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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.
December 31, 1999 0-2040
- ----------------- -------------------
THE ST. LAWRENCE SEAWAY CORPORATION
-----------------------------------
(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
incorporation or organization) Identification No.)
818 Chamber of Commerce Building
320 N. Meridian Street
Indianapolis, Indiana 46204
- ---------------------------------------- -----
(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 February 2, 2000
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Common Stock, $1.00 par value 393,735
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<PAGE>
THE ST. LAWRENCE SEAWAY CORPORATION
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Balance Sheets - December 31, 1999 (UNAUDITED) and March 31, 1999.............3
Statements of Income - Three months ended December 31, 1999 and 1998
(UNAUDITED)................................................................4
Statements of Income - Nine months ended December 31, 1999 and 1998
(UNAUDITED)................................................................5
Statements of Cash Flows - Nine months ended December 31, 1999 and
1998 (UNAUDITED)...........................................................6
Notes to Financial Statements - December 31, 1999..................... ......7-8
Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................9-10
PART II. OTHER INFORMATION..................................................11
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Signatures...................................................................12
Exhibit (27).................................................................13
2
<PAGE>
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
DECEMBER 31, 1999 (UNAUDITED) AND MARCH 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
DECEMBER 31, MARCH 31,
1999 1999
================================
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,015,425 1,031,389
Interest and other receivables 0 10,731
Prepaid items 762 1,202
Deferred income taxes/tax benefits 5,999 2,014
--------------------------------
Total Current Assets 1,022,186 1,045,336
Land 118,913 118,913
Property and equipment 0 1,111
--------------------------------
Total Assets $ 1,141,099 1,165,360
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payroll taxes withheld and accrued 0 0
Accounts payable & other $ 19,885 13,798
Deferred Income 0 8,208
Federal & state taxes payable 440 0
--------------------------------
Total Current Liabilities 20,324 22,006
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 349,778 372,367
--------------------------------
Total Shareholders' Equity 1,120,775 1,143,354
--------------------------------
Total Liabilities and Shareholders' Equity $ 1,141,099 1,165,360
================================
</TABLE>
3
<PAGE>
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31,
1999 1998
=====================================
<S> <C> <C>
Revenues:
Farm rentals $ 2,736 $ 2,736
Interest and dividends 13,052 13,104
-------------------------------------
Total revenues 15,788 15,840
Operating costs and expenses:
Farm related operating costs 65 408
Depreciation 326 392
General and administrative 28,775 34,000
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Total operating expenses 29,166 34,800
Income (Loss) before tax provision (13,378) (18,960)
Provision for income taxes/
(tax benefit) (1,858) (2,713)
-------------------------------------
Net income (loss) (11,520) (16,247)
=====================================
Per share data:
Weighted average number
of common shares outstanding 393,735 393,735
-------------------------------------
Primary earnings per share:
Income (Loss) per share ($0.03) ($0.04)
=====================================
</TABLE>
4
<PAGE>
THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31,
1999 1998
=========================================
<S> <C> <C>
Revenues:
Farm rentals $ 8,208 $ 8,208
Interest and dividends 35,852 40,058
---------------------------------------
Total revenues 44,060 48,266
Operating costs and expenses:
Farm related operating costs 833 1,216
Depreciation 1,111 1,176
General and administrative 68,240 84,363
---------------------------------------
Total operating expenses 70,184 86,755
Income (Loss) before tax provision (26,124) (38,489)
Provision for income taxes/
(tax benefit) (3,545) (5,373)
---------------------------------------
Net income (loss) (22,579) (33,116)
=======================================
Per share data:
Weighted average number
of common shares outstanding 393,735 393,735
---------------------------------------
Primary earnings per share:
Income (Loss) per share ($0.06) ($0.08)
=======================================
</TABLE>
5
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMER 31,
1999 1998
=========================================
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(22,579) $(33,116)
Adjustments to reconcile net income to
net cash from operating activities
Depreciation 1,111 1,176
(Increase) Decrease in current assets:
Interest and other receivables 10,730 1,644
Prepaid items 440 (705)
Deferred income tax (3,985) (5,844)
(Decrease) Increase in current liabilities:
Payroll tax & other 0 (8,980)
Deferred Income (8,208) 0
Accounts payable 6,087 (21,160)
Income taxes payable 440 471
-----------------------------------------
Net cash from operating activities (15,964) (66,514)
Cash flows from investing activities:
Purchase of equipment 0 0
-----------------------------------------
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 (15,964) (66,514)
Cash and cash equivalents, beginning 1,031,389 1,105,940
----------------------------------------
Cash and cash equivalents, ending $1,015,425 1,039,426
========================================
Supplemental disclosures of cash flow information:
Cash paid for income taxes 250 750
Cash paid for interest expense 0 0
</TABLE>
6
<PAGE>
THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1999
(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 nine month period ending December 31, 1999, are not
necessarily indicative of the results that may be expected for the fiscal year
ending March 31, 2000. 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, 1999.
NOTE B--RECLASSIFICATION
The 1998 financial statements have been reclassified, where necessary, to
conform to the presentation of the 1999 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
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to St. Lawrence stockholders. The cost of organizing Paragon and registering the
distribution have been borne by the founders of Paragon.
