UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
FORM 11-K
Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended June 30, 1997
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
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(Full title of the Plan)
Wisconsin Central Transportation Corporation
(Employer sponsoring the Plan, issuer of the
participations in the Plan and issuer of
the shares held pursuant to the Plan)
6250 North River Road, Suite 9000
Rosemont, Illinois 60018
(Address of principal executive offices)
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WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
FORM 11-K
Fiscal Year Ended June 30, 1997
CONTENTS PAGE
Independent Auditors' Report........................................... 1
Statements of Net Assets Available for Benefits........................ 2
Statements of Changes in Net Assets Available for Benefits............. 3
Notes to Financial Statements.......................................... 4
Signatures............................................................. 7
Index to Exhibits...................................................... 8
Exhibit No. 23 - Consent of Independent Public Accountants............. 9
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Independent Auditors' Report
To Wisconsin Central Transportation Corporation
Employee Stock Purchase Plan Administration Committee:
We have audited the accompanying statements of net assets available for benefits
of the Wisconsin Central Transportation Corporation Employee Stock Purchase Plan
(the "Plan") as of June 30, 1997 and 1996, and the related statements of changes
in net assets available for benefits for each of the years in the three-year
period ended June 30, 1997. These financial statements are the responsibility of
the Plan'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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
June 30, 1997 and 1996, and the changes in net assets available for benefits for
each of the years in the three-year period ended June 30, 1997, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 29, 1997
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<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Statements of Net Assets Available For Benefits
June 30, 1997 and 1996
June 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash....................................................................... $ 13,218 $ 4,861
Wisconsin Central Transportation Corporation employee stock options, at quoted
fair market value (70,650 and 93,824 options, respectively, total cost
$1,951,353 and $1,302,277,
respectively).......................................................... 2,582,964 3,049,280
------------ ------------
Net assets available for benefits.......................................... $ 2,596,182 $ 3,054,141
============ ============
The accompanying notes to financial statements are an
integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Statements of Changes in Net Assets Available for Benefits
For the Fiscal Years Ended June 30, 1997, 1996 and 1995
Fiscal Year Ended June 30,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net assets available for benefits,
beginning of fiscal year................................ $ 3,054,141 $ 1,759,929 $ 1,277,165
Increase (decrease) during year:
Participants' payroll deductions........................ 1,964,571 1,307,138 1,007,264
Unrealized 15% discount on price of stock............... 344,772 229,869 176,457
Unrealized appreciation in the fair
market value of stock options........................ 286,839 1,517,134 576,208
Stock issued, at fair market value,
and cash paid to participants........................ (3,054,141) (1,759,929) (1,277,165)
------------ ------------ ------------
Net assets available for benefits,
end of fiscal year...................................... $ 2,596,182 $ 3,054,141 $ 1,759,929
============ ============ ============
The accompanying notes to financial statements are an
integral part of these financial statements.
</TABLE>
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WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
The financial statements of the Wisconsin Central Transportation
Corporation Employee Stock Purchase Plan (the "Plan") are prepared under
the accrual method of accounting. The Plan's investments are stated at
fair value. All security transactions are recorded on a trade-date basis.
All administrative expenses of the Plan are paid by Wisconsin Central
Transportation Corporation (the "Company").
(2) Basis of Presentation - Stock Split
On May 16, 1996, the Company's Board of Directors announced a
three-for-one split of the Company's common stock in the form of a common
stock dividend to shareholders of record as of May 17, 1996 which was
effective May 31, 1996. The stated par value of each share was not
changed from $.01. All share and per share amounts have been restated to
reflect the stock split.
(3) Description of Plan
The Plan was established in 1991 by the Company to furnish eligible
employees (see "Eligibility") of the Company and its participating
subsidiaries a mechanism for voluntarily purchasing shares of the
Company's common stock ("Common Stock") from the Company at a discount by
exercising options to purchase Common Stock ("Options") under the Plan.
The Plan is administered by a Plan Administration Committee (the
"Committee") composed of members of the Company's Board of Directors. The
Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974. Under Internal Revenue Code ("IRC") Section 423,
the Plan is not subject to Federal income tax. Eligible employees are
subject to Federal income taxes.
