2011 St. Lawrence Seaway Managment Corp. financial report

8/6/2019 2011 St. Lawrence Seaway Managment Corp. financial report

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28

The eview o the Copoations fnancialposition and opeating esults, ate itsthiteenth yea o opeation, should be eadin conjunction with the audited fnancial

statements on the ollowing pages. Theesults o 2010/11 cove the peiod omApil 1, 2010 to Mach 31, 2011, while thecompaative numbes ae o the peiodom Apil 1, 2009 to Mach 31, 2010, andthe look ahead coves the peiod omApil 1, 2011 to Mach 31, 2012.

ovErviEw

FInancIal perForMance

The Corporation is governed by a Management, Operationsand Maintenance Agreement signed with the ederalgovernment in 1998 or a twenty-year period, which was

renewed ater the initial ten-year term. 2010/11 was the thirdyear o the current ten-year term. The nancial success othe Corporation is measured by comparing the total cost

o operating against the business plan established or thescal period.

In 2010/11, the Corporations spending on manageable costs

and asset renewal projects amounted to $117.8 million,

which breaks down into $67.0 million o operating expendi-tures, $49.3 million o regular and major maintenance, and$1.5 million o capital expenditures. The business plan targetwas $122.7 million.

rESuLtS of oPErationS

revenueS

Toll revenue increased 20.9% in the scal year, rom$50.1 million in 2009/10 to $60.7 million in 2010/11, ater a24.3% decrease in 2009/10. The Corporation continued toprovide a 20% Cargo Toll discount or new business which

generated $2.9 million o new business in 2010/11. Othernavigation revenue increased 7.2%, while power generationrevenue increased 57.0%, due to the maximization o useo water at times when the spot rates were high. Investmentincome derived rom the working capital balances increasedby 161% with higher cash sums on hand and better interestrates due to a new investment product.

Capital asset acquisitions are unded by the Capital FundTrust; the net contribution is credited to a deerred balancesheet account, and amortized on the same basis as the

assets or which the contribution was made. The amortiza-tion o this deerred contribution relating to capital assets

amounted to $1.5 million in 2010/11, 6% higher than the

previous year.

Overall, the Corporations total revenue increased by 19.4%in 2010/11, to $66.0 million, compared to the previous years$55.2 million total.

managEmEntdiSCuSSion and

anaLySiS


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29The St. Lawence Seaway Management Copoation

revIeW oF actual to aDjuSteD BuSIneSS plan coSt

(in millions o dollas)

n Actual

n Business Plan

2007/2008 2008/2009 2009/2010 2010/20112006/2007

101.

3

101.

2

100.

6

102.

8

116.

3

118.

0

112.

0

117.

8

coMparISon oF actual to aDjuSteD BuSIneSS plan


revenues Adjusted Manageable Costs

(opeating expenses)

Asset renewal

including capital

expenditues

64.

4

89.

7

67.

0

69.

9

50.

8

52.

8

revIeW oF revenueS


76.

7

87.

1

83.

6

87.

4

69.

4

81.

0

53.

8

88.

7

expenSeS

Operating expenses or 2010/11 relating to the manage-

ment and operation o the Seaway inrastructure amountedto $67.0 million. This represents an increase o 3.1% rom

the previous year, and is below the business plan target o$69.9 million by 4.1%.

The combined salaries, wages and benets totalled$61.2 million, or 91% o total operating costs. The compar-able gure or 2009/10 was $58.8 million or 90% o total

operating costs. Salaries and wages paid to employees

amounted to $44.6 million, an increase o 5.6% over last

years $42.2 million. Current and uture employee benetsand pension costs amounted to $16.6 million equivalent tolast years gure. An increase in active employee health

insurance oset by a decrease in accumulated employeeleave resulted in employee benets remaining stable.

The Corporation employed 575 ull-time equivalents (FTEs)in 2010/11, up 0.5% rom the previous years level o 572.