Paragon is an independent publicly-owned corporation. However, because Paragon
did not have a specific operating business at the time of the distribution, the
distribution of the shares was conducted in accordance with Rule 419 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). As a
result, the shares, subscription rights, and any shares 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.
8
<PAGE>
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 December 31, 1999 as compared to
three months ended December 31, 1998.
Interest and dividend income decreased slightly to $13,052 in the three months
ended December 31, 1999, from $13,104 in the three months ended December 31,
1998. This decrease is a result of slightly lower available cash investments.
Farm rental revenue remained unchanged in the three months ended December 31,
1999 from those in the three months ended December 31, 1998.
General and administrative expenses decreased to $28,775 in the three months
ended December 31, 1999 from $34,000 in the three-months ended December 31,
1998. This decrease reflects significant savings realized on professional fees
and on employee salaries and general office expenses.
As a result of the above items, the Company had a loss of $13,378 before taxes
in the three months ended December 31, 1999, as compared to a loss of $18,960
before taxes in the three months ended December 31, 1998.
Federal and state income tax benefits of $1,858 were applicable in the three
months ended December 31, 1999 as compared to federal and state income tax
benefits of $2,713 in the three months ended December 31, 1998.
RESULTS OF OPERATIONS - Nine months ended December 31, 1999, compared to nine
months ended December 31, 1998.
Interest and dividend income decreased to $35,852 in the nine months ended
December 31, 1999, from $40,058 in the same period ended December 31, 1998. The
decrease is a result of slightly lower interest rates received on slightly lower
available cash investments.
Farm rental revenues remained unchanged in the nine months ended December 31,
1999 from those in the nine months ended December 31, 1998.
General and administrative expenses decreased to $68,240 in the nine months
ended December 31, 1999, from $84,363 in the nine months ended December 31,
1998. This decrease was principally due to decreases in professional fees paid
to the Company's accountants and legal counsel, and decreases in employment
compensation, taxes and related expenses, all as illustrated by the following
comparison table:
NINE MONTH ENDED
DECEMBER 31
1999 1998
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Executive Compensation, Management Fees,
Salaries, and Employee Benefits $15,728 $21,472
9
<PAGE>
Office Rent and Company Operations
(including Farm Operations) $13,091 $14,187
Stock Services, Proxy, Annual Meeting, and
SEC Report Compliance $12,295 $11,174
Professional Fees (accounting & legal) $26,184 $34,801
Payroll, excise and other taxes $ 1,479 $ 3,112
As a result of the above items the Company incurred a loss before provision for
income taxes of $26,124 in the nine months ended December 31, 1999 as compared
to a loss before provision for income taxes of $38,489 in the comparable period
a year earlier.
Federal and state income tax benefits of $3,545 were applicable in the nine
months ended December 31, 1999 as compared to federal and state income benefits
of $5,373 that were applicable in the nine months ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had net working capital of $1,001,862 the
major portion of which was in cash and money market funds. St. Lawrence has
sufficient capital resources to continue its current business.
The Company may require the use of its assets for a purchase or partial payment
for an acquisition or in connection with another business opportunity. In
addition, St. Lawrence may incur debt of an undetermined amount to effect an
acquisition or in connection with another business opportunity. It may also
issue its securities in connection with an acquisition or other business
opportunity.
St. Lawrence does not have a formal arrangement with any bank or financial
institution with respect to the availability of financing in the future.
YEAR 2000
Through January 31, 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 Company's Farm Management Company, stock transfer agent, landlord
and certified public accountants.
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.
10
<PAGE>
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
(a) The Company held its Annual Meeting of Stockholders on December 15, 1999.
(b) Not applicable.
(c) At the stockholders meeting, the Company's nominees for director
were elected by the following votes:
NOMINEE VOTES IN FAVOR VOTES TO WITHHOLD
------- -------------- AUTHORITY
---------
Joel M. Greenblatt 222,102 1,385
Daniel L. Nir 222,102 1,385
Jack C. Brown 221,819 1,668
Edward B. Grier III 222,102 1,385
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
11
<PAGE>
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: 2/11/00 --------------------------
Daniel L. Nir
President and Treasurer
(Chief Financial Officer)
Date: 2/11/00 /s/Jack C. Brown
--------------------------
Jack C. Brown
Secretary
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit (27)
Financial Data Schedule
For Period Ended December 31, 1999
The St. Lawrence Seaway Corporation
(Unaudited)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE-MONTH PERIOD ENDED DECEMBER 31, 1999, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,015,425
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,022,186
<PP&E> 0
<DEPRECIATION> 1,111
<TOTAL-ASSETS> 1,141,099
<CURRENT-LIABILITIES> 20,324
<BONDS> 0
0
0
<COMMON> 393,735
<OTHER-SE> 727,040
<TOTAL-LIABILITY-AND-EQUITY> 1,141,099
<SALES> 0
<TOTAL-REVENUES> 44,060
<CGS> 0
<TOTAL-COSTS> 70,184
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,124)
<INCOME-TAX> (3,545)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,579)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