Eligibility
The Plan covers all full-time employees of the Company and its
subsidiaries, other than Algoma Central Railway Inc., who have had at
least twelve months of continuous service preceding the date of the grant
of Options, except any employee owning 5% or more of the total voting
stock of the Company and certain highly compensated employees ("Eligible
Employees"). Notwithstanding the limitations of the preceding sentence
with respect to twelve months of continuous service, employees who had at
least nine months of continuous service as of the end of June 1994 (and
were otherwise eligible to participate in the Plan) were eligible to
participate in the Plan with respect to options granted on July 1, 1994.
At June 30, 1997, 967 Eligible Employees participated in the Plan.
Grant of Options
Under the Plan, the Company grants Options to all Eligible Employees once
each year on a date selected by the Committee ("Date of Grant"). For the
fiscal years ended June 30, 1997, 1996 and 1995, the Date of Grant was
July 1, 1996, 1995 and 1994, respectively. The term of each Option is
twelve months beginning on the Date of Grant. The last day of each option
period is the date on which the applicable Options may be exercised
("Date of Exercise"). For the fiscal years ended June 30, 1997, 1996 and
1995, the Date of Exercise was June 30, 1997, 1996 and 1995. The number
of shares subject to Option for each participant is the quotient of the
aggregate payroll deductions authorized by the participant for the option
period divided by the applicable option price per share; provided,
however, that the maximum number of shares for which Options may be
granted to a participant for any option period shall not exceed $25,000
(as provided by Section 423(b) of the IRC) divided by the lesser of (i)
85% of the fair market value of the Common Stock on the Date of Exercise
or (ii) 85% of the fair market value of the Common Stock on the Date of
Grant. For purposes of the Plan, "fair market value"of the Common
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Stock on each of the Date of Grant, the Date of Exercise or other
applicable date is determined on the basis of the per share closing price
of the last sale of the Common Stock immediately prior to the applicable
date as reported by NASDAQ or, if listed on a stock exchange, as reported
in the published reports of composite transactions for the exchange.
Exercise of Options
Each participant is considered to have exercised his or her Option on the
Date of Exercise to the extent of the maximum number of whole shares of
the Company's Common Stock that may be purchased with the balance on that
date in the participant's account under the Plan for such Option. Any
balance in such account after payment of the option price is refunded to
the employee. The Company issues to each participant, in the
participant's name or in joint tenancy, the number of whole shares of
Common Stock acquired on exercise of an option on the first day following
the term of an Option.
The option price per share is equal to the lesser of (i) 85% of the fair
market value of the Common Stock on the Date of Exercise or (ii) 85% of
the fair market value of the Common Stock on the Date of Grant. The
following summarizes the fair market value of the Company's Common Stock
at the Date of Exercise and the Date of Grant as well as the discounted
price offered to employees under the Plan for the fiscal years ended June
30, 1997, 1996 and 1995:
Fair Market Discounted
Date Value Discount Price
------------------------------ -------- ------- --------
Fiscal Year Ended June 30, 1997:
Date of Grant, July 1, 1996........ $ 32.50 $ 4.88 $ 27.62
Date of Exercise, June 30, 1997.... $ 36.56 $ 5.48 $ 31.08
Fiscal Year Ended June 30, 1996:
Date of Grant, July 1, 1995........ $ 16.33 $ 2.45 $ 13.88
Date of Exercise, June 30, 1996.... $ 32.50 $ 4.88 $ 27.62
Fiscal Year Ended June 30, 1995:
Date of Grant, July 1, 1994........ $ 10.79 $ 1.62 $ 9.17
Date of Exercise, June 30, 1995.... $ 16.08 $ 2.41 $ 13.67
Contributions to the Plan
Eligible employees may contribute annually to the Plan up to the smaller
of (1) 7.5% (or another percentage as established by the Committee) of
their annual compensation (not including incentives, bonuses, overtime,
extended work-week premiums or other special payments, fees or
allowances) or (2) an amount which complies with the $25,000 IRC Section
423(b) limitation discussed previously.
Participant Accounts
All payroll deductions and payments during the term of an Option are held
in the general assets of the Company and credited to a special account
established under the Plan in the employee's name. No interest is paid or
credited to amounts accumulated in the special account under the Plan. On
the first business day following the term of an Option, the Company
issues whole shares of Common Stock in return for the funds accumulated
in the special account under the Plan. Any balance in the special account
after the Common Stock is issued is refunded to the employee.
