-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JijA96oXr3Vl8/QWIMjz2FWlluO1jIDraaIN5i0aC8LE6xULbA4m3bBzoKqN0TNP +0Pv2Kj+I9y9Isf1EmvYyA== 0000024751-02-000012.txt : 20021230 0000024751-02-000012.hdr.sgml : 20021230 20021230154909 ACCESSION NUMBER: 0000024751-02-000012 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020920 FILED AS OF DATE: 20021230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNING NATURAL GAS CORP CENTRAL INDEX KEY: 0000024751 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 160397420 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-00643 FILM NUMBER: 02871962 BUSINESS ADDRESS: STREET 1: 330 W WILLIAM ST STREET 2: P O BOX 58 CITY: CORNING STATE: NY ZIP: 14830 BUSINESS PHONE: 6079363755 MAIL ADDRESS: STREET 1: 330 W WILLIAM STREET STREET 2: P O BOX 58 CITY: CORNING STATE: NY ZIP: 14830 10KSB 1 cng-10ksb.htm CNG 10 KSB <cng-10ksb

U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-KSB

(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

 

For the fiscal year ended September 30, 2002

Commission file number

0-643

Corning Natural Gas Corporation

(Name of small business issuer 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., Corning NY

14830

(Address of principal executive offices)

(Zip Code)

Issuers telephone number

(607) 936-3755

 

 

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock - $5.00 par value

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. (X)

Revenues for the fiscal year ended September 30, 2002 $23,846,000

The aggregate market value of the 390,916 shares of the Common Stock held by non-affiliates of the Registrant at the $11.60 average of bid and asked prices as of November 1, 2002 was $4,534,626.

Number of shares of Common Stock outstanding as of the close of business on November 30,2002 - 460,000

Transitional Small Business Disclosure Format (check one)

Yes _____ No __X____

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrants Annual Report to Shareholders for the twelve month period ended September 30, 2002, and definitive proxy statement to be dated on or about January 2, 2003 are incorporated by reference into Part I and Part II. Portions of Registrants definitive proxy statement, to be dated on or about January 2, 2003, are incorporated by reference into Part III hereof.

Information contained in this Form 10-KSB and the Annual Report to

shareholders for fiscal 2002 period which is incorporated by reference contains certain forward looking comments which may be impacted by factors beyond the control of the Company, including but not limited to natural gas supplies, regulatory actions and customer demand. As a result, actual conditions and results may differ from present expectations.

CORNING NATURAL GAS CORPORATION

FORM 10-KSB

For the 12 Month Period Ended September 30, 2002

Part I

ITEM 1 DESCRIPTION OF BUSINESS

(a) Business Development

Corning Natural Gas Corporation (the "Company" or "Registrant"), incorporated in 1904, is a natural gas utility. The Company operates as six operating segments, the Gas Company, Appliance Corporation, Tax Center International, Corning Mortgage, Corning Realty and Foodmart Plaza. The Gas Company purchases its entire supply of gas, and distributes it through its own pipeline distribution and transmission systems to residential, commercial, industrial and municipal customers in the Corning, New York area and to two other gas utilities which service the Elmira and Bath, New York areas. The Gas Company is under the jurisdiction of the Public Service Commission of New York State which oversees and sets rates for New York gas distribution companies. The Appliance Corporation sells, rents and services primarily gas burning appliances. The Tax Center provides tax preparation, accounting and payroll services to approximately 1000 clients. Corning Realty is a residential and commercial real estate business with appr oximately 80 agents operating in three neighboring counties. Foodmart Plaza is a retail complex consisting of eight tenants under multi-year leases anchored by a major supermarket. An equal joint venture between Elmira Savings & Loan(a local commercial bank) and Corning Mortgage Company, LLC (a subsidiary of Corning Natural Gas Appliance Corporation) has been formed to start a mortgage lending services company, Choice One Lending LLC.

(b) Business of Issuer

(1) The Gas Company maintains a gas supply portfolio of numerous contracts and is not dependent on a single supplier. Additionally, the Gas Company has capabilities for storing 662,050 Mcf through storage operations with two of its suppliers. The Gas Company had no curtailments during fiscal 2002 and expects to have an adequate supply available for its customers during fiscal 2003 providing that no abnormal conditions or actions occur.

(2) The Gas Company is franchised to supply gas service in all of the political subdivisions in which it operates.

(3) Since the Gas Companys business is seasonal by quarters, sales for each quarter of the year vary and are not comparable. Sales for different periods vary depending on variations in temperature, but the Companys Weather Normalization Clause (WNC) serves to stabilize net revenue from the effects of temperature variations. The WNC allows the Company to adjust customer billings to compensate for fluctuations in net revenue caused by temperatures which are more than 2.2% higher or lower than the thirty year average temperature for the period. Degree days, which represent the number of degrees that the average daily temperature falls below 65 degrees Fahrenheit, totaled 5,629 for the period October 1, 2001 through September 30, 2002 and 6,809 for the same period ended September 30, 2001.

(4) The Company has three major customers, Corning Incorporated, New York State Electric & Gas (NYSEG), and Bath Electric, Gas & Water Systems (BEGWS). The loss of any of these customers could have a significant impact on the Companys financial results.

(5) Historically, the Companys competition in the residential market has been primarily from electricity in cooking, water heating and clothes drying, and to a very small degree, in heating. The price of gas remains low in comparison to that of electricity in the Companys service territory and the Companys competitive position in the residential market continues to be very strong. Approximately 99% of the Companys general service customers heat with gas.

Competition from oil still exists in the industrial market. The Company has been able to counteract much of this competition, to date, through the transportation of customer owned gas for a transportation charge. The customer arranges for their own gas supply, then moves it through the Companys facilities for a transportation fee. The Companys transportation rate is equal to the lowest unit rate of the appropriate rate classification, exclusive of gas costs, hence the profit margin is maintained.

The Appliance Corporation faces the challenges of local competition. The home center chains which have been opened in our vicinity offer competition, however, the Appliance Corporation continues to depend on its long standing reputation in the area as a top quality sales and service company. As for the rental section of the appliance business, there really isnt a great deal of competition in our very strong rental water heater market. This stabilizes a substantial portion of our net income.

The real estate business is clearly a highly competitive market in which Corning Realty is well positioned. Prudential Ambrose & Shoemaker Real Estate maintains approximately 55% of the local market. Local economy and interest rates play a factor in the outcome of the market, however, Corning Realty continues to hold strong.

There is a considerable amount of competition in the mortgage lending business, however, the business plan for Choice One Lending was compiled recognizing that this company will utilize the relationships with another subsidiary, Corning Realty, the areas largest residential real estate business that is involved in over 1,000 real estate closings annually.

The impact of competition is less material in the other two areas of our business, the commercial property rented out at our Foodmart Plaza is in demand with limited competition. The services provided by Tax Center are available from various competitors. The Tax Center maintains a steady growth of clients regardless of that competition.

(6) The Gas Company believes compliance with present federal, state and local provisions relating to the protection of the environment will not have any material adverse effect on capital expenditures, earnings and financial position of the Company and its subsidiaries.

(7) Ninety-two persons were employed by the Company in 2002 and 2001.

(8) The Gas Company expects no shortage of raw materials to impact our business over the next 5 - 10 years. The Energy Information Administration indicates an increase in the efficiency of gas exploration and development is expected to result in increased gas productive capacity. As for the availability of the necessary pipes and valves for safe distribution of natural gas, the Gas Company likewise anticipates no shortages and continues to receive both gas supply and material inventory from various reliable sources.

ITEM 2 DESCRIPTION OF PROPERTY

The Company completed construction of a new office building at 330 West William Street, Corning, NY in the fall of 1991. This structure is physically connected to the operations center built three years earlier. The Company had outgrown its general offices at 27 East Denison Parkway. That property has been sold, and the gain on the sale was returned to ratepayers.

