SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission File Number 0-643
Corning Natural Gas Corporation
(Exact name of registrant as specified in its charter)
New York 16-0397420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
330 W. William St,. P.O. Box 58, Corning, New York 14830
607-936-3755
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Sections 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
There were 460,000 shares of Common Stock outstanding at the
end of the quarter. There is only one class of Common Stock and
no Preference Stock outstanding.
Management's Discussion
Operating revenues for the quarter ending March 31, 1996
were $4,474,020 or 100% more than the quarter ending December 31,
1995 and $195,147 or 2% more than the quarter ending March 31,
1995.
Degree days for the quarter ending March 31, 1996 were
1,031 or 41% more than the quarter ending December 31, 1995 and
462 or 15% less than the quarter ending March 31, 1995. Since
much of the Company's sales are dependent on weather conditions,
the effects of the changes in degree days are reflected in the
total MCF (thousand Cubic feet) deliveries.
Increase (Decrease)
From Quarter Ending
Actual MCF Deliveries 3/31/96
Quarter Ending 03/31/96 3,611,230
Quarter Ending 12/31/95 2,200,305 (1,410,925)
Quarter Ending 03/31/95 3,139,622 ( 471,608)
MCF deliveries include transportation of customer owned gas
for specific end use customers for which the Company receives a
fee equal to its normal markup for transporting the gas.
Operating expenses, made up largely of the cost of purchased
gas were $3,779,725 or 95% more than the quarter ending December
31, 1995 and $80,892 or 1% more than the quarter ending March 31,
1995.
Net Income was $409,089 or 131% more than the quarter ended
December 31, 1995 and $111,507 or 18% more than the quarter
ending March 31, 1995.
Since the Company's business is seasonal by quarters,
results for the first three months of 1996 should not be used as
an indication of what results for the full twelve months of 1996
may be.
In October, 1993, the Company commenced operating in the
deregulated environment brought on by the implementation of
Federal Energy Regulatory Commission Order 636. The Company now
makes purchasing decisions at the wellhead and must arrange and
monitor the delivery of gas through the national pipeline
network. This is a daily and even an hourly process. The
Company's gas supply portfolio is now comprised of numerous
contracts, short-term in length, ranging from 3 days to 2 years.
This is in stark contrast to the traditional long-term 20 year
contracts. Producer spot market prices change daily and escalate
during periods of peak demand. Another responsibility of the
Company under deregulation is the management of much greater
levels of storage gas. The Company held 451,317 Mcf in storage
at December 31, 1995 valued at $838,400.
In September 1995 the Company purchased the assets of a
local gas distribution company, Finger Lakes Gas Company, through
the Federal Bankruptcy Court. Finger Lakes Gas served customers
in the Hammondsport, NY area and had a customer base of
approximately 320 customers. The Company was able to purchase
this all plastic system with a bid of $560,000. The Company was
pleased to purchase these assets that originally cost over $1.5
million to construct for its relatively low bid. The nearly new,
all plastic, system was already connected and serving 320
customers with a potential to add 200 more in the near future.
On a per customer basis, this represents a very low investment.
The capital to purchase these assets was obtained through short
term debt. The Company has not found it necessary to apply for
an increase in rates on this part of our system which means the
original rates made effective in 1990 remain in effect six years
later.
Shortly after the Company took possession of the system,
Mercury Aircraft, Inc. announced it would purchase the former
Taylor Wine Company facilities and centralize their other plants.
The reopening of this major facility will most certainly
contribute toward the stability and future viability of the new
gas system which is now part of the Company. The former Finger
Lakes Gas Company's operations, which did not have a significant
impact on 1995, are included in the consolidated results from the
acquisition date.
In December, 1994 the New York Public Service Commission
instituted a proceeding to address issues related to the merging
competitive natural gas market. This proceeding is intended to
provide a framework whereby access to facilities on upstream
pipelines made available by FERC Order 636 would be available to
end use customers on the Local Distribution Company level. The
Company made the required filings and estimates the new tariff
filings to be approved and become effective May 1, 1996. The
Company considers this a transitional step towards full
unbundling of services with future changes made as circumstances
warrant.
The Company currently has a rate application before the New
York State Public Service Commission requesting an increase of
approximately 2.5% of revenues. Negotiations are on going and
the Company expects approval of the application and the ability
to implement the new rates in 1996.
Internal generation of funds should be sufficient to meet
the needs of the Company coupled with some intermittent short-
term borrowings.
There has been no change in independent public accountants.
The Company has not filed any reports on Form 8-K for the quarter
ended March 31, 1996.
The information furnished herewith reflects all adjustments
which are in the opinion of management necessary to a fair
statement of the results for the period. Certain information and
footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to SEC rules
and regulations, although the Company believes the disclosures
which are made are adequate to make the information presented not
misleading.
The condensed financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's latest annual report on Form 10-KSB.
The statements contained herein have not been examined or
certified by a firm of certified public accountants.
There were no sales of unregistered securities (debt or
equity) during the fiscal quarter ending March 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORNING NATURAL GAS CORPORATION
(Registrant)
Date May 14, 1996 THOMAS K. BARRY
Thomas K. Barry, Chairman of
the Board, President and
C.E.O.
