-----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, Jegbeh4FN7dRM6O9pDMysU9wwF5xRvPV9137JM/WvnfxAgfEM7Ha8sFKP7ejHl+a ijIJI2TzAb40dUFtz/KrPA== 0000102710-97-000045.txt : 19970415 0000102710-97-000045.hdr.sgml : 19970415 ACCESSION NUMBER: 0000102710-97-000045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970414 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: 97580010 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 28, 1997 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, 1997 $1 Par Value 4,265,606 VALLEY RESOURCES, INC. FORM 10-Q FEBRUARY 28, 1997 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, 1997 and 1996....................................................... 3 Consolidated Condensed Balance Sheets--February 28, 1997 and August 31, 1996................................... 4 & 5 Consolidated Condensed Statements of Cash Flows--for the six-months ended February 28, 1997 and 1996................ 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. 28, Feb. 29, Feb. 28, Feb. 29, 1997 1996 1997 1996 (in thousands except share and per share numbers) Operating Revenues: Utility Gas Revenues $ 25,177 $ 24,563 $ 36,123 $ 33,962 Nonutility Revenues 5,755 5,687 11,149 10,383 ---------- ---------- ---------- ---------- Total 30,932 30,250 47,272 44,345 ---------- ---------- ---------- ---------- Operating Expenses: Cost of Gas Sold 14,175 12,746 20,578 17,798 Cost of Sales - Nonutility 3,894 3,961 7,720 7,277 Operations 4,698 4,713 9,255 8,981 Maintenance 388 414 826 803 Depreciation and Amortization 778 750 1,555 1,462 Taxes - Other Than Federal Income 1,352 1,321 2,224 2,153 - Federal Income 1,631 1,889 1,122 1,409 ---------- ---------- ---------- ---------- Total 26,916 25,794 43,280 39,883 ---------- ---------- ---------- ---------- Operating Income 4,016 4,456 3,992 4,462 Other Income - Net of Tax 93 233 158 271 ---------- ---------- ---------- ---------- Total Income 4,109 4,689 4,150 4,733 ---------- ---------- ---------- ---------- Interest Charges: Long-Term Debt 477 479 964 948 Other 372 355 698 706 ---------- ---------- ---------- ---------- Total 849 834 1,662 1,654 ---------- ---------- ---------- ---------- Net Income $ 3,260 $ 3,855 $ 2,488 $ 3,079 ========== ========== ========== ========== Average Number of Common Shares Outstanding 4,261,726 4,258,330 4,261,672 4,250,996 Earnings Per Average Common Share Outstanding $ 0.76 $ 0.91 $ 0.58 $ 0.72 Dividends Declared on Common Stock $ 0.1825 $ 0.18 $ 0.365 $ 0.36
The accompanying Notes are an integral part of these statements. 3 VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets
(Unaudited) Feb. 28, Aug. 31, 1997 1996 -------- -------- (in thousands) ASSETS Utility Plant - Net $ 49,876 $ 49,442 -------- -------- Leased Property - Net 2,638 2,945 -------- -------- Nonutility Property-Net 3,657 3,568 -------- -------- Other Investments 1,531 1,510 -------- -------- Current Assets: Cash 692 507 Accounts Receivable - Net 16,746 9,946 Deferred Fuel Costs 3,208 827 Deferred Unbilled Gas Costs 1,603 439 Fuel and Other Inventories (Note 3) 4,716 6,048 Prepayments 701 1,409 Common Stock held for Dividend Reinvestment-amounting to 14,422 and 10,813 shares respectively (Note 4) 177 131 -------- -------- Total 27,843 19,307 -------- -------- Deferred Debits: Recoverable Postretirement Benefits 577 693 Recoverable Vacations Accrued 723 633 Unamortized Debt Discount and Expense 1,494 1,523 Prepaid Pensions 6,633 6,171 Recoverable Deferred FIT 6,183 5,970 Recoverable Transition Obligation 1,700 1,700 Other 3,007 3,227 -------- -------- 20,317 19,917 -------- -------- Total $105,862 $ 96,689 ======== ========
The accompanying Notes are an integral part of these statements. 4 VALLEY RESOURCES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Cont'd)
(Unaudited) Feb. 28, Aug. 31, 1997 1996 -------- -------- (in thousands) CAPITALIZATION & LIABILITIES Capitalization: Common Stock $ 4,280 $ 4,280 Paid In Capital 18,170 18,204 Retained Earnings 8,683 7,750 Less: Accounts Receivable from ESOP (3,142) (3,142) --------- --------- Total Common Stock Equity 27,991 27,092 --------- --------- Long-Term Debt (Less Current Maturities): 8% First Mortgage Bonds, Series Due 2022 20,155 20,212 9% Notes Payable, Due 1999 2,139 2,139 Notes Payable 905 905 --------- --------- Total Long-Term Debt 23,199 23,256 --------- --------- Total Capitalization 51,190 50,348 --------- --------- Revolving Credit Arrangement 2,300 2,200 --------- --------- Obligation Under Capital Lease 1,760 2,134 --------- --------- Current Liabilities: Current Maturities of Long-Term Debt 500 500 Obligation Under Capital Lease 878 811 Notes Payable 20,700 14,900 Accounts Payable 5,943 5,243 Security Deposits & Refund Obligations 1,091 1,097 Taxes Accrued 494 190 Accrued Interest 556 552 Other 906 712 --------- --------- Total 31,068 24,005 --------- --------- Commitments and Contingencies Deferred Credits 6,756 6,740 --------- --------- Deferred Federal Income Taxes 12,788 11,262 --------- --------- $ 105,862 $ 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 6 Months Ended Feb. 28, Feb. 29, 1997 1996 -------- -------- (in thousands) Cash Flows from Operating Activities: Net Income $ 2,488 $ 3,079 Adjustments to Reconcile Net Income to Net Cash used in Operating Activities: Depreciation and Amortization 1,555 1,462 Provision for Uncollectibles 778 672 Deferred Federal Income Taxes 