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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000928465-03-000024.txt : 20030811
<SEC-HEADER>0000928465-03-000024.hdr.sgml : 20030811
<ACCEPTANCE-DATETIME>20030811172004
ACCESSION NUMBER:		0000928465-03-000024
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20030627
FILED AS OF DATE:		20030811

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMCON DISTRIBUTING CO
		CENTRAL INDEX KEY:			0000928465
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-GROCERIES & GENERAL LINE [5141]
		IRS NUMBER:				470702918
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15589
		FILM NUMBER:		03835272

	BUSINESS ADDRESS:	
		STREET 1:		7405 IRVINGTON ROAD
		STREET 2:		POST OFFICE BOX 641940 (68164-7940)
		CITY:			OMAHA
		STATE:			NE
		ZIP:			68122
		BUSINESS PHONE:		4023313727

	MAIL ADDRESS:	
		STREET 1:		7405 IRVINGTON ROAD
		STREET 2:		POST OFFICE BOX 641940 (68164-7940)
		CITY:			OMAHA
		STATE:			NE
		ZIP:			68122
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>june0310q.txt
<DESCRIPTION>FORM 10-Q FOR JUNE 27, 2003
<TEXT>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-Q

/X/  Quarterly report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the quarterly period ended June 27, 2003

                                      OR

/ /  Transition report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the transition period from          to

                        ------------------------------
                        COMMISSION FILE NUMBER 0-24708
                        ------------------------------

                          AMCON DISTRIBUTING COMPANY
           (Exact name of registrant as specified in its charter)

                                   DELAWARE
                  (State or other jurisdiction of Incorporation)

                              7405 Irvington Road
                                Omaha, NE 68122
                   (Address of principal executive offices)
                                  (Zip Code)

                                  47-0702918
                    (I.R.S. Employer Identification No.)

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

        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
                             -------       -------

        Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

                        Yes            No     X
                             -------       -------
The Registrant had 3,168,954 shares of its $.01 par value common stock
outstanding as of August 1, 2003.


                                                                Form 10-Q
                                                               3rd Quarter


                                INDEX
                               -------

                                                                        PAGE
                                                                        ----
PART I -  FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements:
          --------------------------------------------
          Condensed consolidated balance sheets at
          June 2003 and September 2002                                    3

          Condensed consolidated statements of operations
          for the three and nine-month periods ended
          June 2003 and 2002                                              4

          Condensed consolidated statements of cash flows
          for the nine-month periods ended
          June 2003 and 2002                                              5

          Notes to unaudited condensed consolidated
          financial statements                                            6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                  17

Item 3.   Quantitative and Qualitative Disclosures About Market Risk     31

Item 4.   Controls and Procedures                                        32

PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                               33






                                     2


<PAGE>
PART I -  FINANCIAL INFORMATION
Item 1.   Condensed Consolidated Financial Statements
<TABLE>
<Caption>
                               AMCON Distributing Company and Subsidiaries
                                 Condensed Consolidated Balance Sheets
                                      June 2003 and September 2002
- ----------------------------------------------------------------------------------------
                                                         (Unaudited)
                                                          June 2003      September 2002
                                                        ------------     --------------
<S>                                                         <C>                <C>
                  ASSETS
Current assets:
  Cash                                                  $    581,216      $     130,091
  Accounts receivable, less allowance for doubtful
    accounts of $0.7 million and $0.6 million,
    respectively                                          26,438,363         31,216,783
  Inventories                                             23,765,698         35,744,074
  Income tax receivable                                      357,239            981,054
  Deferred income taxes                                      324,369            324,369
  Other                                                      560,958            393,365
                                                        ------------      -------------
          Total current assets                            52,027,843         68,789,736

Fixed assets, net                                         16,181,578         16,096,124
Available-for-sale investments                               671,494            562,000
Goodwill                                                   6,091,402          6,091,402
Other intangible assets, net                              11,523,058         11,804,284
Other assets                                               1,403,501          1,242,923
                                                        ------------      -------------
                                                        $ 87,898,876      $ 104,586,469
                                                        ============      =============

       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                      $ 14,018,737      $  19,873,851
  Accrued expenses                                         3,600,878          3,969,164
  Accrued wages, salaries, bonuses                         1,701,770          1,371,310
  Current liabilities of discontinued operations             118,011             93,558
  Current portion of long-term debt                        7,840,070         14,783,967
  Current portion of subordinated debt                     1,752,667          1,708,986
                                                        ------------      -------------
          Total current liabilities                       29,032,133         41,800,836
                                                        ------------      -------------

Deferred income taxes                                        763,103            788,316
Non-current liabilities of discontinued operations           170,025            197,024
Long-term debt, less current portion                      32,986,445         36,362,099
Subordinated debt, less current portion                    7,853,067          8,738,886

Commitments and contingencies

Shareholders' equity:
  Preferred stock, $.01 par value, 1,000,000
    shares authorized, none outstanding                            -                  -
  Common stock, $.01 par value, 15,000,000
    shares authorized, 3,168,954 and 3,156,962
    issued, respectively                                      31,690             31,570
  Additional paid-in capital                               5,997,977          5,977,643
  Accumulated other comprehensive income,
    net of tax of $0.2 million and $0.2 million,
    respectively                                             252,880            294,771
  Retained earnings                                       10,811,556         10,395,324
                                                        ------------      -------------
          Total shareholders' equity                      17,094,103         16,699,308
                                                        ------------      -------------
                                                        $ 87,898,876      $ 104,586,469
                                                        ============      =============

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

</TABLE>

                                     3



<TABLE>
<CAPTION>
                                    AMCON Distributing Company and Subsidiaries
                                  Condensed Consolidated Statements of Operations
                               for the three and nine-months ended June 2003 and 2002
                                                  (Unaudited)
- ----------------------------------------------------------------------------------------------------------
                                                   For the three months            For the nine months
                                                       ended June                      ended June
                                             -----------------------------   -----------------------------
                                                 2003            2002            2003            2002
                                             -------------   -------------   -------------   -------------
<S>                                               <C>             <C>            <C>            <C>
Sales (including excise taxes of
  $42.8 million and $42.7 million, and
  $123.4 million and $119.5 million,
  respectively)                              $ 189,949,079   $ 218,732,361   $ 564,678,909  $ 623,045,508
Cost of sales                                  173,924,679     202,677,900     520,979,369    577,650,180
                                             -------------   -------------   -------------  -------------
     Gross profit                               16,024,400      16,054,461      43,699,540     45,395,328
                                             -------------   -------------   -------------  -------------
Selling, general and administrative
  expenses                                      13,628,524      12,873,782      38,803,228     37,986,850
Depreciation and amortization                      574,332         743,610       1,706,844      2,197,531
                                             -------------   -------------   -------------  -------------
                                                14,202,856      13,617,392      40,510,072     40,184,381
                                             -------------   -------------   -------------  -------------

     Income from operations                      1,821,544       2,437,069       3,189,468      5,210,947
                                             -------------   -------------   -------------  -------------
Other expense (income):
  Interest expense                                 788,898       1,219,074       2,436,769      3,126,332
  Other                                            (85,159)       (158,669)       (367,294)      (233,280)
  Equity in loss of unconsolidated affiliate             -               -               -         95,007
                                             -------------   -------------   -------------  -------------
                                                   703,739       1,060,405       2,069,475      2,988,059
                                             -------------   -------------   -------------  --------------

Income before income taxes                       1,117,805       1,376,664       1,119,993      2,222,888

Income tax expense                                 427,000         534,071         428,000        899,217
                                             -------------   -------------   -------------  -------------

Net income                                   $     690,805   $     842,593   $     691,993  $   1,323,671
                                             =============   =============   =============  =============

Earnings per share:
 Basic                                       $        0.22   $        0.27   $        0.22  $        0.44
                                             =============   =============   =============  =============

 Diluted                                     $        0.22   $        0.26   $        0.22  $        0.43
                                             =============   =============   =============  =============

Dividends per share                          $        0.03   $        0.03   $        0.09  $        0.09
                                             =============   =============   =============  =============

Weighted average shares outstanding:
  Basic                                          3,168,955       3,112,962       3,165,270      3,004,852
  Diluted                                        3,209,148       3,190,232       3,221,139      3,078,883


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

</TABLE>




                                     4







<TABLE>
<Caption>

                     AMCON Distributing Company and Subsidiaries
                   Condensed Consolidated Statements of Cash Flows
                    for the nine months ended June 2003 and 2002
                                    (Unaudited)
- ---------------------------------------------------------------------------------
                                                         2003            2002
                                                     ------------    ------------
<S>                                                       <C>           <C>
Net cash flows from operating activities             $ 13,226,704    $ (3,757,013)
                                                     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of fixed assets                            (1,705,061)     (1,962,021)
  Proceeds from sales of fixed assets                      42,425          65,082
  Proceeds from sale of available for
   sale securities                                        112,926         140,142
                                                      ------------   ------------

  Net cash flows from investing activities             (1,549,710)     (1,756,797)
                                                     ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments on bank credit agreement                (9,857,184)      7,105,271
  Payments on long-term debt and
   subordinated debt                                   (1,110,175)     (1,087,182)
  Dividends paid                                         (286,961)       (275,139)
  Proceeds from short-term debt                             7,998               -
  Proceeds from exercise of stock options                  20,489             325
  Retirement of common stock                                  (36)              -
                                                      ------------   ------------
  Net cash flows from financing activities            (11,225,869)      5,743,275
                                                     ------------    ------------

Net increase in cash                                      451,125         229,465

Cash, beginning of period                                 130,091         296,940
                                                     ------------    ------------

Cash, end of period                                  $    581,216    $    526,405
                                                     ============    ============


SUPPLEMENTAL NONCASH INFORMATION:
  Business combinations:
   Fair value of assets acquired                     $          -    $  6,013,978
   Liabilities assumed                               $          -    $  3,157,087


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

</TABLE>




                                     5



                AMCON Distributing Company and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements
                           June 2003 and 2002
- -----------------------------------------------------------------------------
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements
include the accounts of AMCON Distributing Company and its subsidiaries
("AMCON" or the "Company").  All significant intercompany transactions and
balances have been eliminated in consolidation.  In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to fairly present the financial
information included therein, such adjustments consisting of normal recurring
items.  It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes thereto for the
fiscal year ended September 27, 2002, which are included in the Company's
Annual Report to Shareholders filed with Form 10-K ("2002 Annual Report").
The accounting policies and methods of computation followed in these interim
financial statements are the same as those followed in the financial
statements for the year ended September 27, 2002.  Results for the interim
period are not necessarily indicative of results to be expected for the
entire year.

AMCON's fiscal third quarters ended on June 27, 2003 and June 28, 2002.  For
convenience, the fiscal quarters have been indicated as June 2003 and 2002,
respectively.  Each quarter and each nine-month period ended comprised 13
weeks and 39 weeks, respectively.

Stock-based Compensation
- ------------------------
AMCON maintains a stock-based compensation plan which provides that the
Compensation Committee of the Board of Directors may grant incentive stock
options and non-qualified stock options.  AMCON accounts for stock option
grants using the intrinsic value method under which compensation cost is
measured by the excess, if any, of the deemed fair market value of its common
stock on the date of grant over the exercise price of the stock option.
Accordingly, stock-based compensation cost related to stock option grants is
not reflected in net income as all options granted under the plan had an
exercise price equal to the market value of the underlying stock on the date
of grant.

In December 2002, the FASB issued Statement of Financial Accounting Standard
No. 148 "Accounting for Stock-Based Compensation-Transition and Disclosure"
("SFAS No. 148").  SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-
Based Compensation," to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation.  It also amends the disclosure
provisions of that Statement to require prominent disclosure about the
effects on reported net income of an entity=s accounting policy decisions with
respect to stock-based employee compensation.  Finally, this Statement amends
APB Opinion No. 28, "Interim Financial Reporting," to require disclosure
about those effects in interim financial information. The disclosure
provisions of SFAS No. 148 are effective for financial statements issued for
interim periods beginning after December 15, 2002, (Q2 2003 for AMCON), with
early adoption encouraged.

                                    6

AMCON does not intend to voluntarily change to the fair value based
accounting principle.  The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation:

<TABLE>
<CAPTION>
                                          For the three months         For the nine months
                                             ended June                  ended June
                                       -------------------------    -------------------------
                                          2003          2002           2003          2002
                                       -----------   -----------    -----------   -----------
<S>                                        <C>           <C>            <C>           <C>
Net earnings
============

Net income as reported                 $   690,805   $   842,593    $   691,993   $ 1,323,671
Deduct: Total stock-based employee
  compensation expense determined
  under fair value based method
  for all awards, net of
  related tax effects                      (15,571)      (17,646)       (46,713)      (52,938)
                                       -----------   -----------    -----------   -----------
Pro forma net income                   $   675,234   $   824,947    $   645,280   $ 1,270,733
                                       ===========   ===========    ===========   ===========


Income per share
================

As reported: Basic                     $      0.22   $      0.27    $      0.22   $      0.44
                                       ===========   ===========    ===========   ===========

             Diluted                   $      0.22   $      0.26    $      0.21   $      0.43
                                       ===========   ===========    ===========   ===========

Pro forma:   Basic                     $      0.21   $      0.27    $      0.20   $      0.42
                                       ===========   ===========    ===========   ===========

             Diluted                   $      0.21   $      0.26    $      0.20   $      0.41
                                       ===========   ===========    ===========   ===========
</TABLE>

2.  CHANGES IN ACCOUNTING POLICY

In June 2002, the FASB issued Statement of Financial Accounting Standard No.
146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS No. 146").  SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of
costs covered by SFAS No. 146 include lease termination costs and certain
employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity.
Previous accounting guidance was provided by Emerging Issues Task Force
("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)."  SFAS No. 146 replaces EITF No. 94-3.
SFAS 146 is applied prospectively to exit or disposal activities initiated
after December 31, 2002 (at Q2 2003 for AMCON).  The adoption of SFAS No. 146
had no impact to the Company.

                                     7

In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others."  FIN No. 45 clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing certain
guarantees.  FIN No. 45 also elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its
obligations under certain guarantees that it has issued. The recognition
provisions of FIN No. 45 are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002.  The disclosure requirements of

FIN No. 45 are effective for financial statements of interim or annual
periods ending after December 15, 2002 (at Q2 2003 for AMCON).  The Company
did not have any guarantees outstanding at June 2003 and will apply the
recognition provisions of FIN No. 45 prospectively to guarantees issued after
December 31, 2002.

The Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142") at the beginning of
fiscal year 2003.  SFAS No. 142 requires the use of a nonamortization
approach to account for purchased goodwill and certain intangibles.  Under a
nonamortization approach, goodwill and certain intangibles will not be
amortized into results of operations, but instead will be reviewed at least
annually for impairment and written down and charged to results of operations
only in the periods in which the impairment recognition criteria has been met
and the recorded value of goodwill and certain intangibles is more than its
measured fair value.  Upon adoption of SFAS No. 142, goodwill and tradename
amortization ceased as it has been considered that they have indefinite
useful lives.  Management obtained an independent valuation of its goodwill
and intangible assets and did not incur an impairment charge upon
implementation of SFAS No. 142.  As of June 2003, the Company had
approximately $6.1 million of goodwill and $10.9 million of tradenames
reflected on the accompanying condensed consolidated balance sheet.

