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 December 31, 1999
____ 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 re-
quired 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 January 31, 2000:
1,464,006.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements:
Introduction 1
Consolidated Condensed Balance Sheets,
December 31, 1999 and September 30,1999 2
Consolidated Condensed Statements of
Operations for the Three-Months Ended
December 31, 1999 and 1998 3
Consolidated Condensed Statements of Cash
Flows for the Three-Months Ended
December 31, 1999 and 1998 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 13
Signatures 14
</TABLE>
<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, 1999 and for the
three-month periods ended December 31, 1999 and 1998 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 consolidated 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, 1999. In the opinion of the Company, all
adjustments, consisting only of normal recurring adjustments to the consolidated
condensed financial statements, necessary to present fairly the financial
position of the Company as of December 31, 1999 and the results of operations
and cash flows for the indicated periods have been included. The results of
operations for such interim period is not necessarily indicative of the results
to be expected for the fiscal year ending September 30, 2000.
Deloitte & Touche LLP, independent public accountants, has made a
limited review of the consolidated condensed financial statements as of
December 31, 1999 and for the three-month periods ended December 31, 1999 and
1998 included herein.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Dec 31, Sept 30,
1999 1999
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 950,000 $ 1,242,000
Accounts and notes receivable, current portion 177,000 208,000
Inventories 539,000 469,000
Prepaid expenses 81,000 242,000
Total current assets 1,747,000 2,161,000
Property, plant and equipment:
Land 1,654,000 1,868,000
Buildings 6,440,000 6,900,000
Leasehold improvements 17,485,000 17,268,000
Equipment and furniture 21,896,000 21,469,000
Construction in progress 2,000 429,000
Total 47,477,000 47,934,000
Less accumulated depreciation and amortization (32,043,000) (32,392,000)
Property, plant and equipment - net 15,434,000 15,542,000
Other assets:
Land and buildings held for sale 712,000 309,000
Other, including noncurrent portion of receivables 353,000 400,000
Total other assets 1,065,000 709,000
------------ ------------
Total assets $ 18,246,000 $ 18,412,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 942,000 $ 701,000
Debt classified as current 139,000 139,000
Accrued wages and bonuses 1,527,000 1,734,000
Accrued insurance costs, current 1,011,000 1,087,000
Other current liabilities 1,752,000 1,331,000
Total current liabilities 5,371,000 4,992,000
Other liabilities:
Long-term debt 184,000 222,000
Accrued insurance costs, non-current 1,033,000 1,149,000
Restructuring reserves, non-current 330,000 346,000
Total other liabilities 1,547,000 1,717,000
Commitments and Contingencies
Stockholders' equity:
Preferred stock
Common stock 149,000 149,000
Additional paid-in capital 18,988,000 18,988,000
Retained earnings (accumulated deficit) (7,574,000) (7,197,000)
Treasury stock at cost (66,000) (68,000)
Stock notes receivable (169,000) (169,000)
Stockholders' equity 11,328,000 11,703,000
------------ ------------
Total liabilities and stockholders' equity $ 18,246,000 $ 18,412,000
============ ============
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
Dec 31,
1999 1998
<S> <C> <C>
Sales $ 13,307,000 $ 13,767,000
Costs and Expenses:
Food costs 3,517,000 3,680,000
Restaurant labor and related expenses 5,293,000 5,324,000
Restaurant operating expenses 3,204,000 3,060,000
Depreciation and amortization 489,000 500,000
General and administrative expenses 1,130,000 1,196,000
Preopening costs 43,000
Total 13,676,000 13,760,000
Operating Income (loss) (369,000) 7,000
Interest Expense (17,000)
Other, including interest income (8,000) 124,000
Earnings (loss) before income taxes (377,000) 114,000
Provision (benefit) for income taxes
Net earnings (loss) $ (377,000) $ 114,000
Basic and diluted earnings (loss) per share $ (0.26) $ 0.08
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (377,000) $ 114,000
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 489,000 500,000
Loss (gain) on sale of assets 19,000 (110,000)
Stock compensation to outside directors 10,000
Other 2,000
Changes in operating assets and liabilities:
Accounts and notes receivable 31,000 4,000
Inventories, prepaid expenses and other assets 97,000 183,000
Accounts payable and accrued expenses 318,000 164,000
