<PAGE>
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
         SECURITIES EXCHANGE ACT OF 1934

         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
         SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM __________ TO __________

                          COMMISSION FILE NO. 000-29226

                       VALLEY NATIONAL GASES INCORPORATED
             (Exact name of registrant as specified in its charter)

         PENNSYLVANIA                                  23-2888240
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                                 67 43RD STREET
                          WHEELING, WEST VIRGINIA 26003
                    (Address of principal executive offices)

                                 (304) 234-4460
              (Registrant's telephone number, including area code)


Indicate by checkmark 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 (or for such shorter period that the registrant was
required to file such reports), 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.

                       Class                      Outstanding at May 14, 2002
                       -----                      ---------------------------
             Common stock, $0.001 par value                9,347,584

================================================================================


<PAGE>
                       Valley National Gases Incorporated

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ----
<S>                                                                                              <C>
PART I            FINANCIAL INFORMATION

     ITEM 1       Condensed Consolidated Balance Sheets as of June 30, 2001
                  and March 31, 2002                                                              3

                  Condensed Consolidated Statements of Operations for the
                  Three Months Ended March 31, 2001 and 2002                                      5

                  Condensed Consolidated Statements of Operations for the
                  Nine Months Ended March 31, 2001 and 2002                                       6

                  Condensed Consolidated Statements of Cash Flows for the
                  Nine Months Ended March 31, 2001 and 2002                                       7

                  Notes to Condensed Consolidated Financial Statements                            8

     ITEM 2       Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                            13

     ITEM 3       Quantitative and Qualitative Disclosures About Market Risk                     19


PART II     OTHER INFORMATION

     ITEM 6       Exhibits and Reports on Form 8-K                                               19

     SIGNATURES                                                                                  20
</TABLE>





                                      -2-
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                       VALLEY NATIONAL GASES INCORPORATED

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                              A S S E T S
                              -----------                              June 30,        March 31,
                                                                         2001             2002
                                                                     -------------    -------------
                                                                                       (Unaudited)
<S>                                                                  <C>              <C>
CURRENT ASSETS:
    Cash and cash equivalents                                        $     542,720    $     855,260
    Accounts receivable, net of allowance for doubtful accounts of
       $597,898 and $684,898, respectively                              16,263,030       17,721,111
    Inventory                                                           16,303,257       16,135,540
    Prepaids and other                                                   1,380,950        1,901,504
                                                                     -------------    -------------
                  Total current assets                                  34,489,957       36,613,415
                                                                     -------------    -------------
PROPERTY, PLANT AND EQUIPMENT:
    Land                                                                    88,000           90,000
    Buildings and improvements                                           5,344,429        5,981,040
    Equipment                                                           75,229,048       81,855,837
    Transportation equipment                                            13,023,381       13,799,994
    Furniture and fixtures                                               5,177,088        6,573,657
                                                                     -------------    -------------
                  Total property, plant and equipment                   98,861,946      108,300,528

    Accumulated depreciation                                           (37,123,059)     (40,370,637)
                                                                     -------------    -------------
                  Net property, plant and equipment                     61,738,887       67,929,891
                                                                     -------------    -------------
OTHER ASSETS:
    Non-compete agreements and consulting agreements, net of
       amortization of $9,173,886 and $9,571,001,
       respectively                                                      8,425,332        6,326,057
    Goodwill, net of amortization of $6,990,582 and 6,930,855,
       respectively                                                     38,553,833       40,464,848
    Deposits and other assets                                            1,768,251        1,610,332
                                                                     -------------    -------------
                  Total other assets                                    48,747,416       48,401,237
                                                                     -------------    -------------
TOTAL ASSETS                                                         $ 144,976,260    $ 152,944,543
                                                                     =============    =============
</TABLE>








   The accompanying notes are an integral part of these financial statements.



                                      -3-
<PAGE>


                       VALLEY NATIONAL GASES INCORPORATED

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                  LIABILITIES AND STOCKHOLDERS' EQUITY          June 30,         March 31,
                  ------------------------------------            2001             2002
                                                             -------------    -------------
                                                                                (Unaudited)
<S>                                                          <C>              <C>
CURRENT LIABILITIES:
    Current maturities of long-term debt                     $   6,715,209    $   6,240,028
    Bank overdraft                                                 259,852          425,463
    Accounts payable, trade                                      6,958,922        6,199,942
    Accrued compensation and employee benefits                   3,508,931        3,582,653
    Other current liabilities                                    2,662,632        5,568,280
                                                             -------------    -------------
                  Total current liabilities                     20,105,546       22,016,366

LONG-TERM DEBT, less current maturities                         76,415,134       79,341,625
DEFERRED TAX LIABILITY                                          11,612,787       11,287,535
OTHER LONG-TERM LIABILITIES                                      3,238,607        3,258,451
                                                             -------------    -------------
                  Total liabilities                            111,372,074      115,903,977
                                                             -------------    -------------
STOCKHOLDERS' EQUITY:
    Common stock, par value, $.001 per share-
    Authorized, 30,000,000 shares
    Issued, 9,620,084 shares, outstanding 9,347,584 shares           9,620            9,620
    Paid-in-capital                                             19,269,338       19,269,338
    Retained earnings                                           17,531,623       21,507,643
    Accumulated other comprehensive loss                          (942,967)      (1,482,607)
    Treasury stock at cost, 272,500 shares                      (2,263,428)      (2,263,428)
                                                             -------------    -------------
                  Total stockholders' equity                    33,604,186       37,040,566
                                                             -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 144,976,260    $ 152,944,543
                                                             =============    =============
</TABLE>




   The accompanying notes are an integral part of these financial statements.


