oversight

Audit of Financial Statements of Saint Lawrence Seaway Development Corporation, Calendar Year 1970

Published by the Government Accountability Office on 1971-11-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT TO THE CONGRESS
                                                                \




                               lllllllllllllllllllllllllllllllllllllll
                                      LM095476




Audit Of Financial Statements
Of Saint Lawrence Seaway
Development Corporation
Calendar Year 1970 B-125007

Department of Transportation




BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
                    COMPTROLLER      GENERAL     OF      THE      UNITED    STATES
                                   WASHINGTON.    D.C.         20548




    B-125007




    To the     President      of the Senate     and the
2   Speaker      of the    House    of Representatives

              The
                accompanying          report    presents      the opinion       of the
    General   Accounting      Office     on the financial        statements       of the
    Saint Lawrence       Seaway      Development        Corporation         for the      c ‘..Z’
    year ended December           31, 1970.

              Theaudit was made pursuant            to the Government       Cor-
    poration   Control      Act (31 U.S.C.     841) and the Department         of
    Commerce      and Related       Agencies     Appropriation      Act, 1961
    (74 Stat. lOl),     which   require    the Comptroller        General  to
    make an annual        audit of the Corporation          and to submit   a re-
    port thereon     directly    to the Congress,

               Copies    of this report      are being    sent to the                   Director,
    Office      of Management         and Budget;     the Secretary                     of Trans-   /
    portation;        and the Administrator,         Saint Lawrence                       Seaway
    Development          Corporation.




                                                      Comptroller                 General
                                                      of the United               States




                            50TH   ANNIVERSARY                    1921-    1971
I
I             , COMPf'ROLLE~Q
                           GENERAL'S                             AUDIT OF FINANCIAL STATEMENTS OF SAINT
I               REPORTTO THE CONGRESS                            LAWRENCE SEAWAY DEVELOPMENT CORPORATION,
I
                                                                 CALENDAR YEAR 1970
                                                                 Department  of Transportation B-125007
I
 I
 I
 I
 I
              DIGEST
              ------

I
I             WHYTHE AUDIT WASMADE
I
I
I                      By law, the Comptroller     General  is required     to make an annual    audit     of
    I             r    the?Zii-n??Lawrence   Seaway Development    Corporation     and to report    directly
    I                  tothe      Congress.
    I


              FINDINGS AND CONCLUSIONS

                       In the opinion        of the General      Accounting      Office,      the financial       state-
                       ments of the Saint         Lawrence    Seaway Development          Corporation       present
                       fairly   the financial        position    of the Corporation          at December 31, 1970,
                       and the results         of its operations       and the source        and application         of its
                       funds for the year then ended,              in conformity       with generally        accepted     ac-
                       counting    principles       applied   on a basis consistent             with that of the pre-
                       ceding year and with applicable               Federal   laws.       (See p. 8.)
     I
     I                 For calendar       year 1970 the Corporation       reported      a gain of about $2.8 mil-
     l                 lion   compared     with a loss of about $7.5 million            in 1969.    The current
     I
     I                 year's    reported      gain resulted   primarily    from the U.S. Government's          for-
     I                 giving   on October        21, 1970, all interest      amounts     due but unpaid   on Octo-
     I
     I
                       ber 21, 1970, on Corporation          bonds held by the Secretary          of the Treasury
     I                 and declaring        the Corporation    bonds non-interest-bearing         as of Octo-
     I                 ber 21, 1970.
      I
     I
     I                 Of the $25.7 million          in unpaid        interest        forgiven     as of October       21, 1970,
     I
     I                 $5.1 million      represented        interest        applicable        to that    part of the current
     I                 year from January         1, 1970, to the date of forgiveness                       and $20.6 million
     I
     I
                       represented      deferred     interest        applicable         to prior    years.     Current-year
     I                 interest     that would have accrued               from the date of forgiveness               to Decem-
         I             ber 31, 1970, totaled           $1.2 million.             (See p. 4.)
         I
         I
         I             The Corporation's            indebtedness   to the U.S. Government     decreased   from
         I             $155.9   million        in 1969 to $131.5      million  in 1970.   The $24.4 million       de-
         I
         I             crease    resulted        from forgiveness     by the U.S. Government     of $20.6 million
         I             of deferred        interest,       payment by the Corporation    of $1.8 million     of de-
         I
         I             ferred    interest,         and redemption    by the Corporation    of $2 million    worth
         I             of revenue       bonds.        (See p. 4.)
         I
         I
         I             At the close    of the 1964 navigation           season, the Corporation    found evi-
         l
         I             dence of deep-seated        concrete   deterioration     in the lock system.      In 1967
         I             a 5-year  lock rehabilitation        program was initiated       at an estimated    cost
          I
          I
                       of $13.1 million.       At the end of 1970, costs of the program were about
                                                                                                                                     a
          I                                                                                            /,’   ./             ‘-
                                                                                                :.i.    .”   _    -.;   -   -’   i       1
          I