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Withdrawals
An employee can withdraw from the Plan at any time with proper notice.
Withdrawal from the Plan is also effected by termination of service with
the Company. Employees are entitled to a full refund of monies previously
withheld under the Plan during the current Plan fiscal year upon
withdrawal.
Stock Subject to the Plan
The Common Stock which may be issued pursuant to Options under the Plan
is limited to 2,400,000 shares of Common Stock. After the stock Options
are exercised under the Plan for the fiscal year ended June 30, 1997, the
remaining number of shares which may be issued pursuant to the Plan is
1,669,462, as is illustrated below:
<TABLE>
<CAPTION>
Since
Fiscal Year Ended June 30, Inception
1997 1996 1995 of Plan
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Stock issuable under the Plan at the
beginning of the fiscal year............................ 1,740,112 1,833,936 1,942,860 2,400,000
Stock options exercised for the
fiscal year............................................. (70,650) (93,824) (108,924) (730,538)
--------- --------- --------- ---------
Remaining stock issuable at end
of fiscal year.......................................... 1,669,462 1,740,112 1,833,936 1,669,462
========= ========= ========= =========
</TABLE>
(4) Stock and Cash Payable to Participants
For the fiscal years ended June 30, 1997, 1996 and 1995, participant
deductions under the Plan amounted to $1,964,571, $1,307,138 and
$1,007,264, respectively. Utilizing the discounted exercise price of the
Common Stock offered to participants ($27.62, $13.88 and $9.17 for the
fiscal years ended June 30, 1997, 1996 and 1995, respectively), these
deductions were used to purchase 70,650, 93,824 and 108,924 whole shares
of Common Stock for participants for the fiscal years ended June 30,
1997, 1996 and 1995, respectively. The cash remaining in the Plan after
purchasing whole shares ($13,218, $4,861 and $8,068 for the fiscal years
ended June 30, 1997, 1996 and 1995, respectively) was refunded to
employees as part of their August 1, 1997, August 1, 1996 and August 1,
1995 payroll checks, respectively. Stock certificates issued to
participants on July 1, 1997, July 3, 1996 and July 1, 1995 from the
exercise of options for the fiscal years ended June 30, 1997, 1996 and
1995, respectively, were mailed to participants by First National Bank of
Boston, the Company's transfer agent.
(5) Wisconsin Central Transportation Corporation Employee Stock Options
Options owned by the Plan at June 30, 1997, 1996 and 1995 (the Date of
Exercise for each of the fiscal years ended June 30, 1997, 1996 and 1995)
are stated in the Statement of Net Assets Available for Plan Benefits at
the fair market value of the Common Stock on these Exercise Dates
($36.56, $32.50 and $16.08, respectively) as reported by the NASDAQ
National Market System.
(6) Unrealized Appreciation in Employee Stock Options
The unrealized appreciation in the value of the stock Options is the
increase in the fair market value of the Company's Common Stock from the
Date of Grant to the Date of Exercise multiplied by the number of Options
exercised at June 30, 1997, 1996 and 1995. For the fiscal years ended
June 30, 1997, 1996 and 1995, the unrealized appreciation amounted to
$4.06, $16.17 and $5.29 per share, respectively. In addition, the 15%
discount on the purchase price of the Common Stock, which amounted to
$4.88, $2.45 and $1.62 per share for the fiscal years ended June 30,
1997, 1996 and 1995, respectively, was also unrealized.
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WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan Administration Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Date: September 25, 1997 By: /s/ Walter C. Kelly
--------------------
Walter C. Kelly
Vice President, Finance
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INDEX TO EXHIBITS
Exhibit No. Description
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23 Consent of Independent Public Accountants
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Exhibit No. 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wisconsin Central Transportation Corporation
Employee Stock Purchase Plan Administration Committee:
We consent to incorporation by reference in the previously filed registration
statement (No. 33-40820) on Form S-8 of Wisconsin Central Transportation
Corporation of our report dated August 29, 1997, relating to the statements of
net assets available for benefits of the Wisconsin Central Transportation
Corporation Employee Stock Purchase Plan as of June 30, 1997 and 1996 and the
related statements of changes in net assets available for benefits for each of
the years in the three-year period ended June 30, 1997.
KPMG Peat Marwick LLP
Chicago, Illinois
September 24, 1997
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