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, 1997
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 change
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.
<PAGE>Management's Discussion
Operating revenues for the quarter ending March 31, 1997 were $5,987,344 or
364%
more than the quarter ending September 30, 1996 and $1,339,220 or 15% less
than the
quarter ending March 31, 1996.
Degree days for the quarter ending March 31, 1997 were 3,032 or 5228% more
than
the quarter ending September 30, 1996 and 440 or 12% less than the quarter
ending
March 31, 1996. 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 03/31/97
Quarter Ending 03/31/97 3,455,554
Quarter Ending 9/30/96 876,534 (2,579,020)
Quarter Ending 03/31/96 3,611,230 155,676
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
$5,016,885
or 254% more than the quarter ending September 30, 1996 and $1,401,942 or 17%
less
than the quarter ending March 31, 1996.
Net Income was $976,755 more than the quarter ended September 30, 1996 and
$30,952 less than the quarter ending March 31, 1996.
Since the Company's business is seasonal by quarters, results for the first
six
months of fiscal year 1997 should not be used as an indication of what results
for
the full twelve months of fiscal year 1997 may be.
In September 1995 the Company purchased the assets of a local gas
distribution
system, 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,
did not
have a significant impact on 1995, but contributed in excess of $150,000 to
gross
margin (revenues less gas cost) for the period ended September 30, 1996.
In December, 1994 the New York Public Service Commission instituted a
proceeding
to address issues related to the emerging competitive natural gas market.
This
proceeding was 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. New tariff filings were
approved
and became effective September 1, 1996. The Company considers this a
transitional
step towards full unbundling of services with future changes made as
circumstances
warrant.
The Company received approval for a rate increase from the New York State
Public
Service Commission of approximately $124,000 in revenues with an effective
date of
September 1, 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, 1997.
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, 1997.
<PAGE>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 April 30, 1997 THOMAS K. BARRY
Thomas K. Barry, Chairman of
the Board, President and C.E.O.
Date April 30, 1997 GARY K. EARLEY
Gary K. Earley, Treasurer
<PAGE> CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
FORM 10 QSB
FOR QUARTER ENDED SIX MONTHS ENDED
March 31, 1997 March 31, 1996 March 31, 1997 March 31, 1996
---------------------- ---------------------- ---------------------
- ---------------------
Operating Revenues $7,630,103 $ 8,969,323
$12,515,296 $13,464,627
Cost and Expense
Operating Expenses 6,445,749 7,745,754
10,813,512 11,708,782
Interest Expense 219,375 219,988
405,675 466,197
Federal Income Tax 324,227
424,495 411,789 507,950
Other Deductions Net 577
1,633 1,214 3,576
------------- ------------------
- ---------------- ---------------
Total Costs and Expenses 6,989,928
8,391,870 11,677,190 12,686,505
------------- -------------
- --------------- --------------
Operating Income 640,175 577,453
838,106 778,122
Other Income 100
89,259 888 102,935
Corning Natural Gas Appliance Corp.:
Operating Revenues 562,171
541,005 1,254,792 1,146,524
Depreciation 60,754
58,251 122,217 116,693
Other Operating Expense 426,734
383,771 929,822 789,848
Federal Income Tax 25,132
44,917 72,160 88,574
------------ ---------------
- --------------- --------------
Net Income of Appliance Corp. 49,551
54,066 130,593 151,409
-----------
- -------------- --------------- --------------
Net Income $ 689,826 $
720,778 $ 969,587 $ 1,032,466
========== =========
========= ==========
Earnings Per Share $ 1.50 $
1.567 $ 2.108 $ 2.244
Dividends Per Share $ .32
$ .315 $ .64 $ .63
Total Dividends Paid $ 147,200 $
144,900 $ 294,400 $ 289,801
Shares of common stock outstanding were 460,000 at March 31, 1997
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 Management's Discussion & Analysis on Page 5.
