AMCON Takes Impairment Charge and Reports Loss for Year.OMAHA Omaha, city, United States Omaha (ō`məhä, –hô), city (1990 pop. 335,795), seat of Douglas co., E Nebr., on the west bank of the Missouri River; inc. 1857. , Neb. -- AMCON Distributing Company (AMEX AMEX See: American Stock Exchange :DIT), an Omaha, NE based consumer products company, announced today that its sales increased by 6.7% for the fiscal year ended September 24, 2004. The Company incurred an overall loss available for common shareholders for the fiscal year of $4.2 million or $7.94 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share versus a profit of $1.0 million or $1.91 per fully diluted common share for the prior year. This loss included a pre-tax charge of $3.6 million taken during the fiscal year related to the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. in the Company's beverage segment. William F. Wright, Chairman of the Board of AMCON, noted that, "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite our increase in sales, which was generated primarily by our profitable wholesale distribution segment, our year-end financial results are quite disappointing. Even though many good things happened during the last fiscal year, we are not at all satisfied with the financial performance. "Recently, we have renewed, for a period of two and a half years, our $55 million line of credit with a group led by LaSalle Bank LaSalle Bank Corporation is the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. With $116 billion in assets, it is headquartered at 135 South LaSalle Street in Chicago, Illinois. , a subsidiary of ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) . Such renewal for our operating line was at less than the prime rate of interest. In addition, during the past six months, we have placed $4.5 million of our Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. with a dividend rate under 6.8%. The proceeds from a $5.0 million term loan, which was part of the bank refinancing Refinancing An extension and/or increase in amount of existing debt. , and $1.8 million of Preferred Stock were used to retire all of the subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". which originated from our original purchase of seven retail health food stores in the Midwest. "The biggest contributor to our loss before impairment charges came from the operations of The Beverage Group, Inc. Recently, we have completed a total reorganization of that company which included the shifting of certain products to Trinity Springs, Inc. and Hawaiian Natural Water Company, Inc., two of our subsidiaries. This shift allowed us to significantly reduce personnel and other costs in The Beverage Group, the results of which will show up in the second quarter of our current fiscal year. "We are also presently looking at a reorganization of our overall Company and are considering whether or not to structure ourselves as a holding company with three separate operating segments. With a streamlined holding company, we believe there are many benefits to our organization. Accordingly, we anticipate future announcements in this area. "As discussed in the 2004 Annual Report to Shareholders, the Company is implementing a strategy to invest its cash resources into growth-oriented businesses and has therefore determined to suspend the payment of cash dividends for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. We will periodically revisit re·vis·it tr.v. re·vis·it·ed, re·vis·it·ing, re·vis·its To visit again. n. A second or repeated visit. re our dividend policy to determine whether we have adequate internally generated funds, together with other needed financing, to fund our growth and operations in order to resume the payment of cash dividends. "Finally, Chris Atayan, the Senior Managing Director at Slusser and Associates, Inc., a New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. Investment Banking firm, has recently joined our Board of Directors. In addition to Chris' wealth of experience in investment banking and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. relationship with AMCON since the late 1980s, Chris has been a successful investor and director in retail and beverage enterprises and grew up in a family owned convenience wholesale distribution business, so he is very familiar with all of our industry segments. Also this year, Bill Hoppner, a long-term director of the Company, was elected Senior Vice President of the Company and placed in charge of the retail health food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. segments." AMCON is a leading wholesale distributor of consumer products including beverages, candy candy: see confectionery. candy Sweet sugar- or chocolate-based confection. The Egyptians made candy from honey (combined with figs, dates, nuts, and spices), sugar being unknown. , tobacco, groceries gro·cer·y n. pl. gro·cer·ies 1. A store selling foodstuffs and various household supplies. 2. groceries Commodities sold by a grocer. , food service, frozen and chilled foods Chilled foods are prepared foods stored at refrigeration temperatures (at or below 8°C). They have been available in the United Kingdom and many other industrialised countries since the 1960s. , and health and beauty care products with distribution centers in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Missouri, Nebraska, North Dakota North Dakota, state in the N central United States. It is bordered by Minnesota, across the Red River of the North (E), South Dakota (S), Montana (W), and the Canadian provinces of Saskatchewan and Manitoba (N). , South Dakota South Dakota (dəkō`tə), state in the N central United States. It is bordered by North Dakota (N), Minnesota and Iowa (E), Nebraska (S), and Wyoming and Montana (W). and Wyoming. Chamberlin's Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc. (formerly Food For Health Co., Inc.), operate health and natural product retail stores in central Florida