All other operating costs, ater allocation o salaries and

wages to asset renewal, amounted to $5.8 million or2010/11, compared to $6.2 million the previous scal year,with insurance premiums remaining the major expense at$1.8 million.

aSSet reneWal

Asset renewal expenditures, representing the cost o mainten-ance and major repairs o locks, canals, bridges, buildingsand other inrastructure assets excluding capital acquisi-

tions, totalled $49.3 million or the current year, compared to$45.2 million in 2009/10. The approved ve-year envelope

or this purpose, which also includes capital expenditures,is set at $270 million.

aMortIzatIon oF capItal aSSetS

The amortization expense o $1.6 million or the year endingMarch 31, 2011 was up slightly rom the previous years amount.

Reer to Note 2(e) or the accounting policy detail.

122.

7

117.

8

2007/2008 2008/2009 2009/2010 2010/20112006/2007

64.

4

89.

7


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30

lIquIDItY anD FunDIng caSh FloW

Rules regarding the liquidity and unding o the Corporationare clearly set out in the Management, Operations and

Maintenance Agreement and the Capital Trust Agreementwith Transport Canada. The Corporations cash surplusor shortall is paid to, or reimbursed by, the Capital Fund

Trust.

In 2010/11, the Corporation was in a negative cash fow position.

The Corporation was able to cover all o the controllable costs

or the year with revenues however, or the second year, thetotal revenue generated, less the amortization o deerred

contributions related to capital assets ($64.4 million), wasinsucient to pay or the Corporations operating expenseso $67.0 million. Added to the cash decit on operation o$2.6 million, were mandatory additional pension paymentso $17.1 million to pay down part o the pension solvency

decit and the asset renewal expenditures o $50.8 millionduring the year including capital acquisitions o $1.5 million.Reer to notes 3 and 9 o the ollowing nancial statementsor explanations on the amounts owed or paid rom theCapital Fund Trust or capital asset acquisitions and the

contribution towards the Corporations excess expenses

over revenues.

The Corporation normally maintains the minimum workingcapital and cash in the bank required to meet all o its nancialobligations to its employees and trade creditors. The cashlevel at March 31, 2011 was $5.9 million, compared to theprevious years $14.3 million. This cash balance is a returnto the normal cash required to pay those amounts payableearly in the new scal year.

Looking forward

The Corporation expects an improvement in trac and tollrevenues in 2011/12 as the North American and Europeaneconomies continue to emerge rom the global economiccrisis.

We also expect that operating expenses will be higher than2010/11 due to an increase in maintenance inrastructure which

we expect will also increase personnel-related costs.

Asset renewal expenditures, including capital asset purchases,

or 2011/12 are expected to increase by $7.2 million to reach

$58.0 million, as part o the $270 million o asset renewalprojects in the 5-year plan or the period April 1, 2008 to

March 31, 2013.

managEmEntdiSCuSSion andanaLySiS


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The accompanying nancial statements o the St. Lawrence Seaway Management Corporation

and all inormation in this Annual Report are the responsibility o management.

The nancial statements have been prepared by management in accordance with Canadiangenerally accepted accounting principles consistent with the accounting policies set out inthe notes to the nancial statements. Where necessary, management has made inormedjudgments and estimates in accounting transactions. Inormation contained elsewhere

in the Annual Report is consistent, where applicable, with that contained in the nancial

statements.

In ullling its responsibilities, management has developed and maintains systems o internalcontrol designed to provide reasonable assurance that the Corporations accounting records

are a viable basis or the preparation o the nancial statements. Policies and proceduresare designed to ensure that transactions are appropriately authorized and assets aresaeguarded rom loss or unauthorized use.

The Board o Directors carries out its responsibility or review o the annual nancial state-ments principally through the Audit Committee. The Board o Directors has appointed anAudit Committee consisting o three outside directors.

The Audit Committee meets during the year, with management, the internal and externalauditors, to review any signicant accounting, internal control and auditing matters to satisyitsel that management responsibilities are properly discharged and to review the nancialstatements beore they are presented to the Board o Directors or approval.

The external and internal auditors have ull and ree access to the members o the Audit

Committee with and without the presence o management.

The independent auditors Ernst & Young LLP, whose report ollows, have audited the

nancial statements.

