<PAGE>   1

                       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 DECEMBER 31, 2000

[ ]      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 February 12,2001
               -----                         -------------------------------
     Common stock, $0.001 par value                       9,347,584

<PAGE>   2



                       Valley National Gases Incorporated


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----

<S>          C>                                                            <C>
PART I       FINANCIAL INFORMATION

     ITEM 1  Condensed Consolidated Balance Sheets as of June 30, 2000
             and December 31, 2000                                            3

             Condensed Consolidated Statements of Operations for the
             Three Months Ended December 31, 1999 and 2000                    5

             Condensed Consolidated Statements of Operations for the
             Six Months Ended December 31, 1999 and 2000                      6

             Condensed Consolidated Statements of Cash Flows for the
             Six Months Ended December 31, 1999 and 2000                      7

             Notes to Condensed Consolidated Financial Statements             8

     ITEM 2  Management's Discussion and Analysis of Financial
             Condition and Results of Operations                             11


     ITEM 3  Quantitative and Qualitative Disclosures About Market Risk      15


PART II      OTHER INFORMATION

     ITEM 6  Exhibits and Reports on Form 8-K                                15

     SIGNATURES                                                              16

     EXHIBIT INDEX                                                           17
</TABLE>



                                      -2-
<PAGE>   3



                          PART I. FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                       VALLEY NATIONAL GASES INCORPORATED

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                       June 30,           December 31,
                                                                                         2000                 2000
                                                                                     ------------         -------------
                                                                                                          (Unaudited)
<S>                                                                                 <C>                   <C>
                              A S S E T S
CURRENT ASSETS:
    Cash and cash equivalents                                                        $    769,564         $    569,548
    Accounts receivable, net of allowance for doubtful accounts of $586,698            16,131,425           18,338,677
    Inventory                                                                          13,748,347           15,195,615
    Prepaids and other                                                                    920,159            1,623,825
                                                                                     ------------         ------------

                  Total current assets                                                 31,569,495           35,727,665
                                                                                     ------------         ------------

PROPERTY, PLANT AND EQUIPMENT:
    Land                                                                                   88,000               88,000
    Buildings and improvements                                                          5,026,630            5,153,869
    Equipment                                                                          65,774,656           69,256,120
    Transportation equipment                                                           11,654,109           12,403,267
    Furniture and fixtures                                                              4,579,751            4,834,684
                                                                                     ------------         ------------

                  Total property, plant and equipment                                  87,123,146           91,735,940

    Accumulated depreciation                                                          (32,901,262)         (35,338,822)
                                                                                     ------------         ------------

                  Net property, plant and equipment                                    54,221,884           56,397,118
                                                                                     ------------         ------------

OTHER ASSETS:
    Intangibles, net of amortization of $14,752,111 and $13,822,768,
       respectively                                                                    44,348,795           42,567,543
    Deposits and other assets                                                           1,803,118            2,375,482
                                                                                     ------------         ------------

                  Total other assets                                                   46,151,913           44,943,025
                                                                                     ------------         ------------

TOTAL ASSETS                                                                         $131,943,292         $137,067,808
                                                                                     ============         ============
</TABLE>


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



                                      -3-
<PAGE>   4



                       VALLEY NATIONAL GASES INCORPORATED

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     June 30,           December 31,
                                                                       2000                2000
                                                                   ------------        -------------
                                                                                        (Unaudited)
<S>                                                               <C>                   <C>
               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Current maturities of long-term debt                           $  7,064,877         $  6,780,633
    Bank overdraft                                                    1,460,492            1,169,324
    Accounts payable, trade                                           5,751,892            6,220,413
    Accrued compensation and employee benefits                        3,346,283            2,449,415
    Other current liabilities                                         2,678,345            3,100,534
                                                                   ------------         ------------

                  Total current liabilities                          20,301,889           19,720,319

LONG-TERM DEBT, less current maturities                              68,818,457           72,250,822
DEFERRED TAX LIABILITY                                               10,624,109           10,698,290
OTHER LONG-TERM LIABILITIES                                           1,544,525            2,612,111
                                                                   ------------         ------------

                  Total liabilities                                 101,288,980          105,281,542
                                                                   ------------         ------------

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                                                13,638,782           15,636,560
  Accumulated other comprehensive loss                                       --             (865,824)
  Treasury stock at cost, 272,500 shares                             (2,263,428)          (2,263,428)
                                                                   ------------         ------------

