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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, 2000
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 Number)
of corporation or organization)
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 June 15, 2000 was approximately $718,843.
The number of shares of Common Stock of the registrant outstanding as of June
15, 2000 was 393,735.
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THE ST. LAWRENCE SEAWAY CORPORATION
PART I
ITEM 1 - BUSINESS
RECENT DEVELOPMENTS
On February 23, 2000, The St. Lawrence Seaway Corporation (herein "St.
Lawrence" or the "Company") conducted a real estate auction and entered into
definitive purchase and sale agreements with seven non-affiliated, individual
purchasers for the sale of all of the Company's remaining agricultural real
estate in Northern Indiana. The real estate was sold at auction for an aggregate
gross sales price of $567,500. At closing, an aggregate $13,225 price reduction
was made due to acreage corrections revealed by the survey delivered at closing
and due to deletion from the sale property of an electrical substation not owned
by the Company . All sales were closed as of June 14, 2000, and net proceeds of
$506,510 were delivered to the Company as of that date.
The Company had devoted the Northern Indiana property to farming activities
under a cash lease method. The property was leased to farmers who were directly
responsible for the operation thereof and who paid the Company a rental fee
covering a ten-month period of use of the property. The Company generally
received such rental payments at the beginning of a planting season. The Company
was responsible for real estate taxes, insurance, and minor expenses. As a
result of the sale of the property and termination of the farm tenant agreements
prior to the calendar year 2000 planting season, the Company will not realize
any farm rental income in the fiscal year ending March 31, 2001. Farm rental
income for the fiscal year covered by this 10-K report was not significantly
affected.
DESCRIPTION OF CURRENT BUSINESS
With the sale of the Schleman Farm, the Company is no longer actively
engaged in an operating business. The Company is currently engaged in evaluating
alternatives that may be in the best interest of shareholders, including
continuing its evaluating of operating businesses for acquisition, merger or
investment, commencement of a new operating business, or distribution of all or
part of its capital to shareholders. Pending any such transaction, the Company
will continue its practice of maintaining its cash assets in relatively liquid
interest/dividend bearing money market investments. Eventually such assets may
be used for an acquisition or for a partial payment of an acquisition or for the
commencement of a new business.
OTHER ACTIVITIES DURING FISCAL YEAR 2000
During the fiscal year ended March 31, 2000, St. Lawrence was still the
record owner of one parcel of agricultural real estate in Northern Indiana
comprising approximately 195 acres. This real estate, known as Schleman Farm,
was 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 paid St. Lawrence a rental fee covering a ten-month period for the use
of the property for farming and related activities. St. Lawrence generally
received these rental payments at one time or in semi-annual installments. Real
estate taxes and other minor expenses, such as insurance, were the
responsibility of St. Lawrence in some instances.
St. Lawrence engaged the services of a farm management company, Halderman
Farm Management Service, Inc., of Wabash, Indiana ("Halderman"). Under the
current contract, Halderman managed, and was responsible for the negotiation of
all leases, tenant contracts, and general operations and programs of the
Schleman Farm. Halderman was compensated on a quarterly per-acre fee basis. It
had managed the current and former farm properties of the Company for more than
ten years.
Halderman assisted the Company with the auction of the Schleman Farm and
received a 5% commission on the sale thereof, as well as a co-broker's fee on
the sale of one parcel. Advertising expenses for the auction paid by Halderman
were reimbursed thereto by the Company from the proceeds of the sale of the
property.
2
DISTRIBUTION OF SHARES OF PARAGON ACQUISITION COMPANY, INC.
On March 19, 1997, the Board of Directors of the Company declared a
dividend distribution of 514,191 shares of common stock, $.01 par value (the
"Shares") of Paragon Acquisition Company, Inc. ("Paragon"), and 514,191
non-transferable rights (the "Subscription Right") to purchase two (2)
additional Shares of Paragon. Paragon's business purpose is to seek to acquire
or merge with an operating business, and thereafter to operate as a
publicly-traded company. Neither St. Lawrence nor Paragon received any cash or
other proceeds from the distribution, and St. Lawrence stockholders did not make
any payment for the share and subscription rights. The distribution to St.
Lawrence stockholders was made by St. Lawrence for the purpose of providing St.
Lawrence stockholders with an equity interest in Paragon without such
stockholders being required to contribute any cash or other capital in exchange
for such equity interest.
