10-Q

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

oTRANSITION 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

(Exact name of registrant as specified in its charter)

Delaware	47-0702918
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
7405 Irvington Road, Omaha NE	68122
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (402) 331-3727

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)   Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

The Registrant had 608,271 shares of its $.01 par value common stock outstanding as of July 16, 2012.

Form 10-Q

3rd Quarter

INDEX

	PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed consolidated balance sheets at June 30, 2012 (unaudited) and September 30, 2011	3
Condensed consolidated unaudited statements of operations for the three and nine months ended June 30, 2012 and 2011	4
Condensed consolidated unaudited statements of cash flows for the nine months ended June 30, 2012 and 2011	5
Notes to condensed consolidated unaudited financial statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	24
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3. Defaults Upon Senior Securities	25
Item 4. Mine Safety Disclosures	25
Item 5. Other Information	25
Item 6. Exhibits	26

2

PART I — FINANCIAL INFORMATION

Item 1.      Financial Statements

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Balance Sheets

June 30, 2012 and September 30, 2011

	June2012			September2011
	(Unaudited)
ASSETS
Current assets:
Cash	$	568,960		$	1,389,665
Accounts receivable, less allowance for doubtful accounts of $1.2 million at both June 2012 and September 2011	34,032,935			32,963,693
Inventories, net	49,381,171			38,447,982
Deferred income taxes	1,784,114			1,707,889
Prepaid and other current assets	4,976,295			6,073,536
Total current assets	90,743,475			80,582,765
Property and equipment, net	13,128,075			13,713,238
Goodwill	6,349,827			6,349,827
Other intangible assets, net	5,277,225			5,550,978
Other assets	1,289,963			1,238,825
	$	116,788,565		$	107,435,633
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,060,295		$	18,439,446
Accrued expenses	6,660,965			7,153,672
Accrued wages, salaries and bonuses	2,979,030			2,460,558
Income taxes payable	303,998			2,100,180
Current maturities of long-term debt	1,185,647			1,384,625
Total current liabilities	27,189,935			31,538,481
Credit facility	30,080,482			20,771,613
Deferred income taxes	3,842,164			2,743,238
Long-term debt, less current maturities	5,374,586			6,194,195
Other long-term liabilities	338,197			429,513
Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, and a total liquidation preference of $2.5 million at both June 2012 and September 2011	2,500,000			2,500,000
Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized, 62,000 shares outstanding and a total liquidation preference of $1.6 million at both June 2012 and September 2011	1,550,000			1,550,000
Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, 162,000 shares outstanding and issued in Series A and B referred to above	—			—
Common stock, $.01 par value, 3,000,000 shares authorized, 608,271 shares outstanding at June 2012 and 609,320 shares outstanding at September 2011	6,252			6,093
Additional paid-in capital	10,910,595			9,981,055
Retained earnings	35,914,354			31,721,445
Treasury stock, 17,000 shares at cost	(918,000		)	—
Total shareholders’ equity	45,913,201			41,708,593
	$	116,788,565		$	107,435,633

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

3

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Operations

for the three and nine months ended June 30, 2012 and 2011

	For the three monthsended June						For the nine monthsended June
	2012			2011			2012			2011
Sales (including excise taxes of $96.1 million and $85.9 million, and $272.7 million and $238.1 million, respectively)	$	307,112,774		$	263,828,199		$	866,505,090		$	725,388,399
Cost of sales	287,211,769			245,610,146			808,750,009			673,193,512
Gross profit	19,901,005			18,218,053			57,755,081			52,194,887
Selling, general and administrative expenses	15,845,201			13,781,556			47,096,958			40,378,569
Depreciation and amortization	552,888			519,099			1,780,309			1,523,815
	16,398,089			14,300,655			48,877,267			41,902,384
Operating income	3,502,916			3,917,398			8,877,814			10,292,503
Other expense (income):
Interest expense	361,756			372,525			1,105,707			1,020,980
Other (income), net	(47,841		)	(73,878		)	(292,979		)	(141,970		)
	313,915			298,647			812,728			879,010
Income from operations before income tax	3,189,001			3,618,751			8,065,086			9,413,493
Income tax expense	1,343,000			1,791,000			3,316,000			4,169,000
Net income	1,846,001			1,827,751			4,749,086			5,244,493
Preferred stock dividend requirements	(66,907		)	(70,649		)	(201,454		)	(218,755		)
Net income available to common shareholders	$	1,779,094		$	1,757,102		$	4,547,632		$	5,025,738
Basic earnings per share available to common shareholders:	$	2.92		$	2.93		$	7.38		$	8.53
Diluted earnings per share available to common shareholders:	$	2.37		$	2.36		$	6.06		$	6.81
Basic weighted average shares outstanding	608,271			599,281			615,913			589,084
Diluted weighted average shares outstanding	779,106			775,416			783,987			769,870

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

4

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Cash Flows

for the nine months ended June 30, 2012 and 2011

	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,749,086		$	5,244,493
Adjustments to reconcile net income from operations to net cash flows from operating activities:
Depreciation	1,496,868			1,268,397
Amortization	283,441			255,418
Gain on sale of property and equipment	(28,606		)	(37,177		)
Equity-based compensation	930,593			1,740,969
Net excess tax benefit on equity-based awards	—			(125,904		)
Deferred income taxes	1,022,701			1,521,683
Provision (recoveries) for losses on doubtful accounts	75,757			(768,000		)
Provision for losses on inventory obsolescence	98,789			104,871
Other	(6,034		)	(6,033		)
Changes in assets and liabilities:
Accounts receivable	(1,144,999		)	3,044,399
Inventories	(11,031,978		)	(20,191,024		)
Prepaid and other current assets	1,097,241			(3,444,459		)
Other assets	(51,138		)	(186,546		)
Accounts payable	(2,396,748		)	2,598,310
Accrued expenses and accrued wages, salaries and bonuses	(19,827		)	(824,500		)
Income tax payable	(1,796,182		)	(1,729,818		)
Net cash flows from operating activities	(6,721,036		)	(11,534,921		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(914,486		)	(1,641,035		)
Proceeds from sales of property and equipment	48,984			64,375
Acquisition	—			(13,368,057		)
Net cash flows from investing activities	(865,502		)	(14,944,717		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on bank credit agreements	9,308,869			28,533,322
Principal payments on long-term debt	(1,018,587		)	(684,108		)
Repurchase of common stock	(918,000		)	—
Net excess tax benefit on equity-based awards	—			125,904
Dividends paid on convertible preferred stock	(201,454		)	(218,755		)
Dividends on common stock	(354,723		)	(325,377		)
Proceeds from exercise of stock options	1,180			22,391
Withholdings on the exercise of equity-based awards	(51,452		)	—
Net cash flows from financing activities	6,765,833			27,453,377
Net change in cash	(820,705		)	973,739
Cash, beginning of period	1,389,665			356,735
Cash, end of period	$	568,960		$	1,330,474

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

5

	2012		2011
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	1,094,086	$	994,280
Cash paid during the period for income taxes	4,089,482		4,377,134
Supplemental disclosure of non-cash information:
Equipment acquisitions classified as accounts payable	28,282		33,233
Issuance of common stock in connection with the vesting and exercise of equity based awards	950,562		—
Conversion by holders of Series B Convertible Preferred Stock to common stock	—		450,000
Business acquisition (see Note 2):
Accounts receivable	—		8,881,428
Inventory	—		4,571,629
Property and equipment	—		1,795,859
Prepaid assets	—		35,000
Fair value of non-competition agreement	—		500,000
Customer relationships intangible assets	—		500,000
Goodwill	—		200,659
Accrued expenses	—		(120,000		)
Note payable	—		(2,552,090		)
Amount due under non-competition agreement	—		(444,428		)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

6

AMCON Distributing Company and Subsidiaries

Notes to Condensed Consolidated Unaudited Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

· Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products in the Central, Rocky Mountain, and Southern regions of the United States. Additionally, our Wholesale Segment provides programs, services and technology to assist our customers in managing their business and profitability.

· Our retail health food segment (“Retail Segment”) operates fourteen health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our wholesale segment is one of the largest wholesale distributors in the United States serving approximately 5,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 14,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and chilled products and institutional food service products. We also provide consultative services in the areas of marketing, merchandising, inventory optimization, and information systems which are designed to enhance the ability of our customers to compete and maximize their profitability. Convenience stores represent our largest customer category. In October 2011, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 601,000 square feet of permanent floor space. Our principal suppliers include Philip Morris USA, RJ Reynolds, Commonwealth Brands, Lorillard, Proctor & Gamble, Hershey, Mars, and Kraft. We also market private label lines of snuff, water, candy products, batteries, film, and other products. We do not maintain any long-term purchase contracts with these suppliers.

RETAIL SEGMENT

Our retail segment is comprised of fourteen retail health food stores which are operated as Chamberlin’s Market & Café (“Chamberlin’s”) and Akin’s Natural Foods Market (“Akin’s”). These stores carry over 30,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was first established in 1935, operates six stores in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of eight locations in Oklahoma, Nebraska, Missouri, and Kansas (“Midwest”).

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein, such as adjustments consisting of normal recurring items. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2011, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended June 30, 2012 and June 30, 2011 have been referred to throughout this quarterly report as Q3 2012 and Q3 2011, respectively. The fiscal balance sheet dates as of June 30, 2012, June 30, 2011, and September 30, 2011 have been referred to as June 2012, June 2011, and September 2011, respectively.

7

2. ACQUISITION

In May 2011, the Company, through its wholly-owned subsidiary, acquired the convenience store distribution assets of L.P. Shanks Company Inc. (“LPS”).  LPS was a wholesale distributor to convenience stores in Tennessee, Kentucky, Georgia, Virginia, West Virginia, and North Carolina with annual sales of approximately $200 million.  In exchange for certain accounts receivable, inventory, property and equipment, and customer lists of LPS, the Company paid $13.4 million in cash, issued a $2.6 million note payable due to the seller due in quarterly installments over three years and bearing interest at 4% annually, and will also pay a total of $0.5 million over five years in annual installments related to a non-competition agreement with the seller. The Company also entered into warehouse leases with the seller and assumed certain operating leases in conjunction with the transaction. No significant liabilities were assumed in connection with the transaction and the costs incurred to effectuate the acquisition were expensed as incurred. The transaction was funded through the Company’s existing credit facility and the issuance of a note payable to the seller. The acquisition expands the Company’s strategic footprint in the Southeastern portion of the United States and enhances our ability to service customers in that region.

The following table summarizes the consideration paid for the acquired assets and their related acquisition date fair values. The fair value of the assets acquired have been measured in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” In valuing identifiable intangible assets, the Company has estimated the fair value using the discounted cash flows methodology. The acquired assets are reported as a component of our Wholesale Segment.

Total Consideration	Amount(in millions)
Cash	$	13.4
Note payable	2.6
Fair value of non-competition agreement	0.4
Total fair value of consideration transferred	$	16.4

Recognized amounts of identifiable assets acquired

	Amount (in millions)			WeightedAverageAmortization Period
Accounts receivable	$	8.9		—
Inventory	4.6			—
Property and equipment	1.8			5 years
Identifiable intangible assets:
Non-competition agreement	0.5			5 years
Customer relationships	0.5			8 years
Liabilities	(0.1		)
Total identifiable net assets	16.2
Goodwill	0.2
Total identifiable assets and goodwill	$	16.4

Goodwill totaling approximately $0.2 million arose from the acquisition and primarily represents synergies and economies of scale expected to be generated through reductions in selling, general, and administrative expenses. This goodwill has been assigned to the Company’s Wholesale Segment and is deductible for tax purposes.  No significant measurement adjustments related to this transaction were recorded during the nine months ended June 2012.

The following table sets forth the unaudited actual revenue and earnings included in the Company’s statement of operations related to the acquisition and the pro forma revenue and earnings of the combined entity if the acquisition had occurred as of the beginning of the Company’s prior fiscal year. These pro forma amounts do not purport to be indicative of the actual results that would have been obtained had the acquisition occurred at that time.

8

	Three months ended				Nine months ended
	June				June
(In millions)	2012		2011		2012		2011
Revenue — Actual results	$	307.1	$	263.8	$	866.5	$	725.4
Revenue — Supplemental pro forma results	$	307.1	$	299.4	$	866.5	$	859.1
Net Income — Actual results	$	1.8	$	1.8	$	4.8	$	5.2
Net Income — Supplemental pro forma results	$	1.8	$	1.9	$	4.8	$	5.1

3. CONVERTIBLE PREFERRED STOCK:

The Company has two series of convertible preferred stock outstanding at June 2012 as identified in the following table:

	Series A			Series B
Date of issuance:	June 17, 2004			October 8, 2004
Optionally redeemable beginning	June 18, 2006			October 9, 2006
Par value (gross proceeds):	$	2,500,000		$	1,550,000
Number of shares:	100,000			62,000
Liquidation preference per share:	$	25.00		$	25.00
Conversion price per share:	$	30.31		$	24.65
Number of common shares in which to be converted:	82,481			62,880
Dividend rate:	6.785		%	6.37		%

The Series A Convertible Preferred Stock (“Series A”) and Series B Convertible Preferred Stock (“Series B”), (collectively, the “Preferred Stock”), are convertible at any time by the holders into a number of shares of AMCON common stock equal to the number of preferred shares being converted multiplied by a fraction equal to $25.00 divided by the conversion price. The conversion prices for the Preferred Stock are subject to customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable in arrears, when, and if declared by the Board of Directors, on March 31, June 30, September 30 and December 31 of each year.

In the event of a liquidation of the Company, the holders of the Preferred Stock are entitled to receive the liquidation preference plus any accrued and unpaid dividends prior to the distribution of any amount to the holders of the Common Stock. The shares of Preferred Stock are optionally redeemable by the Company beginning on various dates, as listed in the above table, at redemption prices equal to 112% of the liquidation preference. The redemption prices decrease 1% annually thereafter until the redemption price equals the liquidation preference, after which date it remains the liquidation preference. The Preferred Stock is redeemable at the liquidation value and at the option of the holder.  The Series A Preferred Stock is owned by Mr. Christopher Atayan, AMCON’s Chief Executive Officer and Chairman of the Board. The Series B Preferred Stock is owned by an institutional investor which has the right to elect one member of our Board of Directors, pursuant to the voting rights in the Certificate of Designation creating the Series B.  Christopher H. Atayan was first nominated and elected to this seat in 2004.

