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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 March 31, 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, 1700 S. JEFFERSON 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 April
30, 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)
MARCH 31, 1998
(UNAUDITED) June 30, 1997
ASSETS
Current Assets
Cash $ 1,145 $ 965
Trade receivables - Net 7,679 5,101
Inventories 6,541 6,924
Prepaid Expense 623 401
Due from Related Parties -- 98
Refundable Income Taxes -- 630
Deferred Income Taxes 700 --
----------------- ---------------
Total Current Assets 16,688 14,119
----------------- ---------------
Property, Plant and Equipment 118,185 105,344
Less Accumulated Depreciation 35,773 32,118
----------------- ---------------
Fixed Assets - Net 82,412 73,226
----------------- ---------------
Other Assets
Debt Acquisition Costs - Net 3,214 3,605
Excess of Cost Over Fair
Value of Assets
Acquired - Net 13,907 14,101
Other 2,679 2,781
----------------- ---------------
Total Other Assets 19,800 20,487
----------------- ---------------
Total Assets $ 118,900 $ 107,832
----------------- ---------------
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MARCH 31, 1998
(UNAUDITED) June 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities of
Long-Term Debt $ 12,200 $ 2,385
Accounts Payable and
Accrued Expenses 13,675 16,332
--------------- ----------------
Total Current Liabilities 25,875 18,717
Long-Term Debt 133,488 124,247
Deferred Income Taxes 5,975 7,190
Accrued Self-Insurance Liability 300 398
--------------- ----------------
Total Liabilities 165,638 150,552
--------------- ----------------
Stockholders' Equity (Deficit)
Common; $.001 Par Value;
Authorized 20,000,000
Shares, Issued Mar. 31,
1998 and June 30, 1997 -
14,291,020 Shares 14 14
Common Stock Purchase Warrants 1,227 1,227
Additional Paid-In Capital 27,279 27,279
Retained Earnings 12,816 16,834
--------------- ----------------
41,336 45,354
Treasury Stock at Cost
March 31, 1998 and June 30,
1997 - 12,726,970 Shares (88,074) (88,074)
--------------- ----------------
Total Stockholders' Equity (Deficit) (46,738) (42,720)
--------------- ----------------
Total Liabilities and
Stockholders' Equity
(Deficit) $ 118,900 $ 107,832
--------------- ----------------
See Notes to Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Revenue $ 30,237 $ 34,135 $ 73,152 $ 81,411
Cost of Product Sold 14,229 18,942 35,783 46,296
------------ ----------- ----------- ----------
Gross Profit 16,008 15,193 37,369 35,115
------------ ----------- ----------- ----------
Operating Costs and
Expenses
General and
Administrative 8,309 7,162 22,819 20,801
Depreciation and
Amortization 2,239 1,813 6,623 4,947
(Gain) Loss on Sale
of Assets (345) 215 (219) 580
------------ ----------- ----------- ----------
10,203 9,190 29,223 26,328
------------ ----------- ----------- ----------
Operating Income 5,805 6,003 8,146 8,787
------------ ----------- ----------- ----------
Other Income (Expense)
Interest Expense, Net (2,892) (2,622) (8,463) (8,054)
Amortization of
Debt Discount
and Expense (1,749) (1,579) (5,047) (4,561)
Gain on SYN/Myers
Transaction -- (899) -- 16,954
Restructuring Proposal
Costs (95) -- (754) --
------------ ----------- ----------- ----------
(4,736) (5,100) (14,264) 4,339
------------ ----------- ----------- ----------
Income (Loss) Before
Income Taxes 1,069 903 (6,118) 13,126
Provision (Credit)
for Income Taxes -- 600 (2,100) 5,500
------------ ----------- ----------- ----------
Net Income (Loss) $ 1,069 $ 303 $ (4,018) $ 7,626
============ =========== =========== ==========
Basic and Diluted
Earnings Per Share $ .68 $ .19 $ (2.57) $ 4.88
============ =========== =========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1998 1997
---- ----
Cash Flows From Operating Activities
Net Income (Loss) $ (4,018) $ 7,626
Items not requiring (providing) cash
Depreciation 5,459 3,908
Amortization 6,213 5,599
Gain on sale of assets (219) (16,375)
Deferred income taxes (2,100) 450
Changes In:
Trade receivables (2,650) (5,363)
Inventories 839 (1,113)
Prepaid expense & other (230) (306)
Accounts payable & accrued
expenses (2,716) (211)
------------ ------------
Net cash provided by (used in)
operating activities 578 (5,785)
------------ ------------
Cash Flows From Investing Activities
Purchase of property & equipment (6,700) (6,179)
Acquisition of retail service
centers (4,144) (4,334)
Receipts on sales of retail
outlets previously accrued -- 3,002
Proceeds from sales of property
and equipment 809 537
Disposal of retail service centers 1,490 1,540
Proceeds from sale of
investment in SYN Inc. -- 18,000
------------ ------------
Net cash provided by (used in)
investing activities (8,545) 12,566
------------ ------------
Cash Flows From Financing Activities
Checks in process of collection 465 (1,671)
Increase (decrease) in working
capital financing 8,794 (3,389)
Purchase of treasury stock -- (99)
Principal payments on other
long-term debt (1,112) (855)
------------ ------------
Net cash provided by (used in)
financing activities 8,147 (6,014)
------------ ------------
INCREASE IN CASH 180 767
CASH, BEGINNING OF PERIOD 965 898
------------ ------------
CASH, END OF PERIOD $ 1,145 $ 1,665
============ ============
See Notes to Condensed Consolidated Financial Statements
ALL STAR GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 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 March 31, 1998, and the consolidated results of its
operations and cash flows for the periods ended March 31, 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, 1997, 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 nine and three months ended March 31,
1998 are not necessarily indicative of the results to be expected for
the full year.