          I
          I     Tear
                -I__   Sheet                                               1
                                                                                                                 I
                                                                                                                 I
                                                                                                                 I
                                                                                                                 I
                                                                                                                 I
                                                                                            .                    I
                                                                                                                I
    $8.9 million.        Because the most critical     lock repair    work had been       corn-     '           I
    pleted,    the   1970 charges   were about $160,000--a     decrease   of about                              I
                                                                                                                I
    $3.3 million      from the 1969 charges.       (See p, 6.)                                                  I
                                                                                                                I
                                                                                                                I
    In 1970 the Congress         authorized      the Corps of Engineers    to determine     means               I
    of extending       the navigation       season of the Great Lakes and the Seaway and,                       I
                                                                                                                I
    in cooperation        with the Corporation       and other  interests,   to demonstrate                     I
    the practicability         of extending      the season.   (See p. 7.)                                      I
                                                                                                                I
                                                                                                                I
                                                                                                                I
RECOMldENDATIONS
              OR SUGGESTIONS                                                                                    I
                                                                                                                I
                                                                                                                I
    None.                                                                                                       I
                                                                                                                I
                                                                                                                I
                                                                                                                I
AGENCYACTIONS AND UNRESOLVEDISSUES                                                                              I
                                                                                                                I
                                                                                                                I
    None.
                                                                                                                I
                                                                                                                I
                                                                                                                I
MATTERSFOR CONSIDERATIONBY THE CONGRESS                                                                         I
                                                                                                                I

    This report  contains      no recommendations      or   suggestions   requiring    action
    by the Congress.
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I
                                                                                                            I




                                                                                                            I
                                                                                                            I
                                                                                                         I
                                                                                                         I
                                                                                                         I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I
                                                                                                        I




                                                2
                                                                                                        I
                        Contents
                                                                Page

DIGEST                                                             1

INTRODUCTION

CO~lMEBTSON SELECTEDACTIVITIES
    Indebtedness to the U.S. Government
    Extraordinary    repairs  to the lock system
    Traffic
    Navigation    season extension

SCOPE OF EXAMINATION

OPINION ON THE FINANCIAL STATEMENTS                                8


                                                   --Schedule
FINANCIAL STATEMENTS
    Comparative statement of financial   con-
      dition   as of December 31, 1970 and
      1969                                             1          11

    Comparative statement of revenues      and
      expenses for the calendar years      1970
      and 1969                                         2          12

    Comparative statement of deficit      as of
      December 31, 1970 and 1969                       3          13

    Statement of source and application      of
       funds for calendar year 1970                    4          14

    Comparative statement of plant, property,
      and equipment as of December 31, 1970
      and 1969                                         5          15

    Comparison of operation  and maintenance
      expenses for the calendar years 1970
      and 1969                                         6          16

    Comparison of administrative expenses
      for the calendar years 1970 and 1969             7          17
                                                              Page

                                                   Schedule

    Summary of lock rehabilitation      costs
      as of December 31, 1970                         8         18

    Motes to financial    statements                            19

APPENDIX
    Principal   management officials      of the Department
       of Transportation  and Saint Lawrence Seaway
       Development Corporation,      calendar year 1970         23
.COMP&OLLERGENERAL'S                          AUDIT OF FINANCIALSTATEMENTS OF SAINT
REPORTTO THE CONGRESS                         LAWRENCE SEAWAY DEVELOPMENT CORPORATION,
                                              CALENDAR YEAR 1970
                                              Department of Transportation                B-125007


DIGEST
----__

WHYTHE AUDIT WASMADE

    By law, the Comptroller     General  is required     to make an annual    audit     of
    the Saint  Lawrence   Seaway Development    Corporation     and to report    directly
    to the Congress.


FINDINGS AND CONCLUSIONS

    In the opinion       of the General      Accounting      Office,     the financial       state-
    ments of the Saint        Lawrence    Seaway Development           Corporation     present
    fairly   the financial       position    of the Corporation          at December 31, 1970,
    and the results        of its operations       and the source        and application        of its
    funds for the year then ended,             in conformity       with generally        accepted    ac-
    counting    principles      applied   on a basis consistent            with that of the pre-
    ceding year and with applicable              Federal   laws.       (See p. 8.)

    For calendar      year 1970 the Corporation      reported       a gain of about $2.8 mil-
    lion   compared with a loss of about $7.5 million               in 1969.   The current
    year's   reported      gain resulted   primarily   from the U.S. Government's          for-
    giving   on October       21, 1970, all interest     amounts due but unpaid       on Octo-
    ber 21, 1970, on Corporation          bonds held by the Secretary         of the Treasury
    and declaring       the Corporation    bonds non-interest-bearing         as of Octo-
    ber 21, 1970.

