Form 10-Q
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 September 30, 1998
Commission File Number 1-6537-3
ALL STAR 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, 119 West Commercial Street, Lebanon, Missouri 65536
(Address of Principal Executive Offices and Zip Code)
(417) 532-3103
(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 of outstanding common stock (one class only) as of October
31, 1998 was 1,564,050.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
September 30, 1998
(Unaudited) June 30, 1998
------------------- -------------
Assets
Current Assets
Cash $ 668 $ 897
Trade receivables - Net 4,848 4,526
Inventories 8,077 6,985
Prepaid Expense 753 615
Refundable Income Taxes 2,061 1,135
Deferred Income Taxes 163 312
----------------- --------------------
Total Current Assets 16,570 14,470
----------------- --------------------
Property, Plant and Equipment 118,125 118,313
Less Accumulated Depreciation 38,275 37,323
----------------- --------------------
Fixed Assets - Net 79,850 80,990
----------------- --------------------
Other Assets
Debt Acquisition Costs - Net 2,957 3,086
Excess of Cost Over Fair Value
of Assets Acquired - Net 12,733 13,202
Other 1,970 2,040
----------------- --------------------
Total Other Assets 17,660 18,328
----------------- --------------------
Total Assets $ 114,080 $ 113,788
================= ====================
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
September 30, 1998
(Unaudited) June 30, 1998
---------- --------------
Liabilities and Stockholders' Equity
Current Liabilities
Current Maturities of Long-Term Debt $ 12,154 $ 7,824
Accounts Payable and Accrued
Expenses 19,664 18,877
--------------------- --------------
Total Current Liabilities 31,818 26,701
Long-Term Debt 136,211 134,526
Deferred Income Taxes 2,940 4,905
Accrued Self-Insurance Liability 224 330
--------------------- --------------
Total Liabilities 171,193 166,462
--------------------- --------------
Stockholders' Equity (Deficit)
Common; $.001 Par Value;
Authorized 20,000,000 Shares,
Issued Sept. 30, 1998 and
June 30, 1998 - 14,291,020
Shares 14 14
Common Stock Purchase Warrants 1,227 1,227
Additional Paid-In Capital 27,279 27,279
Retained Earnings 2,441 6,880
--------------------- --------------
30,961 35,400
Treasury Stock at Cost
September 30, 1998 and June 30,
1998 - 12,726,970 Shares (88,074) (88,074)
--------------------- --------------
Total Stockholders' Equity (Deficit) (57,113) (52,674)
--------------------- ---------------
Total Liabilities and
Stockholders' Equity (Deficit) $ 114,080 $ 113,788
--------------------- --------------
See Notes to Condensed Consolidated Financial Statements
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
1998 1997
---- ----
Operating Revenue $ 11,923 $ 13,078
Cost of Product Sold 5,469 6,651
------------ -----------
Gross Profit 6,454 6,427
------------ -----------
Operating Costs and Expenses
General and Administrative 6,999 6,766
Depreciation and Amortization 2,355 2,292
Gain on Sale of Assets (349) (88)
------------ ------------
9,005 8,970
------------ -----------
Operating Loss (2,551) (2,543)
------------ -----------
Other Expense
Interest Expense, Net (2,798) (2,651)
Amortization of Debt
Discount and Expense (1,845) (1,673)
Restructuring Proposal Costs - (368)
------------ -----------
(4,643) (4,692)
------------ -----------
Loss Before Income Taxes (7,194) (7,235)
Credit for Income Taxes (2,755) (2,100)
------------ -----------
Net Loss $ (4,439) $ (5,135)
============ ===========
Basic and Diluted Loss Per
Common Share $ (2.84) $ (3.28)
============ ===========
See Notes to Condensed Consolidated Financial Statements.
