<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 Period ended December 31, 1998
-----------------
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 0-18102
-------
MATTHEWS STUDIO EQUIPMENT GROUP
-------------------------------
(Exact name of registrant as specified in its charter)
California 95-1447751
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3111 North Kenwood Street, Burbank, CA 91505
-------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(818) 525-5200
--------------
(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 Exchange Act 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 the latest practicable date. Common Stock, No Par
--------------------
Value 9,200,156 shares as of January 31, 1999.
- -----------------------------------------------
<PAGE>
Index
Matthews Studio Equipment Group and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - December 31, 1998 and
September 30, 1998
Condensed consolidated statements of operations - Three months ended
December 31, 1998 and 1997
Condensed consolidated statements of cash flows - Three months ended
December 31, 1998 and 1997
Notes to condensed consolidated financial statements -
December 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Part I. Financial Information
Item I. Financial Statements
Matthews Studio Equipment Group and Subsidiaries Condensed
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1998
------------ ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ - $ 331
Accounts receivable, less allowance for doubtful
accounts of $1,272 at December 31,
1998 and $1,259 at September 30, 1998 9,923 8,981
Current portion of net investment in finance and sales-type leases 343 353
Inventories 3,956 3,783
Prepaid expenses and other current assets 818 536
Income tax refund receivable 965 1,045
Deferred income taxes 1,092 753
-------- --------
Total current assets 17,097 15,782
Property and equipment, net 53,053 51,650
Net investment in finance and sales-type leases, less current portion 213 248
Goodwill less accumulated amortization of $911 at December 31,
1998 and $681 at September 30, 1998 22,801 23,168
Other assets 3,544 3,538
-------- --------
Total assets $ 96,708 $ 94,386
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 7,153 $ 4,634
Accrued liabilities 3,572 3,946
Current portion of long-term debt and capital lease obligations 4,522 4,687
-------- --------
Total current liabilities 15,247 13,267
Long-term debt and capital lease obligations less current portion 76,376 74,691
Deferred income taxes 3,815 3,815
Shareholders' equity:
Preferred stock - -
Common stock 7,153 7,144
Retained earnings 3,699 5,051
-------- --------
10,852 12,195
Less retired common stock (1,916,450 shares) 9,582 9,582
-------- --------
Total shareholders' equity 1,270 2,613
-------- --------
Total liabilities and shareholders' equity $ 96,708 $ 94,386
======== ========
</TABLE>
Note: The balance sheet at September 30, 1998 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
<S> <C> <C>
1998 1997
Revenues from rental operations $10,064 $ 7,771
Net product sales 4,882 5,686
------- -------
14,946 13,457
Costs and expenses:
Cost of rental operations 5,950 4,062
Cost of product sales 3,753 3,860
Selling, general and administrative 5,041 4,420
Interest, net 1,893 1,110
------- -------
16,637 13,452
Income (loss) before income taxes (1,691) 5
Income taxes provision (benefit) (339) 2
------- -------
Net income (loss) (1,352) $ 3
======= =======
</TABLE>
Income (loss) per common share,
basic and diluted ($0.15) $ 0.00
====== ======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1998 1997
----- -----
<S> <C> <C>
Operating activities:
Net income (loss) $(1,352) $ 3
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for doubtful accounts receivable 14 41
Depreciation and amortization 2,836 1,867
Deferred income taxes (339) -
Gain on sale of assets (65) (105)
Changes in operating assets and liabilities
net of effects from acquisitions:
Accounts receivable (956) 832
Inventories (173) (585)
Net investment in leases 45 83
Prepaids and other assets (224) 12
Accounts payable and accrued liabilities 2,145 (1,692)
Income tax refund receivable 80 -
------- -------
Net cash provided by operating activities 2,011 456
Investing activities:
Payment for acquisitions (1,800)
Purchase of property and equipment (3,635) (4,227)
Proceeds from sale of property and equipment 141 209
------- ------
Net cash used in investing activities (3,494) (5,818)
Financing activities:
Proceeds from exercise of stock options 9 12
Proceeds from borrowings 1,843 7,019
Repayment of borrowings (700) (1,495)
------- -------
Net cash provided by financing activities 1,152 5,536
Net increase (decrease) in cash and cash equivalents (331) 174
Cash and cash equivalents at beginning of period 331 393
------- -------
Cash and cash equivalents at end of period $ - $ 567
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Matthews Studio Equipment Group and Subsidiaries
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)
($ in thousands)
Three Months Ended
December 31,
1998 1997
-------- --------
<S> <C> <C>
Schedule of noncash investing and financing
transactions:
Common stock issued for acquired company $ - $ 884
Capital lease obligations incurred
377 -
Additional disclosures:
Cash paid during period for:
Interest 1,794 1,069
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
1. General
Presentation
The accompanying unaudited condensed consolidated financial statements of
Matthews Studio Equipment Group and Subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended December 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending September 30, 1999, due to fluctuations in film production activities.
