UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended June 30, 1997
ALGOMA CENTRAL
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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ALGOMA CENTRAL
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 Algoma Central Employee Stock
Purchase Plan Administration Committee:
We have audited the accompanying statements of net assets available for benefits
of the Algoma Central 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 the year ended June 30, 1997 and the six month period ended June
30, 1996. 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
the year ended June 30, 1997 and the six month period ended June 30, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 29, 1997
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<TABLE>
<CAPTION>
ALGOMA CENTRAL
EMPLOYEE STOCK PURCHASE PLAN
Statements of Net Assets Available For Benefits
June 30, 1997 and 1996
June 30,
1997 1996
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<S> <C> <C>
Cash............................................................................ $ 1,493 $ 380
Wisconsin Central Transportation Corporation stock options, at quoted fair
market value (5,541 and 8,168 options, respectively,
total cost $153,043 and $113,372, respectively)............................. 202,579 265,460
---------- ----------
Net assets available for benefits............................................... $ 204,072 $ 265,840
========== ==========
The accompanying notes to financial statements are an
integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
ALGOMA CENTRAL
EMPLOYEE STOCK PURCHASE PLAN
Statements of Changes in Net Assets Available for Benefits
For the Fiscal Year Ended June 30, 1997 and the Six Month Period Ended June 30, 1996
June 30,
1997 1996
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<S> <C> <C>
Net assets available for benefits, beginning of period.......................... $ 265,840 $ ---
Increase (decrease) during period:
Participants' payroll deductions............................................ 154,536 113,752
Unrealized 15% discount on price of stock................................... 27,040 20,012
Unrealized appreciation in the fair market value of stock options........... 22,496 132,076
Cash payment in lieu of stock issued........................................ (265,840) ---
---------- ----------
Net assets available for benefits, end of period................................ $ 204,072 $ 265,840
========== ==========
The accompanying notes to financial statements are an
integral part of these financial statements.
</TABLE>
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ALGOMA CENTRAL
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
The financial statements of the Algoma Central Employee Stock Purchase
Plan (the "Plan") are prepared under the accrual method of accounting.
The Plan's investments are stated at fair value.
All administrative expenses of the Plan are paid by the Plan's sponsor,
Wisconsin Central Transportation Corporation (the "Company"). All amounts
herein are stated in U.S. dollars.
(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 1995 by the Company to furnish eligible
employees (see "Eligibility") of Algoma Central Railway Inc. ("ACRI") 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. Eligible
employees are subject to Canadian Federal and Provincial income taxes.
Eligibility
The Plan covers all full-time employees of ACRI 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 December 1995
(and were otherwise eligible to participate in the Plan) were eligible to
participate in the Plan with respect to options granted on January 1,
1996. At June 30, 1997, 87 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 year ended June 30, 1997 and the six month period ended June 30,
1996, the Date of Grant was July 1, 1996 and January 1, 1996,
respectively. The term of each Option is twelve months beginning on the
Date of Grant, or such other period as the Committee may determine. For
the six month period ended June 30, 1996, the Committee determined that
the term of the Options granted on January 1, 1996 was six months. The
last day of each option period is the date on which the applicable
Options may be exercised ("Date of Exercise"). For the fiscal year ended
June 30, 1997 and the six month period ended June 30, 1996, the Date of
Exercise was June 30, 1997 and 1996, respectively. 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 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 Stock on each of the Date of Grant, the Date of Exercise or other
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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 will issue 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.
Notwithstanding the provisions of the Plan that contemplate the issuance
of shares of Common Stock to participants on the Date of Exercise, the
Committee may elect to make a cash payment to all participants who
exercise options on any Date of Exercise in lieu of issuing shares of
Common Stock to each such participant. Any such cash payment to a
participant shall be an amount equal to the whole number of shares of
Common Stock that would have been issued to such participant upon
exercise of the Option multiplied by the fair market value of the Common
Stock on the Date of Exercise, including the refund of any balance in the
participant accounts after payment of the option price. For the fiscal
year ended June 30, 1997 and the six month period ended June 30, 1996,
the Committee elected to make a cash payment in lieu of issuing shares of
Common Stock.
