<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from _________ to _________
Commission File Number: 33-98490
--------
STAR GAS PARTNERS, L.P.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1437793
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2187 Atlantic Street, Stamford, Connecticut 06902
- ------------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(203) 328-7300
- ----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of February 4, 1998:
Star Gas Partners, L.P. 3,831,727 Common Units
2,396,078 Subordinated Units
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
INDEX TO FORM 10-Q
PAGE
----
PART I FINANCIAL INFORMATION:
Item 1 - Financial Statements
Consolidated Balance Sheets as of September 30,
1997 and December 31, 1997 3
Consolidated Statements of Operations for the three
months ended December 31, 1996 and December 31, 1997 4
Consolidated Statements of Cash Flows for the three
months ended December 31, 1996 and December 31, 1997 5
Consolidated Statement of Partners' Capital for the
three months ended December 31, 1997 6
Notes to Consolidated Financial Statements 7-9
Item 2 - Management's Discussion and Analysis of
Financial Conditions and Results of Operations 10-13
PART II OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 14
Signature 15
2
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1997
1997 (UNAUDITED)
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 889 $ 3,452
Receivables, net of allowance of
$273 and $358, respectively 5,720 11,855
Inventories 6,597 5,760
Prepaid expenses and other current
assets 959 922
-------- --------
Total current assets 14,165 21,989
-------- --------
Property and equipment, net 95,282 108,809
Intangibles and other assets, net 38,022 48,653
-------- --------
Total assets $147,469 $179,451
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 3,178 $ 3,261
Accrued expenses 3,004 3,740
Accrued interest 321 2,041
Customer credit balances 4,343 2,472
-------- --------
Total current liabilities 10,846 11,514
-------- --------
Long-term debt 85,000 96,000
Other long-term liabilities 45 54
Partners' Capital:
Common unitholders 47,573 67,179
Subordinated unitholder 4,034 4,306
General partner (29) 398
-------- --------
Total Partners' Capital 51,578 71,883
-------- --------
Total Liabilities and Partners'
Capital $147,469 $179,451
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1996 1997
-------- ---------
<S> <C> <C>
Sales $50,876 $41,844
Cost of sales 29,027 21,650
------- -------
Gross profit 21,849 20,194
Delivery and branch 9,848 10,153
Depreciation and amortization 2,586 2,825
General and administrative 1,599 1,369
Net loss on sales of assets (70) (48)
------- -------
Operating income 7,746 5,799
Interest expense, net 1,848 2,086
------- -------
Income before income taxes 5,898 3,713
Income tax expense 6 6
------- -------
Net income $ 5,892 $ 3,707
======= =======
$ 118 $ 74
General Partner's interest in net income ------- -------
Limited Partners' interest in net income $ 5,774 $ 3,633
======= =======
Basic and diluted net income per
Limited Partner unit $1.10 $.66
======= =======
Weighted average number of Limited
Partner units outstanding 5,271 5,474
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
----------------------
1996 1997
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,892 $ 3,707
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,586 2,825
Provision for losses on accounts 102 110
receivable
Loss on sales of fixed assets 70 48
Changes in operating assets and
liabilities net of Pearl Gas conveyance:
Increase in receivables (10,474) (6,105)
Decrease in inventories 171 1,143
Increase in other assets (260) (61)
Increase (decrease) in accounts
payable 3,323 (20)
Increase in other current and
long-term liabilities 814 333
-------- --------
Net cash provided by operating
activities 2,224 1,980
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,517) (2,085)
Proceeds from sales of fixed assets 60 72
Acquisition related costs -- (360)
Cash acquired in conveyance -- 1,825
-------- --------
Net cash used in investing
activities (2,457) (548)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facility borrowings 3,550 11,060
Credit facility repayments (900) (11,060)
Acquisition facility borrowings 3,350 21,000
Acquisition facility repayments (1,500) (10,000)
Repayment of debt -- (23,000)
Distributions (2,958) (2,958)
Proceeds from issuance of Common Units,
net -- 15,745
General Partner contribution -- 344
Debt placement and credit agreement
expenses (89) --
-------- --------
Net cash provided by financing
activities 1,453 1,131
-------- --------
Net increase in cash 1,220 2,563
Cash at beginning of period 1,106 889
-------- --------
Cash at end of period $ 2,326 $ 3,452
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 47 $ 337
======== ========
Non-cash investing activities:
Acquisitions $ 26,467
Assumption of note payable $(23,000)
Non-cash financing activities:
Issuance of Common Units $ (3,399)
Additional General Partner interest $ (68)
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF UNITS
-------------------- GENERAL TOTAL PARTNERS'
COMMON SUBORDINATED COMMON SUBORDINATED PARTNER CAPITAL
------ ------------ --------- ------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of September 30, 1997 2,875 2,396 $47,573 $ 4,034 $(29) $51,578
Issuance of Common Units, net 809 -- 15,745 -- 344 16,089
Conveyance of Assets, net 148 -- 3,399 -- 68 3,467
Net Income -- -- 2,043 1,590 74 3,707
Distributions ($.55 per unit) -- -- (1,581) (1,318) (59) (2,958)
----- ------------ ------- ------- ---- -------
Balance as of December 31, 1997 3,832 2,396 $67,179 $ 4,306 $398 $71,883
===== ============ ======= ======= ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1) BASIS OF PRESENTATION
The unaudited consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
statement of the interim periods presented. All adjustments to the financial
statements were of a normal recurring nature.
