FORM 10-Q\A
AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission File Number 1-6537-3
EMPIRE GAS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MISSOURI 43-1494323
_____________________ ________________
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
P.O. Box 303, 1700 S. Jefferson Street, Lebanon, Missouri 65536
________________________________________________________________
Address of Principal Executive Offices and Zip Code)
(417) 532-3101
_____________________________________
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No ___
Number of Shares outstanding common stock (one class only) as of April 30,
1995, was 1,579,225.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EMPIRE GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
March 31,
1995 June 30,
(Unaudited) 1994
____________ __________
ASSETS
Current Assets
Cash $ 1,278 $ 2,927
Trade receivables - Net 8,820 5,454
Inventories 6,201 5,179
Prepaid Expense 1,168 619
Refundable Income Tax -- 2,254
Deferred Income Taxes 897 631
_________ _________
Total Current Assets 18,364 17,064
_________ _________
Property, Plant and Equipment 101,717 93,120
Less Accumulated Depreciation 28,310 25,847
_________ _________
Fixed Assets -- Net 73,407 67,273
_________ _________
Other Assets
Debt Acquisition Costs - Net 4,965 5,406
Excess of Cost Over Fair Value
Assets Acquired - Net 13,396 14,027
Other 1,670 874
_________ _________
Total Other Assets 20,031 20,307
_________ _________
Total Assets $ 111,802 $ 104,644
_________ _________
<PAGE> 3
EMPIRE GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
March 31,
1995 June 30,
(Unaudited) 1994
___________ _________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Current Maturities of Long-Term Debt $ 4,018 $ 292
Accounts Payable and Accrued Expenses 10,593 10,830
_________ _________
Total Current Liabilities 14,611 11,122
Long-Term Debt (Note 3) 114,037 104,949
Deferred Income Taxes 13,787 15,421
Accrued Self Insurance Liability (Note 2) 1,030 1,372
_________ _________
Total Liabilities 143,465 132,864
_________ _________
Stockholders' Equity (Deficit)
Common; $.001 Par Value; Authorized
20,000,000 Shares, Issued March
31, 1995 and June 30, 1994 --
14,291,020 Shares 14 14
Common Stock Purchase Warrants 1,227 1,227
Additional Paid-In Capital 27,279 27,279
Retained Earnings 27,792 31,235
__________ _________
56,312 59,755
Treasury Stock at Cost
March 31, 1995 and June 30, 1994
12,711,795 Shares (87,975) (87,975)
___________ __________
Total Stockholders' Equity (Deficit) (31,663) (28,220)
___________ __________
Total Liabilities and Stockholders'
Equity (Deficit) $ 111,802 $ 104,644
___________ __________
See Notes to Condensed Consolidated Financial Statements
<PAGE> 4
EMPIRE GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994)
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
_____________________ ______________________
1995 1994 1995 1994
____ ____ ____ ____
Operating Revenue $ 28,132 $ 46,121 $ 63,563 $ 110,107
Cost of Product Sold 13,493 20,117 30,720 50,770
_________ ________ _________ _________
Gross Profit 14,639 26,004 32,843 59,337
_________ ________ _________ _________
Operating Costs and Expenses
General & Administrative 7,644 12,108 21,559 33,109
Depreciation & Amortization 1,965 2,097 4,743 6,311
________ ________ _________ _________
9,609 14,205 26,302 39,420
________ ________ _________ _________
Operating Income 5,030 11,799 6,541 19,917
________ ________ _________ _________
Other Expense
Interest Expense, Net (2,676) (2,082) (7,960) (6,446)
Amortization of Debt
Discount & Expense (1,254) (509) (3,624) (1,501)
Restructuring Proposal
Costs (276) (674)
_________ _________ __________ __________
(3,930) (2,867) (11,584) (8,621)
_________ _________ __________ __________
Income (Loss) Before
Income Taxes 1,100 8,932 (5,043) 11,296
Provision (Credit) for 500 3,700 (1,600) 4,700
Income Taxes _________ ________ __________ _________
Net Income (Loss) $ 600 $ 5,232 $ (3,443) $ 6,596
_________ _______ __________ _________
Income (Loss) Per
Common Share $ .34 $ 0.49 $ (2.18) $ 0.61
__________ _______ ___________ __________
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
EMPIRE GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1995 AND 1994)