4. INVENTORIES

Inventories consisted of finished goods at June 2012 and September 2011 and are stated at the lower of cost, determined on a First-in, First-out (“FIFO”) basis, or market. The wholesale distribution and retail health food segment inventories consist of finished products purchased in bulk quantities to be redistributed to the Company’s customers or sold at retail. Finished goods included total reserves of approximately $1.0 million and $0.9 million at June 2012 and September 2011, respectively. These reserves include the Company’s obsolescence allowance, which reflects estimated unsalable or non-refundable inventory based upon an evaluation of slow moving and discontinued products.

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5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill by reporting segment of the Company consisted of the following:

	June2012		September2011
Wholesale Segment	$	4,436,950	$	4,436,950
Retail Segment	1,912,877		1,912,877
	$	6,349,827	$	6,349,827

Other intangible assets of the Company consisted of the following:

	June2012		September2011
Trademarks and tradenames	$	3,373,269	$	3,373,269
Non-competition agreement (less accumulated amortization of $0.1 million at both June 2012 and September 2011)	391,666		466,667
Customer relationships (less accumulated amortization of $0.6 million and $0.4 million at June 2012 and September 2011, respectively)	1,512,290		1,711,042
	$	5,277,225	$	5,550,978

Goodwill, trademarks and tradenames are considered to have indefinite useful lives and therefore no amortization has been taken on these assets. At June 2012, identifiable intangible assets considered to have finite lives were represented by customer relationships and the value of a non-competition agreement acquired as part of acquisitions. The customer relationships are being amortized over eight years and the value of the non-competition agreement is being amortized over five years. These intangible assets are evaluated for accelerated attrition or amortization adjustments if warranted.  Amortization expense related to these assets was $0.1 million and $0.3 million for the three and nine month periods ended June 2012, and $0.1 million and $0.2 million for the three and nine month periods ended June 2011.

Estimated future amortization expense related to identifiable intangible assets with finite lives is as follows at June 2012:

Customer relationships	June2012
Fiscal 2012 (1)	$	91,247
Fiscal 2013	365,000
Fiscal 2014	365,000
Fiscal 2015	365,000
Fiscal 2016	331,667
Thereafter	386,042
	$	1,903,956

(1)  Represents amortization for the remaining three months of Fiscal 2012.

6. DIVIDENDS:

The Company paid cash dividends on its common stock and convertible preferred stock issuances totaling $0.2 million and $0.6 million for the three and nine month periods ended June 2012, respectively, and $0.2 million and $0.5 million for the three and nine month periods ended June 2011, respectively.

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7. EARNINGS PER SHARE

Basic earnings per share available to common shareholders is calculated by dividing net income less preferred stock dividend requirements by the weighted average common shares outstanding for each period. Diluted earnings per share available to common shareholders is calculated by dividing income from operations less preferred stock dividend requirements (when anti-dilutive) by the sum of the weighted average common shares outstanding and the weighted average dilutive options, using the treasury stock method.

	For the three months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	608,271			608,271		599,281			599,281
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			170,835		—			176,135
Weighted average number of shares outstanding	608,271			779,106		599,281			775,416
Income from operations	$	1,846,001		$	1,846,001	$	1,827,751		$	1,827,751
Deduct: convertible preferred stock dividends (2)	(66,907		)	—		(70,649		)	—
Net income available to common shareholders	1,779,094			1,846,001		1,757,102			1,827,751
Net earnings per share available to common shareholders	$	2.92		$	2.37	$	2.93		$	2.36

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

	For the nine months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	615,913			615,913		589,084			589,084
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			168,074		—			180,786
Weighted average number of shares outstanding	615,913			783,987		589,084			769,870
Income from operations	$	4,749,086		$	4,749,086	$	5,244,493		$	5,244,493
Deduct: convertible preferred stock dividends (2)	(201,454		)	—		(218,755		)	—
	4,547,632			4,749,086		5,025,738			5,244,493
Net earnings per share available to common shareholders	$	7.38		$	6.06	$	8.53		$	6.81

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

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8. DEBT

The Company primarily finances its operations through a credit facility agreement with Bank of America (the “Facility”) and long-term debt agreements with banks.

The Facility included the following significant terms at June 2012:

·April 2014 maturity date and a $70.0 million revolving credit limit.

·Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

·A provision providing an additional $5.0 million of credit advances for certain inventory purchases.

·Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of the original term of the agreement or the end of any renewal period.

·Prepayment penalty equal to one-half of one percent (1/2%) if the Company prepays the entire Facility or terminates it in year one of the agreement, and one-fourth of one percent (1/4%) if the Company prepays the entire Facility or terminates it in year two of the agreement. The prepayment penalty is calculated based on the maximum loan limit.

·The Facility bears interest at either the bank’s prime rate or at LIBOR plus 175 basis points, at the election of the Company.

·Lending limits subject to accounts receivable and inventory limitations.

·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.

·Secured by 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 $1.00 per share on an annual basis.

·A financial covenant requiring a fixed charge coverage ratio of at least 1.1 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement.

Cross Default and Co-Terminus Provisions

The Company’s owned real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, and certain warehouse equipment in the Rapid City, SD warehouse are financed through term loans with BMO Harris, NA (“BMO”) which is also a participant lender on the Company’s revolving line of credit. The BMO loans contain cross default provisions which cause all loans with BMO to be considered in default if any one of the loans where BMO is a lender, including the revolving credit facility, is in default. There were no such cross defaults at June 2012.  In addition, the BMO loans contain co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Other

AMCON has issued a letter of credit in the amount of approximately $0.4 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

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9. EQUITY-BASED INCENTIVE AWARDS

Omnibus Plan

The Company has an Omnibus Incentive Plan (“the Omnibus Plan”) which provides for equity incentives to employees. The Omnibus Plan was designed with the intent of encouraging employees to acquire a vested interest in the growth and performance of the Company. The Omnibus Plan permits the issuance of up to 150,000 shares of the Company’s common stock in the form of stock options, restricted stock awards, restricted stock units, performance share awards as well as awards such as stock appreciation rights, performance units, performance shares, bonus shares, and dividend share awards payable in the form of common stock or cash. The number of shares issuable under the Omnibus Plan is subject to customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock.  At June 2012, awards with respect to a total of 109,800 shares, net of forfeitures, had been awarded pursuant to the Omnibus Plan and awards with respect to another 40,200 shares may be awarded under the plan.

Stock Options

During the nine month period ended June 2012, the Company issued 6,500 incentive stock options to various employees pursuant to the provisions of the Company’s Omnibus Plan. These awards vest in equal installments over a five year service period and had an estimated fair value of approximately $0.1 million using the Black-Scholes option pricing model. The following assumptions were used in connection with the Black-Scholes option pricing calculation:

	Stock Option Pricing Assumptions
Risk-free interest rate	2.39	%
Dividend yield	1.10	%
Expected volatility	27.90	%
Expected life in years	6

The stock options issued by the Company expire ten years from the grant date and include graded vesting schedules up to five years in length.  Stock options issued and outstanding at June 2012 are summarized as follows:

			Remaining			Exercisable
	ExercisePrice	NumberOutstanding	Weighted-AverageContractual Life	Weighted-AverageExercise Price		NumberExercisable	Weighted-AverageExercise Price
Fiscal 2003	$28.80	42	0.32 years	$	28.80	42	$	28.80
Fiscal 2007	$18.00	25,000	4.45 years	$	18.00	25,000	$	18.00
Fiscal 2010	$51.50	5,500	7.83 years	$	51.50	2,200	$	51.50
Fiscal 2012	$53.80 - $65.97	6,500	9.33 years	$	54.74	—	$	—
		37,042		$	29.43	27,242	$	20.72

The following is a summary of stock options activity for the nine months ended June 2012:

	NumberofShares		WeightedAverageExercisePrice
Outstanding at September 2011	30,583		$	24.05
Granted	6,500		54.74
Exercised	(41	)	28.80
Forfeited/Expired	—		—
Outstanding at June 2012	37,042		$	29.43

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Restricted Stock Units

Restricted stock units issued and outstanding at June 2012 are as follows:

	Restricted Stock Units (1)		Restricted Stock Units (2)		Restricted Stock Units (3)
Date of award:	November 22, 2010		November 22, 2010		October 26, 2011
Original number of awards issued:	38,400		12,000		15,900
Service period:	24 months		36 months		36 months
Estimated fair value of award at grant date:	$	2,765,000	$	864,000	$	855,000
Awards outstanding at June 2012		12,800		8,000		15,900
Fair value of non-vested awards at June 2012:	$	719,000	$	450,000	$	894,000

(1)	25,600 of the restricted stock unit awards were vested as of Q3 2012. The remaining 12,800 restricted stock units will vest on October 26, 2012.
(2)	4,000 of the restricted stock units were vested as of Q3 2012. The remaining 8,000 restricted stock units will vest in equal amounts (4,000 per year) on November 22, 2012 and November 22, 2013.
(3)	The 15,900 restricted stock units will vest in equal amounts (5,300 per year) on October 25, 2012, October 25, 2013 and October 25, 2014.

There is no direct cost to the recipients of the restricted stock units, except for any applicable taxes. The recipients of the restricted stock units are entitled to the customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock.  All cash dividends and/or distributions payable to restricted stock recipients will be held in escrow until all the conditions of vesting have been met.

The restricted stock units provide that the recipients can elect, at their option, to receive either common stock in the Company, or a cash settlement based upon the closing price of the Company’s shares, at the time of vesting.  Based on these award provisions, the compensation expense recorded in the Company’s Condensed Statement of Operations reflects the amortization of these awards over their respective service life.  The awards and their related compensation and amortization expense are also adjusted to fair value at each reporting date until vested.  The following summarizes restricted stock unit activity under the Omnibus Plan for the nine months ended June 2012:

	NumberofShares		Weighted AverageFair Value
Nonvested restricted stock units at September 2011	37,600		$	57.00
Granted	15,900		$	53.80
Vested	(16,800	)	$	56.58
Expired	—		$	—
Nonvested restricted stock units at June 2012	36,700		$	64.40

All Equity-Based Awards (stock options and restricted stock units)

For the three and nine months ended June 2012, net income before income taxes included compensation expense of $0.3 million and $0.9 million, respectively, related to the amortization of all equity-based compensation awards. Total unamortized compensation expense for these awards at June 2012 was approximately $1.4 million.

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10. 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 retail health food stores’ operations are aggregated to comprise the Retail Segment because such operations have similar economic characteristics, as well as similar characteristics with respect to the nature of products sold, the type and class of customers for the health food products and the methods used to sell the products. Included in the “Other” column are intercompany eliminations, and assets held and charges incurred by our company for both segments. The segments are evaluated on revenues, gross margins, operating income (loss), and income before taxes.

	WholesaleSegment		RetailSegment		Other			Consolidated
THREE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	223,189,406	$	—	$	—		$	223,189,406
Confectionery	20,433,115		—		—			20,433,115
Health food	—		9,499,012		—			9,499,012
Tobacco, food service & other	53,991,241		—		—			53,991,241
Total external revenue	297,613,762		9,499,012		—			307,112,774
Depreciation	363,557		97,142		938			461,637
Amortization	91,251		—		—			91,251
Operating income (loss)	4,073,549		757,482		(1,328,115		)	3,502,916
Interest expense	131,983		67,437		162,336			361,756
Income (loss) from operations before taxes	3,953,942		695,509		(1,460,450		)	3,189,001
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	182,156		24,606		—			206,762
THREE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	190,156,165	$	—	$	—		$	190,156,165
Confectionery	18,125,809		—		—			18,125,809
Health food	—		9,509,251		—			9,509,251
Tobacco, food service & other	46,036,974		—		—			46,036,974
Total external revenue	254,318,948		9,509,251		—			263,828,199
Depreciation	316,032		106,308		937			423,277
Amortization	95,822		—		—			95,822
Operating income (loss)	4,092,131		803,020		(977,753		)	3,917,398
Interest expense	117,643		93,381		161,501			372,525
Income (loss) from operations before taxes	3,997,180		715,497		(1,093,926		)	3,618,751
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	624,284		59,497		—			683,781

15

	WholesaleSegment		RetailSegment		Other			Consolidated
NINE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	628,218,679	$	—	$	—		$	628,218,679
Confectionery	55,792,444		—		—			55,792,444
Health food	—		28,175,654		—			28,175,654
Tobacco, food service & other	154,318,313		—		—			154,318,313
Total external revenue	838,329,436		28,175,654		—			866,505,090
Depreciation	1,193,834		300,222		2,812			1,496,868
Amortization	283,441		—		—			283,441
Operating income (loss)	10,402,816		2,295,893		(3,820,895		)	8,877,814
Interest expense	401,043		225,849		478,815			1,105,707
Income (loss) from operations before taxes	10,108,749		2,085,526		(4,129,189		)	8,065,086
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	765,508		148,978		—			914,486
NINE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	520,018,745	$	—	$	—		$	520,018,745
Confectionery	48,253,405		—		—			48,253,405
Health food	—		28,509,834		—			28,509,834
Tobacco, food service & other	128,606,415		—		—			128,606,415
Total external revenue	696,878,565		28,509,834		—			725,388,399
Depreciation	944,662		320,923		2,812			1,268,397
Amortization	255,418		—		—			255,418
Operating income (loss)	12,182,183		2,712,105		(4,601,785		)	10,292,503
Interest expense	343,807		293,369		383,804			1,020,980
Income (loss) from operations before taxes	11,880,020		2,435,886		(4,902,413		)	9,413,493
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	1,474,382		166,653		—			1,641,035

11. COMMON STOCK REPURCHASE

The Board of Directors of the Company had previously authorized the repurchase of up to 50,000 shares of the Company’s common stock in open market or negotiated transactions.  During the nine months ended June 2012, the Company repurchased 17,000 shares of its common stock in a negotiated transaction for $918,000, or $54.00 per share. The share repurchase was funded with cash from operations and through our revolving credit facility.  All repurchased shares were recorded in treasury stock at cost.

12. SUBSEQUENT EVENT

On July 17, 2012, the Company refinanced two existing real estate notes payable due to BMO totaling approximately $4.8 million into a single note payable. The new note payable bears a fixed interest rate of 2.99% and requires monthly installments of principal and interest totaling approximately $0.5 million on an annual basis through June 2017, with the remainder due July 2017. The note payable is secured by the Company’s Quincy, IL and Rapid City, SD distribution facilities.