    Of the $25.7 million          in unpaid       interest        forgiven     as of October       21, 1970,
    $5.1 million      represented       interest        applicable        to that part of the current
    year from January 1, 1970, to the date of forgiveness                              and $20.6 million
    represented      deferred     interest       applicable         to prior    years.     Current-year
    interest     that would have accrued              from the date of forgiveness               to Decem-
    ber 31, 1970, totaled $1.2 million.                      (See p. 4.)

    The Corporation's            indebtedness   to the U.S. Government     decreased   from
    $155.9 million          in 1969 to $131.5      million  in 1970.   The $24.4 million       de-
    crease    resulted        from forgiveness     by the U.S. Government     of $20.6 million
    of deferred        interest,       payment by the Corporation    of $1.8 million     of de-
    ferred    interest,         and redemption    by the Corporation   of $2 million     worth
    of revenue       bonds.        (See p. 4.)
     At the close    of the 1964 navigation          season,     the Corporation    found evi-
     dence of deep-seated       concrete   deterioration         in the lock system.      In 1967
     a 5-year  lock rehabilitation       program       was initiated     at an estimated    cost
     of $13.1 million.       At the end of 1970, costs of the program               were about



                                                        1
    $8.9    million.     Because      the most critical     lock repair    work had been    com-
    pleted, the 1970 charges             were about $160,000--a     decrease   of about
    $3.3    million    from   the    1969 charges.      (See p. 6.)

    In 1970 the Congress authorized              the Corps of Engineers    to determine     means
    of extending       the navigation       season of the Great Lakes and the Seaway and,
    in cooperation        with the Corporation       and other  interests,   to demonstrate
    the practicability         of extending      the season.   (See p. 7.)


RECOMMENDATIONS
            ORSUGGESTIONS
    None.


AGENCY
     ACTIONSANDUNRESOLVED
                       ISSUES
    None.      I


MATTERS
      FORCONSIDERATION
                    BY THECONGRESS
   This report   contains           no recommendations    or   suggestions   requiring   action
   by the Congress.




                                                    2
                           INTRODUCTION

      The Saint Lawrence Seaway Development Corporation    is a
wholly owned Government corporation   created and authorized
by the act of May 13, 1954 (68 Stat,93;    33 U.S.C. 981>, as
amended July 17, 1957, to construct,    operate, and maintain
a deep-water navigation  works in the International   Rapids
section of the Saint Lawrence River and to perform necessary
dredging in the Thousand Islands section.

      The Seaway system is a joint  venture between Canada and
the United States to provide deep-water navigation     in the
Saint Lawrence River from Montreal,    Canada,to Lake Ontario
by a series of locks and channels.     The system consists   of
seven locks in Canadian and international    waters.   The four
locks in Canadian waters and one of the locks in interna-
tional waters are operated and maintained by the Saint law-
rence Seaway Authority  of Canada. The remaining two locks,
known as the Dwight D. Eisenhower and the Bertrand I-I, Snell
locks, are operated and maintained by the Corporation.

        On January 29, 1959, the Corporation       and the authority
entered into an agreement that toll revenues would be di-
vided 29 percent to the Corporation         and 71 percent to the
authority--the       ratio of gross revenue which the two Seaway
entities     anticipated    they would require to pay for operation
and maintenance expenses, interest         on borrowings,    and amor-
tization     of investment.      In March 1967 the Department of
State announced an agreement with the Government of Canada
which provided for a change in the distribution            of revenues
to 27 percent to the Corporation         and 73 percent to the au-
thority     and for no increase in tolls      for 4 years,

      The Corporation submits an annual report on its activi-
ties for the calendar year to the Secretary   of Transporta-
tion, who, in turn, submits it to the President.




                                   3
                   COMMENTSON SELECTED ACTIVITIES

       For calendar year 1970 the Corporation                reported a gain
of about $2.8 million         compared with a loss of about $7.5 mil-
lion in 1969. The gain resulted             primarily      from the U.S. Gov-
ernment's forgiving        on October 21,      1970,   all     interest      amounts
due but unpaid on October 21, 1970, on Corporation                       bonds
held by the Secretary         of the Treasury and declaring               the
Corporation    bonds non-interest-bearing            as of October 21,
1970. Of the $25.7 million           in unpaid interest            forgiven    as
of October 21, 1970, $5.1 million            represented         interest     ap-
plicable    to that part of the current year from January 1,
1970, to the date of forgiveness,            and $20.6 million            repre-
sented deferred      interest    applicable     to prior years.            Current-
year interest     that would have accrued from the date of for-
giveness to December 31, 1970,totaled              $1.2 million.            Other
major factors    which contributed        to the reported 1970 gain
 included an increase of $1.1 million             in toll revenues and
a $3.3 million      decrease in lock rehabilitation                charges.

