SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported) May 24, 2006
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AMCON DISTRIBUTING COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 1-15589 47-0702918
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7405 Irvington Road, Omaha, NE 68122
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(Address of principal executive offices) (Zip Code)
(402) 331-3727
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
On January 16, 2006, the Company issued a press release disclosing
management's investigation into potential accounting irregularities that were
discovered in the inventory accounting records of Hawaiian Natural Water Co.,
Inc. ("HNWC"), a wholly owned AMCON subsidiary. This investigation revealed
that there were errors made in inventory accounting, as well as, incorrect
capitalization of certain product development costs, which all related to
fiscal 2005.
As a result of the accounting errors, management and the Company's Audit
Committee determined on May 24, 2006 that the Company's first, second and
third quarter financial statements of fiscal 2005 filed on Form 10-Qs with
the Securities and Exchange Commission on February 14, 2006, May 27, 2006 and
August 22, 2006, respectively, should no longer be relied upon because of
these errors and that these financial statements should be restated to
correct these errors. Management and the Audit Committee have discussed the
above with the Company's independent registered public accountants, Deloitte
and Touche.
After identifying the source of the errors, management of the Company took
several steps to significantly strengthen our internal control over financial
reporting including terminating HNWC's then current president and chief
financial officer, hiring a new acting president and a highly qualified
accounting consultant to investigate and guide internal accounting personnel
in the application of generally accepted accounting principles related to
inventory and production costs, hiring accounting staff at HNWC with more
experience and implementing procedures to ensure proper review and approval
of all manual journal entries posted at HNWC.
The table set forth below gives effect to these restatements. Management
expects to restate the quarterly financials prospectively as each quarter is
filed in fiscal 2006.
A summary of the significant effects of this restatement by quarter is as
follows:
FIRST FISCAL QUARTER ENDED DECEMBER 31, 2004
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As previously
reported Corrections As restated
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Condensed Consolidated Unaudited Balance Sheet
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Inventory $ 35,454,419 $ (574,165) $ 34,880,254
Deferred income taxes 2,618,391 232,000 2,850,391
Other assets 1,485,457 (108,759) 1,376,698
Retained earnings 6,397,550 (450,924) 5,946,626
Condensed Consolidated Unaudited Statement of Operations
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Cost of sales $198,459,240 $ 574,165 $199,033,405
Selling, general and administrative expenses 13,824,366 108,759 13,933,125
Income tax (benefit) expense 224,000 (232,000) (8,000)
Net (loss) income (85,599) (450,924) (536,523)
Basic (loss) earnings per share (0.16) (0.86) (1.02)
Diluted (loss) earnings per share (0.02) (0.86) (1.02) /1/
2
/1/ Before this restatement, the impact of the conversion of the stock options and preferred stock was
dilutive to earnings per share because there was income from continuing operations. After making the
corrections for the restatement, there will now be a loss from continuing operations which makes the
impact of the conversion of the stock options and preferred stock was antidilutive. This antidilutive
impact results in a loss of ($1.02) per dilutive share.
Condensed Consolidated Unaudited Statement of Cash Flows
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Income (loss) from continuing operations $ 394,063 $ (450,924) $ (56,861)
available to common shareholders
Deferred income taxes (45,224) (232,000) (277,224)
Inventory (464,962) 574,165 109,203
Other assets (28,512) 108,759 80,247
SECOND FISCAL QUARTER ENDED MARCH 31, 2005
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Condensed Consolidated Unaudited Balance Sheet /2/
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As previously
reported Corrections As restated
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Inventory $ 30,304,173 $ (689,993) $ 29,614,180
Deferred income taxes 3,729,391 279,000 4,008,391
Other assets 1,494,754 (129,904) 1,364,850
Retained earnings 4,509,877 (540,897) 3,968,980
Condensed Consolidated Unaudited Statement of Operations /2/
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Three months ended March 31, 2005 Six months ended March 31, 2005
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As previously As previously
reported Corrections As restated reported Corrections As restated
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Cost of sales $180,236,017 $115,828 $180,351,845 $378,695,256 $689,993 $379,385,249
Selling, general
and administrative expenses 13,727,633 21,145 13,748,778 27,551,999 129,904 27,681,903
Income tax (benefit) expense (565,000) (47,000) (612,000) (341,000) (279,000) (620,000)
Net (loss) income (1,887,674) (89,973) (1,977,647) (1,973,273) (540,897) (2,514,170)
Basic (loss) earnings per share (3.58) (0.17) (3.75) (3.74) (1.03) (4.77)
Diluted (loss) earnings per share (3.58) (0.17) (3.75) (3.74) (1.03) (4.77)
Condensed Consolidated Unaudited Statement of Cash Flows /2/
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As previously
reported Corrections As restated
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Net income (loss) from continuing operations $ (603,991) $ (540,897) $ (1,144,888)
available to common shareholders
Deferred income taxes (1,137,076) (279,000) (1,416,076)
Inventory 4,639,543 689,993 5,329,536
Other assets (37,810) 129,904 92,094
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THIRD FISCAL QUARTER ENDED JUNE 30, 2005
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Condensed Consolidated Unaudited Balance Sheet /2/
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As previously
reported Corrections As restated
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Inventory $ 28,939,608 $ (889,612) $ 28,049,996
Deferred income taxes 3,780,391 353,000 4,133,391
Other assets 1,570,434 (148,884) 1,421,550
Retained earnings 4,354,000 (685,496) 3,668,504
Condensed Consolidated Unaudited Statement of Operations /2/
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Three months ended June 30, 2005 Nine months ended June 30, 2005
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As previously As previously
reported Corrections As restated reported Corrections As restated
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Cost of sales $201,251,586 $199,619 $201,451,205 $579,946,842 $889,612 $580,836,454
Selling, general
and administrative expenses 13,693,711 18,980 13,712,691 41,245,710 148,884 41,394,594
Income tax (benefit) expense 138,000 (74,000) 64,000 (203,000) (353,000) (556,000)
Net (loss) income (155,877) (144,599) (300,476) (2,129,150) (685,496) (2,814,646)
Basic (loss) earnings per share (0.30) (0.27) (0.57) (4.04) (1.30) (5.34)
Diluted (loss) earnings per share (0.28) (0.27) (0.55) (4.04) (1.30) (5.34)
Condensed Consolidated Unaudited Statement of Cash Flows /2/
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As previously
reported Corrections As restated
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Income (loss) from continuing operations $ (441,609) $ (685,496) $ (1,127,105)
available to common shareholders
Deferred income taxes (1,205,608) (353,000) (1,558,608)
Inventory 5,911,793 889,612 6,801,405
Other assets (191,170) 148,884 (42,286)
/2/ In March 2006, the Company discontinued the operations of Trinity Springs, Inc., its water bottling
operation located in Idaho. As a result, the balance sheets as of March 31, 2005 and June 30, 2005 and
the statements of operations and statements of cash flows for the fiscal periods then ended will be
prepared reflecting TSI's financial results as discontinued operations in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets" when filed. As a result, the information presented above will differ from the actual financial
statements to be filed with the SEC.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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AMCON DISTRIBUTING COMPANY
(Registrant)
Date: May 31, 2006 By : Andrew C. Plummer
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Name: Andrew C. Plummer
Title: Vice President & Acting
Chief Financial Officer
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