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Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, 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. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. 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:

·increases in state and federal excise taxes on cigarette and tobacco products,

·integration risk related to acquisitions or other efforts to expand,

·higher commodity prices which could impact food ingredient costs for many of the products we sell,

·regulation of cigarette and tobacco products by the FDA, in addition to existing state and federal regulations by other agencies,

·potential bans or restrictions imposed by the FDA on the manufacture, distribution, and sale of certain cigarette and tobacco products,

·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 or acquisitions,

·domestic regulatory and legislative risks,

·competition,

·poor weather conditions,

·increases in fuel prices,

·consolidation trends within the convenience store and wholesale distribution industry,

·natural disasters and domestic unrest,

·other risks over which the Company has little or no control, and any other factors not identified herein,

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FORWARD-LOOKING STATEMENTS (continued)

Changes in these 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. Any forward-looking statement contained herein is made as of the date of this document. Except as required by law, the Company undertakes no obligation to publicly update or correct any of these forward-looking statements in the future to reflect changed assumptions, the occurrence of material events or changes in future operating results, financial conditions or business over time.

CRITICAL ACCOUNTING ESTIMATES

Certain accounting estimates used in the preparation of the Company’s financial statements require us to make judgments and estimates and the financial results we report may vary depending on how we make these judgments and estimates. Our critical accounting estimates are set forth in our annual report on Form 10-K for the fiscal year ended September 30, 2011, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these policies during our fiscal quarter ended June 2012.

THIRD FISCAL QUARTER 2012 (Q3 2012)

The following discussion and analysis includes the Company’s results of operations for the three and nine months ended June 2012 and June 2011.

Wholesale Segment

Our wholesale segment is one of the largest wholesale distributors in the United States serving approximately 5,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops.  In October 2011, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.

We currently distribute over 14,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and chilled products and institutional food service products. We also provide consultative services to our customers in the areas of marketing, merchandising, inventory optimization, and information systems which are designed to enhance the ability of our customers to compete and maximize their profitability. Convenience stores represent our largest customer category.

Retail Segment

The Company’s retail health food stores, which are operated as Chamberlin’s Market & Café and Akin’s Natural Foods Market, carry over 30,000 different national and regionally branded and private label products. These products include high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was first established in 1935, operates six stores in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of eight locations in Oklahoma, Nebraska, Missouri, and Kansas.

Business Update — Wholesale Segment

From sugary drinks to tobacco products, legislative initiatives across the country (i.e. higher excise taxes) are squarely taking aim at many of the products sold by convenience stores which is one of our core customer segments. We believe these trends could accelerate as states continue to struggle with budget shortfalls. The convenience store industry continues to consolidate and from time-to-time, some of our customers are acquired by larger chains which either self-distribute or have preexisting relationships with competing distributors.  Accordingly, the competitive landscape remains intense and we expect these factors to pressure margins moving forward.

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Business Update — Wholesale Segment (continued)

The industry remains highly fragmented with a high percentage of independent single-store operators and mid-sized convenience store chains. Our customers’ reliance on traditional revenue streams (gas, tobacco products etc.) is evolving and many store owners are transitioning their businesses into newer quick-style restaurant retail formats. Our Company offers a comprehensive suite of next generation merchandising programs to assist convenience stores in making this transition.  This is an important consideration as the wholesale competitive environment is intense and customers are looking for suppliers with the best price-value relationship.

Business Update — Retail Segment

Our Chamberlin’s stores in Florida have shown improved sales results as that region of the country gradually recovers from the severity of the economic downturn. Our Akin’s stores, which are located in the Midwest, have experienced increased competition in certain markets resulting from the expansion of national and regional health food chains.  We are actively seeking opportunities for expansion.

The popularity and awareness of natural products continues to grow. Consumers of natural products tend to be a better educated customer segment who demand a higher level of product knowledge by in-store associates; a level of service which is difficult for mass merchandisers to deliver in a big box retail format.  This is particularly true in product categories such as vitamin supplements which involve a high degree of expert consultation and personal interaction throughout the sales engagement process.  We believe that our high level of service differentiates our stores from those of our competitors.  This is an important consideration as the retail health food industry is highly competitive and customers are looking for a compelling price-value relationship.

RESULTS OF OPERATIONS — THREE MONTHS ENDED JUNE 2012:

	For the three months ended June
	2012			2011			Incr(Decr)			% Change
CONSOLIDATED:
Sales (1)	$	307,112,774		$	263,828,199		$	43,284,575		16.4
Cost of sales	287,211,769			245,610,146			41,601,623			16.9
Gross profit	19,901,005			18,218,053			1,682,952			9.2
Gross profit percentage	6.5		%	6.9		%
Operating expense	16,398,089			14,300,655			2,097,434			14.7
Operating income	3,502,916			3,917,398			(414,482		)	(10.6	)
Interest expense	361,756			372,525			(10,769		)	(2.9	)
Income tax expense	1,343,000			1,791,000			(448,000		)	(25.0	)
Income from operations after income taxes	1,846,001			1,827,751			18,250			1.0
BUSINESS SEGMENTS:
Wholesale
Sales	$	297,613,762		$	254,318,948		$	43,294,814		17.0
Gross profit	15,827,670			14,177,301			1,650,369			11.6
Gross profit percentage	5.3		%	5.6		%
Retail
Sales	$	9,499,012		$	9,509,251		$	(10,239	)	(0.1	)
Gross profit	4,073,335			4,040,752			32,583			0.8
Gross profit percentage	42.9		%	42.5		%

(1)Sales are reported net of costs associated with incentives provided to retailers. These incentives totaled $4.5 million in Q3 2012 and $3.7 million in Q3 2011.

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SALES:

Changes in sales are driven by two primary components:

(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.

SALES — Q3 2012 vs. Q3 2011

Sales in our Wholesale Segment increased $43.3 million during Q3 2012 as compared to Q3 2011.  Significant items impacting sales during Q3 2012 included a $29.3 million increase in sales related to our acquisition of LPS in May 2011, a $7.2 million increase in sales related to price increases implemented by cigarette manufacturers, a $2.9 million increase in sales related to the volume and mix of cigarette cartons sold, and a $3.9 million increase in sales in our tobacco, beverage, snacks, candy, grocery, health & beauty products, automotive, foodservice, and store supplies categories (“Other Products”).

Sales in our Retail Segment were substantially unchanged in Q3 2012 as compared to Q3 2011. Significant items impacting sales during the period were a $0.5 million increase in our Chamberlin’s retail stores, offset by a $0.5 million decrease in sales in our Akin’s retail stores.  Sales in our Chamberlin’s stores continue to show improved results coming off the depths of the severe recession in the Florida region, while sales in our Akin’s retail stores have been impacted by increased competition from the expansion of national and regional health food chains in our markets.

GROSS PROFIT — Q3 2012 vs. Q3 2011

Our gross profit does not include fulfillment costs and costs related to the distribution network which are included in selling, general and administrative costs, and may not be comparable to those of other entities. Some entities may classify such costs as a component of cost of sales. Cost of sales, a component used in determining gross profit, for the wholesale and retail segments includes the cost of products purchased from manufacturers, less incentives we receive which are netted against such costs.

Gross profit in our Wholesale Segment increased $1.7 million in Q3 2012 as compared to Q3 2011. Of this increase, approximately $1.5 million related to our acquisition of LPS and $0.9 million related to the benefit from cigarette manufacturer price increases and the impact of increases in cigarette excise taxes.  These increases were partially offset up a $0.7 million decrease in gross profit related to the volume and mix of sales in our cigarette and Other Product categories.  Gross profit in our Retail Segment was substantially unchanged in Q3 2012 as compared to Q3 2011.

OPERATING EXPENSE — Q3 2012 vs. Q3 2011

Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses include costs related to our sales, warehouse, delivery and administrative departments for all segments. Specifically, purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders are all classified as selling, general and administrative expenses. Our most significant expenses relate to employee costs, facility and equipment leases, transportation costs, fuel costs, insurance, and professional fees.

Q3 2012 operating expenses increased $2.1 million as compared to Q3 2011. Significant items impacting operating expenses during Q3 2012 included an additional $1.4 million in operating expenses related to servicing our new business added in conjunction with the LPS acquisition, a $0.4 million increase in compensation expense, and a $0.3 million increase in other operating expenses.

INCOME TAX EXPENSE — Q3 2012 vs. Q3 2011

The effective income tax rate for Q3 2012 was 42.1% as compared to 49.5% in Q3 2011. The change in the effective tax rates between the fiscal periods was primarily related to the deductibility of certain expenses based on limitations set forth by the Internal Revenue Service.

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RESULTS OF OPERATIONS — NINE MONTHS ENDED JUNE 2012:

	For the nine months
	ended June
							Incr
	2012			2011			(Decr)			% Change
CONSOLIDATED:
Sales	$	866,505,090		$	725,388,399		$	141,116,691		19.5
Cost of sales	808,750,009			673,193,512			135,556,497			20.1
Gross profit	57,755,081			52,194,887			5,560,194			10.7
Gross profit percentage	6.7		%	7.2		%
Operating expenses	48,877,267			41,902,384			6,974,883			16.6
Operating income	8,877,814			10,292,503			(1,414,689		)	(13.7	)
Interest expense	1,105,707			1,020,980			84,727			8.3
Income tax expense	3,316,000			4,169,000			(853,000		)	(20.5	)
Income from operations after income taxes	4,749,086			5,244,493			(495,407		)	(9.4	)
BUSINESS SEGMENTS:
Wholesale
Sales	$	838,329,436		$	696,878,565		$	141,450,871		20.3
Gross profit	45,688,406			39,977,660			5,710,746			14.3
Gross profit percentage	5.4		%	5.7		%
Retail
Sales	$	28,175,654		$	28,509,834		$	(334,180	)	(1.2	)
Gross profit	12,066,675			12,217,227			(150,552		)	(1.2	)
Gross profit percentage	42.8		%	42.9		%

(1) Sales are reported net of costs associated with incentives provided to retailers. These incentives totaled $12.7 million for the nine months ended June 2012 and $11.1 million for the nine months ended June 2011.

SALES — Nine Months Ended June 2012

Sales in our Wholesale Segment increased $141.5 million for the nine months ended June 2012 as compared to the same prior year period. Significant items impacting our Wholesale Segment sales for the nine months ended June 2012 included a $120.0 million increase in sales related to the acquisition of LPS, a $19.2 million increase in sales related to price increases implemented by cigarette manufacturers, and a $8.0 million increase in our Other Product categories sales. These increases were partially offset by a $5.7 million reduction in sales related to the volume and mix of cigarette cartons sold.

Sales in our Retail Segment for the nine months ended June 2012 decreased approximately $0.3 million as compared to the same prior year period. The change in sales is primarily related to lower sales in our Akin’s retail stores which have experienced increased competition from the expansion of national and regional health food chains, partially offset by higher sales in our Chamberlin’s stores which continue to show improved results coming off the depths of the severe recession.

GROSS PROFIT — Nine Months Ended June 2012

Gross profit in our Wholesale Segment increased $5.7 million for the nine month period ended June 2012 as compared to the same prior year period.  Of this increase, approximately $6.5 million related to our acquisition of LPS and $0.9 million related to the benefit from cigarette manufacturer price increases and the impact of increases in cigarette excise taxes.  Partially offsetting this was a $1.7 million reduction in gross profit related to the volume and mix of sales in our cigarette and Other Product categories.

Gross profit in our Retail Segment decreased $0.2 million for the nine month period ended June 2012 as compared to the same prior year period.  This decrease was primarily related to lower sales volumes in our Akin’s retail stores.

21

OPERATING EXPENSE — Nine Months Ended June 2012

Operating expenses increased $7.0 million for the nine months ended June 2012 as compared to the same prior year period. Significant items impacting operating expenses during the nine month period ended June 2012 included an additional $5.9 million in operating expenses related to servicing our new business added in conjunction with the LPS acquisition, a $0.8 million net increase in bad debt expense, a $0.3 million increase in our Retail Segment operating expenses, a $0.3 million increase in fuel expense, and a $0.5 million increase in other operating expenses. These increases were partially offset by a $0.8 million reduction in compensation expense.

INCOME TAX EXPENSE —Nine Months Ended June 2012

The effective income tax rate for the nine months ended was 41.1% as compared to 44.3% same prior year period.  The change in the effective tax rates between fiscal periods was primarily related to the deductibility of certain expenses based on limitations set forth by the Internal Revenue Service.

LIQUIDITY AND CAPITAL RESOURCES

Overview

·	General. The Company requires cash to pay operating expenses, purchase inventory, and make capital investments. In general, the Company finances its cash flow requirements with cash generated from operating activities and credit facility borrowings.
·	Operating Activities. The Company used cash of approximately $6.7 million for operating activities during the nine months ended June 2012. Significant uses of cash during the period included increases in accounts receivable and inventory and decreases in both accounts payable and income taxes payable. These items were partially offset by a decrease in prepaid and other current assets, an increase in deferred income taxes, and the impact of net earnings.
	Our variability in cash flows from operating activities is dependent on the timing of inventory purchases and seasonal fluctuations. For example, periodically we have inventory “buy-in” opportunities which offer more favorable pricing terms. As a result, we may have to hold inventory for a period longer than the payment terms. This generates a cash outflow from operating activities which we expect to reverse in later periods. Additionally, during the warm weather months, which is our peak time of operations, we generally carry higher amounts of inventory to ensure high fill rates and customer satisfaction.
·	Investing Activities. The Company used cash of $0.9 million during the nine month period ended June 2012 for investing activities, primarily related to capital expenditures for property and equipment.
·	Financing Activities. The Company generated cash of $6.8 million from financing activities during the nine months ended June 2012. Of this amount, approximately $9.3 million related to net borrowings on the Company’s credit facility. Partially offsetting this was $1.0 million related to repayment on long-term debt, $0.9 million related to the repurchase of the Company’s common shares, and $0.6 million related to dividends on the Company’s common and preferred stock.
·	Cash on Hand/Working Capital. At June 2012, the Company had cash on hand of $0.6 million and working capital (current assets less current liabilities) of $63.6 million. This compares to cash on hand of $1.4 million and working capital of $49.0 million at September 2011.

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CREDIT AGREEMENT

The Company primarily finances its operations through a credit facility agreement with Bank of America (the “Facility”) and long-term debt agreements with banks.

The Facility included the following significant terms at June 2012:

·April 2014 maturity date and a $70.0 million revolving credit limit.

·Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

·A provision providing an additional $5.0 million of credit advances for certain inventory purchases.

·Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of the original term of the agreement or the end of any renewal period.