Paragon is an independent publicly-owned corporation. However, because Paragon
does not have a specific operating business in accordance with Rule 419
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
the shares, subscription rights, and any shares issuable upon exercise of
subscription rights, are held in escrow and are non-transferable by the holder
thereof. There is no current public trading market for the shares and none is
expected to develop, if at all, until after the consummation of a business
combination and the release of shares from escrow. In addition, even if Paragon
were to acquire an operating business it is expected that no distribution of the
shares may be made until a new Registration Statement under the Securities Act
is filed and declared effective. The Company is not aware of any current plans
by Paragon to acquire an operating business, is not involved in Paragon's
operations or filings, and has provided the preceding information solely based
on information made know to it by representatives of Paragon.
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.
3
SEASONALITY
Although farm operations are generally conducted during the summer months,
St. Lawrence received the majority of its rental and other payments based upon a
definitive schedule and therefore seasonal or weather factors generally did not
have an effect on the revenues of the Company.
EMPLOYEES
The Company has no employees 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. Secretarial and bookkeeping services are provided to the Company by
an employee of a management company with whom the Company shares office space.
ITEM 2 - PROPERTIES
At March 31, 2000, the Company owned one parcel of agricultural real estate
in Porter County, Indiana comprising approximately 195 acres and known as
Schleman Farm. As discussed above, this parcel was auctioned for sale on
February 23, 2000 and finally sold as of June 14, 2000. Only a portion of the
property was suitable for farming purposes. The balance was wooded and from
time-to-time was suitable to some extent for timber harvesting operations. In
the past, St. Lawrence had harvested excess timber from its various properties.
Such timber harvesting occurred at intermittent times and there were no
assurances that there would 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 closing price for each
quarterly period during the fiscal years 2000 and 1999, as reported by Bloomberg
and 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, mark-down or commission and may not represent actual transactions.
FISCAL YEAR QUARTER HIGH LOW
----------- ------- ---- ---
2000 First $2.375 $1.9375
Second $2.00 $1.875
Third $2.75 $2.00
Fourth $2.75 $2.50
1999 First $2.875 $2.75
Second $2.75 $2.375
Third $2.50 $2.25
Fourth $2.50 $1.875
DIVIDENDS
It is the present policy of the Board of Directors of St. Lawrence to
retain earnings, if any, to finance the future expansiopn of the Company. No
cash dividends were paid this year and no cash dividends are expected to be paid
in the future.
5
NUMBER OF STOCKHOLDERS
As of June 15, 2000, there were approximately 1,263 holders of record of
the Company's Common Stock.
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, 2000. Certain information
with respect to the fiscal years ended March 31, 1996 has been restated. All
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.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
REVENUES:
Interest & Dividends 49,244 51,069 56,704 54,545 59,858
Farm Rentals & Sales 8,208 9,120 9,120 9,120 9,120
Gain on Sale of Farm
Properties, net 0* 0 0 0 0
Other 0 0 0 0 0
------ ------ ------ ------- -------
Total 57,452 60,189 65,824 63,665 68,978
------ ------ ------ ------- -------
COSTS & EXPENSES:
- ----------------
Farm Related 833 1,613 1,734 2,056 1,243
General and 88,034 102,102 112,092 105,220 141,748
Administrative
Consulting 6,000 6,000 6,000 6,000 44,400
Depreciation 1,111 1,568 1,568 1,568 1,438
----- ------- ------- ------- -------
Total 95,978 111,283 121,394 114,844 188,829
*Approximate Net Gain on Sale of Schleman Farm (which was consummated subsequent
to fiscal year end) is $387,597.
6
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Income (Loss) Before
Income Taxes (38,526) (51,094) (55,570) (51,179) (119,851)
Income Tax
Expense (Benefit) 573 690 787 965 735
--- --- --- --- ---
Net Income (Loss) (39,099) (51,784) (56,357) (52,144) (120,586)
Income (Loss) per
Common Share (0.10) (0.13) (0.14) (0.13) (0.31)
------ ------ ------ ------ ------
Weighted Average Number
of Common Shares
Outstanding 393,735 393,735 393,735 393,735 393,735
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Total Assets 1,123,040 1,165,360 1,231,852 1,293,467 1,370,874
Total Liabilities 18,785 22,006 36,714 41,972 62,094
Shareholders' Equity 1,104,255 1,143,354 1,195,138 1,251,495 1,308,780
7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000, AS COMPARED TO YEAR ENDED MARCH 31, 1999.
Interest and dividend income decreased to $49,244 in the year ended March
31, 2000, from $51,069 in the previous year. The decrease is a result of lower
interest rates received and fewer dollars invested in the year ended March 31,
2000.
Farm rental revenues decreased to $8,208 in the fiscal year ended March 31,
2000, from $9,120 in the previous year. The decrease is due solely to the
termination during the fiscal year of the existing farm tenant agreement as a
result of the sale of the Schleman Farm.