1,410 774 Change in Assets and Liabilities: Accounts Receivable (7,578) (6,269) Deferred Fuel Costs (2,381) (1,304) Unbilled Gas Costs (1,164) (1,381) Fuel and Other Inventories 1,332 1,874 Other Current Assets 200 679 Accounts Payable, Accrued Expenses and Current Liabilities 998 2,550 Other - Net 392 (54) ------- ------- Net Cash (Used) Provided by Operating Activities (1,970) 2,082 ------- ------- Cash Flows from Investing Activities: Utility Capital Expenditures (1,708) (2,435) Nonutility Capital Expenditures (371) (298) Other Investments (20) (12) ------- ------- Net Cash (Used) by Investing Activities (2,099) (2,745) ------- ------- Cash Flows from Financing Activities: Dividends Paid (1,555) (1,527) Capital Stock Transactions (34) 56 Issuance of Long Term Debt 100 2,200 Retirement of Long-Term Debt (57) (825) Increase in Notes Payable 5,800 1,400 ------- ------- Net Cash Provided by Financing Activities 4,254 1,304 ------- ------- Net Increase in Cash 185 641 Cash - Beginning 507 455 ------- ------- Cash - Ending $ 692 $ 1,096 ======= ======= Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 1,658 $ 1,732 ======= ======= Federal Income Taxes $ -0- $ -0- ======= ======= Capital Lease Obligations Incurred $ 201 $ 99 ======= =======
The accompanying Notes are an integral part of these statements. 6 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, 1997 the results of operations for the three- and six-months ended February 28, 1997 and 1996 and Statement of Cash Flows for the six-months ended February 28, 1997 and 1996. The results of operations for the three- and six-month periods ended February 28, 1997 and 1996 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 28, August 31, 1997 1996 ------------ ---------- Fuels (at average cost) $2,140 $3,623 Merchandise and Other (at average cost) 1,106 1,199 Merchandise (at LIFO) 1,470 1,226 ------ ------ $4,716 $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 II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- For the three months ended February 28, 1997 vs 1996 Utility gas revenues for the three months ended February 28, 1997, the second fiscal quarter, totaled $25,177,300, an increase of 3 percent over the same period in fiscal 1996. The revenue increase is primarily the result of collections through the PGPA and increased transportation revenues offset by a decrease in base revenues. PGPA revenues increased due to increases in the cost of natural gas paid by the utilities; this increase does not impact the profitability of the company because it is a pass-through of gas cost changes. Revenues generated from the regulated base tariffs declined 8 percent when compared to the prior year as a result of decreased natural gas sales. Gas sales to firm customers during the second fiscal quarter totaled 3,367,400 Mcf, a decrease of 8 percent from the prior year. The decrease in gas sales is the result of warmer weather. Weather during the second quarter, as measured by degree days, was 10 percent warmer than the same period last year. Valley Gas transports natural gas owned by customers if delivered to Valley Gas's gate station. Transportation revenues for the quarter increased $42,600 over the same period in fiscal 1996 due to increased volumes transported. Nonutility revenues totaled $5,755,400 for the three months ended February 28, 1997, an increase of 1 percent over the second quarter in fiscal 1996. During the second quarter the operations of all nonutility subsidiaries generated increased revenues, except retail merchandise. The continuing strategic focus toward commercial and industrial markets, as well as on electric heating conversions, which generate higher margins, resulted in increased profitability despite decreased retail merchandise sales. Propane revenues increased due to price increases, despite a decline in volume of propane sold resulting from the warmer weather. The primary contributor to the increase in operating expenses during the second fiscal quarter was an 11 percent increase in the cost of gas sold. The average cost of gas distributed to firm customers was $4.46 per Mcf for the three months ended February 28, 1997 versus $3.54 per Mcf during the second quarter of fiscal 1996. Changes in gas costs are recovered from customers through the PGPA. The decrease in merchandise retail sales is responsible for the decrease in nonutility cost of sales. Other operation expenses decreased slightly during the period as a result of a reduction in costs associated with the propane operations due to the warmer weather. Other income decreased $140,800 for the quarter compared to last year. The second quarter of fiscal 1996 included other income of $275,000 generated by off-system sales. This was offset slightly by increased interest income. Off - -system sales are natural gas sales arranged by the utility to customers outside the franchise area at market clearing prices. Gas becomes available for sale through acquisition rights available to the utility and from supplies not required to meet firm market demand. This market did not materialize this winter and as a result the company was unable to generate revenues from off-system sales. For the three months ended February 28, 1997, interest expense increased 2 percent over the same quarter last year. The increase in interest expense was the result of increases in short-term borrowings. 