AMCON Reports Late Filing of Quarterly Report; A Periodic SEC Review and Preliminary Results of Second Quarter

Business Wire, May 25, 2005

OMAHA, Neb. -- AMCON Distributing Company (AMEX:DIT), an Omaha, Nebraska based consumer products company, announced today that it was not able to timely file its Quarterly Report on Form 10-Q for the second quarter ended March 31, 2005. The Company does, however, plan to file its quarterly report in the next few days. In addition, the Company announced that a periodic review by the staff of the Securities and Exchange Commission ("SEC") will result in corrections to the classification of two balance sheet items in prior periods which are discussed below. The Company also announced preliminary earnings results for its second quarter.

Michael James, AMCON's CFO, stated "We received comments from the SEC from their review of our annual report for the year ended September 2004 and our quarterly report for the first quarter ended December 2004. As a result of certain comments, we reevaluated the balance sheet classification of two of our financial instruments and, as discussed below, will be required to amend our annual report for 2004 and our quarterly report for the first quarter of fiscal 2005 to correct the classifications. The time required to fully evaluate these issues and to obtain an amendment from our bank lenders to reverse one of the reclassifications in the quarter ended March 2005 caused us to miss the filing deadline and we expect to file our Form 10-Q in the next few days."

The Company does not believe that the review by the SEC, which is a normal review required of all public companies on a periodic basis, will result in a change to prior periods' reported earnings. A correction will be made, however, in the classification of AMCON's preferred stock. That preferred stock will be shown as mezzanine financing between the debt and equity sections on the balance sheet. The correction was necessitated because the preferred stock may be redeemed in the event of a change of control or a significant reduction in the percentage ownership of the family of William F. Wright, the Company's Chairman, Chief Executive Officer and largest stockholder. The Company's Annual Report on Form 10-K for the year ended September 2004 and the Quarterly Report on Form 10-Q for the first quarter ended December 2004 will be restated to show this balance sheet correction as soon as is practicable.

In addition to the preferred stock, a correction will be made in the prior reports to the balance sheet classification of the Company's revolving credit agreement with LaSalle Bank. The credit agreement expires in April 2007 and the Company had previously classified the majority of the loan as long-term debt on the balance sheet. Since the credit agreement includes both certain acceleration language and a requirement to maintain a lockbox arrangement, the Company has determined that the entire loan should be classified as current debt, rather than long-term debt in its financial statements for the year ended September 2004 and first quarter ended December 2004. The credit agreement was amended in May 2005 to remove the requirement to maintain a lockbox arrangement, except at the discretion of the lender in the event of a default. Therefore, the Company has classified the majority of the debt as long-term in its financial statements for the quarter ended March 2005 because the applicable accounting guidance requiring current debt classification no longer applies to our amended credit agreement.

William F. Wright, Chairman of AMCON, noted that, "Even though our banks and attorneys have stated that our preferred stock is equity for legal purposes, the financial accounting rules require such a presentation if certain redemption provisions of the preferred stock are outside the control of the Company, even when considered without regard to probability or likelihood of occurrence. Therefore, the change will be made for the prior quarter and for the fiscal year ended September 2004. The loan classification issue has been resolved through an amendment to our credit agreement and will be classified as long-term in our quarter ended March 2005."

Preliminary Quarter Results

Sales for the second quarter ended March 31, 2005 were $194.0 million compared to $193.0 million for the same quarter in the prior year. For the quarter, the Company incurred a loss from continuing operations available to common shareholders of $1.0 million or $1.89 per diluted share, compared with a loss from continuing operations available to common shareholders of $0.1 million or $0.24 per diluted share for the second quarter of the prior year, and a loss from discontinued operations of $0.9 million or $1.69 per diluted share compared with a loss of $1.0 million or $1.85 for the second quarter of the prior year. The combined net loss available to common shareholders for the quarter was $1.9 million or $3.58 per diluted share, compared with a net loss available to common shareholders of $1.1 million or $2.09 per diluted share for the first quarter of the prior year.

For the six months ended March 31, 2005, sales were $408.4 million compared to $385.5 million for the same period in the prior year. The Company incurred a loss from continuing operations available to common shareholders of $0.6 million or $1.14 per diluted share, compared with income from continuing operations available to common shareholders of $1.2 million or $2.20 per diluted share for the first six months of the prior year. The loss from discontinued operations was $1.4 million or $2.60 per diluted share, compared with a loss of $1.8 million or $3.31 for the prior year comparable period. The combined net loss available to common shareholders for the six months ended March 31, 2005 was $2.0 million or $3.74 per share, compared with a net loss available to common shareholders of $0.6 million or $1.11 per share during the prior year.