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 December 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 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.
Management's Discussion
Operating revenues for the quarter ending December 31, 1996 were $3,242,434
or 197% more than the quarter ending September 30, 1996 and $389,889 or 8% more
than the quarter ending December 31, 1995.
Degree days for the quarter ending December 31, 1996 were 2,362 or 4072%
more than the quarter ending September 30, 1996 and 79 or 3% less than the
quarter ending December 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 12/31/96
Quarter Ending 12/31/96 2,126,330
Quarter Ending 9/30/96 876,534 (1,249,796)
Quarter Ending 12/31/95 2,200,305 73,975
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
$2,714,219 or 138% more than the quarter ending September 30, 1996 and $392,627
or 9% more than the quarter ending December 31, 1995.
Net Income was $566,691 or 297% more than the quarter ended September 30,
1996 and $31,926 or 10% more than the quarter ending December 31, 1995.
Since the Company's business is seasonal by quarters, results for the first
three 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 December 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 December 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 January 30, 1997 THOMAS K. BARRY
Thomas K. Barry, Chairman of
the Board, President and C.E.O.
Date January 30, 1997 GARY K. EARLEY
Gary K. Earley, Treasurer
CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
FORM 10 QSB
FOR QUARTER ENDED
-----------------
Dec. 31, 1996 Dec. 31, 1995
------------- -------------
Operating Revenues $ 4,885,193 $ 4,495,304
Cost and Expense
Operating Expenses 4,367,763 3,963,028
Interest Expense 231,300 246,209
Federal Income Tax 87,562 83,455
Other Deductions Net 637 1,943
----------- -----------
Total Costs and Expenses 4,687,262 4,294,635
----------- -----------
Operating Income 197,931 200,669
Other Income 789 13,676
Corning Natural Gas Appliance Corp.:
Operating Revenues 692,621 605,519
Depreciation 61,463 58,442
Other Operating Expenses 503,088 406,077
Federal Income Tax 47,028 43,657
----------- -----------
Net Income of Appliance Corp. 81,042 97,343
----------- -----------
Net Income $ 279,762 $ 311,688
=========== ===========
Earnings Per Share $ 0.608 $ 0.678
Dividends Per Share $ 0.64 $ 0.315
Total Dividends Paid $ 147,200 $ 144,900
Shares of common stock outstanding were 460,000 at December 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 Management's Discussion & Analysis on Page 5.
CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FORM 10-QSB - UNAUDITED
DEC. 31, 1996 DEC. 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 279,762 311,689
Adjustments to Reconcile Net Income
to Net Cash
Provided by Operating Activities:
Depreciation 180,279 173,066
Allowance for Funds Used During Const. 0 0
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (1,181,052) (1,697,098)
Materials, Supplies & Appliance Inventory 232,174 478,564
Other Deferred Charges 311,465 (284,438)
Prepaid and Other Assets 494,035 (406,755)
Increase (Decrease) in:
Accounts Payable 1,266,475 362,605
Accrued General Taxes (10,232) (132,122)
Accrued Federal Income Tax (51,603) 404,730
Deferred Federal Income Tax 57,087 103,475
Other Liabilities and Deferred Credits (965,395) 381,450
Net Cash Provided (used) by
Operating Activities 612,995 (304,834)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (228,135) (221,231)
Allowance for Funds Used During Const. 0 0
Net Cash Used in Investing Activities (228,135) (221,231)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under
Line-of-Credit Agreement 715,000 550,000
Dividends Paid (294,400) (144,901)
Repayment of Long-Term Debt (100,000) (100,000)
Restricted Funds used for
Qualified Additions 0 0
Common Stock Issued 0 0
Net Cash Provided (used in)
Financing Activities 320,600 305,099
NET INC. (DEC.) IN CASH AND CASH EQUIV. 705,460 (220,966)
CASH AND CASH EQUIV. AT BEG. OF PERIOD 180,595 363,871
CASH AND CASH EQUIV. AT END OF PERIOD $ 886,055 $ 142,905
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid During the Year for:
Interest (Net of Amount Capitalized) $ 296,588 $ 314,561
Income Taxes $ 0 $ 83,500
CORNING NATURAL GAS CORPORATION
Consolidated Balance Sheet At December 31, 1996
Form 10-QSB
Unaudited
Assets 12/31/96 09/30/96
Gas Utility Plant $19,803,085 $19,616,872
Non-Utility-Principally Rented Gas App. 2,476,294 2,451,396
22,279,379 22,068,268
Less: Accum. Provision for Depreciation (8,009,383) (7,846,128)
$14,269,996 $14,222,140
Current Assets:
Cash and Equivalents 886,055 180,595
Restricted Short-Term Investments 0 0
Accounts Receivable 1,970,729 789,677
Materials, Supplies and Inventories 1,767,955 2,000,129
Prepayments and Other 379,613 873,648
Total Current Assets 5,004,352 3,844,049
Non-Current Assets
Def. Tax Assets 573,022 257,000
Def. Debits - Acctg. for Income Taxes 669,550 1,016,661
Deferred Debits 906,247 1,217,712
Total Non-Current Assets 2,148,819 2,491,373
Total Assets $21,423,167 $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 2,179,744 2,194,382
5,133,090 5,147,728
Long Term Debt 6,200,000 6,300,000
Total Capitalization 11,333,090 11,447,728
Current Liabilities:
Short Term Notes Payable 3,440,000 2,725,000
Accounts Payable 2,412,665 1,146,190
Customer Deposits and Accrued Interest 214,428 735,398
Accrued Federal Income Tax (51,603) 0
Other Accrued Taxes 131,366 141,598
Current Maturities of Long Term Debt 100,000 100,000
Other Current and Accrued Liabilities 302,602 884,710
Total Current Liabilities 6,549,458 5,732,896
Accumulated Deferred FIT 2,643,211 2,617,213
Reserves and Other Liabilities 897,408 759,725
Total Liabilities and Capitalization $ 21,423,167 $ 20,557,562
=========== ==========
See Management's Discussion & Analysis on Page 5
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