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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-2040
THE ST. LAWRENCE SEAWAY CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1038443
(State or other jurisdiction (I.R.S. Employer Identification
of corporation or organization) Number)
320 N. Meridian St., Suite 818 46204
Indianapolis, Indiana (Zip Code)
(Address of principal executive offices)
(317) 639-5292
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(g) of the Act:
Name of Exchange on
Title of each class Which Registered
------------------- ----------------
Common Stock, par value $1.00 per share None
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. Yes [x] No [ ]
The aggregate market value of Common stock held by non-affiliates of the
registrant as of May 31, 1996 was approximately $808,197.
The number of shares of Common Stock of the registrant outstanding as of June
26, 1996 was 393,735.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be used in connection with the registrant's
1996 Annual Meeting of Shareholders are incorporated by reference into Part
III of this report.
1
The St. Lawrence Seaway Corporation
Part I
Item 1 - Business
Recent Developments
On December 31, 1995, The St. Lawrence Seaway Corporation (the "Company" or
"St. Lawrence") organized a wholly-owned subsidiary as a Massachusetts business
trust under the name "The St. Lawrence Fund" (the "Subsidiary") for the purpose
of investing in securities. At such time, the Company intended to register the
Subsidiary as a closed-end investment company and to distribute beneficial
shares of the Subsidiary to the Company's shareholders. Subsequently, the
Company determined that because of tax considerations, such steps would not be
practical or in the best interest of the Company's shareholders and,
accordingly, determined to dissolve the Subsidiary, effective as of May 31,
1996. A Certificate of Termination and Plan of Dissolution of the Subsidiary was
filed with the Massachusetts Secretary of State on June 12, 1996, and the
Company's original investment in the Subsidiary was distributed to it with
interest in accordance with such Plan of Dissolution.
Company History
The Company is an Indiana corporation organized on March 31, 1959, which,
since such date has principally engaged in farming, timber harvesting and other
traditional agricultural activities. During the last six years, the Company's
only other operating activity has been the sale of certain farming acreage, and
investment of its remaining liquid assets, primarily in interest bearing cash
equivalent securities.
Description of Business
The Company is engaged in a search for other business opportunities which
may or may not be related to its present agricultural, cash management and other
investment activities.
(a) Agricultural Activities -- At March 31, 1996, St. Lawrence was the
owner of one parcel of agricultural real estate in Northern Indiana comprising
approximately 195 acres. This real estate, known as Schleman Farm, is primarily
devoted to farming activities under the cash lease method of operation. The cash
lease method of operation involves the leasing of the property to farmers who
are directly responsible for the operation of the Farm and who pay St. Lawrence
a rental fee covering a ten-month period for the use of the property for farming
and related activities. St. Lawrence generally receives these rental payments at
one time or in
2
semi-annual installments. Real estate taxes and other minor expenses, such as
insurance, are the responsibility of St. Lawrence in some instances.
St. Lawrence has engaged the services of a farm management company,
Halderman Farm Management Service, Inc., of Wabash, Indiana ("Halderman"). Under
the current contract, Halderman manages, and is responsible for the negotiation
of all leases, tenant contracts, and general operations and programs of the
Schleman Farm. Halderman is compensated on a quarterly per-acre fee basis. It
has managed the current and former farm properties of the Company for more than
ten years.
(b) Cash Management and Other Investments -- During the fiscal year ended
March 31, 1996, the Company continued its practice of maintaining its other
assets in relatively liquid interest/dividend bearing money market investments.
A portion of such assets were transferred to the Subsidiary and maintained by it
in a similar money market account, until distributed to the Company pursuant to
the Plan of Dissolution thereof. The Company is engaged in a search for other
business opportunities and, accordingly, such assets may be used for an
acquisition or for a partial payment of an acquisition or for the commencement
of a new business.
Financing Arrangements
The Company's real estate is unencumbered. Furthermore, the Company
currently has no debt for borrowed funds or similar obligations or
contingencies. The Company may incur debt of an undetermined amount to effect an
acquisition or commence a new business. St. Lawrence does not have a formal
arrangement with any bank or financial institution with respect to the
availability of financing in the future.
Licenses and Trademarks, etc.
The business of St. Lawrence is not currently dependent upon any patent,
trademark, franchise or license.