                  Total stockholders' equity                         30,654,312           31,786,266
                                                                   ------------         ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $131,943,292         $137,067,808
                                                                   ============         ============
</TABLE>






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



                                      -4-
<PAGE>   5



                       VALLEY NATIONAL GASES INCORPORATED

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                          December 31,
                                                ------------------------------
                                                   1999                2000
                                                -----------        -----------
<S>                                            <C>                <C>
NET SALES                                       $30,380,990        $36,119,757
COST OF PRODUCTS SOLD, excluding
   depreciation and amortization                 14,916,617         17,693,426
                                                -----------        -----------
                  Gross profit                   15,464,373         18,426,331
                                                -----------        -----------

EXPENSES:
    Operating and administrative                 10,443,269         12,293,122
    Depreciation and amortization                 2,234,538          2,644,108
                                                -----------        -----------
                  Total expenses                 12,677,807         14,937,230
                                                -----------        -----------
                  Income from operations          2,786,566          3,489,101

Interest expense                                  1,178,950          1,519,139
OTHER INCOME, NET                                   102,211            157,252
                                                -----------        -----------
EARNINGS BEFORE INCOME TAXES                      1,709,827          2,127,214

PROVISION FOR INCOME TAXES                          774,901            942,624
                                                -----------        -----------
NET EARNINGS                                    $   934,926        $ 1,184,590
                                                ===========        ===========

BASIC EARNINGS PER SHARE                        $      0.10        $      0.13
DILUTED EARNINGS PER SHARE                             0.10               0.13
WEIGHTED AVERAGE SHARES:
   Basic                                          9,347,584          9,347,584
   Diluted                                        9,347,584          9,359,656
</TABLE>


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



                                      -5-
<PAGE>   6


                       VALLEY NATIONAL GASES INCORPORATED

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                        Six Months Ended
                                                           December 31,
                                                ------------------------------
                                                   1999                2000
                                                -----------        -----------
<S>                                            <C>                <C>
NET SALES                                       $56,828,067        $67,477,036
COST OF PRODUCTS SOLD, excluding
   depreciation and amortization                 27,496,038         32,442,801
                                                -----------        -----------
                  Gross profit                   29,332,029         35,034,235
                                                -----------        -----------

EXPENSES:
    Operating and administrative                 19,962,912         23,824,368
    Depreciation and amortization                 4,412,861          5,089,960
                                                -----------        -----------
                  Total expenses                 24,375,773         28,914,328
                                                -----------        -----------
                  Income from operations          4,956,256          6,119,907

Interest expense                                  2,295,908          2,806,774
OTHER INCOME, NET                                   178,357            254,324
                                                -----------        -----------
EARNINGS BEFORE INCOME TAXES                      2,838,705          3,567,457

PROVISION FOR INCOME TAXES                        1,249,030          1,569,681
                                                -----------        -----------

NET EARNINGS                                    $ 1,589,675        $ 1,997,776
                                                ===========        ===========

BASIC EARNINGS PER SHARE                        $      0.17        $       .22
DILUTED EARNINGS PER SHARE                             0.17                .22
WEIGHTED AVERAGE SHARES:
   Basic                                          9,347,584          9,347,584
   Diluted                                        9,347,584          9,363,593
</TABLE>



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





                                      -6-
<PAGE>   7


                       VALLEY NATIONAL GASES INCORPORATED

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                      Six Months Ended
                                                                         December 31,
                                                               ---------------------------------
                                                                   1999                 2000
                                                               ------------         ------------
<S>                                                           <C>                  <C>
Net cash provided by operating activities                      $  3,703,461         $  2,223,622
                                                               ------------         ------------

Cash flows from investing activities:
    Proceeds from disposal of assets                                 18,879              180,366
    Purchases of property and equipment                          (2,815,076)          (4,652,125)
    Business acquisitions, net of cash acquired                  (9,711,214)          (1,050,000)
                                                               ------------         ------------

                  Net cash used by investing activities         (12,507,411)          (5,521,759)

Cash flows from financing activities:
    Proceeds from borrowings                                     16,642,189           22,463,405
    Principal payments on loans                                  (7,486,637)         (19,365,284)
                                                               ------------         ------------

                         Net cash provided by
                             financing activities                 9,155,552            3,098,121
                                                               ------------         ------------

Net change in cash and cash equivalents                             351,602             (200,016)

Cash and cash equivalents, beginning of period                      224,708              769,564
                                                               ------------         ------------

Cash and cash equivalents, end of period                       $    576,310         $    569,548
                                                               ============         ============

Supplemental cash flow information:
    Cash payments for interest                                 $  2,171,338         $  3,436,325
                                                               ============         ============
    Cash payments for income taxes                             $    875,615         $    777,475
                                                               ============         ============
</TABLE>


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






                                      -7-
<PAGE>   8

                       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, 2000.

