SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ TO _______
Commission File No. 0-4678
Pancho's Mexican Buffet, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1292166
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3500 Noble Avenue, Fort Worth, Texas 76111
(Address of principal executive offices) (Zip Code)
817-831-0081
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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
Number of shares of Common Stock outstanding as of February 7, 1996:
4,397,559.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Introduction 1
Consolidated Condensed Balance Sheets,
December 31, 1995 and September 30, 1995 2
Consolidated Condensed Statements of
Operations for the Three-Months Ended
December 31, 1995 and 1994 3
Consolidated Condensed Statements of Cash
Flows for the Three-Months Ended
December 31, 1995 and 1994 4
Notes to Consolidated Condensed Financial
Statements 5
Independent Accountants' Review Report 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II. Other Information
Item 1. Legal Proceedings (no response required)
Item 2. Changes in Securities (no response required)
Item 3. Defaults Upon Senior Securities (no
response required)
Item 4. Submission of Matters to a Vote of
Security Holders (no response required)
Item 5. Other Information (no response required)
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated condensed financial statements included herein
have been prepared by the Company without audit as of December 31,
1995 and for the three-month periods ended December 31, 1995 and 1994
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's
annual report on Form 10-K for the fiscal year ended September 30,
1995. In the opinion of the Company, all adjustments, consisting
only of normal recurring adjustments except as discussed in the notes
to consolidated condensed financial statements, necessary to present
fairly the financial position of the Company as of December 31, 1995
and the results of operations and cash flows for the indicated
periods have been included. The results of operations for such
interim periods are not necessarily indicative of the results to be
expected for the fiscal year ending September 30, 1996.
Deloitte & Touche LLP, independent public accountants, has made
a limited review of the consolidated condensed financial statements
as of December 31, 1995 and for the three-month periods ended
December 31, 1995 and 1994 included herein.
-1-
<PAGE>
<TABLE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31, September 30,
1995 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 875,000 $ 1,199,000
Accounts and notes receivable-current portion 437,000 486,000
Income taxes receivable 1,618,000 1,227,000
Inventories 740,000 907,000
Prepaid expenses 245,000 267,000
Deferred income taxes 257,000 294,000
Total current assets 4,172,000 4,380,000
PROPERTY, PLANT AND EQUIPMENT (AT COST):
Land 3,446,000 3,446,000
Buildings 10,444,000 10,346,000
Leasehold improvements 22,517,000 22,465,000
Equipment and furniture 29,431,000 29,612,000
Construction in progress 10,000 517,000
Total 65,848,000 66,386,000
Less accumulated depreciation and amortization (30,742,000) (30,353,000)
Property, plant and equipment-net 35,106,000 36,033,000
OTHER ASSETS:
Deferred income taxes 2,815,000 2,909,000
Other, including noncurrent portion of receivables 1,035,000 1,065,000
Total other assets 3,850,000 3,974,000
TOTAL $ 43,128,000 $ 44,387,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 941,000 $ 1,047,000
Current portion of long-term debt 138,000 162,000
Accrued wages and bonuses 1,628,000 2,141,000
Other current liabilities 1,944,000 2,120,000
Total current liabilities 4,651,000 5,470,000
OTHER LIABILITIES:
Long-term debt 8,720,000 8,705,000
Accrued insurance costs 3,170,000 3,031,000
Other 153,000 193,000
Total other liabilities 12,043,000 11,929,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock
Common stock 440,000 440,000
Additional paid-in capital 18,632,000 18,633,000
Retained earnings 8,472,000 8,894,000
Cumulative foreign currency translation adjustment (580,000) (449,000)
Stock notes receivable from officers (530,000) (530,000)
Stockholders' equity 26,434,000 26,988,000
TOTAL $ 43,128,000 $ 44,387,000
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended
December 31,
1995 1994
<S> <C> <C>
SALES $ 17,460,000 $ 20,910,000