General and administrative expenses decreased to $88,034 in the year ended
March 31, 2000 from $102,102 in the year ended March 31, 1999 principally due to
reduced employee compensation and reduced legal and other professional expenses
currently recognized in the Company's Statement of Income as of March 31, 2000.
The following table summarizes the significant components of these expenses, and
presents a comparison of such components for the years ended March 31, 2000 and
March 31, 1999:
YEAR ENDED MARCH 31,
2000 1999
---- ----
Executive Compensation, Management Fees $20,762 $27,926
Salaries and Employee Benefits
Office Rent and Operations 16,665 16,224
Stock Services, Proxy, Annual Meeting and 17,609 13,645
SEC Report Compliance
Professional Fees (accounting & legal) 37,866 45,576
Payroll, excise and other taxes 1,132 3,165
The Company had a loss of $38,526 before taxes in the year ended March 31,
2000, as compared to a loss of $51,784 before taxes in the year ended March 31,
1999.
The income tax paid in the current year was $573. An income tax of $690 was
paid in the year ended March 31, 1999.
8
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 1999, AS COMPARED TO YEAR ENDED MARCH 31, 1998.
Interest and dividend income decreased to $51,069 in the year ended March
31, 1999, from $56,704 in the previous year primarily due to a decrease in the
cash balances invested.
Farm rental revenues of $9,120 were comparable in the years ended March 31,
1999, and 1998. The Company has discussed with local real estate agents the
possibility of instituting a rent increase at Schleman Farm. Based on the market
rents currently being obtained in Northern Indiana, a rent increase is not
feasible at this time.
General and administrative expenses decreased to $102,102 in the year ended
March 31, 1999 from $112,092 in the year ended March 31, 1998 principally due to
decreases in professional fees paid to the Company's accountants and legal
counsel, and decreases in employee salaries and stock transfer and annual
meeting expenses, all as illustrated by the following comparison table:
YEAR ENDED MARCH 31,
1999 1998
---- ----
Executive Compensation, Management Fees,
Salaries and Employee Benefits $27,926 $33,128
Office Rent and Operations 16,224 14,650
Stock Services, Proxy, Annual Meeting and
SEC Report Compliance 13,645 18,114
Professional Fees (accounting & legal) 45,576 49,496
Payroll, excise and other taxes 3,175 2,654
The Company had a loss of $51,094 before taxes in the year ended March 31,
1999, as compared to a loss of $55,570 before taxes in the year ended March 31,
1998.
The income tax paid in the current year was $690. An income tax of $787 was
paid in the year ended March 31, 1998.
9
YEAR ENDED MARCH 31, 1998, AS COMPARED TO YEAR ENDED MARCH 31, 1997.
Interest and dividend income increased to $56,704 in the year ended March
31, 1998, from $54,545 in the previous year primarily due to stable or slightly
increased interest rates.
Farm rental revenues of $9,120 were comparable in the years ended March 31,
1998, and 1997. The Company has discussed with local real estate agents the
possibility of instituting a rent increase at Schleman Farm. Based on the market
rents currently being obtained in Northern Indiana, a rent increase is not
feasible at this time.
General and administrative expenses increased to $112,092 in the year ended
March 31, 1998 from $105,220 in the year ended March 31, 1997 principally due to
an increase in office rent, an increase in professional fees associated with the
Company's recent response to certain shareholder and SEC informational inquiries
regarding the Company's 10-K for the fiscal year ended March 31, 1997, and an
increase in personnel costs associated with a small salary increase and partial
reimbursement of health insurance for the Company's sole employee, all as
illustrated by the following comparison table:
YEAR ENDED MARCH 31,
1998 1997
---- ----
Executive Compensation, Salaries and
Employee Benefits $33,128 $31,478
Office Rent and Operations 14,650 11,382
Stock Services, Proxy, Annual Meeting and
SEC Report Compliance 18,114 19,595
Professional Fees (accounting & legal) 49,496 44,362
Payroll, excise and other taxes 2,654 3,711
The Company had a loss of $55,570 before taxes in the year ended March 31,
1998, as compared to a loss of $51,179 before taxes in the year ended March 31,
1997.
The income tax paid in the current year was $787. An income tax of $965 was
paid in the year ended March 31, 1997.
10
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had net working capital of $985,342, the
major portion of which was in cash and money market funds. St. Lawrence has
sufficient capital resources to continue its current business.
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.
YEAR 2000
Through June 15, 2000, the Company had not experienced any difficulties
with its management and information systems in connection with the turnover from
1999 to 2000. In addition, no Y2K problems have been experienced by the Company
directly or indirectly with respect to its significant service providers;
including the Company's Farm Management Company, stock transfer agent, landlord
and certified public accountants.