<PAGE> CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FORM 10-QSB - UNAUDITED
MARCH 31, 1997 MARCH 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 969,587 $ 720,778
Adjustments to Reconcile Net Income
to Net Cash
Provided by Operating Activities:
Depreciation 360,049 179,535
Allowance for Funds Used During Const. 0 0
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (1,361,094) (1,561,916)
Materials, Supplies & Appliance Inventory
724,573 674,721
Other Deferred Charges 984,555
1,795,752
Prepaid and Other Assets
306,636 92,325
Increase (Decrease) in:
Accounts Payable
270,285 (288,515)
Accrued General Taxes
53,765 195,310
Accrued Federal Income Tax
312,023 316,281
Deferred Federal Income Tax
(25,682) (174,492)
Other Liabilities and Deferred
Credits
(693,603) ( 64,198)
Net Cash Provided (used) by
Operating Activities 1,901,094
1,885,581
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures
(462,461) (157,934)
Allowance for Funds Used During
Const.
0 0
Net Cash Used in Investing
Activities
(462,261) (157,934)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under
Line-of-Credit Agreement
125,000 1,515,000
Dividends Paid (294,400) (144,900)
Repayment of Long-Term Debt
(100,000) 0
Restricted Funds used for
Qualified
Additions 0
0
Common Stock Issued
0 0
Net Cash Provided (used in)
Financing Activities
(519,400) (1,659,900)
NET INC. (DEC.) IN CASH AND CASH
EQUIV. 919,433 67,747
CASH AND CASH EQUIV. AT BEG. OF PERIOD
180,595 405,806
CASH AND CASH EQUIV. AT END OF PERIOD $
1,100,028 $ 473,553
======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid During the Year for:
Interest (Net of Amount
Capitalized) $
440,027 $ 144,580
Income Taxes $
86,000 $ 253,126
<PAGE> CORNING NATURAL GAS CORPORATION
Consolidated Balance Sheet At March 31, 1997
Form 10-QSB
Unaudited
Assets 03/31/97 09/30/96
Gas Utility Plant $19,993,380$19,616,872
Non-Utility-Principally Rented Gas App.
2,512,087 2,451,396
22,445,467 22,068,268
Less: Accum. Provision for Depreciation
(8,178,131) (7,846,128)
$14,267,336 $14,222,140
Current Assets:
Cash and Equivalents 1,100,028 180,595
Restricted Short-Term Investments
0 0
Accounts Receivable 2,150,771 789,677
Materials, Supplies and Inventories
1,275,556 2,000,129
Prepayments and Other 567,012 873,648
Total Current Assets
5,093,367 3,844,049
Non-Current Assets
Def. Tax Assets 588,868 257,000
Def. Debits - Acctg. for Income Taxes
670,466 1 ,016,661
Deferred Debits 233,157 1,217,712
Total Non-Current Assets 1,492,491 2,491,373
Total Assets $20,853,194 $20,557,562
=========== ============
Capitalization & Liabilities
Capitalization:
Common Stock 2,300,000 2,300,000
Premium on Capital Stock - Common
653,346 653,346
Retained Earnings
2,869,569 2,194,382
5,822,915 5,147,728
Long Term Debt 6,200,000
6,300,000
Total Capitalization 12,022,915 11,447,728
Current Liabilities:
Short Term Notes Payable 2,600,000
2,725,000
Accounts Payable 1,416,475 1,146,190
Customer Deposits and Accrued
Interest 220,422 735,398
Accrued Federal Income Tax
312,023 0
Other Accrued Taxes 195,363
141,598
Current Maturities of Long Term
Debt 100,000 100,000
Other Current and Accrued
Liabilities 418,548
884,710
Total Current Liabilities
5,262,831 5,732,896
Accumulated Deferred FIT 2,577,204 2,617,213
Reserves and Other Liabilities
990,244 759,725
Total Liab. and
Capitalization $
20,853,194 $ 20,557,562
========== ==========
See Management's Discussion & Analysis on Page 5
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