The following is certain unaudited pro forma information assuming SFAS No.
142 had been in effect for the three and nine months ended June 28, 2002:
<TABLE>
<Caption>
                                                Three Months    Nine Months
                                                 Ended June     Ended June
                                                    2002            2002
                                                 ---------      -----------
<S>                                                 <C>
Reported net income                              $ 842,593      $ 1,323,671
  Add goodwill amortization (net of tax)            49,367          145,203
  Add tradename amortization (net of tax)           67,555          202,666
                                                 ---------      -----------
Adjusted net income                              $ 959,515      $ 1,671,540
                                                 =========      ===========

Earnings per share-basic:
  Reported net income                            $    0.27      $      0.44
    Add goodwill amortization (net of tax)            0.02             0.05
    Add tradename amortization (net of tax)           0.02             0.07
                                                 ---------      -----------
  Adjusted earnings per share-basic              $    0.31      $      0.56
                                                 =========      ===========

                                           8

Earnings per share-diluted:
  Reported net income                            $    0.26      $      0.43
    Add goodwill amortization (net of tax)            0.02             0.05
    Add tradename amortization (net of tax)           0.02             0.07
                                                 ---------      -----------
  Adjusted earnings per share-diluted            $    0.30      $      0.55
                                                 =========      ===========
</TABLE

3.  ACQUISITIONS OF BUSINESSES:

On December 17, 2001, Hawaiian Natural Water Company, Inc. ("HNWC") merged
with and into, and thereby became, a wholly-owned subsidiary of AMCON.  The
merger consideration valued the entire common equity interest in HNWC at
approximately $2.9 million, which was paid in cash of $0.8 million during
fiscal 2001 and in common stock of the Company valued at $2.1 million.  As a
result, the Company issued 373,558 shares of its common stock to outside HNWC
shareholders, representing 12.0% of the Company's outstanding shares after
giving effect to the merger.  HNWC option holders and warrant holders also
received comparable options and warrants of the Company, with the exercise
price and number of shares covered thereby being adjusted to reflect the
exchange ratio.  Transaction costs, totaling approximately $0.3 million, were
incurred to complete the merger and consist primarily of fees and expenses
for bankers, attorneys and accountants, SEC filing fees, stock exchange
listing fees and financial printing and other related charges.

The merger has been recorded on the Company=s books using the purchase method
of accounting.   The purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair values.  The portion of the
purchase price in excess of the fair value of the net assets acquired to be
allocated to other identifiable assets is approximately $3.5 million.  The
identifiable intangible asset, the HNWC trade name, is considered to have an
indefinite useful life. Therefore, in accordance with SFAS No. 142, no
amortization has been recorded since the acquisition occurred subsequent to
June 30, 2001.

Prior to the acquisition, the Company accounted for its initial common stock
investment in HNWC under the equity method.  The charge to the Company=s
results of operations to record its equity in the losses of HNWC from the
investment date was approximately $0.1 million in the first six months of
fiscal 2002.

Assuming the above acquisition had occurred on October 1, 2001 unaudited pro
forma consolidated sales, net income and net earnings per share for the nine
months ended June 2002, would have been as follows:

                                             Nine months ended
                                                 June 2002
                                             -----------------

Sales                                         $  623,531,842
Net income                                    $    1,068,128

Net earnings per share:
  Basic                                       $         0.36
  Diluted                                     $         0.35
                                     9


4.  INVENTORIES:

The wholesale distribution segment inventories consist of finished products
purchased in bulk quantities to be redistributed to the Company's customers
and are stated at the lower of cost (last-in, first-out or "LIFO" method) or
market.  The retail health food operations utilize the retail LIFO inventory
method of accounting stated at the lower of cost (LIFO) or market.  The
beverage operation's inventories are stated at the lower of cost (LIFO) or
market and consist of raw materials and finished goods.  Raw materials
inventory of $0.3 million consists of pre-forms used to make bottles, caps,
labels and various packaging and shipping materials.  Finished goods
inventory of $23.5 million includes materials, labor and manufacturing
overhead costs.  LIFO inventories at June 2003 and 2002 were approximately
$3.7 million and $4.5 million less than the amount of such inventories valued
on a first-in, first-out basis, respectively.


5.  DIVIDENDS:

The Company paid cash dividends totaling $0.03 per share during the quarter
ended June 2003, representing dividends of $0.09 per share for the first nine
months of fiscal 2003.


6.  EARNINGS PER SHARE:

Basic earnings per share is calculated by dividing net income by the weighted
average common shares outstanding for each period.  Diluted earnings per
share is calculated by dividing net income by the sum of the weighted average
common shares outstanding and the weighted average dilutive options, using
the treasury stock method.  Stock options outstanding at June 2003 and 2002,
which were not included in the computations of diluted earnings per share
because the option's exercise price was greater than the average market price
of the Company's common shares, totaled 194,340 with an average exercise
price of $7.17 for the three months ended June 2003, and 179,340 with an
average exercise price of $7.41 for the nine month period ended June 2003,
and 145,390 with an average exercise price of $8.01 for the three and nine
month periods ended June 2002.
















                                     10




<TABLE>
<CAPTION>
                                              For the three-month period ended June
                                      -------------------------------------------------------
                                                 2003                         2002
                                      -------------------------     -------------------------
                                         Basic        Diluted          Basic        Diluted
                                      -----------   -----------     -----------   -----------
<S>                                       <C>           <C>             <C>           <C>
1.  Weighted average common
     shares outstanding                 3,168,955     3,168,955       3,112,962     3,112,962


2.  Weighted average of net
     additional shares outstanding
     assuming dilutive options and
     warrants exercised and proceeds
     used to purchase treasury stock            -        40,193               -        77,270
                                      -----------   -----------     -----------   -----------
3.  Weighted average number of
     shares outstanding                 3,168,955     3,209,148       3,112,962     3,190,232
                                      ===========   ===========     ===========   ===========

4.  Net income                        $   690,805   $   690,805     $   842,593   $   842,593
                                      ===========   ===========     ===========   ===========

5.  Net income per share              $      0.22   $      0.22     $      0.27   $      0.26
                                      ===========   ===========     ===========   ===========
</TABLE>


<TABLE>
<CAPTION>
                                                 For the nine-month period ended June
                                      -------------------------------------------------------
                                                 2003                         2002
                                      -------------------------     -------------------------
                                         Basic        Diluted          Basic        Diluted
                                      -----------   -----------     -----------   -----------
<S>                                       <C>           <C>             <C>           <C>
1.  Weighted average common
     shares outstanding                 3,165,270     3,165,270       3,004,852     3,004,852


2.  Weighted average of net
     additional shares outstanding
     assuming dilutive options and
     warrants exercised and proceeds
     used to purchase treasury stock            -        55,869               -        74,031
                                      -----------   -----------     -----------   -----------

3.  Weighted average number of
     shares outstanding                 3,165,270     3,221,139       3,004,852     3,078,883
                                      ===========   ===========     ===========   ===========

4.  Net income                        $   691,993   $   691,993     $ 1,323,671   $ 1,323,671
                                      ===========   ===========     ===========   ===========

5.  Net income per share              $      0.22   $      0.22     $      0.44   $      0.43
                                      ===========   ===========     ===========   ===========
</TABLE>




                                       11




7.  COMPREHENSIVE INCOME (LOSS):

The following is a reconciliation of net income per the accompanying
unaudited condensed consolidated statements of operations to comprehensive
income for the periods indicated:
<TABLE>
<CAPTION>
                                         For the three months         For the nine months
                                               ended June                  ended June
                                      -------------------------     -------------------------
                                          2003          2002           2003          2002
                                      -----------   -----------     -----------   -----------
<S>                                        <C>           <C>            <C>           <C>
Net income                            $   690,805   $   842,593     $   691,993   $ 1,323,671
Other comprehensive income:
 Unrealized holding gains from
  investments arising during the
  period, net of income tax expense (benefit)
  of $17,000 and $(64,000) for the three
  months ended June 2003 and 2002
  and $83,000 and $30,000 for the nine
  months ended June 2003 and
  2002, respectively                       28,194      (105,229)        134,709        52,821

 Reclassification adjustments for
   gains included in net income
   in prior periods                             -       (78,107)        (58,374)      (78,107)

 Interest rate swap valuation
   adjustment, net of income tax
   benefit of $72,000                    (118,226)            -        (118,226)            -

                                      -----------   -----------     -----------   -----------
Comprehensive income                  $   600,773   $   659,257     $   650,102   $ 1,298,385
                                      ===========   ===========     ===========   ===========
</TABLE>
8.  DEBT

The Company maintains a revolving credit facility (the "Facility") with a
bank that allows the Company to borrow up to $55.0 million at any time,
subject to eligible accounts receivable and inventory requirements.   As of
June 2003, the outstanding balance on the Facility was $28.2 million. The
Facility bears interest at a variable interest rate equal to the bank's base
rate, which was 4.00% at June 2003 or LIBOR plus 2.50% as selected by the
Company.  However, as discussed below, a notional amount of $15.0 million is
subject to two interest rate swap agreements which have the effect of
converting this amount to fixed rates ranging between 4.38% and 4.87%.  In
addition, the Company is required to pay an unused commitment fee equal to
0.25% per annum on the difference between the maximum loan limit and the
average monthly borrowing for the month.  The Facility is collateralized by
all of the wholesale distribution segment's equipment, intangibles,
inventories and accounts receivable.

The Facility contains covenants which, among other things, (i) restrict
permitted investments, (ii) restrict intercompany advances to HNWC, (iii)
restrict incurrence of additional debt, (iv) restrict mergers and
acquisitions and changes in business or conduct of business and (v) require
the maintenance of certain financial ratios and net worth levels including,
average annual debt service coverage ratio of 1.0 to 1.0, to be measured
quarterly, and minimum tangible net worth of $8.0 million for fiscal year
2003.  In addition, the Company must maintain a fill rate percentage of not

                                    12
less than 93% calculated on a weekly basis.  The fill rate percentage is
determined by dividing the total dollar amount of inventory delivered to the
Company's customers each week into the total amount of orders which
correspond to such deliveries.  The Facility also provides that the Company
may not pay dividends in excess of $0.12 per share on an annual basis.  The
Company was in compliance with its debt covenants at June 2003.

In connection with the purchase of the Quincy, Illinois distribution business
in June 2001, the Company assumed an interest rate swap agreement with a
bank.  Under the agreement, which expired on May 27, 2003, the Company agreed
to exchange, at specified intervals, fixed interest amounts for variable
interest amounts calculated by reference to an agreed-upon notional principal
amount of $25.0 million.  The interest rate swap effectively converted $25.0
million of variable-rate senior debt to fixed-rate debt (before accounting
for the impact of the change in market value of the interest rate swap
derivative financial instrument) at a rate of 8.33%, through the maturity of
the swap agreement on May 27, 2003.  The Company did not renew this swap
agreement.  This interest rate swap agreement was not designated as a hedge.

In June 2003, the Company entered into two interest rate swap agreements with
a bank.  Under the agreements, the Company agrees to exchange, at specified
intervals, fixed interest amounts for variable interest amounts calculated by
reference to agreed-upon notional principal amounts of $10.0 million and $5.0
million.  The interest rate swaps effectively convert $15.0 million of
variable-rate senior debt to fixed-rate debt at rates of 4.87% and 4.38% on
the $10.0 million and $5.0 million notional amounts through the maturity of
the swap agreements on June 2, 2006 and 2005, respectively.  These interest
rate swap agreements have been designated as hedges and will be accounted for
as such for financial accounting purposes.

The Company has a $2.8 million credit facility with a bank to be used to fund
operating activities at our natural spring water bottling operation in
Hawaii, (the "Water Facility").  Borrowings under the Water Facility bear
interest at the bank=s base rate plus 1.0%, which equaled 6.75% at June 2003.
As of June 2003, the outstanding balance under the Water Facility was $2.8
million.  The Water Facility is guaranteed by the Company=s Chairman.

The Company has a $2.0 million credit facility with a bank collateralized by
inventories of the Retail segment (the "Retail Facility ").  Borrowings under
the Retail Facility bear interest at the bank=s base rate plus 1.0%, which
equaled 6.75% at June 2003.  As of June 2003, the outstanding balance under
the Retail Facility was $1.9 million.













                                    13


9.  BUSINESS SEGMENTS:

AMCON has three reportable business segments: the wholesale distribution of
consumer products, the retail sale of health and natural food products, and
the bottling, marketing and distribution of Hawaiian natural spring water and
other beverage products.  Prior to the first quarter of fiscal 2003, the
Beverage segment consisted of the bottling, marketing and distribution of
Hawaiian natural spring water.  Due to the formation of the new beverage
marketing and distribution company during the first quarter of fiscal 2003,
the Beverage segment now includes the marketing and distribution of other
beverage products, as well as, Hawaiian natural spring water.  Intersegment
sales have been recorded at amounts approximating market.  The segments are
evaluated on revenue, operating income (loss) and income (loss) before taxes.


<TABLE>
<CAPTION>
                             Wholesale                                     Eliminate
                               Distribution       Retail         Beverage    Intersegment    Consolidated
                               -------------    -----------    -----------   ------------   -------------
<S>                             <C>           <C>          <C>          <C>          <C>
QUARTER ENDED JUNE 2003:
External revenue:
 Cigarettes                    $ 135,446,471    $         -    $         -    $        -    $ 135,446,471
 Confectionery                    14,150,458              -              -             -       14,150,458
 Health food                               -      8,315,500              -             -        8,315,500
 Tobacco, beverage & other        31,010,861              -      1,025,880           (91)      32,036,650
                               -------------    -----------    -----------    ----------    -------------
  Total external revenue         180,607,790      8,315,500      1,025,880           (91)     189,949,079


Depreciation and amortization        311,977        244,683         46,365             -          603,025
Operating income (loss)            2,988,164        176,946     (1,349,753)        6,187        1,821,544
Interest expense                     333,456        338,128        117,314             -          788,898
Income (loss) before taxes         2,730,841       (153,725)    (1,465,498)        6,187        1,117,805
Total assets                      60,933,876     17,661,428      9,303,572             -       87,898,876
Capital expenditures                 121,064         60,172         92,759             -          273,995

QUARTER ENDED JUNE 2002:
External revenue:
 Cigarettes                    $ 164,602,322    $         -   $          -             -    $ 164,602,322
 Confectionery                    13,882,660              -              -             -       13,882,660
 Health food                               -      8,065,582              -             -        8,065,582
 Tobacco, beverage & other        31,462,945              -        718,852             -       32,181,797
                               -------------    -----------   ------------    ----------    -------------
  Total external revenue         209,947,927      8,065,582        718,852             -      218,732,361

Depreciation and amortization        349,463        376,473         17,674             -          743,610
Operating income (loss)            2,753,246         32,925       (349,102)            -        2,437,069
Interest expense                     865,695        290,617         62,762             -        1,219,074
Income (loss) before taxes         1,968,442       (313,552)      (278,226)            -        1,376,664
Total assets                      84,631,285     19,038,198      6,479,991             -      110,149,474
Capital expenditures               1,036,430         57,347        214,839             -        1,308,616














                                           14


NINE MONTHS ENDED JUNE 2003:
External revenue:
 Cigarettes                    $ 414,575,090    $         -    $         -    $        -    $ 414,575,090
 Confectionery                    37,390,510              -              -             -       37,390,510
 Health food                               -     24,713,813              -             -       24,713,813
 Tobacco, beverage & other        85,567,462              -      2,585,125      (153,091)      87,999,496
                               -------------   ------------    -----------    ----------    -------------
  Total external revenue         537,533,062     24,713,813      2,585,125      (153,091)     564,678,909

Depreciation and amortization        949,931        706,950        136,038             -        1,792,919
Operating income (loss)            5,225,925        453,590     (2,443,362)      (46,685)       3,189,468
Interest expense                   1,090,500      1,049,157        297,112             -        2,436,769
Income (loss) before taxes         4,462,954       (586,167)    (2,710,109)      (46,685)       1,119,993
Total assets                      60,933,876     17,661,428      9,303,572             -       87,898,876
Capital expenditures                 575,578        369,046        760,437             -        1,705,061

NINE MONTHS ENDED JUNE 2002:
External revenue:
 Cigarettes                    $ 471,633,774   $          -   $          -             -    $ 471,633,774
 Confectionery                    39,190,407              -              -             -       39,190,407
 Health food                               -     23,668,614              -             -       23,668,614
 Tobacco, beverage & other        87,110,890              -      1,441,823             -       88,552,713
                               -------------   ------------   ------------    ----------    -------------
  Total external revenue         597,935,071     23,668,614      1,441,823             -      623,045,508

Depreciation and amortization      1,023,422      1,127,100         47,009             -        2,197,531
Operating income (loss)            5,536,919        406,128       (732,100)            -        5,210,947
Interest expense                   2,038,386        963,775        124,171             -        3,126,332
Income (loss) before taxes         3,564,287       (662,031)      (679,368)            -        2,222,888
Total assets                      84,631,285     19,038,198      6,479,991             -      110,149,474
Capital expenditures               1,431,215        167,557        363,249             -        1,962,021

</TABLE>

10.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In November 2002, the FASB's EITF reached a consensus on EITF Issue No. 00-
21, "Revenue Arrangements with Multiple Deliverables".  EITF Issue No. 00-21
provides guidance for revenue arrangements that involve the delivery or
performance of multiple products or services where performance may occur at
different points or over different periods of time.  EITF Issue No. 00-21 is
effective for revenue arrangements entered into in fiscal periods beginning
after June 15, 2003 (i.e., the Company's fiscal 2004).  The Company does not
believe that adoption of EITF Issue No. 00-21 will have a material impact on
its results from operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities."  FIN No. 46 clarifies when variable interest entities are
consolidated by business enterprises where the equity investment at risk is
not sufficient to permit the entity to finance its activities without
additional subordinated financial support from other parties, which is
provided through other interests that will absorb some or all of the expected
losses of the entity, or, where equity investors lack certain characteristics
of a controlling financial interest.  FIN No. 46 applies immediately to
variable interest entities created after January 31, 2003 and to variable
interest entities in which an enterprise obtains an interest after that date.
It applies in the first fiscal year or interim period beginning after June
15, 2003, to variable interest entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003.  The Company did
not have any investments in any variable interest entities at June 2003 and
will apply the provisions of FIN No. 46 prospectively to investments in
variable interest entities made after February 1, 2003.