OUTLOOK
This Form 10-K contains statements which are not historical facts, but are
forward-looking statements which are subject to risks, uncertainties and
unforseen factors that could affect the Company's ability to accomplish its
strategic objectives with respect to acquisitions and developing new business
opportunities, as well as its operations and actual results. All forward-looking
statements contained herein, reflect Management's analysis only as of the date
of the filing of this Report. Except as may be required by law, the Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof. In addition to
the disclosures contained herein, readers should carefully review risks and
uncertainties contained in other documents which the Company files from time to
time with the Securities and Exchange Commission.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Annexed hereto starting on Page 21.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
11
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth in the following table are the names and ages of all persons who
were members of the Board of Directors of the Company at March 31, 2000, all
positions and offices with the Company held by such persons, their business
experience, the period during which they have served as members of the board of
directors and other directorships held by them.
Business
Experience
Directors/Position Director During Last Other
In Company Age Since Five Years Directorships
- --------------- --- ---------- ---------- -------------
Jack C. Brown 81 1959 Attorney at Law None
Secretary Indianapolis,
Indiana
since 1945.
Joel M. Greenblatt 42 1993 Managing Partner None
Chairman of the of Gotham
Board Capital III L.P.
("Gotham") and its
predecessors since
1985 Gotham is a
private investment
partnership which
owns securities,
equity interests,
distressed debt,
trade claims and
bonds, derivatives,
and options and
warrants of issuers
engaged in a variety
of businesses.
Daniel L. Nir 39 1993 Manager of Gracie Capital, None
President and L.P. since December, 1998,
Treasurer Manager of Sargeant Capital
Ventures, LLC
since December, 1997;
Managing Partner of
Gotham Capital III, L.P.,
prior thereto.
12
Edward B. Grier 42 1993 Partner of Gracie Capital, L.P. None
Vice President since December, 1998; Vice
President of Gotham Capital
from 1991-1994 and a
limited partner of Gotham
from January 1, 1995
through December 31, 1998.
Mr. Grier was Vice
President of Smith New
Court, a merger and
restructuring advisory firm
from 1990-91, a research
associate with Paine
Webber, Inc. from 1987-90,
and a senior financial
analyst with Transworld
Corporation from 1985-87.
Directors of the Company are elected by a plurality of the votes cast at the
Annual Meeting of Shareholders. Each Director's current term of office will
expire at the next annual meeting of Shareholders or when a successor is duly
elected and qualified. Executive officers of the Company are elected annually
for a term of office expiring at the Board of Directors meeting immediately
following the next succeeding Annual Meeting of Shareholders, or until their
successors are duly elected and qualified.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and amendments thereto, furnished
to the Company during the fiscal year ended March 31, 2000 and Forms 5 and
amendments thereto furnished to the Company with respect to the fiscal year
ended March 31, 2000, no director, officer or beneficial owner of more than 10%
of the Company's equity securities failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act during the fiscal years ended
March 31, 2000 and March 31, 1999.
ITEM 11 - EXECUTIVE COMPENSATION
Except as noted below, neither the Company's Chief Executive Officer nor any
other executive officers of the Company (collectively the "Named Executives")
received salary, bonus or other annual compensation for rendering services to
the Company during the fiscal years ended March 31, 2000, March 31, 1999, and
March 31, 1998.
During the fiscal years ended March 31, 1995 and March 31, 1996, pursuant to
an Agreement dated as of September 30, 1993 between Bernard Zimmerman & Co.,
Inc. and the Windward Group, L.L.C., principal stockholder of the Company,
Bernard Zimmerman & Co. was paid an aggregate $36,000 for services provided for
the benefit of the Company. All such payments were made by the Windward Group,
L.L.C. on behalf of the Company. They were recognized as an expense by the
Company and treated as a contribution of capital by Windward to the Company. No
such payments were made during the fiscal year ended March 31, 1998, March 31,
1999 or March 31, 2000.
During each of the three fiscal years ended March 31, 1998, March 31, 1999
and March 31, 2000, the Company paid to Jack C. Brown, Secretary and a Director,
a monthly fee of $500 for administrative services that he renders to the
Company. Such fee is on a month to month arrangement.
13
SUMMARY COMPENSATION TABLE
As permitted by Item 402 of Regulation S-K, the Summary Compensation Table
has been intentionally omitted as there was no compensation awarded to, earned
by or paid to the Named Executives which is required to be reported in such
Table for any fiscal year covered thereby. In addition, no transactions between
the Company and a third party where the primary purpose of the transaction was
to furnish compensation to a Named Executive were entered into for any fiscal
year covered thereby.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000
No options or Stock appreciation rights were granted in the fiscal year
ended March 31, 2000.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2000 AND
FISCAL YEAR-END OPTION/SAR VALUES
The Company has a stock option plan originally adopted by the Shareholders
on June 12, 1978, and revised and approved by the Shareholders on June 13, 1983,
September 21, 1987 and August 28, 1992. The Company currently has one
outstanding Stock Option Agreement entered into pursuant to the Plan. The
options granted thereunder expires on September 21, 2002. The following table
summarizes options exercised during fiscal year 2000 and presents the value of
unexercised options held by the Named Executives at fiscal year end. There are
currently no outstanding stock appreciation rights.
