UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7924
VALLEY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Rhode Island 05-0384723
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1595 Mendon Road 02864
Cumberland, Rhode Island (Zip Code)
(Address of principal executive offices)
(401) 334-1188
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X . NO .
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Outstanding at
Class of Common Stock February 28, 1995
$1 Par Value 4,217,599
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VALLEY RESOURCES, INC.
FORM 10-Q
FEBRUARY 28, 1995
Page of
Form 10-Q
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations--for
the three- and six-months ended February 28, 1995
and 1994..................................................... 3
Consolidated Condensed Balance Sheets-February 28,
1995 and August 31, 1994................................. 4 & 5
Consolidated Condensed Statements of Cash Flows--for
the six months ended February 28, 1995 and 1994.............. 6
Notes to Consolidated Condensed Financial Statements......... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 8
PART II: OTHER INFORMATION
Item 6. ............................................................. 9
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<TABLE>
VALLEY RESOURCES, INC. AND SUBISIDIARIES
Consolidated Condensed Statements of Operations (Unaudited)
<CAPTION>
3 Months Ended 6 Months Ended
Feb. 28, Feb. 28, Feb. 28, Feb. 28,
1995 1994 1995 1994
(in thousands except share and per share numbers)
<S> <C> <C> <C> <C>
Operating Revenues:
Utility Gas Revenues $ 21,838 $ 26,893 $ 31,818 $ 37,918
Nonutility Revenues 5,127 4,692 9,921 9,423
Total 26,965 31,585 41,739 47,341
Operating Expenses:
Cost of Gas Sold 12,384 16,347 18,167 22,796
Operations 7,847 7,149 15,353 14,551
Maintenance 429 383 813 758
Depreciation and Amortization 671 631 1,352 1,263
Taxes-Other Than Income 1,276 1,411 2,152 2,403
-Federal Income 1,198 1,608 730 1,271
Total 23,805 27,529 38,567 43,042
Operating Income 3,160 4,056 3,172 4,299
Other Income-Net of Tax 35 39 39 98
Total Income 3,195 4,095 3,211 4,397
Interest Charges:
Long-Term Debt 490 501 999 1,013
Other 323 186 565 352
Total 813 687 1,564 1,365
Net Income $ 2,382 $ 3,408 $ 1,647 $ 3,032
Average Number of Common Shares
Outstanding 4,216,727 4,202,842 4,216,667 4,205,195
Earnings Per Average Common Share
Outstanding $0.56 $0.81 $0.39 $0.72
Dividends Declared on Common Stock $0.175 $0.17 $0.35 $0.34
The accompanying Notes are an integral part of these statements.
</TABLE>
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<TABLE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<CAPTION>
(Unaudited)
Feb. 28, Aug. 31,
1995 1994
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant - Net $44,972 $44,207
Leased Property-Net 2,182 2,436
Nonutility Property-Net 3,617 3,519
Other Investments 1,479 1,466
Current Assets:
Cash 1,970 587
Accounts Receivable - Net 16,729 10,348
Deferred Unbilled Gas Costs 1,467 430
Fuel and Other Inventories (Note 3) 4,783 5,887
Prepayments 388 1,087
Common Stock held for Dividend Reinvestment-amounting
to 4,856 and 1,496 shares respectively (Note 4) 55 19
Total 25,392 18,358
Deferred Debits:
Recoverable Postretirement Benefits 548 441
Recoverable Vacations Accrued 774 803
Unamortized Debt Discount and Expense 1,610 1,639
Prepaid Pensions 5,259 4,973
Recoverable Deferred FIT 5,608 5,744
Recoverable Transition Obligation 1,325 3,172
Other 4,229 4,311
19,353 21,083
Total $96,995 $91,069
The accompanying Notes are an integral part of these statements.