                                    15


In March 2003, the FASB added a project to address issues related to share-
based payments.  In April 2003, the FASB decided that goods and services,
including employee stock options, received in exchange for stock-based
compensation should be recognized in the income statement as an expense, with
the cost measured at fair value.  An exposure draft is expected by the end of
this year and a final statement could be effective in 2004.

In April 2003, the FASB issued Statement of Financial Accounting Standard No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities" (SFAS No. 149).  SFAS No. 149 amends FASB No. 133 for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. SFAS No. 149 also amends certain other
existing pronouncements. It will require contracts with comparable
characteristics to be accounted for similarly. In particular, SFAS No. 149
clarifies when a contract with an initial net investment meets the
characteristic of a derivative and clarifies when a derivative that contains
a financing component will require special reporting in the statement of cash
flows. SFAS No. 149 is effective for AMCON for contracts entered into or
modified after June 30, 2003.  AMCON and its subsidiaries are evaluating the
impact of adopting the requirements of SFAS No. 149.

In April 2003, the FASB issued Statement of Financial Accounting Standard No.
150, "Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity" (SFAS No. 150).  SFAS No. 150 establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.  It requires
an issuer to classify a financial instrument that is within its scope as a
liability (or asset in some circumstances).  Many of those instruments were
previously classified as equity.  SFAS No. 150 is effective for AMCON for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003 (Q4 for AMCON).  It is to be implemented by reporting the
cumulative effect of a change in an accounting principle for financial
instruments created before the issuance date of SFAS No. 150 and still
existing at the beginning of the interim period of adoption.  Restatement is
not permitted.  AMCON and its subsidiaries are evaluating the impact of
adopting the requirements of SFAS No. 150.

















                                     16



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

COMPANY OVERVIEW

AMCON Distributing Company ("AMCON" or the "Company") is primarily engaged in
the wholesale distribution business in the Great Plains and Rocky Mountain
regions of the United States.  In addition, AMCON operates 13 retail health
food stores as well as a beverage division consisting of a natural spring
water bottling operation and a newly formed beverage marketing and
distribution business.  As used herein, unless the context indicates
otherwise, the term "ADC" means the wholesale distribution segment and
"AMCON" or the "Company" means AMCON Distributing Company and its
consolidated subsidiaries.

ADC operates six distribution centers located in Illinois, Missouri,
Nebraska, North Dakota, South Dakota and Wyoming.  ADC sells approximately
13,000 consumer products, including cigarettes and tobacco products, candy
and other confectionery, food service products, beverages, groceries, paper
products, health and beauty care products and frozen and chilled products.
ADC distributes products primarily to retailers such as convenience stores,
discount and general merchandise stores, grocery stores and supermarkets,
drug stores and gas stations.  In addition, ADC services institutional
customers, such as restaurants and bars, schools, sports complexes and
vendors, as well as other wholesalers.

Our retail health food segment operates seven stores in Florida under the
name Chamberlin's Market & Cafe and six stores in Oklahoma, Kansas, Missouri
and Nebraska under the name Akin's Natural Foods Market.  These stores carry
a comprehensive line of approximately 35,000 natural and gourmet foods,
supplements, herbs, natural cosmetics, homeopathic and sports nutrition
products.  Although this segment has not achieved profitability, with the
realignment of top management, development of a new marketing department,
increased focus on in-store staff training and the implementation of a new
central point-of-sale inventory control system during the fiscal year,
management expects financial performance of the retail segment to continue to
improve.  If financial performance of this segment improves consistent with
our expectations, it lays the foundation for future expansion in the number
of retail stores.

Our beverage segment consists of Hawaiian Natural Water Company, Inc.
("HNWC") and The Beverage Group Inc. ("TBG").  HNWC bottles natural spring
water from an exclusive source located on the Big Island of Hawaii.  HNWC
currently markets its products primarily in the State of Hawaii, but is in
the process of expanding marketing to the mainland United States and certain
international markets.  HNWC was acquired during the first quarter of fiscal
2002 and completed an upgrade of its bottling equipment in fiscal 2002 in
order to increase its production capacity.  During Q2 2003, HNWC began
construction of an expanded warehouse and packaging building at its plant in
Hawaii which is expected to be completed late in Q4 2003.  HNWC has
historically operated at a loss and is expected to continue to do so until it
is able to complete the planned expansion of its markets.  AMCON's newly
formed wholly-owned subsidiary, TBG will focus on marketing and distribution
of HWNC bottled water products and other beverages including Hype Energy
Drink/TM/, Royal Kona Coffee/R/, Bottle Green/R/ drinks and Xterra/R/, a line
of sports beverages in the United States, Canada and Mexico.

                                       17

INDUSTRY SEGMENT OVERVIEWS

The wholesale distribution industry continues to consolidate as larger
distribution companies acquire smaller companies.  Competition and pressure
on profit margins continue to affect both large and small distributors and
demands that distributors consolidate in order to become more efficient.

Although ADC sells a diversified line of products, it remains dependent on
cigarette sales, which represented approximately 71% of total revenue and 39%
of gross margin of the Company in the third quarter of fiscal 2003.  Overall
cigarette consumption in the United States continues to decline and many
retailers, such as grocery stores and general merchandise stores, have
discontinued the sale of cigarettes.  As a result, convenience stores and
tobacco stores, which represent ADC's largest customer base, have increased
their share of the cigarette market.  This trend has partially mitigated the
effect of lower overall cigarette consumption on the Company's sales.
However, over the past few years as prices for national cigarette brands have
increased, primarily to cover payments to states in accordance with the
Master Settlement Agreement signed in 1998, and state excise taxes have
increased to fund state budget deficits, sales of national cigarette brands
have decreased at a more rapid rate than for all cigarettes.  For example, as
reported in Altria Inc.'s 2002 Annual Report, U.S. cigarette industry
shipment volume in 2002 declined 3.7%, while shipments from Philip Morris
declined 7.5%.  At the same time, sales of value-priced cigarettes have
actually increased.

Generally, wholesale cigarette distributors align themselves as national
brand distributors or value-priced distributors.  Since a national brand
distributor derives a significant amount of its gross profit from selling
national cigarette brands, it is generally a detriment to gross profit to
focus sales efforts on value-priced brands.  The loss of one key customer
that was acquired and several smaller customers due to competitive pricing
strategies, combined with ADC's alignment as primarily a national brand
distributor has resulted in a higher rate of decline in cigarette carton
sales (11.2%) than the national average, when compared to the prior year.

Changes in manufacturers' cigarette pricing over the past decade and
increases in state excise taxes over the past year have greatly affected the
market for value-priced, generic and private label cigarettes.  Although
sales of ADC's private label cigarettes have steadily declined over the past
nine years due to the relatively small price differential between its private
label brands and national brands, and the increasing price differential
between our brands and new value-priced, generic and import brands, ADC's net
income is still heavily dependent on sales of private label cigarettes and
the volume discounts it receives from manufacturers in connection with these
sales.  The Company entered into a new private label cigarette manufacturing
agreement with Philip Morris effective October 1, 2002.  The new agreement
ends on December 31, 2004, and has two one-year renewal options.  However,
given the current cigarette industry environment, terms of the new agreement
are not as favorable to the Company as the prior agreement, and, as a result,
the Company expects that gross margin related to private label cigarettes
will decrease by up to $1.4 million in fiscal 2003, as compared to fiscal
2002.



                                     18


The retail natural foods industry is highly fragmented, with more than 9,000
stores operated independently or as part of small chains.  The two leading
natural food chains continue to expand their geographic markets and acquire
smaller independent competitors.  In addition, conventional supermarkets and
mass market outlets have increased their emphasis on natural products.  This
business climate subjects operating income to a number of factors which are
beyond the control of management, such as competing retail stores opening in
close proximity to AMCON's retail stores and manufacturers' changing prices
and promotional programs.

The natural bottled water and beverage business is also highly competitive.
All of the popular national brands of natural water, plus several local
brands, are sold in Hawaii, which is presently HNWC's primary market.  HNWC
competes primarily by differentiating its products from those of its
competitors due to the fact that it is the only producer of natural spring
water bottled in Hawaii.  In addition to marketing HNWC=s natural spring water
products, TBG has acquired exclusive licenses to market and distribute
several premium beverage products which will be marketed as a portfolio.

CERTAIN ACCOUNTING CONSIDERATIONS

During fiscal 2002 the Company acquired HNWC.  In accordance with Statement
of Financial Accounting Standard ("SFAS") No. 141, "Business Combinations,"
the Company used the purchase method of accounting to record the business
combination.  Recorded intangibles, primarily the HNWC tradename, were
separately identified and recognized.  No goodwill was recognized in the
acquisition.

SFAS No. 142, "Goodwill and Other Intangible Assets," requires the use of a
nonamortization approach to account for purchased goodwill and certain
intangibles.  Under a nonamortization approach, goodwill and certain
intangibles will not be amortized into results of operations, but instead
will be reviewed at least annually for impairment and written down and
charged to results of operations only in the periods in which the impairment
recognition criteria has been met and the recorded value of goodwill and
certain intangibles is more than its measured fair value.  Due to the
adoption of SFAS No. 142 by the Company at the beginning of fiscal 2003, the
Company no longer amortizes goodwill, tradenames and other intangible assets
considered to have indefinite useful lives.  Goodwill, tradenames and other
intangible assets not subject to amortization are now reviewed periodically
(at least annually) to determine if their recorded values exceed their fair
values.  If the recorded value of these assets is determined to be impaired,
it will be written down to fair value and the write down will be charged to
operations during the period in which the impairment is recognized.
Management has obtained an independent valuation of its goodwill and
intangible assets and did not incur an impairment charge due to the
implementation of SFAS No. 142.

In March 2003, the FASB added a project to address issues related to share-
based payments.  In April 2003, the FASB decided that goods and services,
including employee stock options, received in exchange for stock-based
compensation should be recognized in the income statement as an expense, with
the cost measured at fair value.  An exposure draft is expected by the end of
this year and a final statement could be effective in 2004.

                                    19


On April 30, 2003, the FASB issued Statement of Financial Accounting Standard
No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities" (SFAS No. 149). SFAS No. 149 amends FASB No. 133 for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. SFAS No. 149 also amends certain other
existing pronouncements. It will require contracts with comparable
characteristics to be accounted for similarly. In particular, SFAS No. 149
clarifies when a contract with an initial net investment meets the
characteristic of a derivative and clarifies when a derivative that contains
a financing component will require special reporting in the statement of cash
flows.  SFAS No. 149 is effective for AMCON for contracts entered into or
modified after June 30, 2003.  AMCON and its subsidiaries are evaluating the
impact of adopting the requirements of SFAS No. 149.

In April 2003, the FASB issued Statement of Financial Accounting Standard No.
150, "Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity" (SFAS No. 150).  SFAS No. 150 establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.  It requires
an issuer to classify a financial instrument that is within its scope as a
liability (or asset in some circumstances).  Many of those instruments were
previously classified as equity.  SFAS No. 150 is effective for AMCON for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003 (Q4 for AMCON).  It is to be implemented by reporting the
cumulative effect of a change in an accounting principle for financial
instruments created before the issuance date of SFAS No. 150 and still
existing at the beginning of the interim period of adoption.  Restatement is
not permitted.  AMCON and its subsidiaries are evaluating the impact of
adopting the requirements of SFAS No. 150.

CRITICAL ACCOUNTING POLICIES

Certain accounting policies 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
judgements and estimates.  In addition to the critical accounting policies
previously discussed in the Company's 2002 Annual Report to Shareholders on
Form 10-K for the fiscal year ended September 27, 2002, the Company adopted
SFAS No. 142 in Q1 2003 and believes its accounting policy with respect to
goodwill and other identifiable intangible assets is a critical accounting
policy.  The following is a summary of this critical accounting policy.

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS.  Goodwill associated with
the excess purchase price over the fair value of assets acquired and other
identifiable intangible assets, such as trademarks and tradenames, with
indefinite useful lives are no longer amortized, but will be reviewed
periodically (at least annually) to determine if the recorded values exceed
the fair market values of the assets.  If impairment exists, the impairment
write-down will be charged to operations during the period in which the
impairment is recognized.  Identifiable intangible assets that are considered
to have definite useful lives are amortized on the straight-line method over
their estimated useful lives.

                                    20



RESULTS OF OPERATIONS

As more fully described in our 2002 Annual Report to Shareholders on Form 10-
K for the fiscal year ended September 27, 2002, we completed the acquisition
of HNWC on December 17, 2001.  Accordingly, the results of operations for
this acquisition are included in the accompanying unaudited condensed
consolidated statements of operations from the date of acquisition.

AMCON's fiscal third quarters ended on June 27, 2003 and June 28, 2002.  For
ease of discussion, the fiscal quarters are referred to herein as June 2003
and 2002, respectively or Q3 2003 and Q3 2002, respectively.

Comparison of the three and nine-month periods ended June 2003 and 2002
- -----------------------------------------------------------------------

SALES

Three Months
- ------------
Sales for Q3 2003 decreased 13.2% to $189.9 million, compared to $218.7
million in Q3 2002.  Sales are reported net of costs associated with sales
incentives provided to retailers, totaling $1.9 million in both Q3 2003 and
Q3 2002, respectively.  Sales changes by business segment are as follows:

    Wholesale distribution        $(29.3) million
    Retail health food stores        0.2  million
    Beverage                         0.3  million
                                  ------
                                  $(28.8) million
                                  ======
Sales from the wholesale distribution business decreased by $29.3 million
from Q3 2002 to Q3 2003.  Of the total decrease, $29.2 million related to
cigarettes, with $16.9 million attributable to a decrease in cigarette prices
on Philip Morris and Brown & Williamson brands during Q3 2003.  Although the
Philip Morris price reduction program was communicated as a temporary
reduction, Philip Morris has extended the program through September 2003 and
could extend it further.  The Brown & Williamson price reduction program is
permanent.  The remaining decrease in cigarette sales of $12.3 million was
the result of a 12.2% reduction in carton volume.  See discussion above under
INDUSTRY SEGMENT OVERVIEWS for additional information regarding cigarette
sales trends.  Sales of tobacco, confectionary and other products accounted
for the remainder of the decrease as sales of these products fell by $0.1
million over the prior year primarily due to the loss of a key customer,
however, we believe the Company is positioned to increase our customer base
in certain geographic regions and continue to market our full service
capabilities in an effort to differentiate our Company from competitors who
utilize pricing as their primary marketing tool.

Sales from the retail health food segment during Q3 2003 increased by $0.2
million, or 3.1%, when compared to Q3 2002, due primarily to improvements in
the Midwest retail stores.  The Florida market continues to suffer from lower
tourist trade and general economic depression.  Competition by national
chains who have stores in the same markets as our stores and an overall
softening of the natural food retail market over the past two years continue
to hamper sales growth in the retail health food segment.

                                   21

Sales from the beverage segment during Q3 2003 increased by $0.3 million or
42.7% when compared to Q3 2002, due to increases in the customer base in
Hawaii and Japan.  The marketing and distribution business, which was started
in Q1 2003, accounted for $0.1 million of the increase in sales.  Management
continues to seek out new ways of increasing the customer base and is
currently establishing a nationwide broker network to get the beverage
products into distribution companies to sell to retail stores.

There were no material intersegment sales eliminated in consolidation for Q3
2003 or Q3 2002.

