<PAGE>
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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 December 31, 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 January 31,
2000 was 1,586,915.
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<PAGE>
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>
December 31, 1999 June 30, 1999
(Unaudited) Restated
----------------- -------------
Assets
Current Assets
<S> <C> <C>
Cash $ 1,001 $ 1,323
Trade receivables - Net 9,509 4,262
Inventories 6,486 4,854
Prepaid Expense 1,119 974
Refundable Income Taxes 3,791 749
Deferred Income Taxes 300 300
-------- --------
Total Current Assets 22,206 12,462
-------- --------
Property and Equipment 112,356 120,802
Less Accumulated Depreciation 41,696 43,378
-------- --------
Total Property and Equipment 70,660 77,424
-------- --------
Other Assets
Debt Acquisition Costs - Net 3,198 3,718
Excess of Cost Over Fair Value of Net Assets
Acquired - Net 9,168
11,261
Other 2,120 2,110
-------- --------
Total Other Assets 14,486 17,089
-------- --------
Total Assets $107,352 $106,975
======== ========
</TABLE>
<PAGE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
(Unaudited) Restated
----------------- -------------
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
<S> <C> <C>
Current Maturities of Long-Term Debt $ 2,250 $ 2,252
Accounts Payable and Accrued Expenses 26,972 21,460
--------- ---------
Total Current Liabilities 29,222 23,712
Long-Term Debt 147,866 145,458
Deferred Income Taxes 776 794
Accrued Self-Insurance Liability 340 320
--------- ---------
Total Liabilities 178,204 170,284
--------- ---------
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) (11,298) (3,755)
--------- ---------
17,062 24,605
Treasury Stock at Cost - 12,704,105 shares (87,914) (87,914)
--------- ---------
Total Stockholders' Equity (Deficit) (70,852) (63,309)
--------- ---------
Total Liabilities and Stockholders' Equity
(Deficit) $ 107,352 $ 106,975
========= =========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
------------------------ ------------------------
1998 1998
1999 Restated 1999 Restated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Revenue $ 26,287 $ 27,260 $ 39,531 $ 40,368
Cost of Product Sold 13,939 13,259 20,390 19,108
-------- -------- -------- --------
Gross Profit 12,348 14,001 19,141 21,260
-------- -------- -------- --------
Operating Costs and Expenses
General and Administrative 8,212 8,489 16,036 16,430
Depreciation and Amortization 2,258 2,408 4,933 4,850
(Gain) Loss on Sale of Assets 43 (3) (305) (351)
-------- -------- -------- --------
10,513 10,894 20,664 20,929
-------- -------- -------- --------
Operating Income (Loss) 1,835 3,107 (1,523) 331
-------- -------- -------- --------
Other Expense
Interest Expense, Net (4,811) (3,121) (9,183) (5,952)
Amortization of Debt Discount and
Expense (352) (1,852) (704) (3,698)
-------- -------- -------- --------
(5,163) (4,973) (9,887) (9,650)
-------- -------- -------- --------
Loss Before Income Taxes (3,328) (1,866) (11,410) (9,319)
Credit for Income Taxes (1,167) (530) (3,867) (3,285)
-------- -------- -------- --------
Net Loss $ (2,161) $ (1,336) $ (7,543) $ (6,034)
======== ======== ======== ========
Basic and Diluted Loss Per Common Share $ (1.36) $ (.84) $ (4.75) $ (3.80)
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(Unaudited)
(Dollars in Thousands)
1998
1999 Restated
------- --------
Cash Flows From Operating Activities
Net Loss $(7,543) $(6,034)
Items not requiring (providing) cash
Depreciation 3,691 3,797
Amortization 1,946 4,751
Gain on sale of assets (305) (351)
Deferred income taxes (18) (1,816)
Changes In:
Trade receivables (4,544) (3,575)
Inventories (2,069) 748
Prepaid expense and other (121) (87)
Accounts payable and accrued expenses 935 1,222
------- -------
Net cash used in operating activities (8,028) (1,345)
------- -------
Cash Flows From Investing Activities
Purchase of property and equipment (2,668) (1,676)
Acquisition of retail service centers (5) (601)
Proceeds from sales of property and equipment 365 286
Disposal of retail service centers 5,748 803
Advances from related parties 325 970
------- -------
Net cash provided by (used in) investing activities 3,765 (218)
------- -------
Cash Flows From Financing Activities
Checks in process of collection 1,229 595
Increase in working capital financing 4,134 2,956
Proceeds on long-term debt obligations 118 1,684
Principal payments on other long-term debt (1,540) (2,718)
------- -------
Net cash provided by financing activities 3,941 2,517
------- -------
INCREASE (DECREASE) IN CASH (322) 954
CASH, BEGINNING OF PERIOD 1,323 929
------- -------
CASH, END OF PERIOD $ 1,001 $ 1,883
======= =======
See Notes to Condensed Consolidated Financial Statements
<PAGE>
ALL STAR GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED DECEMBER 31, 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 36 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 condensed consolidated financial position
as of December 31, 1999, and the condensed consolidated results of its
operations and cash flows for the periods ended December 31, 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 and six months ended December 31, 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 (See Note 8). The Company is also
exploring several financing and recapitalization alternatives in
conjunction with a downsizing of the Company's overall structure. Sale
of assets in other than the ordinary course of business to meet
liquidity needs could incur losses not reflected in these financial
statements, or result in not obtaining the highest value for the sale
of properties.
