. In
addition, the Producer Price index utilized by the Company to compute its
LIFO reserve increased substantially during Q2 2000 as compared to increases
in the index in prior quarters, thus requiring a charge to cost of sales of
$0.8 million to increase the LIFO reserve accordingly.
Since 1993, sales of the Company's private label cigarettes have declined an
average of 30% annually. This trend is primarily due to the decreased price
differential between premium and major generic brands, including the
Company's brands, and to the price of sub-generic brands being substantially
less than the Company's brand. Sales of the Company's private label
cigarettes were down by approximately 38% compared to the first six months of
the prior year and the volume incentive payment related to those sales was
$355,000 less than the first six months of the prior year. Management
anticipates the volume of the Company's private label cigarettes will
continue to decline over the next few years. Based on these estimates, gross
profit from the sale of private label cigarettes could decrease by up to an
additional $200,000 for the remainder of fiscal 2001.
Total operating expense, which includes selling, general and administrative
expenses and depreciation and amortization, increased 5.1% or approximately
$0.5 million to $9.5 million for Q2 2001 compared to Q2 2000. The increase
was primarily due to expenses associated with the retail health food
business, which accounted for $0.4 million of the increase in operating
expenses. Operating expenses incurred by this business segment increased due
to the addition of a new store since Q2 2000 and additional administrative
costs associated with the development of new retail business opportunities.
As a percentage of sales, total operating expense increased to 9.4% from 9.1%
during Q2 2000. This increase is primarily due to operating costs incurred
by the retail health food business during Q2 2001. Operating expenses
incurred by this business segment were approximately 43% of sales compared to
35% for Q2 2000.
For the six month period ended March 31, 2001, total operating expense
increased 2.9% or approximately $0.5 million to $18.6 million compared to the
same period in the prior fiscal year. The increase was primarily due to
expenses associated with the retail health food business which accounted for
$490,000 of the increase in operating expenses. Operating expenses incurred
by this business segment increased due to the addition of a new store since
the same period in the prior fiscal year and additional administrative costs
associated with the development of new retail business opportunities. The
wholesale distribution business experienced increases in general labor,
delivery and fuel costs, as compared to the prior fiscal year. However,
these costs were offset principally through a reduction in bad debt expense
and other administrative expenses. As a percentage of sales, total operating
expense increased to 9.2% from 9.0% during the same period in the prior
fiscal year. This increase is primarily due to operating costs incurred by
the retail health food business during the period. Operating expenses
incurred by this business segment were approximately 43% of sales compared to
35% for the prior fiscal year.
As a result of the above, income from operations for Q2 2001 decreased by
$2.3 million to a loss of $10,000. Income from operations for the six months
ended March 31, 2001 decreased by $2.8 million to $1.6 million.
Interest expense for Q2 2001 increased 1.8% to approximately $633,000
compared to approximately $622,000 during Q2 2000. The increase was
primarily due to interest expense attributable to the debt incurred to
acquire an additional retail store and to provide advances to and investments
in Hawaiian Natural Water Company ("HNWC"). Interest incurred for these
purposes was approximately $44,000. Interest expense for the six months
ended March 31, 2001 increased 9.8% to $1.3 million compared to $1.2 million
for the same period in the prior fiscal year. The increase was primarily due
to debt incurred to increase inventory levels in order to take advantage of
manufacturer price incentives in Q1 2001, debt incurred to acquire an
additional retail store and debt incurred to provide advances to and
investments in HNWC. These items accounted for approximately $113,000, or
93%, of the increase in interest expense.
Other income for the three and six-month periods ended March 31, 2001 of
approximately $38,000 and $48,000, respectively, was generated primarily by
interest income and dividends received on investment securities.
As a result of the above factors, income (loss) from continuing operations
for the three months ended March 31, 2001 was ($378,444) compared to
$1,166,106 for the three months ended March 31, 2000. Income from continuing
operations for the six months ended March 31, 2001 was $172,258, compared to
$2,076,209 for the first six months of the prior year.