COSTS AND EXPENSES:
Food costs 4,967,000 5,943,000
Restaurant labor and related expenses 6,770,000 8,130,000
Restaurant operating expenses 3,863,000 4,611,000
Depreciation and amortization 1,014,000 1,167,000
General and administrative expenses 1,356,000 1,419,000
Total 17,970,000 21,270,000
OPERATING LOSS (510,000) (360,000)
INTEREST EXPENSE (183,000) (101,000)
OTHER, INCLUDING INTEREST INCOME 90,000 32,000
LOSS BEFORE INCOME TAXES (603,000) (429,000)
PROVISION (BENEFIT) FOR INCOME TAXES (247,000) (150,000)
NET LOSS $ (356,000) $ (279,000)
NET LOSS PER SHARE $ (0.08) $ (0.06)
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three
Months Ended
December 31,
1995 1994
<S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (356,000) $ (279,000)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 1,014,000 1,167,000
Provision (benefit) for deferred income taxes 131,000 285,000
Amortization of restaurant start-up costs 14,000 36,000
Payment of restaurant start-up costs 0 (23,000)
(Gain) loss on sale of assets (38,000) 6,000
Changes in operating assets and liabilities: 0
Accounts and notes receivable 40,000 321,000
Income taxes receivable (391,000) (465,000)
Inventories, prepaid expenses and other asset 185,000 258,000
Accounts payable and accrued expenses (693,000) (1,035,000)
Total adjustments 262,000 550,000
Net cash provided (used) by operating act (94,000) 271,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (206,000) (2,853,000)
Proceeds from sale of assets 75,000 119,000
Net cash (used in) investing activities (131,000) (2,734,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings (24,000)
Long-term borrowings 7,487,000 18,940,000
Repayments of long-term borrowings (7,472,000) (16,890,000)
Proceeds from increase in minority interest 0 100,000
Dividends paid (66,000) (264,000)
Net cash provided (used) by financing act (75,000) 1,886,000
EFFECT OF FOREIGN EXCHANGE RATE
CHANGE ON CASH (24,000) (33,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (324,000) (610,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,199,000 1,661,000
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 875,000 $ 1,051,000
SUPPLEMENTAL INFORMATION:
Income taxes paid $ 14,000 $ 30,000
Assets sold for notes receivable 0 125,000
Interest paid, net of capitalized amounts 183,000 97,000
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. NET LOSS PER SHARE
Net loss per share is based on the weighted average number of
shares and equivalent shares (including stock options, when
dilutive) outstanding during each period. The weighted average
of such shares was 4,398,000 for both the three-months ended
December 30, 1995 and December 31, 1994.
2. LONG-TERM DEBT
The Company's revolving credit and term loan agreement ("Loan
Agreement") with a bank includes various financial covenants. As
a result of the net losses incurred by the Company in the current
quarter and each of the three quarters in the nine months ended
June 30, 1995, the Company violated certain of these covenants.
The bank has subsequently granted permanent waivers for each of
these covenant violations.
In February 1996, the Company reached an agreement with the
Bank to amend the Loan Agreement to reduce the revolving
credit line to $8 million effective March 31, 1996 and
extend its termination date to April 30, 1997. The amended
agreement will reduce the credit limit at the end of each subsequent
quarter by $750,000 plus 75% of the Company's excess cash flow
(as defined in the agreement). Cash capital expenditures and
dividend payments will be limited by the amendment to $850,000 and
$150,000 per fiscal year, respectively.
At December 31, 1995, the Company's debt under the bank credit
line was $8,630,000.
3. STOCKHOLDERS' RIGHTS PLAN AND PREFERRED STOCK PURCHASE RIGHTS
In January 1996, the Company's Board of Directors adopted a
Stockholders' Rights Plan to replace a similar plan which expires
on March 31, 1996. Under the new plan, the Company declared a
dividend distribution of one preferred share purchase right
(Right) for each share of common stock outstanding at the close
of business on March 29, 1996. Each Right entitles the holder to
buy one one-thousandth of a share of the Company's
newly-designated Series A Junior Participating Preferred Stock,
for the exercise price of $10 per one one-thousandth of a
Preferred Share, subject to adjustment.
