-----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, KjTCKVJ9tLiFnCI89sfb5lZ07v2QnausSgt0+H7dX4njCPyvIWHGoLePHppMBLLj V1yM2h8LMIJZyFA6sFizyw== 0000102710-96-000057.txt : 19960712 0000102710-96-000057.hdr.sgml : 19960712 ACCESSION NUMBER: 0000102710-96-000057 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960711 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: 96593417 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 May 31, 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 May 31, 1996 $1 Par Value 4,263,710 VALLEY RESOURCES, INC. FORM 10-Q MAY 31, 1996 Page of Form 10-Q PART I: FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Operations--for the three and nine months ended May 31, 1996 and 1995................................................. 3 Consolidated Condensed Balance Sheets--May 31, 1996 and August 31, 1995................................. 4 & 5 Consolidated Condensed Statements of Cash Flows--for the nine months ended May 31, 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......................... 10 PART I: FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited)
3 Months Ended 9 Months Ended May 31, May 31, May 31, May 31, 1996 1995 1996 1995 (in thousands except share and per share numbers) Operating Revenues: Utility Gas Revenues $ 19,126 $ 16,993 $ 53,088 $ 48,811 Nonutility Revenues 4,539 4,445 14,923 14,366 ---------- ---------- ---------- ---------- Total 23,665 21,438 68,011 63,177 ---------- ---------- ---------- ---------- Operating Expenses: Cost of Gas Sold 10,152 8,905 27,950 26,715 Cost of Sales - Nonutility 3,095 3,109 10,372 9,988 Operations 4,488 4,294 13,470 13,125 Maintenance 430 388 1,232 1,200 Depreciation and Amortization 750 668 2,212 2,020 Taxes - Other Than Federal Income 1,121 1,066 3,273 3,219 - Federal Income 920 637 2,330 1,367 ---------- ---------- ---------- ---------- Total 20,956 19,067 60,839 57,634 ---------- ---------- ---------- ---------- Operating Income 2,709 2,371 7,172 5,543 Other Income - Net of Tax 61 31 332 69 ---------- ---------- ---------- ---------- Total Income 2,770 2,402 7,504 5,612 ---------- ---------- ---------- ---------- Interest Charges: Long-Term Debt 489 484 1,438 1,483 Other 286 332 991 896 ---------- ---------- ---------- ---------- Total 775 816 2,429 2,379 ---------- ---------- ---------- ---------- Net Income $ 1,995 $ 1,586 $ 5,075 $ 3,233 ========== ========== ========== ========== Average Number of Common Shares Outstanding 4,262,970 4,218,570 4,255,017 4,217,308 Earnings Per Average Common Share Outstanding $ 0.47 $ 0.38 $ 1.19 $ 0.77 Dividends Declared on Common Stock $ 0.1825 $ 0.18 $ 0.5425 $ 0.53
The accompanying Notes are an integral part of these statements. VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets
(Unaudited) May 31, Aug. 31, 1996 1995 (in thousands) ASSETS Utility Plant - Net $48,889 $47,411 ------- ------- Leased Property - Net 3,138 2,014 ------- ------- Nonutility Property-Net 3,565 3,547 ------- ------- Other Investments 1,516 1,461 ------- ------- Current Assets: Cash 760 455 Accounts Receivable - Net 13,115 10,686 Deferred Unbilled Gas Costs 483 434 Fuel and Other Inventories (Note 3) 3,717 5,385 Prepayments 528 1,159 Common Stock held for Dividend Reinvestment-amounting to 11,608 and 26,190 shares respectively (Note 4) 133 290 ------- ------- Total 18,736 18,409 ------- ------- Deferred Debits: Recoverable Postretirement Benefits 718 693 Recoverable Vacations Accrued 823 847 Unamortized Debt Discount and Expense 1,538 1,581 Prepaid Pensions 5,772 5,546 Recoverable Deferred FIT 5,856 5,713 Recoverable Transition Obligation 1,325 1,325 Other 3,667 3,791 ------- ------- 19,699 19,496 ------- ------- Total $95,543 $92,338 ======= =======
The accompanying Notes are an integral part of these statements. VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Cont'd)
(Unaudited) May 31, Aug. 31, 1996 1995 (in thousands) CAPITALIZATION & LIABILITIES Capitalization: Common Stock $ 4,275 $ 4,261 Paid In Capital 18,154 18,039 Retained Earnings 9,605 6,835 Less: Accounts Receivable from ESOP (3,142) (3,142) -------- -------- Total Common Stock Equity 28,892 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 3,105 1,405 -------- -------- Total Long-Term Debt 25,491 24,616 -------- -------- Total Capitalization 54,383 50,609 -------- -------- Obligation Under Capital Lease 2,298 1,255 -------- -------- Current Liabilities: Current Maturities of Long-Term Debt 500 500 Obligation Under Capital Lease 841 759 Notes Payable 9,300 11,900 Accounts Payable 4,672 4,321 Security Deposits & Refund Obligations 1,106 1,162 Taxes Accrued 2,179 508 Deferred Fuel Costs 1,293 3,151 Accrued Interest 948 