##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    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 1-15589
 
 (AMCON LOGO)
 
 Delaware
    
    47-0702918(State or other jurisdiction 
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 7405 Irvington Road, Omaha NE
    
    68122(Address of principal executive offices)
    
    (Zip code)
  
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
  o þ




---



##### 



Form 10-Q
3rd Quarter
 INDEX
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed consolidated balance sheets 
at June 30, 2009 (unaudited) and September 30, 2008
    
    
    3Condensed consolidated unaudited statements of operations 
for the three and nine months ended June 30, 2009 and 2008
    
    
    4Condensed consolidated unaudited statements of cash flows 
for the nine months ended June 30, 2009 and 2008
    
    
    5Notes to condensed consolidated unaudited financial statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4T. Controls and Procedures
    
    
    31PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    34Signatures
    
    
    35Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  
  2




---



##### Table of Contents



AMCON Distributing Company and Subsidiaries
 
 Condensed Consolidated Balance Sheets
 June 30, 2009 and September 30, 2008
 June
    
    
    September2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash
    
    $
    410,404
    
    
    $
    457,681Accounts receivable, less allowance for doubtful accounts
of $1.2 million and $0.8 million, respectively
    
    
    28,506,716
    
    
    
    27,198,414Inventories, net
    
    
    35,285,633
    
    
    
    37,330,969Deferred income taxes
    
    
    1,705,820
    
    
    
    1,260,609Current assets of discontinued operations
    
    
    
    
    
    
    18,947Prepaid and other current assets
    
    
    3,206,891
    
    
    
    3,519,650Total current assets
    
    
    69,115,464
    
    
    
    69,786,270Property and equipment, net
    
    
    10,798,795
    
    
    
    10,907,541Goodwill
    
    
    5,848,808
    
    
    
    5,848,808Other intangible assets, net
    
    
    3,373,269
    
    
    
    3,373,269Deferred income taxes
    
    
    
    
    
    
    234,171Non-current assets of discontinued operations
    
    
    
    
    
    
    2,032,047Other assets
    
    
    1,063,975
    
    
    
    1,123,252$
    90,200,311
    
    
    $
    93,305,358LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    15,034,390
    
    
    $
    14,738,214Accrued expenses
    
    
    7,940,022
    
    
    
    5,275,697Accrued wages, salaries and bonuses
    
    
    2,599,148
    
    
    
    2,636,699Income taxes payable
    
    
    5,043,290
    
    
    
    313,021Current liabilities of discontinued operations
    
    
    
    
    
    
    4,041,837Current maturities of credit facility
    
    
    3,046,000
    
    
    
    3,046,000Current maturities of long-term debt
    
    
    1,480,307
    
    
    
    787,128Total current liabilities
    
    
    35,143,157
    
    
    
    30,838,596Credit facility, less current maturities
    
    
    23,199,769
    
    
    
    32,155,005Deferred income taxes
    
    
    1,104,891
    
    
    
    Long-term debt, less current maturities
    
    
    5,240,060
    
    
    
    6,525,881Noncurrent liabilities of discontinued operations
    
    
    
    
    
    
    6,542,310Series A cumulative, convertible preferred stock, $.01 par value,
100,000 shares authorized and issued, liquidation preference
$25.00 per share
    
    
    2,500,000
    
    
    
    2,438,355Series B cumulative, convertible preferred stock, $.01 par value,
80,000 shares authorized and issued, liquidation preference
$25.00 per share
    
    
    2,000,000
    
    
    
    1,857,645Series C cumulative, convertible preferred stock, $.01 par value,
80,000 shares authorized and issued at September 30, 2008,
liquidation preference $25.00 per share
    
    
    
    
    
    
    1,982,372Shareholders equity:Preferred stock, $0.01 par, 1,000,000 shares authorized,
180,000 shares outstanding and issued in Series A and B
at June 30, 2009 and 260,000 shares outstanding and issued
in Series A, B and C at September 30, 2008 referred to above
    
    
    
    
    
    
    Common stock, $0.01 par value, 3,000,000 shares authorized,
570,397 shares outstanding at June 2009 and September 2008
    
    
    5,704
    
    
    
    5,704Additional paid-in capital
    
    
    7,378,056
    
    
    
    6,995,948Retained earnings
    
    
    13,628,674
    
    
    
    3,963,542Total shareholders equity
    
    
    21,012,434
    
    
    
    10,965,194$
    90,200,311
    
    
    $
    93,305,358
   3




---



##### Table of Contents



AMCON Distributing Company and Subsidiaries
 
 Condensed Consolidated Unaudited Statements of Operations
 for the three and nine months ended June 30, 2009 and 2008
 For the three months
    
    
    For the nine monthsended June
    
    
    ended June2009
    
    
    2008
    
    
    2009
    
    
    2008Sales (including excise taxes of $77.4
million and $53.6 million, and $171.0
million and $151.5 million, respectively)
    
    $
    242,817,927
    
    
    $
    223,397,392
    
    
    $
    655,637,536
    
    
    $
    624,472,299Cost of sales
    
    
    225,753,469
    
    
    
    207,135,083
    
    
    
    605,481,395
    
    
    
    577,272,429Gross profit
    
    
    17,064,458
    
    
    
    16,262,309
    
    
    
    50,156,141
    
    
    
    47,199,870Selling, general and administrative expenses
    
    
    12,800,612
    
    
    
    12,959,518
    
    
    
    38,625,335
    
    
    
    37,866,602Depreciation and amortization
    
    
    273,650
    
    
    
    340,983
    
    
    
    884,972
    
    
    
    1,043,26613,074,262
    
    
    
    13,300,501
    
    
    
    39,510,307
    
    
    
    38,909,868Operating income
    
    
    3,990,196
    
    
    
    2,961,808
    
    
    