INDEBTEDNESSTO THE U.S. GOVERNMENT

        The Corporation's   indebtedness   to the U.S. Government
decreased from $155.9 million        in 1969 to $131.5 million        in
1970.     The $24.4 million    decrease resulted    from forgiveness
by the U.S. Government of $20.6 million          of deferred   interest,
payment by the Corporation       of $1.8 million    of deferred     in-
terest,    and redemption by the Corporation       of $2 million
worth of revenue bonds.

     The act of May 13, 1954, as amended provided that the
Seaway be financed through the issuance to the Secretary       of
the Treasury of interest-bearing      bonds payable from Corpora-
tion revenues.    The act provided also that interest    payments
on such bonds could be deferred but that deferred-interest
payments would bear interest     after June 30, 1960.

       In 1958 the Seaway tolls   committee estimated  that, at
the end of 1969, the Corporation     would have paid from reve-
nues all current    interest charges and would have reduced its
debt to about $127.9 million.      Revenues, however, proved
inadequate to meet interest     on the debt, and, as of Decem-
ber 31, 1969, the debt of the Corporation      was $155.9 million--
 $133.5 million   in revenue bonds and $22.4 million    in deferred
interest.      In 1970 the Secretary      of Transportation      proposed
legislation      to the Congress   to  cancel    the payment    of  all in-
terest    on the Corporation's     bonds.     This action was favored
by the Secretary       over the alternative      of instituting     Seaway
toll   increases which,he believed,         would discourage Seaway
use.

       Section 43 of the Merchant Marine Act of 1970 (84 Stat.
1038) amended the act of May 13, 1954, to provide that,          as
of October 21, 1970, the Corporation's      bonds held by the
Secretary    of the Treasury bear no interest;      the unpaid in-
terest   which had accrued on the bonds was terminated.         Sec-
tion 43 provided also that the interest        incurred  by the
Secretary    of the Treasury in financing   the Corporation,      al-
though not required     to be paid by the Corporation,     be con-
sidered as a Corporation     expense in establishing     the per-
centages for the division     of revenues with Canada,

      The accrued unpaid interest         of $25.7 million       forgiven
as of October 21, 1970, comprised unpaid interest                of $6.7 mil-
lion capitalized       prior  to the opening of the Seaway on
April 25, 1959, and recorded as a plant,             property,     and equip-
ment cost; unpaid interest          of $13.9 million     accrued from
the start    of operations      through December 31, 1969; and un-
paid interest      of $5.1 million     applicable    to the period       Jan-
uary 1 to October 21, 1970--the          date of interest      forgiveness,
Current-year     interest    that would have accrued from the date
of forgiveness      to December 31, 1970, totaled         $1.2 million.

       The Corporation       adjusted its financial         records to ac-
count for the interest           forgiveness     by (1) writing     off its
deferred-interest         accounts applicable        to the construction
period ($6.7 million)          and the operating       period ($13.9 mil-
lion),    (2) reducing the recorded cost of its plant,                  property,
and equipment by the $6.7 million               of interest    capitalized        '.
during the construction            period,   (3) reducing its deficit
and depreciation        accounts by about $765,000 for the total
depreciation       charges applicable        to the capitalized       interest,
and (4) reducing its deficit              by $13.9 million     for the de-
ferred    interest     applicable      to the operating     period,      The
transactions       are reflected       in schedules 3 and 5 of the Cor-
poration's      financial     statements,
EXTRAORDINARYREPAIRS 'x0 LOCK SYSTEM

       At the close of the 1964 navigation         season, the Cor-
poration     found evidence of deep-seated concrete deteriora-
tion in the lock system.          The Corporation   and the Corps of
Engineers have concluded that the deterioration           was primarily
the result      of frost damage; however, studies to determine
the reasons for the inadequate performance of the concrete
are being conducted by the Corps of Engineers.             These studies
consist primarily       of pouring test blocks of different      con-
crete mixtures       and subjecting    them to water pressures and
freeze-to-thaw       conditions   experienced by the locks in 1964.

       In 1967 the Corporation  initiated a 5-year rehabilita-
tion program for the Eisenhower and Snell locks.      The Cor-
poration   estimated that the total cost of the rehabilita-
tion program would amount to about $13.1 million.

      As of December 31, 1970, costs under the rehabilita-
tion program amounted to about $8.9 million,      of which the
Corporation  charged about $160,000 to operations     in 1970
compared with a charge of about $3.5 million      in 1969. The
decrease of $3.3 million   was a result   of the Corporation's
completion  of the most critical   lock repair work.     During
the period 1971-73, annual lock rehabilitation      charges are
expected to average about $150,000 for remaining minor re-
pair work and for routine maintenance to the locks.        During
the 1973-74 winter season, the Corporation     plans to cover
and dewater the Eisenhower lock for a thorough inspection
and to make any necessary repairs,      This work is expected
to cost about $400,000.    Similar work is planned for the
Snell lock during the 1975-76 winter season at a cost of
about $300,000.