As described in Management's Discussion and Analysis in the Company's Annual
Report to Shareholders for the Fiscal Year Ended September 30, 2000, the
distribution industry is in a state of consolidation. Competition and
pressure on profit margins continue to affect both large and small
distributors. The retail natural foods industry is highly fragmented, with
more than 9,000 stores operated independently or as part of small chains.
The two leading natural food chains continue to expand their geographic
markets and acquire smaller independent competitors. In addition,
conventional supermarkets and mass market outlets have also begun to increase
their emphasis on the sale of natural products. This business climate
subjects operating income to a number of factors which are beyond the control
of management, such as competing retail stores opening in close proximity to
the Company's retail stores and manufacturers changing prices and promotional
programs.
While the Company sells a diversified product line, it remains dependent on
cigarette sales which represented approximately 71% of its revenue and 39% of
its gross margin in the first six months of the fiscal year. Changes in
manufacturers' cigarette pricing affects the market for generic and private
label cigarettes and net income is heavily dependent upon sales of the
Company's private label cigarettes and volume discounts received from
manufacturers in connection with such sales. The Company continuously
evaluates steps it may take to improve net income in future periods,
including further acquisitions of other distributing companies and retail
stores in similar business lines and further sales of assets that are no
longer essential to its primary business activities such as investments in
equity securities.
Investments at March 31, 2001 and September 30, 2000, respectively, consisted
primarily of 70,000 shares of Consolidated Water Company Limited ("CWC"), a
public company which is listed on NASDAQ. The Company's basis in the
securities is $127,000 and the fair market value of the securities was
$538,0000 and $499,000 on March 31, 2001 and September 30, 2000,
respectively. The unrealized gain on CWC shares was approximately $411,000
and $372,000 on March 31, 2001 and September 30, 2000, respectively. The
fair market value of the CWC shares held on April 30, 2001 was $635,000.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 2001, cash of $10.3 million was
provided by operating activities primarily through reductions in accounts
receivable and inventory and due to increases in accounts payable resulting
from the Company taking advantage of extended payment terms offered by
manufacturers. Cash of $6.8 million was generated from investing activities
during the six- month period ended March 31, 2001 primarily due to proceeds
received from the sale of the health food distribution business, offset by r
an additional investment of $400,000 in notes receivable from HNWC, a
$300,000 equity investment in HNWC and for capital expenditures of
approximately $0.7 million. Cash of $17.2 million was utilized in financing
activities to reduce the revolving credit facilities and long-term debt and
for payment of dividends to stockholders.
The Company had working capital of approximately $18.6 million as of March
31, 2001 compared to $27.0 million as of September 30, 2000. The Company's
debt to equity ratio was 2.42 at March 31, 2001 compared to 3.33 at September
30, 2000.
The Company maintains a revolving credit facility that allows the Company to
borrow up to $25 million at any time, subject to eligible accounts receivable
and inventory requirements, and provides for an additional $1.5 million
facility to be used for transportation equipment purchases. The facility was
amended in November 2000 to increase the borrowing limit to $30 million for a
six-month period. The facility bears interest at the bank's base rate
("Prime") less 0.5% or LIBOR plus 1.75%, as selected by the Company. As of
March 31, 2001, the Company had borrowed approximately $11.7 million under
the facility. The facility is collateralized by all equipment, general
intangibles, inventories and accounts receivable. The facility expires on
February 25, 2002. All borrowings under the facility have been classified as
long-term based on expected borrowing levels.
The Company is renegotiating its revolving credit facility up to $55 million
in connection with the pending acquisition of Merchants Wholesale Inc.
The Company maintained a second revolving credit facility used to provide
capital to the health and natural foods distribution business and a term loan
from a bank used to finance the purchase of a Florida health and natural
foods distributor in November 1998. The revolving credit facility and the
term loan were repaid in full during the second quarter with proceeds
received from the sale of the assets of the health and natural foods
distribution business during the second quarter.
