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 JULY 31, 1995
_______ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-620
DETROIT & CANADA TUNNEL CORPORATION
----------------------------------------------
(Name of small business issuer in its charter)
Michigan 38 - 0477830
--------------------------------------------- ------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
100 East Jefferson Avenue, Detroit, Michigan 48226
--------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (313) 567-4422
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 August 31,
1995 was 676,027.
Transitional Small Business Disclosure (check one) Yes ( ) No (X)
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Balance Sheets
Unaudited
July 31 October 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS
CASH $ 1,195,857 $ 1,632,395
SHORT TERM INVESTMENTS 5,221,414 7,471,623
ACCOUNTS RECEIVABLE, Net of allowance 1,165,302 992,458
for doubtful accounts of $20,900 and $11,900
PREPAID EXPENSES 532,990 364,012
------------ ------------
TOTAL CURRENT ASSETS 8,115,563 10,460,488
------------ ------------
LONG TERM INVESTMENTS
EQUITY INVESTMENTS 355,856 343,676
OTHER INVESTMENTS 890,039 878,661
------------ ------------
1,245,895 1,222,337
------------ ------------
PROPERTY, PLANT & EQUIPMENT
Leasehold Improvements 10,754,307 9,334,175
Equipment 1,324,815 992,865
------------ ------------
12,079,122 10,327,040
Accumulated Depreciation and Amortization (2,147,671) (1,845,105)
------------ ------------
9,931,451 8,481,935
------------ ------------
DEFERRED INCOME TAX BENEFIT 1,012,000 1,012,000
------------ ------------
$ 20,304,910 $ 21,176,760
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Balance Sheets (continued)
Unaudited
July 31 October 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 572,231 $ 1,395,638
ACCRUED PAYROLL & VACATION 87,906 153,642
ACCRUED TAXES 498,760 1,559,260
OTHER ACCRUED LIABILITIES 70,982 171,063
------------ ------------
TOTAL CURRENT LIABILITIES 1,229,879 3,279,603
------------ ------------
POSTRETIREMENT BENEFITS 3,329,861 3,152,200
------------ ------------
STOCKHOLDERS' INVESTMENT
COMMON STOCK, 1,000,000 shares authorized, 3,382,965 3,412,965
676,027 (682,027 in 1994) issued and outstanding
CAPITAL SURPLUS 28,124 28,124
RETAINED EARNINGS 12,334,081 11,303,869
------------ ------------
15,745,170 14,744,958
------------ ------------
$ 20,304,910 $ 21,176,760
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Statements of Operations
For the three months ended
Unaudited
---------------
July 31 July 31
1995 1994
---------- ----------
<S> <C> <C>
OPERATING REVENUE
Tolls $1,973,810 $1,778,027
Management Fee 161,206 138,345
Rental & Lease Income 226,435 238,846
---------- ----------
2,361,452 2,155,218
---------- ----------
OPERATING EXPENSES
Tunnel Operations 1,434,789 1,528,981
Taxes Other than Income 154,997 150,884
Foreign Currency Transaction Loss 8,635 11,474
---------- ----------
1,598,421 1,691,339
---------- ----------
763,031 463,880
---------- ----------
OTHER INCOME
Interest & Dividends 110,949 112,236
Other Income - net 5,201 30,742
---------- ----------
116,150 142,978
---------- ----------
Income before taxes 879,181 606,858
Provision for Income Taxes 328,076 231,298
---------- ----------
Net Income $ 551,106 $ 375,560
========== ==========
Earnings per Average Share $ 0.81 $ 0.55
========== ==========
Dividends declared per share $ 0.125 $ 0.125
========== ==========
Average Shares Outstanding 678,078 685,309
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Statements of Operations
For the nine months ended
Unaudited
---------------
July 31 July 31
1995 1994
---------- ----------
<S> <C> <C>
OPERATING REVENUE
Tolls $5,457,549 $4,585,919
Management Fee 456,775 403,417
Rental and Lease Income 726,785 779,404
---------- ----------
6,641,110 5,768,740
---------- ----------
OPERATING EXPENSES
Tunnel Operations 4,372,578 4,239,503
Taxes Other than Income 408,894 459,244
Foreign Currency Transaction Loss 7,594 73,980
---------- ----------
4,789,066 4,772,726
---------- ----------
1,852,044 996,014
---------- ----------
OTHER INCOME
Interest and Dividends 359,571 264,452
Other Income - net 14,882 143,653
---------- ----------
374,453 408,105
---------- ----------
Income before taxes 2,226,497 1,404,118
Provision for income taxes 813,021 533,050
---------- ----------
Net Income $1,413,476 $ 871,068
========== ==========
Net Income per Average Share $ 2.08 $ 1.27
========== ==========
Dividends declared per share $ 0.375 $ 0.375
========== ==========
Average Shares Outstanding 678,078 685,309
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DETROIT & CANADA TUNNEL CORPORATION
AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
For the nine months ended
Unaudited
----------------
July 31 July 31
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities :
Net income $ 1,413,476 $ 871,068
Adjustments to reconcile net income to net cash
provided by (used in) operating activities :
Postretirement Benefits 177,661 163,997
