FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 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 Nov. 30, 1995
$1 Par Value 4,251,286
<PAGE>
VALLEY RESOURCES, INC.
FORM 10-Q
NOVEMBER 30, 1995
Page of
Form 10-Q
---------
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations--for the
three-months ended November 30, 1995 and
1994.............................................................. 3
Consolidated Condensed Balance Sheets--November 30,
1995 and August 31, 1995...................................... 4 & 5
Consolidated Condensed Statements of Cash Flows--for
the three-months ended November 30, 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
Item 6(a) Exhibits.......................................................... 9
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders............... 9
Item 6. Exhibits and Reports on Form 8-K.................................. 9
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the 3 Months Ended
Nov. 30 Nov. 30
1995 1994
(in thousands)
(except share and
per share numbers)
<S> <C> <C>
Operating Revenues:
Utility Gas Revenues ................... $ 9,398 $ 9,980
Nonutility Revenues .................... 4,697 4,794
Total ........................ 14,095 14,774
Operating Expenses:
Cost of Gas Sold ....................... 5,052 5,669
Cost of Sales - Nonutility ............. 3,316 3,365
Operations ............................. 4,268 4,256
Maintenance ............................ 389 384
Depreciation and Amortization .......... 712 680
Taxes - Other Than Federal Income ...... 831 876
- Federal Income ................. (480) (468)
Total ........................ 14,088 14,762
Operating Income .......................... 7 12
Other Income - Net of Tax ................. 37 4
Total Income .............................. 44 16
Interest Charges:
Long-Term Debt ......................... 469 510
Other .................................. 350 241
Total ........................ 819 751
Net Loss .................................. $ (775) $ (735)
Average Number of Common Shares Outstanding 4,243,663 4,216,608
Loss Per Average Common Share Outstanding . ($0.18) ($0.17)
Dividends Declared on Common Stock ........ $0.18 $0.175
The accompanying Notes are an integral part of these statements.
</TABLE>
<PAGE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
Nov. 30, Aug. 31,
1995 1995
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant - Net .................................... $48,607 $47,411
Leased Property - Net .................................. 1,825 2,014
Nonutility Property-Net ................................ 3,548 3,547
Other Investments ...................................... 1,459 1,461
Current Assets:
Cash ................................................ 894 455
Accounts Receivable - Net ........................... 9,895 10,686
Deferred Unbilled Gas Costs ......................... 1,585 434
Fuel and Other Inventories (Note 3) ................. 5,790 5,385
Prepayments ......................................... 741 1,159
Common Stock held for Dividend Reinvestment-amounting
to 9,511 and 26,190 shares respectively (Note 4) .. 104 290
Total ....................................... 19,009 18,409
Deferred Debits:
Recoverable Postretirement Benefits ................. 771 693
Recoverable Vacations Accrued ....................... 916 847
Unamortized Debt Discount and Expense ............... 1,567 1,581
Prepaid Pensions .................................... 5,660 5,546
Recoverable Deferred FIT ............................ 5,778 5,713
Recoverable Transition Obligation ................... 1,325 1,325
Other ............................................... 4,106 3,791
20,123 19,496
Total ....................................... $94,571 $92,338
The accompanying Notes are an integral part of these statements.
</TABLE>
<PAGE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
Nov. 30, Aug. 31,
1995 1995
(in thousands)
<S> <C> <C>
CAPITALIZATION & LIABILITIES
Capitalization:
Common Stock ........................... $ 4,261 $ 4,261
Paid In Capital ........................ 18,029 18,039
Retained Earnings ...................... 5,298 6,835
Less: Accounts Receivable from ESOP .... (3,142) (3,142)
Total Common Stock Equity ...... 24,446 25,993
Long-Term Debt (Less Current Maturities):
8% First Mortgage Bonds, Series Due 2022 21,057 21,072
9% Notes Payable, Due 1999 ............. 2,139 2,139
Note Payable ........................... 1,405 1,405
Total Long-Term Debt ........... 24,601 24,616
Total Capitalization .... 49,047 50,609
Obligation Under Capital Lease ............ 1,067 1,255
Current Liabilities:
Current Maturities of Long-Term Debt ... 500 500
Obligation Under Capital Lease ......... 758 759
Notes Payable .......................... 16,000 11,900
Accounts Payable ....................... 4,504 4,321
Security Deposits & Refund Obligations . 1,156 1,162
Taxes Accrued (Debit) .................. (518) 508
Deferred Fuel Costs .................... 2,598 3,151
Accrued Interest ....................... 1,120 655
Other .................................. 1,063 976
Total .......................... 27,181 23,932
Commitments and Contingencies
Deferred Credits .......................... 6,586 6,451
Deferred Federal Income Taxes ............. 10,690 10,091
$ 94,571 $ 92,338
The accompanying Notes are an integral part of these statements.