-5-
<PAGE>
If any person or group (other than certain current stockholders
and their affiliates, associates and successors, which may
acquire up to 28%) acquires 15% of the Common Stock, all
stockholders except the acquiring person (Acquiror) will be
entitled to purchase Common Stock having twice the market value
of the Rights exercise price. If the Company is involved in a
merger or other business combination, or sells 50% or more of its
assets or earning power, all of the Stockholders, other than the
Acquiror, will be entitled to purchase Common Shares of the other
person having twice the market value of the exercise price. In
addition, under the Plan's exchange provision, at any time after
such an acquisition, but prior to the time any person acquires a
majority of the Common Stock, the Board of Directors may exchange
all or part of the outstanding Rights (other than the Rights of
the Acquiror) for Common Stock at a ratio of one Right per share.
The Rights trade with the common stock and are not exercisable or
transferable apart from the common stock until 10 days after a
person or group acquires, or announces a tender offer for 15% or
more of the Company's outstanding common stock. Prior to
acquisition by someone of beneficial ownership of 15% or more of
the Company's common stock, the Rights are redeemable by the
Board for $.01 per Right. The Rights expire on March 27, 2006.
Under the Plan, the Company's Board of Directors has designated
10,000 shares of preferred stock as Series A Junior Participating
Preferred Stock. This designation is part of the 500,000 shares
of preferred stock, par value $10, previously authorized, none is
issued.
4. CASH DIVIDEND
On January 24, 1996, the Company's board of directors declared a
$.015 per common share semi-annual cash dividend. The dividend
will be paid on June 11, 1996 to holders of record on May 28,
1996.
5. STATEMENT OF OPERATIONS RECLASSIFICATION
The statement of operations has been reformatted to provide more
detailed information on costs and expenses. Prior period amounts
have been reclassified to conform to the current period
presentation.
-6-
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Pancho's Mexican Buffet, Inc.:
We have reviewed the accompanying consolidated condensed balance
sheet of Pancho's Mexican Buffet, Inc. and subsidiaries as of
December 31, 1995 and the related consolidated condensed statements
of operations and cash flows for the three-month periods ended
December 31, 1995 and 1994. These consolidated condensed financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical review procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated condensed financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of September 30, 1995,
and related the consolidated statements of operations, stockholders'
equity and cash flows for the year then ended (not presented herein),
and in our report dated November 7, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated condensed
balance sheet as of September 30, 1995, is fairly stated in all
material respects in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
February 13, 1996
-7-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
As of December 31, 1995, the Company's current ratio was 0.9 to 1,
which was 0.1 better than on September 30, 1995. Cash and cash
equivalents decreased $324,000 during the three-month period to a
balance of $875,000 at December 31, 1995, as cash was used by
operating, investing and financing activities.
Operating activities used net cash of $94,000 for the three-month
period ended December 31, 1995, compared to providing net cash of
$271,000 for the same period last year. The Company incurred a net
loss of $356,000 in the first quarter of fiscal 1996, versus a net
loss of $279,000 a year earlier. Operating cash flow decreased due
largely to the decline in profitability and lower adjustments from
depreciation and deferred income taxes.
Investing activities used $131,000 of cash in the quarter, primarily
for remodeling of existing restaurants and completion of the
Guadalajara location, which opened in October 1995. No other
locations were opened in the quarter. One restaurant in Tulsa,
Oklahoma was closed after the close of business September 30, 1995.
In the prior fiscal year first quarter, the Company invested $2.7
million cash in new restaurant construction, remodeling existing
locations and installing new restaurant computer systems.
Financing activities used cash of $75,000 during the three-month
period, due primarily to the payment of a cash dividend of $66,000.
In the quarter ended December 31, 1994, financing activities provided
net cash of $1.9 million, primarily from net long-term borrowings.
No new restaurants are currently planned, as management intends to
focus on improving sales and profitability and reducing debt.
Capital expenditures to remodel existing restaurants and to install
restaurant computer systems will continue within the constraint of
available operating cash flow and the loan agreement restrictions
(see Note 2 to the consolidated condensed financial statements).
-8-
<PAGE>
The Company's revolving credit and term loan agreement ("Loan
Agreement") with a bank includes various financial covenants. As a
result of the net losses incurred by the Company in the current
quarter and each of the three quarters ended June 30, 1995, the
Company violated certain of these covenants. The bank has
subsequently granted permanent waivers for each of these covenant
violations.