(UNAUDITED)
(In Thousands)
1995 1994
____ ____
Cash Flows From Operating Activities
Net Income (Loss) $ (3,443) $ 6,596
Items not requiring (providing) cash
Depreciation 3,866 5,746
Amortization 4,502 2,066
(Gain) Loss on sale of assets (320) 3
Deferred income taxes (1,900) (1,485)
Changes In:
Trade receivables (3,214) (6,873)
Inventories (928) 378
Prepaid expense & other (1,150) (224)
Accounts payable & accrued expenses 1,650 6,106
__________ _________
Net cash provided by (used in) (937) 12,313
operating activities __________ _________
Cash Flows From Investing Activities
Purchase of property & equipment (8,363) (4,721)
Acquisitions of retail service
centers (1,431) --
Proceeds from sale of property &
equipment 859 153
__________ _________
Net cash used in investing activities (8,935) (4,568)
__________ _________
Cash Flows From Financing Activities
Increase in working capital financing 8,400 (3,800)
Principal payments on other long-term
debt (177) (162)
Principal payments on term credit
facilities -- (1,950)
Repurchase of debentures for sinking
fund repayment -- (2,012)
_______ _______
Net cash provided by (used in)
financing activities 8,223 (7,924)
__________ _________
DECREASES IN CASH (1,649) (179)
CASH, BEGINNING OF PERIOD 2,927 352
__________ _________
CASH, END OF PERIOD $ 1,278 $ 173
__________ _________
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
EMPIRE GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
(1) In the opinion of Management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly Empire Gas Corporation's condensed consolidated
financial position as of March 31, 1995, and the condensed consolidated
results of its operations and cash flow for the periods ended March 31,
1995 and 1994. All such adjustments are of a normal recurring nature.
The accounting policies followed by the Company are set forth in Note 1
to the Company's consolidated financial statements in the 1994 Annual
Report on Form 10-K.
The results of operations for the three month and nine month periods
ended March 31, 1995 are not necessarily indicative of the results to
be expected for the full year due to the seasonal nature of the
Company's business.
(2) The Company reports the following contingencies. Except as
noted, there have been no significant changes in these items
since reports in the Company's 1994 Annual Report on Form 10-K.
Under the Company's current insurance program, coverage for
comprehensive general liability, workers' compensation and vehicle
liability is obtained for catastrophic exposures as well as those risks
required to be insured by law or contract. The Company retains a
significant portion of certain expected losses related primarily to
comprehensive general liability and vehicle liability. Under these
current insurance programs, the Company self-insures the first $500,000
of coverage (per incident) for general liability and $250,000 per
incident for vehicle liability. The Company obtains excess coverage
from carriers for these programs on claims-made basis policies. The
excess coverage for comprehensive general liability provides a loss
limitation that limits the Company's aggregate of self-insured losses
to $1 million per policy period. Provisions for self-insured losses
are recorded based upon the Company's estimates of the aggregate
self-insured liability for claims incurred. Effective July 1994, the
Company changed its policy so that it will obtain workers' compensation
coverage from carriers and state insurance pools. Prior to July, 1994,
the Company self-insured the first $500,000 of coverage for workers'
compensation.
For the policy periods July 1, 1989 through December 30, 1989, December
31, 1989 through June 30, 1991, July 1, 1992 through June 30, 1993, and
July 1, 1993 through June 30, 1994, the Company has provided for
comprehensive general liability losses up to the policies' $1 million
loss limit. Additional losses, if any, are insured by the excess
carrier and should not result in additional expense to the Company. As
of March 31, 1995, the Company has not exceeded the $1 million loss
limit for the comprehensive general liability policy period July 1,
1991 through June 30, 1992 or for the nine month period July 1, 1994 to
March 31, 1995.