·Prepayment penalty equal to one-half of one percent (1/2%) if the Company prepays the entire Facility or terminates it in year one of the agreement, and one-fourth of one percent (1/4%) if the Company prepays the entire Facility or terminates it in year two of the agreement. The prepayment penalty is calculated based on the maximum loan limit.

·The Facility bears interest at either the bank’s prime rate or at LIBOR plus 175 basis points, at the election of the Company.

·Lending limits subject to accounts receivable and inventory limitations.

·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.

·Secured by 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 $1.00 per share on an annual basis.

·A financial covenant requiring a fixed charge coverage ratio of at least 1.1 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement.

The amount available for use on the Facility at any given time is subject to a number of factors including eligible accounts receivable and inventory balances that fluctuate day-to-day. Based on our collateral and loan limits as defined in the Facility agreement, the credit limit of the Facility at June 2012 was $69.6 million, of which $30.1 million was outstanding, leaving $39.5 million available.

At June 2012, the revolving portion of the Company’s Facility balance bore interest based on the bank’s prime rate and various short-term LIBOR rate elections made by the Company. The average interest rate was 2.43% at June 2012.

For the nine months ended June 2012, our peak borrowings under the Facility were $50.7 million, and our average borrowings and average availability under the Facility were $33.8 million and $30.0 million, respectively.  Our availability to borrow under the Facility generally decreases as inventory and accounts receivable levels increase because of the borrowing limitations that are placed on collateralized assets.

23

Cross Default and Co-Terminus Provisions

The Company’s owned real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, and certain warehouse equipment in the Rapid City, SD warehouse are financed through term loans with BMO Harris, NA (“BMO”) which is also a participant lender on the Company’s revolving line of credit. The BMO loans contain cross default provisions which cause all loans with BMO to be considered in default if any one of the loans where BMO is a lender, including the revolving credit facility, is in default. There were no such cross defaults at June 2012. In addition, the BMO loans contain co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Dividends Payments

The Company paid cash dividends on its common stock and convertible preferred stock issuances totaling $0.2 million and $0.6 million for the three and nine month periods ended June 2012, respectively, and $0.2 million and $0.5 million for the three and nine month periods ended June 2011, respectively.

Contractual Obligations

There have been no significant changes to the Company’s contractual obligations as set forth in the Company’s annual report on Form 10-K for the fiscal period ended September 30, 2011.

Other

AMCON has issued a letter of credit in the amount of approximately $0.4 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Liquidity Risk

The Company’s liquidity position is significantly influenced by its ability to maintain sufficient levels of working capital. For our Company and industry in general, customer credit risk and ongoing access to bank credit heavily influence liquidity positions.

The Company does not currently hedge its exposure to interest rate risk or fuel costs. Accordingly, significant price movements in these areas can and do impact the Company’s profitability.

The Company believes its liquidity position going forward will be adequate to sustain operations. However, a precipitous change in market conditions could materially impact the Company’s future revenue stream as well as its ability to collect on customer accounts receivable or secure bank credit.

Item 3.      Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.      Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

24

As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2012 was made under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer.  Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control that occurred during the fiscal quarter ended June 30, 2012, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.      Legal Proceedings

None.

Item 1A.      Risk Factors

There have been no material changes to the Company’s risk factors as previously disclosed in Item 1A “Risk Factors” of the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2011.

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3.      Defaults Upon Senior Securities

Not applicable.

Item 4.      Mine Safety Disclosures

Not applicable.

Item 5.      Other Information

Not applicable.

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Item 6.      Exhibits

(a) Exhibits

10.1	Real estate note payable between BMO and the Company dated July 17, 2012.
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
101	Interactive Data File (filed herewithin electronically)

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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 thereunto duly authorized.

	AMCON DISTRIBUTING COMPANY
	(registrant)
Date: July 19, 2012	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman
Date: July 19, 2012	/s/ Andrew C. Plummer
	Andrew C. Plummer,
	Vice President, Chief Financial Officer
	(Principal Financial and Accounting Officer)

27

EX-10.1

Exhibit 10.1

PROMISSORY NOTE

Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
$4,781,149.64	07-17-2012	07-17-2017	***	E150 / C0	00005284626	60867

Borrower:	AMCON Distributing Company7405 Irvington Rd.Omaha, NE 68122-1232	Lender:	BMO Harris Bank N.A.Plaza - Central States Commercial Lending800 West 47th StKansas City, MO 64112
Principal Amount:  $4,781,149.64			Date of Note:  July 17, 2012

PROMISE TO PAY.  Amcon Distributing Company (“Borrower”) promises to pay to BMO Harris Bank N.A. (“Lender”), or order, in lawful money of the United States of America, the principal amount of Four Million Seven Hundred Eighty-one Thousand One Hundred Forty-nine & 64/100 Dollars ($4,781,149.64), together with interest on the unpaid principal balance from July 17, 2012, calculated as described in the “INTEREST CALCULATION METHOD” paragraph using an interest rate of 2.992% per annum based on a year of 360 days, until paid in full.  The interest rate may change under the terms and conditions of the “INTEREST AFTER DEFAULT” section.

PAYMENT.  Borrower will pay this loan in 59 regular payments of $38,344.16 each and one irregular last payment estimated at $3,121,050.27.  Borrower’s first payment is due August 17, 2012, and all subsequent payments are due on the same day of each month after that.  Borrower’s final payment will be due on July 17, 2017, and will be for all principal and all accrued interest not yet paid.  Payments include principal and interest.  Unless otherwise agreed or required by applicable law, payments will be applied to Accrued Interest, Principal, Late Charges, and Escrow.  Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.  This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note.

PREPAYMENT PENALTY.  Upon prepayment of this Note, Lender is entitled to the following prepayment penalty:  The Yield Maintenance Fee, as hereinafter provided, shall be immediately due and payable by Maker upon a full or partial prepayment of this Note at any time prior to the final scheduled payment due date on the Note.

Yield Maintenance Fee:  “Yield Maintenance Fee” means an amount equal to the excess, if any, of the amount of:

(i)	monthly interest which would otherwise be payable on the prepaid principal amount of this Note from the date of prepayment through the final scheduled payment due date on the Note, over the
(ii)	monthly interest Lender would earn if the prepaid principal amount were reinvested for the period from the date of prepayment through the final scheduled payment due date on the Note, at the Reinvestment Rate (as hereinafter defined) plus 2.100%,

Such difference shall be discounted to present value at the Reinvestment Rate.

Reinvestment Rate:

If the remaining term of the Note is less than one year, “Reinvestment Rate” means:  the yield in percent per annum on Eurodollar Deposits (London) as of the Reinvestment Rate Determination Date (as hereinafter defined) which has a maturity equal to the remaining term of the Note;

If the remaining term of the Note is one year or more, “Reinvestment Rate” means:  the yield in percent per annum on Interest Rate Swaps as of the Reinvestment Rate Determination Date which has a maturity equal to the remaining term of the Note; or,

In the event there is no rate available for a term that is equal to the remaining term of the Note, “Reinvestment Rate” means: the linear interpolation between the two rates (Eurodollar Deposits and/or Interest Rate Swaps, as applicable), one for the closest maturity less than the remaining term of the Note, and the other for the closest maturity greater than the remaining term of the Note.

Reinvestment Rate Determination Date: “Reinvestment Rate Determination Date” means the date which is five (5) banking days prior to the scheduled prepayment date.

Published yields:  Yields on Eurodollar Deposits (London) and Interest Rate Swaps shall be the applicable rates available and published most recently by the Board of Governors of the Federal Reserve System as of such Reinvestment Rate Determination Date. (Release H.15, available at www.federalreserve.gov/releases/h15/update)

Prepayment calculation notice to Borrower: Promptly after the Reinvestment Rate Determination Date, Lender shall notify Borrower of the amount and the basis of determination of the required Yield Maintenance Fee, and such determination and amount shall be binding on both parties absent manifest error.  Except for the foregoing, Borrower may pay all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule.  Rather, early payments will reduce the principal balance due and may result in Borrower’s making fewer payments.  Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  BMO Harris Bank N.A., Plaza - Central States Commercial Lending, 800 West 47th St, Kansas City, MO  64112.

LATE CHARGE.  If a payment is more than 10 days late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 3.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default (“Event of Default”) under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

LENDER’S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses whether or not there is a lawsuit, including attorneys’ fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Missouri.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Jackson County, State of Missouri.

DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $30.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge with which Borrower pays is later dishonored.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

COLLATERAL.  Borrower acknowledges this Note is secured by among other things, that certain mortgage dated June 1, 2001, on real property located at 2517 Ellington Road, Quincy, IL 62305 and recorded in the public records of Adams County, Illinois, that certain mortgage dated December 21, 2004, on real property located at 1511 Turbine Drive, Rapid City, SD and recorded in the public records of Pennington County, South Dakota and that certain mortgage dated June 1, 2001, on real property located at 3125 East Thayer Avenue, Bismark, ND 58501 and recorded in the public records of Burleigh County, North Dakota.

PAYMENT AMOUNT AFTER DEFAULT. Whenever increases occur in the interest rate due to an event of default, Lender, at its option, may do one or more of the following: (A) increase Borrower’s payments to ensure Borrower’s loan will pay off by its original final maturity date, (B) increase Borrower’s payments to cover accruing interest, (C) increase the number of Borrower’s payments, and (D) continue Borrower’s payments at the same amount and increase Borrower’s final payment.

PRIOR NOTE.  This Promissory Note provides for the renewal or refinance of the existing debt evidenced by the Promissory Notes, dated December 31, 2009 and July 11, 2008, as may have been modified, extended, or amended.  This Note is not intended to satisfy or extinguish the underlying debt and obligation evidenced by the December 31, 2009 and July 11, 2008 Promissory Notes, but rather set forth the terms and conditions on which such debt is being renewed or refinanced.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.

ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT.  TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:
AMCON DISTRIBUTING COMPANY
By:	/s/ Andrew C. Plummer
Andrew C. Plummer, Chief Financial Officer of AMCON Distributing Company

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Christopher H. Atayan, certify that:

1. I have reviewed this report on Form 10-Q of AMCON Distributing Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 19, 2012	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Andrew C. Plummer, certify that:

1. I have reviewed this report on Form 10-Q of AMCON Distributing Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 19, 2012	/s/ Andrew C. Plummer
	Andrew C. Plummer, Vice President,
	Chief Financial Officer and Secretary

EX-32.1

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of AMCON Distributing Company (the “Company”) for the fiscal quarter ended June 30, 2012, I, Christopher H. Atayan, Chief Executive Officer and Principal Executive Officer of the Company, have executed this certification for furnishing to the Securities and Exchange Commission. I hereby certify that, to the best of my knowledge and belief:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 19, 2012	/s/ Christopher H. Atayan
	Title: Chief Executive Officer and Chairman

A signed original of this written statement required by Section 906 has been provided to AMCON Distributing Company and will be retained by AMCON Distributing Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of AMCON Distributing Company (the “Company”) for the fiscal quarter ended June 30, 2012, I, Andrew C. Plummer, Vice President and Chief Financial Officer of the Company, have executed this certification for furnishing to the Securities and Exchange Commission. I hereby certify that, to the best of my knowledge and belief:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 19, 2012	/s/ Andrew C. Plummer
	Title: Vice President,
	Chief Financial Officer and Secretary

A signed original of this written statement required by Section 906 has been provided to AMCON Distributing Company and will be retained by AMCON Distributing Company and furnished to the Securities and Exchange Commission or its staff upon request.

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COMMON STOCK REPURCHASE (Details) (USD $)	9 Months Ended
	Jun. 30, 2012
COMMON STOCK REPURCHASE
Number of shares of common stock authorized to be repurchased	50,000
Number of shares of common stock repurchased in a negotiated transaction	17,000
Value of shares of common stock repurchased in a negotiated transaction	$ 918,000
Share price of common stock repurchased in a negotiated transaction (in dollars per share)	$ 54.00

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DIVIDENDS: (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
DIVIDENDS:
Cash dividends paid on common stock and convertible preferred stock issuances	$ 0.2	$ 0.2	$ 0.6	$ 0.5

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BUSINESS SEGMENTS (Tables)

9 Months Ended

Jun. 30, 2012

BUSINESS SEGMENTS

Schedule of segment information

	WholesaleSegment		RetailSegment		Other			Consolidated
THREE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	223,189,406	$	—	$	—		$	223,189,406
Confectionery	20,433,115		—		—			20,433,115
Health food	—		9,499,012		—			9,499,012
Tobacco, food service & other	53,991,241		—		—			53,991,241
Total external revenue	297,613,762		9,499,012		—			307,112,774
Depreciation	363,557		97,142		938			461,637
Amortization	91,251		—		—			91,251
Operating income (loss)	4,073,549		757,482		(1,328,115		)	3,502,916
Interest expense	131,983		67,437		162,336			361,756
Income (loss) from operations before taxes	3,953,942		695,509		(1,460,450		)	3,189,001
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	182,156		24,606		—			206,762
THREE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	190,156,165	$	—	$	—		$	190,156,165
Confectionery	18,125,809		—		—			18,125,809
Health food	—		9,509,251		—			9,509,251
Tobacco, food service & other	46,036,974		—		—			46,036,974
Total external revenue	254,318,948		9,509,251		—			263,828,199
Depreciation	316,032		106,308		937			423,277
Amortization	95,822		—		—			95,822
Operating income (loss)	4,092,131		803,020		(977,753		)	3,917,398
Interest expense	117,643		93,381		161,501			372,525
Income (loss) from operations before taxes	3,997,180		715,497		(1,093,926		)	3,618,751
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	624,284		59,497		—			683,781

	WholesaleSegment		RetailSegment		Other			Consolidated
NINE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	628,218,679	$	—	$	—		$	628,218,679
Confectionery	55,792,444		—		—			55,792,444
Health food	—		28,175,654		—			28,175,654
Tobacco, food service & other	154,318,313		—		—			154,318,313
Total external revenue	838,329,436		28,175,654		—			866,505,090
Depreciation	1,193,834		300,222		2,812			1,496,868
Amortization	283,441		—		—			283,441
Operating income (loss)	10,402,816		2,295,893		(3,820,895		)	8,877,814
Interest expense	401,043		225,849		478,815			1,105,707
Income (loss) from operations before taxes	10,108,749		2,085,526		(4,129,189		)	8,065,086
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	765,508		148,978		—			914,486
NINE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	520,018,745	$	—	$	—		$	520,018,745
Confectionery	48,253,405		—		—			48,253,405
Health food	—		28,509,834		—			28,509,834
Tobacco, food service & other	128,606,415		—		—			128,606,415
Total external revenue	696,878,565		28,509,834		—			725,388,399
Depreciation	944,662		320,923		2,812			1,268,397
Amortization	255,418		—		—			255,418
Operating income (loss)	12,182,183		2,712,105		(4,601,785		)	10,292,503
Interest expense	343,807		293,369		383,804			1,020,980
Income (loss) from operations before taxes	11,880,020		2,435,886		(4,902,413		)	9,413,493
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	1,474,382		166,653		—			1,641,035