The Gas Companys pipeline system is thoroughly surveyed each year. Any necessary replacements are included in the construction budget. Approximately 106 miles of transmission main, 297 miles of distribution main, 13,734 services and 88 measuring and regulating stations, along with various other property are owned by the Gas Company, except for one short section of 10" gas main which is under a long-term lease and is used primarily to serve Corning Incorporated. All of the above described property, which is owned by the Gas Company, is adequately insured and is subject to the lien of the Companys first mortgage indenture.

The Foodmart Plaza is a retail/commercial complex consisting of a major grocery store and several other businesses located on an approximately 7 acre lot at 328 Park Avenue, South Corning, NY. The main building includes 2 retail stores which covers 48,300 square feet and an additional 6 buildings totaling 10,775 square feet house 7 other businesses. The property is well maintained and its overall condition remains very good. All of the above described property, which is owned by the Appliance Company, is adequately insured and is subject to a lien agreement with a local bank.

The Appliance Corporation, Tax Center and Realty businesses are operated out of the Companys West William Street complex in combination with rented office space in various locations. The Tax Center and Realty companies own no buildings at this time.

ITEM 3 LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings, nor is the Company aware of any problems of any consequence which it anticipates may result in legal proceedings.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2002.

Additional Item

Executive Officers of the Registrant

(Including Certain Significant Employees)

Business Experience

Years Served

Name

Age

During Past 5 Years

In This Office

Thomas K. Barry

57

Chairman of the Board of Directors

9

President & C.E.O

18

Russell S. Miller

39

Vice President - Operations

3

Gas Supply Manager

4

Kenneth J. Robinson

58

Executive Vice President

11

Phyllis J. Groeger

61

Secretary

15

Thomas S. Roye

48

Vice President - Administration

11

Gary K. Earley

48

Treasurer

11

Stanley G. Sleve

52

Vice President-Business Development

5

 

Term of office is one year. (Normally from February to February)

Part II

ITEM 5 MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Companys common stock is quoted on the OTC Bulletin Board (OTC-BB) under the symbol "CNIG". The range of high and low bid quotations for each quarterly period during the past two years, the amount and frequency of dividends, and a description of restrictions upon the Registrants ability to pay dividends, appear in the table below. The number of stockholders of record of the Registrants Common Stock was 303 September 30, 2002. The high and low bid quotations reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.

MARKET PRICE (OTC)

Dividend

Quarter Ended

High

Low

Declared

December 31, 2000

22 7/8

20 1/4

.325

March 31, 2001

30 1/8

21

.325

June 30, 2001

24

21 3/4

.325

September 30, 2001

21

21

.325

December 31, 2001

21 1/4

18 3/4

.325

March 31, 2002

24

21

.325

June 30, 2002

22

18 1/2

0

September 30, 2002

19 1/4

11

0

Under the terms of a $4,700,000 senior note issued September 5, 1997, the Company may not declare or pay any dividend, or cause any other payment from retained earnings except to the extent that consolidated tangible net worth of the Company exceeds $2,000,000.

ITEM 6 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements discussion and analysis of financial condition and results of operations of the Company appears in the 2002 Annual Report to Shareholders and is incorporated by reference into this Form 10-KSB.

ITEM 7 FINANCIAL STATEMENTS

The consolidated financial statements, together with the independent auditors report thereon of Deloitte & Touche LLP dated November 22, 2002 are included in the 2002 Annual Report to Shareholders and are incorporated by reference into this Form 10-KSB.

ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Part III

ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The information required regarding the executive officers of the Registrant appears in the Definitive Proxy Statement, to be dated on or about January 2, 2003, and is incorporated by reference into this Form 10-KSB.

ITEM 10 EXECUTIVE COMPENSATION

The information required regarding the compensation of the executive officers appears in the Definitive Proxy Statement, to be dated on or about January 2, 2003, and is incorporated by reference into this Form 10-KSB.

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required regarding the security ownership of certain beneficial owners and management appears in the Definitive Proxy Statement, to be dated on or about January 2, 2003, and is incorporated by reference into this Form 10-KSB.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required regarding certain relationships and related transactions appears in the Definitive Proxy Statement, to be dated on or about January 2, 2003, and is incorporated by reference into this Form 10-KSB.

Part IV

ITEM 13 EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a) Exhibits

The following exhibits are filed with this Form 10-KSB or incorporated herein by reference: (Exhibit numbers correspond to numbers assigned to exhibits in Item 601 of Regulation S-B)

Exhibit Name of Exhibit

3.1 A copy of the Corporations Articles of Incorporation, as currently in effect, including all amendments, was filed with the Companys Form 10-K for December 31, 1987.

3.2 A copy of the Corporations complete by-laws, as currently in effect, was filed with the Corporations report on Form 10-Q for the quarter ended March 31, 1984.

10.1 A copy of the "Agreement Between Corning Natural Gas Corporation and Local 139", dated September 1, 1998 was filed with Form 10-KSB for December 31, 1998.

10.2 Consulting Agreement and Employment Contracts with three executive officers were filed with the Companys Form 10-K for December 31, 1987.

10.3 A copy of the Service Agreement with CNG Transmission Corporation was filed with the Companys Form 10-K for December 31, 1993.

10.4 A copy of the Sales Agreement with Bath Electric, Gas and Water was filed with the Companys Form 10-K for December 31, 1989.

10.5 A copy of the Transportation Agreement between the Company and New York State Electric and Gas Corporation was filed with the Companys Form 10-K for December 31, 1992.

10.6 A copy of the Transportation Agreement between the Company and Corning Incorporated was filed with the Companys Form 10-K for December 31, 1992.

10.7 A copy of the Service Agreement with Columbia Gas Transmission Co. was filed with the Companys 10-K for December 31,1993.

13. A copy of the Corporations Annual Report to Shareholders for 2002, is filed herewith.

22. Information regarding the Companys sole subsidiary was filed as Exhibit 22 with the Companys Form 10-K for the period ended December 31, 1981.

99.1 Order from the U.S. Bankruptcy Court, Northern District of New York re: Approval of Acquisition of Finger Lakes Gas Company was filed with the Companys Form 10-K for the period ended December 31, 1995.

99.2 Order from the Public Service Commission of New York State re: Approval of Acquisition of Finger Lakes Gas Company was filed with the Companys Form 10-K for the period ended December 31, 1995.

99.3 Certification pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.

99.4 Certification pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.

 

(b) Reports on Form 8-K

The Company filed no reports on Form 8-K during the three month period ended September 30, 2002.

ITEM 14 CONTROLS AND PROCEDURES

Management of the Company, including the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-14(c)) during the 90 days prior to the filing date of this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective. The Company did not conclude that any significant changes in the Companys internal controls were necessary subsequent to the date of their evaluation.

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 December 27, 2002 /s/ Thomas K. Barry

Thomas K. Barry, Chairman of the Board,

President and C.E.O.

(Principal Executive Officer)

 

Date December 27, 2002 /s/ Gary K. Earley

Gary K. Earley, Treasurer

(Principal Financial and Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date December 27, 2002 /s/ Thomas K. Barry

Thomas K. Barry, Chairman of the Board,

President and C.E.O.

(Principal Executive Officer)

 

Date December 27, 2002 /s/ Gary K. Earley

Gary K. Earley, Treasurer

(Principal Financial and Accounting Officer)

 

Date December 27, 2002 /s/ K.J. ROBINSON

K.J. Robinson, Director

 

Date December 27, 2002 /s/ DONALD R. PATNODE

Donald R. Patnode, Director

 

Date December 27, 2002 /s/ T.H. BILODEAU

T.H. Bilodeau, Director

 

CERTIFICATION

I, Thomas K. Barry, certify that:

1. I have reviewed this annual report on Form 10-KSB of Corning Natural Gas Corpoartion;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and

6. The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date: December 27, 2002 /s/ Thomas K. Barry

President and Chief Executive Officer

 

CERTIFICATION

I, Gary K. Earley, certify that:

1. I have reviewed this annual report on Form 10-KSB of Corning Natural Gas Corpoartion;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and

6. The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date: December 27, 2002 /s/ Gary K. Earley

Treasurer

 

EXHIBIT 99.3

 

CORNING NATURAL GAS CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Annual Report of Corning Natural Gas Corporation (the "Company") on Form 10-KSB for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas K. Barry, Chairman of the Board of Directors, President and Chief Executive Officer of the Company, certify, pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

  1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of September 30, 2002 (the last date of the period covered by the Report).

