-----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, ENJ5gXM4DahNeClZp0iUvzEutwcjFTKlsJAf6lCLAm0rcqZfG0k1gXmFGVZdQLuZ n3l68pq4/hv4fi/RObqYKg== 0000024751-99-000001.txt : 19990217 0000024751-99-000001.hdr.sgml : 19990217 ACCESSION NUMBER: 0000024751-99-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-00643 FILM NUMBER: 99541625 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 10QSB 1 U.S. Securities and Exchange Commission Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarter ended December 31, 1998 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 Identification No.) incorporation or organization) 330 W. William St., Corning NY 14830 (Address of principal executive offices) (Zip Code) Registrant's telephone number (607) 936-3755 Indicate by check mark whether the registrant (1) has filed all reports to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __x__ No____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes_____ No_____ There were 460,000 shares of Common Stock outstanding at the end of the quarter. There is only one class of Common Stock and no Preference Stock outstanding. Net income (loss) for the quarter ended December 31, 1998 was $163,322, a $49,389 reduction from the same quarter the previous year. The reduction results from a decline in gas sales due to milder weather. Mcf deliveries of 2,076,824 were down 4 percent from the same quarter last year. In addition, capacity assignment revenues of $32,802 were down 39 percent from the previous year due to an increasingly competitive market. Subsidiary earnings were also up 17 percent for the quarter due to the newly acquired businesses discussed below. As the Comnpany's business is seasonal by quarters, results for the first three months of fiscal year 1999 should not be used as an indication of what results for the full twelve months of fiscal year 1999 may be. Late in September, 1997, the Company completed a long-term debt financing in the amount of $4.7 million. These funds were obtained through a private placement of a senior note with interest at 7.9 percent over a 20 year term. This financing allowed the Company to reduce short-term debt in the amount of $3.1 million and to retire a 10 percent bond with a balance of $1.6 million. Savings of over $200,000 were estimated on the bond retirement while the entire package served to strenghten the capitalization structure. In April 1998 the Company's Appliance subsidiary completed the purchase of three local existing businesses. A shopping plaza in South Corning was purchased which has multi-year leases with eight businesses housed in 52,000 square feet of rentable space with a major grocery store as the anchor. Also purchased was a real estate management and brokerage organization and a tax and financial services company. The shopping plaza was purchased for $1,175,000 and financed primarily through a $940,000 twenty year note secur- ed by a mortgage on the shopping center real estate. The real estate and financial service companies were purchased for $349,000, funded through a $180,000 eight year loan agreement with the sellers and the balance through operating funds. The real estate firm is a franchise of The Prudential Marketplace Realty and has twenty three agents operating out of offices in both the Corning and Elmira, New York market. The financial services business, Tax Center International, provides tax preparation, accounting and payroll services and currently serves over six hundred clients. On December 3, 1998 the Corning Realty Associates, LLC, a wholly owned subsidiary of Corning Natural Gas Appliance Corp. acquired a local real estate company, Ambrose and Shoemaker Better Homes and Gardens Real Estate. The acquisition cost of $1,525,000 and was accounted for by the purchase method, as follows: (a) $468,334 to be paid at closing (b) $608,333 to be paid pursuant to a Promissory Note for a period of 60 months at an interest rate of 6.5% per annum. (c) $448,333 to be paid over a three year period pursuant to an "earn out" formula. Total goodwill related to this transaction was $1,400,000. These purchases are part of the Company's plan to aggressively explore new opportunties in non-traditional areas. The Company adopted Statement of FInancial Accounting Standards No. 130, Reporting Comprehensive Income in the quarter ended December 31, 1998. Total Comprehesive Income amounted to $219,009 for the quarter, consisting of Net Income of $163,322 and Unrealized Gain on Marketable Securities of $55,697. Internal generation of funds should be sufficient to meet the needs of the Company coupled with some intermittent short-term borrowings. Year 2000 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 was assigned to develop and implement a Y2K plan. The Company has developed and put in place solutions for the following areas: 1: Computer