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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
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
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THE ST. LAWRENCE SEAWAY CORPORATION
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(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)
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(317) 639-5292
(Registrant's telephone number including area code)
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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 10, 1999 was approximately $729,414.00.
The number of shares of Common Stock of the registrant outstanding as of June
25, 1999 was 393,735.
1
THE ST. LAWRENCE SEAWAY CORPORATION
PART I
ITEM 1 - BUSINESS
RECENT DEVELOPMENTS
On March 19, 1997, the Board of Directors of The St. Lawrence Seaway
Corporation (herein "St. Lawrence" or the "Company") declared a dividend
distribution (the "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 Rights") to purchase two (2)
additional Shares of Paragon. Paragon was incorporated by its founders under the
laws of Delaware on June 19, 1996, for the purpose of seeking to acquire or
merge with an operating business, and thereafter to operate as a publicly-traded
company. Paragon offered to sell Shares for par value of $.01 per Share to St.
Lawrence, and in turn, have such Shares distributed to St. Lawrence Shareholders
to broaden its shareholder base. St. Lawrence purchased the Paragon Shares on
March 6, 1997, for total consideration of $5,141, using readily available cash
assets of the Company.
St. Lawrence has undertaken the Paragon transaction with the goal of providing
St. Lawrence shareholders with an additional opportunity to participate in an
acquisition or merger of businesses through Paragon, without requiring any
additional investment by such shareholders. The Company believes that by
acquiring for St. Lawrence stockholders an equity interest in Paragon, and the
right to acquire additional ownership on the same terms as Paragon's majority
shareholder, St. Lawrence shareholders will thereby have an interest in a
greater number of vehicles available to effect a merger, acquisition or other
business combination, and therefore, an increased opportunity to benefit from
such transactions.
The cash payment of $5,141 by St. Lawrence in exchange for the Paragon Shares
and Subscription Rights to be distributed to St. Lawrence stockholders, was
determined by St. Lawrence to represent a nominal investment in light of the
potential benefits to St. Lawrence shareholders which may be available through
their ownership of the Shares, the possible exercise of Subscription Rights to
purchase additional Shares and the fact that PAR Holding, the majority
shareholder of Paragon, agreed to purchase a significant number of Shares at a
price substantially higher than the price paid by St. Lawrence.
Because Paragon did not yet have a specific operating business, 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
2
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 18 months have expired since Paragon's Registration Statement 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 purchase of Shares and Subscription Rights by St. Lawrence, and the
Distribution, was made by St. Lawrence for the purpose of distributing to St.
Lawrence stockholders an equity interest in Paragon without such stockholders
being required, either individually or directly, to contribute any cash or other
capital in exchange for such equity interest.
At the time of the Distribution on or about March 21, 1997, St. Lawrence mailed
to each of its Shareholders a copy of Paragon's Prospectus. Significant points
explained in the Prospectus (and noted to St. Lawrence shareholders in a cover
letter accompanying the Prospectus) include:
--St. Lawrence shareholders were not required to make any payment
to receive the Paragon shares. Payment will only be required from
St. Lawrence shareholders if they decide to exercise their
Subscription Rights to purchase additional Paragon Shares;
--The costs of organizing and operating Paragon have been borne by
the founders of Paragon. Neither St. Lawrence nor its shareholders
have any future obligations to Paragon, financial or otherwise.
--There is no change in ownership of St. Lawrence, and St.
Lawrence shareholders remain free to purchase or sell St. Lawrence
common stock at all times. Restrictions on transfer only apply to
the Paragon shares. St. Lawrence common stock and Paragon common
stock are entirely separate in all respects.
--Paragon and St. Lawrence are independent companies, with
separate management, and will be operated as independent companies
in the future.
None of the officers and directors of Paragon are officers and directors of St.
Lawrence, and Paragon and St. Lawrence have arrangements, fiduciary obligations,
understandings or intentions to allocate acquisition or other business
opportunities between them. Any opportunities identified by the managements of
the respective companies are expected to be examined and pursued, if at all,
independently of each other. With each of Paragon and St. Lawrence independently
available for business combinations and other acquisition opportunities, St.