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
(Dollars in Thousands)
1998 1997
---- ----
Cash Flows From Operating Activities
Net Loss $ (4,439) $ (5,135)
Items not requiring (providing) cash
Depreciation 1,793 1,836
Amortization 2,407 2,129
Gain on sale of assets (349) (88)
Deferred income taxes (1,816) (2,100)
Changes In:
Trade receivables (28) (647)
Inventories (1,133) (446)
Prepaid expense & other (86) 170
Accounts payable & accrued expenses 580 4,481
---------- ----------
Net cash provided by (used in)
operating activities (3,071) 200
----------- ----------
Cash Flows From Investing Activities
Purchase of property & equipment (787) (2,088)
Acquisition of retail service centers (601) (2,697)
Proceeds from sales of property and
equipment 116 189
Disposal of retail service centers 719 550
Advances from related parties (19) -
Net cash used in investing
activities (572) (4,046)
---------- ----------
Cash Flows From Financing Activities
Checks in process of collection (810) (373)
Increase in working capital financing 3,379 4,683
Proceeds on long-term debt obligations 1,621 -
Principal payments on other long-term
debt (776) (251)
--------- -----------
Net cash provided by financing
activities 3,414 4,059
--------- ----------
INCREASE (DECREASE) IN CASH (229) 213
CASH, BEGINNING OF PERIOD 897 965
----------- -----------
CASH, END OF PERIOD $ 668 $ 1,178
=========== ===========
See Notes to Condensed Consolidated Financial Statements
ALL STAR GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
(1) BASIS OF PRESENTATION
All Star Gas Corporation (the Company) was founded in 1963 and
through its subsidiaries has been in operation for over 34 years. The
Company is engaged primarily in the retail marketing of propane and
propane related appliances, supplies and equipment to residential,
agricultural and commercial customers. As of the last fiscal year,
the Company provided service to approximately 115,000 customers in 21
states through 130 retail service centers.
The accompanying unaudited condensed consolidated financial
statements contain, in the opinion of Management, all adjustments
necessary to present fairly the Company's consolidated financial
position as of September 30, 1998, and the consolidated results of
its operations and cash flows for the periods ended September 30,
1998 and 1997. All such adjustments are of a normal recurring nature.
These financial statements should be read in conjunction with the
Company's audited consolidated financial statements as of June 30,
1998, and the notes thereto included in the Form 10-K as filed with
the United States Securities and Exchange Commission as disclosure
which would substantially duplicate the disclosure contained in that
registration has been omitted.
Due to the seasonal nature of the Company's business, the results of
operations for the three months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full
year.
(2) MANAGEMENT'S CONSIDERATION OF GOING CONCERN MATTERS
The Company has net working capital and stockholders' equity
deficiencies and its working capital borrowing facility is due in
full in December 1998. The financial statements have been prepared
assuming the Company will continue as a going concern, realizing
assets and liquidating liabilities in the ordinary course of
business. Management is considering several alternatives for
mitigating these conditions during the next year. These include
seeking a long-term extension of the existing credit facility and
exploring other financing and recapitalization alternatives.
Management is also seeking operational improvements and economies,
such as those the Company expects to realize from reductions in
general and administrative expenses undertaken in the latter part of
fiscal 1998. While management believes the Company will be able to
obtain the necessary financing and/or capital, no commitments have
been obtained. Although not currently planned, realization of assets
in other than the ordinary course of business to meet liquidity needs
could incur losses not reflected in these financial statements.
(3) SELF-INSURANCE AND CONTINGENCIES
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
self-insures the first $200,000 for each and every general liability
incident. For the vehicle and workers' compensation programs, the
Company has a $250,000 deductible per occurrence. The Company obtains
excess coverage on occurrence basis policies. Provisions for
self-insured losses are recorded based upon the Company's estimates
of the aggregate self-insured liability for claims incurred,
resulting in a retention for a portion of these expected losses.
The Company and its subsidiaries are defendants in other 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.
The Company currently self-insures health benefits provided to the
employees of the Company and its subsidiaries, subject to a $75,000
maximum per claim. Provisions for losses expected under this program
are recorded based upon the Company's estimate of the aggregate
liability for claims incurred.
As previously reported, the State of Missouri has made an assessment
of state income tax for the years ended June 30, 1992 and 1993, the
nature and magnitude of which has not changed. The Company continues
to believe that it has a strong position on this matter and intends
to vigorously contest the assessment. It is likely that this matter
will have to be settled in litigation.
The Company and its subsidiaries are presently involved in other
various state tax audits, which are not expected to have a material
adverse effect on the Company's financial position or results of
operations.
(4) RELATED PARTY TRANSACTIONS
During the three months ending September 30, 1998, the Company
received advances bearing interest at a rate of 12% from its
Principal Shareholder totaling $230,000. At September 30, 1998, the
balances of these obligations and other prior loan agreements are
$261,000.
(5) ACCOUNTING FOR DERIVATIVES
There has been no change since June 30, 1998 in the Company's
treatment of commodity futures contracts. As of September 30, 1998,
the Company's open positions on futures contracts are immaterial.
(6) LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss for the
three month periods by the average number of common shares and,
except where anti-dilutive, common share equivalents outstanding, if
any. The weighted average number of common shares outstanding used in
the computation of loss per common share was 1,564,050 as of
September 30, 1998 and 1997, respectively.
