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, 2000
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Commission File Number 0-643
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Corning Natural Gas Corporation
(Exact name of registrant as specified in its charter)
NEW YORK 16-0397420
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(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
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607-936-3755
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(Registrant's telephone number, including area code)
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
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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>
As the Company's business is seasonal, the interim results should not
be used as an indication of what results for the twelve months of the fiscal
year 2000 may be.
Net consolidated loss for the quarter ended June 30, 2000 was $65,187,
compared to a loss of $89,276 in the same quarter the previous year. The Company
typically experiences a third quarter loss, due to the seasonality of its gas
utility business. Earnings from gas operations decreased $10,816 due to
increased costs, particularly interest and wages. The Foodmart Plaza and Tax
Center International produced earnings that met forecasted levels, contributing
an additional $35,905 to consolidated net income. The Appliance Company
experienced an increase in earnings of $5,642 due to a 9% increase in revenues.
Earnings from Corning Realty Associates increased $16,982 due to implementation
of some new policies and budgets.
The Company has recently formed a mortgage banking company, Choice One
Lending, which is still in the process of obtaining the necessary regulatory
approvals. Hence, there have been no mortgages written or revenues generated to
date. The Company has incurred some expenses, although insignificant at this
point.
Segment Overview:
Information concerning the Company's 5 operating segments for the third quarter
of 2000 and 1999 is provided below. The table reflects the results of the
segments on a basis that is consistent with the manner in which management
evaluates the performance of each of the segments.
<TABLE>
<CAPTION>
Gas Appliance Tax Corning Foodmart
Company Corporation Center Realty Plaza Consolidated
------- ----------- ------ ------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
2000 3,350,548 549,323 102,994 1,268,473 70,500 5,341,838
1999 3,184,562 503,928 71,853 1,217,203 67,850 5,045,396
Net Income (Loss):
2000 (138,319) 37,862 25,673 (635) 10,232 (65,187)
1999 (127,503) 32,220 15,014 (17,617) 8,610 (89,276)
Interest Income:
2000 352 25,025 485 --- --- 25,862
1999 359 16,844 --- --- --- 17,203
Interest Expense:
2000 270,211 7,571 282 36,657 22,427 337,148
1999 229,676 (179) 1,402 31,889 23,708 286,496
Identifiable Assets*
2000 21,034,895 3,262,784 227,440 2,051,620 1,212,094 27,788,833
1999 20,664,079 2,554,957 147,322 1,910,542 1,212,295 26,489,195
Depreciation and
Amortization:
2000 118,839 7,612 2,891 48,415 7,789 235,546
1999 108,510 58,562 2,128 33,894 7,316 210,410
Income Tax Expense
(Benefit):
2000 (41,793) 32,320 17,073 (423) 5,395 12,572
1999 (2,712) 28,358 9,987 (13,522) 7,597 29,708
</TABLE>
<PAGE>
*Identifiable assets include property, plant and equipment, accounts receivable,
inventories, cash and other amounts specifically related to each identified
segment.
Interest income and expense have been displayed in the segment in which it has
been earned or incurred. Segment interest expense other than the gas Company is
included within unregulated expenses in the consolidated statements of income.
On January 1, 1999 the Company adopted Financial Accounting Standards Board
Statement No. 130, Reporting Comprehensive Income (Statement 130). Statement 130
established standards for reporting and presentation of comprehensive income and
its components in a full set of financial statements. Comprehensive income
consists of net income and net unrealized gains on marketable securities and is
presented in a statement of comprehensive income. The statement requires only
additional disclosures in the consolidated financial statements; it does not
affect the Company's financial position or results of operations.
The year 2000 issue (Y2K) refers to the inability of certain computerized
systems and technologies to recognize and/or correctly process dates beyond
December 31, 1999. Corning Natural Gas Corporation has identified those areas
within the Company where the potential exists for computer system failure or
miscalculations by computer programs could cause a disruption in the Company's
operations or services. A Y2K Coordinator, Thomas S. Roye, was assigned and a
Y2K plan was developed. The event has passed, without any significant problems,
and although problems may still occur, the Company anticipates no further
problems.