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EQUITY-BASED INCENTIVE AWARDS (Details 2) (USD $)	3 Months Ended	9 Months Ended		1 Months Ended				1 Months Ended					1 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2012 Restricted Stock Units	Nov. 30, 2010 Restricted Stock Units 1	Oct. 26, 2012 Restricted Stock Units 1	Jun. 30, 2012 Restricted Stock Units 1	Nov. 22, 2010 Restricted Stock Units 1	Nov. 30, 2010 Restricted Stock Units 2	Nov. 22, 2013 Restricted Stock Units 2	Nov. 22, 2012 Restricted Stock Units 2	Jun. 30, 2012 Restricted Stock Units 2	Nov. 22, 2010 Restricted Stock Units 2	Oct. 31, 2011 Restricted Stock Units 3	Oct. 25, 2014 Restricted Stock Units 3	Oct. 25, 2013 Restricted Stock Units 3	Oct. 25, 2012 Restricted Stock Units 3	Jun. 30, 2012 Restricted Stock Units 3	Oct. 26, 2011 Restricted Stock Units 3
Restricted stock units
Service period (in months)				24 months				36 months					36 months
Estimated fair value of award at grant date							$ 2,765,000					$ 864,000						$ 855,000
Award outstanding at the end of the period			36,700			12,800					8,000						15,900
Fair value of nonvested awards at the end of the period						719,000					450,000						894,000
Units scheduled to vest					12,800				4,000	4,000				5,300	5,300	5,300
Number of Shares
Nonvested restricted stock units at the beginning of the period (in shares)			37,600			12,800					8,000						15,900
Granted (in shares)			15,900	38,400				12,000					15,900
Vested (in shares)			(16,800)
Vested as of the balance sheet date (in shares)						25,600					4,000
Nonvested restricted stock units at the end of the period (in shares)			36,700			12,800					8,000						15,900
Weighted Average Fair Value
Nonvested restricted stock units at the beginning of the period (in dollars per share)			$ 57.00
Granted (in dollars per share)			$ 53.80
Vested (in dollars per share)			$ 56.58
Nonvested restricted stock units at the end of the period (in dollars per share)			$ 64.40
All Equity-Based Awards (stock options and restricted stock units)
Compensation expense related to the amortization of all equity-based compensation awards	300,000	900,000
Total unamortized compensation expense	$ 1,400,000	$ 1,400,000

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CONVERTIBLE PREFERRED STOCK:

9 Months Ended

Jun. 30, 2012

CONVERTIBLE PREFERRED STOCK:

CONVERTIBLE PREFERRED STOCK:

3. CONVERTIBLE PREFERRED STOCK:

The Company has two series of convertible preferred stock outstanding at June 2012 as identified in the following table:

	Series A			Series B
Date of issuance:	June 17, 2004			October 8, 2004
Optionally redeemable beginning	June 18, 2006			October 9, 2006
Par value (gross proceeds):	$	2,500,000		$	1,550,000
Number of shares:	100,000			62,000
Liquidation preference per share:	$	25.00		$	25.00
Conversion price per share:	$	30.31		$	24.65
Number of common shares in which to be converted:	82,481			62,880
Dividend rate:	6.785		%	6.37		%

The Series A Convertible Preferred Stock (“Series A”) and Series B Convertible Preferred Stock (“Series B”), (collectively, the “Preferred Stock”), are convertible at any time by the holders into a number of shares of AMCON common stock equal to the number of preferred shares being converted multiplied by a fraction equal to $25.00 divided by the conversion price. The conversion prices for the Preferred Stock are subject to customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable in arrears, when, and if declared by the Board of Directors, on March 31, June 30, September 30 and December 31 of each year.

In the event of a liquidation of the Company, the holders of the Preferred Stock are entitled to receive the liquidation preference plus any accrued and unpaid dividends prior to the distribution of any amount to the holders of the Common Stock. The shares of Preferred Stock are optionally redeemable by the Company beginning on various dates, as listed in the above table, at redemption prices equal to 112% of the liquidation preference. The redemption prices decrease 1% annually thereafter until the redemption price equals the liquidation preference, after which date it remains the liquidation preference. The Preferred Stock is redeemable at the liquidation value and at the option of the holder.  The Series A Preferred Stock is owned by Mr. Christopher Atayan, AMCON’s Chief Executive Officer and Chairman of the Board. The Series B Preferred Stock is owned by an institutional investor which has the right to elect one member of our Board of Directors, pursuant to the voting rights in the Certificate of Designation creating the Series B.  Christopher H. Atayan was first nominated and elected to this seat in 2004.

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CONVERTIBLE PREFERRED STOCK: (Details) (USD $)	9 Months Ended
	Jun. 30, 2012	Sep. 30, 2011
CONVERTIBLE PREFERRED STOCK:
Number of series of convertible preferred stock outstanding	2
Series A
Convertible preferred stock
Par value (gross proceeds):	$ 2,500,000
Number of shares:	100,000	100,000
Liquidation preference per share:	$ 25.00
Conversion price per share:	$ 30.31
Number of common shares in which to be converted:	82,481
Dividend rate: (as a percent)	6.785%
Numerator of the multiplier used to calculate number of common shares in which the preferred stock are convertible	25.00
Redemption price as a percentage of liquidation preference	112.00%
Annual percentage decrease in redemption price until the redemption price equals the liquidation preference	1.00%
Series B
Convertible preferred stock
Par value (gross proceeds):	1,550,000
Number of shares:	62,000	62,000
Liquidation preference per share:	$ 25.00
Conversion price per share:	$ 24.65
Number of common shares in which to be converted:	62,880
Dividend rate: (as a percent)	6.37%
Numerator of the multiplier used to calculate number of common shares in which the preferred stock are convertible	$ 25.00
Redemption price as a percentage of liquidation preference	112.00%
Annual percentage decrease in redemption price until the redemption price equals the liquidation preference	1.00%
Number of directors who can be elected by an institutional investor, pursuant to the voting rights in the certificate of designation	1

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ACQUISITION (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Unaudited actual revenue and earnings included in the Company's statement of operations related to the acquisition and the pro forma revenue and earnings of the combined entity if the acquisition had occurred as of the beginning of the Company's prior fiscal year
Revenue - Actual results	$ 307.1	$ 263.8	$ 866.5	$ 725.4
Revenue - Supplemental pro forma results	307.1	299.4	866.5	859.1
Net Income - Actual results	1.8	1.8	4.8	5.2
Net Income - Supplemental pro forma results	$ 1.8	$ 1.9	$ 4.8	$ 5.1

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INVENTORIES (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
INVENTORIES
Total reserves on finished goods	$ 1.0	$ 0.9

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $)	Jun. 30, 2012	Sep. 30, 2011
Goodwill by reporting segment
Goodwill	$ 6,349,827	$ 6,349,827
Wholesale Segment
Goodwill by reporting segment
Goodwill	4,436,950	4,436,950
Retail Segment
Goodwill by reporting segment
Goodwill	$ 1,912,877	$ 1,912,877

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ACQUISITION

9 Months Ended

Jun. 30, 2012

ACQUISITION

ACQUISITION

2. ACQUISITION

In May 2011, the Company, through its wholly-owned subsidiary, acquired the convenience store distribution assets of L.P. Shanks Company Inc. (“LPS”).  LPS was a wholesale distributor to convenience stores in Tennessee, Kentucky, Georgia, Virginia, West Virginia, and North Carolina with annual sales of approximately $200 million.  In exchange for certain accounts receivable, inventory, property and equipment, and customer lists of LPS, the Company paid $13.4 million in cash, issued a $2.6 million note payable due to the seller due in quarterly installments over three years and bearing interest at 4% annually, and will also pay a total of $0.5 million over five years in annual installments related to a non-competition agreement with the seller. The Company also entered into warehouse leases with the seller and assumed certain operating leases in conjunction with the transaction. No significant liabilities were assumed in connection with the transaction and the costs incurred to effectuate the acquisition were expensed as incurred. The transaction was funded through the Company’s existing credit facility and the issuance of a note payable to the seller. The acquisition expands the Company’s strategic footprint in the Southeastern portion of the United States and enhances our ability to service customers in that region.

The following table summarizes the consideration paid for the acquired assets and their related acquisition date fair values. The fair value of the assets acquired have been measured in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” In valuing identifiable intangible assets, the Company has estimated the fair value using the discounted cash flows methodology. The acquired assets are reported as a component of our Wholesale Segment.

Total Consideration	Amount(in millions)
Cash	$	13.4
Note payable	2.6
Fair value of non-competition agreement	0.4
Total fair value of consideration transferred	$	16.4

Recognized amounts of identifiable assets acquired

	Amount (in millions)			WeightedAverageAmortization Period
Accounts receivable	$	8.9		—
Inventory	4.6			—
Property and equipment	1.8			5 years
Identifiable intangible assets:
Non-competition agreement	0.5			5 years
Customer relationships	0.5			8 years
Liabilities	(0.1		)
Total identifiable net assets	16.2
Goodwill	0.2
Total identifiable assets and goodwill	$	16.4

Goodwill totaling approximately $0.2 million arose from the acquisition and primarily represents synergies and economies of scale expected to be generated through reductions in selling, general, and administrative expenses. This goodwill has been assigned to the Company’s Wholesale Segment and is deductible for tax purposes.  No significant measurement adjustments related to this transaction were recorded during the nine months ended June 2012.

The following table sets forth the unaudited actual revenue and earnings included in the Company’s statement of operations related to the acquisition and the pro forma revenue and earnings of the combined entity if the acquisition had occurred as of the beginning of the Company’s prior fiscal year. These pro forma amounts do not purport to be indicative of the actual results that would have been obtained had the acquisition occurred at that time.

	Three months ended				Nine months ended
	June				June
(In millions)	2012		2011		2012		2011
Revenue — Actual results	$	307.1	$	263.8	$	866.5	$	725.4
Revenue — Supplemental pro forma results	$	307.1	$	299.4	$	866.5	$	859.1
Net Income — Actual results	$	1.8	$	1.8	$	4.8	$	5.2
Net Income — Supplemental pro forma results	$	1.8	$	1.9	$	4.8	$	5.1

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011
Other intangible assets
Other intangible assets, net	$ 5,277,225		$ 5,277,225		$ 5,550,978
Amortization expense related to finite-lived intangible assets	100,000	100,000	300,000	200,000
Estimated future amortization expense related to identifiable intangible assets with finite lives
Fiscal 2012	91,247		91,247
Fiscal 2013	365,000		365,000
Fiscal 2014	365,000		365,000
Fiscal 2015	365,000		365,000
Fiscal 2016	331,667		331,667
Thereafter	386,042		386,042
Total	1,903,956		1,903,956
Non-competition agreement
Other intangible assets
Other intangible assets, net	391,666		391,666		466,667
Accumulated amortization	100,000		100,000		100,000
Amortization period (in years)			5 years
Customer relationships
Other intangible assets
Other intangible assets, net	1,512,290		1,512,290		1,711,042
Accumulated amortization	600,000		600,000		400,000
Amortization period (in years)			8 years
Trademarks and tradenames
Other intangible assets
Other intangible assets, net	$ 3,373,269		$ 3,373,269		$ 3,373,269

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SUBSEQUENT EVENT (Details) (Subsequent event, Note payable, USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2012 item	Jul. 17, 2012
Subsequent event | Note payable
SUBSEQUENT EVENT
Number of debt instruments refinanced	2
Refinanced amount	$ 4.8
Fixed interest rate (as a percent)		2.99%
Total annual installments of principal and interest	$ 0.5

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Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2012	Sep. 30, 2011
Current assets:
Cash	$ 568,960	$ 1,389,665
Accounts receivable, less allowance for doubtful accounts of $1.2 million at both June 2012 and September 2011	34,032,935	32,963,693
Inventories, net	49,381,171	38,447,982
Deferred income taxes	1,784,114	1,707,889
Prepaid and other current assets	4,976,295	6,073,536
Total current assets	90,743,475	80,582,765
Property and equipment, net	13,128,075	13,713,238
Goodwill	6,349,827	6,349,827
Other intangible assets, net	5,277,225	5,550,978
Other assets	1,289,963	1,238,825
TOTAL ASSETS	116,788,565	107,435,633
Current liabilities:
Accounts payable	16,060,295	18,439,446
Accrued expenses	6,660,965	7,153,672
Accrued wages, salaries and bonuses	2,979,030	2,460,558
Income taxes payable	303,998	2,100,180
Current maturities of long-term debt	1,185,647	1,384,625
Total current liabilities	27,189,935	31,538,481
Credit facility	30,080,482	20,771,613
Deferred income taxes	3,842,164	2,743,238
Long-term debt, less current maturities	5,374,586	6,194,195
Other long-term liabilities	338,197	429,513
Shareholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, 162,000 shares outstanding and issued in Series A and B referred to below
Common stock, $.01 par value, 3,000,000 shares authorized, 608,271 shares outstanding at June 2012 and 609,320 shares outstanding at September 2011	6,252	6,093
Additional paid-in capital	10,910,595	9,981,055
Retained earnings	35,914,354	31,721,445
Treasury stock, 17,000 shares at cost	(918,000)
Total shareholders' equity	45,913,201	41,708,593
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	116,788,565	107,435,633
Series A Preferred Stock
Cumulative, convertible preferred stock
Cumulative, convertible preferred stock	2,500,000	2,500,000
Series B Preferred Stock
Cumulative, convertible preferred stock
Cumulative, convertible preferred stock	$ 1,550,000	$ 1,550,000