(2) SELF-INSURANCE AND CONTINGENCIES
Under the Company's fiscal 1998 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 fiscal 1998 insurance program reduced the self-insurance of
general liability incidents from $250,000 per incident in fiscal 1997
(under joint coverage with SYN, Inc., a former related party) and
$500,000 per incident in fiscal 1996, while maintaining similar
premium costs to 1997 and reducing premium costs from 1996.
Subsequent to March 31, 1998, a jury verdict of $1.6 million
was returned against the Company in a lawsuit involving an
ex-employee. A significant portion of any final damages owed will be
the responsibility of the Company's underwriters. The incident
leading to the suit occurred pre-June 30, 1994 and, accordingly, any
actual cash obligations of the Company will be split 47.7%/52.3% with
the assignee of the pre-June 30, 1994 majority owners who are no
longer associated with the Company. The actual amount of damages owed
by the Company, if any, is still being negotiated. The Company
believes the maximum cash outlay related to this item will be
$150,000. Company management feels that the established reserve for
any future obligations is adequate.
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.
(3) RELATED PARTY TRANSACTIONS
During the three months ending March 31, 1998, the Company
entered into loan agreements with the Principal Shareholder of the
Company totalling $1.8 million with terms ranging from 7 days to 6
months. At March 31, 1998, the balances of these obligations were
$1.1 million. At the time of filing, the majority of these balances
had been repaid.
(4) ACCOUNTING FOR DERIVATIVES
There has been no change since June 30, 1997 in the Company's
treatment of commodity futures contracts. As of March 31, 1998, the
Company's open positions on futures contracts are immaterial.
(5) RECLASSIFICATION
Certain reclassifications have been made to the March 31, 1997
financial statements to conform to the March 31, 1998 financial
statement presentation. These reclassifications had no effect on net
earnings.
(6) EARNINGS PER SHARE
Earnings per share (EPS) data for all periods presented was
computed consistent with the application of the Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share,"
adopted by the Financial Accounting Standards Board (FASB). SFAS No.
128 replaces the presentation of primary and fully-diluted EPS with
basic and diluted EPS. Although the Company has outstanding at each
period certain convertible options and warrants, it does not
anticipate conversion under the treasury stock method. Further, for
all periods of loss presented, the effect of such conversion would be
anti-dilutive. Therefore, basic and diluted EPS are computed as net
income for the three and nine month periods divided by the average
weighted common stock outstanding of 1,564,050 and 1,575,853 as of
March 31, 1998 and 1997, respectively.
(7) FUTURE ACCOUNTING PRONOUNCEMENTS
The FASB adopted SFAS No. 130, "Reporting Comprehensive
Income," effective for fiscal years beginning after December 31,
1997. SFAS No. 130 establishes standards for reporting the total of
net income and all nonowner changes in stockholders' equity as a
component of the statement of operations or in other optional
presentations in the financial statements.
The FASB also adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," effective for fiscal years
beginning after December 31, 1997. SFAS No. 131 establishes reporting
requirements for identifiable operating segments and other business
activities in addition to consolidated disclosure.
The Company does not expect that adoption of these standards
will have a material effect on its financial statements.
(8) 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 March 31, 1998, there
were no acquisitions and the Company disposed of two retail service
centers. 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.