The Company has an outstanding term loan from a bank which was used to
finance the purchase of the common stock of Food For Health Co., Inc. (the
"Acquisition Loan"). The Acquisition Loan has a term of five years, bears
interest at Prime less 0.5% or LIBOR plus 1.75%, as selected by AMCON, and
requires monthly payments equal to accrued interest plus principal payments
of $85,096, which began in August 1998. As of March 31, 2001, the
outstanding balance of the Acquisition Loan was $1.7 million.
In September 1999, borrowings under an 8% Convertible Subordinated Note (the
"Convertible Note") and a Collateralized Promissory Note (the "Collateralized
Note"), in addition to borrowings under the revolving credit facility were
used to purchase all of the common stock of HFA. Both the Convertible Note
and the Collateralized Note have five-year terms and bear interest at 8% per
annum. Principal on the Convertible Note is due in a single payment at
maturity. Principal on the Collateralized Note is payable in installments of
$800,000 per year with the balance due at maturity. The Collateralized Note
is collateralized by a pledge of the stock of HFA. The principal balance of
the Convertible Note may be converted into stock of FFH under circumstances
set forth in the Convertible Note. As of March 31, 2001, the outstanding
balances of the Convertible Note and the Collateralized Note were $2.0
million and $7.2 million, respectively.
In November 1999, borrowings under a $220,000 subordinated note (the "MDF
Note") were used to purchase the assets of MDF Health, Inc. ("MDF"). The MDF
Note has a term of 3 years and bears interest at 8% per annum. Principal and
interest payments are due monthly. As of March 31, 2001, the outstanding
balances of the MDF Note was $168,300.
In August 2000, borrowings of $600,000 under the revolving credit facility
were utilized, in addition to $300,000 under a subordinated note (the "TINK
Note"), to purchase all of the outstanding common stock of TINK, Inc. The
TINK Note has a term of 5 years and bears interest at 7% per annum. Interest
payments are due monthly with annual principal payments ranging from $40,000
to $80,000. As of March 31, 2001, the outstanding balance of the TINK Note
was $260,000.
The Company believes that funds generated from operations, supplemented as
necessary with funds available under the revolving credit facility, will
provide sufficient liquidity to cover its debt service and any reasonably
foreseeable future working capital and capital expenditure requirements
associated with existing operations.
ACQUISITIONS AND DISPOSITIONS
Effective March 23, 2001, the Company's subsidiary, Food For Health Co.,
Inc., completed the sale of the assets of its health food distribution
business for $10.3 million, subject to certain adjustments. The purchase
price was paid in cash and the assumption by the purchaser of approximately
$2.1 million in indebtedness. The sale resulted in a pre-tax loss of
approximately $1.1 million ($675,000 after taxes). This loss includes an
accrual for estimated costs, including rent and related expenses associated
with the remaining lease commitments on the two distribution facilities that
were retained by the Company of $2.5 million and contractual consulting
agreements of $445,000, which will provide no future economic benefit to the
Company. The Company is actively seeking tenants to sublease the facilities
for the remainder of the lease terms. Any differences between these expense
estimates and their actual settlement will change the loss accordingly. In
connection with the sale of the health food distribution business, the
Company also entered into a 5 year supply agreement with the purchaser
underwhich the purchaser will supply products to the Company's retail health
food stores at market prices.
The sale of the Company's health food distribution business has been
reflected as discontinued operations in the unaudited condensed consolidated
financial statements in accordance with APB No. 30. Revenues from the
discontinued operations, which have been excluded from income from continuing
operations in the accompanying unaudited condensed consolidated statements of
operations for the three and six month periods ended March 31, 2001 and 2000,
are presented below. The effects of the discontinued operations on net
income (loss) and per share data are reflected within the accompanying
unaudited condensed consolidated statements of operations.