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,         December 31,
                               2000               2000
                           -----------        -----------
                                              (Unaudited)

          Hardgoods        $11,943,855        $13,207,582
          Gases              1,804,492          1,988,033
                           -----------        -----------

                           $13,748,347        $15,195,615
                           ===========        ===========


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.

3.  ACQUISITIONS:
    -------------

   The Company acquires businesses engaged in the distribution of industrial,
medical and specialty gases and related welding supplies and accessories.
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 six months ended December 31, 2000, the Company purchased
substantially all of the assets of Titan Welding Supply, Ltd.





                                      -8-
<PAGE>   9


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


                                                               Six Months Ended
                                                               December 31, 2000
                                                               -----------------
                                                                   (Unaudited)
          Cash paid                                                $1,050,000
          Other liabilities assumed and acquisition costs              50,000
                                                                   ----------

          Total purchase price allocated to assets acquired
                                                                   $1,100,000
                                                                   ==========

4.  LONG-TERM DEBT:
    ---------------

   Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                             June 30, 2000     December 31, 2000
                                                                             -------------     -----------------
                                                                                                 (Unaudited)
<S>                                                                         <C>               <C>
Revolving note, interest at LIBOR plus 1.875%
  payable monthly through April 2003. Secured by
  the assets of the Company                                                   $51,880,202         $58,993,608
Term note, interest at LIBOR plus 1.875%
  payable monthly through October 2003. Secured
  by the assets of the Company                                                  8,314,565           7,035,395
Note payable, interest at 6.6% payable annually
  through October 2003. Secured by certain assets
  of the Company                                                                2,732,298           2,049,223
Individuals and corporations, mortgages and notes, interest at 3.7% to
    10.00%, payable at various dates through 2010                              13,090,893          11,077,103
                                                                              -----------         -----------

                                                                               76,017,958          79,155,329
                  Original issue discount                                        (134,624)           (123,874)
                  Current maturities                                           (7,064,877)         (6,780,633)
                                                                              -----------         -----------

Total long-term debt                                                          $68,818,457         $72,250,822
                                                                              ===========         ===========
</TABLE>

    The prime rate was 9.5% and LIBOR was 6.6% at December 31, 2000.

    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 8.9% as of December 31, 2000. As of December 31, 2000, availability under
the revolving loan was approximately $34.8 million, with outstanding borrowings
of approximately $59.0 million and outstanding letters of credit of
approximately $6.2 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.




                                      -9-
<PAGE>   10

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 228,850 shares of common stock were outstanding during
the six months and quarter ended December 31, 2000 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 periods.

<TABLE>
<CAPTION>
                                                                 Three Months Ended                   Six Months Ended
                                                                    December 31,                        December 31,
                                                            ----------------------------        ----------------------------
                                                               1999              2000              1999              2000
                                                            ----------        ----------        ----------        ----------
<S>                                                        <C>               <C>               <C>               <C>
Net earnings available for common stock                     $  934,926        $1,184,590        $1,589,675        $1,997,776
                                                            ==========        ==========        ==========        ==========

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                             $     0.10        $     0.13        $     0.17        $     0.22
                                                            ==========        ==========        ==========        ==========

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                                                   --            12,072                --            16,009
                                                            ----------        ----------        ----------        ----------

Weighted average common and common equivalent shares         9,347,584         9,359,656         9,347,584         9,363,593
                                                            ==========        ==========        ==========        ==========
Diluted earnings per common share                           $     0.10        $     0.13        $     0.17        $     0.22
                                                            ==========        ==========        ==========        ==========
</TABLE>

6. SUBSEQUENT EVENTS
   -----------------

     On January 17, 2001, the Company acquired substantially all of the assets
of Burton C. French, Inc., a welding supply distributor having approximately
$1.5 million in annualized sales. This transaction was financed through the
Company's credit facility.