Nine Months
- -----------
Sales for the nine months ended June 2003 decreased 9.4% to $564.7 million,
compared to $623.1 million for the same period in the prior fiscal year.
Sales changes by business segment are as follows:

    Wholesale distribution       $ (60.3) million
    Retail health food stores        1.0  million
    Beverage                         1.1  million
    Intersegment eliminations       (0.2) million
                                 -------
                                 $ (58.4) million
                                 =======

Sales from the wholesale distribution business decreased by $60.3 million for
the nine months ended June 2003 as compared to the same period in the prior
year.  Of the total decrease, $57.1 million was attributable to a decrease in
sales of cigarettes, with $25.7 million related to a decrease in cigarette
prices on Philip Morris and Brown & Williamson brands during the second and
third quarters of 2003.  Although the Philip Morris price reduction program
was communicated as a temporary reduction, Philip Morris has extended the
program through September 2003 and could extend it further.  The Brown &
Williamson price reduction program is permanent. The remaining decrease in
cigarette sales of $31.4 million resulted primarily from a 11.2% reduction in
carton volume.  See discussion above under INDUSTRY SEGMENT OVERVIEWS for
additional information regarding cigarette sales trends.  Sales of tobacco,
confectionary and other products accounted for the remainder of the decrease
as sales of these products decreased by $3.2 million or 3.0% from the prior
year due to loss of several key customers during the year.  We continue to
market our full service capabilities in an effort to differentiate our
Company from competitors who utilize pricing as their primary marketing tool
and anticipate increases to our customer base in the fourth quarter as a
result of these efforts.

Sales from the retail health food segment increased by $1.0 million, or 4.4%,
when compared to the nine months ended June 2002 due primarily to the
improvements in the Midwest retail stores in which same store sales increased
by 9.5% over the prior year.  The Florida market continues to suffer from
lower tourist trade and general economic depression.




                                     22




The beverage segment accounted for $2.6 million in sales for the nine months
ended June 2003, compared to $ 1.5 million for the same period in 2002.  The
water bottling operation was acquired during the latter part of Q1 2002.  The
marketing and distribution business, which accounted for $0.2 million of the
sales, was started in Q1 2003.

There were $0.2 million of intersegment sales eliminated in consolidation for
the nine months ended June 2003, all of which related to beverage segment
sales to wholesale distribution.  There were no intersegment sales for the
same period in 2002.

GROSS PROFIT

Three Months
- ------------
Gross profit decreased 0.2% to $16.0 million in Q3 2003 from $16.1 million in
Q3 2002.  Gross profit as a percent of sales increased to 8.4% in Q3 2003
compared to 7.3% in Q3 2002.  Gross profit by business segment is as follows
(dollars in millions):
<TABLE>
<CAPTION>
                                             Quarter ended
                                                 June
                                            ----------------    Incr
                                             2003      2002    (Decr)
                                            ------    ------    -----
    <S>                                       <C>      <C>       <C>
    Wholesale distribution                  $ 12.3    $ 12.8    $(0.5)
    Retail health food stores                  3.4       3.2      0.2
    Beverage segment                           0.3       0.1      0.2
                                            ------    ------    -----
                                            $ 16.0    $ 16.1    $(0.1)
                                            ======    ======    =====
</TABLE>

Gross profit from our wholesale distribution business for Q3 2003 decreased
approximately $0.5 million as compared to Q3 2002.  This is primarily due to
the absence of a cigarette price increase in Q3 2003 as compared to the same
period last year, which accounted for $1.0 million in gross profit, and a
decrease of $0.5 million in incentive payments received on our private label
cigarettes.  These items were offset by a $1.9 million decrease in cost of
sales to account for a reduction in the LIFO reserve, as compared to Q3 2002.
The decrease in the LIFO reserve was primarily attributable to the cigarette
price decreases discussed in the SALES section above.  Gross profit was
further impacted by a decrease in incentive allowances received primarily
from cigarette manufacturers on products other than private label cigarettes
of approximately $1.5 million (net of amounts paid to customers) which was
partially offset by an increase of $0.6 million in gross profit from sales of
other products.

Gross profit for the retail health food segment increased by $0.2 million
compared with Q3 2002. An increase in gross profit from increased sales
volume in Q3 2003 of $0.3 million was offset by a decrease of $0.1 million in
gross profit due to a larger charge to cost of sales to account for the
increase in the LIFO reserve in Q3 2003, as compared to Q3 2002.

                                     23


Gross profit of $0.3 million was generated from the beverage segment in Q3
2003, compared to $0.1 million in Q3 2002.  The increase was primarily due to
new sales generated in the segment from the formation of the marketing and
distribution business in Q1 2003.

There was no impact on gross profit from intersegment sales eliminated in
consolidation for Q3 2003 or Q3 2002.

Nine Months
- -----------

For the nine months ended June 2003, gross profit decreased 3.7% to $43.7
million from $45.4 million for the same period during the prior fiscal year.
Gross profit as a percent of sales increased to 7.7% for the nine month
period ended June 2003 compared to 7.3% for the nine month period ended June
2002.  Gross profit by business segment is as follows (dollars in millions):
<TABLE>
<CAPTION>
                                           Nine months ended
                                                 June
                                           ----------------
                                            2003      2002     Incr
                                                              (Decr)
                                           ------    ------    -----
    <S>                                      <C>      <C>       <C>
    Wholesale distribution                 $ 33.3    $ 35.4   $ (2.1)
    Retail health food stores                 9.9       9.8      0.1
    Beverage segment                          0.6       0.2      0.4
    Intersegment elimination                 (0.1)        -     (0.1)
                                           ------    ------    -----
                                           $ 43.7    $ 45.4   $ (1.7)
                                           ======    ======    =====
</TABLE>
Gross profit from our wholesale distribution business for the nine months
ended June 2003 decreased approximately $2.1 million, as compared to the
prior year, primarily due to a decrease of $1.2 million in incentive payments
received on our private label cigarettes, the absence of a cigarette price
increase during the first nine months of fiscal 2003 which accounted for a
$1.5 million decrease in gross profit, and a decrease in incentive allowances
received primarily from cigarette manufacturers on products other than
private label cigarettes of approximately $1.9 million (net of amounts paid
to customers).  The above decrease in gross profit was partially offset by a
$1.7 million decrease in cost of sales to account for the reduction in the
LIFO reserve, and a $0.8 million decrease related to sales of other products.
The decrease in the LIFO reserve was primarily attributable to the cigarette
price decreases discussed in the SALES section above.

Gross profit for the retail health food segment increased approximately $0.1
million compared with the nine months ended June 2002 due to increased sales.

Gross profit from the beverage segment increased by $0.4 million over the
same period in the prior year.  The increase was due to a full nine months of
sales in the current year from the natural spring water bottling operation
compared to six months in the prior year, and new sales generated in the
segment from the formation of the marketing and distribution business in Q1
2003.
                                      24

There was a $0.1 million decrease in gross profit from intersegment sales
eliminated in consolidation for the nine months ended June 2003, all of which
related to beverage segment sales to wholesale distribution.  There were no
intersegment sales for the same period in 2002.

Gross profit as a percentage of sales for the three and nine months ended
June 2003 increased primarily due to the manufacturers' cigarette price
decrease discussed under SALES above.  Our gross profit per cigarette carton
sold did not change materially after the price decrease.  Therefore, since
total sales decreased, but gross profit remained constant, gross profit
expressed as a percentage of sales increased.

OPERATING EXPENSE

Total operating expense, which includes selling, general and administrative
expenses and depreciation and amortization, increased 4.3% or approximately
$0.6 million to $14.2 million in Q3 2003 compared to Q3 2002.  Operating
expenses in the wholesale segment decreased by $0.6 million due to a
reduction in warehousing, delivery and administrative costs of approximately
$0.7 million.  These reductions were offset by an increase of approximately
$0.1 million in selling expenses.  Total operating expense in the retail
segment remained fairly constant compared to the same period in the prior
fiscal year.  The beverage segment's operating expenses increased by
approximately $1.2 million primarily due to the formation of the marketing
and distribution business in Q1 2003.

For the nine month period ended June 2003, total operating expense increased
0.1% or approximately $0.3 million to $40.5 million compared to the same
period in the prior fiscal year.  The wholesale distribution segment reduced
operating costs in its selling, warehousing and delivery areas by
approximately $1.8 million and the absence of goodwill amortization accounted
for a reduction of approximately $0.2 million.  Administrative costs
increased by $0.1 million primarily due to increased professional fees and
insurance, as compared to the nine months ended June 2002.

Total operating expenses in our retail segment increased approximately $0.1
million for the nine months ended June 2003, compared to the same period in
the prior year.  Operating costs increased by approximately $0.4 million
primarily due to additional labor and travel costs, but were offset by the
absence of tradename amortization of approximately $0.3 million.  Our
beverage segment, which began in Q1 2002 with the acquisition of a natural
spring water bottling operation, incurred $3.0 million in operating expenses
for the nine months ended June 2003, an increase of approximately $2.1
million over the prior year, due primarily to $1.7 million of expenses
attributable to the marketing and distribution business which was formed late
in Q1 2003.

As a result of the above, income from operations for Q3 2003 decreased by
$0.7 million to $1.8 million, as compared to Q3 2002.  Income from operations
for the nine months ended June 2003 decreased by $2.0 million to $3.2
million.




                                       25



INTEREST EXPENSE

Interest expense for Q3 2003 decreased 35.3% to $0.8 million compared to Q3
2002.  The decrease was primarily due to a reduction in average interest
rates of approximately 0.5% and a reduction in total average debt outstanding
of approximately $7.3 million in the wholesale segment.

Interest expense for the nine months ended June 2003 decreased by 22.1% to
$2.4 million compared to $3.1 million for the same period in the prior fiscal
year.  The decrease was primarily due to a reduction in average interest
rates of approximately 0.6% and a reduction in total average debt outstanding
of approximately $3.4 million in the wholesale segment.

OTHER

Other income for Q3 2003 of approximately $0.1 million was generated
primarily from interest income on income tax refunds and dividends received
on investment securities.  Other income of approximately $0.2 million for Q3
2002 was generated primarily from vendor debt forgiveness, interest income
and dividends received on investment securities.

Included in other income for the nine months ended June 2003 of approximately
$0.4 million is $0.1 million received from a settlement related to a former
distribution facility, $0.1 million from gains on sales of available-for-sale
securities and $0.1 million in interest income on income tax refunds, as well
as dividends on investment securities.  Other income for the nine months
ended June 2002 was approximately $0.2 million and included approximately
$0.1 million of interest income and dividends received on investment
securities.  Equity in loss of an unconsolidated affiliate of $0.1 million
represented our ownership interest in the loss of HNWC up to the date of
acquisition.

As a result of the above factors, net income (loss) for the three and nine
months ended June 2003 was $0.7 million and $0.7 million, respectively
compared to $0.8 million and $1.3 million for the three and nine months ended
June 2002.

LIQUIDITY AND CAPITAL RESOURCES

As of June 2003, our liquidity was provided by cash on hand of approximately
$0.6 million and approximately $26.8 million available under a revolving
credit facility with a capacity of $55.0 million.  During the nine months
ended June 2003, we generated approximately $13.2 million in cash through
operating activities primarily through reductions in accounts receivable and
inventory, resulting from the cigarette price decrease discussed in SALES.
Our working capital was approximately $23.0 million as of June 2003 compared
to approximately $27.0 million at September 2002.  Our debt to equity ratio
decreased 20.0% to 2.95 at June 2003, compared to 3.69 at September 2002,
primarily due to a net decrease in our three revolving lines of credit of
approximately $9.9 million as inventory was reduced and cash was used to pay
down debt on the wholesale segment's revolving credit facility.  Investing
activities required cash of approximately $1.5 million during the nine month
period ended June 2003 and primarily represents the purchases of fixed
assets.  Financing activities utilized cash of approximately $11.2 million to
reduce amounts outstanding under the revolving credit facilities and
long-term debt.
                                  26

The following table summarizes our outstanding contractual obligations and
commitments as of fiscal year end September 2002.  Other than the paydown of
approximately $12.7 million on the wholesale segment's revolving credit
facility and $2.4 million in additional borrowings on the retail and HNWC
revolving credit facilities, there have been no significant changes to debt
or contractual obligations since September 2002.  Changes applicable to other
commercial commitments are footnoted and described below. (Amounts in
thousands):
<TABLE>
<CAPTION>

                                           Payments Due By Period
                        --------------------------------------------------------------------
   Contractual                      Fiscal    Fiscal    Fiscal   Fiscal   Fiscal
   Obligations            Total      2003      2004      2005     2006     2007   Thereafter
- ------------------      ---------  --------  --------  -------  -------  -------  ----------
<S>                         <C>       <C>       <C>      <C>      <C>      <C>        <C>
Long-Term Debt          $  50,208  $ 14,634  $ 29,181  $   200  $ 6,193  $     -  $        -
Subordinated Debt          10,448     1,709     7,763      976        -        -           -
Capital Lease
  Obligations                 938       150       228      266      254       40           -
Operating Leases           24,877     5,091     4,451    3,956    3,213    1,698       6,468
                        ---------  --------  --------  -------  -------  -------  ----------
                        $  86,471  $ 21,584  $ 41,623  $ 5,398  $ 9,660  $ 1,738  $    6,468
                        =========  ========  ========  =======  =======  =======  ==========
<CAPTION>
                          Total
 Other Commercial        Amounts    Fiscal    Fiscal    Fiscal   Fiscal   Fiscal
   Commitments          Committed    2003      2004      2005     2006     2007   Thereafter
- ------------------      ---------  --------  --------  -------  -------  -------  ----------
<S>                         <C>       <C>       <C>      <C>      <C>      <C>        <C>
Lines of Credit         $  59,500  $ 59,500  $ 55,000  $     -  $     -  $     -  $        -
Letters of Credit /1/         967       967       837        -        -        -           -
Purchase Obligations/2/     1,000     1,000         -        -        -        -           -
                        ---------  --------  --------  -------  -------  -------  ----------
                        $  61,030  $ 61,030  $ 55,400  $     -  $     -  $     -  $        -
                        =========  ========  ========  =======  =======  =======  ==========
</TABLE>
- ------------------
     /1/ In April 2003, we were required to increase the letter of credit
issued to our property and casualty insurance carrier from $0.4 million to
$0.8 million as part of our loss control arrangement.

     /2/ Represents capital expenditures associated with the warehouse
expansion and new equipment purchases for our water bottling operation in
Hawaii which is expected to be completed in Q4 2003.

ADC maintains a revolving credit facility, ("the Facility") that allows us to
borrow up to $55.0 million at any time, subject to eligible accounts
receivable and inventory requirements.  As of June 2003, the outstanding
balance on the Facility was $28.2 million.  The Facility bears interest at a
variable rate equal to the bank's base rate, which was 4.00% at June 2003 or
LIBOR plus 2.50%, as selected by the Company.  As discussed under
"Qualitative and Quantitative Disclosures about Market Risk", a notional
amount of $15.0 million is subject to interest rate swap agreements which
have the effect of converting this amount to fixed rates ranging between
4.38% and 4.87%.  In addition, the Company is required to pay an unused
commitment fee equal to 0.25% per annum on the difference between the maximum
loan limit and average monthly borrowing for the month.  The Facility is
collateralized by all of ADC's equipment, intangibles, inventories, and
accounts receivable.
                                       27

The Facility contains covenants which, among other things, set certain
financial ratios and net worth requirements, including covenants that (i)
restrict permitted investments, (ii) restrict intercompany advances to HNWC,
(iii) restrict incurrence of additional debt, (iv) restrict mergers and
acquisitions and changes in business or conduct of business and (v) require
the maintenance of certain financial ratios and net worth levels including an
average annual debt service coverage ratio of 1.0 to 1.0, and a minimum
tangible net worth of $8.0 million for fiscal year 2003.  In addition, the
Company must maintain a fill rate percentage of not less than 93% calculated
on a weekly basis.  The fill rate percentage is determined by dividing the
total dollar amount of inventory delivered to the Company's customers each
week into the total amount of orders which correspond to such deliveries.
The Facility also provides that the Company may not pay dividends in excess
of $0.12 per share on an annual basis.   The Company was in compliance with
its debt covenants at June 2003.

The Company has a $2.8 million credit facility with a bank to be used to fund
operating activities at our natural spring water bottling operation in
Hawaii, (the "Water Facility").  Borrowings under the Water Facility bear
interest at the bank=s base rate plus 1.0%, which equaled 6.75% at June 2003.
As of June 2003, the outstanding balance under the Water Facility was $2.8
million.  The Water Facility is guaranteed by the Company=s Chairman.