Governmental Regulation
St. Lawrence believes it is in compliance with all federal, state and local
regulations including all applicable environmental matters.
Seasonality
Although farm operations are generally conducted during the summer months,
St. Lawrence receives the majority of its rental and other payments based upon a
definitive
3
schedule and therefore seasonal or weather factors generally do not have an
effect on the revenues of the Company.
Employees
The Company has only one full time salaried employee at this time.
Mr. Jack C. Brown, Secretary of St. Lawrence receives a monthly fee of $500
for administrative services that he renders to the Company. Such fee is paid
pursuant to a month to month arrangement.
Item 2 - Properties
At March 31, 1996, the Company owned one parcel of agricultural real estate
in Porter County, Indiana comprising approximately 195 acres. Only a portion of
the property, known as Schleman Farm, is suitable for farming purposes. The
balance is wooded and from time-to-time is suitable to some extent for timber
harvesting operations. In the past, St. Lawrence has harvested excess timber
from its various properties. Such timber harvesting has occurred at intermittent
times and there can be no assurances that there will be timber activities at
Schleman Farm in the future.
Item 3 - Legal Proceedings
St. Lawrence is not a party to nor is any of its property the subject of
any material legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
4
Part II
Item 5 - Market For the Company's Common Equity and Related Stockholder Matters.
Market information
The Company's common stock is not currently listed for trading on any
exchange. The following table sets forth the high and low bid price for each
quarterly period during the fiscal years 1996 and 1995, as reported by the
National Quotation Bureau, Inc. from the pink sheets and the OTC Bulletin Board.
Such price data reflects inter-dealer prices, without retail mark-up, markdown
or commission and may not represent actual transactions.
Year Quarter High Low
- ---- ------- ---- ---
1996 First $1.88 $1.50
Second $2.13 $1.75
Third $2.25 $1.88
Fourth $2.50 $2.00
1995 First $1.63 $1.50
Second *Unpriced
Third *Unpriced
Fourth *Unpriced
Dividends
It is the present policy of the Board of Directors of St. Lawrence to
retain earnings, if any, to finance the future expansion of the Company. No cash
dividends are expected to be paid in the future.
Number of Stockholders
As of June 26, 1996, there were approximately 1,382 holders of record of
the Company's Common Stock.
5
Item 6 - Selected Financial Data
Selected Financial Data
Years Ended March 31,
The following table sets forth selected financial information with respect
to the Company for the five fiscal years ended March 31, 1996. The information
set forth in the following table should be read in connection with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in
conjunction with the Company's audited Financial Statements and Notes thereto
appearing elsewhere in this Report.
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
REVENUES:
Interest & Dividends 59,858 55,311 34,855 33,085 50,913
Farm Rentals & Sales 9,120 9,804 21,913 34,725 34,665
Gain on Sale of Farm
Properties, net 0 0 80,779 80,183 0
Other 0 0 48 0 216
------ ------ ------ ------ ------
Total 68,978 65,115 137,595 147,993 85,794
------ ------ ------- ------- ------
COSTS & EXPENSES:
Farm Related 1,243 1,634 2,155 4,327 4,867
General and
Administrative 147,748 154,053 111,306 105,365 103,649
Other 1,438 588 0 0 1,558
------ ------ ------- ------- ------
Total 150,429 156,275 113,461 109,692 109,926
Income (Loss) Before
Extraordinary Items
And Income Taxes (81,451) (91,160) 24,134 38,301 (24,132)
Income Tax
Expense (Benefit) (735) (5,429) 8,048 10,289 (2,751)
----- ------- ------ ------ -------
Net Income (loss) (82,186) (85,731) $ 16,086 $ 28,012 $ (21,381)
6
Income (Loss) per
Common Share (0.21) (0.22) $0.04 $0.07 $ (0.05)
----- ----- ----- ----- -------
Weighted Average Number
of Common Shares
Outstanding 393,735 393,735 395,005 406,740 409,036
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Total Assets 1,370,874 1,414,825 1,507,513 1,499,482 1,492,007
Total Liabilities 62,094 23,859 30,817 35,835 35,856
Shareholders' Equity 1,308,780 1,390,966 1,476,696 1,463,647 1,456,151
7
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Year Ended March 31, 1996, as compared to Year Ended March 31, 1995.
