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 December 31, 1997
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
January 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)
December 31, 1997
(Unaudited) June 30, 1997
Assets
Current Assets
Cash $ 2,074 $ 965
Trade receivables - Net 9,009 5,101
Inventories 7,620 6,924
Prepaid Expense 648 401
Due from Related Parties -- 98
Refundable Income Taxes 110 630
------------- ------------
Total Current Assets 19,461 14,119
------------- ------------
Property, Plant and Equipment 117,867 105,344
Less Accumulated Depreciation 34,652 32,118
------------- ------------
Fixed Assets - Net 83,215 73,226
------------- ------------
Other Assets
Debt Acquisition Costs - Net 3,343 3,605
Excess of Cost Over Fair
Value of Assets 14,263 14,101
Acquired - Net
Other 2,780 2,781
------------- ------------
Total Other Assets 20,386 20,487
------------- ------------
Total Assets $ 123,062 $ 107,832
------------- ------------
Liabilities and Stockholders' Equity
Current Liabilities
Current Maturities of
Long-Term Debt $ 12,500 $ 2,385
Accounts Payable and
Accrued Expenses 21,877 16,332
------------ -------------
Total Current Liabilities 34,377 18,717
Long-Term Debt 131,927 124,247
Deferred Income Taxes 4,290 7,190
Accrued Self-Insurance Liability 275 398
------------ -------------
Total Liabilities 170,869 150,552
------------ -------------
Stockholders' Equity (Deficit)
Common; $.001 Par Value;
Authorized
20,000,000 Shares, Issued
Dec. 31, 1997
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 11,747 16,834
------------ -------------
40,267 45,354
Treasury Stock at Cost
December 31, 1997 and June
30, 1997 -
12,726,970 Shares (88,074) (88,074)
------------ -------------
Total Stockholders' Equity
(Deficit) (47,807) (42,720)
------------ -------------
Total Liabilities and $ 123,062 $ 107,832
Stockholders' Equity
(Deficit)
------------ -------------
See Notes to Condensed Consolidated Financial Statements
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Revenue $ 29,836 $ 34,191 $ 42,914 $ 47,310
Cost of Product Sold 14,903 20,294 21,554 27,354
Gross Profit 14,933 13,897 21,360 19,956
---------- --------- ----------- -------------
Operating Costs and
Expenses
General and 7,744 7,812 14,510 13,638
Administrative
Depreciation and 2,092 1,689 4,384 3,134
Amortization
(Gain) Loss on Sale of 214 (845) 126 (532)
Assets
---------- --------- ----------- -------------
10,050 8,656 19,020 16,240
---------- --------- ----------- -------------
Operating Income 4,883 5,241 2,340 3,716
---------- --------- ----------- -------------
Other Income (Expense)
Interest Expense, (2,919) (2,803) (5,570) (5,433)
Net
Amortization of
Debt Discount (1,625) (1,491) (3,298) (2,982)
and Expense
Gain on SYN/Myers
Transaction -- 16,922 -- 16,922
Restructuring Proposal Costs (291) -- (659) --
---------- --------- ----------- -------------
(4,835) 12,628 (9,527) 8,507
---------- --------- ----------- -------------
Income (Loss) Before
Income Taxes 48 17,869 (7,187) 12,223
Provision (Credit) for
Income Taxes -- 6,900 (2,100) 4,900
---------- --------- ----------- -------------
Net Income (Loss) $ 48 $ $ $ 7,323
10,969 (5,087)
---------- --------- ----------- -------------
Basic and Diluted
Earnings Per Share $ .03 $ 6.95 $ (3.25) $ 4.64
---------- --------- ----------- -------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
1997 1996
---- ----
Cash Flows From Operating Activities
<S> <C> <C>
Net Income (Loss) $ (5,087) $ 7,323
Items not requiring (providing)
cash
Depreciation 3,552 2,674
Amortization 4,130 3,442
Loss (Gain) on sale of assets 126 (17,488)
Deferred income taxes (2,100) 450
Changes In:
Trade receivables (3,980) (7,136)
Inventories (240) (4,531)
Prepaid expense & other (343) (552)
Accounts payable & accrued
expenses 4,374 9,699
--------------- -----------
Net cash provided by (used in) operating
activities 432 (6,119)
--------------- ------------
Cash Flows From Investing Activities
Purchase of property & equipment (4,365) (4,205)
Acquisition of retail service
centers (4,562) (1,151)
Receipts on sales of retail
outlets previously accrued -- 3,002
Proceeds from sales of property
and equipment 189 468
Disposal of retail service centers 550 1,519
Proceeds from sale of investment
in SYN Inc. -- 18,000
--------------- ------------
Net cash provided by (used in)
investing activities (8,188) 17,633
--------------- ------------
Cash Flows From Financing Activities
Checks in process of collection 822 (420)
Increase (decrease) in working
capital financing 9,110 (6,389)
Principal payments on other
