-----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, UiIHw4owWUw074ouUgytWIChEUKAb3Bc7ilTB88Or+SpD6LwMBHchbsZQZX4XUMM O0YW8aYxcU0vtCx1lP1G7w== 0000102710-98-000003.txt : 19980115 0000102710-98-000003.hdr.sgml : 19980115 ACCESSION NUMBER: 0000102710-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980114 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: SEC FILE NUMBER: 001-07924 FILM NUMBER: 98506449 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, 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 Nov. 30, 1997 --------------------- ------------- $1 Par Value 4,965,557 VALLEY RESOURCES, INC. FORM 10-Q NOVEMBER 30, 1997 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, 1997 and 1996................................................... 3 Consolidated Condensed Balance Sheets--November 30, 1997 and August 31, 1997................................... 4 & 5 Consolidated Condensed Statements of Cash Flows--for the three-months ended November 30, 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 4. Submission of Matters to a Vote of Security Holders........ 9 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)
For the 3 Months Ended Nov. 30, Nov. 30, 1997 1996 ---- ---- (in thousands) (except share and per share numbers) Operating Revenues: Utility Gas Revenues $ 10,084 $ 10,946 Nonutility Revenues 5,741 5,394 --------- --------- Total 15,825 16,340 --------- --------- Operating Expenses: Cost of Gas Sold 5,594 6,403 Cost of Sales - Nonutility 4,027 3,826 Operations 4,715 4,557 Maintenance 398 438 Depreciation and Amortization 825 778 Taxes - Other Than Federal Income 852 871 - Federal Income (525) (509) --------- --------- Total 15,886 16,364 --------- --------- Operating Income (Loss) (61) (24) Other Income - Net of Tax 49 65 --------- --------- Total Income (Loss) (12) 41 --------- --------- Interest Charges: Long-Term Debt 622 487 Other 127 326 --------- --------- Total 749 813 --------- --------- Net Loss $ (761) $ (772) ========= ========= Average Number of Common Shares Outstanding 4,939,253 4,261,618 Loss Per Average Common Share Outstanding ($0.15) ($0.18) Dividends Declared on Common Stock $0.185 $0.1825
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, 1997 1997 ---- ---- (in thousands) ASSETS Utility Plant - Net $ 50,982 $50,447 -------- ------- Leased Property - Net 2,288 2,377 -------- ------- Nonutility Property-Net 3,913 3,712 -------- ------- Other Investments 1,598 1,592 -------- ------- Current Assets: Cash 891 820 Accounts Receivable - Net 10,961 11,183 Deferred Fuel Costs 596 -0- Deferred Unbilled Gas Costs 1,912 440 Fuel and Other Inventories (Note 3) 6,484 6,120 Prepayments 1,017 1,290 Common Stock held for Dividend Reinvestment- amounting to 27,471 and 31,179 shares respectively (Note 4) 306 352 -------- ------- Total 22,167 20,205 -------- ------- Deferred Debits: Recoverable Postretirement Benefits 404 462 Recoverable Vacations Accrued 608 596 Unamortized Debt Discount and Expense 1,728 1,745 Prepaid Pensions 7,528 7,095 Recoverable Deferred FIT 6,034 6,044 Recoverable Transition Obligation 373 373 Other 3,369 3,049 -------- ------- 20,044 19,364 -------- ------- Total $100,992 $97,697 ======== =======
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, 1997 1997 ---- ---- (in thousands) CAPITALIZATION & LIABILITIES Capitalization: Common Stock $ 4,993 $ 4,900 Paid In Capital 24,903 24,035 Retained Earnings 6,602 8,279 Less: Accounts Receivable from ESOP (2,878) (2,907) -------- ------- Total Common Stock Equity 33,620 34,307 -------- ------- Long-Term Debt (Less Current Maturities): 8% First Mortgage Bonds, Series Due 2022 20,090 20,090 7.7% Debentures, Due 2027 7,000 7,000 9% Notes Payable, Due 1999 2,139 2,139 Note Payable 2,711 2,757 -------- ------- Total Long-Term Debt 31,940 31,986 -------- ------- Total Capitalization 65,560 66,293 -------- ------- Revolving Credit Arrangement 2,300 2,300 -------- ------- Obligation Under Capital Lease 1,532 1,541 -------- ------- Current Liabilities: Current Maturities of Long-Term Debt 150 150 Obligation Under Capital Lease 756 836 Notes Payable 4,900 1,900 Accounts Payable 6,090 4,298 Security Deposits & Refund Obligations 1,037 1,035 Taxes Accrued (Debit) (804) 362 Deferred Fuel Costs -0- 793 Accrued Interest 1,111 541 Other 754 697 -------- ------- Total 13,994 10,612 -------- ------- Commitments and Contingencies Deferred Credits 5,115 5,130 -------- ------- Deferred Federal Income Taxes 12,491 11,821 -------- ------- $100,992 $97,697 ======== =======
