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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, 2001
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 14,
2001 was approximately $778,042.
The number of shares of Common Stock of the registrant outstanding as of June 14, 2001 was 393,735.
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THE ST. LAWRENCE SEAWAY CORPORATION
PART I
ITEM 1 - BUSINESS
DESCRIPTION OF CURRENT BUSINESS
The Company is currently engaged in evaluating alternatives to its former business, including
continuing its evaluation of operating companies 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 2001
During part of the fiscal year ended March 31, 2001, 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.
On February 23, 2000, St. Lawrence 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. 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. 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.
CANCELLATION 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.
2
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.
On June 1, 2001, Paragon notified the Board of Directors of St. Lawrence that the Paragon Board
had determined that due to the lack of suitable business combinations available to Paragon, Paragon
would be liquidated and dissolved and all outstanding shares thereof (including all escrowed shares)
would be cancelled effective on or about June 29, 2001.
FINANCING ARRANGEMENTS
The Company currently has no debt for borrowed funds or similar obligations or contingencies.
The Company may incur debt of an undetermined amount to effect an acquisition or commence a new
business. St. Lawrence does not have a formal arrangement with any bank or financial institution
with respect to the availability of financing in the future.
LICENSES AND TRADEMARKS, ETC.
The business of St. Lawrence is not currently dependent upon any patent, trademark, franchise
or license.
GOVERNMENTAL REGULATION
St. Lawrence believes it is in compliance with all federal, state and local regulations
including all applicable environmental matters.
SEASONALITY
Although farm operations are generally conducted during the summer months, St. Lawrence
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. Part-time 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, 2001, the Company did not own any real estate. Until June 14, 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.
3
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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
2001 and 2000, 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
----------- ------- ---- ---
2001 First $2.125 $2.125
Second $3.25 $2.062
Third $3.50 $2.25
Fourth $2.75 $2.00
2000 First $2.375 $1.9375
Second $2.00 $1.875
Third $2.75 $2.00
Fourth $2.75 $2.50
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.
4
NUMBER OF STOCKHOLDERS
As of June 14, 2001, there were approximately 1,241 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, 2001. 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.
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
REVENUES:
- ---------
Interest & Dividends 79,540 49,244 51,069 56,704 54,545
Farm Rentals & Sales 0 8,208 9,120 9,120 9,120
Gain on Sale of Farm
Properties, net 392,235 0 0 0 0
Other 0 0 0 0 0
------- ------ ------ ------ ------
Total 471,775 57,452 60,189 65,824 63,665
------- ------ ------ ------ ------
COSTS & EXPENSES:
Farm Related 0 833 1,613 1,734 2,056
General and 85,585 88,034 102,102 112,092 105,220
Administrative
Consulting 6,000 6,000 6,000 6,000 6,000
Depreciation 0 1,111 1,568 1,568 1,568
------ ------ ------- ------- -------
Total 91,585 95,978 111,283 121,394 114,844
5
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Income (Loss) Before
Income Taxes 380,190 (38,526) (51,094) (55,570) (51,179)
Income Tax
Expense (Benefit) 7,584 573 690 787 965
----- --- --- --- ---
Net Income (Loss) 372,596 (39,099) (51,784) (56,357) (52,144)
Income (Loss) per
Common Share 0.95 (0.10) (0.13) (0.14) (0.13)
---- ------ ------ ------ ------
Weighted Average Number
of Common Shares
Outstanding 393,735 393,735 393,735 393,735 393,735
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Total Assets 1,491,692 1,123,040 1,165,360 1,231,852 1,293,467
Total Liabilities 14,841 18,785 22,006 36,714 41,972
Shareholders' Equity 1,476,851 1,104,255 1,143,354 1,195,138 1,251,495
6
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 2001, AS COMPARED TO YEAR ENDED MARCH 31, 2000.