7. COMPREHENSIVE INCOME
-----------------------

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

<TABLE>
<CAPTION>
                                                                                  Six Months Ended
                                                                                     December 31,
                                                                              ----------------------------
                                                                                1999               2000
                                                                              ----------        ----------
<S>                                                                          <C>               <C>
          Net earnings                                                        $1,589,675        $1,997,776

          Change in net unrealized losses on derivatives designated as
          cash flow hedges, net of tax                                                --           634,631
                                                                              ----------        ----------

          Comprehensive income                                                $1,589,675        $1,363,145
                                                                              ----------        ----------
</TABLE>



                                      -10-
<PAGE>   11


   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.

8. DERIVATIVES AND HEDGING ACTIVITIES
-------------------------------------

   On July 1, 2000, Statement of Financial Acocunting 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 current quarter and
six month results include a reduction of interest expense of $56,648 and
$222,848, respectively, to reflect an increase in the fair market value of
options related to the Company's interest rate swap agreements.

   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 July 2005. 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
$310,000 into earnings in the next 12 months.


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 ten states in
the mid-Atlantic and midwestern regions of the 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 $136.7 million for the last twelve
months. In fiscal 2000, gases accounted for approximately 39% of net sales,
welding equipment and supplies accounted for approximately 45% 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 47 acquisitions since 1990. Some
acquisitions have had, and the Company expects some future acquisitions may
have, a dilutive effect upon the Company's income from operations and net income
before tax for a short period following consummation. This temporary dilution
occurs because some of the benefits of acquisitions, such as leveraging of
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
falling 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.


                                      -11-
<PAGE>   12


   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 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, in some cases, 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 December 31, 2000 and 1999
-----------------------------------------------------------

   Net sales increased 18.9%, or $5.7 million, to $36.1 million from $30.4
million for the three months ended December 31, 2000 and 1999, respectively.
Acquisitions made during the preceding twelve months contributed $2.7 million of
the increase in net sales, while same store sales increased $3.0 million. Same
store sales increased 9.9% versus the same quarter last year. Gases and cylinder
revenue represented 60.7% of net sales for the three months ended December 31,
2000, with hard goods representing 39.3%. In comparison, net sales for the three
months ended December 31, 1999 reflected gases and cylinder revenue as 56.7% and
hard goods as 43.3%. The increase in gases and cylinder revenue as a percentage
of total net sales reflects, primarily, the improvement in same store sales and
the impact of the product mix of acquisitions made over the last twelve months.

   Gross profit, which excludes depreciation and amortization, increased 19.2%,
or $2.9 million, to $18.4 million from $15.5 million for the three months ended
December 31, 2000 and 1999, respectively. Acquisitions made during the last
twelve months contributed $1.4 million of the change with same stores gross
profit increasing $1.5 million. Gross profit as a percentage of net sales was
51.0% for the three months ended December 31, 2000, compared to 50.9% for the
three months ended December 31, 1999.

   Operating and administrative expenses increased 17.7%, or $1.8 million, to
$12.2 million from $10.4 million for the three months ended December 31, 2000
and 1999, respectively. Of this increase, $1.0 million was related to acquired
businesses while base business expenses increased $0.8 million. Operating and
administrative expenses as a percentage of sales were 34.0% for the three months
ended December 31, 2000, as compared to 34.4% for the same quarter in 1999.

   Depreciation and amortization expense increased $0.4 million for the three
months ended December 31, 2000 compared to the same period in 1999, reflecting
the increase from acquisitions made during the last twelve months.

   Interest expense increased $0.3 million for the quarter, reflecting primarily
the financing of acquisitions made during the last twelve months partially
offset by the Company's adoption of SFAS No.133, which reduced interest expense
by $0.1 million.

   Net earnings increased 26.7% to $1.2 million for the three months ended
December 31, 2000 compared to $0.9 million for the prior year quarter.