<PAGE>
(3) BUSINESS ACQUISITION AND DISPOSITION
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
and six months ended December 31, 1998 have been retroactively restated
to reflect the operations of Tres Hombres, Inc., which resulted in an
increase in net loss for the three and six months for 1998 of $401,592
and $659,847, respectively.
Due to covenant requirements established by its working capital lender,
the Company sold Tres Hombres, Inc. in December 1999, recognizing a
loss of approximately $363,000. The sale was consummated through
receipt of a promissory note and assumption of certain liabilites by
the buyer. The restaurant chain accounted for approximately 5% of sales
volume for the three months ended December 31, 1999 and 1998. At June
30, 1999, the carrying value of Tres Hombres, Inc. was approximately
2.1% of total assets.
(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 milliion 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 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 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) ACCOUNTING FOR DERIVATIVES
There has been no change since June 30, 1999 in the Company's treatment
of commodity futures contracts. As of December 31, 1999, the Company
had no open positions on futures contracts.
(6) RELATED PARTY TRANSACTIONS
During the three months ending December 31, 1999, the Company received
advances bearing interest at a rate 12% from its principal shareholder
totaling $1,075,000. At December 31, 1999, the balances of these
obligations and other prior loan agreements are $1,754,773.
<PAGE>
(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 December 31,
1999 and 1998 (restated).
(8) DISPOSITIONS OF RETAIL SERVICE CENTERS
During the three months ended December 31, 1999, the Company sold 11
retail service centers at a gain. The Company received approximately
$4.8 million in cash and $500,000 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 transaction and the seasonal nature of the business.
In February 2000, the Company sold for cash its Michigan, Indiana and
Ohio retail service centers at a gain. The retail service centers
disposed of accounted for approximately 14.5%, 12.9% and 13.0% of sales
volume for the quarters ended December 31, 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 12.2% of
total assets.
The Company continues to negotiate for the sale of additional retail
service centers as a part of its downsizing and restructuring program.
(9) ADDITIONAL CASH FLOW INFORMATION (In Thousands)
<TABLE>
<CAPTION>
1998
Additional Cash Payment Information 1999 Restated
----------------------------------- ---- --------
<S> <C> <C>
Interest Paid $ 5,715 $ 5,955
Income Taxes Paid (net of refunds) $ (806) $ (1,156)
Noncash Investing and Financing Activities
------------------------------------------
Mortgage obligations incurred on the
acquisition of a service center $389 $75
Receivables from sale of retail service centers
and Tres Hombres, Inc. $850 $207
Capital lease obligations incurred for equipment $168 $219
</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% effective
July 16, 1999 resulting in a significantly higher semiannual interest
payment to be paid January 15, 2000 and subsequently. The Company
decided to utilize its 30 day grace period for the payment of the $8.2
million interest payment due on January 15, 2000. on its $127.2 million
12 7/8% Senior Secured Notes, due 2004. The Company made the interest
payment on February 14, 2000.
<PAGE>
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>
December 31 June 30
1998 1999 1998
1999 Restated Restated Restated
---- -------- -------- --------
<S> <C> <C> <C> <C>
Total long-term debt (including current
maturities) $150,116 $149,365 $ 147,710 $ 143,709
Working Capital (deficit) $ (7,016) $(13,377) $ (11,250) $ (14,802)
Current Ratio .76 .59 .53 .50
</TABLE>
During the six months ended December 31, 1999, the increase in long-term debt is
related to an increase in the revolving credit facility of $4.1 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:
o the balance of the revolving credit facility and its classification as
long-term at December 31, 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.
Subsequent to December 31, 1999, the Company paid off in full the revolving
credit facility which had a balance of approximately $8.9 million at December
31, 1999. Payment was made from the proceeds of the Company's sale of various
retail service centers as discussed in Note 8 to the condensed consolidated
financial statements.
Customer prepayments primarily related to the Company's prepaid product program,
decreased to $8.2 million as of December 31, 1999 compared to $8.7 million as of
December 31, 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
$8.2 million interest payment due on January 15, 2000 on its $127.2 million 12
7/8% Senior Secured Notes, due 2004. The Company continues to experience cash
shortages due to the unusually warm weather, and higher inventory costs
resulting from significantly higher wholesale product costs and the Company's
experiencing unusual difficulty in passing through increased product costs to
customers. The Company has made the interest payment as of the date of this
filing, utilizing in part proceeds from the Company's sale of various retail
service centers as discussed in Note 8 to the condensed consolidated financial
statements.