The propane industry is seasonal in nature because propane is used
primarily for heating in residential and commercial buildings. Therefore, the
results of operations for the periods ended December 31, 1996 and December 31,
1997 are not necessarily indicative of the results to be expected for a full
year.
Inventories
Inventories are stated at the lower of cost or market and are computed
on a first-in, first-out basis. At the dates indicated the components of
inventory were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1997
------------- ------------
<S> <C> <C>
Propane gas $4,805 $3,916
Appliances and equipment 1,792 1,844
------ ------
$6,597 $5,760
====== ======
</TABLE>
2) BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT
Basic net income per Limited Partner Unit is computed by dividing net
income, after deducting the General Partner's 2.0% interest, by the weighted
average number of Common Units and Subordinated Units outstanding. Diluted net
income per Limited Partner Unit, reflects the dilutive effect of the unit option
plan.
3) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Partnership is threatened
with, or is named in, various lawsuits. The Partnership is not a party to any
litigation which individually or in the aggregate could reasonably be expected
to have a material adverse effect on the company.
4) RELATED PARTY TRANSACTIONS
The Partnership has no employees except for certain employees of its
corporate subsidiary, Stellar Propane Service Corporation and is managed and
controlled by the General Partner. Pursuant to the Partnership Agreement, the
General Partner is entitled to reimbursement for all direct and indirect
7
<PAGE>
4) RELATED PARTY TRANSACTIONS (CONTINUED)
expenses incurred or payments it makes on behalf of the Partnership, and all
other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partner in connection with
operating the Partnership's business. For the three months ended December 31,
1997, the Partnership reimbursed the General Partner and Petro $5.3 million
representing salary, payroll tax and other compensation paid to the employees of
the General Partner and to Petro for certain corporate functions such as finance
and compliance. In addition, the Partnership reimbursed Petro $0.2 million
relating to the Partnership's share of the costs incurred by Petro in conducting
the operations of a certain shared branch location which includes managerial
services.
5) ACQUISITION OF PEARL GAS CO.
On October 22, 1997, pursuant to a purchase agreement ("Stock Purchase
Agreement") dated as of October 20, 1997, Star Gas Corporation ("General
Partner") purchased 240 shares of Common Stock ($100 par value) of Pearl Gas Co.
("Pearl"), an Ohio Corporation, representing all of the issued and outstanding
capital stock of Pearl.
The purchase price for said stock was $22.6 million and was paid in
cash. The assets purchased included working capital of $1.9 million. Funding
for the stock purchase and related transaction expenses of $0.4 million was
provided by a $23.0 million bank acquisition facility. Subsequent to the
acquisition of the common stock of Pearl, Pearl was merged into the General
Partner in a tax-free liquidation.
Immediately following the merger, a Conveyance and Contribution
Agreement was entered into by, and among, the Partnership, the OLP and the
General Partner. The General Partner contributed to the OLP all of the Pearl
assets it obtained in the merger of Pearl into the General Partner. In
exchange, the General Partner received a 2.7% limited partnership interest in
the OLP and a 0.00028% general partnership interest in the OLP. In addition,
the OLP assumed all of the liabilities associated with the Pearl stock purchase
prior and subsequent to the merger, including the $23.0 million of bank debt.