Depreciation and amortization 302,567 152,650
Loss (Gain) on sale of investments, net (8,816) (126,406)
Loss (Gain) on sale of property 0 (4,756)
Cash provided (used) by changes in
Operating assets and liabilities :
Accounts receivable (172,844) 94,482
Prepaid expenses (168,978) (186,368)
Other assets 0 0
Accounts payable (823,406) (1,565,212)
Accrued liabilities (165,817) 17,212
Accrued taxes (1,060,500) (43,216)
Deferred tax liabilities 0 (5,750)
----------- -----------
Net cash provided by (used in)
operating activities (506,657) (632,299)
Cash flows from investing activities :
Purchase of long term investments (46,528) (69,137)
Purchase of property, plant & equipment (1,752,083) (1,759,744)
Net change in short term investments 2,250,209 2,803,506
Proceeds from sale of long term investments 31,786 329,027
Proceeds from sale of property 0 7,667
----------- -----------
Net cash provided by (used in)
investing activities 483,384 1,311,319
Cash flows from financing activities :
Dividends paid (254,262) (256,117)
Purchase of common stock (159,003) (283,464)
----------- -----------
Net cash used by financing activities (413,265) (539,581)
----------- -----------
Net increase(decrease) in cash (436,538) 139,440
Cash at beginning of period 1,632,395 1,489,928
----------- -----------
Cash at end of period $ 1,195,857 $ 1,629,368
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
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 1994 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.
<PAGE>
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
I. Results of Operations
For the nine months ended July 31, 1995
---------------------------------------
Traffic volume has continued to be strong during the first nine months due
largely to casino related traffic. The casino which opened in May 1994 is
located in downtown Windsor near the tunnel facility. Traffic volume was lower
in 1994 due to the disruption of the Tunnel renovation project. Accordingly,
toll revenue for the first nine months has increased $872,000 or 19.0%.
During March, the Windsor casino was closed for approximately four weeks due
to a union work stoppage. Traffic volumes during the closure decreased by an
average 20%.
Despite lower invested balances as funds were utilized for capital projects,
interest and dividend revenues increased 36.0% from 1994 due to higher
interest rates and changes in the components of the investment portfolio.
II. Liquidity
---------
During the first nine months of 1995, the Corporation met its dividend,
operating and construction capital needs using cash provided from operating
activities and utilization of cash reserves and short term investments.
The Corporation purchased 6,000 shares of its common stock at market prices
for a total cost of $159,003 during the first nine months of 1995.
III. Construction Projects
---------------------
The Corporation and the City of Windsor are engaged in a major renovation of
the tunnel property. Projected expenditures for fiscal 1995 are expected to be
approximately $6.7 million. Construction projects will be funded through
current earnings, utilization of cash and short term investments and if
necessary, short term draws against the Corporation's line of credit. Certain
short term investments were converted to interest bearing demand accounts to
facilitate the start of the construction season. During the nine months ended
July 31, 1995 the Corporation incurred $1,752,000 on all capital projects.
The effect of the current year's construction projects is reflected in the
balance sheet : in the decrease in Cash and Short Term Investments as payments
were made; in the increase in Property, Plant and Equipment as completed
projects were capitalized and in Accounts Payable which included construction
related invoices unpaid at year end.
The City of Windsor plaza renovation which began in April 1994 was completed
in May 1995. Any reduction of traffic volume as a result of this construction
was offset by Windsor casino gambling traffic as discussed above.
<PAGE>
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
------------------------------------
David C. Canavesio
Treasurer and Vice President - Finance
(Principal Financial Officer and Principal
Accounting Officer)
Date September 15, 1995
----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEETS AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
<CASH> $ 1,195,857
<SECURITIES> 5,221,414
<RECEIVABLES> 1,165,302
<ALLOWANCES> 20,900
<INVENTORY> 0
<CURRENT-ASSETS> 8,115,563
<PP&E> 12,079,122
<DEPRECIATION> (2,147,671)
<TOTAL-ASSETS> 20,304,910
<CURRENT-LIABILITIES> 1,229,879
<BONDS> 0
<COMMON> 3,382,965
0
0
<OTHER-SE> 12,362,205
<TOTAL-LIABILITY-AND-EQUITY> 20,304,910
<SALES> 0
<TOTAL-REVENUES> 7,015,562
<CGS> 0
<TOTAL-COSTS> 4,789,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,226,497
<INCOME-TAX> 813,021
<INCOME-CONTINUING> 1,413,476
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,413,476
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.08
</TABLE>