TRAFFIC

       Seaway tolls    increased from $5.8 million     in 1969 to
$6.9 million    in 1970. The $1.1 million      increase was attrib-
utable to a 25-percent       increase over 1969 traffic.      The
cargo transits     for the Seaway between Montreal and Lake
Ontario in 1970 amounted to a record 51.1 million          tons com-
pared with only 41 million        tons handled in 1969 when iron ore
shipments were reduced because of a prolonged strike           at the
Quebec-Labrador     mines.    The previous record was 49.2 million
tons in 1966.
                                    6
      Bulk cargoes   accounted for about 45 million             tons and
general cargoes for about 6 million          tons.     Iron   ore ship-
ments--15.1  million   tons-- continued      to dominate      traffic;
wheat shipments--G.2    million   tons--were       second,    followed
by iron and steel shipments--4       million     tons.

NAVIGATION SEASONEXTENSION

       The Rivers and Harbors,        Flood Control Acts of 1970,
approved December 31,         1970  (Pub.  L. 91-6111, authorized          the
Corps of Engineers to determine the means of extending                   the
navigation     season of the Great Lakes and the Seaway and
authorized     $6.5 million      to be appropriated      to the Corps to
demonstrate     the practicability       of an extension.         The act
also provided for the Corps to conduct the demonstration
program in cooperation         with the Departments of Transporta-
tion,    the Interior,     and Commerce--including         specifically
the Coast Guard, the Saint Lawrence Seaway Development Cor-
poration,    the Maritime Administration,and           the Environmental
Protection    Agency- -and other public or private            interests.
The act provided also for the Secretary             of Commerce to study
the possibility        of providing   reasonable    insurance rates for
shippers and vessels using the Great Lakes and Seaway beyond
the current     navigation     season, which is about 250 days.

       The Secretary  of Transportation  announced that the ini-
tial   goal of the program was to explore the possibility       of
extending   the navigation   season by at least 1 month.      This
effort   should show the problems involved    in establishing
the Great Lakes and the Seaway as a year-round       navigation
route and should provide some solutions.
                         SCOPEOF EXAMINATION
                        -_--I_
        Our examination   of the Corporation's  statement of fi-
nancial condition      as of December 31, 1970, and the related
statements of revenues and expenses and of source and ap-
plication     of funds for the year then ended, was made in ac-
cordance with generally      accepted auditing standards and in-
cluded such tests of accounting records and such other au-
diting    procedures as we considered necessary in the circum-
stances.      The audit was conducted at the Corporation's    of-
fice in Massena, New York.

      By agreement between the authority     and the Corporation,
the billing   and collection  of tolls   are the responsibility
of the authority    which accounts to the Corporation     for the
Corporation's    share of the toll  revenue.

               OPINION ON THE FINANCIAL STATEMENTS

      The financial statements    and the notes to the finan-
cial statements in this report are the same as those pre-
pared by the Corporation   for inclusion  in its annual report
for the calendar year 1970. Our opinion,      as far as it re-
lates to Seaway toll revenues, is based on the examination
and the report of the Auditor General of Canada.
        Pursuant to law, as of October 21, 1970, unpaid inter-
est in the amount of $25.7 million           on the Corporation's
bonds held by the Secretary of the Treasury was forgivenand
the Corporation's       bonds became non-interest-bearing.          Of the
$25.7 million      in unpaid interest     forgiven,    $5.1 million   was
applicable      to that part of the current year from January 1,
1970, to the date of forgiveness          and $20.6 million      was appli-
cable to prior years.        Current-year     interest   that would have
accrued from the date of forgiveness            to December 31, 1970,
totaled     $1.2 million.    This matter is discussed more fully
beginning on page 4.
       In our opinion,  the accompanying financial     statements
(schs.1 through 8) present fairly     the financial    position    of
the Corporation    at December 31, 1970, and the results        of its
operations   and the source and application    of its funds for
the year then ended, in conformity     with generally     accepted
accounting principles     applied on a basis consistent     with
that of the preceding year and with applicable        Federal laws.
=CIAL       STATEMENT8