</TABLE>
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<TABLE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets (Continued)
<CAPTION>
(Unaudited)
Feb. 28, Aug. 31,
1995 1994
(in thousands)
<S> <C> <C>
CAPITALIZATION & LIABILITIES
Capitalization:
Common Stock $ 4,222 $ 4,213
Paid In Capital 17,757 17,695
Retained Earnings 7,443 7,270
Less: Accounts Receivable from ESOP (3,142) (3,142)
Total Common Stock Equity 26,280 26,036
Long-Term Debt (Less Current Maturities):
8% First Mortgage Bonds, Series Due 2022 21,225 22,405
9% Notes Payable, Due 1999 2,725 2,725
Note Payable 1,905 1,905
Total Long-Term Debt 25,855 27,035
Total Capitalization 52,135 53,071
Obligation Under Capital Lease 1,473 1,747
Current Liabilities:
Current Maturities of Long-Term Debt 450 450
Obligation Under Capital Lease 709 690
Notes Payable 12,100 8,900
Accounts Payable 4,761 4,596
Security Deposits & Refund Obligations 3,039 1,131
Taxes Accrued 1,035 640
Deferred Fuel Costs 3,090 522
Deferred Federal Income Taxes 328 -0-
Accrued Interest 539 631
Other 993 970
Total 27,044 18,530
Commitments and Contingencies
Deferred Credits 6,627 8,204
Deferred Federal Income Taxes 9,716 9,517
$96,995 $91,069
The accompanying Notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows (Unaudited)
<CAPTION>
For the 6 Months
Ended
Feb. 28, Feb. 28,
1995 1994
(in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $1,647 $3,032
Adjustments to Reconcile Net Income to Net Cash used in
Operating Activities:
Depreciation and Amortization 1,352 1,263
Provision for Uncollectibles 601 474
Deferred Federal Income Taxes 663 836
Change in Assets and Liabilities:
Accounts Receivable (6,981) (8,979)
Deferred Fuel Costs 2,568 2,054
Unbilled Gas Costs (1,037) (1,756)
Fuel and Other Inventories 1,104 1,629
Other Current Assets 376 154
Accounts Payable, Accrued
Expenses and Current Liabilities 2,468 2,463
Other - Net 233 54
Net Cash provided by Operating Activities 2,994 1,224
Cash Flows from Investing Activities:
Utility Capital Expenditures (1,840) (2,245)
Nonutility Capital Expenditures (375) (324)
Other Investments (13) (18)
Net Cash (Used) by Investing Activities (2,228) (2,587)
Cash Flows from Financing Activities:
Dividends Paid (1,474) (1,429)
Capital Stock Transactions 71 (27)
Retirement of Long-Term Debt (1,180) -0-
Increase in Notes Payable 3,200 3,300
Net Cash Provided by Financing Activities 617 1,844
Net Increase in Cash 1,383 481
Cash - Beginning 587 940
Cash - Ending $ 1,970 $ 1,421
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest $ 1,656 $ 1,395
Federal Income Taxes $ 130 $ 57
Capital Lease Obligations Incurred $ 111 $ 496
The accompanying Notes are an integral part of these statements.
</TABLE>
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1
The Corporation computes earnings per average common share based on the
weighted average number of shares outstanding during the period.
Note 2
In the opinion of the Corporation, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals and matters discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations") necessary to
present fairly the financial position as of February 28, 1995 and August 31,
1994 the results of operations for the three- and six-months ended February 28,
1995 and 1994, and Statement of Cash Flows for the six-months ended
February 28, 1995 and 1994.
The results of operations for the three- and six-month periods ended
February 28, 1995 and 1994 are not necessarily indicative of the results to be
expected for the full year.
Note 3
<TABLE>
Inventories - Fuel and Other Inventories:
(in Thousands)
<CAPTION>
February 28 August 31
1995 1994
<S> <C> <C>
Fuels (at average cost) $2,394 $3,813
Merchandise and Other (at average cost) 1,024 1,075
Merchandise (at LIFO) 1,365 999
$4,783 $5,887
</TABLE>
Note 4
Pursuant to the dividend reinvestment plan, stockholders can reinvest
dividends and make limited additional investments in shares of Common Stock.
Shares issued through dividend reinvestment can be acquired on the open market
or original issue.
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<PAGE>
PART 1 - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Utility gas revenues totaled $21,838,500 and $31,818,200, respectively,
for the three- and six-months ended February 28, 1995. Utility gas revenues
decreased 19 percent for the three-month period and 16 percent for the six-
month period when compared to the same periods in fiscal 1994. Utility gas
revenues are generated from sales to firm, seasonal and transportation
customers, as well as, miscellaneous gas revenues.