                                      -4-
<PAGE>


                       VALLEY NATIONAL GASES INCORPORATED

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                         March 31,
                                                                 -------------------------
                                                                     2001          2002
                                                                 -----------   -----------
<S>                                                              <C>           <C>
NET SALES                                                        $41,060,313   $41,141,892
COST OF PRODUCTS SOLD, excluding depreciation and
  amortization                                                    20,441,576    19,549,659
                                                                 -----------   -----------
                  Gross profit                                    20,618,737    21,592,233
                                                                 -----------   -----------
EXPENSES:
    Operating and administrative                                  13,790,806    14,243,669
    Depreciation                                                   1,317,600     1,434,722
    Amortization of intangibles                                    1,192,261       682,582
                                                                 -----------   -----------
                  Total expenses                                  16,300,667    16,360,973
                                                                 -----------   -----------
                  Income from operations                           4,318,070     5,231,260
INTEREST EXPENSE                                                   2,167,641     1,339,486
OTHER INCOME, NET                                                    130,679       101,592
                                                                 -----------   -----------
EARNINGS BEFORE INCOME TAXES                                       2,281,108     3,993,366
PROVISION FOR INCOME TAXES                                         1,003,687     1,657,247
                                                                 -----------   -----------
NET EARNINGS                                                     $ 1,277,421   $ 2,336,119
                                                                 ===========   ===========
BASIC EARNINGS PER SHARE                                         $      0.14   $      0.25
DILUTED EARNINGS PER SHARE                                       $      0.14   $      0.25
WEIGHTED AVERAGE SHARES:
   Basic                                                           9,347,584     9,347,584
   Diluted                                                         9,371,400     9,409,958
</TABLE>



   The accompanying notes are an integral part of these financial statements.




                                      -5-
<PAGE>

                       VALLEY NATIONAL GASES INCORPORATED

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                          Nine Months Ended
                                                              March 31,
                                                    ---------------------------
                                                        2001           2002
                                                    ------------   ------------

NET SALES                                           $108,537,349   $109,767,912
COST OF PRODUCTS SOLD, excluding depreciation and
 amortization                                         52,884,377     51,129,134
                                                    ------------   ------------
                  Gross profit                        55,652,972     58,638,778
                                                    ------------   ------------
EXPENSES:
    Operating and administrative                      37,615,174     41,899,353
    Depreciation                                       3,932,800      3,770,001
    Amortization of intangibles                        3,667,021      1,981,609
                                                    ------------   ------------
                  Total expenses                      45,214,995     47,650,963
                                                    ------------   ------------
                  Income from operations              10,437,977     10,987,815
INTEREST EXPENSE                                       4,974,415      4,470,039
OTHER INCOME, NET                                        385,003        278,839
                                                    ------------   ------------
EARNINGS BEFORE INCOME TAXES                           5,848,565      6,796,615

PROVISION FOR INCOME TAXES                             2,573,368      2,820,595
                                                    ------------   ------------
NET EARNINGS                                        $  3,275,197   $  3,976,020
                                                    ============   ============
BASIC EARNINGS PER SHARE                            $       0.35   $       0.43
DILUTED EARNINGS PER SHARE                                  0.35           0.42
WEIGHTED AVERAGE SHARES:
   Basic                                               9,347,584      9,347,584
   Diluted                                             9,366,079      9,403,301






   The accompanying notes are an integral part of these financial statements.


                                      -6-
<PAGE>


                       VALLEY NATIONAL GASES INCORPORATED

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                       Nine Months Ended
                                                            March 31,
                                                  ----------------------------
                                                      2001            2002
                                                  ------------    ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES         $  8,683,689    $ 10,565,567
                                                  ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from disposal of assets                   183,316         138,636
    Purchases of property and equipment             (5,896,877)     (6,122,809)
    Business acquisitions, net of cash acquired     (1,615,901)     (5,478,966)
                                                  ------------    ------------
     Net cash used by investing activities          (7,329,462)    (11,463,139)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings                        31,341,374      46,497,245
    Principal payments on loans                    (33,203,634)    (45,287,133)
                                                  ------------    ------------
     Net cash provided by financing activities      (1,862,260)      1,210,112
                                                  ------------    ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS               (508,033)        312,540
CASH AND CASH EQUIVALENTS, beginning of period         769,564         542,720
                                                  ------------    ------------
CASH AND CASH EQUIVALENTS, end of period          $    261,531    $    855,260
                                                  ============    ============
SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash payments for interest                    $  4,551,762    $  4,536,431
                                                  ============    ============
    Cash payments for income taxes                $  1,324,746    $    212,038
                                                  ============    ============








   The accompanying notes are an integral part of these financial statements.