Interest and dividend income increased to $59,858 in the year ended March
31, 1996, from $55,311 in the previous year. The increase is a result of higher
interest rates received in cash invested in the year ended March 31, 1996.
Farm rental revenue decreased to $9,120 in the year ended March 31, 1996
from $9,804 in fiscal year 1995 because the lease for the Schleman Farm contains
a $5/acre rent concession given in consideration of the uncertainty of crop
yields due to abnormally inclement weather.
General and administrative expenses decreased to $141,748 in the year ended
March 31, 1996 from $148,053 on the year ended March 31, 1995 principally due
to reduced legal and other professional expenses currently recognized in the
Company's Statement of Income as of March 31, 1995.
As a result of the above items, the Company had a loss of $81,451 before
taxes in the year ended March 31, 1996, as compared to a loss of $91,160 before
taxes in the year ended March 31, 1995.
The income tax paid in the current year was $735. An income tax benefit of
$5,429 was received in the year ended March 31, 1995 as a result of the loss
realized in that year.
Year Ended March 31, 1995, as compared to Year Ended March 31, 1994.
Interest and dividend income increased to $55,311 in the year ended March
31, 1995, from $34,855 in the previous year. The increase is a result of higher
interest rates received in cash invested in the year ended March 31, 1995.
Farm rental revenue decreased in the year ended March 31, 1995 because
fiscal year 1995 was the first year that there were no carry-over rentals from
the sale of previously owned farm properties and because the new lease for the
Schleman Farm contains a $5/acre rent concession given in consideration of the
uncertainty of crop yields due to abnormally inclement weather.
A net increase of approximately $54,700 in general and administrative
expenses occurred in the year ended March 31, 1995 principally due to deferred
legal and other expenses currently recognized in the Company's Statement of
Income as of March 31, 1995. The Company's other actual expenses were comparable
in the year ended March 31, 1995 with prior years.
8
As a result of the above items, the Company had a loss of $91,160 before
taxes in the year ended March 31, 1995, as compared to a profit of $24,134
before taxes in the year ended March 31, 1994.
The income tax benefit in the current year was $5,429 as a result of the
loss realized in the year ended March 31, 1995. An income tax of $8,048 was paid
in the year ended March 31, 1994 as a result of profit realized in that year.
Year Ended March 31, 1994, as compared to Year Ended March 31, 1993.
Interest and dividend income increased to $34,855 in the year ended March
31, 1994, from $33,085 in the previous year. The increase is a result of
slightly higher interest rates received on cash invested in the year ended March
31, 1994.
Farm rental revenue and farm related costs and expenses decreased in the
year ended March 31, 1994, due to the sale on August 2, 1993, of the Company's
Airport Farm property of approximately 205 acres. The Company continued to
receive farm rental revenues from the Airport Farm through December 31, 1993.
A net increase of approximately $6,000 in general and administrative
expenses occurred in the year ended March 31, 1994, due to increased
professional fees (including legal and accounting costs), salaries and annual
meeting expenses of an aggregate of approximately $20,000 which were offset by
decreases in certain other expenses.
In the year ended March 31, 1994, the Company realized, after all costs and
expenses, a gain on the sale of farm property of $80,779 before applicable
income taxes. A sale by the Company of comparable farm property occurred in the
year ended March 31, 1993, which provided a gain of $80,301 before applicable
income taxes.
As a result of the above items, the Company achieved a profit of $24,134
before taxes in the year ended March 31, 1994, as compared to a profit of
$38,301 before taxes in the year ended March 3l, 1993.
The income tax provision in the current year was $8,048 as a result of the
profit realized in the year ended March 31, 1994. An income tax of $10,289 was
paid in the year ended March 31, 1993, as a result of profit realized in that
year.
Liquidity and Capital Resources
At March 31, 1996, the Company and Subsidiary had net working capital of
$1,184,051, the major portion of which was in cash and money market funds. St.
Lawrence has sufficient capital resources to continue its current business.
9
The Company may require the use of its assets for a purchase or partial
payment for an acquisition or in connection with another business opportunity.
In addition, St. Lawrence may incur debt of an undetermined amount to effect an
acquisition or in connection with another business opportunity. It may also
issue its securities in connection with an acquisition or other business
opportunity.