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Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,827,751	$ 4,749,086	$ 5,244,493
Adjustments to reconcile net income from operations to net cash flows from operating activities:
Depreciation	423,277	1,496,868	1,268,397
Amortization	95,822	283,441	255,418
Gain on sale of property and equipment		(28,606)	(37,177)
Equity-based compensation		930,593	1,740,969
Net excess tax benefit on equity-based awards			(125,904)
Deferred income taxes		1,022,701	1,521,683
Provision (recoveries) for losses on doubtful accounts		75,757	(768,000)
Provision for losses on inventory obsolescence		98,789	104,871
Other		(6,034)	(6,033)
Changes in assets and liabilities:
Accounts receivable		(1,144,999)	3,044,399
Inventories		(11,031,978)	(20,191,024)
Prepaid and other current assets		1,097,241	(3,444,459)
Other assets		(51,138)	(186,546)
Accounts payable		(2,396,748)	2,598,310
Accrued expenses and accrued wages, salaries and bonuses		(19,827)	(824,500)
Income tax payable		(1,796,182)	(1,729,818)
Net cash flows from operating activities		(6,721,036)	(11,534,921)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(914,486)	(1,641,035)
Proceeds from sales of property and equipment		48,984	64,375
Acquisition			(13,368,057)
Net cash flows from investing activities		(865,502)	(14,944,717)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on bank credit agreements		9,308,869	28,533,322
Principal payments on long-term debt		(1,018,587)	(684,108)
Repurchase of common stock		(918,000)
Net excess tax benefit on equity-based awards			125,904
Dividends paid on convertible preferred stock		(201,454)	(218,755)
Dividends on common stock		(354,723)	(325,377)
Proceeds from exercise of stock options		1,180	22,391
Withholdings on the exercise of equity-based awards		(51,452)
Net cash flows from financing activities		6,765,833	27,453,377
Net change in cash		(820,705)	973,739
Cash, beginning of period		1,389,665	356,735
Cash, end of period	1,330,474	568,960	1,330,474
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		1,094,086	994,280
Cash paid during the period for income taxes		4,089,482	4,377,134
Supplemental disclosure of non-cash information:
Equipment acquisitions classified as accounts payable		28,282	33,233
Issuance of common stock in connection with the vesting and exercise of equity based awards		950,562
Conversion by holders of Series B Convertible Preferred Stock to common stock			450,000
Business acquisition (see Note 2):
Accounts receivable	8,881,428		8,881,428
Inventory	4,571,629		4,571,629
Property and equipment	1,795,859		1,795,859
Prepaid assets	35,000		35,000
Goodwill	200,659		200,659
Accrued expenses	(120,000)		(120,000)
Note payable	(2,552,090)		(2,552,090)
Amount due under non-competition agreement	(444,428)		(444,428)
Non-competition agreement
Business acquisition (see Note 2):
Customer relationships intangible assets	500,000		500,000
Customer relationships
Business acquisition (see Note 2):
Customer relationships intangible assets	$ 500,000		$ 500,000

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DEBT (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended
	Jun. 30, 2012 item
Revolving credit facility
Number of loans in default with participant lender that will cause all loans with participant lender to be in default	1
Letter of credit issued for worker's compensation insurance carrier as part of the entity's self-insured loss control program	$ 0.4
Facility
Revolving credit facility
Revolving credit limit	70.0
Increase in borrowing capacity available under loan accordion	25.0
Additional credit advances for certain inventory purchases	$ 5.0
Automatic renewal period of agreement unless terminated (in years)	1 year
Prepayment penalty in year one of the agreement (as a percent)	0.50%
Prepayment penalty in year two of the agreement (as a percent)	0.25%
Unused commitment fee (as a percent)	0.25%
Period considered for computing fixed charge coverage ratio (in months)	12 months
Threshold of excess availability of credit as a percentage of maximum loan limit, as it relates to requiring a fixed charge ratio	10.00%
Facility | Maximum
Revolving credit facility
Restricted amount of dividends on common stock (in dollars per share)	$ 1.00
Facility | Minimum
Revolving credit facility
Notice period prior to the end of the original term of the agreement or the end of any renewal period required for terminating the agreement either by the borrower or lender (in days)	90 days
Fixed charge coverage ratio	1.1
Facility | LIBOR
Revolving credit facility
Variable rate basis	LIBOR
Basis points added to reference rate (as a percent)	1.75%

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Jun. 30, 2012

GOODWILL AND OTHER INTANGIBLE ASSETS

Schedule of goodwill by reporting segment

	June2012		September2011
Wholesale Segment	$	4,436,950	$	4,436,950
Retail Segment	1,912,877		1,912,877
	$	6,349,827	$	6,349,827

Schedule of other intangible assets

	June2012		September2011
Trademarks and tradenames	$	3,373,269	$	3,373,269
Non-competition agreement (less accumulated amortization of $0.1 million at both June 2012 and September 2011)	391,666		466,667
Customer relationships (less accumulated amortization of $0.6 million and $0.4 million at June 2012 and September 2011, respectively)	1,512,290		1,711,042
	$	5,277,225	$	5,550,978

Schedule of estimated future amortization expense related to identifiable intangible assets with finite lives

Customer relationships	June2012
Fiscal 2012 (1)	$	91,247
Fiscal 2013	365,000
Fiscal 2014	365,000
Fiscal 2015	365,000
Fiscal 2016	331,667
Thereafter	386,042
	$	1,903,956

(1)  Represents amortization for the remaining three months of Fiscal 2012.

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EQUITY-BASED INCENTIVE AWARDS (Details) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Jun. 30, 2012
EQUITY-BASED INCENTIVE AWARDS
Number of shares of the company's common stock permitted for issuance under the plan	150,000
Number of shares awarded pursuant to the plan, net of forfeitures	109,800
Number of shares that may be awarded under the plan	40,200
Stock Options
Omnibus plan and stock option activity
Vesting period (in years)	5 years
Estimated fair value of the stock option awards using the Black-Scholes option pricing model	$ 0.1
Stock Option Pricing Assumptions
Risk-free interest rate (as a percent)	2.39%
Dividend yield (as a percent)	1.10%
Expected volatility (as a percent)	27.90%
Expected life (in years)	6 years
Expiration period (in years)	10 years
Stock options issued and outstanding
Number Outstanding (in shares)	37,042
Number Exercisable (in shares)	27,242
Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 20.72
Number of Shares
Outstanding at the beginning of the period (in shares)	30,583
Granted (in shares)	6,500
Exercised (in shares)	(41)
Outstanding at the end of the period (in shares)	37,042
Weighted Average Exercise Price
Outstanding at beginning of the period (in dollars per share)	$ 24.05
Granted (in dollars per share)	$ 54.74
Exercised (in dollars per share)	$ 28.80
Outstanding at the end of the period (in dollars per share)	$ 29.43
Stock Options | Fiscal 2003 stock options
Stock options issued and outstanding
Number Outstanding (in shares)	42
Remaining Weighted-Average Contractual Life	3 months 25 days
Number Exercisable (in shares)	42
Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 28.80
Number of Shares
Outstanding at the end of the period (in shares)	42
Weighted Average Exercise Price
Outstanding at the end of the period (in dollars per share)	$ 28.80
Stock Options | Fiscal 2007 stock options
Stock options issued and outstanding
Number Outstanding (in shares)	25,000
Remaining Weighted-Average Contractual Life	4 years 5 months 12 days
Number Exercisable (in shares)	25,000
Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 18.00
Number of Shares
Outstanding at the end of the period (in shares)	25,000
Weighted Average Exercise Price
Outstanding at the end of the period (in dollars per share)	$ 18.00
Stock Options | Fiscal 2010 stock options
Stock options issued and outstanding
Number Outstanding (in shares)	5,500
Remaining Weighted-Average Contractual Life	7 years 9 months 29 days
Number Exercisable (in shares)	2,200
Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 51.50
Number of Shares
Outstanding at the end of the period (in shares)	5,500
Weighted Average Exercise Price
Outstanding at the end of the period (in dollars per share)	$ 51.50
Stock Options | Fiscal 2012 stock options
Stock options issued and outstanding
Number Outstanding (in shares)	6,500
Remaining Weighted-Average Contractual Life	9 years 3 months 29 days
Number of Shares
Outstanding at the end of the period (in shares)	6,500
Weighted Average Exercise Price
Granted (in dollars per share)	$ 54.74
Outstanding at the end of the period (in dollars per share)	$ 54.74
Stock Options | Fiscal 2012 stock options | Minimum
Weighted Average Exercise Price
Outstanding at the end of the period (in dollars per share)	$ 53.80
Stock Options | Fiscal 2012 stock options | Maximum
Weighted Average Exercise Price
Outstanding at the end of the period (in dollars per share)	$ 65.97

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EQUITY-BASED INCENTIVE AWARDS (Tables)

9 Months Ended

Jun. 30, 2012

EQUITY-BASED INCENTIVE AWARDS

Schedule of assumptions used in connection with the Black-Scholes option pricing calculation

During the nine month period ended June 2012, the Company issued 6,500 incentive stock options to various employees pursuant to the provisions of the Company’s Omnibus Plan. These awards vest in equal installments over a five year service period and had an estimated fair value of approximately $0.1 million using the Black-Scholes option pricing model. The following assumptions were used in connection with the Black-Scholes option pricing calculation:

	Stock Option Pricing Assumptions
Risk-free interest rate	2.39	%
Dividend yield	1.10	%
Expected volatility	27.90	%
Expected life in years	6

Schedule of stock options issued and outstanding by grant year

The stock options issued by the Company expire ten years from the grant date and include graded vesting schedules up to five years in length.  Stock options issued and outstanding at June 2012 are summarized as follows:

			Remaining			Exercisable
	ExercisePrice	NumberOutstanding	Weighted-AverageContractual Life	Weighted-AverageExercise Price		NumberExercisable	Weighted-AverageExercise Price
Fiscal 2003	$28.80	42	0.32 years	$	28.80	42	$	28.80
Fiscal 2007	$18.00	25,000	4.45 years	$	18.00	25,000	$	18.00
Fiscal 2010	$51.50	5,500	7.83 years	$	51.50	2,200	$	51.50
Fiscal 2012	$53.80 - $65.97	6,500	9.33 years	$	54.74	—	$	—
		37,042		$	29.43	27,242	$	20.72

Summary of stock options activity

	NumberofShares		WeightedAverageExercisePrice
Outstanding at September 2011	30,583		$	24.05
Granted	6,500		54.74
Exercised	(41	)	28.80
Forfeited/Expired	—		—
Outstanding at June 2012	37,042		$	29.43

Schedule of restricted stock units issued and outstanding

	Restricted Stock Units (1)		Restricted Stock Units (2)		Restricted Stock Units (3)
Date of award:	November 22, 2010		November 22, 2010		October 26, 2011
Original number of awards issued:	38,400		12,000		15,900
Service period:	24 months		36 months		36 months
Estimated fair value of award at grant date:	$	2,765,000	$	864,000	$	855,000
Awards outstanding at June 2012		12,800		8,000		15,900
Fair value of non-vested awards at June 2012:	$	719,000	$	450,000	$	894,000

(1)	25,600 of the restricted stock unit awards were vested as of Q3 2012. The remaining 12,800 restricted stock units will vest on October 26, 2012.
(2)	4,000 of the restricted stock units were vested as of Q3 2012. The remaining 8,000 restricted stock units will vest in equal amounts (4,000 per year) on November 22, 2012 and November 22, 2013.
(3)	The 15,900 restricted stock units will vest in equal amounts (5,300 per year) on October 25, 2012, October 25, 2013 and October 25, 2014.

Summary of restricted stock unit activity

	NumberofShares		Weighted AverageFair Value
Nonvested restricted stock units at September 2011	37,600		$	57.00
Granted	15,900		$	53.80
Vested	(16,800	)	$	56.58
Expired	—		$	—
Nonvested restricted stock units at June 2012	36,700		$	64.40

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

9 Months Ended

Jun. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

· Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products in the Central, Rocky Mountain, and Southern regions of the United States. Additionally, our Wholesale Segment provides programs, services and technology to assist our customers in managing their business and profitability.

· Our retail health food segment (“Retail Segment”) operates fourteen health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our wholesale segment is one of the largest wholesale distributors in the United States serving approximately 5,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 14,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and chilled products and institutional food service products. We also provide consultative services in the areas of marketing, merchandising, inventory optimization, and information systems which are designed to enhance the ability of our customers to compete and maximize their profitability. Convenience stores represent our largest customer category. In October 2011, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 601,000 square feet of permanent floor space. Our principal suppliers include Philip Morris USA, RJ Reynolds, Commonwealth Brands, Lorillard, Proctor & Gamble, Hershey, Mars, and Kraft. We also market private label lines of snuff, water, candy products, batteries, film, and other products. We do not maintain any long-term purchase contracts with these suppliers.

RETAIL SEGMENT

Our retail segment is comprised of fourteen retail health food stores which are operated as Chamberlin’s Market & Café (“Chamberlin’s”) and Akin’s Natural Foods Market (“Akin’s”). These stores carry over 30,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was first established in 1935, operates six stores in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of eight locations in Oklahoma, Nebraska, Missouri, and Kansas (“Midwest”).

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein, such as adjustments consisting of normal recurring items. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2011, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended June 30, 2012 and June 30, 2011 have been referred to throughout this quarterly report as Q3 2012 and Q3 2011, respectively. The fiscal balance sheet dates as of June 30, 2012, June 30, 2011, and September 30, 2011 have been referred to as June 2012, June 2011, and September 2011, respectively.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1.2	$ 1.2
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	162,000	162,000
Preferred stock, shares issued	162,000	162,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	3,000,000	3,000,000
Common stock, shares outstanding	608,271	609,320
Treasury stock, shares	17,000
Series A Preferred Stock
Cumulative, convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Cumulative, convertible preferred stock, shares authorized	100,000	100,000
Cumulative, convertible preferred stock, shares issued	100,000	100,000
Cumulative, convertible preferred stock, liquidation preference (in dollars)	2.5	2.5
Series B Preferred Stock
Cumulative, convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Cumulative, convertible preferred stock, shares authorized	80,000	80,000
Cumulative, convertible preferred stock, shares outstanding	62,000	62,000
Cumulative, convertible preferred stock, liquidation preference (in dollars)	$ 1.6	$ 1.6

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COMMON STOCK REPURCHASE

9 Months Ended

Jun. 30, 2012

COMMON STOCK REPURCHASE

COMMON STOCK REPURCHASE

11. COMMON STOCK REPURCHASE

The Board of Directors of the Company had previously authorized the repurchase of up to 50,000 shares of the Company’s common stock in open market or negotiated transactions.  During the nine months ended June 2012, the Company repurchased 17,000 shares of its common stock in a negotiated transaction for $918,000, or $54.00 per share. The share repurchase was funded with cash from operations and through our revolving credit facility.  All repurchased shares were recorded in treasury stock at cost.