Value of Unexercised
Number of Unexercised In-The Money
Shares Options/SAR's Options/SAR's
Acquired Value At Fiscal Year-End At Fiscal Year-End
On Exercise Realized (#) (#) ($) ($)
Name # ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------------- ------------ ------------- ----------- -------------
Joel M. Greenblatt 0 0 0 0 0 0
Daniel L. Nir 0 0 0 0 0 0
Edward B. Grier, III 0 0 0 0 0 0
Jack C. Brown 0 0 15,000 0 45,000 0
LONG-TERM INCENTIVE PLANS - AWARDS IN FISCAL YEAR ENDED MARCH 31, 2000
Not applicable.
COMPENSATION OF DIRECTORS
The By-laws of the Company provide for Directors to receive a fee of $100 for
each meeting of the Board of Directors which they attend plus reimbursement for
reasonable travel expense. The Company paid $100 to Jack Brown for attendance at
the annual meeting of Stockholders. No other fees were paid to Directors for
meetings in fiscal year 2000.
As discussed above, during the fiscal year ended March 31, 2000, the Company
paid Jack C. Brown, Secretary and a Director, a monthly fee of $500 for
administrative services that he renders to the Company.
14
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
The Board of Directors does not have any standing audit, nominating or
compensation committees or any other committees performing similar functions.
Therefore, there are no relationships or transactions involving members of the
Compensation Committee during the fiscal year ended March 31, 2000 required to
be reported pursuant to Item 402(j) of Regulation S-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 15, 2000 the beneficial share
ownership of all beneficial owners of 5% or more of the Company's securities,
all directors and executive officers of the Company owning securities, and of
all officers and directors as a group.
AMOUNT AND
NATURE OF
BENEFICIAL BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS
- ---------- ---------- --------
The Windward Group, L.L.C. 150,000(1) 29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753
Joel M. Greenblatt 150,000(2) 29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753
Daniel L. Nir 150,000(2) 29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753
Jack C. Brown 20,456(3) 4.02%
320 N. Meridian St.
Suite 818
Indianapolis, IN 46204
Edward B. Grier III 0 *
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753
[FN]
(1)Includes 100,000 Shares subject to a currently exercisable Stock Warrant
issued to the Windward Group L.L.C. pursuant to a Warrant Agreement dated
September 24, 1986, and amended on July 6, 1992, August 28, 1992 and September
15, 1997.
(2)Includes 100,000 Shares subject to a currently exercisable Stock Warrant
issued to the Windward Group L.L.C. pursuant to a Warrant Agreement dated
September 24, 1986, and amended on July 6, 1992, August 28, 1992 and September
15, 1997. Ownership of Mr. Nir and Mr. Greenblatt is indirect as a result of
their membership interest in The Windward Group, L.L.C. Mr. Nir and Mr.
Greenblatt disclaim individual beneficial ownership of any common stock of the
Company.
(3)Includes 15,000 shares subject to currently exercisable stock options
granted on June 11, 1983, as amended, and expiring on September 21, 2002, with a
per share exercise price of $3.00.
15
Amount and
Nature of
Beneficial Beneficial Percent
Owner Ownership of Class
- ---------- ---------- ----------
All directors and
officers as a group 170,456 33.5%
(4 persons)
Kevin J. and Dianne M. Bay 20,500(4) 5.2%
W288 S290 Elmhurst Drive
Waukesha, WI 53188
- ---------------------
*Less than 1%
No other person or group has reported that it is the beneficial owner of more
than 5% of the outstanding Common Stock of the Company.
[FN]
- ---------------------
(4)Kevin J. Bay and Dianne M. Bay are husband and wife. The Bays own 18,000
shares of Common Stock of the Company, in a joint account. Each of Mr. and Mrs.
Bay also own 600 and 1,900 additional shares, respectively, in individual
accounts, as reported in a Schedule 13D filed with the SEC and the Company on
January 19, 2000.
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements: Page No.
Independent Auditor's Report 20
Balance Sheets 21
Statements of Income 22
Statement of Shareholders' Equity 23
Statements of Cash Flow 24
Notes to Financial Statements 25-28
Financial Schedules:
X - Supplementary Income Statement 29
Information
Schedules other than those listed above are omitted for the reason that they are
not required or not appropriate or the required information is shown in the
financial statements or notes thereto.
