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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No.
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September 30, 2000 0-2040
THE ST. LAWRENCE SEAWAY CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
INDIANA 35-1038443
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
818 Chamber of Commerce Building
320 N. Meridian Street
Indianapolis, Indiana 46204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (317) 639-5292
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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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at November 3, 2000
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Common Stock, $1.00 par value 393,735
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THE ST. LAWRENCE SEAWAY CORPORATION
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION PAGE
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Balance Sheets - September 30, 2000 (UNAUDITED) and March 31, 2000............ 3
Statements of Income - Three months ended September 30, 2000 and 1999
(UNAUDITED)................................................................ 4
Statements of Income - Six months ended September 30, 2000 and 1999
(UNAUDITED)................................................................ 5
Statements of Cash Flows - Six months ended September 30, 2000 and
1999 (UNAUDITED) ................................................... 6
Notes to Financial Statements - September 30, 2000.......................... 7-8
Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................ 9-11
PART II. OTHER INFORMATION.................................................. 12
Signatures................................................................... 13
Exhibit (27)................................................................. 14
2
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
SEPTEMBER 30, 2000 (UNAUDITED) AND MARCH 31, 2000
(Unaudited)
SEPTEMBER 30, MARCH 31,
2000 2000
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ASSETS
Current assets:
Cash and cash equivalents $1,491,260 999,649
Interest and other receivables 7,223 2,037
Prepaid items 8,071 2,441
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Total Current Assets 1,506,554 1,004,127
Land 0 118,913
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Total Assets $1,506,554 1,123,040
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & other $ 15,316 18,785
Federal & state taxes payable 7,666 0
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Total Current Liabilities 22,982 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 712,585 333,268
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Total Shareholders' Equity 1,483,572 1,104,255
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Total Liabilities and Shareholders' Equity $1,506,554 1,123,040
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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Revenues:
Farm rentals $ 0 2,736
Interest and dividends 23,696 11,585
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Total revenues 23,696 14,321
Operating costs and expenses:
Farm related operating costs 0 368
Depreciation 0 392
General and administrative 24,289 22,325
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Total operating expenses 24,289 23,085
Income (Loss) before tax provision (593) (8,764)
Provision for income taxes net
of net operating loss carryforward/
(tax benefit) 280 (1,262)
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Net income (Loss) $ (873) (7,502)
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Per share data:
Weighted average number
of common shares outstanding 393,735 393,735
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Primary earnings per share:
Income (Loss) per share $ 0 ($0.02)
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4
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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Revenues:
Farm rentals $ 0 $ 5,472
Interest and dividends 37,516 22,800
Sale of Land 392,235 0
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Total revenues 429,751 28,272
Operating costs and expenses:
Farm related operating costs 0 767
Depreciation 0 784
General and administrative 43,341 39,466
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Total operating expenses 43,341 41,017
Income (Loss) before tax provision 386,410 (12,745)
Provision for income taxes net of
Net operating loss carryforward/
(tax benefit) 7,093 (1,687)
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Net income (loss) $379,317 (11,058)
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Per share data:
Weighted average number
of common shares outstanding 393,735 393,735
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Primary earnings per share:
Income (Loss) per share $0.95 ($0.03)
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5
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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Cash flows from operating activities:
Net income (loss) $ 379,317 $(11,050)
Adjustments to reconcile net income to
net cash from operating activities
Gain on Sale of Land (392,235) 0
Depreciation 0 784
(Increase) Decrease in current assets:
Interest and other receivables (5,186) 8,904
Prepaid items (5,630) 680
Deferred income tax 0 (1,951)
(Decrease) Increase in current liabilities:
Payroll tax & other 0 0
Deferred Income 0 (5,472)
Accounts payable (3,469) (2,954)
Income taxes payable 7,666 264
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Net cash from operating activities (19,537) (10,793)
Cash flows from investing activities:
Sale of land 511,148 0
Purchase of equipment 511,148 0
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Net cash from investing activities 0 0
Cash flows from financing activities:
Net cash from financing activities 0 0
Net decrease in cash and cash equivalents 491,611 (10,793)
Cash and cash equivalents, beginning 999,649 1,031,389
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Cash and cash equivalents, ending $ 1,491,260 1,020,596
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Supplemental disclosures of cash flow information:
Cash paid for income taxes 8,071 0
Cash paid for interest expense 0 0
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THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
for generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ending September 30, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending March 31, 2001. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the fiscal year ended March 31, 2000.
