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, 1998
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 Identification
incorporation or organization) No.)
330 W. William Street, PO 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 March 31, 1998 were $7,173,161,
an increase of $5,609,309 or 358% more than the quarter ending September
30, 1997 and $456,942 or 6% less than the quarter ending March 31, 1997.
Degree days for the quarter ending March 31, 1998 were 2,754, an increase
of 2,495 or 963% more than the quarter ending September 30, 1997 and 336 or
11% less than the quarter ending March 31, 1997. 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 03/31/98
Quarter Ending 3/31/98 3,069,063
Quarter Ending 9/30/97 824,993 (2,244,070)
Quarter Ending 3/31/97 3,455,554 (386,491)
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
$6,047,059, an increase of $4,278,674 or 242% more than the quarter ending
September 30, 1997 and $398,690 or 6% less than the quarter ending
March 31, 1997.
Net Income was $604,959, an increase of $783,817 or 436% more than the
quarter ended September 30, 1997 and $84,867 or 12% less than the quarter
ending March 31, 1997.
Since the Company's business is seasonal by quarters, results for the first
six months of fiscal year 1998 should not be used as an indication of what
results for the full twelve months of fiscal year 1998 may be.
Late in September, 1997, the Company completed a long-term debt financing
in the amount of $4.7 million. These funds were obtained as a senior note
with interest at 7.9 percent over a 20 year term. This financing allowed
the Company to reduce short-term debt in the amount of $3.1 million and to
retire a 10 percent bond with a balance of $1.6 million. Savings of over
$200,000 were estimated on the bond retirement while the entire package
served to strengthen the capitalization structure.
In April 1998 the Company's Appliance subsidiary completed the purchase of
three local existing businesses. A shopping plaza in South Corning was
purchased which consists of eight businesses housed in 52,000 square feet
of rentable space with a major grocery store as the anchor. Also purchased
was a real estate organization and a tax and financial services company.
The real estate firm is a franchise of The Prudential Marketplace Realty
and has twenty three agents operating out of offices in both the Corning and
Elmira, New York market. Tax Center International provides tax preparation
accounting, and payroll services and currently serves over six hundred
clients. These purchases are part of the Company's plan to aggressively
explore new opportunities in non-traditional areas.
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, 1998.
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, 1998.
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
Date May 11, 1998 THOMAS K. BARRY
Thomas K. Barry, Chairman of
the Board, President
and C.E.O.
Date May 11, 1998 GARY K. EARLEY
Gary K. Earley, Treasurer
CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
FORM 10 QSB
FOR QUARTER ENDED
SIX MONTHS ENDED
03/31/1998 03/31/1997 03/31/1998
03/31/1997
Operating Revenues $7,173,161 $7,630,103 $11,841,189 $12,515,296
Cost and Expense
Operating Exp 6,047,059 6,445,749 10,309,802
10,813,512
Interest Exp 240,779 219,375 477,121 450,675
Income Tax 319,729 324,227 361,511
411,789
Other Deductions 2,635 577 5,157 1,214
Total 6,610,202 6,989,928 11,153,591 11,677,190
Operating Income 562,959 640,175 687,598 838,106
Other Income 100 100 100 888
Corning Natural Gas Appliance Corp.:
Operating Revenues 555,028 562,171 1,272,707 1,254,792
Depreciation 59,870 60,754 121,035 122,217
Other Operating Exp 440,052 426,734 940,685 929,822
Federal Income Tax 13,206 25,132 81,017 72,160
Net Income 41,900 49,551 129,970 130,593
Net Income $ 604,959 $ 689,826 $ 817,668 $ 969,587
======= ======== ======== =========
Earnings Per Share $ 1.315 $ 1.50 $ 1.778 $ 2.108
Dividends Per Share $ .0 $ 0 $ .33 $ .64
Dividends Declared $0 $0 $149,501 $294,400
Shares of common stock outstanding were 460,000 at March 31, 1998
Earnings per share = Net Income as shown above divided by 460,000 shares.