Date May 14, 1996 GARY K. EARLEY
Gary K. Earley, Treasurer
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORNING NATURAL GAS CORPORATION
(Registrant)
Date May 14, 1996
Thomas K. Barry, Chairman of
the Board, President and
C.E.O.
Date May 14, 1996
FOR QUARTER ENDED
May 31, 1996 May 31, 1995
Operating Revenues $ 8,969,323 $ 6,948,702
Cost and Expense
Operating Expenses 7,745,754 5,878,361
Interest Expense 219,988 222,546
Federal Income Tax 424,495 302,204
Other Deductions Net 1,633 2,954
Total Costs and Expenses 8,391,870 6,406,065
========= =========
Operating Income 577,453 542,637
Other Income 89,259 7,866
Corning Natural Gas Appl. Corp.
Operating Revenues 541,005 470,542
Depreciation 58,251 56,911
Other Operating Expenses 383,771 350,915
Federal Income Tax 44,917 25,244
Net Income of Appl. Corp. 54,066 37,472
Net Income $ 720,778 $ 587,875
========= =========
Earnings Per Share $ 1.567 $ 1.278
Dividends Per Share $ .315 .31
Total Dividends Paid $ 144,900 142,600
Shares of common stock outstanding were 460,000 at March 31, 1996.
Earnings per share = Net Income as shown above divided by
460,000 shares. Dividends per share = Dividends paid divided by
shares outstanding at the time.
See Mgmt's Discussion & Analysis on Page 5.
CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FORM 10-QSB - UNAUDITED
May 31, 1996 May 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 720,778 587,975
Adjustments to Reconcile Net
Income to Net Cash
Provided by Operating Activities:
Depreciation 179,535 170,147
All. for Funds Used During Const. 0 0
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (1,561,916) ( 641,653)
Materials, Supplies & Appliance
Inventory 674,721 667,829
Other Deferred Charges 1,795,752 2,352,536
Prepaid and Other Assets 92,325 160,605
Increase (Decrease) in:
Accounts Payable (288,515) (171,295)
Accrued General Taxes 195,310 86,906
Accrued Federal Income Tax 316,281 149,509
Deferred Federal Income Tax (174,492) (209,452)
Other Liabilities and Deferred
Credits ( 64,198) ( 588,273)
Net Cash Provided (used) by
Operating Activities 1,885,581 2,564,834
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures ( 157,934) (112,188)
Allowance for Funds Used During
Construction 0 0
Net Cash Used in Investing Activities( 157,934) (112,188)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under
Line-of-Credit Agreement (1,515,000) (2,045,000)
Dividends Paid (144,900) (142,600)
Repayment of Long-Term Debt 0 0
Restricted Funds used for
Qualified Additions 0 0
Common Stock Issued 0 0
Net Cash Provided (Used In)
Financing Activities (1,659,900) (2,187,600)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 67,747 265,046
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 405,806 183,086
CASH AND CASH EQUIVALENTS AT END OF PERIOD 473,553 448,132
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During The Year For:
Interest (Net of Amount Capitalized) 144,580 150,075
Income Taxes 253,126 11,000
CORNING NATURAL GAS CORPORATION
Consolidated Balance Sheet At March 31, 1996
Assets 03/31/96 12/31/95
Gas Utility Plant $ 19,438,133 $19,309,418
Non-Utility Principally Rented Gas Appl. 2,378,440 2,366,834
21,816,573 21,675,252
Less: Accum. Provision for Depreciation (7,681,140) (7,519,218)
$ 14,135,433 $14,156,034
Current Assets:
Cash and Equivalents 473,553 405,806
Restricted Short-Term Investments 0 0
Accounts Receivable 3,380,122 1,818,206
Materials, Supplies and Inventories 764,123 1,438,844
Prepayments and Other 399,038 491,363
Total Current Assets 5,016,836 4,154,219
Non-Current Assets:
Def. Tax Assets 591,114 1,016,661
Def. Debits - Acctg. for Income Taxes 659,707 315,000
Deferred Debits 374,049 2,169,801
Total Non-Current Assets 1,624,870 3,501,462
Total Assets $ 20,777,139 $21,812,715
========== ==========
Capitalization and Liabilities
Capitalization:
Common Stock 2,300,000 2,300,000
Premium on Capital Stock-Common 653,346 653,346
Retained Earnings 2,721,575 2,145,697
5,674,921 5,099,043
Long Term Debt 6,300,000 6,300,000
Total Capitalization 11,974,921 11,399,043
Current Liabilities:
Short Term Notes Payable 2,300,000 3,815,000
Accounts Payable 1,332,123 1,620,638
Customer Deposits and Accrued Int. 196,813 192,213
Accrued Federal Income Tax 407,344 91,063
Other Accrued Taxes 302,897 107,587
Current Maturities of Long Term Debt 100,000 100,000
Other Current and Accrued Liabilities 510,441 343,498
Total Current Liabilities 5,149,618 6,269,999
Accrued Deferred FIT 2,648,071 2,963,403
Reserves and Other Liabilities 1,004,529 1,240,220
Total Liabilities and Capitalization $ 20,777,139 $21,812,715
========== ==========
See Management's Discussion & Analysis on Page 5
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