(7) ACQUISITIONS AND DISPOSITIONS OF RETAIL SERVICE CENTERS
The Company continues to pursue growth and improved results through
the acquisition of retail service centers in its market area and the
disposition of service centers in accordance with its overall
marketing plan. During the three months ended September 30, 1998, the
Company, through its unrestricted subsidiary, acquired one business,
consisting of one retail service center which was combined into an
existing retail service center and disposed of two retail service
centers. The Company expended $590,000 in cash and incurred a $75,000
liability related to a noncompete agreement to acquire this business
and received $733,000 in cash and a $207,000 note receivable for the
service center dispositions. Pro forma results of these operations as
if the transactions had been completed at the beginning of the period
would not be materially different from actual results due to the
timing of the transaction and the seasonal nature of the business.
(8) ADDITIONAL CASH FLOW INFORMATION (In Thousands)
Additional Cash Payment Information 1998 1997
- ----------------------------------- ---- ----
Interest Paid $4,825 $4,658
Income Taxes Paid (net of refunds) $(15) $ (874)
Noncash Investing and Financing Activities
Mortgage obligations incurred on the
acquisition of retail service center $75 $2,975
Note receivable from sale of retail
service center $207 --
(9) FUTURE LIQUIDITY NEEDS
The Company's $15 million revolving credit facility expires December
29, 1998. The Company is currently seeking a long-term extension of
the existing credit facility and exploring other financing and
recapitalization alternatives. Should the Company be unable to obtain
such financing, it may not be able to meet its working capital needs.
Under the terms of the Company's 12 7/8% Senior Secured Notes, due
2004, the cash interest rate increases from 7% to 12 7/8% effective
July 16, 1999 resulting in a significantly higher semiannual interest
payment to be paid January 15, 2000 and subsequently.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition, Liquidity and Capital Resources
The following table is presented as a measure of the Company's liquidity
and financial condition (in thousands).
September 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
Total long-term debt
(including current
maturities) $147,415 $ 135,555 $142,350 $126,632
Working Capital (deficit) $(15,248) $ (11,880) $(12,231) $ (4,598)
Current Ratio .52 .56 .54 .75
During the three months ended September 30, 1998, the Company incurred
$75,000 of additional debt related to the acquisition of a retail service
center. The remainder of the increase in long-term debt is related to the
$1.8 million of amortization of original issue discount on the Company's 12
7/8% Senior Secured Notes, due 2004 and the increase in the revolving
credit facility of $3.4 million offset by mortgage obligation principal
payments.
The significant change in working capital and the resulting effect on the
current ratio is due to several factors, including:
o the balance of the revolving credit facility and its
classification as current;
o the use of funds generated from the Company's prepaid product
program; and
o the tax related impact of operations affecting deferred tax
assets and liabilities.
Customer prepayments, primarily related to the Company's prepaid product
program, increased $589,000 for the three months ended September 30, 1998
compared to the same period in 1997. The program allows customers to prebuy
product at an established price, reducing their risk of winter price
fluctuations brought about by changes in demand and allowing the Company to
improve its seasonal cash flow and further enhance its hedging of product
purchases and marketing programs to its customers.
The Company decided to utilize its 30 day grace period for the payment of
the $4.5 million interest payment due on July 15, 1998 on its $127.2
million 12 7/8% Senior Secured Notes, due 2004. The Company experienced a
temporary cash shortage due to the unusually warm weather, lower petroleum
prices which caused a decrease in customer demand for pre-paid gas
contracts and delays in several asset sale transactions. The interest
payment was made through the use of operating cash flows, available
borrowings on its working capital facility and loans from a related party.
Pursuant to the terms of the Senior Secured Notes, the Company is required
to make a $4.5 million interest payment on January 15, 1999. Historically,
operating income increases during the second quarter as the winter selling
season begins. The Company intends to meet the interest payment requirement
through cash available from operations during the remainder of the heating
season and revolving credit facility availability.
The Company has net working capital and stockholders' equity deficiencies
and its working capital borrowing facility is due in full in December 1998.
The Company is considering several alternatives for mitigating these
conditions during the year which include seeking a long term extension of
the existing credit facility and exploring other financing and
recapitalization alternatives. In addition, management has undertaken
significant reductions in general and administrative expenses during the
latter portion of fiscal 1998 which are expected to positively impact
fiscal 1999 results. Capital expenditures have been high over the past
three fiscal years as the Company has upgraded and improved its trucks and
equipment. During the past fiscal year, the Company has also incurred costs
related to the change of the Company name on its retail facilities and the
renovation of an existing building which was converted into the corporate
facilities for the Company allowing the Company to exit an expensive lease
agreement.
