Business Context and Reporting Period
This Form 8-K, dated June 1, 2001, reports on AMCON Distributing Company, a Delaware corporation operating as a wholesale distributor of consumer products. The filing details the completion of a significant acquisition on June 1, 2001.
Key Financial Metrics and Transaction Details
The company acquired the distribution business and assets of Merchants Wholesale Inc. (MWI) for a total purchase price of $36.9 million, net of $5.1 million in assumed liabilities. The transaction included the purchase of a 206,000 square foot building formerly occupied by MWI.
| Funding Source | Amount |
|---|---|
| Revolving Loan (LaSalle National Bank) | $26.4 million |
| Real Estate Loan (Gold Bank) | $7.0 million |
| Deferred Payment to MWI | $3.5 million |
Accounting treatment will utilize the purchase method. Approximately $4.6 million of the purchase price is estimated to be allocated to goodwill, to be amortized over 20 years. The filing does not provide current revenue, profit, cash flow, or margin data for the combined entity.
Material Changes
The primary material change is the expansion of AMCON's operations through the acquisition of MWI, which operated in eight states within a territory contiguous to AMCON's existing distribution network. This acquisition increases AMCON's asset base and debt load significantly.
Outlook, Risks, and Contingencies
Financial statements for the acquired business and pro forma financial information are not yet available; they are scheduled to be filed in an amendment to this Form 8-K by August 15, 2001. The Revolving Loan used to fund the acquisition is secured by all of AMCON's assets excluding real estate, while the Real Estate Loan is secured by two owned distribution centers. The transaction was determined to be an arm's-length negotiation with no material relationships between the parties.
Investor Verification Checklist
- Verify the upcoming amendment filing (due August 15, 2001) for pro forma financial information and financial statements of the acquired business.
- Confirm the impact of the new $33.4 million in debt ($26.4M + $7.0M) on the company's liquidity and debt covenants.
- Monitor the integration of MWI's eight-state territory into AMCON's existing operations.
- Review the amortization schedule for the $4.6 million goodwill allocation over the next 20 years.