Terence F. Bowles Karen Dumoulin

President & CEO Director o FinanceMay 19, 2011 May 19, 2011

managEmEntS rESPonSiBiLityfor finanCiaL rEPorting


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indEPEndEntauditorS rEPort

TO THE MEMBERS OF

the St. laWrence SeaWaY

ManageMent corporatIon

We have audited the accompanying nancial statements

o The St. Lawrence Seaway Management Corporation,which comprise the balance sheet as at March 31, 2011

and the statements o revenue and expenses, changes innet assets and cash fows or the year then ended, and

a summary o signicant accounting policies and other

explanatory inormation.

managEmEntS rESPonSiBiLityfor thE finanCiaL StatEmEntS

Management is responsible or the preparation and airpresentation o these nancial statements in accordance

with Canadian generally accepted accounting principles,

and or such internal control as management determinesis necessary to enable the preparation o nancial state-

ments that are ree rom material misstatement, whether

due to raud or error.

auditorS rESPonSiBiLity

Our responsibility is to express an opinion on these nancialstatements based on our audit. We conducted our audit

in accordance with Canadian generally accepted auditingstandards. Those standards require that we comply with

ethical requirements and plan and perorm the audit to

obtain reasonable assurance about whether the nancial

statements are ree rom material misstatement.

An audit involves perorming procedures to obtain audit

evidence about the amounts and disclosures in the nancialstatements. The procedures selected depend on theauditors judgment, including the assessment o the risks omaterial misstatement o the nancial statements, whetherdue to raud or error. In making those risk assessments,

the auditors consider internal control relevant to the entitys

preparation and air presentation o the nancial statementsin order to design audit procedures that are appropriate inthe circumstances, but not or the purpose o expressing anopinion on the eectiveness o the entitys internal control.An audit also includes evaluating the appropriateness o

accounting policies used and the reasonableness o accounting

estimates made by management, as well as evaluating theoverall presentation o the nancial statements.

We believe that the audit evidence we have obtained in

our audit is sucient and appropriate to provide a basis

or our audit opinion.

oPinion

In our opinion, the nancial statements present airly, in allmaterial respects, the nancial position o The St. LawrenceSeaway Management Corporation as at March 31, 2011and the results o its operations and its cash fows or theyear then ended in accordance with Canadian generally

accepted accounting principles.

othEr mattEr

The nancial statements o The St. Lawrence Seaway

Management Corporation or the year ended March 31,

2010, were audited by another auditor who expressedan unmodied opinion on those statements on April 30,

2010.

Ottawa, Canada, Chartered Accountants

May 19, 2011 Licensed Public Accountants


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year ended March 31, 2011

($000's) 2011 2010

RevenueTolls $ 60,651 $ 50,147Other navigation revenue 1,415 1,320Licence ees 143 144Power revenue 1,997 1,272Insurance recovery 843Investment revenue 162 62Gain on disposal o capital assets 37 2Amortization o deerred contributions related to capital assets (Note 7) 1,547 1,457

65,952 55,247

ExpensesOperating 66,998 65,012Asset renewal 49,276 45,215Amortization o capital assets 1,642 1,576

117,916 111,803

Deciency o revenue over expenses beore contribution rom Capital Fund Trust (51,964) (56,556)

Contribution rom Capital Fund Trust or expenses (Note 9) 67,072 54,116

EXCESS (DEFICIENCY) OF REVENUE OVER EXPENSES $ 15,108 $ (2,440)

StatEmEnt of rEvEnuEand ExPEnSES


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StatEmEnt of ChangESin nEt aSSEtS


($000's)

Invested in Equity o Operating Total

Capital Assets Canada Results 2011 2010

BALANCE, BEGINNING OF YEAR $ 699 $ 7,820 $ $ 8,519 $ 10,959

EXCESS (DEFICIENCY) OF REVENUEOVER EXPENSES 15,108 15,108 (2,440)

Net acquisition o capital assets 1,464 (1,464) Capital assets contributions, net o amortization 55 (55)

Pension plan and other benet plans variances 15,231 (15,231)

Amortization o capital assets (1,642) 1,642

BALANCE, END OF YEAR $ 576 $ 23,051 $ $ 23,627 $ 8,519


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as at March 31, 2011

($000's) 2011 2010

CURRENT ASSETS

Cash and cash equivalents $ 5,912 $ 14,271Accounts receivable Trade 8,371 5,131Accounts receivable Other 2,620 1,170

Due rom Capital Fund Trust (Note 3) 27,661 23,096Supplies inventory 3,225 3,243Prepaid expenses 789 499