    10,645,834
    
    
    
    8,290,002Other expense (income):Interest expense
    
    
    368,048
    
    
    
    635,523
    
    
    
    1,265,834
    
    
    
    2,354,883Other (income), net
    
    
    (43,600
    )
    
    
    (17,958
    )
    
    
    (84,143
    )
    
    
    (90,437
    )324,448
    
    
    
    617,565
    
    
    
    1,181,691
    
    
    
    2,264,446Income from continuing operations
before income tax expense
    
    
    3,665,748
    
    
    
    2,344,243
    
    
    
    9,464,143
    
    
    
    6,025,556Income tax expense
    
    
    1,411,000
    
    
    
    857,000
    
    
    
    3,614,000
    
    
    
    2,226,000Income from continuing operations
    
    
    2,254,748
    
    
    
    1,487,243
    
    
    
    5,850,143
    
    
    
    3,799,556Discontinued operations (Note 2)Gain on asset disposal and
debt settlement, net of income
tax expense of $2.7 million
    
    
    4,666,264
    
    
    
    
    
    
    
    4,666,264
    
    
    
    Income (loss) from discontinued operations,
net of income tax expense (benefit) of
$0.01 million and ($0.1) million, & ($0.1)
million & ($0.2) million, respectively
    
    
    13,105
    
    
    
    (98,441
    )
    
    
    (186,370
    )
    
    
    (291,881
    )Income (loss) on discontinued operations
    
    
    4,679,369
    
    
    
    (98,441
    )
    
    
    4,479,894
    
    
    
    (291,881
    )Net income
    
    
    6,934,117
    
    
    
    1,388,802
    
    
    
    10,330,037
    
    
    
    3,507,675Dividends on convertible preferred stock
    
    
    (74,052
    )
    
    
    (104,386
    )
    
    
    (493,786
    )
    
    
    (314,306
    )Net income available to common shareholders
    
    $
    6,860,065
    
    
    $
    1,284,416
    
    
    $
    9,836,251
    
    
    $
    3,193,369Basic earnings (loss) per share
available to common shareholders:Continuing operations
    
    $
    3.97
    
    
    $
    2.57
    
    
    $
    9.78
    
    
    $
    6.50Discontinued operations
    
    
    8.52
    
    
    
    (0.18
    )
    
    
    8.17
    
    
    
    (0.54
    )Net basic earnings per share
available to common shareholders
    
    $
    12.49
    
    
    $
    2.39
    
    
    $
    17.95
    
    
    $
    5.96Diluted earnings (loss) per share
available to common shareholders:Continuing operations
    
    $
    3.11
    
    
    $
    1.75
    
    
    $
    7.37
    
    
    $
    4.46Discontinued operations
    
    
    6.46
    
    
    
    (0.12
    )
    
    
    5.65
    
    
    
    (0.34
    )Net diluted earnings per share
available to common shareholders
    
    $
    9.57
    
    
    $
    1.63
    
    
    $
    13.02
    
    
    $
    4.12Weighted average shares outstanding:Basic
    
    
    549,397
    
    
    
    537,064
    
    
    
    547,859
    
    
    
    536,002Diluted
    
    
    724,833
    
    
    
    851,911
    
    
    
    793,610
    
    
    
    850,898
   4




---



##### Table of Contents



AMCON Distributing Company and Subsidiaries
 
 Condensed Consolidated Unaudited Statements of Cash Flows
 for the nine months ended June 30, 2009 and 2008
 2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    10,330,037
    
    
    $
    3,507,675Deduct: Income (loss) from discontinued operations, net of tax
    
    
    4,479,894
    
    
    
    (291,881
    )Income from continuing operations
    
    
    5,850,143
    
    
    
    3,799,556Adjustments to reconcile net income from
continuing operations to net cash flows
from operating activities:Depreciation
    
    
    884,972
    
    
    
    1,016,465Amortization
    
    
    
    
    
    
    26,801Loss (gain) on sale of property and equipment
    
    
    26,468
    
    
    
    (36,417
    )Stock based compensation
    
    
    398,700
    
    
    
    302,350Excess tax deficiency on equity-based awards
    
    
    16,592
    
    
    
    Deferred income taxes
    
    
    893,851
    
    
    
    2,000,291Provision for losses on doubtful accounts
    
    
    489,038
    
    
    
    238,000Provision for losses on inventory obsolescence
    
    
    331,319
    
    
    
    118,976Changes in assets and liabilities:Accounts receivable
    
    
    (1,797,340
    )
    
    
    2,072,959Inventories
    
    
    1,714,017
    
    
    
    (8,110,310
    )Prepaid and other current assets
    
    
    312,759
    
    
    
    1,674,160Other assets
    
    
    59,277
    
    
    
    (253,247
    )Accounts payable
    
    
    (365,711
    )
    
    
    (236,455
    )Accrued expenses and accrued wages, salaries and bonuses
    
    
    2,625,568
    
    
    
    (666,365
    )Income tax payable
    
    
    4,713,677
    
    
    
    (170,366
    )Net cash flows from operating activities  continuing operations
    
    
    16,153,330
    
    
    
    1,776,398Net cash flows from operating activities  discontinued operations
    
    
    (2,673,712
    )
    
    
    (112,866
    )Net cash flows from operating activities
    
    
    13,479,618
    
    
    
    1,663,532CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (784,221
    )
    
    
    (667,268
    )Proceeds from sales of property and equipment
    
    
    102,406
    
    
    
    74,821Net cash flows from investing activities
    
    
    (681,815
    )
    
    
    (592,447
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net payments on bank credit agreements
    
    
    (8,955,236
    )
    
    
    (453,482
    )Principal payments on long-term debt
    
    
    (604,975
    )
    
    
    (448,306
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    119,636Excess tax deficiency on vesting equity-based awards
    