                                      -7-
<PAGE>

                       Valley National Gases Incorporated

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

   The financial statements of Valley National Gases Incorporated (the Company)
presented herein are unaudited. Certain information and footnote disclosures
normally prepared in accordance with generally accepted accounting principles
have been either condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission. Although the Company believes that all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation have been made, interim periods are not necessarily indicative
of the financial results of operations for a full year. As such, these financial
statements should be read in conjunction with the financial statements and notes
thereto included or incorporated by reference in the Company's audited financial
statements for the period ending June 30, 2001.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORY

   Inventory is carried at the lower of cost or market using the first-in,
first-out (FIFO) method.

The components of inventory are as follows:

                    June 30,      March 31,
                      2001          2002
                   -----------   -----------
                                 (Unaudited)

     Hardgoods     $14,571,219   $14,108,940
     Gases           1,732,038     2,026,600
                   -----------   -----------
                   $16,303,257   $16,135,540
                   ===========   ===========

PLANT AND EQUIPMENT

   Plant and equipment are stated at cost. Depreciation is provided on the
straight-line basis over the estimated useful lives of the related assets.

   Effective July 1, 2001, the Company changed its estimate of the useful lives
of its delivery vehicles from 3 to 7 years. This change was made to better
reflect the estimated periods during which these assets will remain in service.
The change had the effect of reducing depreciation expense for the quarter and
nine months ended March 31, 2002 by approximately $124,000 and $372,000 and
increasing net earnings by $73,000 and $218,000 or $0.01 and $0.02 per diluted
share, respectively.

   The Company changed the estimated useful life of delivery vehicles as a
result of thorough studies and analyses. The studies considered empirical data
obtained from truck manufacturers and other industry experts and experience
gained from the Company's maintenance of a delivery vehicle population of
approximately 200 delivery vehicles.

3.  ACQUISITIONS:

   The Company acquires businesses engaged in the distribution of industrial,
medical and specialty gases and related welding supplies and accessories.




                                      -8-
<PAGE>

Acquisitions have been recorded using the purchase method of accounting and,
accordingly, results of their operations have been included in the Company's
financial statements since the effective dates of the respective acquisitions.

   During the nine months ended March 31, 2002, the Company purchased three
businesses. These acquisitions and their effective dates were Buckeye
Corporation (August 2001), Mansfield Oxygen Corp. (August 2001) and Gas Arc,
Inc. (December 2001). These acquisitions had approximately $7.0 million in
combined annualized sales. These transactions were financed through the
Company's credit facility.

   In connection with these acquisitions, the total purchase price, fair value
of assets acquired, cash paid and liabilities assumed were as follows:

                                                      Nine Months Ended
                                                       March 31, 2002
                                                       --------------
                                                         (Unaudited)
     Cash paid                                           $5,995,869
     Notes issued to sellers                                   --
     Notes payable and capital leases assumed               391,198
     Other liabilities assumed and acquisition costs
         including non-competes                             850,000
                                                         ----------
     Total purchase price allocated to assets acquired   $7,237,067
                                                         ==========

   As part of these acquisitions, the Company recorded $877,000 for goodwill and
$850,000 for non-compete agreements having an amortization period of 3 years.

4. LONG-TERM DEBT:

   Long-term debt consists of the following:
<TABLE>
<CAPTION>

                                                                                      June 30,      March 31,
                                                                                       2001            2002
                                                                                   ------------    ------------
                                                                                                    (Unaudited)
<S>                                                                                <C>             <C>
     Revolving note, interest at LIBOR plus 1.875% and 2.25% as of 2001 and
         2002, respectively payable monthly through April 2003. Secured by the
         assets of the Company                                                     $ 65,601,201    $ 72,865,000
     Term note, interest at LIBOR plus 1.875% and 2.25% as of 2001 and 2002,
         respectively payable monthly through October 2003.  Secured by the
         assets of the Company                                                        5,756,225       3,837,470
     Note payable, interest at 6.6% payable annually through October 2003
         Secured by certain assets of the Company                                     2,049,224       1,366,149
     Individuals and corporations, mortgages and notes, interest at 3.7% to
         10.00%, payable at various dates through 2010                                9,837,125       7,611,412
                                                                                   ------------    ------------
                                                                                     83,243,775      85,680,031
                       Original issue discount                                         (113,432)        (98,378)
                       Current maturities                                            (6,715,209)     (6,240,028)
                                                                                   ------------    ------------
     Total long-term debt                                                          $ 76,415,134    $ 79,341,625
                                                                                   ============    ============
</TABLE>



                                      -9-
<PAGE>



   Prime rate was 4.75% and LIBOR was 1.92% at March 31, 2002.