Interest and dividend income increased to $79,540 in the year ended March 31, 2001, from
$49,244 in the previous year. The increase is a result of greater dollars invested in the year ended
March 31, 2001.
There were no farm rental revenues in the fiscal year ended March 31, 2001, as compared to
$8,208 in such revenues in the previous year. The decrease is due solely to the termination during
the previous fiscal year of the existing farm tenant agreement as a result of the sale of the
Schleman Farm.
General and administrative expenses decreased to $85,585 in the year ended March 31, 2001, from
$85,034 in the year ended 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, 2001
and March 31, 2000:
YEAR ENDED MARCH 31,
2001 2000
------ -------
Executive Compensation, Management Fees ........................................ $10,757 $14,762
Salaries and Employee Benefits
Office Rent and Operations ..................................................... 15,669 16,665
Stock Services, Proxy, Annual Meeting and ...................................... 16,905 17,609
SEC Report Compliance
Professional Fees (accounting & legal) ......................................... 42,254 37,866
Payroll, excise and other taxes ................................................ 0 1,132
The Company had $380,190 of income before taxes in the year ended March 31, 2001, as compared
to a loss of $38,526 before taxes in the year ended March 31, 2000.
The income tax paid in the current year was $7,594. An income tax of $573 was paid in the year
ended March 31, 2000.
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.
7
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 year ended March 31, 2000 was $573. An income tax of $690 was paid
in the year ended March 31, 1999.
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 Schlemann 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
8
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.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had net working capital of $1,476,851 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.
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 18.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
9
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, 2001, 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 82 1959 Attorney at Law None
Secretary Indianapolis,
Indiana
since 1945.
Joel M. Greenblatt 43 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 40 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.
Edward B. Grier 43 1993 Partner of Gracie Capital, L.P. None
Vice President since January, 1999;
Vice President of Gotham Capital
from 1992-1994 and a limited partner
of Gotham from January 1, 1995
through December 31, 1998.
10
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, 2001 and Forms 5 and amendments thereto furnished to the
Company with respect to the fiscal year ended March 31, 2001, 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, 2001 and March
31, 2000.
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, 2001,
March 31, 2000, and March 31, 1999.
During each of the three fiscal years ended March 31, 1999, March 31, 2000 and March 31, 2001,
the Company paid to Jack C. Brown, Secretary and a Director, a monthly fee of $500 for
administrative services that he renders to the Company. Such fee is on a month to month arrangement.
SUMMARY COMPENSATION TABLE
As permitted by Item 402 of Regulation S-K, the Summary Compensation Table has been
intentionally omitted as there was no compensation awarded to, earned by or paid to the Named
Executives which is required to be reported in such Table for any fiscal year covered thereby. In
addition, no transactions between the Company and a third party where the primary purpose of the
transaction was to furnish compensation to a Named Executive were entered into for any fiscal year
covered thereby.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 31, 2001
No options or stock appreciation rights were granted in the fiscal year ended March 31, 2001.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2001 AND FISCAL YEAR-END
OPTION/SAR VALUES
The Company has a stock option plan originally adopted by the Shareholders on June 12, 1978,
and revised and approved by the Shareholders on June 13, 1983, September 21, 1987 and August 28,
1992. The Company currently has one outstanding Stock Option Agreement entered into pursuant to the
Plan. The options granted thereunder expires on September 21, 2002. The following table summarizes
options exercised during fiscal year 2001 and presents the value of unexercised options held by the
Named Executives at fiscal year end. There are currently no outstanding stock appreciation rights.
11
Value of Unexercised
Number of Unexercised In-The Money
Shares Options/SAR's Options/SAR's
Acquired Value At Fiscal Year-End At Fiscal Year-End
On Exercise Realized (#) (#) ($) ($)
Name # ($) 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, 2001
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. No fees were
paid to Directors for meetings in fiscal year 2001.
As discussed above, during the fiscal year ended March 31, 2001, 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,
2001 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 14, 2001 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
12
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
(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.