48,578 47,410

CAPITAL ASSETS (Note 4) 8,909 9,087DUE FROM EMPLOYEE TERMINATION BENEFITS TRUST FUND (Note 5) 14,725 14,545ACCRUED BENEFIT ASSET (Note 6) 30,051 12,018

$ 102,263 $ 83,060

CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 20,378 $ 19,154Employee benets payable 1,717 1,719Due to Employee Termination Benets Trust Fund (Note 5) 90 21

22,185 20,894

EMPLOYEE TERMINATION BENEFITS 14,725 14,545DEFERRED CONTRIBUTIONS RELATED TO CAPITAL ASSETS (Note 7) 8,333 8,388ACCRUED BENEFIT LIABILITY (Note 6) 33,393 30,714

78,636 74,541

COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)

NET ASSETS

Invested in capital assets 576 699Equity o Canada (Note 8) 23,051 7,820

23,627 8,519

$ 102,263 $ 83,060

FINANCIAL STATEMENTS APPROVED BY THE BOARD

Terence F. BowlesDirector

David MuirDirector

BaLanCEShEEt


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($000's) 2011 2010

NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES:

OPERATINGExcess (deciency) o revenue over expenses $ 15,108 $ (2,440)Items not aecting cash

Amortization o capital assets 1,642 1,576Gain on disposal o capital assets (37) (2)Amortization o deerred contributions related to capital assets (1,547) (1,457)Employee uture benets variance (15,354) 2,097

(188) (226)

Net changes in non-cash operating working capital items (Note 13) (3,671) 4,650

(3,859) 4,424

FINANCINGContributions rom the Capital Fund Trust towards acquisitions o capital assets 1,492 1,729(Increase) decrease in due rom Capital Fund Trust (4,565) 7,155

(3,073) 8,884

INVESTINGAcquisitions o capital assets (1,492) (1,729)Proceeds rom disposal o capital assets 65 96

(1,427) (1,633)

NET CASH (OUTFLOW) INFLOW (8,359) 11,675

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 14,271 2,596

CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,912 $ 14,271

StatEmEnt ofCaSh fLowS


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notES to thEfinanCiaL StatEmEntSYear ended March 31, 2011

($000s)

naturE of BuSinESS

The St. Lawrence Seaway Management Corporation (the Corporation)

was constituted as a not-or-prot corporation under Part II o theCanada Corporations Act on July 9, 1998. Pursuant to an agreement

with her Majesty, certain assets o The St. Lawrence Seaway Authority (the SLSA), a CrownCorporation, were transerred eective October 1, 1998, to the Corporation. These assets

relate to the operation o the St. Lawrence Seaway comprising a deep waterway betweenMontreal and Lake Erie (the Seaway). As a result o a urther agreement with the Ministero Transport, the Corporation assumed responsibility or the management, operation andmaintenance o the Seaway or an initial period o ten years and has now renewed or a

urther ten years.

The transerred assets included all o the movable capital assets, intangibles and workingcapital o the SLSA. Ownership o the real property, locks, bridges, buildings and other

xtures was transerred to the Government o Canada on wind-up o the SLSA.

The Corporation is the Trustee or the Employee Termination Benets Trust Fund and orthe Capital Fund Trust.

The Corporation is exempt rom income tax under section 149(1)(l)o the Income Tax Act(Canada).

The Corporation was mandated to manage, operate and maintain the Seaway in accord-ance with a Management, Operation and Maintenance Agreement (the Agreement), whichrequires the Corporation to negotiate ve-year business plans throughout the term o theAgreement with the Minister o Transport. The business plan includes anticipated revenuesand operating costs and an Asset Renewal Plan. The Corporation is mandated to chargetolls and other revenues to nance the operation and maintenance o the Seaway, and torecover rom the Capital Fund Trust such additional unds, to eliminate operating decitswhen required, in accordance with the terms o the Agreement. The current Agreement isor the period rom April 1, 2008 to March 31, 2013.

1


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Summary of SignifiCant aCCounting PoLiCiES

The nancial statements have been prepared in accordance with

Canadian generally accepted accounting principles (GAAP) or not-or-prot organizations using the deerral method o accounting. A summary

o signicant accounting policies ollows:

a) finanCiaL inStrumEntS

All nancial assets are required to be classied as either held-or-trading, held-to-maturityinvestments, loans and receivables or available-or-sale. All nancial liabilities are requiredto be classied as held-or-trading or other liabilities.