For further information refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended September 30, 1998.
Business
The Company sells, leases and rents audio, video, theatrical, film and
production equipment and accessories, to the motion picture, television,
corporate, theatrical, video and photography industries. The Company operates in
one business segment and provides, as a single source, the necessary production
equipment which is otherwise only available by using many different suppliers.
The Company supplies equipment such as lights, grip lighting supports,
professional video equipment, camera mounts, tripods, pedestals, fluid heads,
camera dollies, portable camera cranes, power generators and production trucks.
In addition, the Company has fully operational and equipment supplied
soundstages and studios.
2. Accounting Policies
Principles of Consolidation - The financial statements include the accounts
of the Company and its subsidiaries as of the respective date each subsidiary
was acquired. All significant intercompany balances and transactions have been
eliminated.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash Equivalents - The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents. The
carrying value of these instruments approximates market value because of their
short maturity.
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Concentration of Credit Risk - The Company's customers are located around
the world and are principally engaged in motion picture and television
production, theatrical production, corporate video, commercial photography, or
in providing rental equipment to companies in these industries. The Company
generally sells on credit terms of 30 days and does not require collateral,
except for items sold under capital leases in which it retains a security
interest. The Company rents equipment under short-term operating leases on
credit terms of generally 30 days and retains a security interest.
Fair Values of Financial Instruments - The Statement of Financial
Accounting Standards No. 107 "Disclosure About Fair Value of Financial
Instruments" ("SFAS No. 107") requires disclosure of fair value information
about most financial instruments both on and off the balance sheet, if it is
practicable to estimate. SFAS No. 107 excludes certain financial instruments
such as certain insurance contracts and all non-financial instruments from its
disclosure requirements. A financial instrument is defined as a contractual
obligation that ultimately ends with the delivery of cash or an ownership
interest in an entity. Disclosure regarding the fair value of financial
instruments is derived using external market sources, estimates using present
value or other valuation techniques. Cash, accounts receivable, accounts
payable, accrued and other liabilities and short-term revolving credit
agreements and variable rate long-term debt instruments approximate their fair
value.
Inventories - Inventories are principally stated at the lower of first-in,
first-out cost or market.
Other Assets - Included in other assets are loan fees that are being
amortized as interest expense over the term of the bank facility.
Goodwill - Goodwill represents the excess of cost over the fair value of
net assets acquired and is amortized using the straight-line method, generally
over 25 years. Useful lives are determined on a case by case basis for each
business acquired. The carrying value of goodwill is reviewed if the facts and
circumstances suggest that it may be impaired. If this review indicates that
goodwill will not be recoverable, as determined based on estimated undiscounted
cash flows of the Company over the remaining amortization period, the Company's
carrying value would be reduced by the estimated shortfall of discounted cash
flows.