St. Lawrence does not have a formal arrangement with any bank or financial
institution with respect to the availability of financing in the future.
Item 8 - Financial Statements and Supplementary Data
Annexed hereto starting on Page 16.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
10
PART III
Item 10 - Directors and Executive Officers of the Registrant
The information required by this Item 10 is hereby incorporated by
reference to a definitive proxy statement involving the election of directors
which is expected to be filed by the Company will 120 days after the close of
its fiscal year.
Item 11 - Executive Compensation
The information required by this Item 11 is hereby incorporated by
reference to a definitive proxy statement involving the election of directors
which is expected to be filed by the Company within 120 days after the close of
its fiscal year.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The information required by this Item 12 is hereby incorporated by
reference to a definitive proxy statement involving the election of directors
which is expected to be filed by the Company within 120 days after the close of
its fiscal year.
Item 13 - Certain Relationships and Related Transactions
The information required by this Item 13 is hereby incorporated by
reference to a definitive proxy statement involving the election of directors
which is expected to be filed by the Company within 120 days after the close of
its fiscal year.
11
PART IV
Item 14 - Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Financial Statements: Page No.
--------
Independent Auditor's Report 16
Consolidated Balance Sheets 17
Consolidated Statements of Income 18
Consolidated Statement of Shareholders' Equity 19
Consolidated Statements of Cash Flows 20
Notes to Financial Statements 21-25
Financial Schedules:
X - Supplementary Income Statement 26
Information
Schedules other than those listed above are omitted for the reason that they are
not required or not appropriates or the required information is shown in the
financial statements or notes thereto.
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company on January 19, 1996 in
connection with the organization of the Subsidiary. This was the only
report on Form 8-K filed by the Company during the quarter ended
March 31, 1996. However, subsequent thereto, but prior to the date
hereof, a report on Form 8-K was filed with respect the dissolution
of the Subsidiary.
(c) Exhibits
(3) (i) Articles of Incorporation of The St. Lawrence Seaway
Corporation, as amended. (Incorporated by reference to Exhibit
(C) (3) (i) to the Annual Report of The St. Lawrence Seaway
Corporation for the fiscal year ended March 31, 1991.)
12
(ii) By-Laws of The St. Lawrence Seaway Corporation
(Incorporated by reference to Exhibit (C) (3) (ii) to the Annual
Report of The St. Lawrence Seaway Corporation on Form 10-K for
the fiscal year ended March 31, 1987.)
(10) (i) Stock Option Agreements, each dated September 21, 1987,
between The St. Lawrence Seaway Corporation and each of Jack C.
Brown, Philip I. Berman, and Albert Friedman. (Incorporated by
reference to Exhibit (C) (10) (i) to the Annual Report of The
St. Lawrence Seaway Corporation on Form 10K for the fiscal year
ended March 31, 1988.)
(ii) Agreement, dated July 31, 1986 by and between The St.
Lawrence Seaway Corporation and Bernard Zimmerman & Company,
Inc. (Incorporated by reference to Exhibit 2 to the 10-Q of The
St. Lawrence Seaway Corporation for the 6 months ended June 30,
1986.)
(iii) St. Clair Farm Property Option and Sale Agreement, dated
March 31, 1992. (Incorporated by reference to the Exhibit (C)
(10) (iii) to the Annual Report of The St. Lawrence Seaway
Corporation on Form 10K for the fiscal year ended March 31,
1992.)
(iv) Airport Farm Property Option and Sale Agreement, dated
March 25, 1993.
(v) Amendment No. I to Stock Option Agreement between The St.
Lawrence Seaway Corporation and Jack C. Brown dated August 28,
1992.
(vi) Amendment No. 1 to Stock Option Agreement between The St.
Lawrence Seaway Corporation and Albert Friedman dated August 28,
1992.
(vii) Amendment No. I to the Warrant issued to Bernard Zimmerman
& Co. Inc. dated August 28, 1992.
(viii) Stock Option Agreement, dated August 28, 1992 between The
St. Lawrence Seaway Corporation and Wayne J. Zimmerman.
(ix) Stock Sale Agreement, dated June 24, 1993 between Bernard
Zimmerman & Co., Inc. and Industrial Development Partners.