Internal generation of funds should be sufficient to meet the needs of the
Company coupled with some intermittent short-term borrowings.
The information furnished herewith reflects all adjustments which are in the
opinion of management necessary to a fair statement of the results of 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
quarter ending June 30, 2000.
As reported on Form 8-K, dated April 19, 2000, the Board of Directors voted on
April 13, 2000 to terminate KPMG LLP's appointment as principal accountants and
Deloitte & Touche LLP were engaged as principal accountants.
<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.
Date August 11, 2000 /s/ THOMAS K. BARRY
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Thomas K. Barry, Chairman of
the Board, President and C.E.O.
Date August 11, 2000 /s/ GARY K. EARLEY
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Gary K. Earley, Treasurer
<PAGE>
CORNING NATURAL GAS CORPORATION
Condensed Consolidated Balance Sheets
Form 10-QSB
<TABLE>
<CAPTION>
June 30, 2000 September 30, 1999
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Assets
<S> <C> <C>
Property, plant and equipment, at original cost:
Utility $ 22,071,532 $ 21,667,115
Non-Utility-principally rented appl and plaza property 4,286,024 3,941,231
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26,357,556 25,608,346
Less accumulated depreciation (9,581,177) (9,113,046)
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16,776,379 16,495,300
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Current assets:
Cash 293,329 205,787
Marketable securities available for sale, at fair value 1,289,661 1,021,696
Accounts receivable, less allowance for uncollectibles 1,502,506 1,883,915
Gas stored underground, at average cost 1,046,785 134,650
Gas and appliance inventories 616,506 634,348
Prepaid income taxes 80,616 340,328
Deferred income tax assets 11,000 11,000
Prepaid expenses 508,808 402,883
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5,349,211 4,634,607
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Deferred charges:
Prepaid pension & other 1,621,552 1,380,984
Regulatory assets 0 196,707
Deferred debits-accounting for income taxes 1,016,661 1,016,661
Unrecovered gas costs 401,713 0
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3,039,926 2,594,352
Goodwill, net of amortization 1,763,851 1,851,625
Long-term debt issuance costs 355,148 371,317
Other assets 504,318 541,994
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$ 27,788,833 $ 26,489,195
================ ===============
CAPITALIZATION AND LIABILITIES
Common stock $ 2,300,000 $ 2,300,000
Additional paid-in capital 653,346 653,346
Accumulated Comprehensive Income
Net unrealized gain on securities available for sale 160,003 64,883
Retained earnings 2,360,445 2,093,937
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5,473,794 5,112,166
Long-term debt, less current installments 10,888,656 11,223,256
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Total Capitalization 16,362,450 16,335,422
================ ===============
Current liabilities:
Borrowings under lines-of-credit 2,756,947 2,165,000
Accounts payable 1,913,439 1,404,370
Dividends payable 149,500 149,500
Current installments of long-term debt 202,774 202,774
Customers' deposits and accrued interest 343,760 665,990
Accrued general taxes 194,181 94,441
Supplier refunds due customers 289,771 268,862
Accrued expenses 790,720 668,224
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Total current liabilities 6,641,092 5,619,161
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Deferred credits:
Deferred income tax liabilities 2,501,006 2,413,080
Deferred compensation, post-retirement benefits, and other 1,519,142 1,519,142
Other 765,143 602,390
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4,785,291 4,534,612
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$ 27,788,833 $ 26,489,195
================ ==============
</TABLE>
<PAGE>
CORNING NATURAL GAS CORPORATION
Condensed Consolidated Statements of Income
Unaudited
Form 10 QSB
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
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June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Utility Operating Revenues $ 3,350,548 $ 3,184,562 $ 14,668,666 $ 14,833,765