Hardware and Software The AS/400 Main Frame Computer Operating System and all software modules including Customer Information Systems, Meter Reading, Billing for the Gas and Appliance Company, Service Orders, Accounting and Financial Statements, Inventory and Purchase Orders and Accounts Payable are now Y2K compliant through upgrades received from our software provider and IBM. All personal computers identified as being non compliant have been replaced. The review of software contained on these computers is currently being conducted and the Company anticipates no problems with compliance in this area. 2:Telemetering System The telemetering system is Y2K compliant and we anticipate no interruption in the flow of gas to our customers due to our computer system. 3:Phone System The internal telephone system for the Company is now Y2K compliant. We will be able to receive emergency calls and generate the proper service orders for all phases of our operations. We do not require the use of PC's in handling our customers' calls and creating orders. Costs of Compliance Because the Company is still in the process of identifying and replacing non compliant systems or problems, it is not possible at this time to quantify the total cost incurred with the Y2K program. However, the company expects that it will not be significant. Risks of the Company's Y2K Issues Since the Company has not completed all testing on some of the IT and non-IT systems that may not be Y2K compliant, failure of these systems could have a material adverse impact on the Company's systems. While the Company's Y2K plan is designed to identify and remedy these systems in order to avoid interruption of its operations, there can be no assurance that it will be able to identify all non compliant systems or successfully remedy all those identified. The Company is dependent upon third party products and services, such as utilities and programming uplinks, for the operation of its businesses. As part of its Y2K program the Company will contact these third party product and service providers to ascertain whether Y2K compliance issues may exist. While many of these companies may give us assurances that they are fully Y2K compliant, the Company does not have the ability to verify such inform- ation. If critical third party systems fail as a result of Y2K issues, the ability of the Company to provide services to its customers may be interrupted. While the Company intends to consider contingency plans to address those risks although no such plans have been identified, there can be no assurance that any such plan would resolve such problems in a satisfactory manner. This could result in lost revenues or the risk of actions against the Company if the businesses of others are disrupted. There has been no change in independent public accountants. The Company has not filed any reports on Form 8-K for the quarter ended December 31, 1998. The information furnished herewith reflects all adjustments which are in the opinion of management necessary to a fair statement of the results for the period. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. The condensed financial statements should be read in conjunction with the financial statements and noted thereto included in the Company's latest Annual Report on Form 10-KSB. The statements contained herein have not been examined or certified by a firm of certified public accountants. There were no sales of unregistered securities (debt or equity) during the fiscal quarter ending December 31, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CORNING NATURAL GAS CORPORATION Date February 12, 1999 THOMAS K BARRY Thomas K. Barry, Chairman of the Board, President and C.E.O. Date February 12, 1999 GARY K EARLEY Gary K. Earley, Treasurer CORNING NATURAL GAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME UNAUDITED FORM 10 QSB FOR QUARTER ENDED December 31, 1998 December 31, 1997 Operating Revenues $4,127,298 $4,668,028 Cost and Expense Operating Expenses 3,825,526 4,262,742 Interest Expense 254,843 236,343 Income Tax (17,612) 41,783 Other Deductions Net 5,042 2,519 ---------- ----------- Total Costs and Expenses 4,067,799 4,543,387 Operating Income 59,499 124,641 Other Income 810 0 Corning Natural Gas Appliance Corp. Operating Revenues 662,914 717,677 Depreciation 58,421 61,166 Other Operating Expense 509,947 500,630 Federal Income Tax 33,179 67,811 Equity in Assoc Cos. 41,646 0 ------- -------- Net Income of Appliance Corp 103,013 88,070 ------- -------- Net Income 163,322 212,711 ======= ======== Earnings Per Share-Basic & Diluted $ 0.355 $ 0.462 Dividends Per Share $ 0.650 $ 0.325 Dividends Declared $299,000 $149,500 Shares of common stock outstanding were 460,000 at December 31, 1998. Earnings per share=Net Income as shown above divided by 460,000 shares. Dividends per share=Dividends declared