    
    (16,592
    )
    
    
    Redemption of Series C convertible preferred stock
    
    
    (2,000,000
    )
    
    
    Dividends paid on convertible preferred stock
    
    
    (272,158
    )
    
    
    (314,306
    )Dividends on common stock
    
    
    (171,119
    )
    
    
    (45,485
    )Net cash flows from financing activities  continuing operations
    
    
    (12,020,080
    )
    
    
    (1,141,943
    )Net cash flows from financing activities  discontinued operations
    
    
    (825,000
    )
    
    
    Net cash flows from financing activities
    
    
    (12,845,080
    )
    
    
    (1,141,943
    )Net change in cash
    
    
    (47,277
    )
    
    
    (70,858
    )Cash, beginning of period
    
    
    457,681
    
    
    
    717,554Cash, end of period
    
    $
    410,404
    
    
    $
    646,696Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    1,347,690
    
    
    $
    2,488,101Cash paid during the period for income taxes
    
    
    612,473
    
    
    
    221,076Supplemental disclosure of non-cash information:Constructive dividends on Series A, B, and C
Convertible Preferred Stock
    
    
    221,628
    
    
    
    Acquisition of equipment through capital leases
    
    
    12,333
    
    
    
    277,624Equipment acquisitions classified as accounts payable
    
    
    108,546
    
    
    
    TSI disposition  discontinued operationsProperty and equipment, net
    
    
    (2,032,047
    )
    
    
    Accrued expenses
    
    
    (925,452
    )
    
    
    Long-term debt
    
    
    (6,945,548
    )
    
    
    Deferred gain on CPH Settlement
    
    
    (1,542,312
    )
    
    
    
  5




---



##### Table of Contents



AMCON Distributing Company and Subsidiaries
 
 Notes to Condensed Consolidated Unaudited Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
        6




---



##### Table of Contents



Adoption of New Accounting Standards
     Recently Issued Accounting Pronouncements
    7




---



##### Table of Contents



2. DISPOSITIONS
   8




---



##### Table of Contents



Three months ended
    
    
    Nine months endedJune
    
    
    June2009
    
    
    2008
    
    
    2009
    
    
    2008Operating income (loss)
    
    $
    20,105
    
    
    $
    (40,791
    )
    
    $
    (65,458
    )
    
    $
    (122,731
    )Interest expense
    
    
    
    
    
    
    (114,750
    )
    
    
    (230,012
    )
    
    
    (344,250
    )Gain on asset disposal and debt settlement
    
    
    7,381,264
    
    
    
    
    
    
    
    7,381,264
    
    
    
    Income tax expense (benefit)
    
    
    2,722,000
    
    
    
    (57,000
    )
    
    
    2,606,000
    
    
    
    (175,000
    )Gain (loss) from discontinued operations
    
    
    4,679,369
    
    
    
    (98,441
    )
    
    
    4,479,894
    
    
    
    (291,881
    )
  June
    
    
    September2009
    
    
    2008Fixed assets  total noncurrent assets of
discontinued operations
    
    $
    
    
    
    $
    2.0Accounts payable
    
    $
    
    
    
    $
    0.5Accrued expenses
    
    
    
    
    
    
    0.7Current portion of long-term debt due related party
    
    
    
    
    
    
    2.8Liabilities of discontinued operations
    
    $
    
    
    
    $
    4.0Deferred gain on CPH settlement
    
    $
    
    
    
    $
    1.5Long-term debt, less current portion
    
    
    
    
    
    
    5.0Noncurrent liabilities of discontinued operations
    
    $
    
    
    
    $
    6.5
 3. CONVERTIBLE PREFERRED STOCK
  Series A
    
    
    Series BDate of issuance:
    
    June 17, 2004
    
    
    October 8, 2004Optionally redeemable beginning
    
    June 18, 2006
    
    
    October 9, 2006Par value (gross proceeds):
    
    $
    2,500,000
    
    
    $
    2,000,000Number of shares:
    
    
    100,000
    
    
    
    80,000Liquidation preference per share:
    
    $
    25.00
    
    
    $
    25.00Conversion price per share:
    
    $
    30.31
    
    
    $
    24.65Number of common shares in
which to be converted:
    
    
    82,481
    
    
    
    81,136Dividend rate:
    
    
    6.785
    %
    
    
    6.37
    %
  9




---



##### Table of Contents



4. INVENTORIES
  June
    
    
    September2009
    
    
    2008Finished Goods
    
    $
    35,285,633
    
    
    $
    37,330,969
    10




---



##### Table of Contents



5. GOODWILL AND OTHER INTANGIBLE ASSETS
  June
    
    
    September2009
    
    
    2008Wholesale
    
    $
    3,935,931
    
    
    $
    3,935,931Retail
    
    
    1,912,877
    
    
    
    1,912,877$
    5,848,808
    
    
    $
    5,848,808
  June
    
    
    September2009
    
    
    2008Trademarks and tradenames
    
    $
    3,373,269
    
    
    $
    3,373,269
  6. DIVIDENDS
  7. EARNINGS (LOSS) PER SHARE
   11




---



##### Table of Contents



For the three months ended June2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedWeighted average common
shares outstanding
    
    
    549,397
    
    
    
    549,397
    
    
    
    537,064
    
    
    
    537,064Weighted average of net
additional shares outstanding
assuming dilutive options
exercised and proceeds
used to purchase treasury
stock and conversion of
preferred stock /1/
    
    
    
    
    
    
    175,436
    
    
    
    
    
    
    
    314,847Weighted average number of
shares outstanding
    
    
    549,397
    
    
    
    724,833
    
    
    
    537,064
    
    
    
    851,911Income from continuing operations
    
    $
    2,254,748
    
    
    $
    2,254,748
    
    
    $
    1,487,243
    
    
    $
    1,487,243Deduct: convertible preferred
stock dividends /2/
    
    
    (74,052
    )
    