While the Company believes that it will be able to obtain the necessary
financing and/or capital to mitigate these conditions, no commitments have
been obtained and no assurances can be made that such financing and/or
capital will be available to the Company. An inability to obtain financing
and/or capital could have a material adverse effect on the Company and its
ability to conduct business.
The Year 2000 issue
The Year 2000 problem concerns the inability of information systems to
recognize and process date-sensitive information properly from and after
January 1, 2000.
To minimize or eliminate the effect of the year 2000 problem on the
Company's information systems and applications, the Company is continually
identifying, evaluating, implementing and testing changes to its computer
systems, applications and software necessary to achieve Year 2000
compliance. The Company has given an Executive officer of the Company
responsibility to identify, evaluate and implement a plan to bring all of
the Company's critical business systems and applications into Year 2000
compliance prior to December 31, 1999.
The year 2000 initiative consists of four phases: (i) identification of all
critical business systems subject to Year 2000 risk (the "Identification
Phase"), (ii) assessment of such business systems and applications to
determine the method of correcting any Year 2000 problems (the "Assessment
Phase"); (iii) implementing the corrective measures (the "Implementation
Phase"); and (iv) testing and maintaining system compliance (the "Testing
Phase"). The Company has substantially completed the Identification,
Assessment and Implementation Phases and has identified and assessed four
areas of risk; (i) third party vendor software, such as business
applications and operating systems; (ii) computer hardware components;
(iii) electronic data transfer systems between the Company and its
suppliers and customers; and (iv) embedded systems, such as phone switches.
Although no assurances can be made, the Company believes that it has
identified substantially all of its systems, application and related
software that are subject to Year 2000 compliance risk and has either
implemented or initiated the implementation of a plan to correct such
systems that are not Year 2000 compliant. The Company does not anticipate
completion of the Testing Phase until sometime prior to December 1999.
The Company relies on third party service providers for services such as
telecommunications, internet service, utilities and other key services as
well as other third parties such as customers and suppliers. Interruption
of those services and business due to Year 2000 issues could affect the
Company's operations. The Company has developed a course of action to
determine the status of such third party service providers, customers and
suppliers to determine alternative and contingency requirements. While
approaches to reducing risks of interruption of business operations vary,
options include identification of alternative service providers, customers
and suppliers available to provide such service and business if such third
party failures to become Year 2000 compliant within an acceptable time
frame prior to December 31, 1999.
Since the Company has recently updated its information systems (which have
been certified to be Year 2000 compliant) in the ordinary course of
business, there has not been any additional cost incurred by the Company in
connection with its Year 2000 compliance plan other than as would have been
incurred in the ordinary course. The Company has been expensing and
capitalizing the costs of updating its information systems and therefore
its Year 2000 compliance plan in accordance with appropriate accounting
policies. The Company does not believe that it will incur significant
future costs for remediation in connection with Year 2000 compliance. In
the event the Year 2000 modifications and conversions are not adequate, the
Year 2000 problem could have a material impact on the operations and
financial condition of the Company.
THE ESTIMATES AND CONCLUSIONS HEREIN ARE FORWARD-LOOKING STATEMENTS AND ARE
BASED ON MANAGEMENT'S BEST ESTIMATES OF FUTURE EVENTS. RISKS OF COMPLETING
THE PLAN INCLUDE THE AVAILABILITY OF RESOURCES, THE ABILITY TO DISCOVER AND
CORRECT THE POTENTIAL YEAR 2000 SENSITIVE PROBLEMS WHICH COULD HAVE A
SERIOUS IMPACT ON CERTAIN OPERATIONS AND THE ABILITY OF THE COMPANY'S
SERVICE PROVIDERS, CUSTOMERS AND SUPPLIERS TO BRING THEIR SYSTEMS INTO YEAR
2000 COMPLIANCE.
Results of Operations
Due to the seasonal nature of its business, the Company usually realizes a
net operating loss the first 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 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.
The following table presents additional operating data for the periods
ended September 30, 1998 and 1997 and the year ended June 30, 1998 (in
thousands).
