<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No )*
---
TSI Incorporated
-----------------------------------
(Name of Issuer)
Common Stock, $.10 par value
-----------------------------------
(Title of Class of Securities)
872876107
-----------------------------------
(CUSIP Number)
Richard D. McNeil, Esq.
Lindquist & Vennum, PLLP
4200 IDS Center
Minneapolis, MN 55402
Telephone: (612) 371-3266
Fax no.: (612) 371-3207
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
May 24, 1999
------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Section 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box / / .
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
(Continued on following page(s))
Page 1 of 16 Pages
<PAGE>
- --------------------------- ---------------------------
CUSIP No. 872876107 13D Page 2 of 16 Pages
--- ----
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
John J. Fauth
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF,OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
652,000
----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY ----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 652,000
WITH ----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
652,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
Page 2 of 16 Pages
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Item 1. Security and Issuer.
This Schedule 13D (the "Statement") relates to the Common Stock, par
value $.10 per share (the "Common Stock"), of TSI Incorporated, a Minnesota
corporation (the "Company"). The principal executive office of the Company is
located at 500 Cardigan Road, Shoreview, MN 55126.
Item 2. Identity and Background.
(a) This Schedule 13D is being filed on behalf of John J. Fauth.
(b) The business address of Mr. Fauth is 3100 Metropolitan Centre,
333 South 7th Street, Minneapolis, MN 55402.
(c) Mr. Fauth's present principal employment is as Chairman and
Chief Executive Officer of Churchill Industries, Inc. and Chairman of
Churchill Capital, Inc., both of which are located at the address set forth
in 2(b) above.
(d)-(e) During the last five years, Mr. Fauth (1) has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and (2) has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of
which he was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
(f) Mr. Fauth is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Fauth has purchased a total of 652,000 shares of Common Stock for
cash in the amount of approximately $5,915,716, including brokerage commissions.
All of these shares were purchased in open market transactions with personal
funds and funds borrowed in a margin account. A copy of the form of margin
agreement pertinent to this filing is attached hereto as Exhibit 1 and
incorporated herein by reference.
Item 4. Purpose of Transaction.
Mr. Fauth acquired the shares of Common Stock that are the subject of
this Schedule 13D in order to obtain an equity position in the Company with a
view toward acquiring the Company. On November 25, 1998, Mr. Fauth met with two
members of the Company's Board of Directors to discuss his interest in the
Company and on March 1, 1999 he met with James Doubles, the Company's President,
to make his acquaintance and discuss Mr. Fauth's interest in the Company. On
approximately March 11, 1999 Mr. Fauth wrote a letter to the Company
Page 3 of 16 Pages
<PAGE>
communicating an interest in commencing negotiations to acquire all of the
Company's outstanding Common Stock in a negotiated transaction for a cash price
above the price per share at which the Common Stock has historically traded. A
copy of the letter is attached hereto as Exhibit 2. On April 27, 1999 Mr. Fauth
received a letter from the Company stating that the Board of Directors of the
Company did not wish to pursue discussions with Mr. Fauth at that time. A copy
of that letter is attached hereto as Exhibit 3.
Mr. Fauth believes that to optimize shareholder value the Company
should be privately held. Mr. Fauth is currently planning to attempt to elect
persons to the Company's Board of Directors at the next regular meeting of
shareholders who will seek to maximize the value of the Common Stock through
a sale of the Company. Such a sale, if implemented, would likely involve a
tender offer for some or all of the Common Stock or a merger with an
acquiring entity, and would likely result in termination of the Company's
registration as a public company under the Securities Exchange Act of 1934,
as amended, and delisting of the Common Stock from the NASDAQ National
Market. Mr. Fauth also is considering proposing amendments to the Company's
bylaws which would make it more difficult for the Company's current Board of
Directors to impede an acquisition of the Company. At present Mr. Fauth is
not soliciting the support of fellow shareholders for any plans or proposals,
although he may do so in the future in compliance with applicable laws. Mr.
Fauth specifically reserves all his rights as a shareholder of the Company to
discuss with other shareholders of the Company matters that may be of common
concern.