The aggregate value of the Partnership's interests transferred to the General
Partner from the OLP was $3.5 million.
The issuance of the partnership interests to the General Partner is
intended to compensate the General Partner for additional significant income tax
liabilities which would be reflected in the consolidated federal income tax
return of Star Gas' parent corporation, Petro. The issuance of such partnership
interests was approved by the Audit Committee of the General Partner and the
Executive Committee of Petro.
The General Partner then exchanged the above described interest in the
OLP for a 0.00027% general partnership interest in the Partnership and 148
common units in the Partnership, at a per unit price based upon the average
closing price of the Partnership's common units ten days prior to the execution
of the Stock Purchase Agreement. The OLP then repaid the $23.0 million
acquisition facility with $2.0 million of available cash and $21.0 million
borrowed under the OLP's own acquisition facility.
8
<PAGE>
5) ACQUISITION OF PEARL GAS CO. (CONTINUED)
Pearl markets and distributes propane in Ohio and Michigan through a
storage and distribution system consisting of five offices, fifteen bulk storage
plants, fifty employees and over forty-five vehicles. For the twelve months
ended September 30, 1997, Pearl sold approximately 14.3 million gallons of
propane, primarily to residential customers. Pearl currently serves over 12,000
active customers.
Sales and net income have been included in the Consolidated Statements
of Operations from October 22, 1997.
Unaudited pro forma data giving effect to the acquisition of Pearl as
if it had been acquired on October 1 of the year preceding the year of purchase
is as follows:
THREE MONTHS ENDED
------------------
DECEMBER 31,
------------------
1996 1997
------- -------
Sales $56,300 $42,254
======= =======
Net income $ 6,492 $ 3,712
======= =======
6) PUBLIC OFFERING
On December 16, 1997, the Partnership completed a public offering of
809,000 Common Units, representing Limited Partner interests, at a price of
$21.25 a unit. The net proceeds received of $15.7 million, after deducting
underwriting discounts, commissions and expenses, were used to repay $10.0
million borrowed under the Partnership's bank acquisition facility and $5.7
million borrowed under its working capital facility. In connection with the
issuance of the Common Units, the General Partner made a capital contribution of
$0.3 million.
7) SUBSEQUENT EVENT - CASH DISTRIBUTION
On January 20, 1998, the Partnership announced that it would pay a
cash distribution of $0.55 per Limited Partner Unit for the three months ended
December 31, 1997. The distribution is payable on February 13, 1998 to holders
of record as of February 2, 1998.
8) SUBSEQUENT EVENT - FIRST MORTGAGE NOTES
In January 1998, the Operating Partnership issued $11.0 million of
First Mortgage Notes with an annual interest rate of 7.17%. The proceeds from
these notes were used to repay $11.0 million borrowed under the Operating
Partnership's acquisition facility. These First Mortgage Notes will mature on
September 15, 2010, and will require a prepayment of $5.5 million on March 15,
2010. Interest is payable semi-annually on March 15 and September 15.
9
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997
- ------------------------------------
COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1996
- ------------------------------------------------
OVERVIEW
In analyzing the financial results of the Partnership, the following matters
should be considered.
Propane's primary use is for heating in residential and commercial applications.
As a result, weather conditions have a significant impact on financial
performance and should be considered when analyzing changes in financial
performance.
In addition, gross profit margins vary according to the customer mix. For
example, sales to residential customers generate higher gross profit margins
than sales to other customer groups, such as agricultural customers.
Accordingly, a change in customer mix can affect gross profit without
necessarily impacting total sales.
Lastly, the propane industry is seasonal in nature with peak activity occurring
during the winter months. Accordingly, results of operations for the periods
presented are not necessarily indicative of the results to be expected for a
full year.
VOLUME
For the three months ended December 31, 1997, retail propane volume increased
4.2 million gallons, or 12.1%, to 38.6 million gallons, as compared to 34.4
million gallons for the three months ended December 31, 1996. This increase was
largely due to the October 22, 1997 acquisition of Pearl Gas, which provided 4.4
million gallons of additional volume and to increased demand for agricultural
uses, which was offset by lower residential consumption.