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.
(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.
13
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 17
Balance Sheets 18
Statements of Income 19
Statement of Shareholders' Equity 20
Statements of Cash Flow 21
Notes to Financial Statements 22-25
FINANCIAL SCHEDULES:
X - Supplementary Income Statement 26
Information
Schedules other than those listed above are omitted for the reason that they are not required or not
appropriate or the required information is shown in the financial statements or notes thereto.
(b) Reports on Form 8-K
None filed during fiscal year ended 3/31/01.
(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.)
14
(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.)
15
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, 2001.
Signatures Title Date
/s/ Daniel L. Nir
- ------------------------ President, Treasurer June 25, 2001
Daniel L. Nir and Director
(Principal Financial
Officer)
/s/ Joel M. Greenblatt
- ------------------------ Chairman of the Board, June 25, 2001
Joel M. Greenblatt and Director
(Principal Executive
Officer)
/s/ Jack C. Brown
- ------------------------ Secretary and Director June 25, 2001
Jack C. Brown
/s/ Edward B. Grier III
- ------------------------ Director June 25, 2001
Edward B. Grier III
16
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, 2001 and 2000, and the related statements of income, shareholders equity, and cash flows for
each of the three years in the period ended March 31, 2001. 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,
2001 and 2000, and the results of its operations and its case flows for each of the three years in
the period ended March 31, 2001 in conformity with generally accepted accounting principles.
May 21, 2001
/s/ Sallee & Company, Inc.
1509 J STREET, P.O. BOX 1148, BEDFORD, INDIANA 47421, 812-275-4444 (FAX) 812-275-3300
17
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
MARCH 31, 2001, AND 2000
ASSETS 2001 2000
---- ----
Current Assets:
Cash and cash equivalents $ 1,479,010 $ 999,649
Interest and other receivables 3,033 2,037
Prepaid items 9,649 2,441
----------- -----------
Total Current Assets $ 1,491,692 $ 1,004,127
Property and fixed assets:
Land 0 118,913
----------- -----------
Total Assets $ 1,491,692 $ 1,123,040
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable & other 6,674 18,785
Federal and state taxes payable 8,167 0
----------- -----------
Total Liabilities $ 14,841 $ 18,785
=========== ===========
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 705,864 333,268
----------- -----------
Total Shareholders' Equity $ 1,476,851 $ 1,104,255
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,491,692 $ 1,123,040
=========== ===========
The accompanying notes are an integral part of these financial statements.
18
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED MARCH 31,
2001 2000 1999
------ ---- ----
Revenues:
Farm rentals $ 0 $ 8,208 $ 9,120
Interest and dividends 79,540 49,244 51,069
Sales of land 392,235 0 0
------- -------- --------
471,775 57,452 60,189
Operating Costs and Expenses:
Farm related operating costs 0 833 1,613
Depreciation 0 1,111 1,568
Consulting fees-Note 3 6,000 6,000 6,000
General and administrative expenses 85,585 88,034 102,102
------- ------- -------
Total Operating Expenses 91,585 95,978 111,283
Income (Loss) before income taxes 380,190 (38,526) (51,094)
Income Taxes/(Tax Benefit) 7,594 573 690
-------- -------- --------
Net Income (Loss) $372,596 ($39,099) ($51,784)
======== ========= =========
Per Share Data:
Weighted average number of
common shares outstanding 393,735 393,735 393,735
------- ------- -------
Basic earnings per common
and common equivalent shares $ 0.95 ($0.10) ($0.13)
======== ========== =========
The accompanying notes are an integral part of these financial statements.
19
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY
Accumulated
Other
Common Paid-in Comprehensive Retained
Stock Capital Income Earnings
----- ------- ------------- --------
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)
-------- -------- -------- --------
Balances at March 31, 2000 393,735 377,252 0 333,268
Net income for 2001 372,596
-------- -------- -------- --------
Balances at March 31, 2001 $393,735 $377,252 $0 $705,864
===============================================================
The accompanying notes are an integral part of these financial statements.