(Incorporated by reference to Exhibit 7(a) to Current Report on
Form 8-K dated September 30, 1993).
13
(x) Assignment and Assumption Agreement dated as of July 30,
1993. (Incorporated by reference to Exhibit 7(b) to Current
Report on Form 8-K dated September 30, 1993.)
(22) Subsidiaries of the Company -- Filed herewith.
(27) Financial Data Schedule -- Filed herewith.
14
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons (who included a majority
of the Board of Directors) on behalf of the registrant and in the capacities
indicated on June 28, 1996.
Signatures Title Date
/s/ Daniel L. Nir President, Treasurer June 28, 1996
- ----------------------- and Director
Daniel L. Nir
(Principal Financial
Officer)
/s/ Joel M. Greenblatt Chairman of the Board, June 28, 1996
- ---------------------- and Director
Joel M. Greenblatt
(Principal Executive
Officer)
/s/ Jack C. Brown Secretary and Director June 28, 1996
- -----------------------
Jack C. Brown
/s/ Edward B. Grier III Director June 28, 1996
- -----------------------
Edward B. Grier III
15
SALLEE & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
MEMBER
AICPA
TAX DIVISION
DIVISION OF FIRMS:
SEC PRACTICE SECTION
INDIANA CPASOCIETY
Board of Directors
The St. Lawrence Seaway Corporation
INDIANAPOLIS, Indiana
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheets of THE ST. LAWRENCE SEAWAY
CORPORATION AND SUBSIDIARY as of March 31, 1996 and 1995, and the related
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended March 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of THE ST. LAWRENCE
SEAWAY CORPORATION AND SUBSIDIARY as of March 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in the period
ended March 31, 1996 in conformity with generally accepted accounting
principles.
May 22, 1996
/s/ Sallee & Company
1509 J STREET, P.O. BOX 1148, BEDFORD, INDIANA 47421,
812-275-4444 (FAX) 812-275-3300
16
THE ST. LAWRENCE SEAWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND MARCH 31, 1995
1996 1995
---- ----
Current assets:
Cash and cash equivalents $ 1,232,478 1,260,870
Interest and other receivables 11,104 19,283
Prepaid items 549 8,453
Deferred tax benefits 2,014 2,014
------------ ---------
Total Current Assets 1,246,145 1,290,620
Property, plant and equipment:
Land 118,913 118,913
Equipment, net 5,816 5,292
------------ ---------
Total Assets $ 1,370,874 1,414,825
============ =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payroll taxes withheld and accrued $ 454 721
Accounts payable & other 53,432 14,930
Deferred income 8,208 8,208
------------ ---------
Total Liabilities 62,094 23,859
Shareholders' equity:
Common stock, par value $1,
4,000,000 authorized, 393,735 issued
and outstanding at the respective dates 393,735 393,735
Additional paid-in capital 281,252 281,252
Retained earnings 633,793 715,979
------------ ---------
Total Shareholders' Equity 1,308,780 1,390,966
------------ ---------
Total Liabilities and Shareholders' Equity $ 1,370,874 1,414,825
============ =========
The accompanying notes are an integral part of these financial statements.
17
THE ST. LAWRENCE SEAWAY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31,
---------------------
1996 1995 1994
---- ---- ----
Revenues:
Farm rentals $ 9,120 9,804 21,913
Gain on asset sales 0 0 80,779
Interest and dividends 59,858 55,311 34,855
Other 0 0 48
-------- ------- ------
Total revenues 68,978 65,115 137,595
Operating costs and expenses:
Farm related operating costs 1,243 1,634 2,155
Depreciation 1,438 588 0
Consulting fees-Note 4 6,000 6,000 18,000
General and administrative expenses 141,748 148,053 93,306
-------- ------- ------
Total operating expenses 150,429 156,275 113,461
Income (Loss) before income taxes (81,451) (91,160) 24,134
Income taxes /(Tax benefit) 735 (5,429) 8,048
-------- ------- ------
Net income (loss) $(82,186) (85,731) 16,086
======== ======= ======
Per share data:
Weighted average number
of common shares outstanding 393,735 393,735 395,005
-------- ------- ------
Primary earnings per common
and common equivalent shares $ (0.21) (0.22) 0.04
======== ======= ======
The accompanying notes are an integral part of these financial statements.
