-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HlX3PUlLfdXTvUM/n5e5PDDfk6EJaf593/j3dt8VlyKtN4PUv+XWtqSEQBCpUYeL PtyPxv04mIZWZaq8Lw59fA== 0000102710-96-000027.txt : 19960416 0000102710-96-000027.hdr.sgml : 19960416 ACCESSION NUMBER: 0000102710-96-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960412 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALLEY RESOURCES INC /RI/ CENTRAL INDEX KEY: 0000102710 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 050384723 STATE OF INCORPORATION: RI FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07924 FILM NUMBER: 96546638 BUSINESS ADDRESS: STREET 1: 1595 MENDON RD CITY: CUMBERLAND STATE: RI ZIP: 02864 BUSINESS PHONE: 4013341188 MAIL ADDRESS: STREET 1: PO BOX 7900 CITY: CUMBERLAND STATE: RI ZIP: 02864-7900 10-Q 1 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 February 29, 1996 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 29, 1996 $1 Par Value 4,264,202 VALLEY RESOURCES, INC. FORM 10-Q FEBRUARY 29, 1996 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 29, 1996 and 1995...................................................... 3 Consolidated Condensed Balance Sheets--February 29, 1996 and August 31, 1995....................................4 & 5 Consolidated Condensed Statements of Cash Flows--for the six-months ended February 29, 1996 and 1995............... 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 6. Exhibits and Reports on Form 8-K.............................. 9 PART I: FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited)
3 Months Ended 6 Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 1996 1995 1996 1995 (in thousands except share and per share numbers) Operating Revenues: Utility Gas Revenues $ 24,563 $ 21,838 $ 33,962 $ 31,818 Nonutility Revenues 5,687 5,127 10,383 9,921 Total 30,250 26,965 44,345 41,739 Operating Expenses: Cost of Gas Sold 12,746 12,140 17,798 17,810 Cost of Sales - Nonutility 3,961 3,515 7,277 6,879 Operations 4,713 4,576 8,981 8,831 Maintenance 414 429 803 813 Depreciation and Amortization 750 671 1,462 1,352 Taxes - Other Than Federal Income 1,321 1,276 2,153 2,152 - Federal Income 1,889 1,198 1,409 730 Total 25,794 23,805 39,883 38,567 Operating Income 4,456 3,160 4,462 3,172 Other Income - Net of Tax 233 35 271 39 Total Income 4,689 3,195 4,733 3,211 Interest Charges: Long-Term Debt 479 490 948 999 Other 355 323 706 565 Total 834 813 1,654 1,564 Net Income $ 3,855 $ 2,382 $ 3,079 $ 1,647 Average Number of Common Shares Outstanding 4,258,330 4,216,727 4,250,996 4,216,667 Earnings Per Average Common Share Outstanding $ 0.91 $ 0.56 $ 0.72 $ 0.39 Dividends Declared on Common Stock $ 0.18 $ 0.175 $ 0.36 $ 0.35
The accompanying Notes are an integral part of these statements. VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets
(Unaudited) Feb. 29, Aug. 31, 1996 1995 (in thousands) ASSETS Utility Plant - Net $48,679 $47,411 Leased Property - Net 1,732 2,014 Nonutility Property-Net 3,550 3,547 Other Investments 1,473 1,461 Current Assets: Cash 1,096 455 Accounts Receivable - Net 16,283 10,686 Deferred Unbilled Gas Costs 1,815 434 Fuel and Other Inventories (Note 3) 3,511 5,385 Prepayments 417 1,159 Common Stock held for Dividend Reinvestment-amounting to 3,682 and 26,190 shares respectively (Note 4) 41 290 Total 23,163 18,409 Deferred Debits: Recoverable Postretirement Benefits 726 693 Recoverable Vacations Accrued 758 847 Unamortized Debt Discount and Expense 1,552 1,581 Prepaid Pensions 5,858 5,546 Recoverable Deferred FIT 5,923 5,713 Recoverable Transition Obligation 1,325 1,325 Other 3,652 3,791 19,794 19,496 Total $98,391 $92,338
The accompanying Notes are an integral part of these statements. VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Cont'd)
(Unaudited) Feb. 29, Aug. 31, 1996 1995 (in thousands) CAPITALIZATION & LIABILITIES Capitalization: Common Stock $ 4,268 $ 4,261 Paid In Capital 18,088 18,039 Retained Earnings 8,388 6,835 Less: Accounts Receivable from ESOP (3,142) (3,142) Total Common Stock Equity 27,602 25,993 Long-Term Debt (Less Current Maturities): 8% First Mortgage Bonds, Series Due 2022 20,247 21,072 9% Notes Payable, Due 1999 2,139 2,139 Notes Payable 3,605 1,405 Total Long-Term Debt 25,991 24,616 Total Capitalization 53,593 50,609 Obligation Under Capital Lease 1,107 1,255 Current Liabilities: Current Maturities of Long-Term Debt 500 500 Obligation Under Capital Lease 625 759 Notes Payable 13,300 11,900 Accounts Payable 5,786 4,321 Security Deposits & Refund Obligations 1,096 1,162 Taxes Accrued 1,659 508 Deferred Fuel Costs 1,847 3,151 Accrued Interest 577 655 Other 909 976 Total 26,299 23,932 Commitments and Contingencies Deferred Credits 6,429 6,451 Deferred Federal Income Taxes 10,963 10,091 $ 98,391 $ 92,338