long-term debt (1,067) (575)
--------------- -------------
Net cash provided by (used in)
financing activities 8,865 (7,384)
--------------- ------------
INCREASE IN CASH 1,109 4,130
CASH, BEGINNING OF PERIOD 965 898
--------------- ------------
CASH, END OF PERIOD $ 2,074 $ 5,028
--------------- ------------
See Notes to Condensed Consolidated Financial Statements
</TABLE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
(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 condensed consolidated financial position as
of December 31, 1997, and the condensed consolidated
results of its operations and cash flows for the periods
ended December 31, 1997 and 1996. 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 six and three months ended
December 31, 1997 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
claims-made 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.
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.
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) ACCOUNTING FOR DERIVATIVES
There has been no change since June 30, 1997 in the
Company's treatment of commodity futures contracts. As of
December 31, 1997, the Company's open positions on futures
contracts are immaterial.
(4) RECLASSIFICATION
Certain reclassifications have been made to the December
31, 1996 financial statements to conform to the December
31, 1997 financial statement presentation. These
reclassifications had no effect on net earnings.
(5) 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 six month periods
divided by the average weighted common stock outstanding
of 1,564,050 and 1,579,225 as of December 31, 1997 and
1996, respectively. Restatement of the 1996 periods did
not result in any material changes.
(6) 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.
(7) ACQUISITIONS 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 December 31, 1997, the Company acquired
one business, consisting of four retail service centers,
from a party related to the principal stockholder of the
Company. The Company expended $1.9 million in cash and
incurred $3.7 million in mortgage obligations and
noncompete agreements to acquire this business. 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 1997 1996
-----------------------------------
Interest Paid $5, 467 $5,904
Income Taxes Paid (net of refunds) $ (520) $ (86)
Noncash Investing and Financing Activities
------------------------------------------
Mortgage obligations incurred
on the acquisition
of retail service centers $6,719 $2,058
Other mortgage obligations incurred --- $1,247
(9) FUTURE LIQUIDITY NEEDS
The Company's $15 million revolving credit facility
expires June 29, 1998. During the quarter ended December
31, 1997, 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).
December 31 June 30
1997 1996 1997 1996
---- ---- ---- ----
Total long-term debt
(including current
maturities) $144,427 $121,867 $126,632 $126,858
Working Capital (deficit) $(14,916) $ 4,080 $ (4,598) $ (5,703)
Current Ratio .57 1.16 .75 .74
During the six months ended December 31, 1997, 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 $3.0 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 $9.1 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:
-- the nonrecurring disposition of the Company's investment
in SYN Inc in the prior year;
-- the balance of the revolving credit facility and its
classification as current;
-- the use of funds generated from the Company's prepaid
product program; and
-- 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 for the
purchase of inventory and to support higher levels of accounts
receivable.
Current maturities of long-term debt increased approximately $11.2
million related primarily to the classification of the revolving credit
facility as current at December 31, 1997. The revolving credit facility
had no borrowings outstanding in 1996 due to the SYN Inc. transaction
discussed above while the balance at December 31, 1997 is $9.7 million.
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 $8.3 million as of December 31, 1997 compared to
$3.2 million as of December 31, 1996. 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 December 31, 1997.
Changes in estimated future tax benefits and liabilities associated with
tax differences resulted in the classification of $800,000 of deferred
tax liabilities as current at December 31, 1997 compared to $725,000 of
current deferred tax assets at December 31, 1996. These changes are
primarily the result of the tax depreciation of fixed assets and the
timing of certain acquisitions and dispositions in the two periods.