(9) ADDITIONAL CASH FLOW INFORMATION (In Thousands)
Additional Cash Payment 1998 1997
- ----------------------- ---- ----
Information
Interest Paid $10,261 $10,541
Income Taxes Paid (net of refunds) $ (860) $ 2,935
Noncash Investing and Financing
Activities
Mortgage obligations incurred
on the acquisition
of retail service centers $6,719 $3,008
Other mortgage obligations incurred --- $1,355
(10) FUTURE LIQUIDITY NEEDS
The Company's $15 million revolving credit facility expires
June 29, 1998. Additionally, during the quarter ended March 31, 1998,
the Company exceeded the facility's acquisition availability
covenant. The Company has received a waiver of this covenant. The
Company is currently in negotiations to renew or replace this
facility, but no new agreement has yet been reached. 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 and Liquidity
The following table is presented as a measure of the Company's liquidity
and financial condition (in thousands).
<TABLE>
<CAPTION>
MARCH 31 JUNE 30
1998 1997 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total long-term debt
(including current
maturities) $145,688 $127,067 $126,632 $126,858
Working Capital (deficit) $ (9,187) $ 4,507 $ (4,598) $ (5,703)
Current Ratio .64 1.30 .75 .74
</TABLE>
During the nine months ended March 31, 1998, the Company incurred $6.7
million of additional debt related to the acquisition of retail service
centers. The remainder of the increase in long-term debt is related to the
$4.6 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 $8.8 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 nonrecurring disposition of the Company's investment in
SYN Inc in the prior year;
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.
The nonrecurring nature of the payment of $18.0 million related to the
disposition of the investment in SYN Inc. in the prior year distorts the
comparison of working capital between the two years. Excess cash in the
prior year influenced the level of other current assets and liabilities as
well as allowing for the reduction of the revolving credit facility.
Operations in the current year resulted in increased borrowings under the
revolving credit facility during the Company's peak cash needs.
Current maturities of long-term debt increased approximately $9.8 million
related primarily to the classification of the revolving credit facility as
current at March 31, 1998. The revolving credit facility had a balance of
$9.3 million and $3.0 million at March 31, 1998 and 1997, respectively. The
working capital facility expires June 29, 1998. The remainder of the
increase is due to the current maturities of increased levels of mortgage
obligations and noncompete agreements incurred in association with the
acquisitions completed over the last two fiscal years.
Customer prepayments, primarily related to the Company's prepaid product
program, increased to $3.6 million as of March 31, 1998 compared to $1.9
million as of March 31, 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. Although the Company experienced much
greater interest from its customers in the program's second year, the cash
generated from the program was utilized for operations and acquisitions
prior to March 31, 1998.
The Company decided to utilize its 30 day grace period for the payment of
the $4.5 million interest payment due on January 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 mild winter weather in most of the
Company's areas of operation and the use of cash for acquisitions during
the current and prior quarter. The interest payment was made through cash
collections of accounts receivable, the cash received from the sale of two
retail service centers and loans of $1.8 million from a related party.
The Company has continued its successful efforts to expand its business
through increased internal growth and acquisitions in targeted market
areas. It intends to meet the requirements for its next interest payment on
July 15, 1998 utilizing cash available from operations during the remainder
of the heating season, the divestiture of certain assets outside of its
targeted marketing area and revolving credit facility availability.
Results of Operations
Due to the seasonal nature of its business, the Company usually realizes a
net operating loss the first quarter and net operating income for the
second and third quarters. 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.
Recently, the Securities and Exchange Commission issued Staff Legal
Bulletin No. 5 regarding the Year 2000 computer software issue and the
potential effects of this issue on the results of operations and the
ability to do business. The Company is in the process of completing the
conversion to a new accounting system that is Year 2000 compliant as well
as evaluating its internal secondary systems to insure their compliance.
The Company is not currently aware of any internal Year 2000 compliance
issues and has not yet been able to determine the potential effect, if any,
of deficiencies existing with its external suppliers or customers. The
Company does not currently believe that the Year 2000 issue will have a
material effect on the financial statements either in costs to address the
problem or in the ability to report financial information.
The following table presents additional operating data for the periods
ended March 31, 1998 and 1997 and the year ended June 30, 1997 (in
thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
3/31/98 3/31/97 3/31/98 3/31/97 6/30/97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Propane Gallons Sold 33,891 29,295 80,417 71,242 85,006
(Bulk and Bottle)
Revenues:
Propane $ 28,684 $ 32,630 $ 66,808 $ 75,072 $ 86,816
Gas systems,
appliances 768 827 2,999 3,120 3,759
and other fuels
Other 735 648 3,294 3,223 3,968
Gross Profit:
Propane 14,931 14,182 32,985 30,833 36,292
Gas systems, appl-
ances and other
fuels 293 590 1,040 1,063 1,208
</TABLE>
Volumes. Retail volumes of propane sold increased 15.6% and 12.9% in the
three and nine months ended March 31, 1998, respectively, compared to the
same periods ended March 31, 1997. Milder winter weather primarily impacted
the three months ending March 31, 1998 as a large portion of sales in this
period are generated from the residential heating market. Comparing stores
that were operated by the Company during both 1997 and 1998, volumes
decreased approximately 1.0%, however the net effect of acquisitions and
dispositions completed by the Company between March 31, 1997 and 1998
offset this decrease and provided for the increased volumes.