Dividends per share = Dividends declared 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
MARCH 31, 1998 MARCH 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 817,668
$ 969,587
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 369,347
360,049
Allowance for Funds Used During Const. 0 0
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (1,452,551)
(1,361,094)
Materials & Supplies Inventory ( 187,339) 724,573
Other Deferred Charges 1,319,858 984,555
Prepaid and Other Assets 263,568 306,636
Increase (Decrease) in:
Accounts Payable 40,570 270,285
Accrued General Taxes 72,358 53,765
Accrued Federal Income Tax 333,938 312,023
Deferred Federal Income Tax ( 81,263) ( 25,682)
Other Liab and Deferred Credits ( 681,664) ( 693,603)
Net Cash Provided (used) by
Operating Activities 814,490
1,901,094
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures ( 502,812) ( 462,261)
Purchases of Marketable Securities ( 59,173) ( 497,497)
Net Cash Used in Investing Act ( 561,985) ( 959,758)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under
Line-of-Credit Agreement 100,000 ( 125,000)
Dividends Paid ( 149,500) (
294,400)
Repayment of Long-Term Debt 0 ( 100,000)
Net Cash Provided (used in)
Financing Activities (49,500) ( 519,400)
NET INC. (DEC.) IN CASH
AND CASH EQUIV. 203,005 421,936
CASH AND CASH EQUIV.
AT BEG. OF PERIOD 262,752 180,595
CASH AND CASH EQUIV.
AT END OF PERIOD $ 465,757 $ 602,531
======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid During the Year for:
Interest (Net of Amount Capitalized) $ 442,524 $ 440,027
Income Taxes $ 110,000 $ 86,000
CORNING NATURAL GAS CORPORATION
Consolidated Balance Sheet At March 31, 1998
and September 30, 1997
Form 10-QSB Unaudited
Assets 03/31/98
09/30/97
Gas Utility Plant $20,818,424
$20,3
78,449
Non-Utility-Principally
Rented Gas App. 2,533,082 2,533,498
23,351,506
22,911,947
Less: Accum. Provision
for Depreciation (8,784,540) (8,478,446)
$14,566,966
$14,433,501
Current Assets:
Cash and Equivalents 465,757
262,752
Marketable Securities Available
for Sale 701,072 641,899
Accounts Receivable 2,447,766
995,215
Materials, Supplies and Inventories 2,176,737 1,989,398
Prepayments and Other 783,114 1,046,682
Total Current Assets 6,574,446 4,935,946
Non-Current Assets
Def. Tax Assets 440,224
62,000
Def. Debits - Acctg. for Income Taxes 865,837 1,016,661
Deferred Debits ( 72,460)
1,247,398
Total Non-Current Assets 1,233,601
2,326,059
Total Assets $22,375,013
$21,695,506
===========
============
Capitalization & Liabilities
Capitalization:
Common Stock 2,300,000
2,300,000
Premium on Capital Stock 653,346 653,346
Retained Earnings 2,924,259 2,256,091
5,877,605 5,209,437
Long Term Debt 9,400,000 9,400,000
Total Capitalization 15,277,605
14,609,437
Current Liabilities:
Short Term Notes Payable 875,000 775,000
Accounts Payable 1,870,910
1,830,340
Customer Deposits and
Accrued Interest 239,366 673,114
Accrued Federal Income Tax 333,938 0
Other Accrued Taxes 184,725 112,367
Current Maturities of Long Term Debt 0 0
Other Current and Accrued
Liabilities 235,177 624,790
Total Current Liabilities 3,739,116 4,015,611
Accumulated Deferred FIT 2,591,103 2,444,966
Reserves and Other Liabilities 767,189 625,492
Total Liab.
and Capitalization $ 22,375,013 $ 21,695,506
==========
==========
See Management's Discussion & Analysis on Page 5
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