</TABLE>
<PAGE>
VALLEY RESOURCES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the 3 Months
Ended
Nov. 30, Nov. 30,
1995 1994
(in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss ................................................... $ (775) $ (735)
Adjustments to Reconcile Net Loss to Net Cash used in
Operating Activities:
Depreciation and Amortization ............................ 712 680
Provision for Uncollectibles ............................. 337 295
Deferred Federal Income Taxes ............................ 521 421
Change in Assets and Liabilities:
Accounts Receivable ...................................... 454 (1,761)
Deferred Fuel Costs ...................................... (553) 515
Unbilled Gas Costs ....................................... (1,151) (850)
Fuel and Other Inventories ............................... (405) (688)
Other Current Assets ..................................... 489 380
Accounts Payable, Accrued Expenses and Current Liabilities (849) (842)
Other - Net .............................................. 256 246
Net Cash (Used) by Operating Activities ............ (964) (2,339)
Cash Flows from Investing Activities:
Utility Capital Expenditures ............................... (1,760) (1,182)
Nonutility Capital Expenditures ............................ (148) (188)
Other Investments .......................................... (3) (2)
Net Cash (Used) by Investing Activities ............ (1,911) (1,372)
Cash Flows from Financing Activities:
Dividends Paid ........................................... (762) (738)
Capital Stock Transactions ............................... (9) 101
Retirement of Long-Term Debt ............................. (15) (88)
Increase in Notes Payable ................................ 4,100 4,700
Net Cash Provided by Financing Activities .......... 3,314 3,975
Net Increase in Cash .......................................... 439 264
Cash - Beginning .............................................. 455 587
Cash - Ending ................................................. $ 894 $ 851
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest ................................................. $ 355 $ 261
Federal Income Taxes ..................................... $ -0- $ 130
Capital Lease Obligations Incurred ......................... $ -0- $ 57
The accompanying Notes are an integral part of these statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1
The Corporation computes its loss 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 at November 30, 1995, the results of operations
for the three-months ended November 30, 1995 and 1994 and Statements of Cash
Flows for the three-months ended November 30, 1995 and 1994.
The results of operations for the three-month periods ended November 30,
1995 and 1994 are not necessarily indicative of the results to be expected for
the full year.
Note 3
<TABLE>
<CAPTION>
Inventories - Fuel and Other Inventories:
(in Thousands) November 30 August 31
1995 1995
<S> <C> <C>
Fuels (at average cost) .............................. $3,549 $3,255
Merchandise and Other (at average cost) .............. 1,050 1,052
Merchandise (at LIFO) ................................ 1,191 1,078
$5,790 $5,385
</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.
<PAGE>
PART I - ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Utility gas revenues for the three months ended November 30, 1995, totaled
$9,398,500, a 6 percent decrease when compared to the same period in fiscal
1995. The revenue decrease is the result of increased gas sales offset by a
reduction in Purchased Gas Price Adjustment (PGPA) revenues and seasonal
revenues.
Base revenues from firm customers, exclusive of the PGPA, increased 4
percent over the prior year as a result of increased gas sales. Sales to firm
customers totaled 1,180,500 Mcf, an increase of 5 percent when compared to
fiscal 1995. The primary contributors to this increase are colder weather and
increased customers. Weather, as measured by degree days, was 6 percent colder
than the prior year. At November 30, 1995, there were 60,919 utility customers
versus 60,240 at November 30, 1994.