Restructuring reserves (15,000) (216,000)
Net cash provided by operating activities 564,000 649,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (837,000) (237,000)
Proceeds from sale of assets 19,000 1,097,000
Net cash provided (used) by investing
activities (818,000) 860,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net (340,000)
Long-term borrowings 4,520,000
Repayments of long-term borrowings (38,000) (5,564,000)
Net cash used by financing activities (38,000) (1,384,000)
Net increase (decrease) in cash and cash equivalents (292,000) 125,000
Cash and cash equivalents, beginning of period 1,242,000 546,000
Cash and cash equivalents, end of period $ 950,000 $ 671,000
SUPPLEMENTAL INFORMATION:
Interest paid, net of capitalized amounts --- $ 35,000
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. NET EARNINGS (LOSS) PER SHARE
The company reports earnings per share under Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share." Because it has potential common
shares, the company has a complex capital structure and must disclose both basic
and diluted EPS. Basic EPS is computed by dividing income available to common
shareholders by the weighted average number of shares outstanding. Diluted EPS
adds the effect of all dilutive potential shares to the weighted average number
of shares outstanding.
All per share amounts have been adjusted for the effect of the one-for-three
reverse stock split of the company's common stock, effective January 27, 1999.
The weighted average outstanding shares were 1,464,000 and 1,453,000 for the
three-months ended December 31, 1999 and 1998, respectively. Due to the net loss
for the first quarter of fiscal 2000, the company's potential common shares were
antidilutive and excluded from the loss per share calculation for that period.
For the quarter ended December 31, 1998, outstanding options had no dilutive
effect because the market price was less than the option exercise price.
Therefore, there was no difference between basic and diluted earnings (loss) per
share in either quarter. At December 31, 1999, there were 118,963 options
outstanding which represented potential common shares which could be dilutive in
the future.
2. INCOME TAXES
Deferred tax assets net of deferred tax liabilities increased $104,000 in the
quarter ended December 31, 1999, to $7.5 million, due mainly to the increase in
the federal net operating loss carry-forward for the quarter. The valuation
allowance was increased by the same amount to match the net deferred tax asset
balance. Accordingly, the company recognized no net tax benefit in the quarter
ended December 31, 1999.
Despite the valuation allowance, the deferred tax assets are still available to
the company for future use. If the company realizes profitability, it may
recognize tax benefits for all or a portion of the deferred tax assets in the
future, when the valuation allowance is reduced or the tax assets realized. The
deferred tax assets include federal employer tax credits and net operating loss
(NOL) carry-forwards which expire in years 2009 through 2020, and state NOL
carry-forwards which expire in years 2000 through 2015.
3. RESTRUCTURING RESERVES
At December 31, 1999, a total of $498,000 in restructuring reserves was included
on the company's balance sheet, split between other current liabilities and
restructuring reserves, noncurrent. The company reduced its total
restructuring reserves by $15,000 paid on restructuring costs incurred during
the quarter ended December 31, 1999.
<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, 1999 and the
related consolidated condensed statements of operations and cash flows for the
three-month periods ended December 31, 1999 and 1998. These 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 conducted 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 such 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, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended (not presented herein), and in our report dated November 12,
1999, 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, 1999, 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
January 25, 2000
<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, 1999, the company's current ratio was 0.3 to 1, down 0.1 from
September 30, 1999. Like many restaurant chains, the company maintains a current
ratio well below 1. Most of its current liabilities, primarily accounts payable,
accrued payroll and accrued insurance costs, flow through operations and roll
over rather than being reduced to zero in subsequent periods. The company's cash
and cash equivalents decreased $292,000 since September 30, 1999, as detailed in
the cash flow statements.
