<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 SEPTEMBER 30, 1997

[ ]      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) 232-1541
              (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 NOVEMBER 7, 1997
          -----                                 -------------------------------
 Common stock, $0.001 par value                             9,620,084
================================================================================




<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, 1997
              And September 30, 1997                                         3

              Condensed Consolidated Statements of Operations for the
              Three Months Ended September 30, 1996 and 1997                 5

              Condensed Consolidated Statements of Changes in
              Stockholders Equity for the Year Ended June 30, 1997 and
              the Three Months Ended September 30, 1997                      6

              Condensed Consolidated Statements of Cash Flows for the
              Three Months Ended September 30, 1996 and 1997                 7

              Notes to Condensed Consolidated Financial Statements           8

     ITEM 2   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           12


PART II       OTHER INFORMATION

     ITEM 6   Exhibits and Reports on Form 8-K                              16

     SIGNATURES                                                             17

     EXHIBIT INDEX                                                          18

</TABLE>



                                     - 2 -
<PAGE>   3
 





                          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,      September 30, 
                                                                         1997            1997
                                                                     ------------    ------------
                                                                                      (Unaudited)
<S>                                                                  <C>            <C>
CURRENT ASSETS:                                                      
    Cash and cash equivalents                                        $  1,551,949    $    706,263
    Accounts receivable, net of allowance for
       doubtful accounts of $200,750                                   10,299,100      11,355,453
    Inventory                                                           6,822,171       7,421,803
    Prepaids and other                                                  1,604,181       1,498,329
                                                                     ------------    ------------

                  Total current assets                                 20,277,401      20,981,848
                                                                     ------------    ------------

PROPERTY, PLANT AND EQUIPMENT:
    Land                                                                   70,842          70,842
    Buildings and improvements                                          3,578,332       3,870,513
    Equipment                                                          38,946,506      42,494,864
    Transportation equipment                                            6,670,016       6,979,442
    Furniture and fixtures                                              2,590,373       2,696,151
                                                                     ------------    ------------

                  Total property, plant and equipment                  51,856,069      56,111,812

    Accumulated depreciation                                          (21,786,762)    (22,911,590)
                                                                     ------------    ------------

                  Net property, plant and equipment                    30,069,307      33,200,222
                                                                     ------------    ------------

OTHER ASSETS:
    Intangibles, net of amortization of $3,666,793 
       and $4,068,463, respectively                                    17,130,777      24,832,944
    Deposits and other assets                                             328,610         315,909
                                                                     ------------    ------------

                  Total other assets                                   17,459,387      25,148,853
                                                                     ------------    ------------

TOTAL ASSETS                                                         $ 67,806,095    $ 79,330,923
                                                                     ============    ============
</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>

         
      LIABILITIES AND STOCKHOLDERS' EQUITY         June 30,    September 30,
                                                     1997          1997
                                                  -----------   -----------
                                                               (Unaudited)
<S>                                              <C>           <C> 

CURRENT LIABILITIES:
    Current maturities of long-term debt         $ 3,928,387   $ 6,173,051
    Accounts payable, trade                        2,984,658     3,828,655
    Accrued compensation and employee benefits     2,965,676     1,907,998
    Other current liabilities                        713,684     1,261,801
                                                 -----------   -----------

                  Total current liabilities       10,592,405    13,171,512

LONG-TERM DEBT, less current maturities           28,787,064    37,043,699

DEFERRED TAXES AND OTHER LONG-TERM LIABILITIES     5,317,031     5,181,766
                                                 -----------   -----------

                  Total liabilities               44,696,500    55,396,977
                                                 -----------   -----------

REDEEMABLE COMMON STOCK, par value, $.001
per share, issued 235,000 shares                   1,880,000     1,880,000

STOCKHOLDERS' EQUITY:
    Common stock, par value, $.001 per share-
    Authorized, 30,000,000 shares
    Issued, 9,385,084 shares                           9,385         9,385
    Paid-in-capital                               17,162,396    17,162,396
    Retained earnings                              4,057,814     4,882,165
                                                 -----------   -----------

                  Total stockholders' equity      21,229,595    22,053,946
                                                 -----------   -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $67,806,095   $79,330,923
                                                 ===========   ===========
</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
                                                                        September 30,
                                                                 -------------------------
                                                                    1996           1997
                                                                 -----------   -----------
<S>                                                             <C>           <C> 

NET SALES                                                        $14,513,655   $20,621,152
COST OF PRODUCTS SOLD, excluding depreciation 
   and amortization                                                6,331,144     9,474,469
                                                                 -----------   -----------
                  Gross profit                                     8,182,511    11,146,683
                                                                 -----------   -----------