Property and Equipment - Property and equipment, including items purchased
under capital leases, are recorded at cost. Costs incurred for major renewals
and betterments that extend the useful life of the assets are capitalized,
whereas repair and maintenance costs are charged to expense as incurred. When
property is retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts and any resulting gain or loss is
reflected in income. Depreciation and amortization is calculated using the
straight-line method over the estimated useful lives of the assets as follows:
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Rental equipment 5 - 10 years
Buildings and improvements 10 - 40 years
Other 5 - 10 years
Leasehold improvements are amortized over the estimated useful lives, or
the term of the related leases, for improvements, whichever is shorter.
Revenue Recognition - The Company recognizes revenue from rentals under
operating leases in the week in which they are earned and recognizes product
sales upon shipment.
Per Share Data - During the year ended September 30, 1998, the Company
adopted the statement of Financial Accounting Standards No. 128 "Earnings Per
Share" ("SFAS No. 128") which established standards for computing and presenting
earnings per share ("EPS") for publicly-held common stock or potential common
stock. SFAS No. 128 supersedes the standards for computing earnings per share
previously found in APB opinion No. 15 "Earnings per Share" and simplifies the
standards for computing earnings per share. In addition, SFAS No. 128 replaces
the presentation of primary earnings per share with a presentation of basic
earnings per share, requires dual presentation of basic and diluted earnings per
share on the face of the income statement for all entities with complex capital
structures, and requires a reconciliation of the numerator and denominator on
the basic earnings per share computation to the numerator and denominator of the
diluted earnings per share computation. All periods presented reflect the
adoption of SFAS No. 128.
Income Taxes - The Company utilizes the liability method to determine the
provision for income taxes. Deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. For the three months
ended December 31, 1998 and 1997, an effective income rates of 20% and 40% were
utilized, respectively.
Long-Lived Assets - Long-lived assets used in operations are reviewed
periodically to determine that the carrying values are not impaired and if
indicators of impairment are present or if long-lived assets are expected to be
disposed of, impairment losses are recorded.
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
3. Earnings Per Share
The following is a reconciliation of the computations for basic and diluted EPS:
<TABLE>
<CAPTION>
For the Quarter Ended December 31,
---------------------------------------------------------------------------------------------
1998 1997
----------------------------------------- -----------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available
to common stockholders $ (1,352) 9,117 $ (0.15) $ 3 10,987 $ 0.00
======== ========
Effect of Dilutive
Options and warrants 1593
-------- ------ ------ ----
Diluted EPS:
Income available to common
Stock holders and assumed
conversions $ (1,352) 9,117 $ (0.15) $ 3 12,580 $ 0.00
======== ====== ======== ======= ====== =======
</TABLE>
Options to purchase 741,000 shares of common stock at a range of $2.94 to
$4.74 per share, and options to purchase 119,000 shares of common stock at a
range of $4.13 to $4.74 per share, were outstanding during the quarter ended
December 31, 1998 and 1997 respectively, but were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common shares.
The Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for its stock-based
compensation plans. Accordingly, no compensation cost has been recognized for
its fixed stock option plans. Had compensation cost for the Company's option
plans been determined based on the fair value at the grant dates for awards
under those plans consistent with the method of FASB Statement 123, "Accounting
for Stock-Based Compensation," the Company's net income (loss) and earnings per
share would have been reduced to the pro forma amounts indicated below (in
thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended December 31,
1998 1997
---- ----
<S> <C> <C>
Net income (loss)
As reported $ (1,352) $ 3
Pro forma (1,387) (16)
Net income (loss) per share, basic and diluted
As reported (0.15) -
As Pro forma (0.15) -
</TABLE>
<PAGE>
Matthews Studio Equipment Group and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
4. Acquisition and disposition
The pro forma results of operations for the three months ended December 31,
1997, assuming consummation of the acquisition of Four Star and Olesen and
disposal of the manufacturing operations as of October 1, 1997, are as follows
($ in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1997
------------------
<S> <C>
Net revenue $14,076
Net income (loss) (190)
Net income (loss) per common share, basic and diluted (0.02)
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
The Company is including the following cautionary statement in this
Form 10-Q to make applicable and take advantage of safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 for any forward looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts. From time to time, the Company may
publish or otherwise make available forward-looking statements of this nature.