Three months ended Six months ended
March 31, March 31,
-------------------------- ---------------------------
2001 2000 2001 2000
----------- ------------ ------------ ------------
Revenue $ 7,964,084 $ 12,180,140 $ 16,192,858 $ 23,607,804
On February 8, 2001, the Company entered into an agreement to purchase
substantially all of the distribution business and assets of Merchants
Wholesale, Inc. ("Merchants") located in Quincy, IL. In addition, the
Company has agreed to a 206,000 square foot building currently occupied by
Merchants. The transaction is scheduled to close in May 2001 pending bank
financing approvals. The purchase price will be based on assets held at the
closing date and is estimated to be between $40 and $45 million, including
the real estate. The transaction will be accounted for using the purchase
method of accounting. Merchants operates through eight states as a wholesale
distributor of consumers products consistent with the Company's current
distribution business. Merchant's distribution territory is within and
contiguous to the Company's current distribution business territory.
It is anticipated that funding for the Merchants acquisition will be provided
through borrowings under a revolving credit facility, which is in the process
of being negotiated to accommodate the additional business. Funding for the
real estate and building will be provided by a term loan from a bank, which
is also being negotiated.
In November 2000, the Company entered into a merger agreement with Hawaiian
Natural Water Company, Inc. (OTC: HNWC), pursuant to which HNWC would be
merged with and into, and thereby become, a wholly-owned subsidiary of the
Company. As a result, the Company will issue between 358,168 and 477,558
shares of its common stock to HNWC shareholders, representing between 11.6%
and 14.9% of the Company's outstanding shares after giving effect to the
merger. The ultimate purchase price will be determined based on the Company's
stock price at the closing of the transaction. Based on the Company's
closing stock price on April 30, 2001, the maximum purchase price would be
$3.2 million (excluding the $750,000 advanced to HNWC through March 31, 2001
and recorded as notes receivable in the accompanying unaudited condensed
consolidated balance sheet at March 31, 2001).
The Company has provided HNWC with certain interim debt financing pending the
consummation of the merger. HNWC is currently experiencing recurring
operating losses and negative cash flows from operations; therefore, the
Company loaned HNWC $350,000 in September 2000 and $400,000 in October 2000
for a total of $750,000 to be used for working capital and other general
corporate purposes, including redemption of outstanding preferred stock. The
loan is evidenced by promissory notes, bearing interest at the rate of 10%
per annum, due on May 31, 2001, which are secured by substantially all of
HNWC's assets. In the event that the merger agreement is terminated for any
reason or HNWC defaults on its obligations under the notes, the Company will
be entitled to convert the notes into Series C Convertible Preferred Stock
which, among other things, would entitle the Company to elect a majority of
HNWC's Board of Directors. The notes are also convertible upon 61 days'
advance notice from the Company into HNWC common stock at the same exchange
ratio as in the merger. Due to the anticipated acquisition of HNWC and
management's belief that the notes will not be paid within the next 12
months, the notes have been classified as noncurrent as of March 31, 2001.
In January 2001, the Company invested an additional $300,000 in HNWC in
exchange for 750,000 shares of common stock at substantially the same
exchange ratio as provided for in the merger agreement. The investment
represents an ownership interest of approximately 9.5% in HNWC and,
accordingly, has been accounted for under the cost method. In addition, in
February 2001, the Company agreed to obtain, and placed orders for, certain
water bottling equipment to be utilized by HNWC in order to increase
production capacity to achieve its growth targets. The estimated commitment
under this operating lease is approximately $2.4 million over 8 years. The
Company will sublease this equipment to HNWC under similar terms. While
there is no commitment to do so, the Company may consider negotiating future
financing needs as they arise.
The merger is expected to qualify as a tax-free reorganization and to be
recorded on the Company's books using the purchase method of accounting. The
merger is subject to various conditions, including the effectiveness of a
registration statement covering the AMCON shares to be issued in the merger,
the listing of such shares on AMEX and the approval of the HNWC stockholders.