<PAGE> 7
EMPIRE GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
The Company and its subsidiaries are defendants in various lawsuits
related to the self-insurance program which are not expected to have a
material adverse effect on the Company's financial position or results
of operations.
Interim accruals for the cost of self insurance are based on an
estimate of the related annual costs compared to the estimated total
gallons of propane to be sold during the same period. Presently, the
resulting accrual rate of expense recognizing self insurance is 3.0
cents per gallon sold.
The Company currently self insures health benefits provided to the
employees of the Company and its subsidiaries. Provisions for losses
expected under this program are recorded based upon the Company's
estimate of the aggregate liability for claims incurred. Effective
January 1995, the Company changed its policy so that it limits its self
insured liability to $75,000 of coverage (per incident).
The Company has no federal income tax audits in process at March 31,
1995. The Company and its subsidiaries are presently involved in
various state income tax audits and are also defendants in other
business-related lawsuits which are not expected to have a material
adverse effect on the Company's financial position or results of
operations.
In conjunction with the restructuring transaction (see Item 2 - Results
of operations) that occurred in June 1994 between the Company and
Empire Energy, the two companies have agreed to share on a percentage
basis the self-insured liabilities and amounts incurred related to
federal and state tax audits. Under the agreement, the Company will
assume 52.3% of the liability with Empire Energy assuming the remaining
47.7%. These liabilities, which are included in the Company's
financial statements at March 31, 1995, represent 52.3% of the total
liability as of that date.
(3) In June 1994 the Company repaid its existing term credit facility and
revolving credit facility with the proceeds from the issuance of
$127,200,000 face value 12 7/8% Senior Secured Notes, due 2004. These
debentures were issued at a discount and bear interest at 7% through
July 15, 1999, and at 12 7/8% thereafter.
The Company entered into a new revolving credit facility with a lender.
All of the Company's receivables and inventories are pledged to the
agreement which contain working capital, capital expenditure, debt and
certain dividend restrictions. These dividend restrictions prohibit
the Company from paying common stock cash dividends.
The facility provides for borrowings up to $15 million, subject to a
sufficient borrowing base. The borrowing base generally limits the
Company's total borrowings to 85% of eligible accounts receivable and
60% of eligible inventory. In addition, the Company can borrow an
additional $1.5 million during the period August 1, 1995 to January 31,
1996 (overadvance option). The facility bears interests at either 1%
<PAGE> 8
EMPIRE GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
over prime or 2.5% over the LIBOR rate. The agreement provides for a
commitment fee of .375% per annum of the unadvanced portion of the
commitment. The Company's available borrowings under the revolving
credit line amounted to $1.7 million at March 31, 1995, after
considering $400,000 outstanding letters of credit. $3.5 million of
the outstanding balance on the revolving credit line is included in
current maturities of long-term debt because of reductions to be
required based upon expected decreases in the borrowing base for the
credit line.
(4) Additional Cash Flow Information (In Thousands)
Additional Cash Payment Information 1995 1994
___________________________________ ____ ____
Interest Paid $ 6,415 $ 6,043
Income Taxes Paid (net of refunds) $ (2,210) $ 2,529
Noncash Investing and Financing Activities
__________________________________________
Mortgage obligations incurred on the $ 1,433 --
acquisition of retail service centers
(5) Underground Storage Facility
The Company owns salt cavern LPG underground storage facilities which
are not in use and are subject to a consent agreement with the state of
Kansas. Under the agreement, the Company was to submit a plan to the
state for resuming use of the facilities or permanently closing them.
The due date of the plan was initially January 1, 1994. The state has
granted a final extension to September 1, 1995, to determine whether to
re-open or permanently close the facility. After the decision is made,
the Company must submit its plan to the State of Kansas by December 1,
1995, and shall implement such plan within 30 days of approval by the
State of Kansas. The Company expects to include effects of the
submitted plan, if any, in its June 30, 1995, financial statements.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
_______________________________
The following table is presented as a measure of Company's liquidity and
financial condition.