All such subsequent forward-looking statements, whether written or oral, and
whether made by or on behalf of the Company, are also expressly qualified by
these cautionary statements. Certain statements contained herein are forward-
looking statements and accordingly involve risks and uncertainties which could
cause actual results or outcomes to differ materially from those expressed in
the forward-looking statements.
Results of Operations
Overview
The Company continued its principal strategy to expand and strengthen its
equipment rental operations during the first three months of fiscal 1999. In
addition, the Company continued to focus on opportunities to provide its
products and services from outlets located in different parts of the United
States as well as expanding its product lines. The development of a marketing
and distribution network in select geographic marketplaces throughout the United
States enabled the Company to improve rental asset utilization and expand the
Company's core businesses.
Company revenues for the first three months of fiscal 1999 increased to
$14,946,000, an increase of $1,489,000 or 11% over the first three months of
fiscal 1998. In addition, EBITDA (earnings before interest expense, income
taxes, depreciation and amortization) increased to $3,038,000 in the first
quarter of fiscal 1999 as compared to $2,982,000 in fiscal 1998. The EBITDA
for the first three months of fiscal 1998 included $143,000 from the
manufacturing operation which was sold during the fourth quarter of fiscal
1998. Net loss for the first quarter 1999 was $1,352,000 or $0.15 per share
compared to net income of $3,000 or $0.00 per share for the same period last
year. Components of the Company's operating results are discussed below.
Revenues From Rental Operations
- -------------------------------
Revenues from rental operations were $10,064,000 for the first three
months of fiscal 1999, compared to $7,771,000 for the same period last year, an
increase of $2,293,000 or 30%. Approximately 31% of rental revenues were
generated by two theatrical rental operations acquired in November 1997 and
April 1998. Rental revenue from production equipment rentals, primarily of
lighting, grip, power generators and trucks, decreased by approximately $465,000
or 11% to $3,640,000 in the first quarter of fiscal 1999 from $4,105,000, for
the same period last year. In addition, revenues from video equipment rentals
decreased $175,000 or 6% in the first three months of fiscal 1999, to $2,524,000
from $2,699,000 in the first quarter of fiscal 1998. The decrease is primarily
due to industry-wide slowdown.
<PAGE>
Net Product Sales
- -----------------
Net equipment and supply sales were $4,882,000 for the first three months
of fiscal 1999, a decrease of $804,000 or 14%, from $5,686,000 for the first
three months of fiscal 1998. The decrease is primarily due to the disposal of
the manufacturing operations during the fourth quarter of last year. Excluding
the manufacturing operations which accounted for $2,569,000 of the net equipment
and supply sales of the first quarter of last year, sales increased $1,765,000
or 57% over the first quarter of fiscal 1998. The increase is primarily due to
the acquisition of Olesen in November 1997 and the expansion into Las Vegas,
Nevada at the end of the third quarter of fiscal 1998.
Gross Profit - Rental
- ---------------------
Gross profit on rental revenues was $4,114,000 or 41% of revenues for the
first three months of fiscal 1999 compared to $3,709,000 or 48% in fiscal 1998.
The two theatrical rental operations acquired during first and second quarters
of fiscal 1998 accounted for approximately $1,969,000 of gross profit on rental
revenues. Production equipment rentals, primarily of lighting, grip, power
generators and trucks accounted for approximately $1,676,000 and the video
equipment rentals accounted for approximately $423,000. The decrease in gross
profit percentage resulted primarily from general industry wide slow-down of the
production and video equipment rental businesses and the fixed nature of some
costs such as depreciation. The Company experienced some price softening and
margin erosion as a result of the slow down. Depreciation expense for rental
operations was $2,246,000 in the first quarter of 1999 compared to $1,563,000 in
1998.
Gross Profit - Sales
- --------------------
Gross profit on sales decreased from $1,826,000 in the first quarter of
1998 to $1,129,000 in the first quarter of 1999. Included in the 1998 results is
gross profit of $979,000 from the manufacturing subsidiary. As a percentage of
sales, gross profit was approximately 23% for the first three months of fiscal
1999, compared to approximately 32% for the same period in fiscal 1998. The
lower gross profit percentage realized by the Company was primarily attributable
to the increase in expendable supply product sales, which have lower gross
profit margins than did the equipment sales of the manufacturing operation. Some
margin erosion also resulted from the industry slow down.