It is expected that the merger will be consummated in the fourth quarter of
fiscal 2001.
The Company anticipates that the interest rate spread on its revolving credit
facilities will increase as a result of higher level of borrowings related to
these acquisitions.
CONCERNING FORWARD LOOKING STATEMENTS
This Quarterly Report, including the Management's Discussion and Analysis
and other sections, 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. Forward looking statements include
information concerning the possible or assumed future results of operations
of the Company and those statements preceded by, followed by or that include
the words "future," "position," "anticipate(s)," "expect," "believe(s),"
"see," "plan," "further improve," "outlook," "should" or similar expressions.
For these statements, we claim the protection of the safe harbor for forward
looking statements contained in the Private Securities Litigation Reform Act
of 1995. You should understand that the following important factors, in
addition to those discussed elsewhere in this document, could affect the
future results of the Company and could cause those results to differ
materially from those expressed in our forward looking statements: changing
market conditions with regard to cigarettes and the demand for the Company's
products, domestic regulatory risks, competitive and other risks over which
the Company has little or no control. Any changes in such factors could
result in significantly different results. Consequently, future results may
differ from management's expectations. Moreover, past financial performance
should not be considered a reliable indicator of future performance.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not utilize financial instruments for trading purposes and
holds no derivative financial instruments which could expose the Company to
significant market risk. The Company's exposure to market risk relates
primarily to its investment in the common stock of Consolidated Water
Company, a public company traded on the NASDAQ National Market system, and
for changes in interest rates on its long-term obligations. At March 31,
2001, the Company held 70,000 shares of common stock of Consolidated Water
Company valued at $538,000. The Company values this investment at market and
records price fluctuations in equity as unrealized gain or loss on
investments. At March 31, 2001, the Company had $13.4 million of variable
rate debt outstanding, with maturities through May 2004. The interest rates
on this debt ranged from 7.1% to 8.5% at March 31, 2001. The Company has the
ability to select the bases on which its variable interest rates are
calculated and may select an interest rate based on its lender's base
interest rate or based on LIBOR. This provides management with some control
of the Company's variable interest rate risk. The Company estimates that its
annual cash flow exposure relating to interest rate risk based on its current
borrowings is approximately $83,000 for each 1% change in its lender's prime
interest rate or LIBOR, as applicable.
The Company is also exposed to market risk through its investment in $750,000
of convertible notes receivable from HNWC. The notes are recorded at
amortized cost, accrue interest at 10% per annum and mature on May 31, 2001.
The original due date of March 31, 2001 was extended to May 31, 2001. The
notes are convertible into HNWC common stock. Market increases in interest
rates and in HNWC's stock price could increase the likelihood that such notes
would be converted. Alternatively, market decreases in interest rates and
HNWC's stock price could decrease the likelihood of conversion. Likewise,
market changes in HNWC's stock price and interest rates impact the fair value
of the convertible note receivable.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on March 9, 2001 for the
purpose of electing three directors and ratifying the appointment of its
auditors.
The following sets forth the results of the election of directors:
NAME OF NOMINEE FOR WITHHELD
William F. Wright 2,443,510 99.7% 7,790 0.3%
Jerry Fleming 2,443,505 99.7% 7,795 0.3%
William R. Hoppner 2,443,511 99.7% 7,789 0.3%
There was no solicitation in opposition to the nominees proposed to be
elected by the Stockholders in the Proxy Statement. In addition to the
directors elected at the Annual Meeting, the following directors continued
their term of office: Kathleen M. Evans, J. Tony Howard, Timothy R. Pestotnik
and Allen D. Petersen.
The ratification of the appointment of PricewaterhouseCoopers as independent
auditors for the Company for the fiscal year ending September 28, 2001 was
approved by the Stockholders with 2,450,539 votes FOR (100.0%), 500 votes
AGAINST, and 261 votes ABSTAINED OR BROKER NON-VOTES.