 

/s/ Thomas K Barry

Chairman of the Board,

President and Chief Executive Officer

December 27, 2002

 

 

 

EXHIBIT 99.4

CORNING NATURAL GAS CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Annual Report of Corning Natural Gas Corpoartion (the "Company") on Form 10-KSB for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary K. Earley, Treasurer of the Company, certify, pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

  1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of September 30, 2002 (the last date of the period covered by the Report).

 

 

/s/ Gary K. Earley Treasurer

December 27, 2002

 

 

 

 

 

 

 

 

 

 

Highlights-12 Months Ended September 30

 

2002

2001

Operating Revenue

$

23,846,000

31,301,000

Net Income

$

526,200

606,600

Earnings Per Common Share

$

1.14

1.32

Gas Deliveries( Mcf)

7,538,000

8,545,000

Degree Days

5,629

6,809

Total Customers

14,388

14,454

Capital Expenditures

$

1,366,000

913,000

Property, Plant and Equipment

$

28,375,000

27,222,100

Common Stock Data-Market Price(OTC)

Quarter Ended

High

Low

Paid Dividend

December 31, 2000

21 7/8

20 1/4

0.325

March 31, 2001

30 1/8

21

0.325

June 30, 2001

24

21 3/4

0.325

September 30, 2001

21

21

0.325

December 31, 2001

21 1/4

18 3/4

0.325

March 31, 2002

24

21

0.325

June 30, 2002

22

18 1/2

-

September 30, 2002

19 1/4

11

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LETTER TO SHAREHOLDERS

Draft #3 12/12/02

Annual Report - 2002

 

A mild winter combined with a weakened local economy resulted in reduced gas deliveries of over one billion cubic feet compared with fiscal 2001. Degree days, which are the industrys measuring stick for heat load requirements relating to daily temperatures, were 17 percent less in 2002 than in 2001 and were 13 percent less than the fifteen year average. Consolidated net earnings of $526,000 for the year are somewhat disappointing yet are reflective of the warmer weather and a weak economy. Earnings per share were $1.14 for fiscal 2002 compared with $1.32 in 2001 and $1.02 in fiscal 2000. Deliveries of natural gas were approximately 12 percent less than the prior year while revenues from utility operations of $17,242,000 were a considerable $6.9 million less than in 2001 or a 29 percent decrease. In most industries this sizable reduction in revenues would result in a major reduction to earnings but in this business the reduced revenues are a result of both a reduction in gas deliveries and lower costs for natural gas throughout the year. There was a rather severe price hike in 2001 but the market finally settled down creating more stable costs for gas in 2002 and these lower costs are passed on to our customers. Thus there was some good news for our customers during the year as they paid $6,499,000 less for gas than they did the prior year. While the Company is neutral as it pertains to gas costs, lower volumes definitely impact gross profit. Reductions in gas deliveries were partially offset as we were allowed to charge an additional $249,000 in weather normalization revenues as a result of the very mild temperatures. Regardless, the Company was faced with working with $380,000 less in gross profit throughout the year than in 2001 and still managed to produce a net profit.

Operations

Total capital expenditures for the Gas Company during fiscal 2002 amounted to $1,162,000 of which $955,000 was expended to replace and install new mains, transmission pipelines, services, meters and regulators. The City of Corning continues an aggressive construction program to replace old water and sewer lines. Meanwhile the State of New York continues its program to replace aging bridges in the counties we serve. The Company has gas mains in these city streets and on many county bridges and it is economical to change out these old lines as well as services connected to these lines when the streets are already under construction. Throughout the year we replaced more than three miles of old, unprotected bare steel distribution and transmission pipeline with polyethylene pipe or cathodically protected plastic coated steel pipe. The Company also installed over one mile of new polyethylene pipe to serve new customers. The replacement of old lines and installation of new lines encompassed a total of forty thr ee separate projects. The single largest project involved the installation of 3,759 feet of 12 inch steel main and 316 feet of 10 inch steel main to serve a new diesel substrate plant being built by Corning, Inc. in Erwin. Another large project was on Bridge Street in the middle of the northside of Corning where the Company replaced nearly 2,400 feet of old 4,6 and 8 inch bare steel mains. In summary, it was a very active year for operations as the Company utilizes most of its capital resources toward maintaining its own infrastructure.

Rate Application

On December 31, 2001 the Company filed with the New York Public Service Commission a multi-year rate increase request and a separate restructuring proposal. After an extensive audit by the staff of the Public Service Commission negotiations ensued over several months that resulted in an agreement by all parties involved in the proceeding. The agreement results in a gas revenue increase of $874,518 annually, beginning January 1, 2003 and freezes rates for the second and third year of the agreement. The request for increased rates was necessitated by the overall increase in the cost of doing business in addition to several extraordinary increases in expense resulting from the downturn in the economy and the events of September 11, 2001. An example of extraordinary costs is the Companys various insurance policies which increased in cost by $140,000, or 47 percent, primarily as a result of September 11th. The downturn in the economy, both local and national, created significant increases in such co sts as pension and uncollectible accounts and was compounded by reduced sales levels. This settlement allows the Company to earn a return on equity up to 11.5% before sharing with customers. The Company believes that the agreement allows for the opportunity to earn a fair rate of return and provides for an improvement to its debt to equity ratio.

The efforts of the Public Service Commission to restructure the utility industry, both natural gas and electric, in order to provide customers with a choice of suppliers has been previously reported. The Company has been methodically moving in the direction of providing open access to competitive marketers for all customers for some time. As of September 30th approximately 3,900 of our small volume residential and commercial customers were acquiring their supply from competitive marketers. The restructuring proposal filed on December 31st further defines the responsibilities of both the Company and customers in the new environment. There is no required timeline in which this proposal must be resolved nor is there an impact on the financial condition of the Company.

Pension Fund Accounting Adjustment

In the footnotes to the Companys financial statements there is information relating to a charge to common stockholders equity. Due to the size of this charge it seems appropriate to address this rather complex matter further in this letter. As a result of the decline in the market value of the assets of the Companys defined benefit pension plan it became necessary to make a year-end accounting entry that reduced common stockholders equity by $1,022,134. Statement of Financial Accounting Standards No. 87 ("SFAS 87") prescribes certain minimum liability requirements with respect to plan assets and the accumulated benefit obligation (ABO) of the plan. Through the ordinary operation of SFAS 87, when the balance sheet liability is less than the shortfall between the plan assets and the ABO, an additional liability must be recorded for this difference. The charge to common stockholders equity of $1,022,134 is recorded as other comprehensive loss and is offset by recording a long term liability on the balance sh eet. This situation will be corrected as the market conditions and the value of the plan assets improve.

 

 

 

 

 

 

 

 

 

 

 

 

 

Managements Discussion and Analysis of Financial Condition and Results of Operations

Earnings

Consolidated net income amounted to $526,200 or $1.14 per share in 2002 compared to $606,600 or $1.32 per share in 2001. Significant items affecting the companys operating results are discussed below.

Operating Revenue

Utility operating revenue decreased $6,879,623 or 29 percent due primarily to a substantial decrease in gas costs. Such decreases are credited to customers through the Companys Gas Adjustment Clause discussed in note 1(d) to the financial statements. Additional discussion of utility operating revenue appears in the Letter to Shareholders section of this report.

Unregulated revenue decreased $574,795 or 8 percent due primarily to reduced activity in the residential marketplace of the Companys real estate operating segment. A complete discussion of the segment results appears in the Letter to Shareholders section of this report. Revenue by operating segment can be found in note 2 to the financial statements.

Utility Operating Expenses

Purchased gas expense decreased $6,271,513 or 37 percent as the result of a substantial market decrease in the cost of natural gas. The Companys average cost of gas decreased to $5.99 per mcf in 2002 from $7.77 per mcf the previous year.