In February 1996, the Company reached an agreement with the Bank
to amend the Loan Agreement to reduce the revolving credit line
$8 million effective March 31, 1996 and to extend its termination
date to April 30, 1997. The amended agreement will reduce the
credit limit at the end of each subsequent quarter by $750,000
plus 75% of the Company's excess cash flow (as defined in the
agreement). Cash capital expenditures and dividend payments will
be limited by the amendment to $850,000 and $150,000 per fiscal,
year respectively.
At December 31, 1995, the Company's debt for the bank credit line was
$8,630,000. The credit line limit changed from $12 million to $10
million effective January 1, 1996.
Management is taking steps to ensure that the Company will be able to
comply with all of its covenants under the Loan Agreement in the
future. However, should the bank decline to waive a future covenant
violation, the bank would be required under the Loan Agreement to
give the Company 15 days written notice of the violation, after which
time the Company would be in default. At the bank's option, it could
then declare the loan principal and all accrued interest current and
payable and/or refuse to make additional advances on the credit line.
The Company could then be forced to seek alternative sources of
financing.
On January 24, 1996, the Company's board of directors declared a
$.015 per common share semi-annual cash dividend. The dividend will
be paid on June 11, 1996 to holders of record on May 28, 1996. The
dividend was reduced from $.015 per share quarterly to $.015 per
share semi-annually. Future cash dividends will depend on earnings,
financial position, capital requirements and other relevant factors.
The Company believes it will realize substantial benefits from the
use of federal employer tax credits and state NOL carryforwards to
reduce future federal and state income tax liabilities. If the
Company's results of operations continue to decline or do not timely
achieve levels needed to use the employer tax credits or the state
NOL carryforwards, they could expire before use, resulting in a
charge against income.
-9-
<PAGE>
In the quarter ended December 31, 1995, deferred tax assets of
$131,000 reversed, due primarily to the payment of restructuring and
non-qualified compensation plan liabilities, and the reversal of
book-tax fixed asset basis differences.
Results of Operations
Sales decreased $3,450,000 (16.5%) for the three-months ended
December 31, 1995 compared to the same period last year. Four new
restaurants added sales of $734,000 for the quarter. The 12
restaurants closed in fiscal 1995 represented $1.8 million in sales
in the prior year quarter, and comparable-store (stores open
throughout all of both periods) sales were down 12.7% for the quarter.
Average sales for restaurants open throughout the current three-month
period were $270,000 compared to $292,000 for the same period a year
ago, down 7.5%. Responding to lower sales, the Company began to use
its new television advertising campaign in the last week of December
1995. Early results are encouraging but not conclusive.
Food costs as a percentage of sales held at 28.4% for current and
prior year quarters ended December 31.
Restaurant labor and related expenses decreased 0.1% of sales for the
current quarter compared to the same period in fiscal 1995 due to the
Company's labor control program.
Restaurant operating expenses increased 0.1% of sales for the current
three-month period versus the same quarter last year. The effect of
lower comparable-store sales on relatively fixed operating costs such
as rent, property taxes and utilities caused an increase of about
1.2% of sales, which was offset by lower advertising costs. The
Company began limited testing of its new television ads in the last
week of December 1995, but bought much more TV time in the quarter
ended December 31, 1994.
Depreciation and amortization decreased $153,000 for the three-months
ended December 31, 1995 compared to the prior year. Reductions from
restaurant closings and impairments were partially offset by the
opening of four new restaurants in Pasadena, Baytown, and Galveston,
Texas and in Guadalajara, Mexico.
General and administrative expenses increased 1.0% of sales versus
the prior year quarter due to the effect of lower sales, despite a
decline of $63,000. Management has taken several steps to lower the
relatively fixed general and administrative costs and expects future
quarters to approximate prior year costs as a percentage of sales.
-10-
<PAGE>
Interest expense increased $82,000 for the current quarter compared
to the same period in fiscal 1995 due to increased debt, higher
interest rates and less interest capitalization due to reduced
construction activity.