(b) Reports on Form 8-K
A Form 8-K was filed by the Company on March 6, 2000, with respect to
the auction and sale of Schleman Farm.
(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.)
(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.)
17
(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. (Incorporated by reference to Form 10-K for
the Fiscal Year ended March 31, 1993 ("the 1993 10-K").
(v) Amendment No. 1 to Stock Option Agreement between The St.
Lawrence Seaway Corporation and Jack C. Brown dated August 28,
1992. (Incorporated by reference to the 1993 10-K.))
(v)(a) Amendment to Stock Option Agreement dated September
15, 1997 -- (Incorporated by reference to Form 10-K for the
fiscal year ended March 31, 1998 (the "1998 10-K."))
(vi) Amendment No. 1 to Stock Option Agreement between The St.
Lawrence Seaway Corporation and Albert Friedman dated August
28, 1992. (Incorporated by reference to the 1993 10-K.)
(vii) Amendment No. 1 to the Warrant issued to Bernard
Zimmerman & Co. Inc. dated August 28, 1992. (Incorporated by
reference to the 1993 10-K).
(vii)(a) Amendment No. 2 to Common Stock Purchase Warrant,
dated September 15, 1997 -- (Incorporated by reference to
the 1998 10-K.)
(viii) Stock Option Agreement, dated August 28, 1992 between
The St. Lawrence Seaway Corporation and Wayne J. Zimmerman.
(Incorporated by reference to the 1993 10-K.)
(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).
(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.)
(27) Financial Data Schedule -- Filed herewith.
18
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 29, 2000.
Signatures Title Date
/s/ Daniel L. Nir President, Treasurer June 29, 2000
- ----------------------- and Director
Daniel L. Nir
(Principal Financial
Officer)
/s/ Joel M. Greenblatt Chairman of the Board, June 29, 2000
- ---------------------- and Director
Joel M. Greenblatt
(Principal Executive
Officer)
/s/ Jack C. Brown Secretary and Director June 29, 2000
- -----------------------
Jack C. Brown
/s/ Edward B. Grier III Director June 29, 2000
- -----------------------
Edward B. Grier III
19
SALLEE & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
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 as of March 31, 2000 and 1999, and the related statements of income,
shareholders equity, and cash flows for each of the three years in the period
ended March 31, 2000. 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 as of March 31, 2000 and 1999, and the results of its
operations and its case flows for each of the three years in the period ended
March 31, 2000 in conformity with generally accepted accounting principles.
May 16, 2000
/s/ Sallee & Company, Inc.
1509 J STREET, P.O. BOX 1148, BEDFORD, INDIANA 47421, 812-275-4444
(FAX) 812-275-3300
20
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
MARCH 31, 2000 AND 1999
ASSETS 2000 1999
- ------ ---- ----
Current Assets:
Cash and cash equivalents $ 999,649 $ 1,031,389
Interest and other receivables 2,037 10,731
Prepaid items 2,441 3,216
Total Current Assets $ 1,004,127 $ 1,045,336
Property and fixed assets:
Land 118,913 $ 118,913
Property & equipment, net 0
-----------
1,111
Total Assets $ 1,123,040 $ 1,165,360
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable & other 18,785 $ 13,798
Deferred income 0 8,208
----------- -----------
Total Liabilities $ 18,785 $ 22,006
=========== ===========
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 377,252 377,252
Retained earnings 333,268 372,367
----------- ------------
Total Shareholders' Equity $ 1,104,255 $ 1,143,354
----------- ------------
Total Liabilities and Shareholders' Equity $ 1,123,040 $ 1,165,360
=========== ============
The accompanying notes are an integral part of these financial statements.