   On May 1, 2000 the Company entered into an amended and restated credit
facility with Bank One, as agent. The credit facility increased the maximum
revolving note borrowings to $100.0 million, including a letter of credit
sublimit of $25.0 million. The term note continued at the existing balance of
$7.7 million. The scheduled maturity date of the term note is October 4, 2003.
The scheduled maturity date of the revolving note is April 30, 2003. The Company
pays a fee for the unused portion of the revolving loan. The revolving loan is
used primarily to fund acquisitions. The Company is not required to make
principal payments on outstanding balances of the revolving loan as long as
certain covenants are satisfied. Interest is charged on both the term loan and
the revolving loan at either the lender's prime rate or various LIBOR rates, at
the Company's discretion, plus an applicable spread. The weighted average
interest rate for substantially all of the borrowings under the credit facility
was 4.16% as of March 31, 2002. As of March 31, 2002, availability under the
revolving loan was approximately $22.8 million, with outstanding borrowings of
approximately $72.9 million and outstanding letters of credit of approximately
$4.3 million. The credit facility is secured by all of the Company's assets.

   The loan agreement for the credit facility contains various financial
covenants applicable to the Company, including covenants requiring minimum fixed
charge coverage, maximum funded debt to EBITDA, and minimum net worth.

5.  EARNINGS PER SHARE

   Basic earnings per share were computed based on the weighted average number
of common shares issued and outstanding during the relevant periods. Diluted
earnings per common share were computed based on the weighted average number of
common shares issued and outstanding plus additional shares assumed to be
outstanding to reflect the dilutive effect of common stock equivalents using the
treasury stock method.

   Options to purchase 189,500 and 228,850 shares of common stock were
outstanding during the quarter and nine months ended March 31, 2002 and 2001
respectively, but were not included in the computation of diluted earnings per
common share as the options' exercise price was greater than the average market
price of the common stock for the respective periods.



                                      -10-
<PAGE>
<TABLE>
<CAPTION>
                                                          Three Months Ended         Nine Months Ended
                                                                March 31,                 March 31,
                                                        -----------------------   --------------------------
                                                          2001         2002         2001            2002
                                                        ----------   ----------   ----------   -------------
<S>                                                     <C>          <C>          <C>          <C>
 Net earnings available for common stock                $1,277,421   $2,336,119   $3,275,197   $   3,976,020
                                                        ==========   ==========   ==========   =============
 Basic earnings per common share:

 Weighted average common shares                          9,347,584    9,347,584    9,347,584       9,347,584
                                                        ==========   ==========   ==========   =============
 Basic earnings per common share                        $     0.14   $     0.25   $     0.35   $        0.43
                                                        ==========   ==========   ==========   =============
 Diluted earnings per common share:

 Weighted average common shares                          9,347,584    9,347,584    9,347,584       9,347,584

 Shares issuable from assumed conversion of common
 stock equivalents                                          23,816       62,374       18,495          55,717
                                                        ----------   ----------   ----------   -------------
 Weighted average common and common equivalent shares    9,371,400    9,409,958    9,366,079       9,403,301
                                                        ==========   ==========   ==========   =============
 Diluted earnings per common share                      $     0.14   $     0.25   $     0.35   $        0.42
                                                        ==========   ==========   ==========   =============
</TABLE>

6. COMPREHENSIVE INCOME

   The components of comprehensive income, net of tax, were as follows:

                                                         Nine Months Ended
                                                             March 31,
                                                    --------------------------
                                                        2001           2002
                                                    -----------    -----------
     Net earnings                                   $ 3,275,197    $ 3,976,020
     Cumulative effect of change in accounting
       principle, net of tax                            213,289             --

     Unrealized losses on derivatives, net of tax    (1,477,821)      (539,640)
                                                    -----------    -----------
     Comprehensive income (loss)                    $ 2,010,665    $ 3,436,380
                                                    -----------    -----------

   Accumulated other comprehensive loss presented in the accompanying condensed
consolidated balance sheets consists of the accumulated other net unrealized
loss on derivatives designated as cash flow hedges.

7. DERIVATIVES AND HEDGING ACTIVITIES

   On July 1, 2000, Statement of Financial Accounting Standard No. 133,
"Accounting for Derivative Instruments and Hedging Activities" was adopted
resulting in the recording of current assets of $476,500, noncurrent assets of
$1,175,800, current liabilities of $365,400, noncurrent liabilities of $931,500
and other comprehensive income of $213,300, net of tax. The March 2002 quarter
and nine months results include a reduction in interest expense of $173,328 and
$129,935, respectively, to record changes in the fair market value of the
Company's interest rate swap agreements, compared to an increase



                                      -11-
<PAGE>

of interest expense in the prior year quarter and nine months of $559,159 and
336,273, respectively.

   Floating to fixed rate interest swap agreements, designated as cash flow
hedges, hedge the Company's floating rate debt and expire at various dates
through January 2006. The fair value of these contracts is recorded in the
Company's balance sheet, with the offset to accumulated other comprehensive
loss, net of tax. The Company expects to recognize net current liabilities of
$260,000 against earnings in the next 12 months.

8. ADOPTION OF NEW ACCOUNTING STANDARDS

   In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations," which establishes new accounting and reporting
standards for business combinations. The Company adopted the new standard on
July 1, 2001.