For the three months ended December 31, 1997, wholesale propane volume declined
by 4.6 million gallons, or 32.5%, to 9.6 million gallons, as compared to
unusually high 14.2 million gallons for the three months ended December 31,
1996. This decline was primarily due to the reduction in spot sales to certain
customers.
SALES
Sales declined 17.8%, or $9.1 million, to $41.8 million for the three months
ended December 31, 1997, as compared to $50.9 million for the three months ended
December 31, 1996. This decline was attributable to a reduction in wholesale
volume and lower retail and wholesale selling prices and was partially offset by
the additional sales provided by the Pearl operations. During the three months
ended December 31, 1997, retail and wholesale selling prices declined versus the
prior year's comparable quarter in response to lower propane supply costs.
10
<PAGE>
COST OF SALES
Cost of sales declined 25.4% or $7.3 million to $21.7 million for the three
months ended December 31, 1997, as compared to $29.0 million for the three
months ended December 31, 1996. This decline was largely due to lower propane
supply costs and lower wholesale sales volume, which was partially offset by the
cost of sales attributable to the Pearl operations.
GROSS PROFIT
Gross profit declined $1.6 million or 7.6% to $20.2 million for the three months
ended December 31, 1997, as compared to $21.8 million for the three months ended
December 31, 1996. Lower wholesale volume and a decline in wholesale and retail
propane per gallon margins were the primary factors resulting in the gross
profit decline, which more than offset the additional gross profit resulting
from the Pearl operations.
While retail margins for the three months ended December 31, 1997 declined from
the level achieved during the comparable 1996 period, these margins compared
favorably with those achieved during the three month periods ended December 31,
1994 and December 31, 1995.
DELIVERY AND BRANCH EXPENSES
Delivery and branch expenses increased $0.3 million, or 3.1%, to $10.1 million
for the three months ended December 31, 1997, as compared to $9.8 million for
the three months ended December 31, 1996. The 3.1% increase was less than the
12.1% increase in retail volume, and was largely attributable to the $0.6
million in additional operating costs associated with the Pearl operations. For
the Partnership's operations prior to the Pearl acquisition, delivery and branch
expenses were $0.3 million less than the prior year's comparable period due to
lower insurance costs and vehicle operating expenses.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased $0.2 million to $2.8 million for
the three months ended December 31, 1997, as compared to $2.6 million for the
three months ended December 31, 1996, primarily due to additional depreciation
expense associated with the Pearl operations.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses declined approximately $0.2 million or 14.4%
to $1.4 million for the three months ended December 31, 1997, as compared to
$1.6 million for the three months ended December 31, 1996. This decline was due
to lower legal and consulting expenses.
INTEREST EXPENSE, NET
Interest expense, net increased $0.3 million, or 12.9%, to $2.1 million for the
three months ended December 31, 1997, as compared to $1.8 million for the three
months ended December 31, 1996. This change was attributable to the increase in
long-term borrowings associated with the Pearl Gas acquisition.
11
<PAGE>
INTEREST EXPENSE, NET (CONTINUED)
During the quarter ended December 31, 1997, the Partnership completed the
acquisition of Pearl Gas and temporarily financed the purchase with $21.0
million borrowed under its acquisition facility. In December 1997, the
acquisition facility borrowings were reduced by $10.0 million with a portion of
the net proceeds from the Partnership's Common Unit offering.
NET INCOME
Net income declined $2.2 million to $3.7 million for the three months ended
December 31, 1997, as compared to $5.9 million for the three months ended
December 31, 1996. The decline was due to lower wholesale and retail gross
profit and increases in depreciation and interest expense relating to the Pearl
Gas acquisition.