    
    
    
    
    
    (104,386
    )
    
    
    2,180,696
    
    
    
    2,254,748
    
    
    
    1,382,857
    
    
    
    1,487,243Income (loss) from discontinued
operations
    
    $
    4,679,369
    
    
    $
    4,679,369
    
    
    $
    (98,441
    )
    
    $
    (98,441
    )Net income available
to common shareholders
    
    $
    6,860,065
    
    
    $
    6,934,117
    
    
    $
    1,284,416
    
    
    $
    1,388,802Income per share from
continuing operations
    
    $
    3.97
    
    
    $
    3.11
    
    
    $
    2.57
    
    
    $
    1.75Income (loss) per share from
discontinued operations
    
    $
    8.52
    
    
    $
    6.46
    
    
    $
    (0.18
    )
    
    $
    (0.12
    )Net earnings per share
available to common shareholders
    
    $
    12.49
    
    
    $
    9.57
    
    
    $
    2.39
    
    
    $
    1.63
  12




---



##### Table of Contents



For the nine months ended June2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedWeighted average common
shares outstanding
    
    
    547,859
    
    
    
    547,859
    
    
    
    536,002
    
    
    
    536,002Weighted average of net
additional shares outstanding
assuming dilutive options
exercised and proceeds
used to purchase treasury
stock and conversion of
preferred stock /1/
    
    
    
    
    
    
    245,751
    
    
    
    
    
    
    
    314,896Weighted average number of
shares outstanding
    
    
    547,859
    
    
    
    793,610
    
    
    
    536,002
    
    
    
    850,898Income from continuing operations
    
    $
    5,850,143
    
    
    $
    5,850,143
    
    
    $
    3,799,556
    
    
    $
    3,799,556Deduct: convertible preferred
stock dividends /2/
    
    
    (493,786
    )
    
    
    
    
    
    
    (314,306
    )
    
    
    5,356,357
    
    
    
    5,850,143
    
    
    
    3,485,250
    
    
    
    3,799,556Income (loss) from discontinued
operations
    
    $
    4,479,894
    
    
    $
    4,479,894
    
    
    $
    (291,881
    )
    
    $
    (291,881
    )Net income available
to common shareholders
    
    $
    9,836,251
    
    
    $
    10,330,037
    
    
    $
    3,193,369
    
    
    $
    3,507,675Income per share from
continuing operations
    
    $
    9.78
    
    
    $
    7.37
    
    
    $
    6.50
    
    
    $
    4.46Income (loss) per share from
discontinued operations
    
    $
    8.17
    
    
    $
    5.65
    
    
    $
    (0.54
    )
    
    $
    (0.34
    )Net earnings per share
available to common shareholders
    
    $
    17.95
    
    
    $
    13.02
    
    
    $
    5.96
    
    
    $
    4.12
 /1/
    
    Diluted earnings per share calculation includes all stock options,
convertible preferred stock, and restricted stock deemed to be
dilutive./2/
    
    Diluted earnings per share calculation excludes dividends for
convertible preferred stock deemed to be dilutive, as those amounts
are assumed to have been converted to common stock of the Company. 8. DEBT
  
    
    A June 2011 maturity date.
 
    
    A $55.0 million revolving credit limit, plus the outstanding balance on Term Note A. Term
Note A had an outstanding balance of $0.2 million at June 2009.
 
    
    The Facility bears interest at either the banks prime rate or at LIBOR plus 250 basis
points, at the election of the Company.
  13




---



##### Table of Contents



8. DEBT (continued)
 
    
    The Facility provides for an additional $5.0 million of credit available for certain
inventory purchases. These advances bear interest at the banks prime rate plus one-quarter
of one-percent (1/4%) per annum and are payable within 45 days of each advance.
 
    
    Lending limits subject to accounts receivable and inventory limitations, and an unused
commitment fee equal to one-quarter of one percent (1/4%) per annum on the difference between
the maximum loan limit and average monthly borrowings.
 
    
    Collateral including all of the Companys equipment, intangibles, inventories, and accounts
receivable.
 
    
    Provides that the Company may not pay dividends on its common stock in excess of $0.72 per
share on an annual basis.
 
    
    The Facility includes a prepayment penalty equal to one-half of one percent (1/2%) of the
original maximum loan limit ($60.4 million) if the Company prepays the entire Facility or
terminates the credit agreement on or before June 30, 2010.
       14




---



##### Table of Contents



Cross Default and Co-Terminus Provisions
  OTHER
  Off-Balance Sheet Arrangements
  9. EQUITY-BASED INCENTIVE AWARDS
 Stock Options
    Number ofOptions
    
    
    NumberDate
    
    Exercise Price
    
    
    Outstanding
    
    
    ExercisableFiscal 1999
    
    $
    45.68
    
    
    
    917
    
    
    
    917Fiscal 2000
    
    $
    34.50
    
    
    
    3,123
    
    
    
    3,123Fiscal 2003
    
    $
    28.80
    
    
    
    3,170
    
    
    
    3,170Fiscal 2007
    
    $
    18.00
    
    
    
    25,000
    
    
    
    16,66632,210
    
    
    
    23,876
  15




---



##### Table of Contents



Number ofOptions
    
    
    NumberDate
    
    Exercise Price
    
    
    Outstanding
    
    
    ExercisableFiscal 2002
    
    $
    26.94
    
    
    
    834
    
    
    
    834Fiscal 2003
    
    $
    28.26
    
    
    
    834
    
    
    
    8341,668
    
    
    
    1,668
  Remaining
    
    
    
    
    
    
    ExercisableExercise
    
    Number
    
    
    Weighted-Average
    
    
    Weighted-Average
    
    
    Number
    
    
    Weighted-AveragePrice
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise Price1999 Options
    
