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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 September 30, 1999
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, 1999 was 1,586,915.
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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)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 JUNE 30, 1999
(UNAUDITED) RESTATED
ASSETS
Current Assets
<S> <C> <C>
Cash $889 $1,323
Trade receivables - Net 5,137 4,262
Inventories 6,221 4,854
Prepaid Expense 1,154 974
Refundable Income Taxes 3,464 749
Deferred Income Taxes 300 300
------------ --------------
Total Current Assets 17,165 12,462
------------ --------------
Property, Plant and Equipment 120,394 120,802
Less Accumulated Depreciation 44,490 43,378
------------ --------------
Fixed Assets - Net 75,904 77,424
------------ --------------
Other Assets
Debt Acquisition Costs - Net 3,458 3,718
Excess of Cost Over Fair Value of Net Assets
Acquired - Net 10,751 11,261
Other 1,926 2,110
------------ --------------
Total Other Assets 16,135 17,089
------------ --------------
Total Assets $109,204 $106,975
============ ==============
</TABLE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 JUNE 30, 1999
(UNAUDITED) RESTATED
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
<S> <C> <C>
Current Maturities of Long-Term Debt $2,250 $2,252
Accounts Payable and Accrued Expenses 27,194 21,460
------------------- -------------
Total Current Liabilities 29,444 23,712
Long-Term Debt 147,335 145,458
Deferred Income Taxes 776 794
Accrued Self-Insurance Liability 340 320
------------------- -------------
Total Liabilities 177,895 170,284
------------------- -------------
Stockholders' Equity (Deficit)
Common; $.001 Par Value; Authorized 20,000,000
Shares, Issued - 14,291,020 Shares 14 14
Common Stock Purchase Warrants 1,227 1,227
Additional Paid-In Capital 27,119 27,119
Retained Earnings (Deficit) (9,137) (3,755)
------------------- -------------
19,223 24,605
Treasury Stock at Cost
September 30, 1999 and June 30, 1999 -
12,704,105 Shares (87,914) (87,914)
------------------- -------------
Total Stockholders' Equity (Deficit) (68,691) (63,309)
------------------- -------------
Total Liabilities and Stockholders' Equity
(Deficit) $109,204 $106,975
=================== =============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998
1999 Restated
---- --------
<S> <C> <C>
Operating Revenue $ 13,244 $ 13,107
Cost of Product Sold 6,451 5,848
---------------- -------------
Gross Profit 6,793 7,259
---------------- -------------
Operating Costs and Expenses
General and Administrative 7,824 7,942
Depreciation and Amortization 2,675 2,442
Gain on Sale of Assets (347) (349)
---------------- -------------
10,152 10,035
---------------- -------------
Operating Loss (3,359) (2,776)
---------------- -------------
Other Expense
Interest Expense, Net (4,372) (2,831)
Amortization of Debt Discount and
Expense (352) (1,845)
---------------- -------------
(4,724) (4,676)
---------------- -------------
Loss Before Income Taxes (8,083) (7,452)
Credit for Income Taxes (2,700) (2,755)
---------------- -------------
Net Loss $(5,383) $(4,697)
================ =============
Basic and Diluted Loss Per Common Share
$(3.39) $(2.96)
================ =============
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998
1999 Restated
---- --------
Cash Flows From Operating Activities
<S> <C> <C>
Net Loss $(5,383) $(4,697)
Items not requiring (providing) cash
Depreciation 1,892 1,873
Amortization 1,135 2,414
Gain on sale of assets (347) (349)
Deferred income taxes (18) (1,816)
Changes In:
Trade receivables (714) (28)
Inventories (1,398) (1,109)
Prepaid expense & other (307) (41)
Accounts payable & accrued expenses 825 549
--------------- ------------
Net cash used in operating activities (4,315) (3,204)
--------------- ------------
Cash Flows From Investing Activities
Purchase of property & equipment (1,032) (791)
Acquisition of retail service centers (5) (601)
Proceeds from sales of property and equipment 311 116
Disposal of retail service centers 999 719
Advances from related parties 1,930 (19)
--------------- ------------
Net cash provided by (used in) investing
activities 2,203 (576)
--------------- ------------
Cash Flows From Financing Activities
Increase (decrease) in checks in process of collection 284 (810)
Increase in working capital financing 1,906 3,379
Proceeds on long-term debt obligations 118 1,745
Principal payments on other long-term debt (630) (776)
---------------
------------
Net cash provided by financing activities 1,678 3,538
--------------- ------------
DECREASE IN CASH (434) (242)
CASH, BEGINNING OF PERIOD 1,323 929
--------------- ------------
CASH, END OF PERIOD $ 889 $ 687
=============== ============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(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 112,000
customers in 19 states through 122 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, 1999, and the consolidated results of
its operations and cash flows for the periods ended September 30,
1999 and 1998. 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,
1999, 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, 1999 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 suffered recurring losses from operations, has net
working capital and stockholders' equity deficiencies and the
annual cash interest requirement on its $127,200,000 Senior
Secured Notes increased from 7% to 12 7/8% on July 16, 1999. 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
undertaking several strategies for mitigating these conditions
during the coming year. These include the ongoing plan of
strategic geographic consolidation of service centers, disposing
of nonstrategic or marginal locations and merging small
acquisitions into existing markets, and an overall campaign to
reduce general and administrative expenses. The Company is also
exploring various long-term financing and recapitalization
alternatives. 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) BUSINESS ACQUISITION
Effective July 2, 1999, the Company acquired Tres Hombres, Inc., a
restaurant chain controlled by the Company's principal
shareholder, in a transaction was accounted for in a manner
similar to a pooling of interests. The Company issued 22,865
shares of stock previously held in Treasury in exchange for all of
the outstanding common stock of Tres Hombres, Inc. The
consolidated balance sheets as of June 30, 1999 and the
consolidated statements of operations and cash flows for the three
months ended September 30, 1998 have been retroactively restated
to reflect the operations of Tres Hombres, Inc., which resulted in
an increase in net loss for 1998 of $258,255.