Lawrence management believes that the potential to benefit St. Lawrence's
shareholders has been enhanced.
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.
3
(a) Agricultural Activities -- At March 31, 1999, 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 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, 1999, the Company continued its practice of maintaining its
other assets in relatively liquid interest/dividend bearing money market
investments. 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.
4
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 schedule and therefore seasonal or weather factors
generally do 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 at
cost by an employee of a management company with whom the Company shares office
space.
ITEM 2 - PROPERTIES
At March 31, 1999, 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 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.
5
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 bid price for
each quarterly period during the fiscal years 1998 and 1997, 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, mark-down
or commission and may not represent actual transactions.
Fiscal Year Quarter High Low
1999 First $2.875 $2.75
Second $2.75 $2.375
Third $2.50 $2.25
Fourth $2.50 $1.875
1998 First $2.50 $2.25
Second $2.25 $2.25
Third $2.75 $2.25
Fourth $3.125 $2.75
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 were paid this year and no cash dividends are expected to be paid in
the future.
6
NUMBER OF STOCKHOLDERS
As of June 14, 1999, there were approximately 1,291 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, 1999. Certain information
with respect to the fiscal years ended March 31, 1996 and March 31,1995 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.
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
REVENUES:
Interest & Dividends 51,069 56,704 54,545 59,858 55,311
Farm Rentals & Sales 9,120 9,120 9,120 9,120 9,804
Gain on Sale of Farm
Properties, net 0 0 0 0 0
Other 0 0 0 0 0
---------- ---------- ----------- ----------- -----------
Total 60,189 65,824 63,665 68,978 65,115
------ ------ ------- ------- -------
COSTS & EXPENSES:
Farm Related 1,613 1,734 2,056 1,243 1,634
General and 102,102 112,092 105,220 141,748 148,053
Administrative
Consulting 6,000 6,000 6,000 44,400 44,400
Depreciation 1,568 1,568 1,568 1,438 588
--------- --------- --------- --------- ------
Total 111,283 121,394 114,844 188,829 194,675
7
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Income (Loss) Before
Income Taxes (51,094) (55,570) (51,179) (119,851) (129,560)
Income Tax
Expense (Benefit) 690 787 965 735 (5,429)
--- --- --- --- -------
Net Income (Loss) (51,784) (56,357) (52,144) (120,586) (124,131)
Income (Loss) per
Common Share (0.13) (0.14) (0.13) (0.31) (0.32)
------ ------ ------ ------ ------
Weighted Average Number
of Common Shares
Outstanding 393,735 393,735 393,735 393,735 393,735
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Total Assets 1,165,360 1,231,852 1,293,467 1,370,874 1,453,225
Total Liabilities 22,006 36,714 41,972 62,094 23,859
Shareholders' Equity 1,143,354 1,195,138 1,251,495 1,308,780 1,429,366
8
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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, Salaries, Management Fees
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
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 1997, AS COMPARED TO YEAR ENDED MARCH 31, 1996.
Interest and dividend income decreased to $54,545 in the year ended March
31, 1997, from $59,858 in the previous year. The decrease is a result of lower
interest rates received on cash invested in the year ended March 31, 1997.
General and administrative expenses decreased to $105,220 in the year
ended March 31, 1997 from $141,748 in the year ended March 31, 1996 principally
due to reduced legal and other professional expenses currently recognized in the
Company's Statement of Income as of March 31, 1997. The following table
summarizes the significant components of these expenses, and presents a
comparison of such components for the years ended March 31, 1997 and March 31,
1996:
YEAR ENDED MARCH 31,
1997 1996
---- ----
Executive Compensation, Salaries and
Employee Benefits $31,478 $29,855
Office Rent and Operations 11,382 11,491
Stock Services, Proxy, Annual Meeting and
SEC Report Compliance 19,595 16,908
Professional Fees (accounting & legal) 44,362 85,166
Amortization and Depreciation 1,568 1,438
Payroll, excise and other taxes 3,711 3,380
The higher professional fees for the year ended March 31, 1996, are
attributable to the formation and subsequent dissolution of the St. Lawrence
Fund, a wholly-owned subsidiary of the Company, which was intended to register
under the Investment Company Act of 1940 and to invest in securities. Reference
is made to the Company's Forms 8-K filed January 19, 1996, and June 3, 1996, for
further information regarding the St. Lawrence Fund.