Revenues generated from firm customers were $20,737,400 and $29,411,400
for the three- and six-months ended February 28, 1995. Firm revenues decreased
22 percent and 19 percent, respectively, when compared to the same period in
fiscal 1994. Firm revenues decreased as a result of the weather impact on gas
sales and decreased PGPA revenues. Weather, as measured by degree days, was 16
percent warmer than the prior six-month period and 15 percent warmer than the
quarter ended February 28, 1994. Firm gas sales were 3,068,200 Mcf and
4,195,700 Mcf for the three- and six-months ended February 28, 1995, a decrease
of 12 percent and 11 percent from the prior three- and six-month periods,
respectively. PGPA revenues declined due to the reductions in gas sales and
decreases in the cost of natural gas.
Seasonal and dual-fuel Mcf sales increased 90 percent and 64 percent for
the three- and six-month periods when compared to the prior year. Seasonal
sales increase and decrease depending on availability of gas and the price of
competitive fuels. Valley Gas' margin on seasonal sales are passed through to
firm customers through the purchased gas price adjustment clause.
Valley Gas transports natural gas owned by customers on their behalf. The
revenues generated from the transportation of natural gas for others increased
$7,200 for the three-month period but were $3,000 less for the six-month period
when compared with the results from the prior year.
Nonutility revenues totaled $5,126,500 and $9,920,900, respectively, for
the three- and six-months ended February 28, 1995. Nonutility revenues
increased 9 percent for the three-month period and 5 percent for the six-month
period when compared to the prior year. The increase in nonutility revenues
was the result of improvements in the merchandising and wholesaling operations
offset by decreased propane operations. The improvement in merchandise and
wholesale operations was the result of sales volume increases and improvements
in service contract and rental revenues as a result of increased sales and
price increases. Propane revenues decreased 18 percent and 12 percent for the
three- and six-month periods, respectively, when compared to the prior year.
The decline in propane revenues is the direct result of decreased gallons sold
due to the warmer weather. Gallons sold decreased 20 percent and 15 percent
for the three- and six-month periods, respectively, when compared to the prior
year.
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<PAGE>
Operating expenses for the three- and six-month periods were affected
primarily by the cost of gas sold and operation expenses. The cost of gas sold
decreased 24 percent and 20 percent, respectively, for the three- and six-month
periods when compared with the results of the prior year. The cost of gas sold
decreased due to decreased commodity prices and decreased usage of peak
supplemental fuels. Other operation expenses increased 10 percent and 6
percent, respectively, for the three- and six-month periods when compared to
the prior year. Other operation expenses increased as a result of increased
uncollectible expenses and cost of sales associated with the increased
nonutility sales.
Interest expense totaled $813,000 and $1,563,600 for three- and six-months
ended February 28, 1995, an increase of 18 percent and 15 percent,
respectively, when compared to the same periods in fiscal 1994. The increase
in interest expense was the result of increased short-term borrowings, PGPA
interest, interest on consulting contracts, and increases in interest rates.
Liquidity and Capital Resources
The liquidity position of the Corporation improved during the second
fiscal quarter due to increased revenues from colder weather during the winter
period, and the reversal of the lag in receivable experienced in the first
quarter. Management believes the available financings are sufficient to meet
cash requirements. The available borrowings under lines of credit at
February 28, 1995 were $11,400,000.
Construction expenditures declined during the second fiscal quarter due to
the constraints caused by the weather, thereby adding favorably to liquidity.
The liquidity position of the Corporation should improve during the third
quarter as a result of a $1.9 million refund from one of Valley's natural gas
suppliers. This refund will be disbursed as credits against Valley's customer
bills. Cash expended on the construction program will increase, however, this
should be offset by cash flows from the reversal of the receivable lag from the
winter period.
PART II
Item 6 - Exhibits and Reports on Form 8-K
(a) None.
(b) The Company did not file a Form 8-K.
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<PAGE>
SIGNATURES
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.
VALLEY RESOURCES, INC. AND SUBSIDIARIES
K. W. Hogan
Senior Vice President,
Chief Financial Officer and Secretary
April 12, 1995
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