EXPENSES:
    Operating and administrative                                   5,740,657     7,364,071
    Depreciation and amortization                                  1,373,458     1,898,901
                                                                 -----------   -----------
                  Total expenses                                   7,114,115     9,262,972
                                                                 -----------   -----------
                  Income from operations                           1,068,396     1,883,711


INTEREST EXPENSE                                                     414,814       571,167
OTHER INCOME (EXPENSE) NET                                            74,285        61,374
                                                                 -----------   -----------
EARNINGS BEFORE INCOME TAXES                                         727,867     1,373,918
                                                                 ===========
PROVISION FOR INCOME TAXES                                                         549,567
                                                                               -----------
NET EARNINGS                                                                   $   824,351
                                                                               ===========
NET EARNINGS PER SHARE                                                         $      0.09

WEIGHTED AVERAGE SHARES                                                          9,620,084

</TABLE>

<TABLE>
<CAPTION>

                                                                  Pro Forma
                                                                 Information
                                                                 (Unaudited)
                                                                 ----------
                                                                    1996
                                                                 ----------
<S>                                                              <C>  

EARNINGS BEFORE INCOME TAXES                                     $  727,867
PRO FORMA INCOME TAXES                                              291,147
                                                                 ----------
PRO FORMA NET EARNINGS                                           $  436,720
                                                                 ==========

PRO FORMA NET EARNINGS PER SHARE                                 $     0.06
PRO FORMA WEIGHTED AVERAGE SHARES                                 7,267,074

</TABLE>






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




                                     - 5 -
<PAGE>   6



                       VALLEY NATIONAL GASES INCORPORATED

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                      FOR THE YEAR ENDED JUNE 30, 1997 AND

                    THE THREE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
                     COMMON STOCK                  TREASURY STOCK
                -----------------------      -------------------------
                                                                                                                   Total
                                                                                Paid-in-       Retained         Stockholders'
                  Shares        Amount         Shares        Amount             Capital        Earnings            Equity
                ----------    ---------      ----------    -----------        ------------    -----------      --------------
<S>             <C>           <C>            <C>            <C>               <C>             <C>              <C>
BALANCE,
  June 30,
    1996        18,300,653    $ 18,301      11,300,653    $(3,705,000)        $    95,914     $ 19,961,877      $ 16,371,092

  Net loss              --          --              --             --                  --         (844,897)         (844,897)

  Issuance of
    common
    stock        2,218,000       2,218              --             --          15,730,059               --        15,732,277

  Issuance of
    stock
    pursuant to
    compensation
    agreements     267,084         267              --             --           2,136,323               --         2,136,590


  Conversion of
    debt to
    equity         135,000         135              --             --           1,079,865               --         1,080,000


  Reclassification
    of redeemable
    common stock
    outside of
    shareholders'
    equity        (235,000)       (235)             --             --          (1,879,765)              --        (1,880,000)


  Retirement of
    treasury
    stock      (11,300,653)    (11,301)    (11,300,653)     3,705,000                  --       (3,693,699)               --


  Dividends
    paid                --          --              --             --                  --      (11,365,467)      (11,365,467)
               -----------    --------     -----------    -----------         -----------     ------------      ------------

BALANCE,
  June 30,
    1997         9,385,084       9,385              --             --          17,162,396        4,057,814        21,229,595

  Net
    earnings            --          --              --             --                  --          824,351           824,351
               -----------    --------     -----------    -----------         -----------     ------------      ------------


BALANCE,
  September 30,
  1997
  (Unaudited)    9,385,084    $  9,385              --             --         $17,162,396     $  4,882,165      $ 22,053,946
               ===========    ========     ===========    ===========         ===========     ============      ============
</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>

                                                              Three Months Ended
                                                                September 30,
                                                          --------------------------
                                                             1996           1997
                                                          -----------    -----------
<S>                                                      <C>            <C> 

NET CASH PROVIDED BY OPERATING ACTIVITIES                 $   331,713    $ 2,095,884
                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from disposal of assets                            7,000          8,150
    Purchases of property and equipment                      (445,649)    (1,219,416)
    Business acquisitions, net of cash acquired              (450,611)    (8,724,000)
                                                          -----------    -----------

                  Net cash used by investing activities
                                                             (889,260)    (9,935,266)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings                                       --      8,673,300
    Principal payments on loans                              (713,129)    (1,679,604)
    Dividends paid                                           (377,864)            --
                                                          -----------    -----------
                     Net cash (used) provided by
                        financing activities               (1,090,993)     6,993,696
                                                          -----------    -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                    (1,648,540)      (845,686)

CASH AND CASH EQUIVALENTS, beginning of period              4,548,546      1,551,949
                                                          -----------    -----------

CASH AND CASH EQUIVALENTS, end of period                  $ 2,900,006    $   706,263
                                                          ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash payments for interest                            $   414,814    $   474,182
                                                          ===========    ===========

</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, 1997.