11
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had net working capital of $1,023,330, 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
The Company has substantially completed review of the Year 2000
compliance of its management and information systems. With respect to its
internal systems, the Company has found that no significant compliance efforts
are required since it does not rely heavily on computers in its operations.
Indeed, the Company's sole computer is used strictly for word processing and
spreadsheet preparation.
As part of its ongoing Year 2000 preparations, in March, 1998, the
Company sent written requests for Year 2000 information to its farm management
company, independent accountant and its transfer agent. In response to such
requests for information, the Company's transfer agent reported that all of its
hardware and software was currently Year 2000 "ready"; that it would be
conducting a full blown test in a Year 2000 environment in October, 1998, after
which it expected to be able to confirm that it is Year 2000 compliant; that it
had been examined by the New York State Banking Department and been found to
have made satisfactory progress on its Year 2000 plan; and that it had also made
the appropriate filing with the SEC in accordance with Rule 17Ad-18. The
Company's farm management company reported that it believed its computers were
ready to handle the Year 2000 turnover and that it was awaiting confirmation
from the bank where the farm account is located as to the Bank's readiness.
Finally, the Company's accountant reported that it was reviewing the guidelines
and recommended policies established by the American Institute of Certified
Public Accountants and addressing specific concerns through a firmwide upgrade
of computer systems and financial software which would be tested after
installation of the upgrades was completed in 1999. The Company requested
compliance updates from its service providers in June, 1999, and is awaiting
replies to such requests.
12
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, including without limitation, those relating to
Year 2000 readiness, 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.
13
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, 1998, 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 80 1959 Attorney at Law None
Secretary Indianapolis,
Indiana
since 1945.
Joel M. Greenblatt 41 1993 Managing Partner Director since August
Chairman of the of Gotham 1994 of Alliant
Board Capital III L.P. Techsystems, Inc., a
("Gotham") and its Delaware corporation
predecessors since 1985 which supplies
Gotham is a private weapons systems
investment partnership to the military and
which owns securities, its allies.
equity interests, distressed
debt, trade claims and
bonds, derivatives, and
options and warrants of
issuers engaged in a variety
of businesses.
Daniel L. Nir 38 1993 Manager of Gracie Capital, Director since August
President and L.P. since December, 1998, 1994 of Alliant
Treasurer Manager of Sargeant Capital Techsystems, Inc., a
Ventures, LLC Delaware corporation
since December, 1997; which supplies weapons
Managing Partner of systems to the United
Gotham Capital III, L.P., States military and its
prior thereto. allies.
14
Edward B. Grier 41 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, 1999 and Forms 5
and amendments thereto furnished to the Company with respect to the fiscal year
ended March 31, 1999, 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, 1999 and March 31, 1998.
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, 1999, March 31,
1998 and March 31, 1997.
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
15
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,
1997, March 31, 1998 or March 31, 1999.
During each of the three fiscal years ended March 31, 1997, March 31,
1998 and March 31, 1999, the Company paid to Jack C. Brown, Secretary and a
Director, a monthly fee of $500 for administrative services that he renders to
the Company. Such fee is on a month to month arrangement.
SUMMARY COMPENSATION TABLE
As permitted by Item 402 of Regulation S-K, the Summary Compensation
Table has been intentionally omitted as there was no compensation awarded to,
earned by or paid to the Named Executives which is required to be reported in
such Table for any fiscal year covered thereby. In addition, no transactions
between the Company and a third party where the primary purpose of the
transaction was to furnish compensation to a Named Executive were entered into
for any fiscal year covered thereby.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 31, 1999
No options or Stock appreciation rights were granted in the fiscal year
ended March 31, 1999.