        9
            SAINT LAWRFiNCESEAWAYDEVELOPMENTCORPORATION

            COMPARATIVESTATEMENTOF FINANCIAL CONDITION
                    AS OF DECEMBER31, 1970 AND 1969

                                    ASSETS
                                                     1970               1969
PLANT, PROPERTY, AND EQUIPMENT:
    Plant in service, at cost (sch.          5
       and note 1)                               $124,555,098    $131,247,006
    Less accumulated depreciation
       (note 21                                    16,081,235      15,308,740
        Net plant     in service                  108,473,863     115,938,266
    Work in progress                                   12,885             11,796
        Total plant,      property,    and
          equipment                               108,486,748     115,950,062
IhvESTMENT IN AND LOANS TO SEAWAYIN-
  TERNATIONAL BRIDGE COMPANY:
    Promissory notes                                                      15,810
    Debenture bonds--due December 31,
      2012                                               7,440             7,440
        Total investment   in and loans
          to Seaway International
          Bridge Company                                 7,440            23,250
CURREHTASSETS:
   Cash (note 3)                                    1,907,323             271,507
   U.S. securities    (par) (note       3)                             1,131,445
   Tolls and other receivables          (net>
      (note 4)                                        131,629            124,942
   Inventories,    at cost                            159,383            155,416
        Total   current    assets                   2,198,335          1,683,310
        Total   assets                           $110,692,523    $117,656,622
The notes   on pages 19 and 20 are an integral        part   of this     state-
ment.
                                                                          SCHEDULE1




       INVESTMENT                          AND        LIABILITIES
                                                             1970           1969
INVESTMENTOF THE U.S. GOVERNMENT:
    Revenue bonds outstanding     (note 6)
      (authorized   $140,000,000,   unis-
      sued $6,200,000)                                  $131,476,050    $133,476,050
    Deferred interest   during construc-
      tion (note 6)                                                        6,706,437
    Deferred interest    during operations
      (note 6)                                                            15,723,061
         Total     bond and interest         debt        131,476,050     155,905,548
    Deficit      (note   5 and note 6)                   -21,149,837    -38,596,555
         Net investment       of U.S. Govern-
           ment                                          110,326,213     117,308,993




CURRENTLIABILITIES:
   Accounts payable                                            67,186          53,536
   Accrued liabilities          and deferred
     income                                                   299,124         294,093
          Total current      liabilities
            (note 7)                                          366,310         347,629
          Total investment        and liabili-
            ties                                        $110,692,523    $117,656,622




                                                 11
SCHEDULE2


        SAiNT LAWRENCESEAWAYDEVELOPMENTCORPORATION




       COMPARATI~ STATEMENTOF REVENUESAND EXPENSES

             FOR THE CALENDARYEARS 1970 AND 1969




                                             1970             1969

REVENUES:
    Seaway tolls                          $6,884,445        $5,839,473
    Other                                     113,564            74,502

         Total   revenues                 $6,998,009        $5,913,975

EXPENSES:
    Operation and maintenance
       (sch. 6)                           $1,827,712        $1,716,484
    General administration
       (sch. 7)                              628,928            529,437
    Interest    on investment of U.S.
       Government (note 6)                                   5,927,550
    Depreciation     (note 2)              1,622,710         1,704,515

         Total   expenses                  4,079,350         9,877,986

         Net gain or loss(-)  for the
           year before lock rehabil-
           itation  charges                2,918,659        -3,964,Oll

    Lock rehabilitation      charges
      (sch. 8 and note      5)              -160,377        -3,486,146

         Net gain or loss(-)              $2,758,282       -$7,450,157

The notes    on pages 19 and 20 are an integral     part    of this
statement.



                                  12
                                                             SCHEDULE3


              SAINT LAWRENCESEAWAYDWELQPMENT CORPORATION



                   COMPARATIVE
                             STATEMENT
                                     OF DEFICIT
                   AS OF DECEMBER
                                31, 1970 AND 1969



                                                  1970              1969

DEFICIT AT BEGINNINGOF YEAR                $38,596,555          $31,146,398

GAIN (*> OR LOSSFOR THEYEAR                     2,918,659*        3,964,Oll
DEFERREDINTERESTDURINGOPERATIONS:
   Unpaid as of 12-31-69 $15,723,061
   Payments during year   -1,800,OOO
    Terminated accrued and unpaid oper-
      ating interest (note 6)                  13,923,061*
ADJUSTMEXC OF PRIORYEAR'S DEPRECIATION
  (note 1)                                        765,375*
LOCKREHABILITATIONCHARGES
                        FORTHE
                                                  160,377         3,486,146
TOTALDEFICIT AT END OF YEAR                $21,149,837          $38,596,555
The notes on pages 19 and 20 are an integral     part of this     state-
ment.
*Deduction.




                                13
SCHEDULE4


        SAINT LAWRENCESEAWAYDEVELOPMENTCORPORATION



        STATEMFNTOF SOURCEAND APPLICATION OF FUNDS

                     FOR CALENDARYEAR 1970



SOURCE:
   Revenues:
        Seaway tolls                                     $6,884,445
        Other                                                113,564
        Proceeds from property        disposals                   3,113

                                                         $7,001,122

APPLICATION:
    Acquisition    of assets                             $      87,761
    Operating expenses                                       2,456,640
    Rehabilitation    of locks                                 160,377
    Payments to U.S. Treasury:
         Deferred interest                                1,800,OOO
         Principal                                        2,000,000
    Increase in working capital                                496,344

                                                         $7,001,122

The notes    on pages 19 and 20 are an integral   part    of this
statement.