Other operating and maintenance expense decreased 5 percent due primarily to reduced post-retirement expense. Taxes other than federal income taxes decreased 16 percent due to a rate reduction and the reduction in utility operating revenue. The Company is subject to the New York public utilities gross receipts tax that is levied on all revenue.

Operating Segments

A description of the Companys six operating segments can be found in note 3 to the financial statements, which also contains the results by segment for fiscal year 2002 and 2001. In addition, a detailed discussion of the operating segments can be found in the Letter to Shareholders at the beginning of this report.

Liquidity and Capital Resources

The Company financed its 2002 capital additions of $1,366,000 through a combination of internally generated funds and short-term borrowing. The Company experienced a significant increase in gas stored underground and in short-term debt at September 30 as the result of an expired agreement with Mirant Energy to manage the Companys gas supply assets. Under the agreement during 2001, the Company avoided the summer fill and funding of storage gas. The Company chose not to renew the agreement after its one-year term, and returned to the more conventional summer fill of storage gas in 2002. The Company has a total of $8,500,000 under lines of credit at local banks, the terms of which are disclosed in note 6 to the financial statements. The amount outstanding under these lines at September 30, 2002 is $5,475,000. It is expected that current capital resources will be sufficient for planned operations for 2003.

Regulatory Matters

On December 31, 2001 the Company filed a rate increase request with the New York Public Service Commission. A discussion appears in the rate application section of the Letter to the Shareholders section of this report.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements which, to the extent they are not recitations of historical facts, constitute "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995 (Reform Act). In this respect, the words "estimate", "project", "anticipate", "expect", "intend", "believe" and similar expressions are intended to identify forward-looking statements. All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. A number of important factors affecting the Companys business and financial results could cause actual results to differ materially from those stated in the forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

 

 

 

Consolidated Statements of Income

 

 

 

For the Years Ended September 30, 2002 and 2001

 

 

 

 

 

 

 

 

 

 

 

Utility Operations

2002

2001

 

 

 

Operating revenue:

 

 

 

Residential, commercial and industrial

$12,096,506

 

$18,932,062

Transportation

5,142,463

 

5,162,956

Capacity assignment

2,646

26,220

 

Total operating revenue

17,241,615

24,121,238

 

 

 

Operating expenses and taxes:

 

 

 

Natural gas purchased

10,763,813

 

17,035,326

Operating and maintenance

3,491,141

 

3,679,016

Taxes other than federal income taxes

1,265,162

 

1,505,948

Depreciation

513,278

 

516,975

Federal income taxes

87,537

142,040

 

Total operating expenses and taxes

16,120,931

22,879,305

 

Operating income from utility operations

1,120,684

1,241,933

 

 

 

 

 

 

 

Unregulated Operations

 

 

 

 

 

 

 

Unregulated revenue

6,604,831

 

7,179,626

Unregulated expenses(includes interest expense of

6,297,190

6,888,948

$143,446 for 2002 and $156,238 for 2001)

Operating income from unregulated operations

307,641

290,678

 

 

 

 

Other income (includes net realized loss on

 

 

 

marketable securities of $28,197 and $55,707

 

 

in 2002 and 2001)

24,696

34,614

 

Income before interest expense

1,453,021

1,567,225

 

 

 

 

Interest expense - regulated

926,868

960,675

 

 

 

 

Net income

$526,153

 

$606,550

 

===========

 

===========

 

 

 

 

Weighted average number of shares outstanding-

 

 

 

basic and diluted

460,000

 

460,000

Basic and diluted earnings per common share

$1.14

 

$1.32

 

===========

 

===========

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

 

 

 

Consolidated Balance Sheets

 

 

 

September 30, 2002 and 2001

 

 

 

 

 

 

 

 

 

 

 

Assets

2002

2001

 

 

 

 

Plant:

 

 

 

Utility property, plant and equipment

$23,980,978

 

$22,940,150

Non-utility property, plant and equipment

4,394,455

 

4,281,945

Less accumulated depreciation

10,846,228

10,287,225

Total plant utility and non-utility net

17,529,205

16,934,870

 

 

Investments:

 

Marketable securities available for sale at fair value

1,249,551

 

1,195,775

Investment in joint venture and associated companies

200,416

187,532

Total investments

1,449,967

1,383,307

 

Current assets:

 

 

 

Cash and cash equivalents

281,036

 

225,239

Customer accounts receivable, (net of allowance for

 

 

 

uncollectible accounts of $97,000 in 2002 and 2001)

1,398,496

 

1,244,121

Gas stored underground, at average cost

1,599,178

 

488,871

Gas and appliance inventories

654,839

 

635,792

Prepaid expenses

635,321

 

645,476

Prepaid income taxes

35,478

 

326,882

Total current assets

4,604,348

 

3,566,381

 

 

 

 

Deferred debits and other assets:

 

 

 

Regulatory assets:

 

 

 

Income taxes recoverable through rates

1,016,661

 

1,016,661

Prepaid pension costs

0

 

2,108,193

Unrecovered gas costs

761,172

 

1,543,392

Other

485,034

 

263,960

Goodwill (net of accumulated amortization of $521,294

 

 

 

in 2002 and $386,962 in 2001)

1,493,719

 

1,628,051

Unamortized debt issuance cost (net of accumulated

 

amortization of $232,931 in 2002 and $211,373 in 2001)

306,642

 

328,200

Other

1,207,233

557,239

Total deferred debits and other assets

5,270,461

7,445,696

 

 

 

 

Total assets

$28,853,981

 

$29,330,254

 

  ===========

 ===========

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

Consolidated Balance Sheets

September 30, 2002 and 2001

2002

2001

Capitalization and liabilities:

Common stockholders equity:

Common stock (common stock $5.00 par

value per share. Authorized 1,000,000

shares; issued and outstanding 460,000 shares)

$2,300,000

$2,300,000

Other paid-in capital

653,346

653,346

Retained earnings

2,352,592

1,975,939

Accumulated other comprehensive loss

(1,137,098)

(39,630)

Total common stockholders equity

4,168,840

4,889,655

Long-term debt, less current installments

10,593,738

10,905,093

Current liabilities:

Current portion of long term debt

416,005

534,894

Borrowings under lines-of-credit

5,475,000

3,925,233

Accounts payable

2,262,896

2,163,274

Accrued expenses

593,686

593,786

Customer deposits and accrued interest

795,061

911,470

Deferred income taxes

473,588

172,763

Accrued general taxes

57,513

46,333

Supplier refunds

59,212

74,095

Dividends payable

0

149,500

Total current liabilities

10,132,961

8,571,348

Deferred credits and other liabilities:

Deferred income taxes

1,581,536

2,463,608

Deferred compensation and post-retirement

benefits

1,724,658

2,206,038

Deferred pension costs

422,660

0

Other

229,588

294,512

Total deferred credits and other liabilities

3,958,442

4,964,158

Concentrations and commitments (notes 3 and 10)

Total capitalization and liabilities

$28,853,981

$29,330,254

 ===========

 ===========

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

 

 

 

 

 

 

Consolidated Statements of Stockholders Equity

 

 

 

 

 

 

 

 

For the Years Ended September 30, 2002 and 2001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Additional

 

 

 

Other

 

 

 

 

Common

 

Paid in

 

Retained

 

Comprehensive

 

 

 

 

Stock

Capital

Earnings

Income (Loss)

Total

 

 

 

 

 

 

 

 

 

 

 

Balances at October 1, 2000

 

$2,300,000

 

$653,346

 

$1,967,389

 

$130,790

 

$5,051,525

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

Change in unrealized loss on

 

 

 

 

 

 

 

 

 

 

securities available for sale, net of

 

 

 

 

 

 

 

 

 

 

income tax credits of $88,330

 

---

 

---

 

---

 

(170,420)

 

(170,420)

Net income

 

---

 

---

 

606,550

 

---

 

606,550

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

 

436,130

Cash dividends

 

---

 

---

 

(598,000)

 

---

 