Three Months Three Months
Ended Ended Year Ended
9/30/98 9/30/97 6/30/98
------- ------- -------
Propane Gallons Sold
(Bulk and Bottle) 13,844 14,480 93,908
Revenues:
Propane $ 10,342 $ 11,529 $ 78,583
Gas systems, appliances
and other fuels 799 800 3,694
Other 782 749 4,233
Gross Profit:
Propane 5,417 5,414 38,848
Gas systems, appliances
and other fuels 255 264 1,013
Volumes. Retail volumes of propane sold decreased 4.4% in the three months
ended September 30, 1998 compared to the same period ended September 30,
1997. Heating degree days experienced by the Company during the quarter
were only 42% of those experienced in a normal winter. Comparing stores
that were operated by the Company during both 1998 and 1997, volumes
decreased 9.9%.
Revenues. Operating revenues declined in the three months ended September
30, 1998 compared to the same period in 1997. In addition to the decrease
in volumes discussed above, sales prices per gallon fell 9% in the three
months ended September 30, 1998 compared to 1997. Other sales, including
gas systems, appliances and other fuels, had no significant impact on the
change in revenues as indicated in the table above.
Cost of product and gross profit. The Company's gross profit remained
consistent in the three months ended September 30, 1998 compared to the
same period in 1997. Although sales volume decreased, gross profit remained
relatively stable due to margins increasing 1.3(cent) per gallon. There
were no significant changes in the cost or related profit on other sales as
indicated in the table above.
General and administrative expense. General and administrative expense for
the three months ended September 30, 1998 increased $233,000 over the same
period in 1997. Salaries and employee benefits increased $327,000 mainly
due to the increased number of personnel associated with the acquisition of
retail service centers. This increase was partially offset by a decrease in
rent and maintenance costs of the Company's facilities and equipment of
$98,000.
Depreciation and amortization. Depreciation and amortization expense
increased slightly for the three months ended September 30, 1998 as
compared to the same period in 1997 mainly due to the increased
amortization on purchased goodwill and noncompete agreements incurred
through retail service center acquisitions.
Interest expense. Interest expense increased slightly for the three months
ended September 30, 1998 compared to the same period in 1997 primarily due
to the increased mortgage obligation debt service resulting from recent
acquisitions and increased balances on the Company's revolving credit
facility.
Restructuring proposal costs. As discussed in Note 12 of the June 30, 1998
financial statements referred to above, the Company abandoned a proposal to
restructure its debt and equity as of June 30, 1997. These expenses for the
three months ended September 30, 1997 consist of residual expenses and
forfeited deposits related to the abandonment of this proposal.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 2 of the Condensed Consolidated Financial
Statements.
Items 2, 3, 4 and 5
No information is reportable under these sections
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description
(27) Financial Data Schedule
(b) Reports on Form 8-K
July 15, 1998
Reviewed by Independent Certified Public Accountants
The September 30, 1998 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.
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.
ALL STAR GAS CORPORATION
Registrant
/s/ Paul S. Lindsey
------------------------------
Paul S. Lindsey
President
DATE: November 13, 1998
Independent Accountants' Report
Board of Directors and Stockholders
All Star Gas Corporation
Lebanon, Missouri
We have reviewed the accompanying condensed consolidated balance
sheet of ALL STAR GAS CORPORATION as of September 30, 1998, and the related
condensed consolidated statements of operations and cash flows for the
three-month periods ended September 30, 1998 and 1997. 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 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 referred to above 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 of ALL STAR GAS
CORPORATION as of June 30, 1998, 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 28, 1998, 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, 1998, is fairly stated,
in all material respects, in related to the consolidated balance sheet from
which it has been derived.
/s/ Baird, Kurtz & Dobson
Springfield, Missouri
October 30, 1998
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 668,000
<SECURITIES> 0
<RECEIVABLES> 5,742,000
<ALLOWANCES> 894,000
<INVENTORY> 8,077,000
<CURRENT-ASSETS> 16,570,000
<PP&E> 118,125,000
<DEPRECIATION> 38,275,000
<TOTAL-ASSETS> 114,080,000
<CURRENT-LIABILITIES> 31,818,000
<BONDS> 136,211,000
<COMMON> 14,000
0
0
<OTHER-SE> (57,127,000)
<TOTAL-LIABILITY-AND-EQUITY> 114,080,000
<SALES> 11,141,000
<TOTAL-REVENUES> 11,923,000
<CGS> 5,469,000
<TOTAL-COSTS> 5,469,000
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<LOSS-PROVISION> 49,000
<INTEREST-EXPENSE> 4,643,000
<INCOME-PRETAX> (7,194,000)
<INCOME-TAX> (2,755,000)
<INCOME-CONTINUING> (4,439,000)
<DISCONTINUED> 0
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