                                 14
                                                                                 SCHEDULE        5



                     SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION




              COMPARATIVE
                        STATEMENTOF PLANT, PROPERTY,AND EQUIPMENT
                          AS OF DECEMBER
                                       31, 1970 AND 1969



                                        1970                                     1969
                                             Accumulated                             Accumulated
  Plant in service               cost       depreciation              cost          depreciation

Land in fee                $      911,026   $          -       $        962,843     $        -
Land rights    and re-
  locations                     5,637,979            414,400        5,956,284             375,254
Locks                          63,856,676       8,565,139          67,334,358           8,238,636
Roads and bridges               8,631,552       2,004,659           9,119,157           1,936,862
Channels and canals            35,982,561       2,644,740          38,016,187           2,395,042
Public use facilities             541,424            114,975          570,355             110,367
Navigation    aids             1,298,138             168,915        1,409,582             222,851
Buildings, grounds,
  and utilities                4,024,105             894,120        4,233,161             860,848
Permanent operating
  equipment                    3,671,637        1,274,287           3,645,079           1,168,880
    Total                 $124,555,098      $16,081,235        $131.247.006         $15,308,740
The notes on pages 19 and 20 are an integral               part of this         statement.




                                                15
SCHEDtilE 6

        SAINT LAURENCESEAWAYDEVEEOPMENTCORPORATION



    COMPARISONOF OPERATION MD MAINTENANCEEXPENSES

               FOR THE CALENDARYEARS 1970 AND 1969



              Type of expenses                     1970                1969

Supervision,  operational,   planning
  and development,    and general
  operating  expense                           $   589,256       $     378,630

Operation     of locks     and canals    and
  traffic     control                              565,574             533,488

Maintenance     of navigation     aids              52,013              63,482

Maintenance     of plant     and equipment         620,869             740,884

    Total                                      $1,827,712        $1,716,484
The notes     on pages 19 and 20 are an integral          part       of this
statement.




                                         16
                                                            SCHEDULE7


        SAINT LAWRENCESEAWAYDEVELOPMENTCORPORATION




             COMPARISONOF ADMINISTRATIVE EXPENSES

              FOR THE CALENDARYEARS 1970 AND 1969




             Type of expense                      1970         1969

Personnel compensation                       $456,829        $348,970
Personnel benefits                             24,118          24,068
Benefits  paid to former personnel                              4,386
Travel and transportation                         29,157       26,971
Rents, communications,     and utilities          23,217       25,173
Printing  and reproduction                        57,298       21,775
Other services                                    22,678       69,468
Supplies and materials                            15,631        8,626

    Total                                    $628,928        $529,437
The notes    on pages 19 and 20 are an integral      part   of this
statement.




                                    17
  SCHEDLUE8

                          SAII:T LAWREXCESZAWAYDSVZLOPEIR!'mCORPORATION




                                SUMMARYOF LOCK REHABILITATION COSTS

                                           AS OF DECEMBER31, 1970




                                                                            Cost for
                                                                      Calendar       Calendar            Total cost
                                                                      year 1969     year 1970              to date

Dwight D. Eisenhower lock:
    Highway tunnel modification                                      $        -          $     -         $      592,422
     Intake manifold repair                                                                                  1,072,487
    Chamber face repair,        monolith N-54                                                                   221,393
    Culvert crack repair                                                                                     1,652,036
     Installation     and removal of lock cover                            213,211                              759;366
    Lock chamber face, culvert wall chamber
        side and ports repair                                            1,298,809             -             1,344,962
     Culvert wall, lsndside repair                                           63,968                              70,573
    Floor and ceiling       repair                                          159,791                             159,791
    Post tensioning-downstream          gate monolith    ;
        and modification      studies                                       41,979        159,258              201,238
    Engineering     and design                                               9,216                             149,761
     Supervision,     inspection,     and administration                   106,865                             466,218
            Total,   Dwight Dr Eisenhower            lock                1,893,839        159,258            6,690,247

Bertrand H. Snell lock:
      Installation  and removal        of lock        cover                 155,309                             398,346
     Culvert crack repair                                                1,218,596                           1,431,034
     Lower sill repair                                                        2,641                               2,641
     Engineering   and design                                                 8,920                676           49,716
     Supervision,   inspection,        and administration                   127,758                             147,834