(4) SELF-INSURANCE AND CONTINGENCIES
Under the Company's current insurance program, the Company's
comprehensive general, auto and excess liability policy provides
for losses of up to $101.0 million with a $250,000 self-insured
retention for general and excess liability losses with a $1
million aggregate cap. The Company's combined auto and workers'
compensation coverage is fully insured with no self-insured
retention. 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 and its subsidiaries are presently involved in other
various federal and state tax audits, which are not expected to
have a material adverse effect on the Company's financial position
or results of operations.
(5) RELATED PARTY TRANSACTIONS
During the three months ending September 30, 1999, the Company
received advances bearing interest at a rate of 12% from its
principal shareholder totaling $1,054,296. At September 30, 1999,
the balances of these obligations and other prior loan agreements
are $3,359,773.
(6) ACCOUNTING FOR DERIVATIVES
There has been no change since June 30, 1999 in the Company's
treatment of commodity futures contracts. As of September 30,
1999, the Company had no open positions on futures contracts.
(7) 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 1,586,915 as
of September 30, 1999 and 1998 (restated).
(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 September
30, 1999, the Company, through its unrestricted subsidiary,
acquired one retail service center and disposed of two retail
service centers. The Company expended $5,000 in cash and incurred
a $389,000 liability related to a mortgage and a noncompete
agreement to acquire this business and received $1,250,000 in cash
and $50,000 was placed in an escrow deposit 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 transactions and the seasonal nature of the
business.
Subsequent to the end of the quarter, the Company disposed of its
Texas and Louisiana retail centers at a gain. The retail centers
disposed of accounted for approximately 7%, 6% and 5% of sales
volume for the quarters ended September 30, 1999 and 1998 and for
the year ended June 30, 1999, respectively. At June 30, 1999, the
carrying value of the retail centers disposed of was approximately
4% of total assets.
(9) ADDITIONAL CASH FLOW INFORMATION (In Thousands)
<TABLE>
<CAPTION>
1998
Additional Cash Payment Information 1999 Restated
----------------------------------- ---- --------
<S> <C> <C>
Interest Paid $4,800 $4,858
Income Taxes Paid (net of refunds) $14 $(15)
Noncash Investing and Financing Activities
-------------------------------------------
Mortgage obligations incurred on the acquisition of
retail service center $389 $75
Note receivable from sale of retail
service center -- $207
</TABLE>
(10) FUTURE LIQUIDITY NEEDS
Under the terms of the Company's 12 7/8% Senior Secured Notes, due
2004, the cash interest rate increased from 7% to 12 7/8% on 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).
<TABLE>
<CAPTION>
SEPTEMBER 30 JUNE 30
1998 1999 1998
1999 RESTATED RESTATED RESTATED
---- -------- -------- --------
<S> <C> <C> <C> <C>
Total long-term debt (including current
maturities) $149,585 $149,848 $147,710 $143,709
Working Capital (deficit) $(12,279) $(17,753) $(11,250) $(14,802)
Current Ratio .58 .48 .53 .50
</TABLE>
During the three months ended September 30, 1999, the Company incurred
$389,000 of additional debt related to the acquisition of a retail service
center. The remainder of the increase in long-term debt is related to an
increase in the revolving credit facility of $1.9 million offset by
mortgage obligation principal payments.
The changes in working capital and the resulting effects on the current
ratio are due to several factors, including:
o the balance of the revolving credit facility and its
classification as long-term at September 30, 1999 and June 30,
1999;
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, decreased $345,000 for the three months ended September 30, 1999
compared to the same period in 1998. 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, 1999 on its $127.2
million 12 7/8% Senior Secured Notes, due 2004. The Company experienced a
cash shortage due to the unusually warm weather and lower petroleum prices
that caused a decrease in customer demand for pre-paid gas contracts. The
interest payment was made through the use of operating cash flows,
available borrowings on its working capital facility and loans from its
principal shareholder. At September 30, 1999, the Company was in violation
of certain financial performance covenants contained in the revolving
credit facility. These violations have been waived by the lender.