655 Other 949 976 -------- -------- Total 21,788 23,932 -------- -------- Commitments and Contingencies Deferred Credits 6,406 6,451 -------- -------- Deferred Federal Income Taxes 10,668 10,091 -------- -------- $ 95,543 $ 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 9 Months Ended May 31, May 31, 1996 1995 (in thousands) Cash Flows from Operating Activities: Net Income $ 5,075 $ 3,233 Adjustments to Reconcile Net Income to Net Cash used in Operating Activities: Depreciation and Amortization 2,212 2,020 Provision for Uncollectibles 1,087 910 Deferred Federal Income Taxes 434 531 Change in Assets and Liabilities: Accounts Receivable (3,516) (3,339) Deferred Fuel Costs (1,858) 3,858 Unbilled Gas Costs (49) (55) Fuel and Other Inventories 1,668 1,433 Other Current Assets 319 400 Accounts Payable, Accrued Expenses and Current Liabilities 1,966 158 Other - Net 130 252 ------- ------- Net Cash Provided by Operating Activities 7,468 9,401 ------- ------- Cash Flows from Investing Activities: Utility Capital Expenditures (3,248) (2,898) Nonutility Capital Expenditures (460) (484) Other Investments (55) (21) ------- ------- Net Cash (Used) by Investing Activities (3,763) (3,403) ------- ------- Cash Flows from Financing Activities: Dividends Paid (2,305) (2,234) Capital Stock Transactions 130 54 Issuance of Long Term Debt 2,200 -0- Retirement of Long-Term Debt (825) (1,260) Decrease in Notes Payable (2,600) (2,100) ------- ------- Net Cash (Used) by Financing Activities (3,400) (5,540) ------- ------- Net Increase in Cash 305 458 Cash - Beginning 455 587 ------- ------- Cash - Ending $ 760 $ 1,045 ======= ======= Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 2,136 $ 1,968 ======= ======= Federal Income Taxes $ 725 $ 380 ======= ======= Capital Lease Obligations Incurred $ 1,804 $ 544 ======= =======
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 May 31, 1996 the results of operations for the three and nine months ended May 31, 1996 and 1995 and Statement of Cash Flows for the nine months ended May 31, 1996 and 1995. The results of operations for the three- and nine-month periods ended May 31, 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) May 31, August 31, 1996 1995 Fuels (at average cost) $1,338 $3,255 Merchandise and Other (at average cost) 1,083 1,052 Merchandise (at LIFO) 1,296 1,078 ------ ------ $3,717 $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. Note 5 On May 20, 1996, Valley Resources, Inc. purchased Alternate Energy Corporation (AEC) a Rhode Island Corporation that constructs natural gas refueling stations, retro-fits vehicles and equipment to run on dedicated natural gas. A form 8-K was not required to be filed. PART I - ITEM II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Utility gas revenues for the third fiscal quarter, the three months ended May 31, 1996, totaled $19,126,200, an increase of 13 percent over the same period in fiscal 1995. For the nine months ended May 31, 1996, utility gas revenues increased 9 percent when compared to the same period in fiscal 1995 and totaled $53,088,000. The revenue increases for the three- and nine-month periods were the result of increased gas sales and rate relief. Partially offsetting the increase in firm gas sales revenues was a reduction in the revenue generated from seasonal and firm off-peak transportation. A reduction in revenues generated through the purchased gas price adjustment (PGPA) clause also affected utility gas revenues for the nine month period. Gas sales to firm customers for the third quarter of fiscal 1996 totaled 2,569,500 Mcf, an increase of 9 percent over the same quarter in fiscal 1995. For the nine months ended May 31, 1996, firm customer gas sales increased 13 percent over the same period in 1995 and were 7,428,300 Mcf. Colder weather is responsible for the increases in gas sales. Weather, as measured by degree days, was one percent colder than the prior year for the three-month period and 10 percent colder than the prior year for the nine-month period. Rate relief granted to the utility subsidiaries in November 1995 positively impacted revenues for both the three- and nine- month periods. The utilities were authorized to combine their rate structures and collect an additional $1.1 million in revenues. The new rate tariffs collect an increased share of revenues through the customer charge, thus reducing the impact of weather on total revenues. The increase in the customer charge resulted in approximately $580,000 of the increase in utility revenues for the nine-month period and approximately $300,000 for the three-month period. Seasonal and dual-fuel gas sales decreased for the three and nine months ended May 