-----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, Om6D15zya8ii3s/TKdnHo3y5hcKOiZMbgjubyvbn4ux04o3i2jyJ5oRJDFt6NpFZ wiKdZ0ie2A1ZH+B6HLqfoA== 0000102710-97-000018.txt : 19970115 0000102710-97-000018.hdr.sgml : 19970115 ACCESSION NUMBER: 0000102710-97-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 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: 97505617 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 November 30, 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 Nov. 30, 1996 --------------------- -------------- $1 Par Value 4,261,618 VALLEY RESOURCES, INC. FORM 10-Q NOVEMBER 30, 1996 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, 1996 and 1995.................................................. 3 Consolidated Condensed Balance Sheets--November 30, 1996 and August 31, 1996................................4 & 5 Consolidated Condensed Statements of Cash Flows--for the three-months ended November 30, 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 4. Submission of Matters to a Vote of Security Holders ....... 9 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)
For the 3 Months Ended Nov. 30, Nov. 30, 1996 1995 --------- --------- (in thousands except share and per share numbers) Operating Revenues: Utility Gas Revenues $ 10,946 $ 9,398 Nonutility Revenues 5,394 4,697 -------- -------- Total 16,340 14,095 -------- -------- Operating Expenses: Cost of Gas Sold 6,403 5,052 Cost of Sales - Nonutility 3,826 3,316 Operations 4,557 4,268 Maintenance 438 389 Depreciation and Amortization 778 712 Taxes - Other Than Federal Income 871 831 - Federal Income (509) (480) -------- -------- Total 16,364 14,088 -------- -------- Operating Income (Loss) (24) 7 Other Income - Net of Tax 65 37 -------- -------- Total Income 41 44 -------- -------- Interest Charges: Long-Term Debt 487 469 Other 326 350 -------- -------- Total 813 819 -------- -------- Net Loss $ (772) $ (775) ======== ======== Average Number of Common Shares Outstanding 4,261,618 4,243,663 Loss Per Average Common Share Outstanding ($ 0.18) ($ 0.18) Dividends Declared on Common Stock $ 0.1825 $ 0.18
The accompanying Notes are an integral part of these statements. 3 VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets
(Unaudited) Nov. 30, Aug. 31, 1996 1996 -------- -------- (in thousands) ASSETS Utility Plant - Net $ 49,856 $ 49,442 -------- -------- Leased Property - Net 2,815 2,945 -------- -------- Nonutility Property-Net 3,613 3,568 -------- -------- Other Investments 1,523 1,510 -------- -------- Current Assets: Cash 612 507 Accounts Receivable - Net 10,518 9,946 Deferred Fuel Costs 2,029 827 Deferred Unbilled Gas Costs 1,825 439 Fuel and Other Inventories (Note 3) 6,788 6,048 Prepayments 949 1,409 Common Stock held for Dividend Reinvestment-amounting to 24,610 and 10,813 shares respectively (Note 4) 316 131 -------- -------- Total 23,037 19,307 -------- -------- Deferred Debits: Recoverable Postretirement Benefits 514 693 Recoverable Vacations Accrued 656 633 Unamortized Debt Discount and Expense 1,509 1,523 Prepaid Pensions 6,402 6,171 Recoverable Deferred FIT 6,127 5,970 Recoverable Transition Obligation 1,700 1,700 Other 3,127 3,227 -------- ------- Total 20,035 19,917 -------- -------- $100,879 $ 96,689 ======== ========
The accompanying Notes are an integral part of these statements. 4 VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets
(Unaudited) Nov. 30, Aug. 31, 1996 1996 -------- -------- (in thousands) CAPITALIZATION & LIABILITIES Capitalization: Common Stock $ 4,280 $ 4,280 Paid In Capital 18,202 18,204 Retained Earnings 6,200 7,750 Less: Accounts Receivable from ESOP (3,142) (3,142) --------- --------- Total Common Stock Equity 25,540 27,092 --------- --------- Long-Term Debt (Less Current Maturities): 8% First Mortgage Bonds, Series Due 2022 20,194 20,212 9% Notes Payable, Due 1999 2,139 2,139 Note Payable 905 905 --------- --------- Total Long-Term Debt 23,238 23,256 --------- --------- Total Capitalization 48,778 50,348 --------- --------- Revolving Credit Arrangement 2,300 2,200 --------- --------- Obligation Under Capital Lease 2,002 2,134 --------- --------- Current Liabilities: Current Maturities of Long-Term Debt 500 500 Obligation Under Capital Lease 813 811 Notes Payable 19,500 14,900 Accounts Payable 6,502 5,243 Security Deposits & Refund Obligations 1,116 1,097 Taxes Accrued (Debit) (1,251) 190 Accrued Interest 993 552 Other 765 712 --------- --------- Total 28,938 24,005 --------- --------- Commitments and Contingencies Deferred Credits 6,556 6,740 --------- --------- Deferred Federal Income Taxes 12,305 11,262 --------- --------- $ 100,879 $ 96,689 ========= =========
The accompanying Notes are an integral part of these statements. 5 VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited)
For the 3 Months Ended Nov. 30, Nov. 30, 1996 1995 -------- -------- (in thousands) Cash Flows from Operating Activities: Net Loss $ (772) $ (775) Adjustments to Reconcile Net Loss to Net Cash used in Operating Activities: Depreciation and Amortization 778 712 Provision for Uncollectibles 377 337 Deferred Federal Income Taxes 983 521 Change in Assets and Liabilities: Accounts Receivable (949) 454 Deferred Fuel Costs (1,202) (553) Unbilled Gas Costs (1,386) (1,151) Fuel and Other Inventories (739) (405) Other Current Assets 44 489 Accounts Payable, Accrued Expenses and Current Liabilities (164) (849) Other - Net 483 256 ------- ------- Net Cash (Used) by Operating Activities (2,547) (964) ------- ------- Cash Flows from Investing Activities: Utility Capital Expenditures (1,051) (1,760) Nonutility Capital Expenditures (186) (148) Other Investments (13) (3) ------- ------- Net Cash (Used) by Investing Activities (1,250) (1,911) ------- ------- Cash Flows from Financing Activities: Dividends Paid (778) (762) Capital Stock Transactions (2) (9) Insurance of Revolving Credit Arrangement 10 -0- Retirement of Long-Term Debt (18) (15) Increase in Notes Payable 4,600 4,100 ------- ------- Net Cash Provided by Financing Activities 3,902 3,314 ------- ------- Net Increase in Cash 105 439 Cash - Beginning 507 455 ------- ------- Cash - Ending $ 612 $ 894 ======= ======= Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 371 $ 355 ======= ======= Federal Income Taxes $ -0- $ -0- ======= ======= Capital Lease Obligations Incurred $ 101 $ -0- ======= =======