20
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOW
YEARS ENDED MARCH 31, 2001, 2000 AND 1999
2001 2000 1999
---- ---- ----
Cash Flows From Operating Activities:
Net Income (Loss) $372,596 $(39,099) $(51,784)
Adjustments to reconcile net income to
Net cash from operating activities
Depreciation 0 1,111 1,568
(Increase) Decrease in Current Assets: (392,235) 0 0
Other receivables (996) 8,694 (9,087)
Prepaid items (7,208) 775 (540)
(Decrease) Increase in Current Liabilities:
Payroll tax & other 0 0 (772)
Accounts payable (3,944) (3,221) (13,936)
--------- --------- ---------
Net Cash From Operating Activities (31,787) (31,740) (74,551)
Cash Flows From Investing Activities:
Purchase of equipment 0 0 0
Proceeds from asset sales 511,148 0 0
-------- -------- --------
Net Cash from Investing Activities 511,148 0 0
Cash Flows From Financing Activities:
Purchase of Paragon Stock 0 0 0
-------- -------- --------
Net Cash From Financing Activities 0 0 0
Net Increase in Cash and Cash Equivalents 479,361 (31,740) (74,551)
Cash and Cash Equivalents, beginning 999,649 1,031,389 1,105,940
-------- --------- ---------
Cash and Cash Equivalents, ending $1,479,010 $ 999,649 $1,031,389
========== ========= ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes 9,649 500 1,000
Cash paid for interest expenses 0 0 0
The accompanying notes are an integral part of these financial statements.
21
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. This property was subsequently sold in June, 2000.
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.
RECLASSIFICATION:
The 2000 and 1999 financial statements have been reclassified, where necessary, to conform to the
presentation of the 2001 financial statements.
CASH FLOWS:
For purposes of reporting cash flows, cash and cash equivalents include all cash in banks and cash
accumulation funds.
22
THE ST. LAWRENCE SEAWAY CORPORATION
DEPRECIATION:
Property and equipment, consisting of small office equipment, has been fully depreciated.
Depreciation was 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.
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.
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, 2001 and 2000,
there were 393,735 common shares issued and outstanding.
NOTE 3. RELATED PARTIES
During the fiscal years ending March 31, 2001, 2000 and 1999, 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
The Company used loss carryforwards to fully offset the Company's current taxable income. At March
31, 2001, the Company had an immaterial amount of loss carryforwards remaining. If not used, these
carryforwards will begin to expire in 2012. No tax benefits have been recognized in these financial
statements. Provisions for any deferred federal and state tax liabilities are immaterial to these
financial statements.
23
THE ST. LAWRENCE SEAWAY CORPORATION
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.
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. 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.
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. The net operating losses of the Company totally offset the
related gains from the aforesaid property sale and no federal tax liabilities are accrued.
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.
NOTE 7. SUBSEQUENT EVENTS
On June 1, 2001, Paragon notified the Board of Directors of St. Lawrence that the Paragon Board had
determined that due to the lack of suitable business contributions available to Paragon, Paragon
would be liquidated and dissolved and all outstanding shares thereof (including all escrowed shares)
would be cancelled effective on or about June 29, 2001.
24
THE ST. LAWRENCE SEAWAY CORPORATION
SCHEDULE X
THE ST. LAWRENCE SEAWAY CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED MARCH 31, 2001, 2000 AND 1999
COLUMN A COLUMN B
ITEM CHARGED TO COSTS AND EXPENSES
YEARS ENDED MARCH, 31
2001 2000 1999
---- ---- ----
Maintenance and repairs $1,886 $1,516 $1,677
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferral $0 $1,111 $1,568
Taxes, other than payroll and
income taxes $0 $1,132 $2,137
Royalties NONE NONE NONE
Advertising costs NONE NONE NONE
25