(598,000)

Balances at September 30, 2001

 

2,300,000

 

653,346

 

1,975,939

 

(39,630)

 

4,889,655

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

Change in unrealized loss on

 

 

 

 

 

 

 

 

 

 

securities available for sale, net of

 

 

 

 

 

 

 

 

 

 

income tax credits of $38,809

 

---

---

 

---

 

(75,334)

 

(75,334)

Minimum pension liability

 

---

---

 

---

 

(1,022,134)

 

(1,022,134)

Net income

 

---

---

 

526,153

 

---

 

526,153

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

 

 

 

 

 

 

 

(571,315)

Cash dividends

 

---

---

 

(149,500)

 

---

 

(149,500)

Balances at September 30, 2002

 

$2,300,000

 

$653,346

 

$2,352,592

 

($1,137,098)

 

$4,168,840

 

 

===========

 

===========

 

 ===========

 

  ===========

 

  ===========

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

 

 

 

Consolidated Statements of Cash Flows

 

 

 

For the Years Ended September 30, 2002 and 2001

 

 

 

 

 

 

 

 

 

 

 

 

2002

2001

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$526,153

 

$606,550

Adjustments to reconcile net income to net cash provided

 

 

 

by (used in) operating activities:

 

 

 

Depreciation and amortization

933,297

 

960,331

Unrealized (gain) loss on investment

(10,022)

 

23,326

Loss on sale of marketable securities

28,197

 

55,707

Deferred income taxes

(15,884)

 

67,274

 

 

 

 

Changes in assets and liabilities:

 

 

 

(Increase) decrease in:

 

 

 

Accounts receivable

(154,375)

 

66,568

Gas stored underground

(1,110,307)

 

1,705,565

Gas and appliance inventories

(19,047)

 

3,099

Prepaid expenses

10,155

 

(115,571)

Unrecovered gas costs

782,220

 

(180,998)

Prepaid income taxes

291,404

 

27,737

Deferred charges - pension and other

105,319

 

(658,177)

Increase (decrease) in:

 

 

 

Accounts payable

99,622

 

447,646

Customer deposit liability

(116,409)

 

(149)

Accrued general taxes

11,180

 

(72,998)

Supplier refunds

(14,883)

 

(220,581)

Other liabilities and deferred credits

(546,404)

558,313

Net cash provided by operating activities

800,216

3,273,642

 

 

 

 

Cash flow from investing activities:

 

 

 

Purchase of securities available for sale

(196,116)

 

(144,019)

Investment in joint venture

(5,250)

 

(18,076)

Investment other

2,388

 

(17,988)

Capital expenditures

(1,365,964)

(913,460)

Net cash used in investing activities

(1,564,942)

(1,093,543)

 

 

 

Cash flows from financing activities:

 

 

Net borrowings (repayments) under lines-of-credit

1,549,767

 

(1,250,126)

Dividends paid

(299,000)

 

(598,000)

Repayment of long-term debt

(430,244)

(363,769)

Net cash provided by (used in) financing activities

820,523

(2,211,895)

Net increase (decrease) in cash

55,797

 

(31,796)

 

 

Cash and cash equivalents at beginning of year

225,239

257,035

 

 

 

 

Cash and cash equivalents at end of year

$281,036

 

$225,239

 

 ===========

 

 ===========

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$1,078,486

 

$1,119,070

 

 ===========

 

 ===========

Income taxes

$167,207

 

$787,909

 

 ===========

 

 ===========

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2002 and 2001

  1. Summary of Significant Accounting Policies

Corning Natural Gas Corporation (the Company) is a gas distribution company providing gas on a commodity and transportation basis to its customers in the Southern Tier of New York State. The Company follows the Uniform System of Accounts prescribed by the Public Service Commission of the State of New York (PSC) which has jurisdiction over and sets rates for New York State gas distribution companies. The Companys regulated operations meet the criteria and accordingly, follow the accounting and reporting of Statement of Financial Accounting Standards No. 71 (SFAS No. 71) Accounting for the Effects of Certain Types of Regulation. The Companys financial statements contain the use of estimates and assumptions for reporting certain assets, liabilities, revenue and expenses and actual results could differ from the estimates. The more significant accounting policies of the Company are summarized below.
    1. Principles of Consolidation and Presentation

      2. The consolidated financial statements include the Company and its wholly owned subsidiary, the Corning Natural Gas Appliance Corporation. The Corning Natural Gas Appliance Corporation owns four businesses which have been established as New York State limited liability subsidiary corporations, as follows: Tax Center International, LLC; The Foodmart Plaza, LLC; Corning Realty Associates, LLC and Corning Mortgage, LLC. Hereinafter the Appliance Corporation and its limited liability subsidiary corporations are collectively referred to as "Appliance Corporation". All significant inter-company accounts and transactions have been eliminated in consolidation. The results of the Appliance Corporation are reported separately as unregulated operations in the consolidated statements of income. Shared expenses are allocated to the Appliance Corporation.

      It is the Companys policy to reclassify amounts in the prior year financial statements to conform with the current years presentation.

    2. Property, Plant and Equipment

      3. Utility plant is stated at the historical cost of construction. Those costs include payroll, fringe benefits, materials and supplies and transportation costs. The Company charges normal repairs to maintenance expense. The Appliance Corporation capitalizes the cost of appliances and the original installation to rented gas appliances. Subsequent repairs are expensed.

       

    3. Depreciation

The Company provides for depreciation for accounting purposes using a straight-line method based on the estimated economic lives of property, which ranges from 3 to 55 years for all assets except utility plant. The depreciation rate used for utility plant, expressed as an annual percentage of depreciable property, was 2.6% in 2002 and 2.7% in 2001. At the time utility properties are retired, the original cost plus costs of removal less salvage, are charged to accumulated depreciation.

Non-utility property, plant and equipment

2002

2001

Rented appliances

$

2,658,563

$

2,612,120

Structures and improvements

1,251,606

1,228,676

Land

214,555

214,555

Furniture and equipment

269,731

226,594

Total:

$

4,394,455

$

4,281,945

 

 

(d) Revenue and Natural Gas Purchased

The Company records revenues from residential and commercial customers based on meters read on a cycle basis throughout each month, while certain large industrial and utility customers meters are read at the end of each month. Pursuant to the most recent rate order, capacity assignment revenue is recorded at a rate of 15% of the amount received from released capacity and is recognized upon notification of capacity release from the pipeline company while the remaining 85% is returned to customers through reduced gas cost. The Company secured a weather normalization clause in the last major rate filing as protection against severe weather fluctuations. This affects space heating customers and is activated when degree days are 2.2% greater or less than a 30 year average. As a result, the effect on revenue fluctuations in weather related gas sales is somewhat neutralized.

Gas purchases are recorded on readings of suppliers meters as of the end of the month. The Companys rate tariffs include a Gas Adjustment Clause (GAC) which adjusts rates to reflect changes in gas costs from levels established in the rate setting process. In order to match such costs and revenue, the PSC has provided for an annual reconciliation of recoverable GAC costs with applicable revenue billed. Any excess or deficiency in GAC revenue billed is deferred and the balance at the reconciliation date is either refunded to or recovered from customers over a subsequent 12-month period.

Real estate commissions are recognized at closing while professional services revenues are recognized as services are performed.
    1. Marketable Securities

Marketable securities, which are intended to fund the Companys deferred compensation plan, are classified as available for sale at September 30, 2002 and 2001. Such securities are reported at fair value based on quoted market prices, with unrealized gains and losses, net of the related income tax effect, excluded from income, and reported as a component of accumulated other comprehensive income in stockholders equity until realized. The cost of securities sold was determined using the specific identification method.