March 31 June 30
________ ________
1995 1994 1994 1993
____ ____ ____ ____
(In thousands except ratios)
Total long-term debt
(including current
maturities) $118,055 $ 72,831 $ 105,241 $ 79,249
Working Capital $ 3,753 $ 4,670 $ 5,942 4,897
Current Ratio 1.26 1.23 1.53 1.36
During the nine months ended March 31, 1995, the Company's working capital
decreased by approximately $2.2 million due primarily to the
reclassification of $3.5 million of debt to current maturities as a result
of reductions to the Company's Credit line to be required upon expected
reductions in the borrowing base for the credit line. Additionally, working
capital decreased due to the reclassification of approximately $400,000
self-insurance reserve liability to current and approximately $300,000
increase in current maturities of mortgages. These decreases were offset by
the Company's approximate $3.0 million of income before income taxes (after
adjustment for noncash expenses). Of this $3.0 million of income,
approximately $1.0 million was used to fund purchases of property and
equipment and other assets.
The increase in long-term debt of approximately $12.8 million from June 30,
1994 to March 31, 1995, was attributable to $8.9 million for purchases of
property and equipment (net of the cash received from the sales of property
and equipment) which consisted of $1.4 million for four new retail centers,
$3.9 million for transportation equipment, and $3.6 million for normal
replacement and new start up retail service centers, $1.4 million of new
mortgages acquired in connection with the acquisition of the four new retail
service centers and $3.2 million of amortization of original issue discount
partially offset by the repayment of approximately $200,000 of other long
term debt and the use of approximately $500,000 of funds from operations to
fund purchases of property and equipment.
Pursuant to the 12 7/8% Senior Secured Notes Due 2004 indenture, the Company
is required to make a $4.5 million interest payment on July 15, 1995.
Historically, operating cash flows improve during the fourth quarter as
accounts receivable from winter sales are collected. The Company intends to
meet the interest payment requirement and funding for its acquisition
program through operating cash flows, the proceeds of previously planned
sales of marginally profitable retail service centers and properties
pursuant to its long-range business plan, expanding its customer advance
purchase program for future retail propane deliveries and scheduling its
payments for equipment purchases in the fall of 1995.
<PAGE> 10
During the nine months ended March 31, 1994, the Company's working capital
decreased by approximately $200,000. The decrease was due to the
reclassification of $1.0 million of long term debt to current maturities
related to increased sinking fund requirements, the reclassification of $1.1
million of deferred income taxes to current income taxes payable, the net
usage of $4.6 million of working capital to purchase property and equipment,
the usage of $7.9 million of working capital to reduce the revolving credit
facility and long-term debt. These decreases were offset by $14.4 million
of net income (after adjustment for non-cash expenses).
RESULTS OF OPERATIONS
_____________________
Due to the seasonal nature of the Company's business, the Company usually
realizes a net operating loss in the first quarter and net income for the
second and third quarters. Due to the warm winter weather this year the
Company realized a loss in the second quarter. Operating revenues for a
particular quarter are not necessarily indicative of a full fiscal year's
operations because of the seasonal element. Other expense items such as
depreciation and general and administrative expenses, however, generally
continue on a more annualized basis. Interest expense also continues on a
more level basis although interest expense is generally somewhat higher
during the summer and fall months due to increased working capital
borrowings used to finance inventory purchases in preparation for the
Company's principal sales months.
On June 30, 1994, the Company implemented a change in ownership and
management by repurchasing shares of Company common stock from its former
principal shareholder and certain other departing officers in exchange for
all of the shares of a subsidiary (Empire Energy Corporation) that owned 133
retail service centers located principally in the Southeast plus certain
home office assets and liabilities. At the same time, the Company acquired
six retail service centers in North Carolina. The analysis below compares
the actual current year information for operating revenue and gross profit
to pro forma historical data for the same period of the previous year.
General and administrative expenses for the current year are compared to
historical data as it relates to operating revenues as these items generally
are more closely related to revenues.
The following table sets forth, for the three months and nine months, ending
March 31, 1995 and 1994, selected aggregate operating data for the retail
service centers of the Company that were retained after the disposition of
Empire Energy and for the retail service centers the Company acquired in
North Carolina. The periods ending March 31, 1994 do not reflect operating
data for the four new retail service centers acquired in 1994.