21
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED MARCH 31,
2000 1999 1998
---- ---- ----
Revenues:
Farm rentals $ 8,208 $ 9,120 $ 9,120
Interest and dividends 49,244 51,069 56,704
---------- ---------- ----------
Total Revenues $ 57,452 $ 60,189 $ 65,824
Operating Costs and Expenses:
Farm related operating costs 833 $ 1,613 $ 1,734
Depreciation 1,111 1,568 1,568
Consulting fees-Note 3 6,000 6,000 6,000
General and administrative expenses 88,034 102,102 112,092
---------- ---------- ----------
Total Operating Expenses $ 95,978 $ 111,283 $ 121,394
Income (Loss) before income taxes (38,526) (51,094) (55,570)
Income Taxes/(Tax Benefit) 573 690 787
---------- ---------- ----------
Net Income (Loss) $ (39,099) $ (51,784) (56,357)
Per Share Data:
Weighted average number of
common shares outstanding 393,735 393,735 393,735
---------- ---------- ----------
Basic earnings per common
and common equivalent shares $ (0.10) $ (0.13) $ (0.14)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
22
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY
Accumulated
Other
Common Paid-in Comprehensive Retained
Stock Capital Income Earnings
------ ------- -------------- --------
Balances at April 1, 1997 $ 393,735 $ 377,252 $ 0 $ 480,508
Net loss for 1998 (56,357)
--------- --------- ---------- ----------
Balances at March 31, 1998 393,735 377,252 0 424,151
Net loss for 1999 (51,784)
--------- --------- ---------- ----------
Balances at March 31, 1999 393,735 377,252 0 372,367
Net loss for 2000 (39,099)
Balance at March 31, 2000 $ 393,735 $ 377,252 $ 0 $ 333,268
======== ========= ========== =========
The accompanying notes are an integral part of these financial statements.
23
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOW
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
2000 1999 1998
---- ---- ----
Cash Flows From Operating Activities:
Net Income (Loss) $ (39,099) $ (51,784) $ (56,357)
Adjustments to reconcile net income to
Net cash from operating activities 1,568 1,568
Depreciation 1,111
(Increase) Decrease in Current Assets: (9,087) (122)
Other receivables 8,694
Prepaid items 775 (540) 147
(Decrease) Increase in Current Liabilities:
Payroll tax & other 0 (772) (872)
Accounts payable (3,221) (13,936) (4,386)
---------- --------- ----------
Net Cash From Operating Activities (31,740) (74,551) (60,022)
Cash Flows From Investing Activities:
Purchase of equipment 0 0 0
Proceeds from asset sales 0 0 0
---------- ----------- ----------
Net Cash from Investing Activities 0 0 0
Cash Flows From Financing Activities:
Purchase of Paragon Stock 0 0 (5,141)
---------- ----------- ----------
Net Cash From Financing Activities 0 0 0
Net Increase in Cash and Cash Equivalents (31,740) (74,551) (60,022)
Cash and Cash Equivalents, beginning 1,031,389 1,105.940 1,165,962
----------- ----------- -----------
Cash and Cash Equivalents, ending $ 999,649 $1,031,389 $1,105,940
=========== =========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes 500 1,000 960
Cash paid for interest expenses 0 0 0
The accompanying notes are an integral part of these financial statements.
24
THE ST. LAWRENCE SEAWAY CORPORATION
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accompanying policies observed in
the preparation of the financial statement for The St. Lawrence Seaway
Corporation (the "Company").
BASIS OF PRESENTATION:
The accounts are maintained on the accrual method or 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.
LAND:
Land was purchased in 1961 for agriculture related purposes and is recorded at
the original historical cost of $118,913.
EARNINGS PER SHARE:
Basic and diluted earnings per share is calculated in accordance with FASB
Statement No. 128 "Earnings Per Share" ("SFAS 128"). In accordance with the
provisions for this statement, basic earnings per share is computed based on the
weighted average number of common shares outstanding during the period and
excludes any potential dilution. Diluted earnings per share reflects potential
dilution from the exercise of options or warrants into common shares. Due to the
antidilutive nature of the Company's current stock option and warrant issued, no
diluted earnings per share is presented in these financial statements. The
adoption of this statement had no effect on previously reported earnings per
share data.
INCOME TAXES:
Income taxes are provided for using the liability method, under which deferred
tax assets and liabilities are recorded based on differences between the
financial accounting and tax bases of assets and liabilities. Deferred tax
assets and liabilities are measured based on the currently enacted tax rate
expected to apply to taxable income in the period in which the deferred tax
asset or liability is expected to be settled or realized. The actual current tax
liability be different than the charge against earnings due to the effect of
cash rents received in advance. No material deferred tax benefits or liabilities
exist as of the dates of the balance sheets.
25
THE ST. LAWRENCE SEAWAY CORPORATION
RECLASSIFICATION:
The 1999 and 1998 financial statements have been reclassified, where necessary,
to conform to the presentation of the 2000 financial statements.
CASH FLOWS:
For purposes of reporting cash flows, cash and cash equivalents include all cash
in banks and cash accumulation funds.
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, 2000 and 1999, was $8,717 and $7,606, respectively.
USE OF ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
ADVERTISING EXPENSE:
Expenses associated with advertising are normally expensed as incurred.
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 21, 2002.
26
THE ST. LAWRENCE SEAWAY CORPORATION
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, 2002.
The Company has 4,000,000 authorized $1 par value common shares. As of March 31,
2000 and 1999, there were 393,735 common shares issued and outstanding.