A summary of the marketable securities at September 30, 2002 and 2001 is as follows:

Net

Market

Cost

Unrealized

Unrealized

Unrealized

Value

Basis

Gains

Losses

Losses

2002

$1,249,551

$1,423,739

$121,649

($295,837)

($174,188)

2001

$1,195,775

$1,255,820

$136,233

($196,278)

($60,045)

 

(f) Investment in Joint Venture

Corning Mortgage, a subsidiary of The Corning Natural Gas Appliance Corporation holds a 50% equity interest in a joint venture, Choice One Lending, which began operations in August, 2000. Investment by the Company in the joint venture is recorded using the equity method of accounting. The Companys pro-rata share of the results of operations of the joint venture was a profit of $10,022 in 2002 and a loss of $23,697 in 2001.

(g) Inventories

Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis.
    1. Federal Income Tax

      2. The Company uses the asset and liability method to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Companys assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. In addition, such deferred tax assets and liabilities will be adjusted for the effects of enacted changes in tax laws and rates.

    2. Dividends

      3. Dividends are accrued when declared by the Board of Directors. Dividends declared were $149,500 or $0.325 per share in 2002 and $598,000 or $1.30 per share in 2001. Dividends paid were $299,000 or $0.65 per share in 2002 and $598,000 or $1.30 per share in 2001.

      Under the most restrictive long-term debt covenants, the Company may not declare or pay annual dividends except to the extent that consolidated net worth exceeds $2,000,000.

    3. Goodwill

      4. Goodwill represents the excess of purchase price over the fair value of the identified net assets of acquired businesses. Goodwill is amortized over 15 years, the estimated period of benefit, on a straight-line basis. Goodwill in excess of associated expected operating cash flows is considered to be impaired and is written down to fair value, which is determined based on undiscounted future cash flows.

    4. Accounting for Impairment

      5. Statement of Financial Accounting Standards No. 121 ("SFAS No. 121"), Accounting for the Impairment of Long-Lived Assets to be Disposed Of establishes accounting standards to account for the impairment of long-lived assets, and certain identifiable intangibles. Under SFAS No. 121 the Company reviews assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. SFAS No. 121 also requires that a rate regulated enterprise recognize an impairment when regulatory assets are no longer probable of recovery. No impairment losses were incurred for the years ended September 30, 2002 and 2001.

    5. Comprehensive Income

Statement of Financial Accounting Standards No. 130 ("SFAS No. 130"), Reporting Comprehensive Income establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Under SFAS No. 130, the Companys comprehensive income consists of net income, net unrealized gains (losses) on securities and minimum pension liability and is presented in the consolidated statements of stockholders equity.

(m) Recently Issued Accounting Standards

In July 2001 the FASB issued Statement of Financial Accounting Standards No. 142 ("SFAS No. 142"), "Goodwill and Other Intangible Assets" which is effective for fiscal years beginning after December 15, 2001. SFAS No.142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. SFAS No. 142 also requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company has obtained the required opinion relative to the goodwill on the books of Corning Realty Associates and determined that there is no impairment. SFAS No. 142 will be adopted in the first quarter of 2003.

  1. Information About Operating Segments

    2. The Companys reportable segments have been determined based upon the nature of the products and services offered, customer base, availability of discrete internal financial information, homogeneity of products, delivery channel and other factors.

    The Corning Natural Gas Corporation (the Gas Company) is a gas distribution company providing gas on a commodity and transportation basis to its customers in the Southern Tier of New York State. The Appliance Corporation sells, rents and services primarily gas burning appliances. The Tax Center provides tax preparation, accounting and payroll services to approximately 1,000 clients. Corning Realty is a residential and commercial real estate business with approximately 80 agents operating in three neighboring counties. Foodmart Plaza is a retail complex consisting of eight tenants under multi-year leases anchored by a major supermarket. Corning Mortgage is a mortgage service company working closely with the realty relationship.

     

    The following table reflects the results of the segments consistent with the Companys internal financial reporting process. The following results are used in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments.

    Gas

    Appliance

    Tax

    Corning

    Foodmart

    Corning

    Company

    Corporation

    Center

    Realty

    Plaza

    Mortgage

    Consolidated

    Revenue:(1)

    2,002

    17,241,615

    2,294,107

    493,225

    3,594,443

    267,073

    18,909

    $23,909,372

    2,001

    24,121,238

    2,391,141

    483,320

    4,195,535

    244,810

    (23,326)

    31,412,718

    Net income (loss):(1)

    2,002

    218,512

    126,323

    126,927

    (16,309)

    69,251

    1,449

    526,153

    2,001

    315,872

    241,503

    130,599

    (82,813)

    25,086

    (23,697)

    606,550

    Interest income:(1)

    2,002

    59,434

    77,321

    9,552

    -

    56

    -

    146,363

    2,001

    54,308

    99,241

    10,264

    -

    -

    -

    163,813

    Interest expense:(1)

    2,002

    926,869

    14,394

    -

    115,488

    63,294

    13,194

    1,133,239

    2,001

    960,674

    7,948

    989

    158,695

    84,693

    15,767

    1,228,766

    Total assets:(2)

    2,002

    23,131,974

    2,120,033

    218,862

    1,797,444

    1,140,615

    -

    28,408,928

    2,001

    21,266,123

    1,976,903

    138,225

    1,815,100

    1,175,903

    -

    26,372,254

    Depreciation and amortization:

    2,002

    513,278

    198,285

    12,986

    177,947

    30,802

    -

    933,298

    2,001

    516,975

    229,619

    12,777

    168,845

    32,115

    -

    960,331

    Federal income tax expense:

    2,002

    87,537

    63,089

    61,021

    (8,770)

    36,968

    1,146

    240,991

    2,001

    142,040

    128,856

    67,278

    (42,646)

    (12,922)

    (11,352)

    271,254

     

     

    (1)Before elimination of intercompany interest.

    (2)Total assets include property, plant and equipment, accounts receivable, inventories, cash and other amounts specifically related to each identified segment. All other assets of the Company not specifically related to a segment as of September 30, 2002 & 2001 totaled $445,053 and $2,958,000 respectively.

    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.

  2. Major Customers

    3. The Company has three major customers, Corning Incorporated, New York State Electric & Gas (NYSEG) and Bath Electric Gas & Water Systems (BEGWS). The loss of any of these customers could have a significant impact on the Companys financial results. Total revenue and deliveries to these customers were as follows:

    Deliveries

    Revenue

    Corning Inc.

    Mcf

    % of Total

    Amount

    % of Total

    Year ended September 30, 2002

    1,985,000

    26

    $855,000

    5

    Year ended September 30, 2001

    1,958,000

    23

    $875,000

    4

    NYSEG

    Year ended September 30, 2002

    2,345,000

    31

    $286,000

    2

    Year ended September 30, 2001

    2,973,000

    35

    $285,000

    1

    BEGWS

    Year ended September 30, 2002

    650,000

    9

    $2,279,000

    13

    Year ended September 30, 2001

    707,000

    8

    $2,870,000

    12

  3. Regulatory Matters

    4. Certain costs are deferred and recognized as expenses when they are reflected in rates and recovered from customers as permitted by SFAS No. 71. These costs are shown as deferred debits and other assets. Such costs arise from the traditional cost-of-service rate setting approach whereby all prudently incurred costs are generally recoverable through rates. Deferral of these costs is appropriate while the Companys rates are regulated under a cost-of-service approach.

    In a purely competitive environment, such costs might not have been incurred or deferred. Accordingly, if the Companys rate setting were changed from a cost-of-service approach and it was no longer allowed to defer these costs under SFAS No. 71, certain of these assets may not be fully recoverable. However, the Company cannot predict the impact, if any, of competition and continues to operate in a cost-of-service based regulatory environment. Accordingly, the Company believes that accounting under SFAS No. 71 is still appropriate.

    Below is a summarization of the Companys regulatory assets as of September 30, 2002 and 2001:

    2002

    2001

    Deferred pension and other

    $485,034

    $2,372,153

    Deferred debits..accounting for income taxes

    1,016,661

    1,016,661

    Unrecovered gas costs

    761,172

    1,543,392

    Total-regulatory assets

    $2,262,867

    $4,932,206

    ==========

    ==========

    Deferred pension and other: Approximately $400,000 and $10,000 of these balances represents deferred pension and post-retirement costs in excess of the amounts currently recoverable through rates at September 30, 2002 and 2001, respectively. The PSC requires such excess costs to be deferred. Remaining balances represent miscellaneous regulatory assets.