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, 1997 1996 ---- ---- (in thousands) Cash Flows from Operating Activities: Net Loss $ (761) $ (772) Adjustments to Reconcile Net Loss to Net Cash used in Operating Activities: Depreciation and Amortization 825 778 Provision for Uncollectibles 573 377 Deferred Federal Income Taxes 671 983 Amortization of ITC (12) -0- Change in Assets and Liabilities: Accounts Receivable (350) (949) Deferred Fuel Costs (1,389) (1,202) Unbilled Gas Costs (1,472) (1,386) Fuel and Other Inventories (363) (739) Other Current Assets (114) 44 Accounts Payable, Accrued Expenses and Current Liabilities 628 (164) Other - Net 404 483 ------- ------- Net Cash (Used) by Operating Activities (1,360) (2,547) ------- ------- Cash Flows from Investing Activities: Utility Capital Expenditures (1,212) (1,051) Nonutility Capital Expenditures (349) (186) Other Investments (7) (13) ------- ------- Net Cash (Used) by Investing Activities (1,568) (1,250) ------- ------- Cash Flows from Financing Activities: Dividends Paid (917) (778) Capital Stock Transactions 962 (2) Insurance of Revolving Credit Arrangement -0- 100 Retirement of Long-Term Debt (46) (18) Increase in Notes Payable 3,000 4,600 ------- ------- Net Cash Provided by Financing Activities 2,999 3,902 ------- ------- Net Increase in Cash 71 105 Cash - Beginning 820 507 ------- ------- Cash - Ending $ 891 $ 612 ======= ======= Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 179 $ 371 ======= ======= Federal Income Taxes $ -0- $ -0- ======= ======= Capital Lease Obligations Incurred $ 139 $ 101 ======= =======
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, 1997, the results of operations for the three-months ended November 30, 1997 and 1996 and Statements of Cash Flows for the three-months ended November 30, 1997 and 1996. The results of operations for the three-month periods ended November 30, 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) November 30, August 31, 1997 1997 ---- ---- Fuels (at average cost) $4,053 $3,809 Merchandise and Other (at average cost) 1,151 1,253 Merchandise (at LIFO) 1,280 1,058 ------ ------ $6,484 $6,120 ====== ======
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 - --------------------- Utility gas revenues for the three months ended November 30 1997, the first fiscal quarter, totaled $10,083,600, a decrease of 7.9 percent from the same period in fiscal 1997. Revenues decreased due to a decline in interruptible sales and transportation and lower revenues generated from regulated base tariffs offset slightly by increased PGPA revenues. Interruptible sales revenues decreased by $756,400 for the three months ended November 30, 1997, when compared to the prior year as a result of a 56.9 percent decrease in gas sales. The level of interruptible sales is dependent on availability of gas and the price of the customer's alternate fuel. The margin on seasonal sales is passed through to firm customers through the PGPA and has no impact on operating income. Valley Gas transports natural gas owned by customers if delivered to Valley Gas's gate station on both an interruptible and firm basis. Transportation revenue declined by $1,400 in the first quarter of fiscal 1998. Interruptible transportation revenues declined by $74,500 during the first quarter from the same period in fiscal 1997. Interruptible transportation is used by customers when their alternate fuel price is above natural gas. During the first quarter, large commercial and industrial sales customers were allowed to choose their gas supplier under the Utilities firm transportation tariffs. These transportation revenues generate approximately the same margin as firm gas sales to this class of customer. A total of $73,100 of revenues was recorded under these firm transportation tariffs. Revenues generated from base tariffs decreased 3.9 percent when compared to the prior year as a result of lower firm natural gas sales primarily due to a transfer of sales customers to transportation as mentioned earlier. Offsetting the base revenue decline was an increase in PGPA revenues. An increase in the PGPA rate charged to firm customers