The Company has a $2.0 million credit facility with a bank collateralized by
inventories of the Retail segment (the "Retail Facility ").  Borrowings under
the Retail Facility bear interest at the bank=s base rate plus 1.0%, which
equaled 6.75% at June 2003.  As of June 2003, the outstanding balance under
the Retail Facility was $1.9 million.

The Company borrowed $6.9 million from a bank, at a fixed rate of 7.5%, to
purchase the distribution facility in Quincy, IL, referred to herein as the
Real Estate Loan, and to retire term debt.  As of June 2003, the outstanding
balance on the Real Estate Loan was approximately $6.6 million.

The acquisition of the Quincy distribution business provides for deferred
payments to be made to the seller totaling $3.4 million (plus interest).
These deferred payments are subordinate to the Facility and the Real Estate
Loan and are due in installments of $0.9 million (including interest) on the
first, second, third and fourth anniversaries of the closing date of the
transaction.  In addition, the Company entered into a noncompetition
agreement with the seller that requires the Company to make payments of $0.1
million annually on the first through fourth anniversary dates of the closing
of the transaction. The Company has recorded the seller obligations at their
fair values utilizing a 6% effective interest rate which was determined based
on the Company's approximate average borrowing rate.  The outstanding
obligation to the seller was approximately $1.8 million as of June 2003.

In September 1999, borrowings under an 8% Convertible Subordinated Note,
referred to herein as the Convertible Note, and a Collateralized Promissory
Note, referred to herein as the Collateralized Note, in addition to
borrowings under the revolving credit facility were used to purchase all of
the common stock of Health Food Associates. Both the Convertible Note and the
Collateralized Note have five-year terms and bear interest at 8% per annum.
Principal on the Convertible Note is due in a single payment at maturity.

                                       28


Principal on the Collateralized Note is payable in installments of $0.8
million per year with the balance due at maturity. The principal balance of
the Convertible Note may be converted into stock of The Healthy Edge, Inc.,
formerly known as Food for Health Co., Inc., under circumstances set forth in
the Convertible Note.  As of June 2003, the outstanding balances of the
Convertible Note and the Collateralized Note were $2.0 million and $5.6
million, respectively.

The Company has borrowings under various notes to purchase the assets of
health food stores and water bottling equipment.  The notes have terms
ranging from three to five years with principal and interest payments due
monthly.  As of June 2003, the outstanding balance of the notes was
approximately $0.3 million.

In connection with the purchase of the Quincy distribution business and HNWC,
we assumed capital leases for office equipment, automobiles and warehouse
equipment.  As of June 2003, the outstanding balances on the capital leases
totaled approximately $0.8 million.

In connection with the discontinued operations of the health and natural
foods distribution business, AMCON is obligated on a letter of credit issued
to the buyer in the amount of $0.1 million which was extended during March
2003 to expire in March 2004.  In addition, AMCON has a letter of credit in
the amount of approximately $0.8 million that is required to be issued to our
workers compensation insurance carrier as part of our self-insured loss
control program.

We have entered into commitments for capital expenditures of approximately
$1.0 million related to expansion of the water bottling operation's warehouse
and new packaging equipment.  We expect these expenditures to be completed in
Q4 2003.  It is anticipated that the source of funds needed to complete these
expenditures will be provided by a combination of leasing and debt financing.

We believe that funds generated from operations, supplemented as necessary
with funds available under our revolving credit facilities, will provide
sufficient liquidity to cover our debt service and any reasonably foreseeable
future working capital and capital expenditure requirements associated with
existing operations.

RELATED PARTY TRANSACTIONS

During the three and nine months ended June 2003, we were charged $15,000 and
$45,000, respectively by AMCON Corporation, the former parent of the Company,
as consideration for office rent and management services, which is included
in selling, general and administrative expenses.  We also contracted with one
of our directors for consulting services in connection with our retail health
food operations during the nine months ended June 2003.  The amount paid for
consulting services during the three and nine months ended June 2003 was
$22,500 and $67,500, respectively, plus reimbursement of expenses.




                                       29




CONCERNING FORWARD LOOKING STATEMENTS

This Quarterly Report, 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.  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: changing
market conditions with regard to cigarettes and the demand for the Company's
products, domestic regulatory risks, and competitive and other risks over
which the Company has little or no control.  Any changes in such 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.






























                                    30



Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to interest rate risk on its variable rate debt.  At
June 2003, we had $17.9 million of variable rate debt outstanding (excluding
$15.0 million variable rate debt which is fixed through the swaps described
below), with maturities through May 2004.  The interest rates on this debt
ranged from 3.49% to 6.75% at June 2003.  Through December 31, 2001, we had
the ability to select the bases on which our variable interest rates were
calculated by selecting an interest rate based on our lender's base interest
rate or based on LIBOR.  This provided management with some control of our
variable interest rate risk.  Effective January 1, 2002, the LIBOR borrowing
rate option was removed.  We negotiated reinstatement of the LIBOR borrowing
option which became available in April 2003.  We estimate that our annual
cash flow exposure relating to interest rate risk based on our current
borrowings is approximately $0.1 million for each 1% change in our lender's
prime interest rate.

In June 2003, the Company entered into two interest rate swap agreements with
a bank in order to mitigate the Company's exposure to interest rate risk on
this variable rate debt.  Under the agreements, the Company agrees to
exchange, at specified intervals, fixed interest amounts for variable
interest amounts calculated by reference to agreed-upon notional principal
amounts of $10.0 million and $5.0 million.  The interest rate swaps
effectively convert $15.0 million of variable-rate senior debt to fixed-rate
debt at rates of 4.87% and 4.38% on the $10.0 million and $5.0 million
notional amounts through the maturity of the swap agreements on June 2, 2006
and 2005, respectively.  These interest rate swap agreements have been
designated as hedges and will be accounted for as such for financial
accounting purposes.

We do not utilize financial instruments for trading purposes and hold no
derivative financial instruments other than the interest rate swap which
could expose us to significant market risk.

In addition, we are exposed to market risk relating to our available-for-sale
investment in the common stock of Consolidated Water Company Limited ("CWCO")
a public company traded on the NASDAQ National Market system.  At June 2003
and 2002 we held 42,500 and 60,300 shares, respectively, of common stock of
CWCO valued at approximately $0.7 million and $0.7 million.  We value this
investment at market and record price fluctuations in shareholders' equity as
unrealized gain or loss on investments.  The unrealized gain on CWCO shares
was approximately $0.6 million and $0.7 million at June 2003 and 2002,
respectively.  We sold 7,500 shares of CWCO common stock in Q3 2003 and
realized a gain of $0.1 million on the sale.










                                      31



Item 4.   Controls and Procedures

A review and evaluation was performed by the Company's management, including
the Company's Principal Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures as of the end of the period covered by this quarterly
report.  Based on that review and evaluation, the Principal Executive Officer
and Chief Financial Officer have concluded that the Company's current
disclosure controls and procedures, as designed and implemented, were
effective.

There were no changes in the Company's internal controls over financial
reporting that occurred during the fiscal quarter covered by this report that
have materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting.






































                                      32




PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

(a) EXHIBITS

 2.1  Fifth Amended and Restated Agreement and Plan of Merger dated
      September 27, 2001 by and between AMCON Distributing Company, AMCON
      Merger Sub, Inc. and Hawaiian Natural Water Company Inc. (incorporated
      by reference to Exhibit 2.1 of AMCON's Registration Statement on Form
      S-4(Registration No. 333-71300) filed on November 13, 2001)

 2.2  Assets Purchase and Sale Agreement by and between Food For Health
      Company, Inc., AMCON  Distributing Company and Tree of Life, Inc.
      dated March 8, 2001 (incorporated by reference to  Exhibit 2.1 of
      AMCON's Current Report on Form 8-K filed on April 10, 2001)

 2.3  Amendment to Assets Purchase and Sale Agreement by and between Food
      For Health Company, Inc., AMCON Distributing Company and Tree of Life,
      Inc. effective March 23, 2001 (incorporated by reference to Exhibit
      2.2 of AMCON's Current Report on Form 8-K filed on April 10, 2001)

 2.4  Asset Purchase Agreement, dated February 8, 2001, between AMCON
      Distributing Company, Merchants Wholesale Inc. and Robert and Marcia
      Lansing (incorporated by reference to Exhibit 2.1 of AMCON's Current
      Report on Form 8-K filed on June 18, 2001)

 2.5  Addendum to Asset Purchase Agreement, dated May 30, 2001, between
      AMCON Distributing Company, Merchants Wholesale Inc. and Robert and
      Marcia Lansing (incorporated by reference to Exhibit 2.2 of AMCON's
      Current Report on Form 8-K filed on June 18, 2001)

 2.6  Real Estate Purchase Agreement, dated February 8, 2001, between AMCON
      Distributing Company and Robert and Marcia Lansing (incorporated by
      reference to Exhibit 2.3 of AMCON's Current Report on Form 8-K filed
      on June 18, 2001)

 2.7  Addendum to Real Estate Purchase Agreement, dated May 30, 2001,
      between AMCON Distributing Company and Robert and Marcia Lansing
      (incorporated by reference to Exhibit 2.4 of AMCON's Current Report on
      Form 8-K filed on June 18, 2001)

 3.1  Restated Certificate of Incorporation of the Company, as amended March
      19, 1998 (incorporated by reference to Exhibit 3.1 of AMCON's
      Quarterly Report on Form 10-Q filed on May 11, 1998)

 3.2  Bylaws of the Company (incorporated by reference to Exhibit 3.2 of
      AMCON's Registration Statement on Form S-1 (Registration No. 33-82848)
      filed on August 15, 1994)

 4.1  Specimen Common Stock Certificate (incorporated by reference to
      Exhibit 4.1 of AMCON's Registration Statement on Form S-1
      (Registration No. 33-82848) filed on August 15, 1994)



                                        33

10.1  Grant of Exclusive Manufacturing Rights, dated October 1, 1993,
      between the Company and  Famous Value Brands, a division of  Philip
      Morris Incorporated, including Private Label Manufacturing Agreement
      and Amended and Restated Trademark License Agreement (incorporated by
      reference to Exhibit 10.1 of  Amendment No. 1 to AMCON's Registration
      Statement on Form S-1 (Registration No. 33-82848) filed on November 8,
      1994)

10.2  Amendment No. 1 to Grant of Exclusive Manufacturing Rights, dated
      October 1, 1998, between the Company and Famous Value Brands, a
      division of Philip Morris Incorporated, including Amendment No. 1 To
      Private Label Manufacturing Agreement and Amendment No. 1 to Amended
      and Restated Trademark License Agreement (incorporated by reference to
      Exhibit 10.2 of AMCON's Annual Report on Form 10-K filed on December
      24, 1998)

10.3  Loan and Security Agreement, dated June 1, 2001, between the Company
      and LaSalle National Bank (incorporated by reference to Exhibit 10.3
      on Form 10-Q filed on August 13, 2001)

10.4  ISDA Master Agreement, dated as of December 22, 2000 between  LaSalle
      Bank National Association and Merchants Wholesale Inc., as assumed by
      the Company on June 1, 2001 (incorporated by reference to Exhibit 10.4
      on Form 10-Q/A filed on October 4, 2001)

10.5  Secured Promissory Note, dated as of May 30, 2001 between the Company
      and Gold Bank (incorporate by reference to Exhibit 10.5 on Form 10-Q/A
      filed on October 4, 2001)

10.6  8% Convertible Subordinated Note, dated September 15, 1999 by and
      between Food For Health Company Inc. and Eric Hinkefent, Mary Ann
      O'Dell, Sally Sobol, and Amy Laminsky (incorporated by reference to
      Exhibit 10.1 of AMCON's Current Report on Form 8-K filed on September
      30, 1999)

10.7  Secured Promissory Note, dated September 15, 1999, by and between Food
      For Health Company, Inc. and James C. Hinkefent and Marilyn M.
      Hinkefent, as trustees of the James C. Hinkefent Trust dated July 11,
      1994, as amended, Eric Hinkefent, Mary Ann O'Dell, Sally Sobol, and
      Amy Laminsky (incorporated by reference to Exhibit 10.2 of AMCON's
      Current Report on Form 8-K filed on September 30, 1999)
10.8  Pledge Agreement, dated September 15, 1999, by and between Food For
      Health Company, Inc. and James C. Hinkefent and Marilyn M. Hinkefent,
      as trustees of the James C. Hinkefent Trust dated July 11, 1994, as
      amended, Eric Hinkefent, Mary Ann O'Dell, Sally Sobol, and Amy
      Laminsky (incorporated by reference to Exhibit 10.3 of AMCON's Current
      Report on Form 8-K filed on September 30, 1999)

10.9  First Amended and Restated AMCON Distributing Company 1994 Stock
      Option Plan (incorporated by reference to Exhibit 10.17 of AMCON's
      Current Report on Form 10-Q filed on August 4, 2000)



                                       34



10.10 AMCON Distributing Company Profit Sharing Plan (incorporated by
      reference to Exhibit 10.8 of Amendment No. 1 to the Company's
      Registration Statement on Form S-1 (Registration No. 33-82848)
      filed on November 8, 1994)

10.11 Employment Agreement, dated May 22, 1998, between the Company and
      William F. Wright (incorporated by reference to Exhibit 10.14 of
      AMCON's Quarterly Report on Form 10-Q filed on August 6, 1998)

10.12 Employment Agreement, dated May 22, 1998, between the Company and
      Kathleen M. Evans incorporated by reference to Exhibit 10.15 of
      AMCON's Quarterly Report on Form 10-Q filed on August 6, 1998)

10.13 ISDA Master Agreement, dated as of May 12, 2003 between the Company
      and LaSalle Bank National Association

10.14 Swap Transaction Confirmation ($10,000,000) dated as of May 23, 2003
      between the Company and LaSalle Bank National Association.

10.15 Swap Transaction Confirmation ($5,000,000) dated as of May 23, 2003
      between the Company and LaSalle Bank National Association

11.1  Statement re: computation of per share earnings (incorporated by
      reference to footnote 3 to the financial statements which are
      incorporated herein by reference to Item 1 of Part I herein)

31.1  Certification by William F. Wright, Chairman and Principal Executive
      Officer, furnished pursuant to section 302 of the Sarbanes-Oxley Act.

31.2  Certification by Michael D James, Vice President and Chief Financial
      Officer, furnished pursuant to section 302 of the Sarbanes-Oxley Act.

32.1  Certification by William F. Wright, Chairman and Principal Executive
      Officer, furnished pursuant to section 906 of the Sarbanes-Oxley Act.

32.2  Certification by Michael D. James, Vice President and Chief Financial
      Officer, furnished pursuant to section 906 of the Sarbanes-Oxley Act.


(b) REPORTS ON FORM 8-K:

       The Company filed a report on Form 8-K dated May 12, 2003
       reporting its earnings for the second quarter ended March 28, 2003
       under Item 12, Results of Operations and Financial Condition.
       Reference was made to a press release furnished therewith as
       Exhibit 99.1










                                     35


                              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, hereunto duly authorized.

                                  AMCON DISTRIBUTING COMPANY
                                        (registrant)


Date:     August 11, 2003         /s/ William F. Wright
          -----------------       -----------------------------
                                  William F. Wright
                                  Chairman of the Board and
                                    Principal Executive Officer


Date:     August 11, 2003         /s/ Michael D. James
          -----------------       -----------------------------
                                  Michael D. James
                                  Treasurer & CFO and
                                    Principal Financial and
                                    Accounting Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>3
<FILENAME>ex1013isda.txt
<DESCRIPTION>EXHIBIT 10.13 ISDA MASTER AGREEMENT
<TEXT>
                           EXHIBIT 10.13

                              ISDA /R/
             International Swap Dealers Association, Inc.

                             MASTER AGREEMENT

                        dated as of MAY 12, 2003

LASALLE BANK NATIONAL ASSOCIATION  AND AMCON DISTRIBUTING COMPANY

have entered and/or anticipate entering into one or more transactions
(each a "Transaction") that are or will be governed by this Master
Agreement, which includes the schedule (the "Schedule"), and the
documents and other confirming evidence (each a "Confirmation")
exchanged between the parties confirming those Transactions.

Accordingly, the parties agree as follows:

1.  Interpretation

(a)  Definitions. The terms defined in Section 12 and in the Schedule
will have the meanings therein specified for the purpose of this
Master Agreement.