18
THE ST. LAWRENCE SEAWAY CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common stock Additional
Number of Par Paid-in Retained
shares Value $1 Capital Earnings
------ -------- ------- --------
Balance at March 31, 1993 395,259 $395,259 $282,764 $785,624
Stock purchase (1,524) (1,524) (1,512)
Net income for 1994 16,086
------- -------- -------- --------
Balance at March 31, 1994 393,735 393,735 281,252 801,710
Net loss for 1995 (85,731)
------- -------- -------- --------
Balance at March 31, 1995 393,735 393,735 281,252 715,979
Net loss for 1996 (82,186)
------- -------- -------- --------
Balance at March 31, 1996 393,735 $393,735 $281,252 $633,793
======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
19
THE ST. LAWRENCE SEAWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Net Income (Loss) $ (82,186) (85,731) 16,086
Adjustments to reconcile net income to
net cash from operating activities
Depreciation 1,438 588 0
(Gain) Loss on asset sales 0 0 (80,779)
(Increase) in deferred items 0 70,000 (70,000)
(Increase) Decrease in current assets:
Interest receivable 0 (1,267) (366)
Other receivables 8,179 (16,650) 0
Prepaid items 7,904 (3,273) (4,921)
Deferred income tax 0 0 2,266
(Decrease) Increase in current liabilities:
Payroll tax & other (267) 25 167
Accounts payable 38,502 (6,982) (4,212)
Income taxes payable 0 0 (974)
---------- --------- ---------
Net cash from operating activities (26,430) (43,290) (142,733)
Cash flows from investing activities:
Purchase of equipment (1,962) (5,880) 0
Proceeds from asset sales 0 0 291,940
---------- --------- ---------
Net cash from investing activities (1,962) (5,880) 291,940
Cash flows from financing activities:
Purchase and retirement of Company stock 0 0 (3,036)
---------- --------- ---------
Net cash from financing activities 0 0 (3,036)
Net increase in cash and cash equivalents (28,392) (49,170) 146,171
Cash and cash equivalents, beginning 1,260,870 1,310,040 1,163,869
---------- --------- ---------
Cash and cash equivalents, ending $1,232,478 1,260,870 1,310,040
========== ========= =========
Supplemental disclosures of cash flow information:
Cash paid for income taxes 0 500 11,463
Cash paid for interest expenses 0 0 0
The accompanying notes are an integral part of these financial statements.
20
THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
observed in the preparation of the consolidated financial statements for The St.
Lawrence Seaway Corporation (the "Company") and its subsidiary, The St. Lawrence
Fund.
BASIS OF PRESENTATION:
The accounts are maintained on the accrual method of accounting in
accordance with generally accepted accounting principles for financial statement
purposes. Under this method, revenue is recognized when earned and expenses are
recognized when incurred.
The St. Lawrence Fund, an unincorporated Massachusetts business
trust, was established on or about December 31, 1995, to invest certain funds of
the parent company. All funds are held in cash accounts and are included in the
cash equivalents of the parent company.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the assets and
revenues earned of the subsidiary unincorporated business trust, The St.
Lawrence Fund. No intercompany transactions other than the initial investment
were made between the parent company and subsidiary business trust.
LAND:
Land was purchased in 1961 for agriculture related purposes and is
recorded at the original historical cost of $118,913.
EARNINGS PER SHARE:
Primary earnings per share and fully diluted earnings per share are
computed, when applicable, using the weighted average number of shares of common
stock and common stock equivalents outstanding under the modified treasury stock
method. Common stock equivalents include all common stock options and warrants
outstanding during each of the periods presented.
21
THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES:
The provision for income taxes charged against earnings relates to
all items of revenue and expense recognized for financial accounting purposes
during each of the years presented. The actual current tax liability may be
different than the charge against earnings due to the effect of cash rents
received in advance resulting in deferred income tax. These deferred tax
benefits are temporary in nature and will offset upon the expiration of all land
rental contracts. No material deferred tax benefits or liabilities exist as of
the dates of the balance sheets.
RECLASSIFICATION:
The 1995 and 1994 financial statements have been reclassified,
where necessary, to conform to the presentation of the 1996 financial
statements.