due to higher estimated gas costs for fiscal 1998 was responsible for the PGPA revenue increase. PGPA revenues do not impact operating margin. Total firm gas throughput, firm gas sales and firm transportation, for the first quarter totaled 1,246,800 Mcf compared to 1,250,600 Mcf during the first quarter of fiscal 1997. Gas sales to firm customers during the first fiscal quarter totaled 1,188,000 Mcf, a decrease of 5.0 percent from the prior year first quarter. The decrease in gas sales is the result of commercial and industrial customers transferring to firm transportation. Weather during the first quarter, as measured by degree days, was 2.7 percent colder than the same period last year. The colder weather during the first fiscal quarter does not have the same impact on gas sales as the second fiscal quarter, the winter heating period. At November 30, 1997, there were 61,971 utility customers versus 61,445 at November 30, 1996. Nonutility revenues totaled $5,740,800 for the three months ended November 30, 1997, an increase of 6.4 percent over the first quarter in fiscal 1997. The increase in nonutility revenues is attributable to increased retail merchandise sales. Retail merchandise revenues increased as a result of commercial and industrial sales of gas-fueled products and the sale of heating systems to customers converting to natural gas and propane. The Corporation's subsidiary, AEC experienced a decline in revenues due to the timing of projects currently being completed. Cost of gas sold decreased 12.6 percent when compared with the prior year resulting from a decline in seasonal and firm gas sales offset slightly by decreased expenses related to the reconciliation of the PGPA. The average cost per Mcf of gas distributed was $4.53 versus $3.96 during the first quarter of fiscal 1997. 8 The increase in nonutility sales is responsible for the 5.2 percent increase in cost of sales-nonutility. Other operation expenses increased during the period primarily due to normal salary increases. Maintenance expenses declined slightly due to decreased repairs on the LNG and propane peak shaving facilities. Interest expense totaled $748,700 for the three months ended November 30, 1997, a 7.8 percent decrease from the prior year. A decrease in short-term interest expense was only partially offset by increased long-term debt interest associated with the corporate refinancing and equity offering done at the end of fiscal 1997. 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 financing are sufficient to meet cash requirements for the foreseeable future. The available borrowings under lines of credit at November 30, 1997, were $32,100,000. Cash flows were negatively impacted during the first quarter by the requirement to increase inventories of supplemental fuels to meet winter requirements and the unexpected increases in the price of natural gas. On September 24, 1997, Valley Resources issued 93,000 additional shares of common stock in fulfillment of the over-allotment option exercised in connection with the August 1997 offering. This common stock issuance favorably impacted liquidity. Construction expenditures increased during the first fiscal quarter, as planned, adversely effecting liquidity. A receivable lag that is generally experienced during the first fiscal quarter should be reversed in the second fiscal quarter and revenues should increase with colder weather. Cash flow should be favorably affected by a reduction in construction expenditures which normally accompanies winter weather conditions in the fiscal second quarter. 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 9, 1997, 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. 9 All of management's nominees for directors were elected by the following vote: Shares Shares Voted Voted "For" "Withheld" ----- ---------- Melvin G. Alperin 4,193,521 59,093 Alfred P. Degen 4,194,976 57,638 C. Hamilton Davison 4,187,143 65,471 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 Amendment 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, 1998 10 EX-27 2
5 1,000 3-MOS AUG-31-1998 NOV-30-1997 891 0 12,596 (1,039) 6,484 22,167 88,907 (34,012) 100,992 13,994 20,090 0 0 4,993 28,627 100,992 15,825 15,825 9,621 15,886 6,265 0 749 (234) (527) (761) 0 0 0 (761) (0.15) (0.15)
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