(b)  Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master
Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this
Master Agreement (including the Schedule), such Confirmation will
prevail for the purpose of the relevant Transaction.

(c)  Single Agreement. All Transactions are entered into in reliance
on the fact that this Master Agreement and all Confirmations form a
single agreement between the parties (collectively referred to as
this "Agreement"), and the parties would not otherwise enter into any
Transactions.

2.  Obligations

(a)  General Conditions.

     (i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.

     (ii) Payments under this Agreement will be made on the due date
for value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on
the due date in the manner customary for the relevant obligation
unless otherwise specified in the relevant Confirmation or elsewhere
in this Agreement.

     (iii) Each obligation of each party under Section 2(a)(i) is
subject to (1) the condition precedent that no Event of Default or
Potential Event of Default with respect to the other party has
occurred and is continuing, (2) the condition precedent that no Early
Termination Date in respect of the relevant Transaction has occurred
or been effectively designated and (3) each other applicable
condition precedent specified in this Agreement.

(b)  Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other party at
least five Local Business Days prior to the scheduled date for the
payment or delivery to which such change applies unless such other
party gives timely notice of a reasonable objection
to such change.

(c)  Netting. If on any date amounts would otherwise be payable:

     (i) in the same currency; and

     (ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party's
obligation to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by one party exceeds the aggregate amount
that would otherwise have been payable by the other party, replaced by
an obligation upon the party by whom the larger aggregate amount would
have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.  The parties may
elect in respect of two or more Transactions that a net amount will be
determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction.
The election may be made in the Schedule or a Confirmation by
specifying that subparagraph (ii) above will not apply to the
Transactions identified as being subject to the election, together
with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such
date). This election may be made separately for different groups of
Transactions and will apply separately to each pairing of branches or
offices through which the parties make and receive payments or
deliveries.

(d)  Default Interest; Other Amounts. Prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to
Section 6(c), be required to pay interest (before as well as after
judgment) on the overdue amount to the other party on demand in the
same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. If, prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party defaults in the performance of
any obligation required to be settled by delivery, it will compensate
the other party on demand if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.

3.  Representations

Each party represents to the other party (which representations will
be deemed to be repeated by each party on each date on which a
Transaction is entered into) that:

(a)  Basic Representations.

     (i)  Status. It is duly organised and validly existing under the
laws of the jurisdiction of its organisation or incorporation and, if
relevant under such laws, in good standing;

     (ii)  Powers. It has the power to execute this Agreement and any
other documentation relating to this Agreement to which it is a party,
to deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorise such execution, delivery and
performance;

     (iii)  No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;

     (iv)  Consents. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party have been obtained
and are in full force and effect and all conditions of any such
consents have been complied with; and

     (v)  Obligations Binding. Its obligations under this Agreement
and any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).





(b)  Absence of Certain Events. No Event of Default or Potential Event
of Default or, to its knowledge, Termination Event with respect to it
has occurred and is continuing and no such event or circumstance would
occur as a result of its entering into or performing its obligations
under this Agreement or any Credit Support Document to which it is a
party.

(c)  Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or
proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely
to affect the legality, validity or enforceability against it of
this Agreement or any Credit Support Document to which it is a party
or its ability to perform its obligations under this Agreement or such
Credit Support Document.

(d)  Accuracy of Specified information. All applicable information
that is furnished in writing by or on behalf of it to the other party
and is identified for the purpose of this Section 3(d) in the Schedule
is, as of the date of the information, true, accurate and complete in
every material respect.

4.  Agreements

Each party agrees with the other that, so long as either party has or
may have any obligation under this Agreement or under any Credit
Support Document to which it is a party:

(a)  Furnish Specified Information. It will deliver to the other party
any forms, documents or certificates specified in the Schedule or any
Confirmation by the date specified in the Schedule or such
Confirmation or, if none is specified, as soon as reasonably
practicable.

(b)  Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or
other authority that are required to be obtained by it with respect to
this Agreement or any Credit Support Document to which it is a party
and will use all reasonable efforts to obtain any that may become
necessary in the future.

(c)  Comply with Laws. It will comply in all material respects with
all applicable laws and orders to which it may be subject if failure
so to comply would materially impair its ability to perform its
obligations under this Agreement or any Credit Support Document to
which it is a party.

5.  Events of Default and Termination Events

(a)  Events of Default. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or
any Specified Entity of such party of any of the following events
constitutes an event of default (an "Event of Default") with respect
to such party:

     (i)  Failure to Pay or Deliver. Failure by the party to make,
when due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(d) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;

     (ii)  Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(d) or to give notice of a Termination Event) to be complied with or
performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;

     (iii)  Credit Support Default.

        (1) Failure by the party or any Credit Support Provider of
such party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit Support
Document if such failure is continuing after any applicable grace
period has elapsed;

        (2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support Document to
be in full force and effect for the purpose of this Agreement
(in either case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each Transaction
to which such Credit Support Document relates without the written
consent of the other party; or

        (3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or challenges
the validity of, such Credit Support Document;

     (iv)  Misrepresentation. A representation made or repeated or
deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit
Support Document proves to have been incorrect or misleading in any
material respect when made or repeated or deemed to have been made or
repeated;

     (v)  Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination
of, a Specified Transaction (or such default continues for at least
three Local Business Days if there is no applicable notice requirement
or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action
is taken by any person or entity appointed or empowered to operate it
or act on its behalf);

     (vi)  Cross Default. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or existence of (1)
a default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support
Provider of such party or any applicable Specified Entity of such
party under one or more agreements or instruments relating to
Specified Indebtedness of any of them (individually or collectively)
in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of
being declared, due and payable under such agreements or instruments,
before it would otherwise have been due and payable or (2) a default
by such party, such Credit Support Provider or such Specified Entity
(individually or collectively) in making one or more payments on the
due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments
(after giving effect to any applicable notice requirement or grace
period);

     (vii)  Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:

        (1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger);

        (2) becomes insolvent or is unable to pay its debts or fails
or admits in writing its inability generally to pay its debts as they
become due;

        (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors;

        (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or restrained
in each case within 30 days of the institution or presentation
thereof;

        (5) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation,
amalgamation or merger);

        (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for it or for all or substantially
all its assets;

        (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party
maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days
thereafter;

        (8) causes or is subject to any event with respect to it
which, under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (1)
to (7) (inclusive); or

        (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or

     (viii)  Merger Without Assumption. The party or any Credit
Support Provider of such party consolidates or amalgamates with, or
merges with or into, or transfers all or substantially all its assets
to, another entity and, at the time of such consolidation,
amalgamation, merger or transfer:-

        (1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other party to
this Agreement; or (2) the benefits of any Credit Support Document
fail to extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee entity of its
obligations under this Agreement.

(b)  Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or
any Specified Entity of such party of any event specified below
constitutes an Illegality if the event is specified in (i) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event
is specified pursuant to (ii) below or an Additional Termination Event
if the event is specified pursuant to (iii) below:

     (i)  Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the Affected Party):

        (1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect of
such Transaction or to comply with any other material provision of
this Agreement relating to such Transaction; or

        (2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;

     (ii)  Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such
Credit Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or

     (iii)  Additional Termination Event. If any "Additional
Termination Event" is specified in the Schedule or any Confirmation as
applying, the occurrence of such event (and, in such event, the
Affected Party or Affected Parties shall be as specified for such
Additional Termination Event in the Schedule or such Confirmation).

(c)  Event of Default and Illegality. If an event or circumstance
which would otherwise constitute or give rise to an Event of Default
also constitutes an Illegality, it will be treated as an Illegality
and will not constitute an Event of Default.

6. Early Termination

(a)  Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has
occurred and is then continuing, the other party (the "Non-defaulting
Party") may, by not more than 20 days notice to the Defaulting Party
specifying the relevant Event of Default, designate a day not earlier
than the day such notice is effective as an Early Termination Date in
respect of all outstanding Transactions. If, however, "Automatic Early
Termination" is specified in the Schedule as applying to a party, then
an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party
of an Event of Default specified in Section 5(a)(vii)(1), (3), (5),
(6) or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or
the presentation of the relevant petition upon the occurrence with
respect to such party of an Event of Default specified in Section
5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)  Right to Terminate Following Termination Event.

     (i)  Notice. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.

     (ii)  Two Affected Parties. If an Illegality under Section
5(b)(i)(1) occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.

     (iii)  Right to Terminate. If:

        (1) an agreement under Section 6(b)(ii) has not been effected
with respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or (2)an Illegality
other than that referred to in Section 6(b)(ii), a Credit Event Upon
Merger or an Additional Termination Event occurs, either party in the
case of an Illegality, any Affected Party in the case of an Additional
Termination Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a Credit Event
Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party
and provided that the relevant Termination Event is then continuing,
designate a day not earlier than the day such notice is effective
as an Early Termination Date in respect of all Affected Transactions.

(c)  Effect of Designation.

     (i)  If notice designating an Early Termination Date is given
under Sect ion 6(a) or (b), the Early Termination Date will occur on
the date so designated, whether or not the relevant Event of Default
or Termination Event is then continuing.

     (ii)  Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(d) in respect of the Terminated Transactions will
be required to be made, but without prejudice to the other provisions
of this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).

(d)  Calculations.

     (i)  Statement. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e)
and will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount payable
to it is to be paid. In the absence of written confirmation from the
source of a quotation obtained in determining a Market Quotation, the
records of the party obtaining such quotation will be conclusive
evidence of the existence and accuracy of such
quotation.
     (ii)  Payment Date. An amount calculated as being due in respect
of any Early Termination Date under Section 6(e) will be payable on
the day that notice of the amount payable is effective (in the
case of an Early Termination Date which is designated or occurs as a
result of an Event of Default) and on the day which is two Local
Business Days after the day on which notice of the amount payable
is effective (in the case of an Early Termination Date which is
designated as a result of a Termination Event). Such amount will be
paid together with (to the extent permitted under applicable law)
interest thereon (before as well as after judgment), from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.

(e)  Payments on Early Termination. If an Early Termination Date
occurs, the following provisions shall apply based on the parties'
election in the Schedule of a payment measure, either "Market
Quotation" or "Loss", and a payment method, either the "First Method"
or the "Second Method". If the parties fail to designate a payment
measure or payment method in the Schedule, it will be deemed that
"Market Quotation" or the "Second Method", as the case may be, shall
apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any
Set-off.

     (i)  Events of Default. If the Early Termination Date results
from an Event of Default:

        (1)  First Method and Market Quotation. If the First Method
and Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum of
the Settlement Amount (determined by the Non-defaulting Party) in
respect of the Terminated Transactions and the Unpaid Amounts owing to
the Non-defaulting Party over (B) the Unpaid Amounts owing to the
Defaulting Party.

        (2)  First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect
of this Agreement.

        (3)  Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Unpaid Amounts owing to
the Defaulting Party.  If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party;
if it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.

        (4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting Party;
if it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.

     (ii)  Termination Events. If the Early Termination Date results
from a Termination Event:

        (1)  One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than all
the Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.

        (2)  Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions, and an
amount will be payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party with the higher
Settlement Amount ("X") and the Settlement Amount of the party with
the lower Settlement Amount ("Y") and (b) the Unpaid Amounts owing to
X less (II) the Unpaid Amounts owing to Y; and (B) if Loss applies,
each party will determine its Loss in respect of this Agreement (or,
if fewer than all the Transactions are being terminated, in respect of
all Terminated Transactions) and an amount will be payable equal to
one-half of the difference between the Loss of the party with the
higher Loss ("X") and the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of that amount to
Y.

     (iii)  Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).

     (iv)  Pre-Estimate. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party will
be entitled to recover any additional damages as a consequence
of such losses.

7.  Transfer

Neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise)
by either party without the prior written consent of the other party,
except that:

(a)  a party may make such a transfer of this Agreement pursuant to a
consolidation amalgamation with, or merger with or into, or transfer
of all or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its
interest in any amount payable to it from a Defaulting Party under
Section 6(e). Any purported transfer that is not in compliance with
this Section will be void.

8. Miscellaneous

(a)  Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject matter
and supersedes all oral communication and prior writings with respect
thereto.

(b)  Amendments. No amendment, modification or waiver in respect of
this Agreement will be effective unless in writing (including a
writing evidenced by a facsimile transmission) and executed by each of
the parties or confirmed by an exchange of telexes or electronic
messages on an electronic messaging system.

(c)  Survival of Obligations. Without prejudice to Sections 2(a)(iii)
and 6(c)(ii), the obligations of the parties under this Agreement will
survive the termination of any Transaction.

(d)  Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies
and privileges provided by law.

(e)  Counterparts and Confirmations.

     (i)  This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be
deemed an original.

     (ii)  The parties intend that they are legally bound by the terms
of each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.

(f)  No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed
to operate as a waiver, and a single or partial exercise of any right,
power or privilege will not be presumed to preclude any subsequent or
further exercise, of that right, power or privilege or the exercise of
any other right, power or privilege.

(g)  Headings. The headings used in this Agreement are for convenience
of reference only and are not to affect the construction of or to be
taken into consideration in interpreting this Agreement.

9. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the
other party for and against all reasonable out-of-pocket expenses,
including legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any
Credit Support Document to which the Defaulting Party is a party or by
reason of the early termination of any Transaction, including, but not
limited to, costs of collection.

10. Notices

(a)  Effectiveness. Any notice or other communication in respect of
this Agreement may be given in any manner set forth below (except that
a notice or other communication under Section 5 or 6 may not be given
by facsimile transmission or electronic messaging system) to the
address or number or in accordance with the electronic messaging
system details provided (see the Schedule) and will be deemed
effective as indicated:

     (i)  if in writing and delivered in person or by courier, on the
date it is delivered;

     (ii)  if sent by telex, on the date the recipient's answerback is
received;

     (iii)  if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);

     (iv)  if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt requested), on the date
that mail is delivered or its delivery is attempted; or

     (v)  if sent by electronic messaging system, on the date that
electronic message is received, unless the date of that delivery (or
attempted delivery) or that receipt, as applicable, is not a Local
Business Day or that communication is delivered (or attempted) or
received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given
and effective on the first following day that is a Local Business Day.

(b)  Change of Addresses. Either party may by notice to the other
change the address, telex or facsimile number or electronic messaging
system details at which notices or other communications are to be
given to it.

11. Governing Law and Jurisdiction

(a)  Governing Law. This Agreement will be governed by and construed
in accordance with the law specified in the Schedule.

(b)  Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably:

     (i)  submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the non-
exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and

     (ii)  waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.

Nothing in this Agreement precludes either party from bringing
Proceedings in any other jurisdiction (outside, if this Agreement is
expressed to be governed by English law, the Contracting States, as
defined in Section 1(3) of the Civil Jurisdiction and Judgments Act
1982 or any modification, extension or re-enactment thereof for the
time being in force) nor will the bringing of Proceedings in any one
or more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.

(c)  Waiver of Immunities. Each party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to itself and
its revenues and assets (irrespective of their use or intended use),
all immunity on the grounds of sovereignty or other similar grounds
from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of
injunction, order for specific performance or for recovery of
property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it
or its revenues or assets might otherwise be entitled in any
Proceedings in the courts of any jurisdiction and irrevocably agrees,
to the extent permitted by applicable law, that it will not claim any
such immunity in any Proceedings.

12. Definitions

As used in this Agreement:

"Additional Termination Event" has the meaning specified in Section
5(b).

"Affected Party" has the meaning specified in Section 5(b).

"Affected Transactions" means (a) with respect to any Termination
Event consisting of an Illegality, all Transactions affected by the
occurrence of such Termination Event and (b) with respect to any other
Termination Event, all Transactions.

"Affiliate" means, subject to the Schedule, in relation to any person,
any entity controlled, directly or indirectly, by the person, any
entity that controls, directly or indirectly, the person or any entity
directly or indirectly under common control with the person. For this
purpose, "control" of any entity or person means ownership of a
majority of the voting power of the entity or person.

"Applicable Rate" means:

(a)  in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii))by a Defaulting Party, the Default
Rate;

(b)  in respect of an obligation to pay an amount under Section 6(e)
of either party from and after the date (determined in accordance with
Section 6(d)(ii)) on which that amount is payable, the Default Rate;

(c)  in respect of all other obligations payable or deliverable (or
which would have been but for Section 2(a)(iii)) by a Non-defaulting
Party, the Non-default Rate; and

(d)  in all other cases, the Termination Rate.