3 Months Ended March 31 9 Months Ended March 31
_______________________ _______________________
1995 1994 1995 1994
____ ____ ____ ____
(Unaudited) (Unaudited)
(In thousands except per gallon amounts)
Operating revenue $28,132 $27,632 $63,563 $64,996
Gross margin 14,639 15,366 32,843 34,931
Retail gallons sold 31,430 30,712 72,299 72,021
Weighted average gross
profit per gallon $.408 $.456 $.381 $.429
<PAGE> 11
During the first nine months of fiscal 1995, the Company completed the
acquisitions of four retail service centers. The service centers acquired
prior to March 31,1995, were purchased for $1.4 million in cash and $1.4
million in new mortgages. The service centers acquired are located in
Arkansas, Missouri, South Carolina, and Wyoming. The aggregate historical
gallons, for the most recent year, of the four service centers acquired was
approximately 3.3 million gallons.
Operating revenues for the nine months ended March 31, 1995, decreased by
$1.4 million as compared to the same pro forma period of the prior year, due
to an approximately $.06 per gallon decrease in the average net sales price
which was created by competitive pressures resulting from decreased demand
due to the warm weather. This decrease is partially offset by an
approximate .4% (300,000 gallons) increase in gallons sold which is due to
the addition of retail service centers through acquisitions and new startups
partially offset by decreased demand described earlier.
The gross profit for the nine months decreased by $2.1 million as compared
to the same pro forma period of the prior year resulting from decreased
demand due to warmer winter weather. The net margin decreased $.05 per
gallon due to the decrease in the average net sales price described above
and Empire's more aggressive marketing program contributed to the margin
decline. These factors were partially offset by a decrease in the average
cost of propane of approximately $.01 per gallon. This decrease was
partially offset by the approximate .4% increase in gallons sold.
Operating revenues for the third quarter of fiscal year 1995 increased by
$500,000 as compared to the same pro forma period of the prior year, due to
an approximate 2.3% (700,000 gallons) increase in gallons sold partially
offset by an approximate $.045 per gallon decrease in the average net sales
price. The reasons for the changes in gallons and average net sales price
have been discussed above.
The gross profit for the third quarter decreased by $700,000 as compared to
the same pro forma period of the prior year due to the decrease in the
average net sales price discussed above combined with an increase in the
average cost of propane of approximately $.015 per gallon. This decrease
was partially offset by the approximate 2.3% increase in gallons sold. The
reasons for the changes in gross profit and gallons have been discussed
above.
General and administrative expenses for the nine months ended March 31,
1995, increased to 33.9% of operating revenues from 30.1% of operating
revenues for the nine months ended March 31, 1994. The increase in general
and administrative expenses is due to the decrease in operating revenues as
a result of warmer winter weather and to an actual increase in expenses in
relation to the company's post transaction size. The increase was due to an
increase of 1.8% in salaries and commissions, .7% in professional fees, 5%
in rent and maintenance of buildings and equipment, and .4% in both taxes
and licenses and the provision for doubtful accounts.
The increase in salaries and commissions was due to several factors
including 1) increased retail salary expense due primarily to additional
employees as a result of acquisitions and startups and increased commissions
as a result of increased emphasis on new customers and tank sets and 2)
increased home office salary expense as a result primarily of additional
<PAGE> 12
operational employees due to acquisitions and additional marketing employees
as a result of the company's emphasis on enhanced sales efforts. Also
affecting the comparison is an increase in the salary costs related to
services rendered by Empire Service Corporation, a subsidiary of Empire
Energy Corporation which provides home office support services. The
increase in professional fees is due to fees related to the formation of a
401k plan, fees related to a state income tax audit, and fees for a supply
purchase consulting agreement. The increase in rent and maintenance of
buildings is primarily due to increased tank painting, building maintenance
in converting certain rental facilities to a new identity in connection with
the restructuring and an increase in the rental of facilities primary
related to the six retail service centers acquired in June 1994. The
increase in taxes and licenses relates primarily to property taxes paid for
the six retail service centers acquired in June 1994. The increase in the
provision for bad debts is due to the Company accruing its provision on a
more level method than in prior years.