Revenues. Despite increased volumes, operating revenues declined in both
the three and nine months ended March 31, 1998 compared to the same periods
in 1997. Revenues were fairly consistent during the first three months of
the nine month periods ending March 31, 1998 and 1997. During the latter
six months of 1998 the impact of an industry-wide decline in product costs
compared to the same period in 1997 resulted in a similar decline in
revenues as sales prices tend to move with product costs in the margin
driven propane market. Sales prices per gallon fell from 15% to 20% in the
three months ended March 31, 1998 compared to 1997, offsetting the impact
of increased volumes. Additionally, the Company sold approximately $4.4
million of wholesale product in 1997 compared to only $510,000 in 1998.
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. As indicated in the discussion of
revenues, product costs were dramatically lower in 1998 than 1997,
particularly in comparing the three months ending March 31, 1998 and 1997.
Higher customer demand and lower market supplies in 1997 resulted in higher
product costs, although these costs did not dramatically affect gross
margins as the rising costs were passed on in the form of higher sales
prices. Through March 31, 1998, the propane industry has experienced higher
than historical supply levels in both the domestic and Canadian markets.
Combined with warmer winter weather, which has depressed demand, these
large supplies have resulted in significantly lower product costs. Lower
costs were partially offset by increased volumes from net acquisitions and
dispositions of retail service centers. Although lower costs were passed
onto customers through lower sales prices, gross profits increased as
margins per gallon remained relatively stable while volumes increased. As
margins on wholesale product sales are extremely low; the reduction in
wholesale sales did not have a significant impact on gross profit.
Similarly, 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 ending March 31, 1998 increased $1.1 million over the same
period in 1997. For these periods, salaries and employee benefits increased
$289,000 mainly due to increased personnel with the acquisition of retail
service centers. Rent and maintenance costs of the Company's facilities and
equipment increased $282,000 due to the increased maintenance costs of the
Company's aircraft and the increase in rental space of the home office.
General and administrative expense for the nine months ending March 31,
1998 increased $2.0 million over the same period in 1997. The most
significant change from 1997 to 1998 was the elimination of the overhead
reimbursement associated with the management of SYN Inc. that was
terminated in December 1996. This reimbursement, included in general and
administrative expense, was $1.4 million for the nine month period ending
March 31, 1997. The reduction of costs such as salaries and office expenses
related to the termination of employees and services involved with the
management of SYN Inc. has been partially offset by increased costs
associated with the acquisition of retail service centers in the current
period and the prior fiscal year. The Company has, however, been able to
recognize cost savings in office and professional expenses.
Depreciation and amortization. Depreciation and amortization expense
increased for both the three and nine month periods ended March 31, 1998
compared to the same periods in 1997. This increase is due primarily to the
increased depreciable basis of fixed assets acquired through the
acquisition of retail service centers occurring in the 1997 fiscal year and
the current period. Depreciation expense on modernization expenditures and
other asset purchases also contributed to the increase in fiscal 1998.
Amortization additionally increased related to the amortization of
noncompete agreements incurred through retail service center acquisitions.
Interest expense. Interest expense increased for the three and nine month
periods ending March 31, 1998 compared to the same periods in 1997
primarily due to the increased mortgage obligation debt service resulting
from recent acquisitions.
Restructuring proposal costs. As discussed in Note 12 of the June 30, 1997
financial statements referred to above, the Company abandoned a proposal to
restructure its debt and equity as of June 30, 1997. These expenses at
March 31, 1998 consist of residual expenses and forfeited deposits related
to the abandonment of this proposal.
Provision (credit) for income taxes. During the quarter ending March 31,
1998, the Company reduced its estimate of future income tax liabilities
which resulted in no provision for income taxes for the quarter.
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
None
Reviewed by Independent Certified Public Accountants
The March 31, 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: May 14, 1998
Independent Accountants' Report
Board of Directors and Stockholders
All Star Gas Corporation
Springfield, Missouri
We have reviewed the accompanying condensed consolidated balance
sheet of All Star Gas Corporation as of March 31, 1998, and the related
condensed consolidated statements of operations and cash flows for the
three-month and nine-month periods ended March 31, 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 Accounts. 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 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, 1997, 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 14, 1997, 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, 1997, is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been derived.
/s/ Baird, Kurtz & Dobson
Springfield, Missouri
May 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,145,000
<SECURITIES> 0
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0
0
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</TABLE>