Aggregated Option/SAR Exercises in Fiscal Year Ended March 31, 1999 and
Fiscal Year-End Option/SAR Values
The Company has a stock option plan originally adopted by the
Shareholders on June 12, 1978, and revised and approved by the Shareholders on
June 13, 1983, September 21, 1987 and August 28, 1992. The Company currently has
one outstanding Stock Option Agreement entered into pursuant to the Plan. The
options granted thereunder expires on September 21, 2002. The following table
summarizes options exercised during fiscal year 1999 and presents the value of
unexercised options held by the Named Executives at fiscal year end. There are
currently no outstanding stock appreciation rights.
16
Value of Unexercised Number of Unexercised
Options/SAR's In-The Money
Shares Options/SAR's
Acquired Value At Fiscal Year-End At Fiscal Year-End
On Exercise Realized (#) (#) ($) ($)
Name # ($) 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, 1999
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 1999.
As discussed above, during the fiscal year ended March 31, 1999, the Company
paid Jack C. Brown, Secretary and a Director, a monthly fee of $500 for
administrative services that he renders to the Company.
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, 1999 required to
be reported pursuant to Item 402(j) of Regulation S-K.
17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 15, 1999 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
- --------
(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.
18
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
All directors and
officers as a group 170,456 33.5%
(4 persons)
- ---------------------
*Less than 1%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
- --------
(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.
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.
19
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements: Page No.
- ------------------------- --------
Independent Auditor's Report 23
Balance Sheets 24
Statements of Income 25
Statement of Shareholders' Equity 26
Statements of Cash Flow 27
Notes to Financial Statements 28
Financial Schedules:
--------------------
X - Supplementary Income Statement 32
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
No Reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1999.
(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.)
20
(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.
21
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 25, 1999.
Signatures Title Date
---------- ----- ----
/s/ Daniel L. Nir President, Treasurer June 25, 1999
- ----------------------- and Director
Daniel L. Nir
(Principal Financial
Officer)
/s/ Joel M. Greenblatt Chairman of the Board, June 25, 1999
- ----------------------
Joel M. Greenblatt and Director
(Principal Executive
Officer)
/s/ Jack C. Brown Secretary and Director June 25, 1999
- -----------------------
Jack C. Brown
/s/ Edward B. Grier III Director June 25, 1999
- -----------------------
Edward B. Grier III
22
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 as of March 31, 1999 and 1998, and the related statements of income,
shareholders equity, and cash flows for each of the three years in the period
ended March 31, 1999. 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, 1999 and 1998, and the results of its
operations and its case flows for each of the three years in the period ended
March 31, 1999 in conformity with generally accepted accounting principles.
May 24, 1999
/s/ Sallee & Company, Inc.
1509 J STREET, P.O. BOX 1148, BEDFORD, INDIANA 47421, 812-275-4444 (FAX)
812-275-3300
23
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
MARCH 31, 1999 AND 1998
ASSETS 1999 1998
- ------ ---- ----
Current Assets:
Cash and cash equivalents $ 1,031,389 $1,105,940
Interest and other receivables 10,731 1,644
Prepaid items 1,202 662
Deferred tax benefits 2,014 2,014
----------- ----------
Total Current Assets $ 1,045,336 $1,110,260
Property and fixed assets:
Land $ 118,913 $ 118,913
Property & equipment, net 1,111 2,679
----------- ----------
Total Assets $ 1,165,360 $1,231,852
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Payroll taxes withheld and accrued $ 0 $ 772
Accounts payable & other 13,798 27,734
Deferred income 8,208 8,208
-------------- ----------
Total Liabilities $ 22,006 $ 36,714
============= ==========
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 372,367 424.151
------------- -----------
Total Shareholders' Equity $ 1,143,354 $ 1,195,138
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,165,360 $ 1,231,852
=========== ===========
The accompanying notes are an integral part of these financial statements.