2. 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:
<TABLE>
<CAPTION>

                             June 30,           September 30,
                               1997                 1997  
                            ----------          ------------
                                                (Unaudited)
    <S>                     <C>                 <C> 

     Hardgoods              $6,043,962           $6,729,425
     Gases                     778,209              692,378
                            ----------           ----------

                            $6,822,171           $7,421,803
                            ==========           ==========
</TABLE>

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 quarter ended September 30, 1997, the Company purchased three
businesses. The largest of these acquisitions and their effective dates included
Doansco, Inc. (July, 1997) and Goss Brothers Welding Supply, Inc. (September,
1997).




                                     - 8 -
<PAGE>   9



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

                                                             Three Months 
                                                                Ended
                                                             September 30, 
                                                                 1997
                                                             ------------
                                                              (Unaudited)
<S>                                                           <C>
          Cash paid                                           $ 8,730,108
          Notes payable and capital leases assumed                550,860
          Other liabilities assumed and acquisition costs       3,487,057
                                                              -----------
                                                                         
          Total purchase price allocated to assets acquired              
                                                              $12,768,025
                                                              ===========
                                                                         
</TABLE>

On October 10, 1996, the Company purchased substantially all of the assets of
Weldco Inc. (Weldco) pursuant to a Purchase and Sale Agreement (the Weldco
Purchase Agreement) for approximately $11.1 million. Approximately $7.9 million
of the purchase price was paid by promissory notes from the Company. In
conjunction with the Company's initial public offering, Weldco shareholders
converted a portion of the Company's promissory notes to shares of the Company's
common stock at the initial public offering price. The Company prepaid
$1,720,000 under the Company's promissory notes and issued 135,000 shares of
common stock to Weldco shareholders immediately prior to the closing of the
Offering in exchange for the cancellation of indebtedness in the amount of
$2,800,000. Additionally, certain Weldco shareholders purchased 100,000 shares
of common stock in the Offering. The Weldco Purchase Agreement further grants
Weldco shareholders the right to cause the Company to purchase the 235,000
shares of common stock issued to Weldco shareholders pursuant to the conversion
of indebtedness for a period of three years following the closing of the
Offering at the initial public offering price plus interest from the date of
issuance at the rate of 6.6% per annum. Accordingly, such shares will not be
classified as shareholders' equity. The Company's payment obligation is secured
by a letter of credit.




                                     - 9 -
<PAGE>   10



4. LONG-TERM DEBT:

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

                                                   June 30,       September 30,
                                                     1997             1997
                                                  ------------    ------------
                                                                  (Unaudited)
<S>                                               <C>            <C>
Revolving note, interest at LIBOR plus 1.75%
  payable monthly through October 1999 and
  October 2000, respectively. Secured by the
  assets of the Company                           $  9,075,154    $ 13,298,914

Term note, interest at LIBOR plus 1.75% payable
  monthly through October 2003.  Secured by the
  assets of the Company                             11,607,143      15,350,000

Note payable, interest at 6.6% payable annually
  through October 2003. Secured by certain
  assets of the Company                              4,781,521       4,781,521

Individuals and corporations, mortgages and
  notes, interest at 2.978% to 10.00%, payable
  at various dates through 2010                      7,456,419       9,984,921
                                                  ------------    ------------

                                                    32,920,237      43,415,356
                  Original issue discount             (204,786)       (198,606)
                  Current maturities                (3,928,387)     (6,173,051)
                                                  ------------    ------------

Total long-term debt                              $ 28,787,064    $ 37,043,699
                                                  ============    ============
</TABLE>


Prime rate was 8.5% and LIBOR was 5.6875% at September 30, 1997.