31, 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 returned to firm customers through the PGPA, thus seasonal sales have no impact on operating margins. Transportation revenues decreased $77,200 and $90,500 for the three- and nine-month periods, respectively. The reduction in transportation revenues was due to a decrease in Mcf's delivered to Valley Gas. Valley Gas transports customer-owned natural gas if delivered to its gate station. Nonutility revenues totaled $4,539,000 and $14,922,600 for the three and nine months ended May 31, 1996, respectively. Nonutility revenues for the third fiscal quarter were 2 percent greater than the 1995 period and for the nine-months ended May 31, 1996, nonutility sales were 4 percent greater than the prior year. Propane revenues for the three- and nine-month period were the major contributor to the increased revenues as a result of an increase in the number of gallons sold. The colder weather and sales to the construction heating market were the primary contributors to the increases in the propane sales volume. Wholesale revenues increased over the prior year for the third fiscal quarter, however, for the nine-month period wholesale revenues declined. Competition and consolidation of wholesale outlets contributed to the decline in sales. Offsetting the increases in nonutility revenues for the three-month period was a decline in merchandising operations. A reduction in units sold to the residential market is responsible for the revenue decline. The focus on the commercial and industrial markets led to the increase in merchandising revenues for the nine-month period. Service contract and rental revenues increased for both the three- and nine-month periods as a result of new customers and price increases. The cost of gas sold increased 14 percent for the three-month period and 5 percent for the nine-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 and colder weather. Cost of sales for nonutility operations decreased for the three-month period as a result of decreased retail sales. The nine-month cost of sales increased due to an increase in the related sales in the commercial and industrial market. Other operation expenses increased 5 percent for the three-month period and were 2 percent greater for the nine-month period when compared to fiscal 1995. The increases in operation expenses resulted from an increase in uncollectible accounts and an increase in the costs to operate supplemental fuel facilities. Other income increased $30,000 and $263,300 for the three and nine months ended May 31, 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 gas suppliers to meet their delivery requirements. As a result, the ability to affect 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 decreased by 5 percent for the three-month period but increased 2 percent for the nine months ended May 31, 1996, when compared to the prior fiscal periods. A reduction in the deferred fuel cost liability and therefore the related interest accrual is responsible for the decrease in interest expense for the third fiscal quarter. For the nine-month period interest expense increased due to a higher balance of short-term debt. Liquidity and Capital Resources During the third fiscal quarter the liquidity position of the Corporation improved due to the collection of accounts receivable, the timing of tax payments and rate relief. The improved liquidity position allowed the corporation to reduce its short-term borrowings. Management believes the available lines of credit are sufficient to meet cash requirements for the foreseeable future. The available borrowings under lines of credit at May 31, 1996, were $17,700,000. 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 third fiscal quarter. Construction expenditures increased during the third fiscal quarter due to more favorable weather, thereby negatively impacting liquidity. The liquidity position of the Corporation will be adversely affected during the fourth quarter when gas inventories are replenished for use during winter months and revenues decline as a result of the lack of heat-sensitive sales in the utility companies. Increased construction activities during the summer months will also adversely impact the Corporation's liquidity. 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 S/K. W. Hogan K. W. Hogan Senior Vice President, Chief Financial Officer and Secretary July 11, 1996 EX-27 2
5 1,000 9-MOS AUG-31-1996 MAY-31-1996 760 0 13,837 722 3,717 18,736 82,908 30,454 95,543 21,788 20,247 0 0 4,275 24,617 95,543 68,011 68,011 38,322 60,839 22,517 0 2,429 7,538 2,463 5,075 0 0 0 5,075 1.19 1.19
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