    $45.68
    
    
    917
    
    
    0.21 years
    
    $
    45.68
    
    
    
    917
    
    
    $
    45.682000 Options
    
    $34.50
    
    
    3,123
    
    
    0.95 years
    
    $
    34.50
    
    
    
    3,123
    
    
    $
    34.502002 Options
    
    $26.94
    
    
    834
    
    
    3.12 years
    
    $
    26.94
    
    
    
    834
    
    
    $
    26.942003 Options
    
    $28.26-$28.80
    
    
    4,004
    
    
    3.49 years
    
    $
    28.69
    
    
    
    4,004
    
    
    $
    28.692007 Options
    
    $18.00
    
    
    25,000
    
    
    7.45 years
    
    $
    18.00
    
    
    
    16,666
    
    
    $
    18.0033,878
    
    
    
    
    
    
    $
    21.75
    
    
    
    25,544
    
    
    $
    22.98
  WeightedNumber
    
    
    Averageof
    
    
    ExerciseShares
    
    
    PriceOutstanding at September 2008
    
    
    42,120
    
    
    $
    26.80Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Expired
    
    
    (8,242
    )
    
    $
    47.54Outstanding at June 2009
    
    
    33,878
    
    
    $
    21.75Options exercisable at end of period
    
    
    25,544
   16




---



##### Table of Contents



Omnibus Plan
   Restricted Stock /1/
    
    
    Restricted Stock /2/Date of award:
    
    December 6, 2007
    
    
    January 29, 2008Number of shares:
    
    
    24,000
    
    
    
    7,500Service period:
    
    34 months
    
    
    36 monthsEstimated fair value of award at grant date/3/:
    
    $
    963,000
    
    
    $
    229,000Intrinsic value of awards outstanding at June 2009:
    
    $
    656,000
    
    
    $
    205,000
 /1/
    
    8,000 shares were vested at June 2009. The remaining 16,000 shares
will vest in equal amounts (8,000 per year) on October 16, 2009 and
October 16, 2010./2/
    
    2,500 shares were vested at June 2009. The remaining 5,000 shares
will vest in equal amounts (2,500 per year) on January 29, 2010 and
January 29, 2011./3/
    
    Amount is net of estimated forfeitures.    17




---



##### Table of Contents



Number
    
    
    Weighted Averageof
    
    
    Grant DateShares
    
    
    Fair ValueNonvested restricted stock
at September 2008
    
    
    31,500
    
    
    $
    40.16Granted
    
    
    
    
    
    
    Vested/Issued
    
    
    (10,500
    )
    
    $
    40.16Expired
    
    
    
    
    
    
    Nonvested restricted stock
at June 2009
    
    
    21,000
    
    
    $
    40.16
 10. BUSINESS SEGMENTS
  WholesaleDistribution
    
    
    Retail
    
    
    Other /1/
    
    
    ConsolidatedTHREE MONTHS ENDED JUNE 2009:External revenue:Cigarettes
    
    $
    175,859,941
    
    
    $
    
    
    
    $
    
    
    
    $
    175,859,941Confectionery
    
    
    17,248,948
    
    
    
    
    
    
    
    
    
    
    
    17,248,948Health food
    
    
    
    
    
    
    9,059,300
    
    
    
    
    
    
    
    9,059,300Tobacco, food service & other
    
    
    40,649,738
    
    
    
    
    
    
    
    
    
    
    
    40,649,738Total external revenue
    
    
    233,758,627
    
    
    
    9,059,300
    
    
    
    
    
    
    
    242,817,927Depreciation
    
    
    223,275
    
    
    
    49,228
    
    
    
    1,147
    
    
    
    273,650Operating income (loss)
    
    
    4,661,114
    
    
    
    888,437
    
    
    
    (1,559,355
    )
    
    
    3,990,196Interest expense
    
    
    132,192
    
    
    
    133,692
    
    
    
    102,164
    
    
    
    368,048Income (loss) from continuing
operations before taxes
    
    
    4,536,746
    
    
    
    765,176
    
    
    
    (1,636,174
    )
    
    
    3,665,748Total assets
    
    
    77,693,924
    
    
    
    11,517,275
    
    
    
    989,112
    
    
    
    90,200,311Capital expenditures
    
    
    223,251
    
    
    
    63,569
    
    
    
    
    
    
    
    286,820THREE MONTHS ENDED JUNE 2008:External revenue:Cigarettes
    
    $
    156,409,915
    
    
    $
    
    
    
    $
    
    
    
    $
    156,409,915Confectionery
    
    
    16,778,331
    
    
    
    
    
    
    
    
    
    
    
    16,778,331Health food
    
    
    
    
    
    
    9,810,444
    
    
    
    
    
    
    
    9,810,444Tobacco, food service & other
    
    
    40,398,702
    
    
    
    
    
    
    
    
    
    
    
    40,398,702Total external revenue
    
    
    213,586,948
    
    
    
    9,810,444
    
    
    
    
    
    
    
    223,397,392Depreciation
    
    
    256,941
    
    
    
    76,400
    
    
    
    707
    
    
    
    334,048Amortization
    
    
    
    
    
    
    6,935
    
    
    
    
    
    
    
    6,935Operating income (loss)
    
    
    3,253,230
    
    
    
    775,679
    
    
    
    (1,067,101
    )
    
    
    2,961,808Interest expense
    
    
    157,599
    
    
    
    211,524
    
    
    
    266,400
    
    
    
    635,523Income (loss) from continuing
operations before taxes
    
    
    3,102,724
    
    
    
    575,021
    
    
    
    (1,333,502
    )
    
    
    2,344,243Total assets
    
    
    76,941,902
    
    
    
    11,756,379
    
    
    
    5,401,427
    
    
    
    94,099,708Capital expenditures
    
    
    101,977
    
    
    