    Deferred debits .. accounting for income taxes: These amounts represent the expected future recovery from ratepayers of the tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities.

    Unrecovered gas costs: These costs are recoverable over future years and arise from an annual reconciliation of certain gas revenue and costs (as described in Note 1).

     

    The Company expects that its regulatory assets will be fully recoverable from customers.

  4. Long-Term Debt

    5. A summary of long-term debt at September 30, 2002 and 2001 follows:

    2002

    2001

    Unsecured senior note 7.9%, due serially with annual payments of

    $355,000 beginning in 2006 through 2016 and $795,500 due in 2017

    $4,700,000

    $4,700,000

    First mortgage bonds 8.25%, series all due 2018, secured by

    substantially all utility plant

    3,100,000

    3,100,000

    Unsecured senior note 9.83%, due serially with annual payments of

    $100,000 beginning in 2007 through 2015 and $700,000 due in 2016

    1,600,000

    1,600,000

    Mortgage note 8.02% monthly installments through April 2008

    840,853

    866,625

    Unsecured promissory note 6.5%

    0

    108,507

    Note payable 6.5% monthly installments through January 2004 secured

    by assets of Corning Realty

    160,060

    287,942

    Note payable 7.75% monthly installments through January 2009 secured

    by assets of Corning Realty

    319,828

    363,936

    Mortgage note payable 9.24% monthly installments through 2010

    94,002

    98,192

    Note payable at the prime rate, 4.75% at September 2002

    125,000

    125,000

    Note payable at the prime rate, 4.75% at September 2002

    70,000

    70,000

    Earned out payable 3.93% of Ambrose & Shoemaker revenues

    0

    119,785

    Total long-term debt

    11,009,743

    11,439,987

    Less current installments

    416,005

    534,894

    Long-term debt less current installments

    $10,593,738

    $10,905,093

    ========

    ========

     

     

    The aggregate maturities of long-term debt for each of the five years subsequent to September 30, 2002 are as follows:

    2003 $416,005 2004 $ 96,719 2005 $ 81,458

    2006 $443,701 2007 $552,518 2008 and thereafter $9,419,342

  5. Lines of Credit

    6. The Company has consolidated lines of credit with local banks to borrow up to $8,500,000 on a short-term basis. Borrowings outstanding under these lines were $5,475,000 and $3,925,233 at September 30, 2002 and 2001, respectively. The maximum amount outstanding during the year ended September 30, 2002 and 2001 was $8,240,000 and $7,175,000 respectively. The lines of credit are unsecured and payable on demand with interest at rates which range from the prime rate (4.75% on September 30, 2002) to the prime rate less 3/4%. The weighted average interest rates on outstanding borrowings during fiscal 2002 and 2001 were 4.15% and 7.29% respectively.

  6. Income Taxes

    7. Income tax expense (benefit) for the years ended September 30 is as follows:

    2002

    2001

    Utility Operations:

    Current

    ($223,561)

    $220,214

    Deferred

    321,801

    (68,644)

    Investment Tax Credits

    0

    6,054

    98,240

    157,624

    Unregulated Operations:

    Current

    203,654

    164,994

    Deferred

    (4,802)

    1,370

    198,852

    166,364

    Total Income Tax Expense

    $297,092

    $323,988

    =======

    =======

     

    Actual income tax expense differs from the expected tax expense (computed by applying the federal corporate tax rate of 34% to income before income tax expense) as follows:

    2002

    2001

    Expected federal tax expense

    $279,903

    $316,383

    Investment tax credits

    0

    6,054

    State tax expense

    45,070

    34,805

    Other, net

    (27,881)

    (33,254)

    Actual tax expense

    $297,092

    $323,988

    =======

    =======

     

    The tax effects of temporary differences that result in deferred income tax assets and liabilities at September 30 are as follows:

    2002

    2001

    Deferred income tax assets:

    Unbilled revenue

    $21,725

    $25,264

    Deferred compensation reserve

    510,142

    404,580

    Post-retirement benefit obligations

    220,394

    294,549

    Allowance for uncollectible accounts

    38,422

    38,422

    Inventories

    19,542

    33,425

    Comprehensive income

    661,415

    0

    Other

    36,562

    22,192

    Total deferred income tax assets

    1,508,202

    818,432

    Deferred income tax liabilities:

    Property, plant and equipment, principally due to

    differences in depreciation

    2,242,951

    2,463,608

    Pension benefit obligations

    733,467

    677,282

    Deficiency of GAC revenue billed

    64,726

    56,763

    Other

    522,182

    257,150

    Total deferred income tax liabilities

    3,563,326

    3,454,803

    Net deferred income tax liability

    $2,055,124

    $2,636,371

    =======

    =======

     

     

    Beginning January 1, 2000, the regulated operations of the company became subject to state income tax. Based on the results of these regulated operations, and because of the states prescribed method regarding how the new tax rules are to be adopted, the effect of this tax on the results of 2002 and 2001 operations is immaterial.

  7. Pension and Other Post-retirement Benefit Plans

    8. In 1997, the Company established a trust to fund a deferred compensation plan for certain officers. The fair market value of assets in the trust was $1,249,551 and $1,195,775 at September 30, 2002 and 2001, respectively, and the plan liability, which is included in deferred compensation, post-retirement benefits and other credits on the balance sheet, was $1,287,911 and $1,070,118 at September 30, 2002 and 2001, respectively. The assets of the trust are available to general creditors in the event of insolvency.

    The Company has defined benefit pension plans covering substantially all of its employees. The benefits are based on years of service and the employees highest average compensation during a specified period. The Company makes annual contributions to the plans equal to amounts determined in accordance with the funding requirements of the Employee Retirement Security Act of 1974. Contributions are intended to provide for benefits attributed for service to date, and those expected to be earned in the future.

    In addition to the Companys defined benefit pension plans, the Company offers post-retirement benefits comprised of medical and life coverages to its employees who meet certain age and service criteria. Currently, the retirees under age 65 pay 60% of their health care premium until Medicare benefits commence at age 65. After age 65, Medicare supplemental coverage is offered with Company payment of the premium. For participants who retire on or after September 2, 1992, the Company cost, as stated above, shall not exceed $150 per month. In addition, the Company offers limited life insurance coverage to active employees and retirees. The post-retirement benefit plan is not funded. The Company accrues the cost of providing post-retirement benefits during the active service period of the employee.

    The following table shows reconciliations of the Companys pension and post-retirement plan benefits as of September 30:

    Pension Benefits

    Post-retirement Benefits

    2002

    2001

    2002

    2001

    Change in benefit obligations

    Benefit obligation at beginning of year

    $9,804,568

    $8,464,053

    $1,065,806

    $911,923

    Service cost

    318,367

    266,987

    28,103

    23,571

    Interest cost

    714,793

    658,804

    77,510

    70,460

    Participant contributions

    -

    -

    84,128

    70,463

    Actuarial loss

    449,884

    691,798

    63,270

    125,335

    Benefits paid

    (517,683)

    (545,124)

    (148,738)

    (135,946)

    Amendments

    -

    268,050

    -

    -

    Benefit obligation at end of year

    $10,769,929

    $9,804,568

    $1,170,079

    $1,065,806

    =======

    =======

    =======

    =======

    Change in plan assets

    Fair value of plan assets at beginning of year

    $10,152,874

    $11,280,165

    $ -

    $ -

    Actual return on plan assets

    (1,159,171)

    (689,067)

    -

    -

    Company contributions

    -

    106,900

    64,610

    65,483

    Participant contributions

    -

    -

    84,128

    70,463

    Benefits paid

    (608,443)

    (545,124)

    (148,738)

    (135,946)

    Fair value of plan assets at end of year

    $8,385,260

    $10,152,874

    $ -

    $ -

    =======

    =======

    =======

    =======

    Funded status

    (2,384,669)

    348,306

    (1,170,079)

    (1,065,806)

