U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal quarter ended January 31, 1996
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-620
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DETROIT & CANADA TUNNEL CORPORATION
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(Name of small business issuer in its charter)
Michigan 38 - 0477830
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 East Jefferson Avenue, Detroit, Michigan 48226
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (313) 567-4422
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Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act during the past 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.
( X ) Yes ( ) No
The number of outstanding shares of the issuer's common stock as of January
12, 1996 was 676,027.
Transitional Small Business Disclosure (check one) Yes ( ) No ( x )
PART I.
ITEM 1. FINANCIAL STATEMENTS
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Balance Sheets
Unaudited
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January 31 October 31
1996 1995
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CURRENT ASSETS
CASH $ 2,285,834 $ 2,129,988
SHORT TERM INVESTMENTS 4,657,316 4,840,847
ACCOUNTS RECEIVABLE, Net of allowance
for doubtful accounts of $7,900 and $5,000 1,033,176 1,057,094
PREPAID EXPENSES 538,979 446,199
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TOTAL CURRENT ASSETS 8,515,305 8,474,127
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LONG TERM INVESTMENTS
EQUITY INVESTMENTS - Available for Sale 1,712,516 1,573,768
OTHER INVESTMENTS 673,800 673,800
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2,386,316 2,247,568
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PROPERTY, PLANT & EQUIPMENT
Leasehold Improvements 11,664,202 11,694,880
Equipment 1,206,716 1,157,898
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12,870,918 12,852,778
Accumulated Depreciation and Amortization (2,126,542) (2,025,624)
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10,744,376 10,827,154
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DEFERRED INCOME TAX BENEFIT 367,736 415,000
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$ 22,013,733 $ 21,963,850
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<FN>
The accompanying notes are an integral part of these financial statements.
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Balance Sheets (continued)
Unaudited
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January 31 October 31
1996 1995
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CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 349,670 $ 960,616
ACCRUED PAYROLL & VACATION 94,015 135,556
ACCRUED TAXES 460,657 301,965
OTHER ACCRUED LIABILITIES 6,441 115,507
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TOTAL CURRENT LIABILITIES 910,783 1,513,644
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POSTRETIREMENT BENEFITS 3,445,072 3,383,744
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STOCKHOLDERS' INVESTMENT
COMMON STOCK, 1,000,000 shares authorized, 3,382,965 3,382,965
676,027 issued and outstanding
CAPITAL SURPLUS 28,124 28,124
RETAINED EARNINGS 13,351,392 12,851,549
UNREALIZED NET GAIN ON INVESTMENT
SECURITIES AVAILABLE FOR SALE 895,396 803,823
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17,657,877 17,066,461
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$22,013,733 $21,963,850
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<FN>
The accompanying notes are an integral part of these financial statements.
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Statements of Operations
For the three months ended
Unaudited
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January 31 January 31
1996 1995
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OPERATING REVENUE
Tolls $ 1,908,750 $ 1,751,266
Management Fee 160,119 148,937
Rental and Lease Income 253,922 265,654
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2,322,791 2,165,857
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OPERATING EXPENSES
Tunnel Operations 1,406,858 1,516,127
Taxes Other than Income 161,422 107,915
Foreign Currency Transaction (Gain)Loss (27,108) 58,115
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1,541,171 1,682,157
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781,621 483,700
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OTHER INCOME
Interest and Dividends 117,954 124,082
Other Income - net 4,249 7,864
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122,202 131,946
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Income before taxes 903,823 615,646
Provision for income taxes 319,476 230,018
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Net Income $ 584,347 $ 385,627
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Net Income per Average Share $ 0.86 $ 0.57
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Dividends declared per share $ 0.125 $ 0.125
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Average Shares Outstanding 676,027 682,027
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<FN>
The accompanying notes are an integral part of these financial statements.