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. As of the date of this filing, the Company
has not yet made the interest payment but intends to do so prior to the
expiration of the grace period from cash available from operations,
divestiture of certain assets and its revolving credit facility.
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 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.
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 December 31, 1997 and 1996 and the year ended June 30, 1997 (in
thousands).
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Year Ended
12/31/97 12/31/96 12/31/97 12/31/96 6/30/97
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Propane Gallons Sold 32,047 28,212 46,527 41,967 85,006
(Bulk and Bottle)
Revenues:
Propane $ 26,595 $ 30,977 $ 38,124 $ 42,442 $ 86,816
Gas systems, appliances
and other fuels 1,431 1,458 2,231 2,293 3,759
Other 1,810 1,756 2,559 2,575 3,968
Gross Profit:
Propane 12,640 11,668 18,054 16,651 36,292
Gas systems, appliances
and other fuels 483 473 747 730 1,208
</TABLE>
Volumes. Retail volumes of propane sold increased in the three and six
months ended December 31, 1997 compared to the same periods ended
December 31, 1996. Milder winter weather primarily impacted the three
months ending December 31, 1997 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 1996 and 1997,
volumes decreased approximately 3.5%, however the net effect of
acquisitions and dispositions completed by the Company between December
31, 1996 and 1997 offset this decrease and provided for the increased
volumes.
Revenues. Despite increased volumes, operating revenues declined in both
the three and six months ended December 31, 1997 compared to the same
periods in 1996. Revenues were fairly consistent during the first three
months of the six month periods ending December 31, 1997 and 1996. During
the latter three months of 1997 the impact of an industry-wide decline in
product costs compared to the same period in 1996 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 December 31, 1997 compared to 1996,
offsetting the impact of increased volumes. Additionally, the Company
sold approximately $3.4 million of wholesale product in 1996 compared to
only $200,000 in 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. As indicated in the discussion of
revenues, product costs were dramatically lower in 1997 than 1996,
particularly in comparing the three months ending December 31, 1997 and
1996. Higher customer demand and lower market supplies in 1996 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 December 31, 1997, 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
was relatively comparable in total between the three months ending
December 31, 1997 and 1996 but was approximately $900,000 higher for the
six months ended December 31, 1997 compared to the same period of 1996.
The most significant change from 1996 to 1997 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 and $600,000 for the six and
three month periods ending December 31, 1996, respectively. 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
transportation, rental, and professional expenses. Insurance claims and
premium costs have also fallen from $720,000 and $430,000 for the six and
three month periods ending December 31, 1996 compared to $520,000 and
$220,000 for the same periods ending December 31, 1997, respectively.
This reduction is primarily due to the successful resolution of several
claims resulting in the reduction of the portion of self-insurance
reserves related to those claims.
Depreciation and amortization. Depreciation and amortization expense
increased for both the three and six month periods ended December 31,
1997 compared to the same periods in 1996. 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 also increased related to the amortization
of noncompete agreements incurred through retail service center
acquisitions.
Interest expense. Interest expense rose slightly for the three and six
month periods ending December 31, 1997 compared to the same periods in
1996 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 December 31, 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
None
Reviewed by Independent Certified Public Accountants
The December 31, 1997 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: February 12, 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 December 31, 1997, and the
related condensed consolidated statements of operations and cash flows
for the three-month and six-month periods ended December 31, 1997 and 1996.
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
February 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,074,000
<SECURITIES> 0
<RECEIVABLES> 10,379,000
<ALLOWANCES> 1,370,000
<INVENTORY> 7,620,000
<CURRENT-ASSETS> 19,461,000
<PP&E> 117,867,000
<DEPRECIATION> 34,652,000
<TOTAL-ASSETS> 123,062,000
<CURRENT-LIABILITIES> 34,377,000
<BONDS> 144,427,000
<COMMON> 14,000
0
0
<OTHER-SE> (47,821,000)
<TOTAL-LIABILITY-AND-EQUITY> 123,062,000
<SALES> 40,355,000
<TOTAL-REVENUES> 42,914,000
<CGS> 21,554,000
<TOTAL-COSTS> 21,554,000
<OTHER-EXPENSES> 0
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</TABLE>