24
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED MARCH 31,
1999 1998 1997
---- ---- ----
Revenues:
Farm rentals $ 9,120 $ 9,120 $ 9,120
Interest and dividends 51,069 56,704 54,545
---------- ---------- ----------
Total Revenues $ 60,189 $ 65,824 $ 63,665
Operating Costs and Expenses:
Farm related operating costs $ 1,613 $ 1,734 $ 2,056
Depreciation 1,568 1,568 1,568
Consulting fees-Note 3 6,000 6,000 6,000
General and administrative expenses 102,102 112,092 105,220
---------- --------- ---------
Total Operating Expenses $ 111,283 $ 121,394 $114,844
Income (Loss) before income taxes (51,094) (55,570) (51,179)
Income Taxes/(Tax Benefit) 690 787 965
---------- ---------- ------------
Net Income (Loss) $ (51,784) (56,357) (52,144)
Per Share Data:
Weighted average number of
common shares outstanding $393,735 $393,735 $393,735
-------- -------- --------
Basic earnings per common
and common equivalent shares $ (0.13) (0.14) (0.13)
========== ========== ===========
The accompanying notes are an integral part of these financial statements.
25
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY
Common Stock Additional
Number of Par Paid-in Retained
Shares Value $1 Capital Earnings
--------- -------- ------- --------
Balances at April 1, 1996 393,735 $393,735 $377,252 $537,793
Net loss for 1997 (52,144)
Distribution of Paragon Stock (5,141)
---------------------------------------------------------
Balances at March 31, 1997 393,735 $393,735 $377,252 $480,508
Net loss for 1998 (56,357)
---------------------------------------------------------
Balances at March 31, 1998 393,735 $393,735 $377,252 $424,151
Net loss for 1999 ( 51,784)
---------------------------------------------------------
Balance at March 31, 1999 393,735 $393,735 $377,252 $372,367
======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
26
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOW
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
1999 1998 1997
---- ---- ----
Cash Flows From Operating Activities:
Net Income (Loss) $(51,784) $ (56,357) $ (52,144)
Adjustments to reconcile net income to
net cash from operating activities 1,568 1,568 1,568
Depreciation
(Increase) Decrease in Current Assets: (9,087) (122) 9,582
Other receivables
Prepaid items (540) 147 (260)
(Decrease) Increase in Current Liabilities:
Payroll tax & other (772) (872) 1,190
Accounts payable (13,936) (4,386) (21,311)
----------- ----------- -----------
Net Cash From Operating Activities (74,551) (60,022) (61,375)
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 (5,141)
Net Increase in Cash and Cash Equivalents (74,551) (60,022) (66,516)
Cash and Cash Equivalents, beginning $1,105.940 $1,165,962 $1,232,478
---------- ---------- ----------
Cash and Cash Equivalents, ending $1,031,389 $1,105,940 $1,165,962
==========
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes 1,000 960 122
Cash paid for interest expenses 0 0 0
The accompanying notes are an integral part of these financial statements.
27
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:
In 1997, the Financial Accounting Standards Board (the "FASB") issued Statement
No. 128, "Earnings Per Share" ("SFAS 128"), which is effective for financial
statements issued for periods after December 15, 1997. 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:
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.
28
THE ST. LAWRENCE SEAWAY CORPORATION
RECLASSIFICATION:
The 1998 and 1997 financial statements have been reclassified, where necessary,
to conform to the presentation of the 1999 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, 1999 and 1998, was $7,606 and $6,308 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.
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.
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
29
THE ST. LAWRENCE SEAWAY CORPORATION
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,
1999 and 1998, there were 393,735 common shares issued and outstanding.
NOTE 3. RELATED PARTIES
During the fiscal years ending March 31, 1999, 1998 and 1997, 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, 1999, 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. Due to the possibility that these
loss amounts will not be recognized in the future, 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.
30
THE ST. LAWRENCE SEAWAY CORPORATION
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.
31
THE ST. LAWRENCE SEAWAY CORPORATION
SCHEDULE X
THE ST. LAWRENCE SEAWAY CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
COLUMN A COLUMN B
-------- --------
ITEM CHARGED TO COSTS AND EXPENSES
YEARS ENDED MARCH, 31
1999 1998 1997
---- ---- ----
Maintenance and repairs $1,677 $1,378 $1,113
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferral $1,568 $1,568 $1,568
Taxes, other than payroll and
income taxes $2,137 $ 787 $1,844
Royalties NONE NONE NONE
Advertising costs NONE NONE NONE
32