XML

Document and Entity Information	9 Months Ended
	Jun. 30, 2012	Jul. 16, 2012
Document and Entity Information
Entity Registrant Name	AMCON DISTRIBUTING CO
Entity Central Index Key	0000928465
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		608,271
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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SUBSEQUENT EVENT

9 Months Ended

Jun. 30, 2012

SUBSEQUENT EVENT

SUBSEQUENT EVENT

12. SUBSEQUENT EVENT

On July 17, 2012, the Company refinanced two existing real estate notes payable due to BMO totaling approximately $4.8 million into a single note payable. The new note payable bears a fixed interest rate of 2.99% and requires monthly installments of principal and interest totaling approximately $0.5 million on an annual basis through June 2017, with the remainder due July 2017. The note payable is secured by the Company’s Quincy, IL and Rapid City, SD distribution facilities.

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Condensed Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales (including excise taxes of $96.1 million and $85.9 million, and $272.7 million and $238.1 million, respectively)	$ 307,112,774	$ 263,828,199	$ 866,505,090	$ 725,388,399
Cost of sales	287,211,769	245,610,146	808,750,009	673,193,512
Gross profit	19,901,005	18,218,053	57,755,081	52,194,887
Selling, general and administrative expenses	15,845,201	13,781,556	47,096,958	40,378,569
Depreciation and amortization	552,888	519,099	1,780,309	1,523,815
Total operating expenses	16,398,089	14,300,655	48,877,267	41,902,384
Operating income	3,502,916	3,917,398	8,877,814	10,292,503
Other expense (income):
Interest expense	361,756	372,525	1,105,707	1,020,980
Other (income), net	(47,841)	(73,878)	(292,979)	(141,970)
Total other expenses (income)	313,915	298,647	812,728	879,010
Income from operations before income tax	3,189,001	3,618,751	8,065,086	9,413,493
Income tax expense	1,343,000	1,791,000	3,316,000	4,169,000
Net income	1,846,001	1,827,751	4,749,086	5,244,493
Preferred stock dividend requirements	(66,907)	(70,649)	(201,454)	(218,755)
Net income available to common shareholders	$ 1,779,094	$ 1,757,102	$ 4,547,632	$ 5,025,738
Basic earnings per share available to common shareholders: (in dollars per share)	$ 2.92	$ 2.93	$ 7.38	$ 8.53
Diluted earnings per share available to common shareholders: (in dollars per share)	$ 2.37	$ 2.36	$ 6.06	$ 6.81
Basic weighted average shares outstanding (in shares)	608,271	599,281	615,913	589,084
Diluted weighted average shares outstanding (in shares)	779,106	775,416	783,987	769,870

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DIVIDENDS:

9 Months Ended

Jun. 30, 2012

DIVIDENDS:

DIVIDENDS:

6. DIVIDENDS:

The Company paid cash dividends on its common stock and convertible preferred stock issuances totaling $0.2 million and $0.6 million for the three and nine month periods ended June 2012, respectively, and $0.2 million and $0.5 million for the three and nine month periods ended June 2011, respectively.

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Jun. 30, 2012

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill by reporting segment of the Company consisted of the following:

	June2012		September2011
Wholesale Segment	$	4,436,950	$	4,436,950
Retail Segment	1,912,877		1,912,877
	$	6,349,827	$	6,349,827

Other intangible assets of the Company consisted of the following:

	June2012		September2011
Trademarks and tradenames	$	3,373,269	$	3,373,269
Non-competition agreement (less accumulated amortization of $0.1 million at both June 2012 and September 2011)	391,666		466,667
Customer relationships (less accumulated amortization of $0.6 million and $0.4 million at June 2012 and September 2011, respectively)	1,512,290		1,711,042
	$	5,277,225	$	5,550,978

Goodwill, trademarks and tradenames are considered to have indefinite useful lives and therefore no amortization has been taken on these assets. At June 2012, identifiable intangible assets considered to have finite lives were represented by customer relationships and the value of a non-competition agreement acquired as part of acquisitions. The customer relationships are being amortized over eight years and the value of the non-competition agreement is being amortized over five years. These intangible assets are evaluated for accelerated attrition or amortization adjustments if warranted.  Amortization expense related to these assets was $0.1 million and $0.3 million for the three and nine month periods ended June 2012, and $0.1 million and $0.2 million for the three and nine month periods ended June 2011.

Estimated future amortization expense related to identifiable intangible assets with finite lives is as follows at June 2012:

Customer relationships	June2012
Fiscal 2012 (1)	$	91,247
Fiscal 2013	365,000
Fiscal 2014	365,000
Fiscal 2015	365,000
Fiscal 2016	331,667
Thereafter	386,042
	$	1,903,956

(1)  Represents amortization for the remaining three months of Fiscal 2012.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Jun. 30, 2012

EARNINGS PER SHARE

Schedule of net earnings per share available to common shareholders

	For the three months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	608,271			608,271		599,281			599,281
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			170,835		—			176,135
Weighted average number of shares outstanding	608,271			779,106		599,281			775,416
Income from operations	$	1,846,001		$	1,846,001	$	1,827,751		$	1,827,751
Deduct: convertible preferred stock dividends (2)	(66,907		)	—		(70,649		)	—
Net income available to common shareholders	1,779,094			1,846,001		1,757,102			1,827,751
Net earnings per share available to common shareholders	$	2.92		$	2.37	$	2.93		$	2.36

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

	For the nine months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	615,913			615,913		589,084			589,084
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			168,074		—			180,786
Weighted average number of shares outstanding	615,913			783,987		589,084			769,870
Income from operations	$	4,749,086		$	4,749,086	$	5,244,493		$	5,244,493
Deduct: convertible preferred stock dividends (2)	(201,454		)	—		(218,755		)	—
	4,547,632			4,749,086		5,025,738			5,244,493
Net earnings per share available to common shareholders	$	7.38		$	6.06	$	8.53		$	6.81

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Jun. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

WHOLESALE SEGMENT and RETAIL SEGMENT

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

· Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products in the Central, Rocky Mountain, and Southern regions of the United States. Additionally, our Wholesale Segment provides programs, services and technology to assist our customers in managing their business and profitability.

· Our retail health food segment (“Retail Segment”) operates fourteen health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our wholesale segment is one of the largest wholesale distributors in the United States serving approximately 5,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 14,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and chilled products and institutional food service products. We also provide consultative services in the areas of marketing, merchandising, inventory optimization, and information systems which are designed to enhance the ability of our customers to compete and maximize their profitability. Convenience stores represent our largest customer category. In October 2011, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 601,000 square feet of permanent floor space. Our principal suppliers include Philip Morris USA, RJ Reynolds, Commonwealth Brands, Lorillard, Proctor & Gamble, Hershey, Mars, and Kraft. We also market private label lines of snuff, water, candy products, batteries, film, and other products. We do not maintain any long-term purchase contracts with these suppliers.

RETAIL SEGMENT

Our retail segment is comprised of fourteen retail health food stores which are operated as Chamberlin’s Market & Café (“Chamberlin’s”) and Akin’s Natural Foods Market (“Akin’s”). These stores carry over 30,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was first established in 1935, operates six stores in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of eight locations in Oklahoma, Nebraska, Missouri, and Kansas (“Midwest”).

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein, such as adjustments consisting of normal recurring items. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2011, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended June 30, 2012 and June 30, 2011 have been referred to throughout this quarterly report as Q3 2012 and Q3 2011, respectively. The fiscal balance sheet dates as of June 30, 2012, June 30, 2011, and September 30, 2011 have been referred to as June 2012, June 2011, and September 2011, respectively.

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EQUITY-BASED INCENTIVE AWARDS

9 Months Ended

Jun. 30, 2012

EQUITY-BASED INCENTIVE AWARDS

EQUITY-BASED INCENTIVE AWARDS

9. EQUITY-BASED INCENTIVE AWARDS

Omnibus Plan

The Company has an Omnibus Incentive Plan (“the Omnibus Plan”) which provides for equity incentives to employees. The Omnibus Plan was designed with the intent of encouraging employees to acquire a vested interest in the growth and performance of the Company. The Omnibus Plan permits the issuance of up to 150,000 shares of the Company’s common stock in the form of stock options, restricted stock awards, restricted stock units, performance share awards as well as awards such as stock appreciation rights, performance units, performance shares, bonus shares, and dividend share awards payable in the form of common stock or cash. The number of shares issuable under the Omnibus Plan is subject to customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock.  At June 2012, awards with respect to a total of 109,800 shares, net of forfeitures, had been awarded pursuant to the Omnibus Plan and awards with respect to another 40,200 shares may be awarded under the plan.

Stock Options

During the nine month period ended June 2012, the Company issued 6,500 incentive stock options to various employees pursuant to the provisions of the Company’s Omnibus Plan. These awards vest in equal installments over a five year service period and had an estimated fair value of approximately $0.1 million using the Black-Scholes option pricing model. The following assumptions were used in connection with the Black-Scholes option pricing calculation:

	Stock Option Pricing Assumptions
Risk-free interest rate	2.39	%
Dividend yield	1.10	%
Expected volatility	27.90	%
Expected life in years	6

The stock options issued by the Company expire ten years from the grant date and include graded vesting schedules up to five years in length.  Stock options issued and outstanding at June 2012 are summarized as follows:

			Remaining			Exercisable
	ExercisePrice	NumberOutstanding	Weighted-AverageContractual Life	Weighted-AverageExercise Price		NumberExercisable	Weighted-AverageExercise Price
Fiscal 2003	$28.80	42	0.32 years	$	28.80	42	$	28.80
Fiscal 2007	$18.00	25,000	4.45 years	$	18.00	25,000	$	18.00
Fiscal 2010	$51.50	5,500	7.83 years	$	51.50	2,200	$	51.50
Fiscal 2012	$53.80 - $65.97	6,500	9.33 years	$	54.74	—	$	—
		37,042		$	29.43	27,242	$	20.72

The following is a summary of stock options activity for the nine months ended June 2012:

	NumberofShares		WeightedAverageExercisePrice
Outstanding at September 2011	30,583		$	24.05
Granted	6,500		54.74
Exercised	(41	)	28.80
Forfeited/Expired	—		—
Outstanding at June 2012	37,042		$	29.43

Restricted Stock Units

Restricted stock units issued and outstanding at June 2012 are as follows:

	Restricted Stock Units (1)		Restricted Stock Units (2)		Restricted Stock Units (3)
Date of award:	November 22, 2010		November 22, 2010		October 26, 2011
Original number of awards issued:	38,400		12,000		15,900
Service period:	24 months		36 months		36 months
Estimated fair value of award at grant date:	$	2,765,000	$	864,000	$	855,000
Awards outstanding at June 2012		12,800		8,000		15,900
Fair value of non-vested awards at June 2012:	$	719,000	$	450,000	$	894,000

(1)	25,600 of the restricted stock unit awards were vested as of Q3 2012. The remaining 12,800 restricted stock units will vest on October 26, 2012.
(2)	4,000 of the restricted stock units were vested as of Q3 2012. The remaining 8,000 restricted stock units will vest in equal amounts (4,000 per year) on November 22, 2012 and November 22, 2013.
(3)	The 15,900 restricted stock units will vest in equal amounts (5,300 per year) on October 25, 2012, October 25, 2013 and October 25, 2014.

There is no direct cost to the recipients of the restricted stock units, except for any applicable taxes. The recipients of the restricted stock units are entitled to the customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock.  All cash dividends and/or distributions payable to restricted stock recipients will be held in escrow until all the conditions of vesting have been met.

The restricted stock units provide that the recipients can elect, at their option, to receive either common stock in the Company, or a cash settlement based upon the closing price of the Company’s shares, at the time of vesting.  Based on these award provisions, the compensation expense recorded in the Company’s Condensed Statement of Operations reflects the amortization of these awards over their respective service life.  The awards and their related compensation and amortization expense are also adjusted to fair value at each reporting date until vested.  The following summarizes restricted stock unit activity under the Omnibus Plan for the nine months ended June 2012:

	NumberofShares		Weighted AverageFair Value
Nonvested restricted stock units at September 2011	37,600		$	57.00
Granted	15,900		$	53.80
Vested	(16,800	)	$	56.58
Expired	—		$	—
Nonvested restricted stock units at June 2012	36,700		$	64.40

All Equity-Based Awards (stock options and restricted stock units)

For the three and nine months ended June 2012, net income before income taxes included compensation expense of $0.3 million and $0.9 million, respectively, related to the amortization of all equity-based compensation awards. Total unamortized compensation expense for these awards at June 2012 was approximately $1.4 million.

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EARNINGS PER SHARE

9 Months Ended

Jun. 30, 2012

EARNINGS PER SHARE

EARNINGS PER SHARE

7. EARNINGS PER SHARE

Basic earnings per share available to common shareholders is calculated by dividing net income less preferred stock dividend requirements by the weighted average common shares outstanding for each period. Diluted earnings per share available to common shareholders is calculated by dividing income from operations less preferred stock dividend requirements (when anti-dilutive) by the sum of the weighted average common shares outstanding and the weighted average dilutive options, using the treasury stock method.

	For the three months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	608,271			608,271		599,281			599,281
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			170,835		—			176,135
Weighted average number of shares outstanding	608,271			779,106		599,281			775,416
Income from operations	$	1,846,001		$	1,846,001	$	1,827,751		$	1,827,751
Deduct: convertible preferred stock dividends (2)	(66,907		)	—		(70,649		)	—
Net income available to common shareholders	1,779,094			1,846,001		1,757,102			1,827,751
Net earnings per share available to common shareholders	$	2.92		$	2.37	$	2.93		$	2.36

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

	For the nine months ended June
	2012					2011
	Basic			Diluted		Basic			Diluted
Weighted average common shares outstanding	615,913			615,913		589,084			589,084
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock (1)	—			168,074		—			180,786
Weighted average number of shares outstanding	615,913			783,987		589,084			769,870
Income from operations	$	4,749,086		$	4,749,086	$	5,244,493		$	5,244,493
Deduct: convertible preferred stock dividends (2)	(201,454		)	—		(218,755		)	—
	4,547,632			4,749,086		5,025,738			5,244,493
Net earnings per share available to common shareholders	$	7.38		$	6.06	$	8.53		$	6.81

(1)Diluted earnings per share calculation includes all stock options, convertible preferred stock, and restricted stock units 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.

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DEBT

9 Months Ended

Jun. 30, 2012

DEBT

DEBT

8. DEBT

The Company primarily finances its operations through a credit facility agreement with Bank of America (the “Facility”) and long-term debt agreements with banks.

The Facility included the following significant terms at June 2012:

·April 2014 maturity date and a $70.0 million revolving credit limit.

·Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

·A provision providing an additional $5.0 million of credit advances for certain inventory purchases.

·Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of the original term of the agreement or the end of any renewal period.

·Prepayment penalty equal to one-half of one percent (1/2%) if the Company prepays the entire Facility or terminates it in year one of the agreement, and one-fourth of one percent (1/4%) if the Company prepays the entire Facility or terminates it in year two of the agreement. The prepayment penalty is calculated based on the maximum loan limit.

·The Facility bears interest at either the bank’s prime rate or at LIBOR plus 175 basis points, at the election of the Company.

·Lending limits subject to accounts receivable and inventory limitations.

·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.

·Secured by 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 $1.00 per share on an annual basis.

·A financial covenant requiring a fixed charge coverage ratio of at least 1.1 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement.

Cross Default and Co-Terminus Provisions

The Company’s owned real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, and certain warehouse equipment in the Rapid City, SD warehouse are financed through term loans with BMO Harris, NA (“BMO”) which is also a participant lender on the Company’s revolving line of credit. The BMO loans contain cross default provisions which cause all loans with BMO to be considered in default if any one of the loans where BMO is a lender, including the revolving credit facility, is in default. There were no such cross defaults at June 2012.  In addition, the BMO loans contain co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Other

AMCON has issued a letter of credit in the amount of approximately $0.4 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

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BUSINESS SEGMENTS

9 Months Ended

Jun. 30, 2012

BUSINESS SEGMENTS

BUSINESS SEGMENTS

10. 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 retail health food stores’ operations are aggregated to comprise the Retail Segment because such operations have similar economic characteristics, as well as similar characteristics with respect to the nature of products sold, the type and class of customers for the health food products and the methods used to sell the products. Included in the “Other” column are intercompany eliminations, and assets held and charges incurred by our company for both segments. The segments are evaluated on revenues, gross margins, operating income (loss), and income before taxes.

	WholesaleSegment		RetailSegment		Other			Consolidated
THREE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	223,189,406	$	—	$	—		$	223,189,406
Confectionery	20,433,115		—		—			20,433,115
Health food	—		9,499,012		—			9,499,012
Tobacco, food service & other	53,991,241		—		—			53,991,241
Total external revenue	297,613,762		9,499,012		—			307,112,774
Depreciation	363,557		97,142		938			461,637
Amortization	91,251		—		—			91,251
Operating income (loss)	4,073,549		757,482		(1,328,115		)	3,502,916
Interest expense	131,983		67,437		162,336			361,756
Income (loss) from operations before taxes	3,953,942		695,509		(1,460,450		)	3,189,001
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	182,156		24,606		—			206,762
THREE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	190,156,165	$	—	$	—		$	190,156,165
Confectionery	18,125,809		—		—			18,125,809
Health food	—		9,509,251		—			9,509,251
Tobacco, food service & other	46,036,974		—		—			46,036,974
Total external revenue	254,318,948		9,509,251		—			263,828,199
Depreciation	316,032		106,308		937			423,277
Amortization	95,822		—		—			95,822
Operating income (loss)	4,092,131		803,020		(977,753		)	3,917,398
Interest expense	117,643		93,381		161,501			372,525
Income (loss) from operations before taxes	3,997,180		715,497		(1,093,926		)	3,618,751
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	624,284		59,497		—			683,781

	WholesaleSegment		RetailSegment		Other			Consolidated
NINE MONTHS ENDED JUNE 2012:
External revenue:
Cigarettes	$	628,218,679	$	—	$	—		$	628,218,679
Confectionery	55,792,444		—		—			55,792,444
Health food	—		28,175,654		—			28,175,654
Tobacco, food service & other	154,318,313		—		—			154,318,313
Total external revenue	838,329,436		28,175,654		—			866,505,090
Depreciation	1,193,834		300,222		2,812			1,496,868
Amortization	283,441		—		—			283,441
Operating income (loss)	10,402,816		2,295,893		(3,820,895		)	8,877,814
Interest expense	401,043		225,849		478,815			1,105,707
Income (loss) from operations before taxes	10,108,749		2,085,526		(4,129,189		)	8,065,086
Total assets	102,837,606		12,957,856		993,103			116,788,565
Capital expenditures	765,508		148,978		—			914,486
NINE MONTHS ENDED JUNE 2011:
External revenue:
Cigarettes	$	520,018,745	$	—	$	—		$	520,018,745
Confectionery	48,253,405		—		—			48,253,405
Health food	—		28,509,834		—			28,509,834
Tobacco, food service & other	128,606,415		—		—			128,606,415
Total external revenue	696,878,565		28,509,834		—			725,388,399
Depreciation	944,662		320,923		2,812			1,268,397
Amortization	255,418		—		—			255,418
Operating income (loss)	12,182,183		2,712,105		(4,601,785		)	10,292,503
Interest expense	343,807		293,369		383,804			1,020,980
Income (loss) from operations before taxes	11,880,020		2,435,886		(4,902,413		)	9,413,493
Total assets	116,520,925		13,285,407		1,014,111			130,820,443
Capital expenditures	1,474,382		166,653		—			1,641,035

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EARNINGS PER SHARE (Details) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
EARNINGS PER SHARE
Weighted average common shares outstanding, Basic	608,271	599,281	615,913	589,084
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock and conversion of preferred stock	170,835	176,135	168,074	180,786
Weighted average number of shares outstanding, Diluted	779,106	775,416	783,987	769,870
Income from operations	$ 1,846,001	$ 1,827,751	$ 4,749,086	$ 5,244,493
Deduct: convertible preferred stock dividends	(66,907)	(70,649)	(201,454)	(218,755)
Net income available to common shareholders	$ 1,779,094	$ 1,757,102	$ 4,547,632	$ 5,025,738
Net earnings per share available to common shareholders, Basic	$ 2.92	$ 2.93	$ 7.38	$ 8.53
Net earnings per share available to common shareholders, Diluted	$ 2.37	$ 2.36	$ 6.06	$ 6.81

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CONVERTIBLE PREFERRED STOCK: (Tables)

9 Months Ended

Jun. 30, 2012

CONVERTIBLE PREFERRED STOCK:

Schedule of Series A & Series B convertible preferred stock outstanding

	Series A			Series B
Date of issuance:	June 17, 2004			October 8, 2004
Optionally redeemable beginning	June 18, 2006			October 9, 2006
Par value (gross proceeds):	$	2,500,000		$	1,550,000
Number of shares:	100,000			62,000
Liquidation preference per share:	$	25.00		$	25.00
Conversion price per share:	$	30.31		$	24.65
Number of common shares in which to be converted:	82,481			62,880
Dividend rate:	6.785		%	6.37		%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details)	1 Months Ended	9 Months Ended
	Oct. 31, 2011 item	Jun. 30, 2012 item squarefeet
Business segment
Number of business segments		2
WHOLESALE SEGMENT
Business segment
Number of retail outlets served		5,000
Number of products sold or distributed		14,000
Rank assigned by Convenience Store News	6
Number of distribution centers		6
Permanent floor space occupied by distribution centers (in square feet)		601,000
RETAIL SEGMENT
Business segment
Number of operating health food retail stores		14
Number of products sold or distributed		30,000
RETAIL SEGMENT | Florida
Business segment
Number of operating health food retail stores		6
RETAIL SEGMENT | Midwest
Business segment
Number of operating health food retail stores		8

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Condensed Consolidated Statements of Operations
Sales, excise taxes	$ 96.1	$ 85.9	$ 272.7	$ 238.1

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INVENTORIES

9 Months Ended

Jun. 30, 2012

INVENTORIES

INVENTORIES

4. INVENTORIES

Inventories consisted of finished goods at June 2012 and September 2011 and are stated at the lower of cost, determined on a First-in, First-out (“FIFO”) basis, or market. The wholesale distribution and retail health food segment inventories consist of finished products purchased in bulk quantities to be redistributed to the Company’s customers or sold at retail. Finished goods included total reserves of approximately $1.0 million and $0.9 million at June 2012 and September 2011, respectively. These reserves include the Company’s obsolescence allowance, which reflects estimated unsalable or non-refundable inventory based upon an evaluation of slow moving and discontinued products.

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ACQUISITION (Details) (USD $)		9 Months Ended		9 Months Ended		1 Months Ended	9 Months Ended			9 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2012 Non-competition agreement	Jun. 30, 2011 Non-competition agreement	Jun. 30, 2012 Customer relationships	Jun. 30, 2011 Customer relationships	May 31, 2011 LPS	Jun. 30, 2012 LPS	Jun. 30, 2012 LPS Non-competition agreement	May 31, 2011 LPS Non-competition agreement	Jun. 30, 2012 LPS Customer relationships	May 31, 2011 LPS Customer relationships	Jun. 30, 2012 LPS Note payable
Total consideration and recognized amounts of identifiable assets acquired
Annual sales						$ 200,000,000
Redemption period of debt (in years)												3 years
Interest rate on debt (as a percent)												4.00%
Period over which payments related to non-competition agreement with the seller need to be made (in years)						5 years
Total Consideration
Cash						13,400,000
Note payable	(2,552,090)					2,600,000
Fair value of non-competition agreement	(444,428)					400,000
Total fair value of consideration transferred						16,400,000
Recognized amounts of identifiable assets acquired
Accounts receivable	8,881,428					8,900,000
Inventory	4,571,629					4,600,000
Property and equipment	1,795,859					1,800,000
Identifiable intangible assets			500,000		500,000				500,000		500,000
Liabilities	(120,000)					(100,000)
Total identifiable net assets						16,200,000
Goodwill	200,659					200,000
Total identifiable assets and goodwill						$ 16,400,000
Weighted Average Amortization Period
Property and equipment (in years)							5 years
Identifiable intangible assets (in years)		5 years		8 years				5 years		8 years

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BUSINESS SEGMENTS (Details) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 item	Jun. 30, 2011	Sep. 30, 2011
BUSINESS SEGMENTS
Number of reportable business segments			2
Information by business segments
Total external revenue	$ 307,112,774	$ 263,828,199	$ 866,505,090	$ 725,388,399
Depreciation	461,637	423,277	1,496,868	1,268,397
Amortization	91,251	95,822	283,441	255,418
Operating income (loss)	3,502,916	3,917,398	8,877,814	10,292,503
Interest expense	361,756	372,525	1,105,707	1,020,980
Income (loss) from operations before taxes	3,189,001	3,618,751	8,065,086	9,413,493
Total assets	116,788,565	130,820,443	116,788,565	130,820,443	107,435,633
Capital expenditures	206,762	683,781	914,486	1,641,035
Cigarettes
Information by business segments
Total external revenue	223,189,406	190,156,165	628,218,679	520,018,745
Confectionery
Information by business segments
Total external revenue	20,433,115	18,125,809	55,792,444	48,253,405
Health food
Information by business segments
Total external revenue	9,499,012	9,509,251	28,175,654	28,509,834
Tobacco, food service & other
Information by business segments
Total external revenue	53,991,241	46,036,974	154,318,313	128,606,415
Wholesale Segment
Information by business segments
Total external revenue	297,613,762	254,318,948	838,329,436	696,878,565
Depreciation	363,557	316,032	1,193,834	944,662
Amortization	91,251	95,822	283,441	255,418
Operating income (loss)	4,073,549	4,092,131	10,402,816	12,182,183
Interest expense	131,983	117,643	401,043	343,807
Income (loss) from operations before taxes	3,953,942	3,997,180	10,108,749	11,880,020
Total assets	102,837,606	116,520,925	102,837,606	116,520,925
Capital expenditures	182,156	624,284	765,508	1,474,382
Wholesale Segment | Cigarettes
Information by business segments
Total external revenue	223,189,406	190,156,165	628,218,679	520,018,745
Wholesale Segment | Confectionery
Information by business segments
Total external revenue	20,433,115	18,125,809	55,792,444	48,253,405
Wholesale Segment | Tobacco, food service & other
Information by business segments
Total external revenue	53,991,241	46,036,974	154,318,313	128,606,415
Retail Segment
Information by business segments
Total external revenue	9,499,012	9,509,251	28,175,654	28,509,834
Depreciation	97,142	106,308	300,222	320,923
Operating income (loss)	757,482	803,020	2,295,893	2,712,105
Interest expense	67,437	93,381	225,849	293,369
Income (loss) from operations before taxes	695,509	715,497	2,085,526	2,435,886
Total assets	12,957,856	13,285,407	12,957,856	13,285,407
Capital expenditures	24,606	59,497	148,978	166,653
Retail Segment | Health food
Information by business segments
Total external revenue	9,499,012	9,509,251	28,175,654	28,509,834
Other
Information by business segments
Depreciation	938	937	2,812	2,812
Operating income (loss)	(1,328,115)	(977,753)	(3,820,895)	(4,601,785)
Interest expense	162,336	161,501	478,815	383,804
Income (loss) from operations before taxes	(1,460,450)	(1,093,926)	(4,129,189)	(4,902,413)
Total assets	$ 993,103	$ 1,014,111	$ 993,103	$ 1,014,111

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ACQUISITIONS (Tables)

9 Months Ended

Jun. 30, 2012

ACQUISITION

Schedule of total consideration paid and recognized amounts of identifiable assets acquired

Total Consideration	Amount(in millions)
Cash	$	13.4
Note payable	2.6
Fair value of non-competition agreement	0.4
Total fair value of consideration transferred	$	16.4

Recognized amounts of identifiable assets acquired

	Amount (in millions)			WeightedAverageAmortization Period
Accounts receivable	$	8.9		—
Inventory	4.6			—
Property and equipment	1.8			5 years
Identifiable intangible assets:
Non-competition agreement	0.5			5 years
Customer relationships	0.5			8 years
Liabilities	(0.1		)
Total identifiable net assets	16.2
Goodwill	0.2
Total identifiable assets and goodwill	$	16.4

Schedule of unaudited actual revenue and earnings included in the Company's statement of operations related to the acquisition and the pro forma revenue and earnings of the combined entity if the acquisition had occurred as of the beginning of the Company's prior fiscal year

	Three months ended				Nine months ended
	June				June
(In millions)	2012		2011		2012		2011
Revenue — Actual results	$	307.1	$	263.8	$	866.5	$	725.4
Revenue — Supplemental pro forma results	$	307.1	$	299.4	$	866.5	$	859.1
Net Income — Actual results	$	1.8	$	1.8	$	4.8	$	5.2
Net Income — Supplemental pro forma results	$	1.8	$	1.9	$	4.8	$	5.1