9. INTANGIBLE ASSETS

   On July 1, 2001, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets," under which goodwill and other intangible assets with
indefinite lives are not amortized. Such intangibles were evaluated for
impairment as of July 1, 2001 and no impairment existed. In addition, each year,
the Company will evaluate the intangible assets for impairment with any
resulting impairment reflected as an operating expense. The Company's only
intangibles, other than goodwill, are its noncompete agreements and consulting
agreements, which the Company currently believes have finite lives. As of March
31, 2002, the Company's noncompete agreements and consulting agreements are
summarized as follows:
<CAPTION>
<TABLE>

                                                                                                Weighted
                                                                         Balance at             Average
                            Original              Accumulated             March 31,          Amortization
                              Cost               Amortization               2002            Period (years)
                            --------             ------------            ----------         -------------
<S>                        <C>                    <C>                    <C>                      <C>
Non-competition
   Agreements              $14,833,275            $ 8,690,717            $ 6,142,558              4.8
Consulting
   Agreements                1,063,771                880,272                183,499              5.5
</TABLE>

Amortization expense for the nine months ended March 31, 2002 totaled
$1,981,609. Estimated amortization expense for the remainder of fiscal 2002 and
the next five fiscal years is summarized as follows:

                        Fiscal year Ending June 30,
                    -------------------------------------
                             Remainder of 2002                  $   649,592
                                    2003                        $ 2,014,617
                                    2004                        $ 1,490,856
                                    2005                        $   923,905
                                    2006                        $   507,635
                                    2007                        $   299,302



                                      -12-
<PAGE>
   The changes in the carrying amount of goodwill for the nine months ended
March 31, 2002, are as follows:

     Balance as of June 30, 2001                     $ 39,521,506
     Goodwill acquired during the current
       fiscal year                                   $  1,047,654
     Goodwill written off related to sale
       of assets                                         (104,312)
                                                     ------------
     Balance as of March 31, 2002                    $ 40,464,848
                                                     ------------


The following table reports pro forma information as if SFAS No. 142 had been
adopted for all periods presented:

<CAPTION>
<TABLE>
                                                    Three Months Ended                             Nine Months Ended
                                                         March 31,                                      March 31,
                                         --------------------------------------            --------------------------------------
                                              2001                     2002                     2001                     2002
                                         -------------            -------------            -------------            -------------
<S>                                      <C>                      <C>                      <C>                      <C>
Reported net earnings                    $   1,277,421            $   2,336,119            $   3,275,197            $   3,976,020
Goodwill amortization, net of
  tax                                          292,320                      --                   871,920                      --
                                         -------------            -------------            -------------            -------------
Adjusted net earnings                    $   1,569,741            $   2,336,119            $   4,147,117            $   3,976,020

Basic earnings per share                 $        0.14            $        0.25            $        0.35            $        0.43
Goodwill amortization                             0.03                      --                      0.09                      --
                                         -------------            -------------            -------------            -------------
Adjusted basic earnings per
  share                                  $        0.17            $        0.25            $        0.46            $        0.43

Diluted earnings per share               $        0.14            $        0.25            $        0.35            $        0.42
Goodwill amortization                             0.03                      --                      0.09                      --
                                         -------------            -------------            -------------            -------------
Adjusted diluted earnings
  per share                              $        0.17            $        0.25            $        0.46            $        0.42
</TABLE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

   The following discussion should be read in conjunction with, and is qualified
in its entirety by, the Financial Statements and the Notes thereto.

OVERVIEW

   The Company is a leading packager and distributor of industrial, medical and
specialty gases, welding equipment and supplies, and propane in 11 states in the
eastern United States. The Company's net sales have grown, primarily as a result
of acquisitions, at a compound annual rate of approximately 17% per year since
the Company started business in 1958, increasing from $190,000 in that year to
$142.6 million for the last twelve months. In fiscal 2001, gases accounted for
approximately 44% of net sales, welding equipment and supplies accounted for
approximately 40% of net sales, and cylinder and tank rental accounted for
approximately 16% of net sales.

   The Company believes it has been successful in executing its strategy of
growth through acquisitions, having completed 52 acquisitions since 1990. Some
acquisitions have had, and the Company expects some future acquisitions will
have, a dilutive effect upon the Company's income from operations and income
before tax for a short period following consummation. This temporary dilution
occurs because some of the benefits of acquisitions, such as leveraging of



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<PAGE>

operating and administrative expenses, improved product gross margins and real
sales growth, occur over a period ranging from two to eight quarters, depending
upon the complexity of integrating each acquisition into the Company's existing
operations. The consideration for most acquisitions includes a combination of a
cash payment at closing, seller financing and payments under covenants not to
compete and consulting agreements. In most cases, operating cash flow of an
acquired business is positive in a relatively short period of time. For many
acquisitions, the Company believes that projections of future cash flows justify
payment of amounts in excess of the book or market value of the assets acquired,
resulting in goodwill being recorded.

   The Company's results are subject to moderate seasonality, primarily due to
fluctuations in the demand for propane, which is highest during winter months,
occurring in the Company's second and third fiscal quarters. Seasonality of
total sales has increased as propane sales as a percentage of total sales have
increased.