The benefit for income taxes was $247,000 for the quarter, an
effective rate of about 41%, versus an effective rate of 38.4% for
fiscal year 1995. Both effective rates are maximized by the
Company's tax planning strategies considering its net loss results.
Due to lower sales and other factors discussed above, the Company
reported a net loss of $356,000 for the quarter ended December 31,
1995 versus a net loss of $279,000 for the same period last year.
The restaurant industry is intensely competitive, and the Company's
future earnings depend largely on reversing the trend of declining
unit sales.
Other Uncertainties and Trends
The Company opened its first foreign restaurant in Guadalajara,
Mexico near the end of October 1995. Despite strong customer counts
during the lunch period, sales were below expectations. Like many
new restaurants, it incurred an operating loss in its first two
months.
Mexico is currently experiencing an economic crisis stemming from the
December 1994 devaluation of the Mexican peso. Management believes
that the economic difficulties in Mexico will have a long-term
negative impact on the Company's Guadalajara restaurant, and,
accordingly, an impairment charge of $812,000 was recorded during the
quarter ended June 30, 1995.
However, the long-term impact of this economic crisis on the
Company's restaurant operations is difficult to estimate. The
Company has invested about $1.8 million in this restaurant and
expects that some additional investment may be required. If the
restaurant incurs negative cash flows or operating losses, more
operating, impairment or restaurant closing losses may be recognized
in future periods. Future Company restaurant development in Mexico
depends on the success of the Guadalajara restaurant.
-11-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K
Exhibit
Number
2 Not applicable
4 Not applicable
11 Not required--explanation of net earnings (loss) per
share computation is contained in notes to
consolidated condensed financial statements.
15 Letter re: unaudited interim financial
information
18 Not applicable
19 Not applicable
22 Not applicable
23 Not applicable
24 Not applicable
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended December 31, 1995
-12-
<PAGE>
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 thereunto duly authorized.
PANCHO'S MEXICAN BUFFET, INC.
February 14, 1996 /s/ Hollis Taylor
Hollis Taylor, President and Chief
Executive Officer (Principal Executive
Officer)
February 14, 1996 /s/ W. Brad Fagan
Brad Fagan, Vice President, Treasurer,
Controller and Assistant Secretary
(Principal Financial and Accounting
Officer)
-13-
<PAGE>
EXHIBIT 15
Pancho's Mexican Buffet, Inc.:
We have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information of Pancho's Mexican Buffet, Inc. and
subsidiaries for the three-months ended December 31, 1995 and 1994,
as indicated in our report dated February 13, 1996. Because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended December 31,
1995, is incorporated by reference in Registration Statements No.
2-86238 and No. 33-60178 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act, is not considered a part of the
Registration statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
February 13, 1996
EXHIBIT 15
Pancho's Mexican Buffet, Inc.:
We have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information of Pancho's Mexican Buffet, Inc. and
subsidiaries for the three-months ended December 31, 1995 and 1994,
as indicated in our report dated February 13, 1996. Because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended December 31,
1995, is incorporated by reference in Registration Statements No.
2-86238 and No. 33-60178 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act, is not considered a part of the
Registration statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
February 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheet as of December 31, 1995 and the
consolidated condensed statement of operations for the three-months then ended,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1995
<CASH> 875000
<SECURITIES> 0
<RECEIVABLES> 437000
<ALLOWANCES> 0
<INVENTORY> 740000
<CURRENT-ASSETS> 4172000
<PP&E> 65848000
<DEPRECIATION> (30742000)
<TOTAL-ASSETS> 43128000
<CURRENT-LIABILITIES> 4651000
<BONDS> 0
0
0
<COMMON> 440000
<OTHER-SE> 25994000
<TOTAL-LIABILITY-AND-EQUITY> 43128000
<SALES> 17460000
<TOTAL-REVENUES> 17460000
<CGS> 4967000
<TOTAL-COSTS> 16614000
<OTHER-EXPENSES> 1356000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 183000
<INCOME-PRETAX> (603000)
<INCOME-TAX> (247000)
<INCOME-CONTINUING> (356000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (356000)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