    22,135
    
    
    
    
    
    
    
    124,112
  18




---



##### Table of Contents



WholesaleDistribution
    
    
    Retail
    
    
    Other /1/
    
    
    ConsolidatedNINE MONTHS ENDED JUNE 2009:External revenue:Cigarettes
    
    $
    464,141,853
    
    
    $
    
    
    
    $
    
    
    
    $
    464,141,853Confectionery
    
    
    47,377,945
    
    
    
    
    
    
    
    
    
    
    
    47,377,945Health food
    
    
    
    
    
    
    27,604,903
    
    
    
    
    
    
    
    27,604,903Tobacco, food service & other
    
    
    116,512,835
    
    
    
    
    
    
    
    
    
    
    
    116,512,835Total external revenue
    
    
    628,032,633
    
    
    
    27,604,903
    
    
    
    
    
    
    
    655,637,536Depreciation
    
    
    716,427
    
    
    
    165,105
    
    
    
    3,440
    
    
    
    884,972Operating income (loss)
    
    
    12,130,097
    
    
    
    2,552,606
    
    
    
    (4,036,869
    )
    
    
    10,645,834Interest expense
    
    
    391,236
    
    
    
    443,550
    
    
    
    431,048
    
    
    
    1,265,834Income (loss) from continuingoperations before taxes
    
    
    11,766,639
    
    
    
    2,140,075
    
    
    
    (4,442,571
    )
    
    
    9,464,143Total assets
    
    
    77,693,924
    
    
    
    11,517,275
    
    
    
    989,112
    
    
    
    90,200,311Capital expenditures
    
    
    526,281
    
    
    
    257,940
    
    
    
    
    
    
    
    784,221NINE MONTHS ENDED JUNE 2008:External revenue:Cigarettes
    
    $
    438,088,121
    
    
    $
    
    
    
    $
    
    
    
    $
    438,088,121Confectionery
    
    
    44,399,849
    
    
    
    
    
    
    
    
    
    
    
    44,399,849Health food
    
    
    
    
    
    
    29,861,462
    
    
    
    
    
    
    
    29,861,462Tobacco, food service & other
    
    
    112,122,867
    
    
    
    
    
    
    
    
    
    
    
    112,122,867Total external revenue
    
    
    594,610,837
    
    
    
    29,861,462
    
    
    
    
    
    
    
    624,472,299Depreciation
    
    
    731,261
    
    
    
    283,543
    
    
    
    1,661
    
    
    
    1,016,465Amortization
    
    
    
    
    
    
    26,801
    
    
    
    
    
    
    
    26,801Operating income (loss)
    
    
    8,387,321
    
    
    
    2,964,701
    
    
    
    (3,062,020
    )
    
    
    8,290,002Interest expense
    
    
    569,564
    
    
    
    794,050
    
    
    
    991,269
    
    
    
    2,354,883Income (loss) from continuingoperations before taxes
    
    
    7,845,094
    
    
    
    2,205,078
    
    
    
    (4,024,616
    )
    
    
    6,025,556Total assets
    
    
    76,941,902
    
    
    
    11,756,379
    
    
    
    5,401,427
    
    
    
    94,099,708Capital expenditures
    
    
    509,447
    
    
    
    157,821
    
    
    
    
    
    
    
    667,268
 /1/
    
    Includes intercompany eliminations, charges incurred by the
holding company, and the assets of discontinued operations.
 11. SUBSEQUENT EVENT:
 Credit
Facility Amendment
   19




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD-LOOKING STATEMENTS
  
    
    increases in state and federal excise taxes on cigarette and tobacco products, including
recent increases in federal excise taxes imposed in connection with the State Childrens
Health Insurance Program (SCHIP) law,
 
    
    regulation of cigarette and tobacco products by the U.S. Food and Drug Administration
(FDA), in addition to existing state and federal regulations by other agencies,
 
    
    increases in manufacturer prices,
 
    
    increases in inventory carrying costs and customer credit risk,
 
    
    changes in promotional and incentive programs offered by manufacturers,
 
    
    decreased availability of capital resources
 
    
    demand for the Companys products, particularly cigarette and tobacco products,
 
    
    new business ventures,
 
    
    domestic regulatory and legislative risks,
 
    
    competition,
 
    
    poor weather conditions,
 
    
    increases in fuel prices,
 
    
    consolidation trends within the convenience store industry,
 
    
    other risks over which the Company has little or no control, and any other factors not
identified herein.
   20




---



##### Table of Contents



CRITICAL ACCOUNTING ESTIMATES
  THIRD FISCAL QUARTER 2009 OVERVIEW (Q3 2009)
  Wholesale Distribution Segment (ADC)
    Retail Health Food Segment
   21




---



##### Table of Contents



Business Update  General
   Business Update  Wholesale Distribution Segment
   Business Update  Retail Health Food Segment
    22




---



##### Table of Contents



Q3 2009 Highlights
  
    
    reported a $1.0 million increase in operating income before income taxes as compared to Q3
2008.
 
    
    recognized a
$4.7 million pre-tax gain on a disposal transaction whereby CPH
exchanged a $5.0 million note receivable which it held and was
due from TSI, for the operating assets of TSI.
 
    
    recognized a $2.7 million pre-tax gain on the settlement and full satisfaction of notes
payable due from TSI.
 
    
    recognized income from continuing operations per basic share of $3.97 and $2.57 for the three
months ended June 2009 and June 2008, respectively, and $9.78 and $6.50 for the nine months
ended June 2009 and June 2008, respectively.
 
    
    recognized income (loss) from discontinued operations per basic share of $8.52 and ($0.18)
for the three months ended June 2009 and June 2008, respectively, and $8.17 and ($0.54) for
the nine months ended June 2009 and June 2008, respectively.
 