Selling, General and Administrative
- -----------------------------------
Selling, general and administrative expenses were $5,041,000 in the first
three months of fiscal 1999 compared to $4,420,000 for the same period in fiscal
1998. As a percent of sales, selling, general and administrative expenses were
34% for the first three months of fiscal 1999 compared to 33% for the same
period in fiscal 1998, an increase of $621,000. The dollar increase is due
primarily to costs and expenses incurred to expand the operations of the
Company, including costs to pursue the growth strategy, improve the foundation
for the operations and improve and integrate business systems. These costs were
incurred in anticipation of the growth in revenues, which has been impacted by
the industry slow down.
<PAGE>
Interest
- --------
Interest increased to $1,893,000 in the first three months of fiscal 1999
from $1,110,000 in the first three months of fiscal 1998. The increase in
interest costs is mainly due to additional debt incurred and assumed in
acquisitions completed after the first quarter of fiscal 1998, and to the
additional capital investment made.
Liquidity and Capital Resources
- -------------------------------
During the three months ended December 31, 1998, the Company financed its
operations from internally generated cash flow and bank borrowings.
At December 31, 1998 the Company's working capital was $1,850,000 which was
a decrease of $665,000 from its working capital at September 30, 1998.
The Company primarily applied cash from additional borrowings from the
Company's bank line of $1,843,000 to pay down capital lease obligations and
other debt incurred in previous years acquisitions. The major components of the
net capital equipment additions were equipment for the Company's theatrical
rental operations of approximately $2,677,000 and equipment additions to other
rental operations (primarily video rental operations) of approximately $791,000.
In January 1999, in connection with the issuance of a $3,000,000 letter of
credit by ING in favor of the lenders, the Company amended its bank agreement.
As a result, the revolving credit loan was reduced to $61,000,000, the covenants
were modified for fiscal 1999 and the effects of prior defaults were eliminated
either through waiver or modification of certain covenants. As of the date of
the amendment, the Company had approximately $5,100,000 available under its
revolving line of credit.
During the next twelve months, the Company expects to purchase new capital
equipment to allow its operations to be more efficient, support growth and to
control cost. The Company expects to finance its capital acquisition program
through a combination of cash generated from operations and additional
borrowings under its bank line. The Company believes it will have sufficient
funds from operations and bank borrowings to meet its anticipated requirements
for working capital during the next twelve months.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
27 Financial Data Schedule (in Edgar filing only)
(b) The Company did not file any reports on Form 8-K during the three
months ended December 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report on Form 10-Q for the period
ending December 31, 1998, to be signed on its behalf by the undersigned hereunto
duly authorized.
MATTHEWS STUDIO EQUIPMENT GROUP
(Registrant)
Date: February 11, 1999
By: /S/ Carlos D. DeMattos
_____________________________________________
Carlos D. DeMattos
Chairman of the Board, President and
Chief Executive Officer
By: /S/ Alan S. Unger
_____________________________________________
Alan S. Unger
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q
PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 11,195
<ALLOWANCES> 1,272
<INVENTORY> 3,956
<CURRENT-ASSETS> 17,097
<PP&E> 81,600
<DEPRECIATION> 28,547
<TOTAL-ASSETS> 96,708
<CURRENT-LIABILITIES> 15,247
<BONDS> 0
0
0
<COMMON> 7,153
<OTHER-SE> (5,883)
<TOTAL-LIABILITY-AND-EQUITY> 96,708
<SALES> 4,882
<TOTAL-REVENUES> 14,946
<CGS> 3,753
<TOTAL-COSTS> 9,703
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 1,893
<INCOME-PRETAX> (1,691)
<INCOME-TAX> (339)
<INCOME-CONTINUING> (1,352)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,352)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