"Consent" includes a consent, approval, action, authorisation,
exemption, notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).

"Credit Support Document" means any agreement or instrument that is
specified as such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default Rate" means a rate per annum equal to the cost (without proof
or evidence of any actual cost) to the relevant payee (as certified by
it) if it were to fund or of funding the relevant amount plus 1% per
annum.

"Defaulting Party" has the meaning specified in Section 6(a).

"Early Termination Date" means the date determined in accordance with
Section 6(a) or 6(b)(iii).

"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"Law" includes any treaty, law, rule or regulation and "lawful" and
"unlawful" will be construed accordingly.

"Local Business Day" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) (a) in relation to any
obligation under Section 2(a)(i), in the place(s) specified in the
relevant Confirmation or, if not so specified, as otherwise agreed by
the parties in writing or determined pursuant to provisions contained,
or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located,
(c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the
address for notice provided by the recipient and, in the case of a
notice contemplated by Section 2(b), in the place where the relevant
new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.

"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party
reasonably determines in good faith to be its total losses and costs
(or gain, in which case expressed as a negative number) in connection
with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading
position (or any gain resulting from any of them). Loss includes
losses and costs (or gains) in respect of any payment or delivery
required to have been made (assuming satisfaction of each applicable
condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section
6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under
Section 9. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may
(but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers
in the relevant markets.

"Market Quotation" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount
determined on the basis of quotations from Reference Market-makers.
Each quotation will be for an amount, if any, that would be paid to
such party (expressed as a negative number) or by such party
(expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the
quoting Reference Market-maker to enter into a transaction (the
"Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and
assuming the satisfaction of each applicable condition precedent) by
the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for
the occurrence of the relevant Early Termination Date, have
been required after that date. For this purpose, Unpaid Amounts in
respect of the Terminated Transaction or group of Terminated
Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date,
have been required (assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such
party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each
Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after
the relevant Early Termination Date. The day and time as of which
those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e),
and, if each party is so obliged, after consultation with the other.
If more than three quotations are provided, the Market Quotation will
be the arithmetic mean of the quotations, without regard to the
quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation
remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If
fewer than three quotations are provided, it will be deemed that the
Market Quotation in respect of such Terminated Transaction or group
of Terminated Transactions cannot be determined.

"Non-default Rate" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the Non-defaulting Party (as
certified by it) if it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Potential Event of Default" means any event which, with the giving of
notice or the lapse of time or both, would constitute an Event of
Default.

"Reference Market-makers" means four leading dealers in the relevant
market selected by the party determining a Market Quotation in good
faith (a) from among dealers of the highest credit standing which
satisfy all the criteria that such party applies generally at the time
in deciding whether to offer or to make an extension of credit and (b)
to the extent practicable, from among such dealers having an office in
the sane city.

"Scheduled Payment Date" means a date on which a payment or delivery
is to be made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off, offset, combination of accounts, right of
retention or withholding or similar right or requirement to which the
payer of an amount under Section 6 is entitled or subject (whether
arising under this Agreement, another contract, applicable law or
otherwise) that is exercised by, or imposed on, such
payer.

"Settlement Amount" means, with respect to a party and any Early
Termination Date, the sum of:

(a)  the Market Quotations (whether positive or negative) for each
Terminated Transaction or group of Terminated Transactions for which a
Market Quotation is determined; and

(b)  such party's Loss (whether positive or negative and without
reference to any Unpaid Amounts) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation cannot
be determined or would not (in the reasonable belief of the party
making the determination) produce a commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

"Specified Indebtedness" means, subject to the Schedule, any
obligation (whether present or future, contingent or otherwise, as
principal or surety or otherwise) in respect of borrowed money.

"Specified Transaction" means, subject to the Schedule, (a) any
transaction (including an agreement with respect thereto) now existing
or hereafter entered into between one party to this Agreement (or any
Credit Support Provider of such party or any applicable Specified
Entity of such party) and the other party to this Agreement (or
any Credit Support Provider of such other party or any applicable
Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option
with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a
Specified Transaction in this Agreement or the relevant confirmation.

"Terminated Transactions" means with respect to any Early Termination
Date (a) if resulting from a Termination Event, all Affected
Transactions and (b) if resulting from an Event of Default, all
Transactions (in either case) in effect immediately before the
effectiveness of the notice designating that Early Termination
Date (or, if "Automatic Early Termination" applies, immediately before
that Early Termination Date).

"Termination Event" means an Illegality or, if specified to be
applicable, a Credit Event Upon Merger or an Additional Termination
Event.

"Termination Rate" means a rate per annum equal to the arithmetic mean
of the cost (without proof or evidence of any actual cost) to each
party (as certified by such party) if it were to fund or of funding
such amounts.

"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have
become payable but for Section 2(a)(iii)) to such party under Section
2(a)(i) on or prior to such Early Termination Date and which remain
unpaid as at such Early Termination Date and (b) in respect of each
Terminated Transaction, for each obligation under Section 2(a)(i)
which was (or would have been but for Section 2(a)(iii)) required to
be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market value of that
which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to
the extent permitted under applicable law) interest, in the currency
of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or
performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts of interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. The
fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the fair market values reasonably determined
by both parties.

IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified
on the first page of this document.


LASALLE BANK NATIONAL ASSOCIATION

By:     Susan Proctor
Name:   Susan Proctor
Title:  Vice President
Date:   August 8, 2003


AMCON DISTRIBUTING COMPANY

By:     Michael D.  James
Name:   Michael D.  James
Title:  Vice President and CFO
Date:   August 6, 2003





                               SCHEDULE
                                to the
                          Master Agreement

                      dated as of May 12, 2003

                              between

             LASALLE BANK NATIONAL ASSOCIATION ("Party A")

                                 and

                AMCON DISTRIBUTING COMPANY ("Party B")

                               Part 1
                       Termination Provisions

In this Agreement -

(a) "Specified Entity" means in relation to Party A for the purpose
of:

Section 5(a)(v),   Not applicable
Section 5(a)(vi),  Not applicable
Section 5(a)(vii), Not applicable
Section 5(b)(ii),  Not applicable

and in relation to Party B for the purpose of:

Section 5(a)(v),   All Affiliates
Section 5(a)(vi),  All Affiliates
Section 5(a)(vii), All Affiliates
Section 5(b)(ii),  All Affiliates

(b) "Specified Transaction" will have the meaning specified in Section
12 of this Agreement.

(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply
to Party A will apply to Party B, provided, however, that is shall not
constitute an Evene of Default under this Section 5(a)(vi) if (I) such
event, condition or failure arises in the ordinary course of business
by mistake, oversight or transfer difficulties in the payment of
money, (ii) such event, condition or failure is remedied on or before
the third Business Day after the occurrence or existence of such
event, condition or failure, and (iii) no Specified Indebtedness in an
aggregate amount equal to or in excess of the Threshold Amount is
accelerated as a result of such event, condition or failure.

     "Specified Indebtedness" shall mean any obligation (whether
present or future, contingent or otherwise, as principal or surety or
otherwise ) (i) in respect of borrowed money (which, for the avoidance
of doubt, shall include, without limitation, bonds, notes, commercial
paper or similar instruments issued or guaranteed by the relevant
party; and shall exclude deposits received), (ii) any amount due and
payable in respect of any Specified Transaction (except that, for this
purpose only, the words "and any other entity" shall be substituted
for the words "and the other party to this Agreement (or any Credit
Support Provider of such other party or any applicable Specified
Entity of such other party)" where they appear in the definition of
Specified Transaction), any repo transaction, any reverse repo
transaction and any stock loan transaction and (iii) with respect to
Party B shall include, without limitation, and without regard to the
Threshold Amount the obligations of Party B under that certain Loan
and Security Agreement dated as of June 1, 2001 between Party B, as
Borrower, and Party A, as a Lender and Agent, and the Lenders party
thereto from time to time as the same may be amended, modified or
supplemented from time to time (the "Credit Agreement:).

Section 5(a)(vi) is amended by insertion of the following words after
the words "due and payable on line 8:

"or, in the case of Specified Indebtedness in respect of any Specified
Transaction, any repo transaction, any reverse repo transaction and
any stock loan transaction, which has resulted in such Specified
Indebtedness becoming due and payable as a result of the early
termination of the relevant Specified Transaction, repo transaction,
reverse repo transaction or stock lending transaction, as the case may
be."

"Threshold Amount" means, in relation to Party A, not applicable, and
in relation to Party B, zero.

(d) The "Credit Event Upon Merger" provisions of Section 5(b)(ii) will
not apply to Party A and will apply to Party B.

(e) The "Automatic Early Termination" provision of Section 6(a) will
not apply to either party.

(f) Payments on Early Termination. For the purpose of Section 6(c) of
this Agreement:

     (i) Market Quotation* will apply.
     (ii) The Second Method will apply.

(g) Additional Termination Event will apply. The following shall
constitute an Additional Termination Event:

     If (i) the Credit Agreement shall be paid or prepaid in full,
expire, terminate, or otherwise cease to be in full force and effect,
other than because of an Event of Default (as defined in the Credit
Agreement) with respect to Party B, or (ii) Party A shall cease (a) to
be a party to, or (b) to have any commitments under the Credit
Agreement, Party A or Party B shall have the right, at its sole
discretion to terminate any Transaction under this Agreement.  For
purposes hereof, each such terminated Transaction shall constitute and
Affected Transaction under the Agreement.



For the purpose of the foregoing Termination Event, the Affected Party
or Affected Parties shall be Party A and Party B.

                               Part 2
                    Documents to be delivered

For the purpose of Section 4(a:

Documents to be delivered are:

     (i) Each party shall promptly deliver to the other party,
certified evidence of the authority, incumbency and specimen signature
of each authorized person executing any document on its behalf in
connection with this Agreement upon execution of each document by any
person.  Covered by Section 3(d) representation.

     (ii) Each party upon request shall promptly deliver to the other
party, a copy of its most recent Annual Report containing consolidated
financial statements, prepared in accordance with accounting
principles that are generally accepted for institutions of its type in
the jurisdiction of its organization and certified by independent
public accountants.  Covered by Section 3(d) representation.

     (iii) Each party upon request shall promptly deliver to the other
party, a copy of its most recent unaudited interim consolidated
financial statements prepared in accordance with accounting principles
that are generally accepted for institutions of its type in the
jurisdiction of its organization in each case consistently applied.
Covered by Section 3(d) representation.

     (iv) Party B shall promptly deliver to Party A an opinion of
counsel substantially in the form of Annex A.  Not covered by Section
3(d) representation.

     (v) Party B shall promptly deliver to Party A such other
information with respect to its condition, or operations, financial or
otherwise, as Party A may reasonably request from time to time.
Covered by Section 3(d) representation.

                                Part 3
                            Miscellaneous

(a) Addresses for Notices. For the purpose of Section 10(a):

     Address for notices or communications to Party A:

     Address:       LaSalle Bank National Association
                    208 South LaSalle Street, Suite 200
                    Chicago, IL 60604-1003
     Attention:     Treasury Operation
     Facsimile No.: 312-855-5852
     Telephone No.: 312-855-5815


     Address for notices or communications to Party B:

     Address:       AMCON Distributing Company
                    7405 Irvington Road
                    Omaha, NE 68122
     Attention:     Michael D.  James
     Facsimile No.: 402-331-4834
     Telephone No.: 402-331-3727

(b) Calculation Agent. The Calculation Agent shall be Party A.

(c) Credit Support Document. Details of any Credit Support Document:
Credit Support Document means, in relation to Party A, the Credit
Agreement.

(d) Credit Support Provider. Credit Support Provider means in relation
to Party B, none.

(e) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law doctrine.

(f) Netting of Payments. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to any Transactions.

(g) "Affiliate" will have the meaning specified in Section 12.


                             Part 4
                       Other Provisions


(a)  ISDA Definitions.  The 2000 ISDA Definitions, as supplemented by
the Supplement to the 2000 ISDA Definitions (the "Definitions"), as
published by the International Swaps and Derivatives Association,
Inc., shall be deemed a part of this Agreement as if fully set forth
herein.  The Definitions and the provisions of Section 12 of this
Agreement shall be deemed a part of each Confirmation as if set forth
in full therein.

(b)  Interpretation.  In the event of any inconsistency between the
provisions of this Schedule and the Definitions, this Schedule will
prevail.  In the event of any inconsistency between the provisions of
this Schedule and the printed Agreement of which it forms a part, this
Schedule will prevail.  In the event of any inconsistency between the
provisions of any Confirmation and this Schedule, such Confirmation
will prevail for the purpose of the relevant Transaction.

(c)  Financial Condition.  Party B represents and warrants to Party A
(which representation will be deemed to be repeated on each date on
which a Transaction is entered into) that there has been no material
adverse change in its financial condition since the last day of the
one year period covered by its most recently prepared year end
financial statement that is likely to affect its ability to perform
its obligations under this Agreement.

(d)  Affected Parties.  For the purposes of Section 6(e) (Payments on
Early Termination), both parties shall be deemed to be Affected
Parties in connection with the Termination Events described in Section
5(b)(i), so that payments on early termination shall be calculated as
provided in Section 6(e)(ii).

(e)  Additional Representations.   Each party represents and warrants
to the other that  (i) it is entering into this Agreement, any Credit
Support Document to which it is a party, each Transaction, and any
other documentation relating to this Agreement that it is required by
the Agreement to deliver as principal (and not as agent or in any
other capacity, fiduciary or otherwise) and (ii) it is an "eligible
contract participant" under, and as defined in, Section 1a of the
Commodity Exchange Act  (7 USC 1a), amended from time to time.

(f)  Consent to Recording.  Each party (i) consents to the recording
of the telephone conversations of trading, marketing and other
relevant personnel of the parties in connection with this Agreement or
any potential Transaction and (ii) agrees that such recording may be
submitted in evidence to any court or in any proceedings with respect
to this Agreement or any Transaction thereunder.

(g)  Transfer.  Each party agrees that with regard to the transfer
provisions set forth in Section 7, consent to any such transfer shall
not be unreasonably withheld.

(h)  Waiver of Jury Trial.  Each Party irrevocably waives any and all
right to trial by jury in any legal proceeding instituted in
connection with this Agreement or any Transaction to the fullest
extent permitted by law.  As to any matter for which a jury trial
cannot be waived, each party agrees not to assert any such matter as a
cross claim or counterclaim in, nor move to consolidate the same with,
any legal proceeding in which a jury trial is waived.

(i)  Setoff.  Each party agrees that the following provision shall be
added as Section 6(f) of this Agreement:

     "(f)  Setoff.  Any amount (the "Early Termination Amount")
payable to one party (the "Payee") by the other party (the "Payer")
under Section 6(e) of this Agreement, in circumstances where there is
a Defaulting Party or one Affected Party in the case where a
Termination Event under this Agreement has occurred, will, at the
option of the party ("X") other than the Defaulting Party or the
Affected Party (and without prior notice to the Defaulting Party or
the Affected Party), be reduced by its setoff against any amount(s)
(the "Other Agreement Amount") payable (whether at such time or in the
future or upon the occurrence of a contingency) by the Payee to the
Payer (irrespective of the currency, place of payment or booking
office of the obligation) under any other agreement(s) between the
Payee and the Payer or instrument(s) or undertaking(s) issued or
executed by one party to, or in favor of, the other party (and the
Other Agreement Amount will be discharged promptly and in all respects
to the extent it is so setoff).  X will give notice to the other party
of any setoff effected under this Section 6(f).

     For this purpose, either the Early Termination Amount or the
Other Agreement Amount (or the relevant portion of such amounts) may
be converted by X into the currency in which the other is denominated
at the rate of exchange at which such party would be able, acting in a
reasonable manner and in good faith, to purchase the relevant amount
of such currency.  The term "rate of exchange" includes, without
limitation, any premiums and costs of exchange payable in connection
with the purchase of or conversion into the relevant currency.

     If an obligation is unascertained, X may in good faith estimate
that obligation and setoff in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained.

     Nothing in Section 6(f) shall be effective to create a charge or
other security interest.  This Section shall be without prejudice and
in addition to any right of setoff, combination of accounts, lien or
other right to which any party is at any time otherwise entitled
(whether by operation of law, contract or otherwise)."

(j)  Relationship between the Parties.  This Agreement is hereby
amended by the addition of a new Section 13 as follows:

     "13.  Relationship between the Parties.