On October 4, 1996, the Company executed a three year revolving credit agreement
with Bank One for the purpose of refinancing the then existing revolving credit
agreement with NationsBank and to provide additional acquisition capital. This
agreement provided for a term note of $13,000,000 at a variable interest rate
based upon prime or LIBOR, depending on the Company's funded debt to EBITDA
ratio, payable monthly through September of 2003. The agreement also provided
for a revolving note with maximum borrowings (including letters of credit) of
$25,000,000 at a variable interest rate equal to that of the term note payable
monthly through September of 1999. A commitment fee of $32,500 was paid upon
acceptance of the agreement. These notes are secured by the Company's accounts
receivable, equipment, inventory, and general intangibles, and the proceeds
thereof. The agreement also contains various financial covenants including
minimum fixed charge coverage, maximum of funded debt to EBITDA, and minimum net
worth level.

On September 29, 1997 the Company entered into an amended and restated revolving
credit agreement with Bank One which increased the term note to $15,350,000 and
the maximum revolving note borrowings to $34,250,000. The maturity of the 
revolving note was also extended to October 2000. The Company is not required
to make principal payments on outstanding balances of the revolving loan as
long as certain covenants are satisfied. The Company pays a fee for the unused
portion of the revolving loan. 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.




                                     - 10 -
<PAGE>   11



5. SUBSEQUENT EVENTS:

On October 31, 1997 the Company entered into an agreement for the purchase of
all of the stock of an industrial gas and welding distributor having
approximately $2 million in annualized sales. The Company expects this
transaction to close within 30 days and to be financed with borrowings under the
credit facility and notes with the Seller.

6. PRO FORMA INFORMATION (UNAUDITED):

The pro forma adjustments for income taxes included in the accompanying
condensed consolidated statement of operations for the three months ended
September 30, 1996 are based upon the statutory rates in effect for C
Corporations during the periods presented. Pro forma earnings per share were
calculated by dividing pro forma earnings by the weighted average shares
outstanding for the period. The weighted average number of shares outstanding
used to calculate the pro forma net income per share is based on the historical
weighted average number of shares outstanding using an offering price of $8 per
share.




                                     - 11 -
<PAGE>   12



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 $80.0 million for the last twelve
months. In fiscal 1997, gases accounted for approximately 42% of net sales,
welding equipment and supplies accounted for approximately 44% of net sales, and
cylinder and tank rental accounted for approximately 14% of net sales.

The Company believes it has been successful in executing its strategy of growth
through acquisitions, having completed 28 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.

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.



                                     - 12 -
<PAGE>   13




Until April 10, 1997, the Company was treated as an S Corporation for federal
and state income tax purposes. As a result, the Company was not subject to
federal and state income taxes. The Company terminated its S Corporation
election in connection with its initial public offering of stock and become a C
Corporation. As a result of termination of the S Corporation election, the
Company recognized $3.9 million of deferred income taxes in the fourth quarter
of fiscal year 1997.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

Net sales increased 42.1%, or $6.1 million, to $20.6 million from $14.5 million
for the three months ended September 30, 1997 and 1996, respectively.
Acquisitions made during the preceding twelve months contributed $5.1 million of
the increase in net sales, while same store growth contributed $1.0 million of
the increase. Same store sales increased 6.6% versus the same quarter last year.
Increased propane sales represented 2.5% growth and all other products reflected
4.1% growth over the same quarter last year on a same store basis. Gases and
cylinder revenue represented 52.8% of net sales for the three months ended
September 30, 1997, with hard goods representing 47.2%. In comparison, net sales
for the three months ended September 30, 1996 reflected gases and cylinder
revenue as 58.0% and hard goods as 42.0%. This change in sales mix reflects the
effect of acquisitions made during the preceding twelve months.

Gross profit, which excludes depreciation and amortization, increased 36.2%, or
$3.0 million, to $11.1 million from $8.1 million for the three months ended
September 30, 1997 and 1996, respectively. Acquisitions made during the
preceding twelve months contributed $2.6 million of the increase in gross
profit, while the base business contributed $0.4 million of the increase. Gross
profit as a percentage of net sales was 54.1% for the three months ended
September 30, 1997, compared to 56.4% for the three months ended September 30,
1996. This change reflected an increase in the proportion of hard good sales,
which have a lower gross profit margin as a percentage of net sales than gases.

Operating and administrative expenses increased 28.3%, or $1.6 million, to $7.4
million from $5.7 million for the three months ended September 30, 1997 and
1996, respectively. Of this increase, $1.4 million was related to acquired
businesses and the remaining $0.2 million reflected increases on a same store
basis. Operating and administrative expenses as a percentage of sales decreased
to 35.7% for the three months ended September 30, 1997, as compared to 39.6% for
the same quarter in 1996, reflecting the addition of operating expenses related
to acquired businesses as a percentage of sales at a rate lower than the Company
average before the acquisitions were made.