NOTE 3. RELATED PARTIES
During the fiscal years ending March 31, 2000, 1999 and 1998, 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.
NOTE 4. INCOME TAXES
As of March 31, 2000, the Company has loss carryforwards of approximately
$335,000 that may be used to offset future taxable income. If not used, the
carryforwards will begin to expire in 2012. No tax benefits have been recognized
in these financial statements. Provisions for current and deferred federal and
state tax liabilities are immaterial to these financial statements.
NOTE 5. STOCK PURCHASE AND DIVIDEND
On March 19, 1997, the Board of Directors of the Company declared a dividend
distribution of 514,191 shares of common stock, $.01 par value (the "Shares") of
Paragon Acquisition Company, Inc. ("Paragon"), and 514,191 non-transferable
rights (the "Subscription Right") to purchase two (2) additional Shares of
Paragon. Paragon's business purpose is to seek to acquire or merge with an
operating business, and thereafter to operate as a publicly-traded company. St.
Lawrence purchased the Paragon shares on March 6, 1997, for $5,141, or $.01 per
share, and distributed one Paragon share and one subscription right for each
share of St. Lawrence Common Stock owned or subject to exercisable options and
warrants as of March 21, 1997 (the "Record Date"). Neither St. Lawrence nor
Paragon received any cash or other proceeds from the distribution, and St.
Lawrence stockholders did not make any payment for the share and subscription
rights. The distribution to St. Lawrence stockholders was made by St. Lawrence
for the purpose of providing St. Lawrence stockholders with an equity interest
in Paragon without such stockholders being required to contribute any cash or
other capital in exchange for such equity interest.
On March 21, 1997, the Securities and Exchange Commission declared effective a
Registration Statement on Form S-1 filed by Paragon, registering the
Distribution of Shares and Subscription Rights to St. Lawrence stockholders. The
cost of organizing Paragon and registering the distribution have been borne by
the founders of Paragon.
Paragon is an independent publicly-owned corporation. However, because Paragon
did not have a specific operating business at the time of the distribution, the
distribution of the shares was conducted in accordance with Rule 419 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). As a
result, the shares, subscription rights, and any shares issuable upon exercise
of subscription rights, are being held in escrow and are non-transferable by the
holder thereof until after the completion of a business combination with an
operating company. The subscription rights will become exercisable at a price to
be determined by Paragon's Board of Directors (not to exceed $2.00 per
subscription right) once a business combination is identified and described in a
post-effective amendment to Paragon's Registration Statement. While held in
escrow, the shares may not be traded or transferred, and the net proceeds from
the exercise of subscription rights will remain in escrow subject to release
upon consummation of a business combination. There is no current public trading
market for the shares and none is expected to develop, if at all, until after
the consummation of a business combination and the release of shares from
escrow. In addition, because more than eighteen months have expired since
Paragon's Registration Statement on Form S-1 was declared effective, it is
possible that Rule 419 will prohibit the distribution, or require an additional
or new registration statement to be filed and approved. The Company is not
involved in Paragon's operations or filings, and has provided the following
information solely based on information made know to it by representatives of
Paragon.
27
NOTE 6. DISPOSITION OF ASSETS
On February 23, 2000, the Company conducted a real estate auction and entered
into definitive sales and purchase agreements with seven non-affiliated
individual purchasers to sell all of the land owned by the Company.
Approximately 195 acres of agricultural real estate was sold at auction for an
aggregate gross sales price of $567,500. In fiscal year ending March 31, 2001
the Company will be subject to tax on the net gain, after related selling
expenses, from the sale that exceeds the existing net operating losses of
approximately $375,000, plus any additional net operating losses incurred in
fiscal year 2001.
The Company devoted the property to farming activities under a cash lease
method. The property was leased to farmers who were directly responsible for the
operation thereof and who paid the Company a rental fee covering a ten-month
period of use of the property. The Company generally received these rental
payments at the beginning of the planting season. The Company was responsible
for real estate taxes, insurance, and minor expenses. As a result of the sale of
the property and termination of the farm tenant agreement prior to the calendar
year 2000 planting season, the Company will not realize any farm rental income
in the fiscal year ending March 31, 2001.
28
SCHEDULE X
THE ST. LAWRENCE SEAWAY CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
COLUMN A COLUMN B
-------- --------
ITEM CHARGED TO COSTS AND EXPENSES
YEARS ENDED MARCH, 31
2000 1999 1998
---- ---- ----
Maintenance and repairs $1,516 $1,677 $1,378
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferral $1,111 $1,568 $1,568
Taxes, other than payroll and
income taxes $1,132 $2,137 $ 787
Royalties NONE NONE NONE
Advertising costs NONE NONE NONE
29