     Each party will be deemed to represent to the other party on the
date on which it enters into a Transaction (absent a written agreement
between the parties that expressly imposes affirmative obligations to
the contrary for that Transaction):

     (a)  Non Reliance.  It is acting for its own account, and it has
made its own independent decisions to enter into that Transaction and
as to whether that Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary.  It is not relying on any communication (written or
oral) of the other party as investment advice or as a recommendation
to enter into that Transaction; it being understood that information
and explanations related to the terms and conditions of a Transaction
shall not be considered investment advice or a recommendation to enter
into that Transaction.  No communication (written or oral) received
from the other party shall be deemed to be an assurance or guarantee
as to the expected results of that Transaction.

     (b)  Assessment and Understanding.  It is capable of assessing
the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the
terms, conditions and risks of that Transaction.

     (c)  Status of Parties.  The other party is not acting as a
fiduciary for or an advisor to it in respect of that Transaction."

(k)  Incorporation by Reference of Covenants.  Party B covenants and
agrees that, from and after the date hereof and thereafter until all
obligations of Party B hereunder are paid in full and this Agreement
is terminated, it shall duly keep, perform and observe each and every
covenant set forth in the Credit Agreement.  All of such covenants,
together with related definitions and ancillary provisions, are hereby
incorporated into this Agreement by reference, mutatis mutandis, as if
such terms were set forth in this Agreement in full, without regard to
any termination of such Credit Agreement, without regard to any
expiration of any commitment thereunder and without regard to the
final payment in full of any obligations of Party B or any other
person or entity thereunder, provided, that no such covenant set forth
above shall be incorporated herein by reference if such incorporation,
by itself, would be a breach of the Credit Agreement.  If an event is
the subject of both a covenant incorporated herein by reference and
another covenant set forth in this Agreement, Party B shall comply
with the covenant that imposes on it the stricter requirement.  To the
extent that any covenant incorporated herein by reference is
inconsistent with the other terms of this Agreement, Party A shall not
be deemed to have waived any rights hereunder by virtue of such
inconsistency.  If the Credit Agreement terminates, any commitment
thereunder expires or any obligations of Party B thereunder are paid
in full and any covenant incorporated herein by reference requires
Party B to obtain the consent of any agent, lender or lenders, then,
for the purpose of this Agreement, Party B shall be required to obtain
the consent of Party A.


IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the date hereof.

LASALLE BANK NATIONAL ASSOCIATION       AMCON DISTRIBUTING COMPANY

By:    Susan Proctor                     By:    Michael D.  James
   ------------------------------          -----------------------
Name:  Susan Proctor                     Name:  Michael D.  James
Title: Vice Presidetn                    Title: Vice President & CFO

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>4
<FILENAME>ex1014swap10mil.txt
<DESCRIPTION>EXHIBIT 10.14 SWAP CONFIRMATION $10 MILLION
<TEXT>
                           EXHIBIT 10.14

                       ISDA MASTER AGREEMENT

LaSalle Bank N.A.
- ----------------------------------------------------------------------------
                                                              LaSalle Banks

                             CONFIRMATION

- ----------------------------------------------------------------------------

     Date:       May 9, 2003

     To:         AMCON DISTRIBUTING COMPANY
                 7405 Irvington Road
                 Omaha, NE 68122

                 ATTN:  Mr. Mike James, CFO
                 Phone: 402-331-3727
                 Fax:   402-331-4834

     From:       LASALLE BANK NATIONAL ASSOCIATION
                 208 South LaSalle Street, 2nd Floor
                 Chicago, IL 60604

                 Fax:   312-855-5847/5852

                 Re:    Swap Transaction (No. INF 17293/23506)
- ----------------------------------------------------------------------------

Ladies/Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions
of the Swap Transaction entered into between us on the Trade Date specified
below (the "Swap Transaction").  This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.

The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
("ISDA"), without regard to subsequent amendments or revisions thereto, are
incorporated into this Confirmation.  In the event of any inconsistency
between those and provisions of this Confirmation, this Confirmation will
govern.  Each party represents and warrants to the other that (i) it is duly
authorized to enter into this Swap Transaction and to perform its obligations
hereunder and (ii) the person executing this Confirmation is duly authorized
to execute and deliver it.

1.   This Confirmation supplements, forms a part of, and is subject to, the
ISDA Master Agreement in the form published by ISDA ( the "Agreement") as if
you and we had executed that agreement (but without any Schedule thereto) and
the Agreement shall be governed by and construed in accordance with the laws
of the State of New York without reference to choice of law doctrine.   In
addition, you and we agree to use our best efforts to promptly negotiate,
execute, and deliver an ISDA Mater Agreement (as published by ISDA).  Upon
execution and delivery by you and us of that agreement (1) this letter
agreement shall constitute a "Confirmation" as referred to in that agreement
and shall supplement, form part of, and be subject to that agreement and (ii)
all provisions contained or incorporated by reference in that agreement shall
govern this Confirmation as expressly modified below.

2.   The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:

     Notional Amount:               USD 10,000,000

     Trade Amount:                  May 9 2003

     Effective Date:                June 2, 2003

     Termination Date:              June 2, 2006

     Fixed Amounts:

       Fixed Rate Payer:            AMCON DISTRIBUTING COMPANY

       Fixed Rate:                  2.37%

       Fixed Rate
       Payer Payment Dates:         The 23rd day of each month, commencing
                                    on June 23, 2003 to and including the
                                    Termination Date, subject to adjustment
                                    in accordance with the Modified
                                    Following Business Day Convention.

       Fixed Rate
       Day Count Fraction:          Actual/360

     Floating Amounts:

       Floating Rate Payer:         LASALLE BANK NATIONAL ASSOCIATION

       Floating Rate
       Payer Payment Dates:         The 23rd day of each month, commencing
                                    on June, 2003 to and including the
                                    Termination Date, subject to adjustment
                                    in accordance with the Modified
                                    Following Business Day Convention.

       Floating Rate Option:        USD-LIBOR-BBA

       Designated Maturity:         1 month

       Initial Floating Rate:       To be determined

       Spread:                      none

       Floating Rate
       Day Count Fraction:          Actual/360

       Reset Dates:                 The first day of each Calculation Period

       Method of Averaging:         Inapplicable

       Compounding:                 Inapplicable

Business Days:                      London and New York

Calculation Agent:                  LASALLE BANK NATIONAL ASSOCIATION

3.   Offices:

(a)  The Office of the Fixed Rate Payer for this Swap Transaction is Omaha.

(b)  The Office of the Floating Rate Payer for this Swap Transaction is
     Chicago.

4.   Account Details

Payments to LASALLE BANK NATIONAL ASSOCIATION:

     LaSalle Bank National Association will debit your DDA# 5800239294

Payments to AMCON DISTRIBUTING COMPANY:

     LaSalle Bank National Association will credit you DDA# 5800239294

5.   Other Provisions:

     Assignment:     This Swap Transaction may be assigned only with prior
                     written consent

     Netting:        The parties hereto hereby agree that subparagraph (ii)
                     of Part 2(c) of the Agreement shall not apply to any
                     Swap Transaction

Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within ten (10) Business Days by
either, (i), returning via telecopier an executed copy of this Confirmation
to the attention of Tina Peters (fax number: (312) 855-5823, or sending a
telex to Tina Peters (telex no. 62734, answerback: ABN UW) substantially to
the following effect: "We acknowledge receipt of your fax dated December
22,2000 with respect to a Swap Transaction between AMCON DISTRIBUTING COMPANY
and LASALLE BANK NATIONAL ASSOCIATION with an Effective Date of May 23, 2003
and a Termination Date of May 23, 2006 and confirm that such fax correctly
sets forth the terms of our agreement relating to the Swap Transaction
described therein. Very truly yours ---------------------------, by (specify
name and title of authorized officer)."  Failure to respond within such
period shall not affect the validity or enforceability of the Swap
Transaction, and shall be deemed to be an affirmation of the terms and
conditions contained herein, absent manifest error.

Yours Sincerely,

LASALLE BANK NATIONAL ASSOCIATION

By: /s/ Lily Levin                  By: /s/ Paul A. Ulmer
    -----------------------------      -------------------------------

Name: Lily Levin                    Name: Paul A. Ulmer
      ---------------------------         ----------------------------

Title: Assistant Vice President     Title: Vice President
       --------------------------          ---------------------------

Confirmed as of the date first written:

AMCON DISTRIBUTING COMPANY

By: /s/ Michael D. James
    -----------------------------
Name:  Michael D. James
      ---------------------------
Title: Vice President & CFO
       --------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>5
<FILENAME>ex1015swap5mil.txt
<DESCRIPTION>EXHIBIT 10.15 SWAP CONFIRMATINO $5 MILLION
<TEXT>
                           EXHIBIT 10.15

                       ISDA MASTER AGREEMENT

LaSalle Bank N.A.
- ----------------------------------------------------------------------------
                                                              LaSalle Banks

                             CONFIRMATION

- ----------------------------------------------------------------------------

     Date:       May 9, 2003

     To:         AMCON DISTRIBUTING COMPANY
                 7405 Irvington Road
                 Omaha, NE 68122

                 ATTN:  Mr. Mike James, CFO
                 Phone: 402-331-3727
                 Fax:   402-331-4834

     From:       LASALLE BANK NATIONAL ASSOCIATION
                 208 South LaSalle Street, 2nd Floor
                 Chicago, IL 60604

                 Fax:   312-855-5847/5852

                 Re:    Swap Transaction (No. INF 17294/23508)
- ----------------------------------------------------------------------------

Ladies/Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions
of the Swap Transaction entered into between us on the Trade Date specified
below (the "Swap Transaction").  This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.

The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
("ISDA"), without regard to subsequent amendments or revisions thereto, are
incorporated into this Confirmation.  In the event of any inconsistency
between those and provisions of this Confirmation, this Confirmation will
govern.  Each party represents and warrants to the other that (i) it is duly
authorized to enter into this Swap Transaction and to perform its obligations
hereunder and (ii) the person executing this Confirmation is duly authorized
to execute and deliver it.

1.   This Confirmation supplements, forms a part of, and is subject to, the
ISDA Master Agreement in the form published by ISDA ( the "Agreement") as if
you and we had executed that agreement (but without any Schedule thereto) and
the Agreement shall be governed by and construed in accordance with the laws
of the State of New York without reference to choice of law doctrine.   In
addition, you and we agree to use our best efforts to promptly negotiate,
execute, and deliver an ISDA Mater Agreement (as published by ISDA).  Upon
execution and delivery by you and us of that agreement (1) this letter
agreement shall constitute a "Confirmation" as referred to in that agreement
and shall supplement, form part of, and be subject to that agreement and (ii)
all provisions contained or incorporated by reference in that agreement shall
govern this Confirmation as expressly modified below.

2.   The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:

     Notional Amount:               USD 5,000,000

     Trade Amount:                  May 9 2003

     Effective Date:                June 2, 2003

     Termination Date:              June 2, 2005

     Fixed Amounts:

       Fixed Rate Payer:            AMCON DISTRIBUTING COMPANY

       Fixed Rate:                  1.88%

       Fixed Rate
       Payer Payment Dates:         The 23rd day of each month, commencing
                                    on June 23, 2003 to and including the
                                    Termination Date, subject to adjustment
                                    in accordance with the Modified
                                    Following Business Day Convention.

       Fixed Rate
       Day Count Fraction:          Actual/360

     Floating Amounts:

       Floating Rate Payer:         LASALLE BANK NATIONAL ASSOCIATION

       Floating Rate
       Payer Payment Dates:         The 23rd day of each month, commencing
                                    on June, 2003 to and including the
                                    Termination Date, subject to adjustment
                                    in accordance with the Modified
                                    Following Business Day Convention.

       Floating Rate Option:        USD-LIBOR-BBA

       Designated Maturity:         1 month

       Initial Floating Rate:       To be determined

       Spread:                      none

       Floating Rate
       Day Count Fraction:          Actual/360

       Reset Dates:                 The first day of each Calculation Period

       Method of Averaging:         Inapplicable

       Compounding:                 Inapplicable

Business Days:                      London and New York

Calculation Agent:                  LASALLE BANK NATIONAL ASSOCIATION

3.   Offices:

(a)  The Office of the Fixed Rate Payer for this Swap Transaction is Omaha.

(b)  The Office of the Floating Rate Payer for this Swap Transaction is
     Chicago.

4.   Account Details

Payments to LASALLE BANK NATIONAL ASSOCIATION:

     LaSalle Bank National Association will debit your DDA# 5800239294

Payments to AMCON DISTRIBUTING COMPANY:

     LaSalle Bank National Association will credit you DDA# 5800239294

5.   Other Provisions:

     Assignment:     This Swap Transaction may be assigned only with prior
                     written consent

     Netting:        The parties hereto hereby agree that subparagraph (ii)
                     of Part 2(c) of the Agreement shall not apply to any
                     Swap Transaction

Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within ten (10) Business Days by
either, (i), returning via telecopier an executed copy of this Confirmation
to the attention of Tina Peters (fax number: (312) 855-5823, or sending a
telex to Tina Peters (telex no. 62734, answerback: ABN UW) substantially to
the following effect: "We acknowledge receipt of your fax dated December
22,2000 with respect to a Swap Transaction between AMCON DISTRIBUTING COMPANY
and LASALLE BANK NATIONAL ASSOCIATION with an Effective Date of May 23, 2003
and a Termination Date of May 23, 2006 and confirm that such fax correctly
sets forth the terms of our agreement relating to the Swap Transaction
described therein. Very truly yours ---------------------------, by (specify
name and title of authorized officer)."  Failure to respond within such
period shall not affect the validity or enforceability of the Swap
Transaction, and shall be deemed to be an affirmation of the terms and
conditions contained herein, absent manifest error.

Yours Sincerely,

LASALLE BANK NATIONAL ASSOCIATION

By: /s/ Lily Levin                  By: /s/ Paul A. Ulmer
    -----------------------------      -------------------------------

Name: Lily Levin                    Name: Paul A. Ulmer
      ---------------------------         ----------------------------

Title: Assistant Vice President     Title: Vice President
       --------------------------          ---------------------------

Confirmed as of the date first written:

AMCON DISTRIBUTING COMPANY

By: /s/ Michael D. James
    -----------------------------
Name:  Michael D. James
      ---------------------------
Title: Vice President & CFO
       --------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>6
<FILENAME>ex311wfwcert.txt
<DESCRIPTION>EXHIBIT 31.1 WILLIAM F. WRIGHT CERTIFICATION
<TEXT>
                                   EXHIBIT 31.1
                                   ------------

                                  CERTIFICATION

I, William F. Wright, certify that:

    1.   I have reviewed this quarterly 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 quarterly
         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)) 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. 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

         c. 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 registrant's fourth
            fiscal 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: August 11, 2003                      William F. Wright, Chairman and
      ---------------                      -------------------------------
                                           Principal Executive Officer
                                           ---------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>7
<FILENAME>ex312mdjcert.txt
<DESCRIPTION>EXHIBIT 31.2 MICHAEL D. JAMES CERTIFICATION
<TEXT>
                               EXHIBIT 31.2
                               ------------

                               CERTIFICATION

I, Michael D. James, certify that:

    1.   I have reviewed this quarterly 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 quarterly
         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)) 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. 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

         c. 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 registrant's fourth
            fiscal 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: August 11, 2003                     Michael D James
      ---------------                     ---------------
                                          Vice President and Chief
                                          ------------------------
                                       Financial Officer
                                          -----------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>8
<FILENAME>ex321wfwcert.txt
<DESCRIPTION>EXHIBIT 32.1 WILLIAM F. WRIGHT CERTIFICATION
<TEXT>
                             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 27, 2003, I, William F. Wright, Chariman and
Principal Executive Officer of the Company, hereby certify pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to my knowledge, that:

    (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: August 11, 2003           /s/ William F. Wright
                                -------------------------
                                Title: Chairman and Principal
                                        Executive Officer



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.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>9
<FILENAME>ex322mdjcert.txt
<DESCRIPTION>EXHBITI 32.2 MICHAEL D. JAMES CERTIFICATION
<TEXT>
                             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 27, 2003, I, Michael D. James, Vice President and
Chief Financial Officer of the Company, hereby certify pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to my knowledge, that:

    (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: August 11, 2003           /s/ Michael D. James
                                -------------------------
                                Title: Vice President and
                                        Chief Financial Officer



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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