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 June 30, 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.
Net income (loss) for the quarter ended June 30, 1998 was ($96,427), a
$61,449 reduction from the same quarter the previous year. The reduction
results primarily from the decline in gas sales due to milder weather. Mcf
deliveries of 1,281,804 were down 14 percent from the same quarter last
year. In addition, capacity assignment revenues of $20,166 were down 40
percent from the previous year due to an increasingly competitive market.
Subsidiary earnings were also down 18 percent for the quarter due to the
expected beginning unprofitableness of the newly acquired businesses
discussed below.
As the Company's business is seasonal by quarters, results for the first
nine 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 through a private
placement of 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 has multi-year leases with 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 management and brokerage
organization and a tax and financial services company. The shopping
plaza was purchased for $1,175,000 and financed primarily through a
$940,000 twenty year note secured by a mortgage on the shopping center real
estate. The real estate and finalncial service companies were purchased for
$349,000, funded through a $180,000 eight year loan agreement with the
sellers and the balance through operating funds. 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. The financial services business, 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 June 30, 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 June 30, 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 July 31, 1998 THOMAS K. BARRY
T
homas K. Barry,
Chairman of the Board,
President and C.E.O.
Date July 31, 1998 GARY K. EARLEY Gary
K. Earley,
Treasurer
CORNING NATURAL GAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
FORM 10 QSB
FOR QUARTER ENDED NINE
MONTHS ENDED
June 30,1998 June 30,1997 June 30,1998 June 30,
1997
-------------- ------------ ------------ -------------
Operating Revenues $3,220,802 $3,756,539 $15,061,991 $16,271,835
Cost and Expense
Operating Expenses 3,171,463 3,612,447 13,481,267 14,425,959
Interest Expense 224,741 201,039 701,862 651,714
Income Tax (52,942) 915 308,569
412,704
Other Deductions Net 3,447 218 8,603 1,432
---------- ----------- -------------
- -----------
Total Costs and Exp 3,346,709 3,814,619 14,500,301 15,491,809
---------- ---------- ------------ ----------
Operating Income (125,907) (58,080) 561,690 780,026
Other Income 10,672 100 10,773 988
Corning Natural Gas Appliance Corp.:
Operating Revenues 519,007 428,209 1,791,714 1,683,001
Depreciation 61,254 58,462 182,289 180,679
Other Operating Exp 443,884 333,252 1,346,431 1,263,074
Federal Income Tax 19,340 13,493 100,879 85,653
Invest in Assoc. Cos. (13,337) 0 (13,337) 0
----------- --------- ---------- ----------
Net Income of Appl Corp. 18,808 23,002 148,778 153,595
----------- --------- --------- ----------
Net Income $ (96,427) $ (34,978) $ 721,241 $ 934,609
======= ======= ======== =========
Earnings Per Share $ (.210) $ (.08) $ 1.568 $ 2.032
Dividends Per Share $ .650 $ .32 $ .975 $ .96
Dividends Declared $ 149,500 $ 147,200 $ 448,501 $ 441,600
Shares of common stock outstanding were 460,000 at June 30, 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 FLOW
FORM 10-QSB - UNAUDITED
JUNE 30, 1998 JUNE 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $
721,241 $ 934,609
Adjustments to Reconcile Net Income
to Net Cash
Provided by Operating Activities:
Depreciation 561,900
538,450
Allowance for Funds Used During Const. 0 0
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (97,819)
(360,926)
Materials, Supplies & Appl Inventory (228,660) 559,030
Other Deferred Charges 1,445,628
1,469,088
Prepaid and Other Assets (52,890) 106,756
Increase (Decrease) in:
Accounts Payable (412,039)
355,275
Accrued General Taxes 71,970 74,455
Accrued Federal Income Tax 173,096
39,249
Deferred Federal Income Tax (151,997) (201,976)
Other Liabilities and Deferred Credits (310,415) (872,813)
Net Cash Provided (used) by ---------- -----------
Operating Activities 1,720,015
2,641,197
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Marketable Securities (109,500) ( 525,340)
Capital Expenditures ( 2,388,039) (621,769)
Allowance for Funds Used During Const. 0 0
------------ ----------