EBITDA
EBITDA (defined as operating income plus depreciation and amortization less net
gain (loss) on sales of assets) decreased $1.7 million to $8.7 million for the
three months ended December 31, 1997, as the increase in EBITDA associated with
the Pearl operations was more than offset by the reduction in gross profit
attributable to lower wholesale volumes and lower wholesale and retail margins.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended December 31, 1997, net cash provided by operating
activities decreased $0.2 million, to $2.0 million, as compared to $2.2 million
for the three months ended December 31, 1996. This decrease was due to lower net
working capital requirements for inventory and receivables of $5.3 million,
which was partially offset by a decline in accounts payable of $3.2 million and
a reduction in operating income of $1.9 million. The decline in inventory and
accounts payable experienced during the three months ended December 31, 1997
versus the prior year's comparable quarter was largely due to decreases in
propane supply costs and corresponding selling prices.
Net cash used in investing activities decreased $1.9 million to $0.5 million for
the three months ended December 31, 1997, as compared to $2.4 million for the
three months ended December 31, 1996. The decline was primarily due to the
receipt of $1.8 million in cash from the Pearl Gas Conveyance, net of expenses
incurred in connection with the transaction.
Net cash flows provided from financing activities declined $0.3 million to $1.1
million for the three months ended December 31, 1997. On December 22, 1997, the
Partnership sold 809,000 Common Units in a public offering. A portion of the
net proceeds from the offering of $15.7 million and $11.0 million borrowed under
the Partnership's acquisition line, net of repayments, were used to repay $23.0
million of long-term debt conveyed in the Pearl Gas acquisition. In addition,
the Partnership paid distributions to unitholders of $3.0 million.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Partnership's cash requirements for the remainder of fiscal 1998 include
maintenance capital expenditures of approximately $1.5 million, interest
payments on its First Mortgage Notes of $7.4 million and Limited and General
Partner distributions of $10.5 million. Based on its current cash position,
bank credit availability and expected net cash from operating activities, the
partnership expects to be able to meet all of its above obligations for fiscal
1998, as well as all of its other current obligations as they become due.
13
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits Included Within:
------------------------
(27) Financial Data Schedule
(b) Reports on Form 8-K
-------------------
The Company filed Form 8-K on October 23, 1997 relating to the Pearl
Gas acquisition.
14
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf of the undersigned
thereunto duly authorized:
Star Gas Partners, L.P.
By: Star Gas Corporation (General Partner)
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Joseph P. Cavanaugh President February 5, 1998
- ------------------------ Star Gas Corporation
Joseph P. Cavanaugh (Principal Executive Officer)
/s/ Richard F. Ambury Vice President Finance February 5, 1998
- ------------------------ Star Gas Corporation
Richard F. Ambury (Principal Financial &
Accounting Officer)
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STAR GAS
PARTNERS, L.P. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997
AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE INTERIM PERIOD SEPTEMBER 30,
1997 THROUGH DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001002590
<NAME> STAR GAS PARTNERS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,452
<SECURITIES> 0
<RECEIVABLES> 12,213
<ALLOWANCES> 358
<INVENTORY> 5,760
<CURRENT-ASSETS> 21,989
<PP&E> 130,024
<DEPRECIATION> 21,215
<TOTAL-ASSETS> 179,451
<CURRENT-LIABILITIES> 11,514
<BONDS> 96,000
0
0
<COMMON> 71,485<F1>
<OTHER-SE> 398<F2>
<TOTAL-LIABILITY-AND-EQUITY> 179,451
<SALES> 40,540
<TOTAL-REVENUES> 41,844
<CGS> 21,650
<TOTAL-COSTS> 11,413
<OTHER-EXPENSES> 2,859
<LOSS-PROVISION> 109
<INTEREST-EXPENSE> 2,100
<INCOME-PRETAX> 3,713
<INCOME-TAX> 6
<INCOME-CONTINUING> 3,707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,707
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<FN>
<F1>COMMON STOCK - REPRESENTS LIMITED PARTNER INTERESTS WHICH CONSISTS OF COMMON
AND SUBORDINATED UNITS. THESE UNITS ARE CONSIDERED TO POSSESS THE
CHARACTERISTICS OF COMMON STOCK AND ARE BOTH INCLUDED IN THE DETERMINATION OF
EPS.
<F2>OTHER SE - REPRESENTS THE GENERAL PARTNER'S INTEREST IN THE PARTNERSHIP AND
IS CLASSIFIED HERE SINCE IT DOES NOT POSSESS THE RELEVANT CHARACTERISTICS OF
EITHER COMMON OR PREFERRED STOCK.
</FN>
</TABLE>