Cash flow from operations provided $564,000 and $649,000 in the quarters ended
December 31, 1999 and 1998, respectively. The decline is due to the net loss
incurred in the first quarter of fiscal 2000, partially offset by an increase in
accounts payable and accrued operating expenses.
Investing activities in the quarter ended December 31, 1999 used $818,000 in
cash, due to property additions of $837,000. Property additions consisted mainly
of the company's complete remodel of its Mesquite, Texas restaurant. In same
period last year, the company invested $237,000 in property additions, and
received $1,097,000 from the sale of assets, mainly land and buildings of two
closed restaurant sites.
Capital spending in fiscal 2000 is expected to be between $2 million and $3
million, as the company continues its reimaging campaign. The company plans
to pay for property additions this year with cash flow from operations and
proceeds from the sale of land and buildings held for sale. In the quarter
ended December 31,1999, the company reclassified $403,000 from property to
land and buildings held for sale. The company has land and buildings held
for sale carried at $712,000, consisting of one closed restaurant site
and land with a warehouse building adjacent to its corporate headquarters.
The company has a tentative sale contract pending on one of these properties.
To increase customer counts and total sales, the company has been pursuing a
reimaging strategy which includes the development of a new appearance and
atmosphere for its restaurants. In September 1999, the company began a complete
remodel of its Mesquite, Texas restaurant. That unit reopened under the banner
Pancho's Buffet & Grill(TM) in December 1999 and has generated significant sales
increases and positive customer response. Management expects to spend about $1
million to remodel two more restaurants with the same style this year.
In February 2000, the company announced plans to develop a Pancho's Express
Buffet(TM) format offering customers the convenient all-you-can-eat buffet at a
price point of only $3.99 per person. The company plans to spend about $600,000
to convert four of its smaller or lower volume units to this format this year.
No new restaurants were opened in the first quarter of 2000 or fiscal year 1999,
and none are currently planned, as management intends to remodel existing
restaurants to develop and expand its new Pancho's Buffet & Grill(TM) and
Pancho's Express Buffet(TM) formats. Other capital spending will include normal
operating replacements and upgrades.
Financing activities used $38,000 to repay debt in the quarter ended
December 31, 1999, versus $1,384,000 in the same period last year. Debt payments
decreased in the first quarter of fiscal 2000 because the company paid off its
bank debt in February 1999. The company continues to make payments on notes
issued in prior years to buy out leases on closed restaurant sites.
The company does not currently have a line of credit to finance working capital
needs. Although the company expects cash flow from operations to be sufficient
to fund its anticipated operating needs in fiscal 2000, management may pursue
some form of working capital credit during the year.
No dividends have been paid since December 1997. Future cash dividends will
depend on earnings, financial position, capital requirements, debt restrictions
and other relevant factors.
Results of Operations
Total sales were down $460,000 for the quarter ended December 31, 1999 compared
to the same period last year. Of this decline, $147,000 resulted from the
temporary closing of the Mesquite restaurant while it was remodeled to the new
Pancho's Buffet & Grill(TM) format. The Mesquite unit reopened in December 1999.
Same-store sales decreased 2.4% versus the prior year quarter. Average sales per
unit were $279,000 and $287,000 in the quarters ended December 31, 1999 and
1998, respectively.
The company implemented a price increase of about 4.5% in the quarter ended
December 31, 1999. This increase was rolled out to restaurants market by market
throughout the quarter, so that its effect in the quarter is estimated at less
than 3%. Customer discounts were 4.5% and 3.7% of sales for the quarters ended
December 31, 1999 and 1998, respectively. Discounting tactics are used to
increase customer frequency and attract new customer trials.