General and administrative expenses for the third quarter ended March 31,
1995, increased to 27.2% of the quarter's operating revenue from 26.3% of
operating revenues for the quarter ended March 31, 1994. The increase was
mainly due to an increase of 1.1% in the provision for bad debts, .8% in
salaries and commissions, .7% in office expenses, and .4% in professional
fees. These increases were offset by decreases of 1.5% in payroll taxes and
employee benefits, and .6% in vehicle fuel and maintenance. The reasons for
the changes in provision for bad debts, salaries and commissions, and
professional fees have been discussed above.
The increase in office expenses is primarily due to additional spending
required for the change of identity for several of the retail sites and
additional mailings to customers during this quarter. The decrease in
payroll taxes and employee benefits is primarily due to decreased health
insurance coverage costs, slightly offset by higher payroll taxes as a
result of higher salary costs. The decrease in vehicle fuel and maintenance
is due primarily to reduced repairs on vehicles resulting from a large
number of trucks replaced with new vehicles purchased in fiscal year 1995.
Interest expense increased approximately $1.5 million for the nine months
ended March 31, 1995, and $600,000 for the third quarter of fiscal year 1995
as compared to the same periods of the prior year, due to approximately $45
million face value additional long-term debt outstanding as compared to the
same period of the prior year partially offset by an overall lower rate of
interest, principally the new senior secured notes issued in June 1994, as
compared to the higher rates of debt repaid with this new debt offering.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 2 of the Condensed Consolidated
Financial Statements
Item 2, 3, 4 and 5.
No information is reportable under these sections.
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
________
Exhibit
No. Description
_______ ___________
(27) Financial Data Schedule
(b) Reports on Form 8-K
___________________
None
Reviewed by Independent Certified Public Accountants
The March 31, 1995 financial statements included in this filing on Form 10-Q
have been reviewed by Baird, Kurtz & Dobson, Independent Certified Public
Accountants, in accordance with established professional standards and
procedures for such a review. The report of Baird, Kurtz & Dobson
commenting upon their review is appended hereto.
<PAGE> 14
SIGNATURE
_________
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.
EMPIRE GAS CORPORATION
Registrant
/s/Willis D. Green
________________________
WILLIS D. GREEN
VICE PRESIDENT
DATE: May 16, 1995
<PAGE>
<PAGE> 15
Independent Accountants' Report
_______________________________
Board of Directors and Stockholders
Empire Gas Corporation
Lebanon, Missouri
We have reviewed the accompanying condensed consolidated balance sheet
of EMPIRE GAS CORPORATION AND SUBSIDIARIES (formerly Empire Gas Acquisition
Corporation) as of March 31, 1995, and the related condensed consolidated
statements of operations and cash flows for the three-month and nine-month
periods ended March 31, 1995 and 1994. These condensed consolidated
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 procedures
to financial data and 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 condensed
consolidated 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 accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of June 30, 1994, and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the year then ended (not presented herein); and
in our report dated August 26, 1994, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as of
June 30, 1994, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
BAIRD, KURTZ & DOBSON
Springfield, Missouri
April 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,278
<SECURITIES> 0
<RECEIVABLES> 10,810
<ALLOWANCES> 1,990
<INVENTORY> 6,201
<CURRENT-ASSETS> 18,364
<PP&E> 101,717
<DEPRECIATION> 28,310
<TOTAL-ASSETS> 111,802
<CURRENT-LIABILITIES> 14,611
<BONDS> 118,055
<COMMON> 14
0
0
<OTHER-SE> (31,677)
<TOTAL-LIABILITY-AND-EQUITY> 111,802
<SALES> 60,440
<TOTAL-REVENUES> 63,563
<CGS> 30,720
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<INTEREST-EXPENSE> 11,584
<INCOME-PRETAX> (5,043)
<INCOME-TAX> (1,600)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,443)
<EPS-PRIMARY> (2.18)
<EPS-DILUTED> 0
</TABLE>