The accompanying Notes are an integral part of these statements. 6 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, 1996, the results of operations for the three-months ended November 30, 1996 and 1995 and Statements of Cash Flows for the three-months ended November 30, 1996 and 1995. The results of operations for the three-month periods ended November 30, 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)
November 30, August 31, 1996 1996 ------------ ---------- Fuels (at average cost) $4,402 $3,623 Merchandise and Other (at average cost) 1,115 1,199 Merchandise (at LIFO) 1,271 1,226 ------ ------ $6,788 $6,048 ====== ======
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. 7 PART I - ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Base revenues from firm customers, exclusive of the PGPA, increased 8 percent over the prior year as a result of increased gas sales and the rate relief granted to the company in fiscal 1996. Sales to firm customers totaled 1,250,600 Mcf, an increase of 6 percent when compared to fiscal 1996. The primary contributors to this increase are colder weather and increased customers. Weather, as measured by degree days, was 10 percent colder than the prior year. At November 30, 1996, there were 61,445 utility customers versus 60,919 at November 30, 1995. PGPA revenues, which collect from or return to customers changes in gas costs, increased for the three month period. The increase is the result of increased gas costs passed through to customers through the PGPA which does not impact the profitability of the company. Seasonal gas sales increased 8 percent for the three months ended November 30, 1996 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 is passed through to firm customers through the PGPA and has no impact on operating income. Transportation revenues increased $42,900 for the three-months ended November 30, 1996, when compared with the results from the prior year. The above factors resulted in utility gas revenues for the three months ended November 30, 1996, totaling $10,946,100, a 16 percent increase when compared to the same period in fiscal 1996. Nonutility revenues totaled $5,393,500 for the three months ended November 30, 1996, an increase of 15 percent when compared to the prior year. The increase in nonutility revenues is the result of retail and wholesale merchandise sales, propane sales and revenues generated by the Corporation's newest subsidiary Alternate Energy Corporation (AEC). Retail merchandise revenue improved due to the sale and installation of commercial equipment and conversions to gas in the residential electric heating market. Wholesale revenues improved as a result of increased unit sales due to a slightly stronger regional economy and focus on market specific opportunities. An increase in gallons of propane sold and price increases contributed to the increase in propane revenues. Sales made by AEC also contributed to the increase in nonutility revenues. Operating expenses for the three-month period were affected primarily by the cost of gas sold and operation expenses. The cost of gas sold increased 27 percent when compared with the prior year both as a result of an increase in the commodity price of natural gas and an increase in the volume of gas sold. The increase in the price of natural gas is recovered from utility customers through the PGPA and, therefore, does not impact the profit margins of the utilities. The cost of sales for nonutility operations increased 15 percent over the prior year with the increase directly attributable to increased sales. Other operation expenses increased 7 percent when compared to fiscal 1996. Normal wage and salary increases and increased uncollectible and employee welfare expenses were responsible for the increase. Maintenance expense increased $49,200 over the prior year as a result of repairs to the LNG storage facilities. Interest expense totaled $812,500 for the three-months ended November 30, 1996, a slight decrease from the prior year. The shift of the deferred fuel cost, which reconciles PGPA revenues and gas costs, from a payable to customers to a receivable from customers resulted in a decrease in interest expense. This decrease was slightly offset by an increase in short-term debt. 8 Liquidity and Capital Resources - ------------------------------- Operations during the first quarter typically do not generate sufficient cash to meet gas costs and construction requirements. Management believes its current borrowing capacity under the present financial structure is sufficient to meet cash requirements. The available borrowings under lines of credit at November 30, 1996 were $9,500,000. Cash flow during the period was negatively impacted by the requirement to increase inventories of supplemental fuels to meet winter requirements and the unexpected increases in the price of natural gas. Actual gas costs, which were greater than expected, also resulted in the utilities underrecovery of gas costs through the PGPA. This negatively impacted liquidity during the first fiscal quarter. 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 10, 1996, 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:
Shares Shares Voted Voted "For" "Withheld" ----- ---------- Ernest N. Agresti 3,356,425 55,273 Don A. DeAngelis 3,354,647 57,051 Eleanor M. McMahon 3,348,532 63,166
Item 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- (a) None. (b) The Company did not file a Form 8-K. 9 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 14, 1997 10 EX-27 2
5 1,000 3-MOS AUG-31-1997 NOV-30-1996 612 0 11,202 684 6,788 23,037 85,011 31,542 100,879 28,938 20,194 0 0 4,280 21,260 100,879 16,340 16,340 10,229 16,364 6,135 0 813 (1,263) (491) (772) 0 0 0 (772) (0.18) (0.18)
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