NOTE B--RECLASSIFICATION
The 1999 financial statements have been reclassified, where necessary, to
conform to the presentation of the 2000 financial statements.
NOTE C--EARNINGS PER SHARE
Primary earnings per share are computed using the weighted average number
of shares of common stock and common stock equivalents outstanding under the
treasury stock method. Common stock equivalents include all common stock options
and warrants outstanding during each of the periods presented.
NOTE D--STOCK PURCHASE AND DIVIDEND
On March 19, 1997, the Board of Directors of the Company declared a
dividend distribution of 514,191 shares of common stock, $.01 par value (the
"Shares") of Paragon Acquisition Company, Inc. ("Paragon"), and 514,191
non-transferable rights (the "Subscription Right") to purchase two (2)
additional Shares of Paragon. Paragon's business purpose is to seek to acquire
or merge with an operating business, and thereafter to operate as a
publicly-traded company. St. Lawrence purchased the Paragon shares on March 6,
1997, for $5,141, or $.01 per share, and distributed one Paragon share and one
subscription right for each share of St. Lawrence Common Stock owned or subject
to exercisable options and warrants as of March 21, 1997 (the "Record Date").
Neither St. Lawrence nor Paragon received any cash or other proceeds from the
distribution, and St. Lawrence stockholders did not make any payment for the
share and subscription rights. The distribution to St. Lawrence stockholders was
made by St. Lawrence for the purpose of providing St. Lawrence stockholders with
an equity interest in Paragon without such stockholders being required to
contribute any cash or other capital in exchange for such equity interest.
On March 21, 1997, the Securities and Exchange Commission declared
effective a Registration Statement on Form S-1 filed by Paragon, registering the
Distribution of Shares and Subscription Rights to St. Lawrence stockholders. The
cost of organizing Paragon and registering the distribution have been borne by
the founders of Paragon.
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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
issueable 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.
NOTE E. 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. The real
estate was sold at auction for an aggregate gross sales price of $567,500. At
closing, an aggregate $13,225 price reduction was made due to acreage
corrections revealed by the survey delivered at closing and due to deletion from
the sale property of an electrical substation not owned by the Company. All
sales were closed as of June 14, 2000, and net proceeds of $506,510 were
delivered to the Company as of that date. In fiscal year ending March 31, 2001,
the Company will be subject to tax on the net gain, after related selling
expenses, from the sale that exceeds the existing net operating losses of
approximately $375,000, plus any additional net operating losses incurred in
fiscal year 2001.
The Company devoted the property to farming activities under a cash lease
method. The property was leased to farmers who were directly responsible for the
operation thereof and who paid the Company a rental fee covering a ten-month
period of use of the property. The Company generally received these rental
payments at the beginning of the planting season. The Company was responsible
for real estate taxes, insurance, and minor expenses. As a result of the sale of
the property and termination of the farm tenant agreement prior to the calendar
year 2000 planting season, the Company will not realize any farm rental income
in the fiscal year ending March 31, 2001.
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THE ST. LAWRENCE SEAWAY CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 2000 AS COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1999.
Interest and dividend income increased to $23,696 in the three months ended
September 30, 2000, from $11,585 in the three months ended September 30, 1999.
This increase is a result of a higher amount of dollars invested in the three
months ended September 30, 2000.
Farm rental revenue decreased to zero (0) in the three months ended
September 30, 2000, from $2,736 in the three months ended September 30, 1999.
The decrease is due solely to the termination of the existing farm tenant
agreement as a result of the sale of the farm property of the Company to which
such agreement relates.
General and administrative expenses increased to $24,289 in the three
months ended September 30, 2000 from $22,325 in the three-months ended September
30, 1999. This increase is largely due to increased professional fees incurred,
in part, in connection with the sale of the Schleman Farm.