    
    paid dividends on common shares totaling $57,040 or $0.10 per share.
 RESULTS OF OPERATIONS  THREE MONTHS ENDED JUNE 2009:
 For the three monthsended JuneIncr2009
    
    
    2008
    
    
    (Decr)
    
    
    % ChangeCONSOLIDATED:Sales /1/
    
    $
    242,817,927
    
    
    $
    223,397,392
    
    
    $
    19,420,535
    
    
    
    8.7Cost of sales
    
    
    225,753,469
    
    
    
    207,135,083
    
    
    
    18,618,386
    
    
    
    9.0Gross profit
    
    
    17,064,458
    
    
    
    16,262,309
    
    
    
    802,149
    
    
    
    4.9Gross profit percentage
    
    
    7.0
    %
    
    
    7.3
    %Operating expense
    
    
    13,074,262
    
    
    
    13,300,501
    
    
    
    (226,239
    )
    
    
    (1.7
    )Operating income
    
    
    3,990,196
    
    
    
    2,961,808
    
    
    
    1,028,388
    
    
    
    34.7Interest expense
    
    
    368,048
    
    
    
    635,523
    
    
    
    (267,475
    )
    
    
    (42.1
    )Income tax expense
    
    
    1,411,000
    
    
    
    857,000
    
    
    
    554,000
    
    
    
    64.6Income from continuing operations
before income taxes
    
    
    2,254,748
    
    
    
    1,487,243
    
    
    
    767,505
    
    
    
    51.6BUSINESS SEGMENTS:WholesaleSales
    
    $
    233,758,627
    
    
    $
    213,586,948
    
    
    $
    20,171,679
    
    
    
    9.4Gross profit
    
    
    13,311,241
    
    
    
    12,271,878
    
    
    
    1,039,363
    
    
    
    8.5Gross profit percentage
    
    
    5.7
    %
    
    
    5.7
    %RetailSales
    
    $
    9,059,300
    
    
    $
    9,810,444
    
    
    $
    (751,144
    )
    
    
    (7.7
    )Gross profit
    
    
    3,753,217
    
    
    
    3,990,431
    
    
    
    (237,214
    )
    
    
    (5.9
    )Gross profit
percentage
    
    
    41.4
    %
    
    
    40.7
    %
 /1/
    
    Sales are reported net of costs associated with incentives provided to retailers. These
incentives totaled $3.7 million in Q3 2009 and $3.8 million in Q3 2008.  23




---



##### Table of Contents



SALES  Q3 2009 vs. Q3 2008 (continuing operations)
  (i)
    
    changes to selling prices, which are largely controlled by our product
suppliers, and excise taxes imposed on cigarettes and tobacco products by various
states; and
 (ii)
    
    changes in the volume of products sold to our customers, either due to a change
in purchasing patterns resulting from consumer preferences or the fluctuation in the
comparable number of business days in our reporting period.
   
    
    $31.6 million increase in cigarette sales due to price increases implemented by
manufacturers, partially offset by a $12.1 million decrease in cigarette sales primarily
resulting from a reduction in cigarette cartons sold as compared to Q3 2008.
 
    
    $0.7 million net increase in our Other Products category sales over Q3 2008, primarily the
result of higher tobacco and confectionary sales, partially offset by a decrease in our food
service sales category.
  GROSS PROFIT  Q3 2009 vs. Q3 2008 (continuing operations)
     24




---



##### Table of Contents



OPERATING EXPENSE  Q3 2009 vs. Q3 2008 (continuing operations)
   INTEREST EXPENSE  Q3 2009 vs. Q3 2008 (continuing operations)
  RESULTS OF OPERATIONS  NINE MONTHS ENDED JUNE 2009:
 For the nine monthsended JuneIncr2009
    
    
    2008
    
    
    (Decr)
    
    
    % ChangeCONSOLIDATED:Sales
    
    $
    655,637,536
    
    
    $
    624,472,299
    
    
    $
    31,165,237
    
    
    
    5.0Cost of sales
    
    
    605,481,395
    
    
    
    577,272,429
    
    
    
    28,208,966
    
    
    
    4.9Gross profit
    
    
    50,156,141
    
    
    
    47,199,870
    
    
    
    2,956,271
    
    
    
    6.3Gross profit percentage
    
    
    7.6
    %
    
    
    7.6
    %Operating expenses
    
    
    39,510,307
    
    
    
    38,909,868
    
    
    
    600,439
    
    
    
    1.5Operating income
    
    
    10,645,834
    
    
    
    8,290,002
    
    
    
    2,355,832
    
    
    
    28.4Interest expense
    
    
    1,265,834
    
    
    
    2,354,883
    
    
    
    (1,089,049
    )
    
    
    (46.2
    )Income tax expense
    
    
    3,614,000
    
    
    
    2,226,000
    
    
    
    1,388,000
    
    
    
    62.4Income from continuing operations
before income taxes
    
    
    5,850,143
    
    
    
    3,799,556
    
    
    
    2,050,587
    
    
    
    54.0BUSINESS SEGMENTS:WholesaleSales
    
    $
    628,032,633
    
    
    $
    594,610,837
    
    
    $
    33,421,796
    
    
    
    5.6Gross profit
    
    
    38,749,866
    
    
    
    34,746,287
    
    
    
    4,003,579
    
    
    
    11.5Gross profit percentage
    
    
    6.2
    %
    
    
    5.8
    %RetailSales
    
    $
    27,604,903
    
    
    $
    29,861,462
    
    
    $
    (2,256,559
    )
    
    
    (7.6
    )Gross profit
    
    
    11,406,275
    
    
    
    12,453,583
    
    
    
    (1,047,308
    )
    
    
    (8.4
    )Gross profit
percentage
    
    
    41.3
    %
    
    
    41.7
    %
 /1/
    
    Sales are reported net of costs associated with incentives provided to retailers. These
incentives totaled $11.6 million for the nine months ended June 2009 and $11.2 million for the
nine months ended June 2008.  25




---



##### Table of Contents



SALES  Nine Months Ended June 2009 (continuing operations)
   
    
    $44.7 million increase in cigarette sales due to price increases implemented by
manufacturers, partially offset by a $18.6 million decrease in cigarette sales primarily
resulting from a reduction in cigarette cartons sold as compared to the same prior year
period.
 