Central Florida is the central region of the United States state of Florida, on the East Coast. (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin's Market & Cafe and Akin's Natural Foods Market. Hawaiian Natural Water Company, Inc. produces and sells natural spring water under the Hawaiian Springs label in Hawaii and other foreign markets. The water is bottled at the source on the Big Island of Hawaii. Trinity Springs, Inc., which was acquired in June 2004, produces and sells geothermal ge·o·ther·mal also ge·o·ther·mic adj. Of or relating to the internal heat of the earth. ge bottled water and a natural mineral supplement under the Trinity label. The water and mineral supplement are both bottled at the base of the Trinity Mountains The Trinity Mountains are found in northern California, USA, between Trinity Lake and Lake Shasta. The range lies in a southwest-northeasterly direction about 17 miles northwest of Redding, and stretches over a distance of 30-35 miles. in Paradise, Idaho, one of the world's deepest known sources. Trinity Springs also distributes Hawaiian Springs and other premium beverage products on the U.S. mainland. The Beverage Group, Inc. primarily markets energy drinks including HYPE, Lightnin', and other private label energy drinks. This news release contains forward looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , industry conditions, Company performance and financial results. A number of factors could affect the future results of the Company and could cause those results to differ materially from those expressed in the Company's forward looking statements. Moreover, past financial performance should not be considered a reliable indicator of future performance. Accordingly, the Company claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 with respect to all such forward-looking statements. Visit AMCON Distributing Company's web site at: www.amcon.com
CONSOLIDATED BALANCE SHEETS
AMCON Distributing Company and Subsidiaries
----------------------------------------------------------------------
Fiscal Year End September 2004 2003
----------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 416,073 $ 668,073
Accounts receivable, less allowance
for doubtful accounts of $0.7
million and $0.8 million in 2004
and 2003, respectively 29,586,255 28,170,129
Available-for-sale investments - 512,694
Inventories 36,481,014 32,489,051
Income tax receivable 1,162,625 -
Deferred income taxes 2,548,391 1,568,476
Other 708,916 581,950
------------------------------
Total current assets 70,903,274 63,990,373
Fixed assets, net 20,095,334 16,951,615
Goodwill 6,449,741 6,091,397
Other intangible assets 13,271,211 11,420,542
Other assets 1,010,303 1,045,503
------------------------------
$ 111,729,863 $ 99,499,430
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,762,392 $ 15,092,091
Accrued expenses 4,427,976 3,715,370
Accrued wages, salaries, bonuses 1,380,477 1,462,678
Income tax payable - 540,414
Current liabilities of discontinued
operations 107,724 117,612
Current portion of long-term debt 11,409,234 15,348,167
Current portion of subordinated
debt 7,876,219 7,762,666
------------------------------
Total current liabilities 42,964,022 44,038,998
Deferred income taxes 593,018 1,367,367
Noncurrent liabilities of discontinued
operations - 161,025
Other long-term liabilities 2,807,000 -
Long-term debt, less current portion 50,063,571 35,654,423
Subordinated debt, less current
portion - 976,220
Minority interest 97,100 -
Commitments and contingencies
Shareholders' equity:
Series A cumulative, convertible
preferred stock, $.01 par value
100,000 shares authorized and
issued 1,000 -
Common stock, $.01 par value,
15,000,000 shares authorized,
527,062 and 528,159 issued in 2004
and 2003, respectively 5,271 31,690
Additional paid-in capital -
preferred stock 2,437,355 -
Additional paid-in capital -
common stock 6,218,476 5,997,977
Accumulated other comprehensive
income, net of tax of $0.1 million
in 2004 and 2003, respectively 59,900 220,732
Retained earnings 6,483,150 11,050,998
------------------------------
15,205,152 17,301,397
------------------------------
$ 111,729,863 $ 99,499,430
==============================
CONSOLIDATED STATEMENTS OF OPERATIONS
AMCON Distributing Company and Subsidiaries
----------------------------------------------------------------------
Fiscal Years Ended September 2004 2003 2002
----------------------------------------------------------------------
Sales (including excise
taxes of $191.6 million,
$172.2 million and
$166.5 million in 2004,
2003 and 2002,
respectively) $ 823,805,300 $ 772,135,351 $ 847,116,997
Cost of sales 765,630,341 711,974,154 785,192,882
-------------------------------------------
Gross profit 58,174,959 60,161,197 61,924,115
-------------------------------------------
Selling, general and
administrative expenses 56,053,767 53,049,723 51,610,419
Depreciation and
amortization 2,386,767 2,284,608 3,163,549
Impairment charges 3,578,255 - -
-------------------------------------------
62,018,789 55,334,331 54,773,968
-------------------------------------------
(Loss) income from
operations (3,843,830) 4,826,866 7,150,147
Other expense (income):
Interest expense 3,385,394 3,269,777 4,272,783
Other income, net (576,677) (98,384) (505,712)
Equity in loss of
unconsolidated
affiliate - - 95,007
-------------------------------------------
2,808,717 3,171,393 3,862,078
(Loss) income from
operations before income
taxes (6,652,547) 1,655,473 3,288,069
Income tax (benefit)
expense (2,423,000) 629,000 1,316,000
Minority interest, net of
tax (91,000) - -
-------------------------------------------
Net (loss) income (4,138,547) 1,026,473 1,972,069
Preferred stock dividend
requirements 49,474 - -
-------------------------------------------
(Loss) income available
to common shareholders $ (4,188,021) $ 1,026,473 $ 1,972,069
===========================================
Basic (loss) earnings
per share $ (7.94) $ 1.95 $ 3.90
===========================================
Diluted (loss)
earnings per share $ (7.94) $ 1.91 $ 3.81
===========================================
Weighted average shares
outstanding:
Basic 527,774 527,699 505,414
Diluted 527,774 537,042 518,197
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