As a result of the above items the Company had a loss before provision for
income taxes of $593 in the three months ended September 30, 2000, as compared
to a loss before provision for income taxes of $8,764 in the comparable period a
year earlier.
Indiana gross tax of $280 was applicable in the three months ended
September 30, 2000, as compared to federal and state income tax benefits of
$1,262 that were applicable in the three months ended September 30, 1999. No
federal tax provision is applicable in the three months ended September 30, 2000
due to the net operating loss carryforward of approximately $375,000.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 2000, COMPARED TO SIX
MONTHS ENDED SEPTEMBER 30, 1999
Interest and dividend income increased to $37,516 in the six months ended
September 30, 2000, from $22,800 in the six months ended September 30, 1999.
This increase is a result of a higher amount of dollars invested in the three
months ended September 30, 2000.
Farm rental revenue decreased to zero (0) in the six months ended September
30, 2000, from $5,472 in the six months ended September 30, 1999. The decrease
is due solely to the termination of the existing farm tenant agreement as a
result of the sale of the farm property of the Company to which such agreement
relates.
General and administrative expenses increased to $43,341 in the six months
ended September 30, 2000 from $39,466 in the six months ended September 30,
1999, as illustrated by the following table. This increase is largely due to
increased professional fees incurred and taxes paid, in part, in connection with
the sale of the Schleman Farm.
9
SIX MONTHS ENDED
SEPTEMBER 30,
2000 1999
Executive Compensation, Management Fees, ---- ----
Salaries, and Employee Benefits $ 7,851 $10,119
Office Rent and Company Operations
(including Farm Operations) $ 6,808 $ 9,336
Stock Services, Proxy, Annual Meeting, and
SEC Report Compliance $ 3,603 $ 4,203
Professional Fees (accounting & legal) $25,079 $15,454
Income and other taxes $ 7,093 $ 1,303
As a result of the above items the Company received income before provision
for income taxes of $386,410 in the six months ended September 30, 2000, as
compared to a loss before provision for income taxes of $12,745 in the
comparable period a year earlier.
Indiana gross tax of $7,093 was applicable in the six months ended
September 30, 2000, as compared to federal and state income tax benefits of
$1,687 that were applicable in the six months ended September 30, 1999. No
federal tax provision is applicable in the six months ended September 30, 2000
due to the net operating loss carryforward of approximately $375,000.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company had net working capital of $1,483,572,
substantially all of which was in cash and money market funds. St. Lawrence has
sufficient capital resources to continue its current business.
The Company may require the use of its assets for a purchase or partial
payment for an acquisition or in connection with another business opportunity.
In addition, St. Lawrence may incur debt of an undetermined amount to effect an
acquisition or in connection with another business opportunity. It may also
issue its securities in connection with an acquisition or other business
opportunity.
St. Lawrence does not have a formal arrangement with any bank or financial
institution with respect to the availability of financing in the future.
YEAR 2000
Through September 30, 2000, the Company had not experienced any
difficulties with its management and information systems in connection with the
turnover from 1999 to 2000. In addition, no Y2K problems have been experienced
by the Company directly or indirectly with respect to its significant service
providers; including the stock transfer agent, landlord and certified public
accountants.
10
OUTLOOK
This Form 10-Q contains statements which are not historical facts, but are
forward-looking statements which are subject to risks, uncertainties and
unforeseen 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.
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THE ST. LAWRENCE SEAWAY CORPORATION
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDING - Not Applicable
Item 2. CHANGES IN SECURITIES - Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS- None
Item 5. OTHER INFORMATION - Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K -
Item 6(a) Exhibits -
(27) Financial Data Schedule
Item 6(b) Reports on Form 8-K -
No reports on Form 8-K were required to be filed for the quarter for
which this report is filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE ST. LAWRENCE SEAWAY CORPORATION
Registrant
/s/ Daniel L. Nir
Date: 11/10/00 -----------------------------------
Daniel L. Nir
President and Treasurer
(Chief Financial Officer)
Date: 11/10/00 /s/ Jack C. Brown
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Jack C. Brown
Secretary
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