Net Cash Used in Investing Activities ( 2,497,539) (1,147,109)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under
Line-of-Credit Agreement 275,000 (650,000)
Dividends Paid (448,501)
(441,600)
Repayment of Long-Term Debt 1,104,983 (100,000)
Net Cash Provided (used in) ---------- ------------
Financing Activities 931,482 (1,191,600)
---------- -----------
NET INC. (DEC.) IN CASH AND CASH EQUIV. 153,958 302,488
CASH AND CASH EQUIV. AT BEG. OF PERIOD 262,752 180,595
--------- -----------
CASH AND CASH EQUIV. AT END OF PERIOD $ 416,710 $ 483,083
======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid During the Year for:
Interest (Net of Amount Capitalized) $ 683,910 $ 710,336
Income Taxes $ 310,000 $ 553,246
CORNING NATURAL GAS CORPORATION
Consolidated Balance Sheet At June 30, 1998 and September 30, 1997
Form 10-QSB
Unaudited
Assets 06/30/98
09/30/97
--------- ----------
Gas Utility Plant $ 21,118,142 $
20,378,449
Non-Utility-Principally Rented Gas App. 4,083,424 2,533,498
------------ ------------
25,201,566 22,911,947
Less: Accum. Provision for Depreciation (8,941,926) (8,478,446)
----------- -------------
$
16,259,640 $ 14,433,501
Current Assets:
Cash and Equivalents 416,710
262,752
Marketable Securities Available For Sale 770,637 641,899
Accounts Receivable 1,093,034
995,215
Materials, Supplies and Inventories 2,218,058 1,989,398
Prepayments and Other 1,099,572
1,046,682
---------- ---------
Total Current Assets 5,598,011 4,935,946
Non-Current Assets
Def. Tax Assets 553,975
62,000
Def. Debits - Acctg. for Income Taxes 866,802 1,016,661
Deferred Debits
(198,230) 1,247,398
--------- ----------
Total Non-Current Assets 1,222,547
2,326,059
Total Asset $23,080,198
$21,695,506
=========== ===========
Capitalization & Liabilities
Capitalization:
Common Stock 2,300,000
2,300,000
Premium on Capital Stock - Common 653,346 653,346
Retained Earnings 2,484,573 2,211,833
Net Unrealized Gain on Securities For Sale
(net of FIT of 22,799) 63,496
44,258
---------- ---------
5,501,415
5,209,437
Long Term Debt 10,504,983
9,400,000
---------- ----------
Total Capitalization 16,006,398
14,609,437
Current Liabilities:
Short Term Notes Payable 1,050,000
775,000
Accounts Payable 1,418,301
1,830,340
Customer Deposits and Accrued Interest 241,416 673,114
Accrued Federal Income Tax 173,096
0
Other Accrued Taxes 184,337
112,367
Current Maturities of Long Term Debt 0 0
Other Current and Accrued Liabilities 612,363 624,790
--------- ---------
Total Current Liabilities 3,679,513
4,015,611
Accumulated Deferred FIT 2,635,085
2,444,966
Reserves and Other Liabilities 759,202
625,492
--------- ---------
Total Liab. and Capitalization $23,080,198 $21,695,506
===========
===========
See Management's Discussion & Analysis on Page 5
[ARTICLE] UT
<TABLE>
<S> <C> <C>
<C> <C>
[PERIOD-TYPE] 12-MOS 12-MOS
3-MOS 3-MOS
[FISCAL-YEAR-END] SEP-30-1998 SEP-30-1998
SEP-30-1998 SEP-30-1998
[PERIOD-END] JUN-30-1998 JUN-30-1998
JUN-30-1998 JUN-30-1998
[BOOK-VALUE] PER-BOOK PER-BOOK
PER-BOOK PER-BOOK
[TOTAL-NET-UTILITY-PLANT] 13716232 1326313
13716232 13236313
[OTHER-PROPERTY-AND-INVEST] 2543408 1069146
0 0
[TOTAL-CURRENT-ASSETS] 5598011 4367017
0 0
[TOTAL-DEFERRED-CHARGES] 1222547 1080009
0 0
[OTHER-ASSETS] 0 0
0 0
[TOTAL-ASSETS] 23080198 19752485
0 0
[COMMON] 2300000 2300000
0 0
[CAPITAL-SURPLUS-PAID-IN] 653346 653346
0 0
[RETAINED-EARNINGS] 2484573 2687391
0 0
[TOTAL-COMMON-STOCKHOLDERS-EQ] 5437919 5640737
0 0
[PREFERRED-MANDATORY] 0 0
0 0
[PREFERRED] 0 0
0 0
[LONG-TERM-DEBT-NET] 10504983 6200000
0 0
[SHORT-TERM-NOTES] 1050000 2075000
0 0
[LONG-TERM-NOTES-PAYABLE] 0 0
0 0
[COMMERCIAL-PAPER-OBLIGATIONS] 0 0
0 0
[LONG-TERM-DEBT-CURRENT-PORT] 0 100000
0 0
[PREFERRED-STOCK-CURRENT] 0 0
0 0
[CAPITAL-LEASE-OBLIGATIONS] 0 0
0 0
[LEASES-CURRENT] 0 0
0 0
[OTHER-ITEMS-CAPITAL-AND-LIAB] 6087296 5736748
0 0
[TOT-CAPITALIZATION-AND-LIAB] 23080198 19752485
0 0
[GROSS-OPERATING-REVENUE] 0 0
3220802 3756539
[INCOME-TAX-EXPENSE] 0 0
(52942) 915
[OTHER-OPERATING-EXPENSES] 0 0
3174910 3612665
[TOTAL-OPERATING-EXPENSES] 0 0
3121968 3613580
[OPERATING-INCOME-LOSS] 0 0
98834 142959
[OTHER-INCOME-NET] 0 0
29480 23102
[INCOME-BEFORE-INTEREST-EXPEN] 0 0
128314 166061
[TOTAL-INTEREST-EXPENSE] 0 0
224741 201039
[NET-INCOME] 0 0
(96427) (34978)
[PREFERRED-STOCK-DIVIDENDS] 0 0
0 0
[EARNINGS-AVAILABLE-FOR-COMM] 0 0
(96427) (34978)
[COMMON-STOCK-DIVIDENDS] 0 0
149500 147200
[TOTAL-INTEREST-ON-BONDS] 0 0
96223 143258
[CASH-FLOW-OPERATIONS] 0 0
1720015 2641197
[EPS-PRIMARY] 0 0
(.21) (.08)
[EPS-DILUTED] 00 0
0 0
</TABLE>