   Operating and administrative expenses are comprised primarily of salaries,
benefits, transportation equipment operating costs, facility lease expenses and
general office expenses. These expenses are generally fixed on a
quarter-to-quarter basis. The Company believes that changes in these expenses as
a percentage of sales should be evaluated over the long term rather than on a
quarter-to-quarter basis due to the moderate seasonality of sales mentioned
above and the generally fixed nature of these expenses.

   Historically, the Company's gross profit margins as a percentage of sales
have been higher on the sale of gases than on the sale of welding equipment and
supplies ("hard goods"). As a result of recent acquisitions of some distributors
with a higher proportion of hard goods to gas sales, the Company's average gross
profit as a percentage of sales has decreased in comparison to prior years.
Future acquisitions may affect this pattern depending upon the product mix of
the acquired businesses.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2002 AND 2001

   Net sales increased 0.2%, or $0.1 million, to $41.1 million from $41.0
million for the three months ended March 31, 2002 and 2001, respectively.
Acquisitions made during the preceding twelve months contributed $4.3 million of
the increase in net sales, while same store sales decreased $4.2 million. Same
store sales decreased 10.4% versus the same quarter last year. Propane sales
declined $4.1 million on a same store basis, reflecting $3.1 million in price
deflation and $1.0 million decline due to the decline in the volume of propane
sold. Bulk propane gallons sold decreased 8.0% for the quarter reflecting the
effect of heating degree-days being down 13.0% in comparison to the prior year.
Hard good sales decreased $0.4 million from the prior year quarter on a same
store basis, reflecting the effect of the softness in the economy during the
quarter. Gases and cylinder revenue represented 62.8% of net sales for the three
months ended March 31, 2002, with hard goods representing 37.2%. In comparison,
net sales for the three months ended March 31, 2001 reflected gases and cylinder
revenue as 65.1% and hard goods as 34.9%.

   Gross profit, which excludes depreciation and amortization, increased 4.7%,
or $1.0 million, to $21.6 million from $20.6 million for the three months ended
March 31, 2002 and 2001, respectively. Acquisitions made during the last twelve
months contributed $2.5 million of the increase with same store gross profit
decreasing $1.5 million. Gross profit as a percentage of net sales was 52.5% for
the three months ended March 31, 2002, compared to 50.2% for the


                                      -14-
<PAGE>

three months ended March 31, 2001, reflecting primarily the change in product
mix, with propane being a lesser portion of total gas sales, along with improved
margins related to propane sales.

   Operating and administrative expenses increased 3.3%, or $0.4 million, to
$14.2 million from $13.8 million for the three months ended March 31, 2002 and
2001, respectively. Of this increase, $1.8 million was related to acquired
businesses while same store expense decreased $1.4 million. The $1.4 million
decrease in same store expenses reflected primarily the results of the Company's
cost reduction initiatives. Operating and administrative expenses as a
percentage of sales were 34.6% for the three months ended March 31, 2002, as
compared to 33.6% for the same quarter in 2001, reflecting primarily the effect
of the decline in same store sales, partially offset by the Company's expense
reduction efforts.

   Depreciation and amortization expense decreased $0.4 million for the quarter
to $2.1 million, compared to the prior year quarter of $2.5 million. The Company
changed its method of accounting for goodwill on July 1, 2001 to comply with
SFAS No. 142 whereby it discontinued amortization of goodwill. In the prior
year, goodwill amortization expense of $0.5 million was recorded. Under the new
standard, pro forma diluted earnings per share for the prior year first quarter
would have been $0.17 compared to $0.14 as reported. As a result of a study on
the useful life of delivery vehicles, the Company changed its estimate of useful
lives for delivery vehicles, effective July 1, 2001, from three years to seven
years. Depreciation and amortization would have been $0.1 million higher for the
quarter before this change. This change increased net earnings $0.01 million for
the current quarter or $0.01 per diluted share.

   Interest expense decreased $0.8 million for the quarter primarily as a result
of a decrease of $0.2 million for the quarter ended March 31, 2002 compared to
an increase in interest expense of $0.6 million in the prior year quarter to
record changes in the fair market value of the Company's interest rate swap
agreements under SFAS No. 133.

   The Company's effective tax rate decreased from 44.0% for the prior year
quarter to 41.5% for the current year as a result of decreased nondeductible
goodwill under SFAS No. 142.

   Net earnings increased 82.9% to $2.3 million after the effect of SFAS No. 133
and SFAS No. 142 for the three months ended March 31, 2002 compared to $1.3 for
the prior year quarter.

COMPARISON OF NINE MONTHS ENDED MARCH 31, 2002 AND 2001

   Net sales increased 1.1%, or $1.2 million, to $109.8 million from $108.6
million for the nine months ended March 31, 2002 and 2001, respectively.
Acquisitions made during the preceding twelve months contributed $11.4 million
of the increase in net sales, while same store sales decreased $10.2 million.
Same store sales decreased 9.5% versus the same period last year. Propane sales
declined $6.8 million on a same store basis, reflecting $4.5 million in price
deflation and $2.3 million decline due to the decline in the volume of propane
sold. Bulk propane gallons sold were off 9.5% for the nine months reflecting the
effect of heating degree-days being down 21.5% in comparison to the prior year.
Gases and cylinder revenue represented 60.0% of net sales for the nine months
ended March 31, 2002, with hard goods representing 40.0%. In comparison, net
sales for the nine months ended March 31, 2001 reflected gases and cylinder
revenue as 60.7% and hard goods as 39.3%.