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
For three months ended
Unaudited
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January 31 January 31
1996 1995
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Cash flows from operating activities:
Net income $ 584,347 $ 385,627
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Postretirement Benefits 61,328 62,118
Depreciation and amortization 100,918 93,033
Loss (Gain) on sale of investments, net 0 0
Loss (Gain) on sale of property 0 0
Cash provided (used ) by changes in
Operating assets and liabilities:
Accounts receivable 23,918 280,637
Prepaid expenses (92,780) (82,498)
Accounts payable (610,946) (970,530)
Accrued liabilities (150,607) (20,308)
Accrued taxes 158,692 (566,263)
Deferred tax liabilities 89 0
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Net cash provided by (used in)
operating activities 74,959 (818,184)
Cash flows from investing activities:
Purchase of investment securities 0 0
Proceeds from sale of investment securities 0 (3,792)
Net change in short term investments 183,531 7,040,596
Purchase of property, plant & equipment (18,140) (486,359)
Proceeds from sale of property 0 0
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Net cash provided by (used in)
investing activities 165,391 6,550,445
Cash flows from financing activities:
Dividends paid (84,504) (85,254)
Purchase of common stock 0 0
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Net cash used by financing activities (84,504) (85,254)
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Net increase (decrease) in cash 155,846 5,647,007
Cash at beginning of period 2,129,988 1,632,395
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Cash at end of period $ 2,285,834 $ 7,279,402
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<FN>
The accompanying notes are an integral part of these financial statements.
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Notes to Consolidated Financial Statements
Unaudited
1 - GENERAL
There has been no change in the Corporation's principal accounting policies
which were set forth in the 1995 Annual Report to the Stockholders.
The consolidated financial statements included herein have been prepared by
the Corporation, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of financial results.
All adjustments are of a normal or recurring nature. Certain information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Corporation
believes that the disclosures are adequate so as to not make the information
presented misleading. The financial statements are subject to year-end audit
and other adjustments as later information may require.
2 - FOREIGN CURRENCY TRANSACTIONS
The functional currency of the Corporation and its subsidiary is the US
dollar. Certain transactions of the Corporation and its subsidiary are
denominated in Canadian dollars. Foreign currency transaction gains or losses
result from exchange rate fluctuations between the US and Canadian dollars and
are recognized in the period in which the exchange rate changes.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
I. Results of Operations
For the three months ended January 31, 1996
Toll revenue increased 9.0% overall during the first three months
corresponding to a 9.02% increase in traffic volume due to casino related
traffic. A second gaming facility in Windsor opened in December, 1995.
Management expects current high traffic volumes to continue.
Foreign currency transaction gain was $27,108 in 1996 compared to a loss of
$58,115 in 1995 as the value of the Canadian dollar rose against the United
States dollar.
II. Liquidity
During the first three months, the Corporation met its dividend, operating and
construction capital needs using cash provided from operating activities,
utilization of cash reserves and short and long term investments. A $4 million
line of credit is available from a bank to meet short term cash needs.
III. Changes in Financial Condition
The Corporation and the City of Windsor are engaged in a major renovation of
the tunnel property. During the first three months of fiscal 1996,
expenditures for capital projects by the Corporation were $.2 million.
Projected expenditures for fiscal 1996 are expected to be $3.9 million.
Additional major capital expenditures are expected in subsequent years.
Construction projects will be funded through current earnings, utilization of
short term investments and if necessary, short term draws against the line of
credit.
Deferred tax benefits relate principally to postretirement benefits which will
be paid in future periods and net unrealized gains on securities classified as
available-for-sale which will be received in future periods.
PART II
ITEM 6. EXHIBITS and REPORTS ON Form 8-K
(a) The following exhibits are filed as part of this report :
Exhibit 10 - Severance agreements with the Chief Executive Officer and
the Principal Financial and Accounting Officer, both dated
December 14, 1995
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Corporation during the quarter
ended January 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DETROIT & CANADA TUNNEL CORPORATION
(Registrant)
BY: /s/ David C. Canavesio
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David C. Canavesio
Treasurer and Vice President - Finance
(Principal Financial Officer and Principal
Accounting Officer)
Date 3/15/96
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