divided by shares outstanding at time. CORNING NATURAL GAS CORPORATION Consolidated Balance Sheets Form 10-QSB Unaudited 12/31/98 09/30/98 --------- -------- Assets Gas Utility Plant $21,669,419 $21,396,130 Non-Utility-Principally Rented Gas Appl 3,912,800 3,782,327 ----------- ----------- 25,582,219 25,178,457 Less:Accum. Provision For Depr (9,225,231) (9,079,776) ----------- ----------- $16,356,988 $16,098,681 Current Assets: Cash and Equivalents 828,096 284,426 Marketable Securities Available for Sale 818,052 785,361 Accounts Receivable 1,812,439 1,038,524 Materials, Supplies and Inventories 1,684,201 2,121,492 Prepayments and Other 465,761 567,172 ----------- ---------- Total Current Assets 5,608,549 4,796,975 Non-Current Assets Def. Tax Assets 330,620 57,000 Def Debits-Acctg for Income Taxes 1,016,661 1,016,661 Deferred Debits 2,286,960 2,507,206 Goodwill, net of amortization 1,742,310 348,235 ---------- --------- Total Non-Current Assets 5,376,551 3,929,102 Total Assets $27,342,088 $24,824,758 =========== =========== Capitalization & Liabilities Capitalization: Common Stock 2,300,000 2,300,000 Premium on Capital Stock-Common 653,346 653,346 Retained Earnings 2,267,812 2,403,489 Net Unrealized Gain on Securites for Sale(net FIT of 51,466) 95,331 39,644 ---------- ---------- 5,316,489 5,396,479 Long Term Debt 12,012,014 10,459,351 ---------- ----------- Total Capitalization 17,328,503 15,855,830 Current Liabilities: Short Term Notes Payable 2,840,000 2,325,000 Accounts Payable 1,641,963 1,266,918 Customer Deposits and Accrued Interest 238,361 728,645 Other Accrued Taxes 304,083 145,170 Current Maturities of Long Term Debt 0 36,830 Other Current and Accrued Liabilities 507,382 602,521 ----------- --------- Total Current Liabilities 5,531,789 5,105,084 Accumulated Deferred FIT 2,855,022 2,353,665 Reserves and Other Liabilities 1,626,774 1,510,179 ----------- ---------- Total Liab. and Capitalization $27,342,088 $24,824,758 =========== =========== CORNING NATURAL GAS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR QUARTER ENDED DECEMBER 31, 1998 FORM 10-QSB-UNAUDITED Dec 31, 1998 Dec 31, 1997 -------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 163,322 $ 212,710 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 155,548 184,567 Allowance for Funds Used During Const. 0 0 Changes in Assets and Liabilities: (Increase)Decrease in: Accounts Receivable (773,915) (1,418,827) Materials, Supplies & Appliance Inv 437,291 (664,184) Other Deferred Charges 568,481 25,221 Prepaid and Other Assets 101,411 490,069 Increase(Decrease)in: Accounts Payable 375,045 2,181,991 Accrued General Taxes 158,913 (104,170) Accrued Federal Income Tax 0 (141,813) Deferred Federal Income Tax 199,050 148,087 Other Liabilities and Def Credits (476,971) (575,785) --------- --------- Net Cash Provided by Operating Activities 908,175 337,866 CASH FLOWS FROM INVESTING ACTIVITIES: Sale of Marketable Securities 22,997 0 Capital Expenditures (2,156,165) (269,046) Allowance for Funds Used During Const. 0 0 --------- ----------- Net Cash Used in Investing Activities (2,133,168) (269,046) CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) Under Line-of-Credit Agreement 515,000 275,000 Dividends Paid (299,000) (149,500) Net Borrowing(Repay)of Long-Term Debt 1,552,663 0 --------- ----------- Net Cash Provided by Financing Activities 1,768,663 125,500 --------- ----------- NET INC IN CASH AND CASH EQUIV. 543,670 194,320 CASH AND CASH EQUIV. AT BEG OF PERIOD 284,426 904,651 --------- ---------- CASH AND CASH EQUIV. AT END OF PERIOD $ 828,096 $ 1,098,971 ========== ============= Supplemental Disclosures of Cash Flow Information: Cash Paid During the Period for: Interest (Net of Amount Capitalized) $ 300,406 $ 238,478 Income Taxes $ 11,357 $ 0 CORNING NATURAL GAS CORPORATION Statement of Comprehensive Income Quarter Ended December 31,1998 Net Income $ 163,322 Other Comprehensive income, net of tax: Unrealized gains(losses) on securities: 55,687 --------- Comprehensive Income $ 219,009 ========= EX-27 2
UT 12-MOS 12-MOS 3-MOS 3-MOS SEP-30-1998 SEP-30-1998 SEP-30-1998 SEP-30-1998 DEC-31-1998 SEP-30-1998 DEC-31-1998 DEC-31-1997 PER-BOOK PER-BOOK PER-BOOK PER-BOOK 12444188 12316354 0 0 5312800 3782327 0 0 5524175 4796975 0 0 3976551 3929102 0 0 0 0 0 0 27257714 24824758 0 0 2300000 2300000 0 0 653346 653346 0 0 2267812 2403489 0 0 5221158 5356835 0 0 0 0 0 0 0 0 0 0 12012014 10459351 0 0 2840000 2325000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7184542 6683572 0 0 27257714 24824758 0 0 0 0 4127298 4668028 0 0 (17612) 41783 0 0 3830568 4265261 0 0 3812956 4307044 00 0 314341 360984 0 0 103823 88070 0 0 418164 449054 0 0 254843 236343 0 0 163321 212711 0 0 0 0 0 0 163321 212711 0 0 299000 149500 0 0 254843 236343 0 0 879488 337866 0 0 .355 .462 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----