Seasonal and dual-fuel gas sales decreased 13 percent for the three months
ended November 30, 1995 when compared to the prior year. Seasonal sales increase
and decrease depending on availability of gas and the price of competitive
fuels. The margin on seasonal sales are passed through to firm customers through
the PGPA.
Valley Gas also transports natural gas owned by customers on their behalf.
The revenues generated from the transportation of natural gas for others
increased $13,400 for the three-months ended November 30, 1995, when compared
with the results from the prior year.
Nonutility revenues totaled $4,696,600 for the three months ended November
30, 1995, a decrease of 2 percent when compared to the prior year. Revenues from
retail sales decreased 13 percent and wholesale revenues decreased 1 percent
which were partially offset by a 4 percent increase in service contract and
rental revenues when compared to the corresponding fiscal 1995 period. Retail
sales volume decreased while improvements in service contract and rental
revenues were the result of price increases. Propane revenues decreased 4
percent, despite increased gallons sold, when compared with the prior year as a
result of price competition.
Operating expenses for the three-month period were affected primarily by
the cost of gas sold and operation expenses. The cost of gas sold decreased 11
percent when compared with the results of the prior year as a result of the flow
through of the prior years over collection of gas cost. Other operation expenses
remained flat as a result of cost control efforts when compared to fiscal 1995.
Interest expense totaled $819,600 for the three-months ended November 30,
1995, an increase of 9 percent over the prior year. The increase in interest
expense was the result of increases in short-term borrowing rates and loan
balances.
Liquidity and Capital Resources
Operations during the first quarter typically do not generate sufficient
cash to meet gas costs and construction requirements. Management believes the
available financings are sufficient to meet cash requirements. The available
borrowings under lines of credit at November 30, 1995 were $11,000,000.
<PAGE>
On November 20, 1995, the Rhode Island Public Utilities Commission
("RIPUC") authorized the Utilities to adjust its tariffs to collect an
additional $1.2 million. This rate increase should favorably impact liquidity in
fiscal 1996.
A receivable lag that is generally experienced during the first fiscal
quarter should be reversed in the second fiscal quarter and revenues should
increase as a result of colder weather. Also, construction expenditures should
be reduced during the second fiscal quarter due to restraints caused by weather
having a favorable effect upon cash flow.
PART I - ITEM 6(a)
Item 6 (a) - Exhibits
27. Financial Data Schedule
PART II: OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Valley Resources, Inc. was held on
December 12, 1995, for the purpose of electing a board of directors. Proxies for
the meeting were solicited pursuant to Section 14(a) of the Securities Exchange
Act of 1934 and there was no solicitation in opposition to management's
solicitations.
All of management's nominees for directors were elected by the following
vote:
<TABLE>
<CAPTION>
Shares Shares
Voted Voted
"For" "Withheld"
<S> <C> <C>
James M. Dillon ........................ 3,145,836 41,022
Jonathan K. Farnum ..................... 3,160,504 26,354
John F. Guthrie, Jr .................... 3,155,223 31,635
</TABLE>
Item 6 - Exhibits and Reports on Form 8-K
(a) None.
(b) The Company did not file a Form 8-K.
<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
S/K. W. Hogan
__________________________________________________
K. W. Hogan
Senior Vice President, Chief Financial Officer and
Secretary
January 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 894
<SECURITIES> 0
<RECEIVABLES> 10,600
<ALLOWANCES> 705
<INVENTORY> 5,790
<CURRENT-ASSETS> 19,009
<PP&E> 81,536
<DEPRECIATION> 29,381
<TOTAL-ASSETS> 94,571
<CURRENT-LIABILITIES> 27,181
<BONDS> 21,057
0
0
<COMMON> 4,261
<OTHER-SE> 20,185
<TOTAL-LIABILITY-AND-EQUITY> 94,571
<SALES> 14,095
<TOTAL-REVENUES> 14,095
<CGS> 8,368
<TOTAL-COSTS> 14,088
<OTHER-EXPENSES> 5,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 819
<INCOME-PRETAX> (1,214)
<INCOME-TAX> (439)
<INCOME-CONTINUING> (775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (775)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