The classication depends on the purpose or which the nancial instruments were acquiredor issued, their characteristics and the Corporations designation o said instruments at

the time o initial recognition. Settlement date accounting is used and transaction costs

related to investments are expensed as incurred.

Classication:Cash and cash equivalents ......................................................Held-or-tradingAccounts receivable .................................................................Loans and receivablesDue rom Capital Fund Trust ....................................................Loans and receivablesDue rom Employee Termination Benets Trust Fund ..............Loans and receivablesAccounts payable and accrued liabilities ................................Other liabilitiesEmployee benets payable ......................................................Other liabilitiesDue to Employee Termination Benets Trust Fund ...................Other liabilities

helD-For-traDIng

These nancial assets are measured at air value at the balance sheet date. Fair value fuc-tuations including interest earned, interest accrued, gains and losses realized on disposaland unrealized gains and losses are included in investment revenue.

loanS anD receIvaBleS

These nancial assets are measured at amortized cost using the eective interest rate

method, less any impairment.

other lIaBIlItIeS

These nancial liabilities are recorded at amortized cost using the eective interest rate

method.

B) rEvEnuE rECognition

Toll revenue and other service charges are recognized as revenue when persuasive evidenceo an arrangement exists, service delivery has occurred, the price to the customer is xedor determinable and collection is reasonably assured.

2


($000s)


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2 Summary of SignifiCant aCCounting PoLiCiES (Cont.)

C) SuPPLiES invEntory

Supplies inventory comprises parts and supplies used in the operation and maintenance othe Seaway. It includes spare parts which were transerred to the Corporation on October 1,1998. Certain parts were transerred at nominal value. Supplies are valued at the lower o costand net realizable value. Cost is determined using the weighted average cost ormula.

d) CaPitaL aSSEtS

Capital assets o the Corporation consist o temporary structures, movable assets such asmotor vehicles, small vessels employed in the operation o the Seaway and oce urniture

and equipment, including computers and related sotware. Such assets are capitalized ithey have an initial cost o at least $5 (ve thousand dollars).

Additions are recorded at cost. The cost o assets sold, retired or abandoned, and the

related accumulated amortization are removed rom the accounts on disposal. Gains orlosses on disposals are credited or charged to operations.

Amortization is recorded using the straight-line method based on the estimated useul

service lives o the assets.

The Corporation treats all major maintenance and reurbishment costs, as well as any

additions to existing capital assets o the Seaway which were transerred to the Governmento Canada on the wind-up o the SLSA, (dened as existing managed assets), as assetrenewal expenses.

E) ContriButionS rELatEd to CaPitaL aSSEtS

Contributions received or the acquisition o capital assets are deerred and amortized torevenue on the same basis as the amortization o the acquired asset.

f) imPairmEnt of Long-LivEd aSSEtS

Long-lived assets are tested or recoverability whenever events or changes in circum-

stances indicate that their carrying amount may not be recoverable. An impairment lossis recognized when their carrying value exceeds the service potential. The amount o

the impairment loss is determined as the excess o the carrying value o the asset over

its air value.

g) EmPLoyEE tErmination BEnEfitS

Employees o the Corporation are entitled to specied benets as provided or underlabour contracts and conditions o employment. These benets include severance benetscalculated on accumulated sick leave and urlough leave which are payable upon termina-tion o employment. For most employees the benets correspond to 75% o the balanceo the employees accumulated sick leave days. Certain employee groups are entitled toreceive severance payments based on years o service. Employees can accumulate upto teen days o sick leave per year. The liability or benets is recorded in the accountsas the benets accrue to the employees.


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40

2 Summary of SignifiCant aCCounting PoLiCiES (Cont.)

h) PEnSion PLan

The Corporation has established its own dened benet pension plan and employees

were allowed the option o transerring their entitlement to the new plan or remaining withthe Public Service Superannuation Plan. All employees, on or ater April 1, 1999, becomemembers o the Corporations pension plan.