Depending upon the course of action he decides to pursue, Mr. Fauth
may continue to increase his investment in the Company through the acquisition
of additional shares of Common Stock in the open market or otherwise, subject to
availability at prices deemed favorable by him. Alternatively, he may decide to
sell any or all of the shares of Common Stock beneficially owned by him in the
open market or otherwise. The foregoing represents the range of activities
presently contemplated by Mr. Fauth, and his plans, proposals and activities are
subject to change at any time depending on, among other things, the actions of
the Company's Board of Directors, the Company's performance and conditions in
the public securities markets.
Except as set forth above, Mr. Fauth has no present plans or
intentions that would result in or relate to any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of the date this filing is made, Mr. Fauth beneficially
owns 652,000 shares of Common Stock, representing approximately 5.8% of the
outstanding shares of Common Stock. The foregoing percentage is based upon
11,249,647 shares of Common Stock reported outstanding as set forth in the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December
31, 1998, as filed by the Company with the Securities and Exchange Commission.
Page 4 of 16 Pages
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(b) Mr. Fauth has the sole power to vote and dispose of the shares of
Common Stock which he beneficially owns.
(c) Transactions in the Common Stock effected by Mr. Fauth in the last
60 days are described on the attached Schedule A and incorporated herein by
reference. All such transactions were purchases effected in the open market.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Mr. Fauth does not have any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of the Company.
Item 7. Material to Be Filed as Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1 Form of Margin Loan Agreement
2 Letter to TSI Incorporated dated March 11, 1999
3 Letter from TSI Incorporated dated April 27, 1999
</TABLE>
Page 5 of 16 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
Dated: June 2, 1999
/s/John J. Fauth
--------------------------------
John J. Fauth
Page 6 of 16 Pages
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Date No. of Shares Purchased Price Per Share
- ---- ----------------------- ---------------
<S> <C> <C>
4/1/99 25,000 8.0000
4/5/99 20,000 8.1750
4/6/99 19,100 8.4836
4/16/99 2,500 7.6250
5/24/99 42,000 10.0908
5/26/99 2,500 10.50
5/27/99 80,000 10.9375
</TABLE>
Page 7 of 16 Pages
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EXHIBIT 1
MARGIN ACCOUNT APPLICATION AND AGREEMENT
Title of account Account Number
----------------------------- ----------------
NO MARGIN ACCOUNT WILL BE ESTABLISHED FOR THE CUSTOMER UNLESS AND UNTIL THE
ACCOUNT IS APPROVED FOR MARGIN TRANSACTIONS BY J.P. MORGAN SECURITIES INC.
To: J.P. Morgan Securities Inc.
Gentlemen:
This agreement sets forth our respective rights and obligations in connection
with the acceptance by J.P. Morgan Securities Inc. ("JPMS") of a margin
account or accounts for the undersigned ("Customer"). JPMS and Customer
hereby agree to the following with respect to any of Customer's accounts with
JPMS for the purchase and sale of securities:
1. All transactions under this agreement shall be in accordance with the
rules and customs of the exchange or market, and its clearing house, if any,
where the transactions are executed and in conformity with applicable law and
regulations of governmental authorities and future amendments or supplements
thereto.
2. Customer agrees that all securities and other property which JPMS or any
of JPMS' affiliates may hold for Customer (either individually or jointly
with others), and the proceeds thereof, shall be subject to a general lien
and security interest for the discharge of all Customer's obligations to JPMS
or any of JPMS' affiliates. JPMS may in JPMS' discretion and without notice
to Customer, apply or transfer any of Customer's securities and other
property interchangeably between any of Customer's accounts.
3. Customer agrees to maintain margins for Customer's account as JPMS may
require from time to time. Customer agrees to pay interest charges which are
imposed, in accordance with JPMS' usual custom with respect to Customer's
account and to pay on demand any debit balance owing with respect to
Customer's account. Customer acknowledges receipt of the enclosed document
entitled "Interest Charges to Customers."
4. Customer agrees to designate all sell orders for securities as either
"long" or "short". The designation of a sale of a security as "long"
constitutes a certification that the securities to be sold are owned by
Customer and, if such securities are not in JPMS' possession, the placing of
such order shall constitute a warranty by Customer that Customer shall
deliver such securities to JPMS on or before settlement date.