   Gross profit, which excludes depreciation and amortization, increased 5.4%,
or $3.0 million, to $58.6 million from $55.6 million for the nine months ended


                                      -15-
<PAGE>

March 31, 2002 and 2001, respectively. Acquisitions made during the last twelve
months contributed $6.3 million of the increase with same store gross profit
decreasing $3.3 million. Gross profit as a percentage of net sales was 53.4% for
the nine months ended March 31, 2002, compared to 51.3% for the nine months
ended March 31, 2001, reflecting primarily the change in product mix, with
propane being a lesser portion of total gas sales, along with improved margins
related to propane sales.

   Operating and administrative expenses increased 11.4%, or $4.3 million, to
$41.9 million from $37.6 million for the nine months ended March 31, 2002 and
2001, respectively. Of this increase, $5.0 million was related to acquired
businesses while same store expense decreased $0.7 million. The $0.7 million
decrease in same store expenses reflected primarily the results of the Company's
cost reduction initiatives. Operating and administrative expenses as a
percentage of sales were 38.2% for the nine months ended March 31, 2002, as
compared to 34.7% for the same period in 2001, reflecting primarily the effect
of the decline in same store sales, partially offset by the Company's expense
reduction efforts.

   Depreciation and amortization expense decreased $1.8 million for the nine
months ended March 31, 2002, compared to the same period in 2001. The Company
changed its method of accounting for goodwill on July 1, 2001 to comply with
SFAS No. 142 whereby it discontinued amortization of goodwill. In the prior
year, goodwill amortization expense of $1.6 million was recorded. Under the new
standard, pro forma diluted earnings per share for the prior year would have
been $0.46, compared to $0.35 as reported. As a result of a study on the useful
life of delivery vehicles, the Company changed its estimate of useful lives for
delivery vehicles, effective July 1, 2001, from three years to seven years.
Depreciation and amortization would have been $0.4 million higher for the year
before this change. This change increased net earnings $0.2 million for the year
or $0.2 per diluted share.

   Interest expense decreased $0.5 million for the nine months primarily as a
result of a decrease of $0.1 million for the quarter ended March 31, 2002
compared to an increase in interest expense of $0.3 million in the prior period
to record changes in the fair market value of the Company's interest rate swap
agreements under SFAS No. 133.

   The Company's effective tax rate decreased from 44.0% for the prior year to
41.5% for the current year as a result of decreased nondeductible goodwill under
SFAS No. 142.

   Net earnings increased 21.4% to $4.0 million after the effect of SFAS No. 133
and SFAS No. 142 for the nine months ended March 31, 2002 compared to $3.3
million for the prior year.

LIQUIDITY AND CAPITAL RESOURCES

   Historically, the Company has financed its operations, capital expenditures
and debt service with funds provided from operating activities. Acquisitions
have been financed by a combination of seller financing, bank borrowings and
funds generated from operations.

   At March 31, 2002, the Company had working capital of approximately $14.5
million. Funds provided by operations for the nine months ended March 31, 2002
were approximately $10.6 million. Funds used for investing activities were
approximately $11.5 million for the nine months ended March 31, 2002, consisting
primarily of capital spending and financing for acquisitions. Sources of funds
from financing activities for the nine months ended March 31, 2002 were
approximately $1.2 million from net borrowings. The Company's cash balance
increased $0.5 million during the nine months to $0.9 million.


                                      -16-
<PAGE>

   On May 1, 2000, the Company entered into a second amended and restated credit
agreement with Bank One, as agent. This agreement increased the maximum
revolving note borrowings to $100.0 million, from the previous maximum
borrowings level of $75.3 million, and extended the maturity of the revolving
note to April 30, 2003. The agreement permits the Company, on an annual basis,
to request that the maturity be extended one year. No significant changes were
made to pricing and the covenant requirements when compared to the original
agreement. The weighted average interest rate for substantially all of the
borrowings under the credit facility was 4.16% as of March 31, 2002. As of March
31, 2002, availability under the revolving loan was approximately $22.8 million,
with outstanding borrowings of approximately $72.9 million and outstanding
letters of credit of approximately $4.3 million. The credit facility is secured
by all of the Company's assets. The revolving loan is used primarily to fund
acquisitions. The Company is not required to make principal payments on
outstanding balances of the revolving loan as long as certain covenants are
satisfied. Interest is charged on both the term loan and the revolving loan at
either the lender's prime rate or various LIBOR rates, at the Company's
discretion, plus an applicable spread.

   The loan agreement for the credit facility contains various financial
covenants applicable to the Company, including covenants requiring minimum fixed
charge coverage, maximum funded debt to EBITDA, and minimum net worth. As of
March 31, 2002, the Company was in compliance with these covenants and believes
that it will continue to be in compliance through at least the next twelve
months.