Further information regarding these matters is contained in the Company's
Proxy Statement dated February 13, 2001.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
2.1 Stock Purchase Agreement dated February 24, 1999, between Food
For Health Company, Inc. ("FFH"), Chamberlin Natural Foods, Inc.
("Chamberlin") and its shareholders (incorporated by reference
to Exhibit 2.2 of AMCON's Quarterly Report on Form 10-Q filed on
May 10, 1999)
2.2 Stock Purchase Agreement dated August 30, 1999, by and among
Food For Health Company, Inc., Health Food Associates, Inc. and
its shareholders (incorporated by reference to Exhibit 2.1 of
AMCON's Current Report of Form 8-K filed on September 30, 1999)
2.3 Second Amended and Restated Agreement and Plan of Merger dated
January 30, 2001 by and between AMCON Distributing Company,
AMCON Merger Sub, Inc. and Hawaiian Natural Water Company Inc.
(incorporated by reference to Exhibit 2.4 of AMCON's Quarterly
Report on Form 10-Q filed on February 12, 2001)
2.4 Assets Purchase and Sale Agreement by and between Food For
Health Company, Inc., AMCON Distributing Company and Tree of
Life, Inc. dated March 8, 2001 (incorporated by reference to
Exhibit 2.1 of AMCON's Current Report on Form 8-K filed on April
10, 2001)
2.5 Amendment to Assets Purchase and Sale Agreement by and between
Food For Health Company, Inc., AMCON Distributing Company and
Tree of Life, Inc. effective March 23, 2001 (incorporated by
reference to Exhibit 2.2 of AMCON's Current Report on Form 8-K
filed on April 10, 2001)
3.1 Restated Certificate of Incorporation of the Company, as amended
March 19, 1998 (incorporated by reference to Exhibit 3.1 of
AMCON's Quarterly Report on Form 10-Q filed on May 11, 1998)
3.3 Bylaws of the Company (incorporated by reference to Exhibit 3.2
of AMCON's Registration Statement on Form S-1 (Registration
No. 33-82848) filed on August 15, 1994)
4.1 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of AMCON's Registration Statement on Form S-1
(Registration No. 33-82848) filed on August 15, 1994)
10.1 Grant of Exclusive Manufacturing Rights, dated October 1, 1993,
between the Company and Famous Value Brands, a division of
Philip Morris Incorporated, including Private Label
Manufacturing Agreement and Amended and Restated Trademark
License Agreement (incorporated by reference to Exhibit 10.1 of
Amendment No. 1 to AMCON's Registration Statement on Form S-1
(Registration No. 33-82848) filed on November 8, 1994)
10.2 Amendment No. 1 to Grant of Exclusive Manufacturing Rights,
dated October 1, 1998, between the Company and Famous Value
Brands, a division of Philip Morris Incorporated, including
Amendment No. 1 To Private Label Manufacturing Agreement and
Amendment No. 1 to Amended and Restated Trademark License
Agreement (incorporated by reference to Exhibit 10.2 of AMCON's
Annual Report on Form 10-K filed on December 24, 1998)
10.3 Loan Agreement, dated November 10, 1997, between the Company and
LaSalle National Bank (incorporated by reference to Exhibit 10.1
of AMCON's Current Report on Form 8-K filed on November 25,
1997)
10.4 Amended Loan Agreement, dated February 25, 1998, between the
Company and LaSalle National Bank (incorporated by reference to
Exhibit 10.5 of AMCON's Quarterly Report on Form 10-Q filed on
May 11, 1998)
10.5 Note, dated November 10, 1997, between the Company and LaSalle
National Bank (incorporated by reference to Exhibit 10.2 of
AMCON's Current Report on Form 8-K filed on November 25, 1997)
10.6 First Allonge to Note, dated February 25, 1998, between the