In 1999, the company initiated a reimaging project to revitalize the Pancho's
concept and improve sales trends. The reimaging initiative addresses changes in
restaurant design, recipes, food offerings and cooking and service procedures.
This reimaging includes the Mesquite location remodel under the Pancho's Buffet
& Grill banner and a Pancho's Express Buffet format to be developed in fiscal
2000.
The Mesquite remodel features an exciting new design with rich, bold colors,
softer lighting and a high-energy atmosphere. The Mesquite restaurant reopened
as Pancho's Buffet & Grill in December 1999 with strong early sales gains and
customer response. Management plans to remodel two more existing restaurants
this year based on the Mesquite prototype.
The company is also developing a Pancho's Express Buffet(TM) format offering
customers the convenient all-you-can-eat buffet at a price point of only $3.99
per person. The company plans to remodel four existing units to the express
format in 2000. This format is designed to reinvigorate certain smaller or lower
sales units.
The company has thus identified a strategy to boost sales in certain units by
updating them with the Pancho's Buffet & Grill(TM) prototype. In other
restaurants, the company will seek to boost sales and improve margins by
developing its express format. As it rolls out these two divergent formats, the
company will evaluate their return on investment potential for remodeling other
Pancho's locations.
Management views these two alternative formats as brand extensions of its
existing Pancho's Mexican Buffet restaurants. It will continue to operate and
promote its traditional Pancho's Mexican Buffet units as it develops the
potential for these brand extensions.
The company continues to emphasize a neighborhood marketing strategy to
strengthen Pancho's ties to each restaurant's community. A portfolio of specific
tactics is developed for each location and complemented by company programs such
as the Birthday Club and School Rewards programs and Seniors Club.
Food cost declined 0.3% of sales in the quarter ended December 31, 1999 compared
with the same quarter last year.
Restaurant labor and related expenses increased 1.1% of sales for the quarter
ended December 31, 1999 compared with the same quarter last year. Due to
successful claims management, the company reduced its reserves for workers'
injury insurance by $162,000 in the quarter ended December 31, 1999. After
eliminating this benefit, labor costs were 2.4% of sales higher in 2000. Wage
rate inflation accounted for about two-thirds of the labor cost increase. The
remaining increase resulted from a combination of lower sales and more time
spent training due to the implementation of new recipes.
Restaurant operating expenses include occupancy costs, utilities, maintenance
expense, supplies, restaurant marketing and other costs. These costs rose 1.9%
of sales for the first quarter of 2000 versus the same period last year.
Restaurant marketing and promotion expenses were 1.2% of sales more than the
prior year quarter. Supply costs rose 0.6% of sales versus the prior year
quarter, mainly due to the purchase of new uniforms and smallwares for the roll
out of new recipes and salsa bars during the quarter. Many other operating
costs, notably utilities, maintenance and occupancy costs, do not vary
directly with sales volume, so lower sales exerts upward pressure on the
cost-to-sales ratio.
The company's Mesquite restaurant was closed from September through November
1999 for a complete reimaging remodel and was reopened in December 1999 under
the new name Pancho's Buffet & Grill(TM). Pre-opening costs of $43,000 for this
unit were recorded in the first quarter of fiscal 2000, and no preopening costs
were recorded in the prior year because no new or rebranded units were opened in
the prior period. Pre-opening costs include labor related costs prior to
opening, including recruiting expenses, food costs for preopening testing and
training, and construction supplies.
The company incurred a loss of $19,000 on the disposal of assets in the quarter
ended December 31, 1999, compared with a gain on sale of assets of $110,000 in
the prior year quarter.
In the quarter ended June 30,1998, the company increased its valuation allowance
for deferred tax assets to offset all of its net deferred tax assets. This was
considered necessary due to the company's net losses for that quarter and the
previous three years.