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, or such
other option price as the Committee may determine for any option period
prior to the first day of such option period. For the six month period
ended June 30, 1996, the Committee determined that the option price for
purposes of the Date of Grant would be based on the fair market value of
the Company's Common Stock on July 1, 1995. The following summarizes the
fair market value of the Company's Common Stock as of the Date of
Exercise and the Date of Grant, as well as the discounted price offered
to employees under the Plan for the fiscal year ended June 30, 1997 and
the six month period ended June 30, 1996:
Fair Market Discounted
Date Value Discount Price
------------------------------- -------- ------- --------
Fiscal year ended June 30, 1997:
July 1, 1996................... $ 32.50 $ 4.88 $ 27.62
June 30, 1997.................. 36.56 5.48 31.08
Six month period ended June 30, 1996:
July 1, 1995................... $ 16.33 $ 2.45 $ 13.88
June 30, 1996.................. 32.50 4.88 27.62
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 limitation
discussed previously. For the six month period ended June 30, 1996, the
Committee established the percent of compensation at 15%.
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Participant Accounts
All payroll deductions and other receipts from participants 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 will issue 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. For the fiscal year ended June 30,
1997 and the six month period ended June 30, 1996, the Committee elected
to make a cash payment to all participants in lieu of issuing shares of
Common Stock.
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
ACRI. Employees are entitled to a full refund of monies previously
withheld under the Plan during the current Plan year upon withdrawal.
Stock Subject to the Plan
The Common Stock which may be issued pursuant to Options under the Plan
is limited to 225,000 shares of Common Stock. For the fiscal year ended
June 30, 1997 and the six month period ended June 30, 1996, cash payment
was made in lieu of issuing shares of Common Stock. As a result, 225,000
shares remain issuable at June 30, 1997.
(4) Cash Payable to Participants
For the fiscal year ended June 30, 1997 and the six month period ended
June 30, 1996, participant deductions under the Plan amounted to $154,536
and $113,752, respectively. Utilizing the discounted exercise price of
the Common Stock offered to participants ($27.62 and $13.88 for the
fiscal year ended June 30, 1997 and the six month period ended June 30,
1996, respectively), the cash payment made in lieu of issuing shares was
equivalent to the fair market value of 5,541 shares of Common Stock for
the fiscal year ended June 30, 1997 and 8,168 shares of Common Stock for
the six month period ended June 30, 1996, in addition to the refund of
cash remaining of $1,493 and $380 for the fiscal year ended June 30, 1997
and the six month period ended June 30, 1996, respectively. These cash
payments were made to employees on July 16, 1997 and 1996.
(5) Wisconsin Central Transportation Corporation Stock Options
Options owned by the Plan at June 30, 1997 and 1996 (the Dates of
Exercise for the fiscal year ended June 30, 1997 and the six month period
ended June 30, 1996) are stated in the Statement of Net Assets Available
for Plan Benefits at the fair market value of the Common Stock on the
Exercise Dates ($36.56 and $32.50, 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
exercisable at June 30, 1997 and 1996, respectively. For the fiscal year
ended June 30, 1997 and the six month period ended June 30, 1996, the
unrealized appreciation amounted to $4.06 and $16.17 per share,
respectively. In addition, the 15% discount from the July 1, 1995 fair
market value, which amounted to $4.88 and $2.45 per share for the fiscal
year ended June 30, 1997 and the six month period ended June 30, 1996,
respectively, was also unrealized.
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ALGOMA CENTRAL
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.
ALGOMA CENTRAL
EMPLOYEE STOCK PURCHASE PLAN
Date: September 25, 1997 By: /s/ Walter C. Kelly
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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 Algoma Central Employee Stock Purchase Plan Administration Committee:
We consent to incorporation by reference in the previously filed registration
statement (No. 33-80309) 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 Algoma Central Employee Stock Purchase
Plan as of June 30, 1997 and 1996 and the related statements of changes in net
assets available for benefits for the year ended June 30, 1997 and the six month
period ended June 30, 1996.
KPMG Peat Marwick LLP
Chicago, Illinois
September 24, 1997
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