                                      -12-
<PAGE>   13



Comparison of Six Months Ended December 31, 2000 and 1999
---------------------------------------------------------

   Net sales increased 18.7%, or $10.6 million, to $67.5 million from $56.9
million for the six months ended December 31, 2000 and 1999, respectively.
Acquisitions made during the preceding twelve months contributed $5.8 million of
the increase in net sales, while same store sales increased $4.8 million. Same
store sales increased 8.4% versus the same period last year. Gases and cylinder
revenue represented 58.1% of net sales for the six months ended December 31,
2000, with hard goods representing 41.9%. In comparison, net sales for the six
months ended December 31, 1999 reflected gases and cylinder revenue as 54.8% and
hard goods as 45.2%. This change in sales mix reflects the effect of
acquisitions made during the preceding twelve months and the before mentioned
factors that affected same store sales.

   Gross profit, which excludes depreciation and amortization, increased 19.4%,
or $5.7 million, to $35.0 million from $29.3 million for the six months ended
December 31, 2000 and 1999, respectively. Acquisitions made during the preceding
twelve months contributed $3.2 million of the increase in gross profit, while
the gross profit in the base business increased $2.5 million. Gross profit as a
percentage of net sales was 51.9% for the six months ended December 31, 2000,
compared to 51.6% for the six months ended December 31, 1999. This change
reflected an increase in the proportion of gas and cylinder rent sales, which
have a higher gross profit margin as a percentage of net sales than hardgoods.

   Operating and administrative expenses increased 19.3%, or $3.8 million, to
$23.8 million from $20.0 million for the six months ended December 31, 2000 and
1999, respectively. Of this increase, $2.4 million was related to acquired
businesses and the remaining $1.4 million reflected increases on a same store
basis. Operating and administrative expenses as a percentage of sales were 35.3%
for the six months ended December 31, 2000 as compared to 35.1% for the same
period in 1999.

   Depreciation and amortization expense increased $0.7 million for the six
months ended December 31, 2000 compared to the same period in 1999, reflecting
the increase from acquisitions made during the last twelve months.

   Interest expense increased $0.5 million for the six months ended December 31,
2000, reflecting the financing of acquisitions made during the last twelve
months, partially offset by the Company's adoption of SFAS No. 133 which reduced
interest expense by $0.2 million.

   Net earnings increased 25.7% to $2.0 million for the six months ended
December 31, 2000 compared to $1.6 million for the same period last 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 December 31, 2000, the Company had working capital of approximately $16.0
million. Funds provided by operations for the six months ended December 31, 2000
were approximately $2.2 million. Funds used for investing activities were
approximately $5.5 million for the six months ended December 31, 2000,
consisting primarily of capital spending and an acquisition. Sources of funds
from financing activities for the six months ended December 31, 2000 were
approximately $3.1 million from net borrowings. The Company's cash balance
decreased $.2 million during the six months to $0.6 million.

   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 million, from the previous maximum borrowings
level of




                                      -13-
<PAGE>   14

$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 8.9% as of December 31, 2000. As of December 31, 2000, availability
under the revolving loan was approximately $34.8 million, with outstanding
borrowings of approximately $59.0 million and outstanding letters of credit of
approximately $6.2 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. The
Company is 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 December 31, 2000 was $11.1 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. Counter parties 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 December 31, 2000, the Company had $60.0 million in notional amounts
outstanding under interest rate swap agreements. These swaps have an average pay
rate of 6.0% versus a receive rate of 6.6%.

   The Company has previously entered into a put/call option agreement with an
independent distributor for the purchase of the distributor's business. This
option becomes exercisable beginning in the year 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 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.





                                      -14-
<PAGE>   15

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.

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.

SUBSEQUENT EVENTS

     On January 17, 2001, the Company acquired substantially all of the assets
of Burton C. French, Inc., a welding supply distributor having approximately
$1.5 million in annualized sales. This transaction was financed through the
Company's credit facility.

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, 2000. 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, 2000.

   There was no change to the composition of the Company's fixed and variable
rate long-term debt or interest rate swaps during the six months ended December
31, 2000. As of December 31, 2000 the Company's average pay rate for these swaps
was 6.0% compared to its average receipt rate of 6.6%.


                           PART II. OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)       Exhibits:

                  See the Exhibit Index on page 17.

(b)      Reports on Form 8-K:

                  No reports on Form 8-K were filed during the quarter.




                                      -15-
<PAGE>   16


                                   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


February 13, 2000                       /s/ Robert D. Scherich
                                        -----------------------------------
                                        Robert D. Scherich
                                        Chief Financial Officer





                                      -16-
<PAGE>   17


                                  EXHIBIT INDEX


Exhibit Number     Description
--------------     -----------

                   None


                                      -17-