CASH FLOWS:
For purposes of reporting cash flows, cash and cash equivalents
include all cash in banks and cash accumulation funds including funds invested
under provisions of the subsidiary trust.
DEPRECIATION:
Property and equipment, consisting of small office equipment, is
stated at cost. Depreciation is computed using the straight-line method over a
five-year estimated useful life. Expenditures for maintenance and repairs that
do not extend useful lives are charged to income as incurred. Total accumulated
depreciation as of March 31, 1996 and 1995, was $2,026 and $588 respectively.
22
THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. SHAREHOLDERS' EQUITY
The Company has a common stock warrant outstanding for the purchase
of 100,000 shares of common stock at $3.00 per share. The warrant was originally
issued in connection with the sale by the Company of 50,000 shares of common
stock during 1986 to Bernard Zimmerman & Co. Inc. The warrant and common stock
were subsequently sold and transferred to The Windward Group, L.L.C. (formerly
Industrial Development Partners), pursuant to an agreement dated September 30,
1993. The warrant expires on September 24, 1997.
The Company has a stock option plan originally adopted by the
shareholders on June 12, 1978, and revised and approved by the shareholders on
June 13, 1983, September 21, 1987,and August 28, 1992. The revised plan provides
that 15,000 shares of the Corporation's stock be set aside at an exercise price
of $3.00 per share for Mr. Jack C. Brown, a Director of the Company. Mr. Brown's
option is currently exercisable with respect to all 15,000 shares and, if not
exercised, will expire on September 21, 1997.
The Company has 4,000,000 authorized $1 par value common shares. As
of March 31, 1996 and 1995, there were 393,735 common shares issued and
outstanding.
NOTE 3. STOCK PURCHASE
On February 4, 1994, the Company purchased 1,524 of its common
shares in the open market at a price of $1.99 per common share. The shares, as
acquired, were immediately cancelled and returned to the status of authorized
and unissued.
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THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. RELATED PARTIES
During the fiscal years ending March 31, 1996, 1995 and 1994, the
Company paid to Jack C. Brown, Secretary and a Director, an annual
administrative fee of $6,000, which was paid monthly in the amount of $500.
During fiscal year 1994, the Company paid The Zimmerman Group, Inc., of which
the former president of the Company is the Senior Vice President and a former
director is President, a monthly fee of $2,000 for financial consulting services
including the evaluation of acquisition and merger opportunities. The consulting
arrangement with The Zimmerman Group expired on September 30, 1993 and was not
renewed.
NOTE 5. INCOME TAXES
As of March 31, 1996, the company has loss carryforwards of
approximately $195,000 that may be used to offset future taxable income. If not
used, the carryforwards will expire in 2011. Provisions for current and deferred
federal and state tax liabilities are immaterial to these financial statements.
NOTE 6. DEFERRED ITEMS
Certain legal and other expenses in the amount of $70,000 as of
were deferred in connection with the filing of a registration statement with the
Securities and Exchange Commission in 1994. Upon the withdrawal of the
registration statement, which occurred during 1995, total related costs of
approximately $53,000 were recognized.
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THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. SUBSIDIARY INVESTMENT
On December 31, 1995, the Company organized a wholly-owned
subsidiary under the name of The St. Lawrence Seaway Fund as a Massachusetts
business trust for the purpose of investing in securities. The Company purchased
100,000 shares of beneficial interest in the trust at $10 per share on January
3, 1996. The Company intended to register the Subsidiary with the Securities and
Exchange Commission as a closed-end investment company. Subsequent to the
balance sheet date, the Company determined that because of tax considerations,
such steps would not be practical or in the best interest of the Company's
shareholders and, accordingly, as of May 31, 1996, dissolved the Subsidiary.
25
SCHEDULE X
THE ST. LAWRENCE SEAWAY CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
COLUMN A COLUMN B
- --------------------------------------------------------------------------------
ITEM CHARGED TO COSTS AND EXPENSES
- --------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
1996 1995 1994
------------------------------
Maintenance and repairs .................... $1,420 $ 903 $1,078
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferral .............. $1,438 $ 588 $ 0
Taxes, other than payroll and
income taxes ............................ $2,286 $2,007 $ 714
Royalties .................................. NONE NONE NONE
Advertising costs .......................... NONE NONE NONE
26