Company and LaSalle National Bank (incorporated by reference to
Exhibit 10.7 of AMCON's Quarterly Report on Form 10-Q filed on
May 11, 1998)
10.7 Loan and Security Agreement, dated February 25, 1998, between
the Company and LaSalle National Bank (incorporated by reference
to Exhibit 10.8 of AMCON's Quarterly Report on Form 10-Q filed
on May 11, 1998)
10.8 Promissory Note, dated February 25, 1998, between the Company
and LaSalle National Bank (incorporated by reference to Exhibit
10.9 of AMCON's Quarterly Report on Form 10-Q filed on May 11,
1998)
10.9 Unconditional Guarantee, dated February 25, 1998, between the
Company and LaSalle National Bank (incorporated by reference to
Exhibit 10.12 of AMCON's Quarterly Report on Form 10-Q
filed on May 11, 1998)
10.10 8% Convertible Subordinated Note, dated September 15, 1999 by
and between Food For Health Company Inc. and Eric Hinkefent,
Mary Ann O'Dell, Sally Sobol, and Amy Laminsky (incorporated by
reference to Exhibit 10.1 of AMCON's Current Report on Form 8-K
filed on September 30, 1999)
10.11 Secured Promissory Note, dated September 15, 1999, by and
between Food For Health Company, Inc. and James C. Hinkefent
and Marilyn M. Hinkefent, as trustees of the James C. Hinkefent
Trust dated July 11, 1994, as amended, Eric Hinkefent, Mary Ann
O'Dell, Sally Sobol, and Amy Laminsky (incorporated by
reference to Exhibit 10.2 of AMCON's Current Report on Form 8-K
filed on September 30, 1999)
10.12 Pledge Agreement, dated September 15, 1999, by and between Food
For Health Company, Inc. and James C. Hinkefent and Marilyn M.
Hinkefent, as trustees of the James C. Hinkefent Trust dated
July 11, 1994, as amended, Eric Hinkefent, Mary Ann O'Dell,
Sally Sobol, and Amy Laminsky (incorporated by reference to
Exhibit 10.3 of AMCON's Current Report on Form 8-K filed on
September 30, 1999)
10.13 First Amended and Restated AMCON Distributing Company 1994
Stock Option Plan (incorporated by reference to Exhibit 10.17
of AMCON's Current Report on Form 10-Q filed on August 4, 2000)
10.14 AMCON Distributing Company Profit Sharing Plan (incorporated by
reference to Exhibit 10.8 of Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-82848)
filed on November 8, 1994)
10.15 Employment Agreement, dated May 22, 1998, between the Company
and William F. Wright (incorporated by reference to Exhibit
10.14 of AMCON's Quarterly Report on Form 10-Q filed on
August 6, 1998)
10.16 Employment Agreement, dated May 22, 1998, between the Company
and Kathleen M. Evans (incorporated by reference to Exhibit
10.15 of AMCON's Quarterly Report on Form 10-Q filed on
August 6, 1998)
10.17 Employment Agreement, dated May 22, 1998, between the Food For
Health Co., Inc. and Jerry Fleming (incorporated by reference
to Exhibit 10.16 of AMCON's Quarterly Report on Form 10-Q
filed on August 6, 1998)
11.1 Statement re: computation of per share earnings (incorporated by
reference to footnote 5 to the financial statements included in
Item 1 of Part I herein)
(b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K under Item 5 on March
6, 2001 announcing the execution of an agreement to purchase substantially
all of the distribution business and assets of Merchants Wholesale Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AMCON DISTRIBUTING COMPANY
(registrant)
Date: May 14, 2001 Kathleen M. Evans
----------------- -------------------------
Kathleen M. Evans
President & Principal
Executive Officer
Date: May 14, 2001 Michael D. James
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Michael D. James
Treasurer & CFO and
Principal Financial and
Accounting Officer