8 For the six months ended February 28, 1997 vs 1996 For the six months ended February 28, 1997, utility gas revenues were $36,123,400, an increase of 6 percent over the same period in fiscal 1996. A decrease in base revenues generated from firm customers was offset by increased collections through the PGPA and seasonal revenues. Base revenues generated from the regulated tariffs declined 4 percent as a result of decreased natural gas sales. PGPA revenues increased $2,971,300 over the prior six month period. Seasonal revenues increased by 27 percent but the volume of seasonal gas sales increased only 5 percent. Sales to seasonal customers are dependent upon the availability of natural gas and the price of alternate fuels. Margins earned from seasonal sales are returned to firm customers through the PGPA and do not impact the profitability of the company. Gas sold to firm customers decreased 5 percent to 4,617,900 Mcf for the six months ended February 28, 1997. The decrease in gas sales is the result of warmer weather which was partially offset by an increase in the number of customers. Weather, as measured by degree days, was 4 percent warmer than the prior year six month period. At February 28, 1997 there were 62,603 utility customers versus 62,149 at February 29, 1996. Nonutility revenues for the six months ended February 28, 1997 totaled $11,148,900, an increase of 7 percent over fiscal 1996. The increase in nonutility revenues is the result of increases in retail and wholesale merchandise sales, revenues generated from propane operations and the addition of revenues generated by AEC. Conversions of electric heating , sales in the commercial markets and increases in the wholesale operation contributed to the increased revenues. Propane revenues increased despite a drop in volume resulting from the warmer weather due to price increases in the cost of propane being passed along to customers. Operating expenses for the six month period were impacted by increases in the cost of gas sold and nonutility cost of sales. The cost of gas sold increased 16 percent when compared to the same period last year. Increases in the purchase price of natural gas was the primary contributor to the increase in cost of gas sold. The average cost of gas distributed to firm customers was $4.43 per Mcf for the six months ended February 28, 1997 versus $3.63 per Mcf in the prior year. Nonutility cost of sales increased 6 percent which is directly attributable to the increase in nonutility revenues. The decrease in other income of $112,900 for the six month period was the direct result of the decline in off-system sales. The decrease in other income was offset by increased interest income. Interest expense remained flat for the six month period. Increased short-term borrowings were offset by a reduction in interest accrued on deferred fuel costs and lower borrowing rates. The PGPA requires a reconciliation of actual gas costs and the amount collected through the PGPA clause. This reconciliation results in either a deferred fuel cost liability (amounts owed to customers) or a deferred fuel cost receivable (amounts owed by customers to the company). If there is a liability to customers, interest expense is accrued by the company, if there is a receivable interest income is recorded. For most of the first six months of fiscal 1997, the deferred fuel cost was a receivable from the customer, versus a liability in fiscal 1996. This situation resulted from the rapid, unanticipated rise in natural gas prices this year. 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 winter period sales, increased PGPA collections and increased nonutility sales. Management believes the available financings are sufficient to meet cash requirements for the foreseeable future. The available borrowings under lines of credit at February 28, 1997, were $8,300,000. 9 Cash flows were negatively impacted during the second quarter by increases in the cost of natural gas and propane. Sales during the second quarter, despite being greater than the first quarter, were less than anticipated due to warmer than normal winter weather which also negatively impacted liquidity. Additionally, the warmer weather resulted in the holding of supplemental fuel inventories which were anticipated to be sold. Construction expenditures declined during the second fiscal quarter, as planned, due to constraints caused by the weather, thereby adding favorably to liquidity. The liquidity position of the Corporation is anticipated to improve in the third quarter as winter bills are collected and increased gas costs will be recovered through the PGPA. In addition, the company anticipates a gas supplier refund in the third quarter which will reduce the deferred fuel cost account, which will positively impact liquidity. Cash expended on the construction program will increase during the third fiscal quarter which will negatively impact cash flows; however, this increased cash requirement should be offset by the improved cash flows. 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. 10 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 April 14, 1997 11 EX-27 2
5 1,000 6-MOS AUG-31-1997 FEB-28-1997 692 0 20,775 (821) 4,716 27,843 85,739 (32,206) 105,862 31,068 20,155 0 0 4,280 23,711 105,862 47,272 47,272 28,298 43,280 14,982 0 1,662 3,652 1,164 2,488 0 0 0 2,488 0.58 0.58
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