    Unrecognized actuarial loss (gain)

    3,466,367

    887,351

    (129,148)

    (213,798)

    Unrecognized PSC adjustment

    211,757

    252,092

    -

    -

    Unrecognized prior service cost

    772,533

    886,586

    27,128

    32,553

    Unrecognized net transition asset (obligation)

    (207,426)

    (246,936)

    631,250

    688,250

    Accrued contribution

    40,000

    -

    -

    -

    Additional minimum liability

    (2,321,221)

    -

    -

    -

    (Accrued) prepaid benefit cost

    ($422,659)

    $2,127,399

    ($640,849)

    ($558,801)

    =======

    =======

    =======

    =======

    Weighted average assumptions as of

    September 30, 2002 and 2001

    Discount rate

    7.00%

    7.50%

    7.00%

    7.50%

    Expected return on assets

    8.00%

    8.00%

    -

    -

    Rate of compensation increase

    5.00%

    5.00%

    -

    -

     

     

    For measurement purposes, a 12% annual rate of increase in the per capita cost of covered benefits (health care cost trend rate) was assumed for 2002. The rate is assumed to decrease gradually to 5% by the year 2009 and remain at that level thereafter. A 1% increase in the actual health care cost trend would result in approximately a 3.8% increase in the service and interest cost components of the annual net periodic post-retirement benefit cost and a 3.9% increase in the accumulated post-retirement benefit obligation. A 1% decrease in the actual health care cost trend would result in approximately a 3.3% decrease in the service and interest cost components of the annual net periodic post-retirement benefit cost and a 3.4% decrease in the accumulated post-retirement benefit obligation.

     

    Pension Benefits

    Post-retirement Benefits

    2002

    2001

    2002

    2001

    Components of net periodic benefit cost (benefit)

    Service cost

    $318,367

    $266,987

    $28,103

    $23,571

    Interest cost

    714,793

    658,804

    77,510

    70,460

    Expected return on plan assets

    (790,311)

    (884,014)

    -

    -

    Amortization of prior service

    114,053

    100,017

    5,425

    5,425

    Amortization of transition obligation

    (39,510)

    (39,510)

    57,000

    57,000

    Amortization of PSC adjustment

    40,335

    40,335

    -

    -

    Amortization of unrecognized actuaria

    (gain)loss

    (88,890)

    (315,959)

    (21,380)

    (37,681)

    Net periodic benefit cost (benefit)

    $268,837

    ($173,340)

    $146,658

    $118,775

    =========

    =========

    =========

    =========

     

    For ratemaking and financial statement purposes, pension expense represents the amount approved by the PSC in the Companys most recently approved rate case. Pension expense for ratemaking and financial statement purposes was approximately ($326,706) and ($149,000) for the years ended September 30, 2002 and 2001 respectively. The difference between the pension expense (benefit) for ratemaking and financial statement purposes, and the amount computed above has been deferred and is not included in the prepaid pension cost noted above. Such balances equal ($365,432) and ($156,000) as of September 30, 2002 and 2001 respectively.

    The PSC has allowed the Company to recover incremental cost associated with post-retirement benefits through rates on a current basis. Due to the timing differences between the Companys rate case filings and financial reporting period, a regulatory liability of $102,098 and $381,468 has been recognized at September 30, 2002 and 2001 respectively.

  8. Rentals Under Operating Leases

Foodmart Plaza receives income from the rental of retail store space under operating leases. The following is a schedule of minimum future non-cancellable rentals (excluding amounts representing executory costs such as taxes, maintenance and insurance) of operating leases as of September 30, 2002:

2003

$253,776

2004

255,575

2005

239,107

Total minimum future rentals

$748,458

======

 

All leases contain renewal options at the end of their respective lease terms.

(10) Commitments

The Company has agreements with seven pipeline companies providing for pipeline capacity for terms that extend through 2006. These agreements require the payment of a demand charge for contracted capacity at Federal Energy Regulatory Commission approved rates. Purchased gas costs incurred under these pipelines capacity agreements during 2002 and 2001 amounted to $2,648,114 and $3,198,489, respectively. The Company also has short-term gas purchase agreements averaging three months in length, with prices tied to various indices. The Company does not anticipate these agreements to be significantly in excess of normal capacity requirements.

 

 

 

 

 

 

 

 

 

INDEPENDENT AUDITORS REPORT

The Board of Directors

Corning Natural Gas Corporation

Corning, New York

We have audited the accompanying consolidated balance sheets of Corning Natural Gas Corporation and Subsidiary, ("the Company") as of September 30, 2002 and 2001, and the related consolidated statements of income, stockholders equity, and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Rochester, New York
November 22, 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

SUMMARY OF FINANCIAL AND OPERATING STATISTICS

2002

2001

2000

1999

1998

Total assets

$

28,853,981

29,330,254

30,326,512

26,513,771

24,798,172

Long-term debt, less current installments

$

10,593,738

10,905,093

11,429,421

11,507,315

10,459,351

Summary of earnings:

Utility operating revenue

$

17,241,615

24,121,238

16,496,841

16,276,170

16,673,295

Total operating expenses and taxes

16,120,931

22,879,305

15,399,498

15,154,747

15,354,527

Net utility operating income

1,120,684

1,241,933

1,097,343

1,121,423

1,318,768

Other income

24,696

34,614

76,483

63,353

31,885

Appliance Corporation Earnings

307,641

290,678

378,988

208,302

248,665

Interest expense-regulated

926,868

960,675

1,081,362

955,130

959,161

Net Income

$

526,153

606,550

471,452

437,948

640,157

Number of common shares

460,000

460,000

460,000

460,000

460,000

Earnings per common share

$

1.14

1.32

1.02

0.95

1.39

Dividends paid per common share

$

0.65

1.30

1.30

1.30

1.30

Statistics

Gas delivered (MMcf)

Residential

997

1,507

1,501

1,519

1,519

Commercial

263

307

291

314

439

Other utilities

300

339

319

309

309

Transportation deliveries

5,978

6,392

5,936

5,875

5,068

Total deliveries

7,538

8,545

8,047

8,017

7,335

Number of customers-end of period

14,388

14,454

14,246

13,993

13,919

Average Mcf use per

residential customer

93.8

119.1

117.4

117.8

116.8

Average revenue per residential

customer

$

897.71

1,250.44

819.00

822.57

814.33

Number of degree days (1)

5,629

6,809

6,333

6,241

5,979

Percent (warmer) colder than avg.

(13.1)

5.0

(2.6)

(4.3)

(9.3)

Peak day deliveries (Mcf)

52,467

53,523

57,642

51,770

44,250

Number of rental appliances in service

6,179

6,213

6,263

6,430

6,409

Miles of mains

402.3

398.4

396.5

394.6

391.7

Investment in gas plant (at cost)

$

23,980,978

22,940,150

22,251,342

21,667,115

21,396,130

Stockholders equity per share

$

9.06

10.63

10.98

11.11

11.73

(1)

Fifeteen year average degree days: 6,477

 

 

 

 

 

 

 

 

 

 

 

OFFICERS

Thomas K. Barry

Chairman of the Board, President

and Chief Executive Officer

Kenneth J. Robinson

Executive Vice President

Russell S. Miller

Vice President-Operations

Thomas S. Roye

Vice President-Administration

Stanley G. Sleve

Vice President-Business Development

Gary K. Earley

Treasurer

Phyllis J. Groeger

Corporate Secretary

DIRECTORS

Thomas K. Barry

Chairman of the Board, President and Chief Executive Officer of the Company

Thomas H. Bilodeau

Vice President-Finance, Medical & Environmental Coolers, Inc.

Bradford J. Faxon

Senior Consultant of Southern Union Gas Company, Former President of Fall River Gas Company

Donald R. Patnode

Former President, Industrial Filters and Equipment Corporation

Kenneth J. Robinson

Executive Vice President of the Company

Registrar and Stock Transfer Agent

Corning Natural Gas Corporation

Corning, New York

Counsel

Rich May, A Professional Corporation

Boston, Massachusetts

 

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