Deferred tax assets net of deferred tax liabilities increased $104,000 in the
quarter ended December 31, 1999, to $7.5 million, due mainly to the increase in
the federal net operating loss carryforward for the quarter. The valuation
allowance was increased by the same amount to match the net deferred tax asset
balance. Accordingly, the company recognized no net tax benefit in the quarter
ended December 31, 1999.
Despite the valuation allowance, the deferred tax assets are still available to
the company for future use. If the company realizes profitability, it may
recognize tax benefits for all or a portion of the deferred tax assets in the
future, when the valuation allowance is reduced or the tax assets realized. The
deferred tax assets include federal employer tax credits and net operating loss
(NOL) carryforwards which expire in years 2009 through 2020, and state NOL
carryforwards which expire in years 2000 through 2015.
For the reasons detailed above, the company had a net loss of $377,000 for the
quarter ended December 31, 1999, compared with net earnings of $114,000 for the
same period last year. The company's future profitability depends on increasing
restaurant revenues and reducing the key cost factors, particularly labor costs.
Year 2000 System Remediation
In the quarter ended December 31, 1999, the company successfully completed its
system remediation efforts regarding date recognition for the year 2000. The
company has not encountered any problems processing date information in the year
2000.
Other Uncertainties and Trends
SFAS No. 121 requires the company to review long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The company considers a history of operating
losses or negative cash flows to be its main indicators of potential impairment.
Assets are generally evaluated for impairment at the restaurant level. If a
restaurant continues to incur negative cash flows or operating losses, an
impairment or restaurant closing charge may be recognized in future periods.
Special Note Regarding Forward-Looking Information
Certain statements in this report are forward-looking statements which represent
the company's expectations or beliefs concerning future events, including, but
not limited to the following: statements regarding restaurant format or concept
changes, plans to sell assets, ability to pay debt, unit growth, capital
expenditures, future borrowings, future cash flows and future results of
operations. The company warns that many factors could, individually or in
aggregate, cause actual results to differ materially from those included in the
forward-looking statements, including, without limitation, the following: the
effects of changes in the company's restaurant format or concept; consumer
spending trends and habits; increased competition in the restaurant industry;
weather conditions; and laws and regulations affecting labor and employee
benefit costs. The company does not expect to update such forward-looking
statements continually as conditions change, and readers should consider that
such statements pertain only to the date hereof.
<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
10 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, 1999.
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 9, 2000
/s/ Hollis Taylor
Hollis Taylor, President and Chief
Executive Officer (Principal
Executive Officer)
February 9, 2000
/s/ W. Brad Fagan
Brad Fagan, Vice President,
Treasurer, Chief Financial Officer and
Assistant Secretary (Principal Financial
and Accounting Officer)
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 in-
terim financial information of Pancho's Mexican Buffet, Inc. and subsidi-
aries for the three-month periods ended December 31, 1999 and 1998, as
indicated in our report dated January 25, 2000; because we did not per-
form 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,
1999, is incorporated by reference in Registration Statements No. 2-
86238 and No. 33-60178 as amended, and No. 333-48295 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act of 1933, 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
January 25, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheets as of December 31, 1999 and the
consolidated condensed statements of operations for the three months then ended
and is qualified in its entirety by reference to such consolidated condensed
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 950,000
<SECURITIES> 0
<RECEIVABLES> 177,000
<ALLOWANCES> 0
<INVENTORY> 539,000
<CURRENT-ASSETS> 1,747,000
<PP&E> 47,477,000
<DEPRECIATION> 32,043,000
<TOTAL-ASSETS> 18,246,000
<CURRENT-LIABILITIES> 5,371,000
<BONDS> 0
0
0
<COMMON> 149,000
<OTHER-SE> 11,179,000
<TOTAL-LIABILITY-AND-EQUITY> 18,246,000
<SALES> 13,307,000
<TOTAL-REVENUES> 13,307,000
<CGS> 3,517,000
<TOTAL-COSTS> 12,546,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (377,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (377,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (377,000)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