The accompanying Notes are an integral part of these statements. VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited)
For the 6 Months Ended Feb. 29, Feb.28, (in thousands) Cash Flows from Operating Activities: Net Income $ 3,079 $ 1,647 Adjustments to Reconcile Net Income to Net Cash used in Operating Activities: Depreciation and Amortization 1,462 1,352 Provision for Uncollectibles 672 601 Deferred Federal Income Taxes 774 663 Change in Assets and Liabilities: Accounts Receivable (6,269) (6,981) Deferred Fuel Costs (1,304) 2,568 Unbilled Gas Costs (1,381) (1,037) Fuel and Other Inventories 1,874 1,104 Other Current Assets 679 376 Accounts Payable, Accrued Expenses and Current Liabilities 2,550 2,468 Other - Net (54) 233 Net Cash Provided by Operating Activities 2,082 2,994 Cash Flows from Financing Activities: Utility Capital Expenditures (2,435) (1,840) Nonutility Capital Expenditures (298) (375) Other Investments (12) (13) Net Cash (Used) by Investing Activities (2,745) (2,228) Cash Flows from Financing Activities: Dividends Paid (1,527) (1,474) Capital Stock Transactions 56 71 Issuance of Long Term Debt 2,200 -0- Retirement of Long-Term Debt (825) (1,180) Increase in Notes Payable 1,400 3,200 Net Cash Provided by Financing Activities 1,304 617 Net Increase in Cash 641 1,383 Cash - Beginning 455 587 Cash - Ending $ 1,096 $ 1,970 Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 1,732 $ 1,656 Federal Income Taxes $ - 0- $ 130 Capital Lease Obligations Incurred $ 99 $ 111
The accompanying Notes are an integral part of these statements. 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 29, 1996 the results of operations for the three- and six-months ended February 29, 1996 and 1995 and Statement of Cash Flows for the six-months ended February 29, 1996 and 1995. The results of operations for the three- and six-month periods ended February 29, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. Note 3 Inventories - Fuel and Other Inventories: (in Thousands)
(Unaudited) February 29, August 31, 1996 1995 Fuels (at average cost) $1,311 $3,255 Merchandise and Other (at average cost) 1,035 1,052 Merchandise (at LIFO) 1,165 1,078 $3,511 $5,385
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. PART I - ITEM II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Utility gas revenues for the three months ended February 29, 1996, the second fiscal quarter, totaled $24,563,300, an increase of 12 percent over the same period in fiscal 1995. For the six months ended February 29, 1996, utility gas revenues increased 7 percent when compared to the same period in fiscal 1995 and totaled $33,961,800. The revenue increases for the three and six month periods were the result of increased gas sales, rate relief and increased customers, partially offset by a reduction in the revenue generated through the purchased gas price adjustment clause (PGPA). Six month revenues were also impacted by a reduction in seasonal revenues. Gas sales to firm customers in fiscal 1996 totaled 3,678,300 Mcf for the three month period and 4,858,800 Mcf for the six-months ended February 29,1996. Gas sales for the three month period represent an increase of 20 percent over the prior year period and for the six month period were 16 percent greater than the prior year period. Colder weather, rate relief and increased customers are responsible for the sales increases. Weather, as measured by degree days, for the second quarter was 17 percent colder than the prior year period and 6 percent colder than normal. For the six-months ended February 29, 1996, the weather was 15 percent colder than the prior year period and 2 percent colder than normal. At February 29, 1996, there were 62,419 utility customers versus 61,609 at February 28, 1995. In November 1995, the utility subsidiaries were authorized to adjust their rate tariffs to recover an additional $1.1 million in revenues. The new tariffs contributed approximately $350,000 to the increase in utility revenues during the second fiscal quarter. Seasonal and dual-fuel gas sales decreased for the three- and six-months ended February 29, 1996, when compared to the prior year periods. Seasonal sales are dependent on availability of gas and the price of competitive fuels. The margins on seasonal sales are passed through to firm customers through the PGPA. Valley Gas transports natural gas owned by customers if delivered to Valley Gas's gate station. Transportation revenues decreased $26,700 and $13,300 for the three- and six-month periods, respectively. Nonutility revenues totaled $5,687,000 and $10,383,600 for the three- and six-months ended February 29, 1996, respectively. Nonutility revenues for the second fiscal quarter were 11 percent greater than the 1995 period and for the six month period nonutility sales were 5 percent greater than the prior year period. The continuing focus of Vamco on the commercial and industrial market led to an increase in retail sales volume. This increase was slightly offset by a reduction in wholesale revenues. Wholesale revenues decreased due to a reduction in units sold. Service contract and rental revenues increased for both the three- and six-month periods when compared to the prior year as a result of new customers and price increases. Propane revenues for the three- and six-months ended February 29, 1996, increased as a result of increased gallons sold. The colder weather and sales to the construction heating market were the primary contributors to the increase in propane sales. The cost of gas sold increased 5 percent for the three-month period but remained flat for the six-month period when compared to fiscal 1995. The cost of gas sold was impacted by higher gas prices and increased usage of natural and supplemental fuels as a result of increased gas sales brought about by more customers and colder weather. The increase in the cost of gas sold was partially offset by the prior fiscal year over-recovery of gas costs that are being returned to customers through the workings of the PGPA in fiscal 1996. The nonutility cost of sales increased as a result of the increased level of retail sales in the commercial and industrial market. Other operation expenses remained flat for both the three- and six-month periods when compared to fiscal 1995. Other income increased $198,500 and $232,200 for the three- and six-months ended February 29, 1996, respectively, over the prior fiscal periods as a result of off-system natural gas sales. Off -system sales are natural gas sales arranged by the utility to customers outside the franchise area at market clearing prices. Gas is available for sale through acquisition rights available to the utility and from supplies not required to meet firm customer demand. The opportunities for off-system sales are dependent upon market demand and the ability of other suppliers to meet their delivery requirements. As a result, the ability to effect this market is beyond the Corporation's total control. While Valley will continue to make excess gas supplies and transportation capacity available to this new market, there is no assurance that this level of off-system sales opportunities will continue. Interest expense increased by 3 percent and 6 percent for the three- and six-months ended February 29, 1996, respectively, over the prior fiscal periods. The increase in interest expense was the result of increases in short-term borrowings. Liquidity and Capital Resources During the second fiscal quarter the liquidity position of the Corporation improved over the first quarter as a result of increased revenues from colder weather during the winter period, rate relief and the reversal of the first quarter lag in receivables. The issuance of a revolving credit arrangement and increased short-term borrowings also favorably impacted liquidity. Management believes the available financings are sufficient to meet cash requirements for the foreseeable future. The available borrowings under lines of credit at February 29, 1996, were $13,700,000. On November 20, 1995, the Rhode Island Public Utilities Commission authorized the utilities to adjust their tariffs to collect an additional $1.1 million in revenue annually. This rate increase favorably impacted liquidity during the second fiscal quarter. Construction expenditures declined during the second fiscal quarter due to constraints caused by the weather, thereby adding favorably to liquidity. The liquidity position of the Corporation is anticipated to remain stable in the third quarter as winter bills are liquidated. Cash expended on the construction program will increase; however, this increased cash requirement should be offset by cash flows from the payment of winter bills. PART I - ITEM 6(a) Item 6(a) - Exhibits 27. Financial Data Schedule PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) None. (b) The Company did not file a Form 8-K. 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, 1996 EX-27 2
5 1,000 6-MOS AUG-31-1996 FEB-29-1996 1,096 0 16,976 693 3,511 23,163 82,218 29,989 98,391 26,299 20,247 0 0 4,268 23,334 98,391 44,345 44,345 25,075 39,883 14,808 0 1,654 4,603 1,524 3,079 0 0 0 3,079 0.72 0.72
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