------------------- ------------------- ------------------ ------------------
Cost and Expense
Operating Expenses 3,267,838 3,102,033 13,129,784 13,359,010
Interest Expense 264,382 227,921 816,167 726,873
Income Tax (41,793) 104 292,651 266,975
Other Deductions, Net 5,830 1,755 8,052 2,741
------------------- ------------------- ------------------ ------------------
Total Costs and Expenses 3,496,257 3,331,813 14,246,654 14,355,599
Utility Operating Income (145,709) (147,251) 422,012 478,166
------------------- ------------------- ------------------ ------------------
Other Income 7,390 19,748 13,189 12,036
------------------- ------------------- ------------------ ------------------
Corning Natural Gas Appliance Corporation
Operating Revenues 549,325 506,928 1,932,505 1,658,841
Depreciation 57,616 58,563 179,099 176,034
Operating Expense 428,810 396,794 1,463,793 1,294,725
Federal Income Tax 25,037 19,351 104,983 69,100
Equity in Earnings of Assoc. Cos. 35,270 6,007 22,099 (46,290)
------------------- ------------------- ------------------ ------------------
Net Income of Appl. Corp 73,132 38,227 206,729 72,692
------------------- ------------------- ------------------ ------------------
Net Income $ (65,187) $ (89,276) $ 641,930 $ 562,894
=================== =================== ================== ==================
Earnings Per Share-
Basic & diluted $ (0.142) $ (0.194) $ 1.396 $ 1.224
Dividends Per Share $ 0.650 $ 0.650 $ 0.975 $ 1.300
Dividends Declared $ 299,000 $ 299,000 $ 448,500 $ 598,000
</TABLE>
Shares of common stock outstanding were 460,000 at June 30, 2000.
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.
<PAGE>
CORNING NATURAL GAS CORPORATION
Statement of Comprehensive Income
Unaudited
Form 10 QSB
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Net Income (loss) $ (65,187) $ (89,276) $ 641,930 $ 562,893
Other comprehensive income, net of tax:
Unrealized gains on securities: 14,769 2,588 95,121 77,586
----------------- ------------------ ----------------- -----------------
Comprehensive Income $ (50,418) $ (86,688) $ 737,051 $ 640,479
================= ================== ================= =================
</TABLE>
<PAGE>
CORNING NATURAL GAS CORPORATION
Condensed Consolidated Statements of Cash Flows
For Nine Month Ended June 30, 2000
Form 10-QSB
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 641,930 562,893
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 704,819 643,219
(Gain)loss on Sale of marketable securities (30,489) 18,237
Changes in assets and liabilities:
(Increase)decrease in:
Accounts Receivable 381,409 (102,883)
Gas stored underground (912,135) 743,345
Gas and appliance inventories 17,842 10,081
Prepaid expenses (105,925) (111,376)
Unrecovered gas costs (401,713) 191,819
Prepaid income taxes 259,712 55,534
Deferred charges-pension and other (240,568) 590,474
Other assets 37,676 (1,372)
(Increase)decrease in:
Accounts payable 509,069 206,586
Accrued general taxes 99,740 112,630
Supplier refunds due customers 20,909 (70,731)
Deferred income taxes 87,926 (486,447)
Other liabilities and deferred credits 86,101 579,391
--------------------- ----------------------
Net cash provided by operating activities 1,156,303 2,941,400
Cash flows from investing activities:
Purchase of securities available for sale, net 0 (74,033)
Acquisitions of businesses, net of cash acquired 0 (468,334)
Capital expenditures, net of minor disposals (877,608) (1,049,018)
--------------------- ----------------------
Net cash used in investing activities (877,608) (1,591,385)
Cash flows from financing activities:
Net borrowings(repayments) under line-of-credit agreements 591,947 (1,145,000)
Dividends paid (448,500) (598,000)
Borrowings(repayments) under long-term debt agreements (334,600) 368,524
--------------------- ----------------------
Net cash provided by (used in) financing activities (191,153) (1,374,476)
Net increase in cash 87,542 (24,461)
Cash at beginning of period 205,787 284,426
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Cash at end of period $ 293,329 259,965
--------------------- ----------------------
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest $ 337,148 857,131
Income taxes 231,500 221,357
Non cash investing and financing activities:
Acquisition of business financed by seller $ 0 1,056,666
</TABLE>