<PAGE>
The Company has net working capital and stockholders' equity deficiencies. The
Company is considering several alternatives for mitigating these conditions
during the coming year, which include exploring several financing and
recapitalization alternatives in conjunction with a downsizing of the Company's
overall structure. 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 which was converted into the corporate
facilities for the Company allowing the Company to exit an expensive lease
agreement.
Impact of Year 2000
The Company believes successful remediation of mission-critical systems has been
completed in a timely manner. The Company has not experienced any significant
operational or financial problems related to the Year 2000 compliance.
Management presently believes that the Year 2000 Issue will not pose any future
operational problems.
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 the first quarter and 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.
<PAGE>
The following table presents additional operating data for the periods ended
December 31, 1999 and 1998 (restated) and the year ended June 30, 1999 (restated
in thousands).
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Year Ended
12/31/98 12/31/98 6/30/99
12/31/99 Restated 12/31/99 Restated Restated
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Propane Gallons Sold 25,453 27,538 38,870 41,382 90,381
(Bulk and Bottle)
Revenues:
Propane $ 22,559 $ 23,357 $ 32,781 $ 33,699 $ 71,992
Gas systems, appliances and other
fuels 1,408 1,370 2,287 2,169 3,741
Other 2,320 2,533 4,463 4,500 7,967
Gross Profit:
Propane 9,808 11,297 14,540 16,712 37,925
Gas systems, appliances and other
fuels 465 465 747 720 1,225
Other 2,075 2,239 3,854 3,828 6,634
</TABLE>
Volumes. Retail volumes of propane sold decreased in the three and six months
ended December 31, 1999 compared to the same periods ended December 31, 1998.
Heating degree-days experienced by the Company during the six months ended
December 31, 1999 were only 86% of those experienced in a normal winter. For the
six months ended December 31, 1999 compared to the same period in 1998, volumes
decreased by approximately $2.5 million due to the sale of retail service
centers. Comparing stores that were operated by the Company during both 1999 and
1998, volumes decreased only .22%.
Revenues. Operating revenues decreased 3.6% and 2.1% in the three and six months
ended December 31, 1999 compared to the same periods in 1998. Offsetting the
decrease in volumes discussed above, sales prices per gallon increased 10% in
the six months ended December 31, 1999 compared to 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. The Company's gross profit decreased 11.8% and
10.0% in the three and six months ended December 31, 1999, respectively,
compared to the same periods in 1998, due to the decline in volumes noted above
and a decline in margins of approximately 3 cents 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 decreased
$277,000 for the three months ended December 31, 1999 compared to the same
period in 1998. The decrease is primarily due to a $291,000 decrease in salaries
and employee benefits from the Company's continued downsizing, specifically at
the corporate office staffing level. General and administrative expenses for the
six months ended December 31, 1999 decreased $394,000 over the same period in
1998. Salaries and employee benefits decreased $406,000 due to the reason
discussed above. Rent and maintenance costs of the Company's facilities and
equipment decreased $218,000. Offsetting these decreases was an increase in
insurance and liability claims of $144,000 due to increased costs on outstanding
claims.
Depreciation and amortization. Depreciation and amortization expense decreased
$150,000 for the three month period ended December 31, 1999 compared to the same
period in 1998. This decrease is due primarily to the decreased amortization on
purchased goodwill and noncompete agreements associated with retail service
centers that were disposed of during the quarter in 1999.
<PAGE>
Interest expense. Interest expense increased for the three and six month periods
ended December 31, 1999 compared to the same periods 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.
<PAGE>
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
January 14, 2000
Reviewed by Independent Certified Public Accountants
The December 31, 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.
<PAGE>
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
-------------------------------
PAUL S. LINDSEY
PRESIDENT AND CEO
DATE: February 14, 2000
<PAGE>
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 December 31, 1999, and the related condensed
consolidated statements of operations and cash flows for the three- and six-
month periods ended December 31, 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.
BAIRD, KURTZ & DOBSON
Springfield, Missouri
February 4, 2000, except for Note 10 as to
which the date is February 14, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,001
<SECURITIES> 0
<RECEIVABLES> 10,080
<ALLOWANCES> 571
<INVENTORY> 6,486
<CURRENT-ASSETS> 22,206
<PP&E> 112,356
<DEPRECIATION> 41,696
<TOTAL-ASSETS> 107,352
<CURRENT-LIABILITIES> 29,222
<BONDS> 147,866
0
0
<COMMON> 14
<OTHER-SE> (70,866)
<TOTAL-LIABILITY-AND-EQUITY> 107,352
<SALES> 36,927
<TOTAL-REVENUES> 39,531
<CGS> 20,390
<TOTAL-COSTS> 20,390
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 89
<INTEREST-EXPENSE> 9,887
<INCOME-PRETAX> (11,410)
<INCOME-TAX> (3,867)
<INCOME-CONTINUING> (7,543)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,543)
<EPS-BASIC> (4.75)
<EPS-DILUTED> (4.75)
</TABLE>
