DEBT

9 Months Ended

Jun. 30, 2011

DEBT

DEBT

8. DEBT

At June 2011, the Company had a credit agreement as amended (the “Facility”) with Bank of America which included the following significant terms.

Significant Terms

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

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

·Provides for an additional $5.0 million of credit advances available for certain inventory purchases.

·Contains an 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.

·Includes a prepayment penalty equal to one-half of one percent (½%) if the Company prepays the entire Facility or terminates it in year one of the agreement, and one-fourth of one percent (¼%) if the Company prepays the entire Facility or terminates it in year two of the agreement. The prepayment penalty is calculated based on the original loan amount.

·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.

·Includes 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 Company’s calculated credit limit of the Facility at June 30 was $69.7 million of which $47.4 million was outstanding leaving $22.3 million available.

At June 2011, 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 2.93% at June 2011.  At June 2011, the Company had $8.0 million in long-term debt outstanding. Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair value of this long-term debt approximated its carrying value at June 2011.

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 is financed through term loans with Marshall and Ilsley Bank (“M&I”), which is also a participant lender on the Company’s revolving line of credit. The M&I loans contain cross default provisions which cause all loans with M&I to be considered in default if any one of the loans where M&I is a lender, including the revolving credit facility, is in default. There were no such cross defaults at June 2011. In addition, the M&I loans contain co-terminus provisions which require all loans with M&I 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 for $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.