   The Company is obligated under various promissory notes related to the
financing of acquisitions that have various rates of interest, ranging from 3.7%
to 10.0% per annum, and maturities through 2010. The outstanding balance of
these notes as of March 31, 2002 was $9.0 million. Some of these notes are
secured by assets related to the applicable acquisition, some are unsecured, and
some are backed by bank letters of credit issued under the Company's credit
facility.

   The Company enters into contractual agreements in the ordinary course of
business to hedge its exposure to interest rate risks. Counterparties to these
agreements are major financial institutions. Management believes the risk of
incurring losses related to credit risk is remote and any losses would be
immaterial.

   Interest rate swap agreements are used to reduce interest rate risks and
costs inherent in the Company's debt portfolio. The Company enters into these
agreements to change the fixed/variable interest rate mix of the debt portfolio
in order to maintain the percentage of fixed and variable debt within certain
parameters set by management. Accordingly, the Company enters into agreements to
effectively convert variable-rate debt to fixed-rate debt.

   As of March 31, 2002, the Company had $60.0 million in notional amounts
outstanding under interest rate swap agreements. These swaps have an average pay
rate of 6.13% versus a receive rate of 1.89%.

   The Company has previously entered into a put/call option agreement with an
independent distributor for the purchase of its business. This option becomes
exercisable beginning in May 2002 and ending in the year 2008. The Company
believes that it will have adequate capital resources available to fund this
acquisition at such time that the option is exercised.

   The Company believes that cash generated from operations, borrowing
availability under its credit facility and the ability to obtain financing with
sellers of businesses will be sufficient to satisfy the Company's


                                      -17-
<PAGE>

requirements for operating funds, capital expenditures and future acquisitions
for at least the next twelve months. The Company has no plans at this time to
issue additional shares of common stock.

FLUCTUATIONS IN QUARTERLY RESULTS

   The Company generally has experienced higher sales activity during its second
and third quarters as a result of seasonal sales of propane, with corresponding
lower sales for the first and fourth quarters. As a result, income from
operations and net income typically are higher for the second and third quarters
than for the first and fourth quarters of the fiscal year. The timing of
acquisitions may also have an appreciable effect on quarter to quarter earnings.

INFLATION

   The impact of inflation on the Company's operating results has been moderate
in recent years, reflecting generally low rates of inflation in the economy and
the Company's historical ability to pass purchase price increases to its
customers in the form of sales price increases. While inflation has not had, and
the Company does not expect that it will have, a material impact upon operating
results, there is no assurance that the Company's business will not be affected
by inflation in the future.

NEW ACCOUNTING STANDARDS

   In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" was issued. SFAS No. 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of and supersedes SFAS No. 121. This statement retains the
fundamental provisions of SFAS No. 121 for recognition and measurement of the
impairment of long-lived assets to be held and used and measurement of
long-lived assets to be disposed of by sale. The provisions of this standard
must be applied for fiscal years beginning after December 15, 2001. The Company
is currently evaluating the effects of SFAS No. 144 and is preparing a plan for
its implementation.

CAUTIONARY STATEMENTS


   The statements set forth in this 10-Q regarding the effect of acquisitions on
the Company's earnings, the expected consideration to be paid for acquisitions,
the Company's ability to comply with the financial covenants under its credit
facility, the risk of loss under interest rate hedging transactions, the
availability of adequate resources to fund the acquisition of a business under
an existing put/call option agreement, the sufficiency of the Company's capital
resources and the effect of inflation on the Company's business are forward
looking statements based on current expectations and assumptions, and entail
various risks and uncertainties that could cause actual results to differ
materially from those expressed in such forward-looking statements. Certain
factors may affect whether these anticipated events occur, including the
Company's ability to accurately identify attractive acquisition targets and
predict the performance of those businesses if integrated into the Company's
operations, integrate the operations of the acquired businesses as anticipated,
secure financing necessary to make acquisitions, including maintaining and/or
expanding its line of credit, negotiating seller financing, or securing other
financing methods, effectively manage rapid growth, and general economic
conditions. Additional information regarding these and other risk factors is
detailed in the Company's filings with the Securities and Exchange Commission
from time to time.


                                      -18-
<PAGE>

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   No change has occurred since the filing by the Registrant on Form 10-K for
the year ended June 30, 2001. Reference is made to Part II, Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, in the Registrant's
Annual Report on Form 10-K for the year ended June 30, 2001.

   There was no change to the composition of the Company's fixed and variable
rate long-term debt or interest rate swaps during the nine months ended March
31, 2002. As of March 31, 2002 the Company's average pay rate for these swaps
was 6.13% compared to its average receive rate of 1.89%.

                           PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  10.1     Agreement dated February 22, 2002 between the company
                           and Lawrence E. Bandi.

         (b)      Reports on Form 8-K:

                  No reports on Form 8-K were filed during the quarter ended
                  March 31, 2002.



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<PAGE>


                                   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 NATIONAL GASES INCORPORATED



May 15, 2002                       /s/ Robert D. Scherich
                                   -----------------------------------
                                   Robert D. Scherich
                                   Chief Financial Officer

                                      -20-