            Total,   Bertrand   H. Snell      lock                    1,513,224                    676       2,029,571
Other:
     Core drilling,  photography,            instrumenta-
       tion studies,   construction,            facilities,
       and other related costs                                              79,083                 443         166,336
            Total,   lock rehabilitation         cost                $3,486,146          $160,377            8,886,154
Estimated     balance   of work remaining                                                                    4,218,846
            Total estimated cost of lock rehabili-
              tation  work as shown in fiscal year
              1972 budget                                                                                $13,105,000
The notes     on pages 19 and 20 are an integral              part   of this      statement.
                  NOTES TO FINANCIAL STATEMENTS

1. Plant,    property,   and equipment are stated at cost of
   acquisition      or construction.        Indirect     costs incurred
   prior to the opening of the Seaway on April 25, 1959,
   have been allocated        to the related       permanent features      of
   the Seaway. In accordance with Public Law 91-469, dated
   October 21, 1970, the plant in service reflects                  a reduc-
   tion of $6.7 million         in capitalized       interest   previously
   allocated     to the related      permanent features        of the Seaway.
   Prior year's depreciation          charges have been adjusted to
   recognize the reduced cost of plant in service.

2. The straight-line     method of depreciation     is used and is
   computed on balances in plant in service.          Accumulated
   reserves are accounted for on a composite basis by groups
   of assets.      The cost of plant retired,    including  the cost
   of removal, less salvage, is charged against the reserves.
   Neither depreciation     nor amortization    allowances have
   been provided for lands in fee.

3, To preserve the Corporation's      borrowing authority    to meet
   emergency cash requirements      in the future,   revenues have
   been retained    to provide working capital     during the win-
   ter nonnavigation    season.    These revenues are deposited
   in the Corporation's     account with the U.S. Treasury.       Rev-
   enues invested during 1969 in U.S. Treasury bills         have
   been redeemed.

4. Included in tolls    and other receivables   at December 31,
   1970, is $29,897 incurred     in 1959, due the Corporation
   from a bankrupt debtor.      Agreements provide for ship-
   owners to pay this amount on a pay-as-you-go      basis.   Col-
   lection  of this account is being handled for the Corpora-
   tion by the Saint Lawrence Seaway Authority      of Canada in
   accordance with the 1959 Memorandum of Agreement respect-
   ing the tariff    of tolls.   Due to the age of this receiv-
   able, a provision    for doubtful   accounts has been estab-
   lished for the full amount.

5, During calendar year 1967, the Corporation      undertook an
   emergency rehabilitation     program to repair deterioration
   which had occurred in the lock structures      and in the
   vehicular  tunnel.     These costs, although of an

                                     19
   extraordinary  nature, are properly     considered as a main-
   tenance expense and are written     off to the deficit.       This
   extraordinary  expense is shown separately       on the state-
   ment of revenues and expenses following       the line item of
   annual net gain or loss.

6. In accordance with Public Law 91-469, dated October 21,
   1970, the accrual and payment of interest             on the debt
   principal     of the Corporation     was terminated.       Accordingly,
   this eliminated       deferred interest    totaling     $22.4 million
   ($6.7 million      accrued during construction        and $15.7 mil-
   lion accrued during operations)         as of December 31, 1969,
   less payments of $1.8 million         made to the U.S. Treasury
   during calendar year 1970 as well as $5.1 million               current
   year's    interest    as of October 21, 1970. As a result           of
   the enactment of this public law, the Corporation               redeemed
   $2 million      in revenue bonds outstanding        during calendar
   year 1970.

7. Not included in the current   liabilities   at December 31,
   1970, are undelivered  orders and contracts    amounting to
   $100,461.62.   At this date, there are no outstanding
   claims pending against the Corporation.




                                   20
APPENDIXES
--




21
                                                             APPENDIX


                     PRINCIPAL MANAGEMENTOFFICIALS OF THE

                         DEPARTMENTOF TRANSPORTATIONAND

              SAINT LAWRENCESEAWAYDEVELOPMENTCORPORATION

                                CALENDARYEAR 1970


                                                    Effective  date
                                                    of appointment

                           DEPARTMENTOF TRANSPORTATION

SECRETARYOF TRANSPORTATION:
   John A. Volpe                                      Jan.   1969

              SAINT LAWRENCESEAWAYDEVELOPMENTCORPORATION

ADMINISTRATOR:
    David W. Oberlin                                  Aug. 1969

ASSISTANT ADMINISTRATOR:
    Brendon T. Jose                                   June 1964




U.S. GAO. Irash., D.C.           22   % 23
.




    Copies  of this report are available      from the
    U. S. General Accounting     Office, Room 6417,
    441 G Street, N W., Washington,     D.C., 20546.

    Copies are provided      without       charge to Mem-
    bers of Congress,       congressional           committee
    staff members, Government          officials,     members
    of the press, college      libraries,       faculty mem-
    bers and students.      The price to the general
    public   is $1 .OO a copy.     Orders should be ac-
    companied    by cash or check.