The cost o employee uture benets earned by employees is actuarially determined usingthe projected benet method prorated on service and managements best estimate o

discount rate, retirement ages o employees and expected health care costs. Plan obliga-tions are discounted using current market interest rates and plan assets are presented at air

market value. The Corporation amortizes past service costs and cumulative unrecognizednet actuarial gains and losses, in excess o 10% o the greater o the projected benetobligation or the market-related value o plan assets, over the expected average remainingservice lietime (EARSL) o the active employee group covered by the plans. The EARSLhas been determined to be seven years under the Pension Benet Plan and our years orthe Supplementary Pension Benet Plan.

i) uSE of EStimatES

The preparation o nancial statements in conormity with Canadian GAAP requires manage-ment to make estimates and assumptions that aect the reported amounts o assets andliabilities and disclosures o contingent assets and liabilities at the date o the nancial

statements and the reported amounts o revenue and expenses during the reporting period.Actual results could dier rom these estimates.

The estimated useul lie o the capital assets and the assumptions o expected economictrends or the post employment benets are the most signicant items where estimates

are used.

j) futurE aCCounting ChangES PuBLiC SECtor aCCounting Board (PSaB) StandardS

The Accounting Standards Board is requiring that government not-or-prot organizationsadopt the Public Sector Accounting Board Standards (PSAB) or year-ends beginning

ater January 1, 2012.

The St. Lawrence Seaway Management Corporation will adopt the PSAB standards

eective April 1, 2012.

The Corporation is currently evaluating the impact o the adoption o these new standardson its nancial statements.


($000s)


14/21


duE from CaPitaL fund truSt

The Corporation has an amount receivable rom the Capital Fund Trustto cover specic Seaway support obligations such as the Corporationsdecits, net capital acquisitions and other short-term cash requirements

in accordance with the Trust Agreement.

Changes in the balance due rom the Capital Fund Trust at March 31 were as ollows:

2011 2010

Net balance, beginning o year $ 23,096 $ 30,251

Cash paid by the Capital Fund Trust (8,154) (17,303)

Payment o previous years decit (55,845) (45,697)Contribution receivable or capital acquisitions 1,492 1,729

Contribution receivable or expenses 67,072 54,116

Net balance, end o year $ 27,661 $ 23,096

CaPitaL aSSEtS

Annual

Amortization

Rate

2011 2010

Cost

Accumulated

Amortization

Net Book

Value

Net Book

Value

Inormation technology systems 20% $ 7,502 $ 5,730 $ 1,772 $ 1,865

Vehicles 10-20% 6,627 4,259 2,368 2,251

Floating equipment 2-20% 3,955 3,673 282 358

Machinery and oce equipment 2-20% 4,538 2,836 1,702 1,637

Inrastructure equipment 2-20% 6,755 4,432 2,323 2,493

Assets under construction 462 462 483

$ 29,839 $ 20,930 $ 8,909 $ 9,087

duE to / from EmPLoyEE tErminationBEnEfitS truSt fund

This amount represents the obligation or the accrued employee termina-tion benets liability o the Corporation which is represented by the net

assets in the Employee Termination Benets Trust Fund, adjusted or any cumulative unreal-ized gains or losses on available-or-sale nancial assets. Any shortall in the EmployeeTermination Benets Trust Funds net assets will be unded by the Government o Canadathrough the Capital Fund Trust.

3

4

5


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42

PoSt EmPLoymEnt BEnEfitS

The Corporation has dened benet pension plans or employees andalso provides post employment benets, other than pension, includingsupplemental health and lie insurance or retired employees. The last

actuarial valuation was perormed in December 2009 or the Pension Benet Plan, March2011 or the Supplementary Pension Benet Plan and December 2009 or the Other BenetPlans. Inormation about the dened benet plans and post employment benets are asollows:

2011

Pension

Beneft Plan

Supplementary

Pension

Beneft Plan

Other

Beneft

Plans

Accrued benet obligation

Balance, beginning o year $ 167,339 $ 1,191 $ 44,462

Current service cost (employer) 5,306 43 1,738

Interest cost 11,305 82 3,033

Member contributions 2,061 3

Benets paid (7,162) (37) (1,835)