Depreciation and amortization expense increased $0.5 million for the three
months ended September 30, 1997 compared to the same period in 1996, primarily
as a result of acquisitions made during the last twelve months.

Interest expense increased $0.2 million for the quarter, reflecting the
financing of acquisitions made during the last twelve months, partially reduced
by lower interest rates.

Net earnings increased 88.8%, or $0.4 million, to $0.8 million from pro forma
net earnings $0.4 million for the three months ended September 30, 1997 and
1996, respectively.




                                     - 13 -
<PAGE>   14



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 September 30, 1997, the Company had working capital of approximately $7.8
million. Funds provided by operations for the three months ended September 30,
1997 were approximately $2.1 million. Funds used for investing activities were
approximately $9.9 million for the three months ended September 30, 1997,
consisting primarily of capital spending and financing for two acquisitions.
Sources of funds from financing activities for the three months ended September
30, 1997 were approximately $7.0 million from net borrowings. The company's cash
balance decreased $0.8 million during the quarter as $0.7 million in voluntary
debt reduction was made.

On September 29, 1997, the Company entered into an amended and restated
revolving credit agreement totaling $49.6 million, consisting of a $15.4 million
term loan, which matures in six years and is amortized in equal monthly
payments, and a $34.2 million revolving loan with a $15.0 million sublimit for
letters of credit, which matures in October 2000. 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 7.4%
as of September 30, 1997. The Company pays a fee for the unused portion of the
revolving loan. As of September 30, 1997, availability under the revolving loan
was approximately $13.2 million, with outstanding borrowings of approximately
$13.3 million and outstanding letters of credit of approximately $7.7 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. 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 3.0% to 10.0%
per annum, and maturities through 2010. The outstanding balance of these notes
as of September 30, 1997 was $14.6 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.

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.




                                     - 14 -
<PAGE>   15



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 October 31, 1997 the Company entered into an agreement for the purchase of
all of the stock of an industrial gas and welding distributor having
approximately $2 million in annualized sales. The Company expects this
transaction to close within 30 days and to be financed with borrowings under the
credit facility and notes with the Seller.


RECENT ACCOUNTING PRONOUNCEMENTS

Financial Accounting Standard Board Statement No. 128, "Earnings Per Share"
(SFAS No. 128) was issued in February 1997 and is effective for periods ending
after December 15, 1997. This statement, upon adoption, will require all
prior-period earnings per share (EPS) data to be restated, to conform to the
provisions of the statement. This statement's objective is to simplify the
computation of EPS and to make the U.S. standard for EPS computations more
compatible with that of the International Accounting Standards Committee. The
Company will adopt SFAS No. 128 in fiscal 1998 and does not anticipate that the
statement will have a significant impact on its reported EPS.

Financial Accounting Standard Board Statement No. 129, "Disclosure of
Information about Capital Structure" (SFAS No. 129) was issued in February 1997
and is effective for periods ending after December 15, 1997. This statement,
upon adoption, will require all companies to provide specific disclosure
regarding the entities capital structure. SFAS No. 129 will specify the
disclosures, for all companies, including descriptions of the securities
comprising the capital structure and the contractual rights of the holders of
such securities. The Company will adopt SFAS No. 129 in fiscal 1998 and does not
anticipate that the statement will have a significant impact on its disclosure.







                                     - 15 -
<PAGE>   16




                           PART II. OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

         See the Exhibit Index on page 18.

     (b) Reports on Form 8-K:

         Form 8-K dated September 19, 1997





                                     - 16 -
<PAGE>   17



                                   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



November 12, 1997                          /S/ ROBERT D. SCHERICH
                                           ----------------------------------
                                           Robert D. Scherich
                                           Chief Financial Officer






                                     - 17 -
<PAGE>   18



                                  EXHIBIT INDEX


Exhibit Number      Description
--------------      ----------------------------------------------------------
3.1                 Articles of Amendment of the Company, incorporated by
                    reference to Exhibit 3.1 to the Company's Registration
                    Statement on Form S-1 under the Securities Act of 1933, as
                    amended, (File No. 333-19973)

3.2                 Bylaws of the Company, incorporated by reference to
                    Exhibit 3.2 to the Company's Registration Statement on Form
                    S-1 under the Securities Act of 1933, as amended, (File No.
                    333-19973)

10.1                Amended and Restated Credit Agreement dated 
                    September 29, 1997 between the Company and BankOne, 
                    Indiana NA

11.1                Calculation of Earnings Per Share

27.1                Financial Data Schedule (provided for the information of 
                    the U.S. Securities and Exchange Commission only)





                                     - 18 -