The Company has net working capital and stockholders' equity deficiencies.
The Company is considering several alternatives for mitigating these
conditions during the year, which include exploring financing and
recapitalization alternatives. 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 renovation of an existing building that was converted
into the corporate facilities for the Company allowing the Company to exit
an expensive lease agreement.
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.
This discussion of the impact of the Year 2000 is a Year 2000 readiness
disclosure within the meaning of the Year 2000 Readiness Disclosure Act.
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 an
operating loss in the first quarter of its fiscal year. 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, 1999 and 1998 (restated) and the year ended June 30,
1999 (restated in thousands).
<TABLE>
<CAPTION>
THREE
THREE MONTHS
MONTHS ENDED YEAR ENDED
ENDED 9/30/98 6/30/99
9/30/99 (RESTATED) (RESTATED)
------- ---------- ----------
<S> <C> <C> <C>
Propane Gallons Sold
(Bulk and Bottle) 13,417 13,844 90,381
Revenues:
Propane $ 10,222 $ 10,342 $71,992
Gas systems, appliances and other
fuels 879 799 3,741
Other 2,143 1,966 7,967
Gross Profit:
Propane 4,732 5,417 37,925
Gas systems, appliances and other
fuels 282 255 1,225
Other 1,779 1,587 6,634
</TABLE>
Volumes. Retail volumes of propane sold decreased 3.1% in the three months
ended September 30, 1999 compared to the same period ended September 30,
1998 due to sales of retail service centers during the previous fiscal
year. Comparing stores that were operated by the Company during both 1999
and 1998, volumes increased .27%.
Revenues. Operating revenues increased slightly in the three months ended
September 30, 1999 compared to the same period in 1998. Offsetting the
decrease in volumes discussed above, sales prices per gallon increased 6.7%
in the three months ended September 30, 1999 compared to 1998. Other sales,
including gas systems, appliances and other fuels, increased but 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 decreased 6.4%
in the three months ended September 30, 1999 compared to the same period in
1998, due to the decline in volumes noted above and a decline in margins of
3.8(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, 1999 decreased $118,000 over the same
period in 1998. Insurance expense and liability claims increased $141,000
primarily due to more claims incurred. This increase was offset by a
decrease in salaries and employee benefits of $100,000 and a decrease in
rent and maintenance costs of the Company's facilities and equipment of
$96,000. In addition, office expenses and other taxes and licenses
decreased $60,000. These decreases are primarily due to the Company's
continued downsizing, specifically at the corporate office staffing level.
Depreciation and amortization. Depreciation and amortization expense
increased slightly for the three months ended September 30, 1999 as
compared to the same period in 1998 mainly due to the increased
amortization on purchased goodwill and noncompete agreements incurred
through retail service center acquisitions.
Interest expense. Interest expense increased for the three months ended
September 30, 1999 compared to the same period in 1998 primarily due to the
increase in the interest rate under the terms of the Company's 12 7/8%
Senior Secured Notes, due 2004 and increased balances on the Company's
revolving credit facility.
Potential Impact of Future Accounting Pronouncements
The Financial Accounting Standards Board (FASB) recently adopted Statement
of Financial Accounting Standards (SFAS 133), Accounting for Derivative
Financial Instruments and Hedging Activities. This Statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000, may be adopted early for periods beginning
after issuance of the Statement and may not be applied retroactively. The
effects of adoption of SFAS 133 on the Company's financial statements are
not determinable currently. The Company expects to initially adopt SFAS 133
for the quarter ending September 30, 2000.
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings
Reference is made to Note 4 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, 1999
Reviewed by Independent Certified Public Accountants
The September 30, 1999 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 AND CEO
DATE: November 15, 1999
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, 1999, and the related
condensed consolidated statements of operations and cash flows for the
three-month periods ended September 30, 1999 and 1998. 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 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, 1999, 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 13, 1999, on
those consolidated financial statements, we expressed an unqualified
opinion that also contained an explanatory paragraph regarding substantial
doubt about the Company's ability to continue as a going concern for a
reasonable period of time. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of June 30, 1999,
before restatement for the matter discussed in Note 3, 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
November 2, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 889
<SECURITIES> 0
<RECEIVABLES> 5,689
<ALLOWANCES> 552
<INVENTORY> 6,221
<CURRENT-ASSETS> 17,165
<PP&E> 120,394
<DEPRECIATION> 44,490
<TOTAL-ASSETS> 109,204
<CURRENT-LIABILITIES> 29,444
<BONDS> 147,335
<COMMON> 14
0
0
<OTHER-SE> (68,705)
<TOTAL-LIABILITY-AND-EQUITY> 109,204
<SALES> 12,241
<TOTAL-REVENUES> 13,244
<CGS> 6,451
<TOTAL-COSTS> 6,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 39
<INTEREST-EXPENSE> 4,724
<INCOME-PRETAX> (8,083)
<INCOME-TAX> (2,700)
<INCOME-CONTINUING> (5,383)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,383)
<EPS-BASIC> (3.39)
<EPS-DILUTED> (3.39)
</TABLE>