Actuarial loss 28,023 143 6,843

Balance, end o year $ 206,872 $ 1,425 $ 54,241

Plan assets

Fair value, beginning o year $ 176,634 $ 1,729 $ 14,761

Return on plan assets 11,436 57

Corporation contribution 23,085 200 2,094

Investment experience gain 4,486 22

Member contributions 2,061 3

Benets paid (7,162) (37) (1,835)

Fair value, end o year $ 210,540 $ 1,974 $ 15,020

Funded status plan surplus (decit) $ 3,668 $ 549 $ (39,221)

Unamortized net actuarial loss 25,513 321 5,828

Accrued benet asset (liability) recognized $ 29,181 $ 870 $ (33,393)

Elements o costs recognized in the year:

Current service cost (employer) $ 5,306 $ 43 $ 1,738

Interest cost 11,305 82 3,033

Expected return on plan assets (11,436) (57)

Net actuarial loss amortization 9 2

$ 5,175 $ 77 $ 4,773

6


($000s)


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44

6 PoSt EmPLoymEnt BEnEfitS (Cont.)

SignifiCant aCtuariaL aSSumPtionS

The signicant actuarial assumptions adopted in measuring the Corporations accrued

benet obligations and net periodic benet cost, are as ollows:

(Weighted average assumptions as o January 1, 2011)

Pension

Beneft Plan

Supplementary

Pension

Beneft Plan

Other

Beneft

Plans

Discount rate 5.75 % 5.75 % 5.75 %

Expected rate o return on plan assets 6.00 % 3.00 % %

Rate o compensation increase 3.50 % 3.50 % 3.50 %

(Weighted average assumptions as o January 1, 2010)

Pension

Benet Plan

Supplementary

Pension

Benet Plan

Other

Benet

Plans

Discount rate 6.75 % 6.75 % 6.75 %

Expected rate o return on plan assets 6.25 % 3.13 % %

Rate o compensation increase 3.50 % 3.50 % 3.50 %

For measurement purposes, a 7.94% health care cost trend rate was assumed or2011 (2010 8.13%), decreasing gradually to 4.5% in 2029 and remaining at that level

thereater.

The expected rate o return on other benets plans is NIL% because the terms whereby theEmployee Termination Benets Trust Fund was established providing that all the incomeearned by the Trust Fund is to be transerred to the Capital Fund Trust.

PLan aSSEtS

The Plans asset allocation, by asset category, is as ollows:

2011 2010

Cash % %

Equity securities 68 % 66 %

Debt securities 32 % 34 %

Total 100 % 100 %


($000s)


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dEfErrEd ContriButionS rELatEd to CaPitaL aSSEtS

Deerred contributions related to capital assets represent contributionsrom the Government o Canada through the Capital Fund Trust or theacquisition o capital assets as per the Agreement and are amortized

on the same basis as the amortization o the acquired asset.

The deerred contributions balance or the year is composed o the ollowing:

2011 2010

Balance, beginning o year $ 8,388 $ 8,116

Plus: Current year contributions or the acquisition o capital assets 1,492 1,729

Less: Amortization o assets acquired with deerred contributions (1,547) (1,457)

Balance, end o year $ 8,333 $ 8,388

Equity of Canada

2011 2010

Secured contribution o Canada $ 36,000 $ 36,000

Contribution to the Capital Fund Trust (24,000) (24,000)

Surplus/(Decit) 11,051 (4,180)

$ 23,051 $ 7,820

Upon transer o certain assets o the SLSA to the Corporation on October 1, 1998, the

Corporation signed a general security agreement with the Government o Canada coveringall the assets o the Corporation, evidenced by a limited recourse term promissory note witha ace value o $36,000. The note is payable without interest on the earlier o (a) March 31,2018, and (b) the termination or any reason whatsoever, o the Agreement. Recourse bythe Government o Canada is limited to a) the collateral as dened in the general securityagreement, and b) the Hypothecated Property (as dened in the Deed o Movable Hypothecbetween the Corporation and the SLSA); and set o against the Purchase Price (as denedin the Option Agreement between the Corporation and Her Majesty).

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46

ContriButionS from thE CaPitaL fund truSt

The Corporation is entitled to contributions rom the Capital Fund Trustto und the operating decit and or capital asset acquisitions in accord-ance with the Agreement. The contribution towards operations is equal

to the excess o expenses over revenue, adjusted or the non-cash items or amortization odeerred contribution related to capital assets, amortization o capital assets, the undepreci-ated cost o capital assets disposed o, and the post retirement benets variation.