    
    $7.3 million net increase in our Other Products category sales over same prior year period,
primarily the result of higher tobacco, confectionary, food service, and store supplies
sales.
  GROSS PROFIT  Nine Months Ended June 2009 (continuing operations)
   OPERATING EXPENSE  Nine Months Ended June 2009 (continuing operations)
   26




---



##### Table of Contents



INTEREST EXPENSE  Nine Months Ended June 2009 (continuing operations)
  DISCONTINUED OPERATIONS  Three and Nine Months Ended June 2009
    Three months ended
    
    
    Nine months endedJune
    
    
    June2009
    
    
    2008
    
    
    2009
    
    
    2008Operating income (loss)
    
    $
    20,105
    
    
    $
    (40,791
    )
    
    $
    (65,458
    )
    
    $
    (122,731
    )Interest expense
    
    
    
    
    
    
    (114,750
    )
    
    
    (230,012
    )
    
    
    (344,250
    )Gain on asset disposal
and debt settlement
    
    
    7,381,264
    
    
    
    
    
    
    
    7,381,264
    
    
    
    Income tax expense (benefit)
    
    
    2,722,000
    
    
    
    (57,000
    )
    
    
    2,606,000
    
    
    
    (175,000
    )Gain (loss) from discontinued operations
    
    
    4,679,369
    
    
    
    (98,441
    )
    
    
    4,479,894
    
    
    
    (291,881
    )
 LIQUIDITY AND CAPITAL RESOURCES
 Overview
    27




---



##### Table of Contents



SCHIP Floor Stocks Tax
  TSI Transactions
  CREDIT AGREEMENT
  
    
    A June 2011 maturity date.
 
    
    A $55.0 million revolving credit limit, plus the outstanding balance on Term Note A. Term
Note A had an outstanding balance of $0.2 million at June 2009.
 
    
    The Facility bears interest at either the banks prime rate or at LIBOR plus 250 basis
points, at the election of the Company.
 
    
    The Facility provides for an additional $5.0 million of credit available for certain
inventory purchases. These advances bear interest at the banks prime rate plus one-quarter
of one-percent (1/4%) per annum and are payable within 45 days of each advance.
  28




---



##### Table of Contents



CREDIT AGREEMENT (continued)
 
    
    Lending limits subject to accounts receivable and inventory limitations, and an unused
commitment fee equal to one-quarter of one percent (1/4%) per annum on the difference between
the maximum loan limit and average monthly borrowings.
 
    
    Collateral including all of the Companys equipment, intangibles, inventories, and accounts
receivable.
 
    
    Provides that the Company may not pay dividends on its common stock in excess of $0.72 per
share on an annual basis.
 
    
    The Facility includes a prepayment penalty equal to one-half of one percent (1/2%) of the
original maximum loan limit ($60.4 million) if the Company prepays the entire Facility or
terminates the credit agreement on or before June 30, 2010.
      Cross Default and Co-Terminus Provisions
   29




---



##### Table of Contents



Redemption of Series C Convertible Preferred Stock
  Dividend Payments
   Contractual Obligations
  OTHER
  Off-Balance Sheet Arrangements
  Liquidity Risk
    30




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Limitations on Effectiveness of Controls
   31




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  RISK FACTORS RELATED TO OUR WHOLESALE DISTRIBUTION SEGMENT
 
    
    Regulation of Cigarette and Tobacco Products by the U.S. Food and Drug Administration (FDA)
May Negatively Impact Our Operations
   32




---



##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
   33




---



##### Table of Contents



Item 6. Exhibits
  10.1
    
    Twelfth Amendment to the Amended and Restated Loan and Security Agreement, dated July 14,
2009
 31.1
    
    Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished
pursuant to section 302 of the Sarbanes-Oxley Act
 31.2
    
    Certification by Andrew C. Plummer, Vice President, Chief Financial Officer, and Principal
Financial Officer furnished pursuant to section 302 of the Sarbanes-Oxley Act
 32.1
    
    Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished
pursuant to section 906 of the Sarbanes-Oxley Act
 32.2
    
    Certification by Andrew C. Plummer, Vice President, Chief Financial Officer, and Principal
Financial Officer furnished pursuant to section 906 of the Sarbanes-Oxley Act
  34




---



##### Table of Contents



SIGNATURES
  AMCON DISTRIBUTING COMPANY
(registrant)Date: July 17, 2009
    /s/ Christopher H. AtayanChristopher H. Atayan,Chief Executive Officer and ChairmanDate: July 17, 2009
    /s/ Andrew C. PlummerAndrew C. Plummer,Vice President, Chief Financial Officer, and
Principal Financial Officer  35




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    
    Twelfth Amendment to the Amended and Restated Loan and Security Agreement, dated July 14,
200931.1
    
    
    Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished
pursuant to section 302 of the Sarbanes-Oxley Act31.2
    
    
    Certification by Andrew C. Plummer, Vice President, Chief Financial Officer, and Principal
Financial Officer furnished pursuant to section 302 of the Sarbanes-Oxley Act32.1
    
    
    Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished
pursuant to section 906 of the Sarbanes-Oxley Act32.2
    
    
    Certification by Andrew C. Plummer, Vice President, Chief Financial Officer, and Principal
Financial Officer furnished pursuant to section 906 of the Sarbanes-Oxley Act
  36