2011 2010

Excess o expenses over revenue beore adjustments $ 51,964 $ 56,556

Plus: Gain on disposal o assets 37 2Amortization o deerred contributions related to capital assets 1,547 1,457

Pension plan and other benet plans variances 15,231

Less: Proceeds rom disposal o capital assets (65) (96)

Pension plan and other benet plans variances (2,227)

Amortization o capital assets (1,642) (1,576)

Contribution rom Capital Fund Trust or expenses $ 67,072 $ 54,116

Contribution rom Capital Fund Trust towards acquisitions o capital assets $ 1,492 $ 1,729

CommitmEntS

The Corporation has entered into various contractual commitments

or capital and other expenditures which expire within the next ve

years. The minimum annual costs or each o the next ve years is

as ollows:

2011/12 $ 1,516

2012/13 516

2013/14 339

2014/15 110

2015/16 20

$ 2,501

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ContingEnCiES

The Corporation, in the normal course o business, experiences claimsor a variety o reasons. Claims outstanding at March 31, 2011 totalling$5,636 (2010 $3,136) have not been provided or in the accounts.

Management is o the opinion that these actions will not result in any material losses to theCorporation. Claims relating to operation and maintenance o the Seaway incurred by theSLSA prior to October 1, 1998 became the obligation o Transport Canada.

LEttEr of guarantEE

As at March 31, 2011, the Corporation issued a letter o guarantee amounting to $392

(2010 $392).

CaPitaL managEmEnt

The Corporations objectives when managing capital (net assets) areto orecast quarterly cash fows accurately in order to minimize the

cash requirement rom Transport Canada while maintaining sucientcash to maintain its operations. For more inormation on the Corporations objectives,

policies, procedures and process or managing capital, reer to Note 1 to the nancial

statements.

Capital management objectives, policies and procedures are unchanged since the preceding

year. The Corporation has complied with all the capital requirements.

nEt ChangES in non-CaSh working CaPitaL BaLanCES

2011 2010

Accounts receivable trade $ (3,240) $ 2,185

Accounts receivable other (1,450) 200

Supplies inventories 18 (148)

Prepaid expenses (290) (21)Accounts payable and accrued liabilities 1,224 2,734

Employee benets payable (2) (88)

Due to employee termination benets trust und 69 (212)

$ (3,671) $ 4,650

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14dirECtorS and offiCErS rEmunEration

The remuneration earned by the directors and ocers, in dollars, wasas ollows:

a) Directors remuneration comprises a xed ee and a per diem based on attendance

at meetings o the Board and its committees.

2011

Ian MacGregor (eective November 30, 2009. Chair eective August 18, 2010 until present) $ 40,635

Guy Vronneau (Chair until August 18, 2010) 19,530

Robert Armstrong (eective November 1, 2010) 8,242

Jonathan Bamberger (eective August 28, 2010) 11,708

Peter Cathcart (ceased to hold oce September 30, 2010) 12,075

Wayne Devlin (eective January 17, 2011) 4,778

Richard Gaudreau (ceased to hold oce May 4, 2010) 3,938

Paul Gourdeau (eective August 6, 2009) 26,040

William Keys (ceased to hold oce November 18, 2010) 18,742

Ralph Mercier (eective November 18, 2010) 8,242

William Mooney (ceased to hold oce January 16, 2011) 18,323

David Mothersill (eective January 26, 2009) 33,810

David Muir (eective May 5, 2010) 23,887$ 229,950

b) Remuneration paid or the six (6) ocers, as employees o the Corporation, was as

ollows:

2011

Terence Bowles, (President/CEO, eective November 1, 2010) $ 125,800

Richard Core, (President/CEO until October 31, 2010, Board Advisor) 413,000Jean Aubry-Morin, Vice President Corporate Sustainability 190,300

Guy Yelle, Vice President Maisonneuve 212,100

Karen Dumoulin, Director o Finance 144,400

Yvette Homan, Counsel & Secretary 119,400

$ 1,205,000


($000s)

Documents

2011 St. Lawrence Seaway Managment Corp. financial report