5. In the event of a default of any obligation to JPMS or any of JPMS'
affiliates, or if for any reason JPMS may deem it advisable for the
protection of JPMS or any of its affiliates, JPMS may, without notice or
demand to Customer, and at such time and place as JPMS may reasonably
determine, sell any securities or other property which JPMS or any of JPMS'
affiliates may hold for Customer (either individually or jointly with others)
and apply the proceeds to the discharge of the obligation, or buy in or
borrow any securities or other property sold for Customer's account buy
undelivered by Customer, and cancel any outstanding orders and take such
other action as JPMS deems appropriate. Customer shall remain liable for any
deficiency and shall
Page 8 of 16 Pages
<PAGE>
promptly reimburse JPMS for any loss or expense incurred thereby, including
losses sustained by reason of JPMS' inability to borrow any securities or
other property sold for Customer's account.
6. Customer agrees that securities and other property in Customer's account
may be used as collateral for JPMS' general loans and may be pledged,
repledged, hypothecated or rehypothecated separately or in common with other
securities and any other property for the sum due to JPMS thereon or for a
greater sum and without retaining in JPMS' possession and control for
delivery a like amount of similar securities or other property. Customer
understands that when JPMS holds on Customer's behalf bonds or preferred
stocks which are callable in part by the issuer, such securities will be
subject to JPMS' impartial lottery allocation system in which the
probability of Customer's securities being selected as called is proportional
to the holdings of all customers of such securities held in bulk by JPMS or
for JPMS; and that JPMS will withdraw such securities from any depository
prior to the first date on which such securities may be called unless such
depository has adopted an impartial lottery system which is applicable to all
participants. Customer may withdraw uncalled securities prior to a partial
call subject to compliance with applicable margin requirements and the terms
of this agreement and any other agreements between JPMS and Customer. JPMS is
authorized to withdraw securities sold or otherwise disposed of, and to
credit Customer's account with the proceeds thereof or to make such other
disposition thereof as Customer may direct or as provided for in the agreement.
JPMS is further authorized to collect all income and other payments which may
become due on Customer's securities, to surrender for payment maturing
obligations and those called for redemption and to exchange certificates in
temporary form for like certificates in definitive form, or if the par value
of any shares is changed, to effect the exchange for new certificates. It is
understood and agreed by Customer that although JPMS will use reasonable
efforts to effect the authorization set forth in the preceding sentence, JPMS
will incur no liability for JPMS' failure to effect the same.
7. Reports of the execution of orders and statements of Customer's account
shall be conclusive if not objected to in writing, the former within two
days, and the latter within ten days, after forwarding by JPMS to Customer by
mail or otherwise.
8. This agreement and its enforcement shall be governed by the laws of the
State of New York and its provisions shall cover individually and
collectively all accounts which Customer may maintain with JPMS. This
agreement is binding upon and inures to the benefit of JPMS, Customer, and
our respective legal representatives, successors and assigns. No waiver of
any provision of this agreement shall be deemed a waiver of any other
provision, nor a continuing waiver of the provision or provisions so waived.
All waivers must be in writing.
9. Arbitration:
(i) Arbitration is final and binding on the parties
(ii) The parties are waiving their right to seek remedies in court,
including the right to jury trial.
(iii) Pre-arbitration discovery is generally more limited than and
different from court proceedings.
(iv) The arbitrators' award is not required to include factual
findings or legal reasoning and any party's right to appeal or to
seek modification of rulings by the arbitrators is strictly limited.
Page 9 of 16 Pages
<PAGE>
(v) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Customer agrees, and by carrying an account for customer JPMS agrees that all
controversies which may arise between us concerning any transaction or the
construction, performance, or breach of this or any other agreement between
us pertaining to securities and other property, whether entered into prior,
on or subsequent to the date hereof, shall be determined by arbitration. Any
arbitration under this agreement shall be conducted pursuant to the Federal
Arbitration Act and the laws of the State of New York, before the American
Arbitration Association, or before the New York Stock Exchange, Inc. or an
arbitration facility provided by any other exchange of which JPMS is a
member, or the national Association of Securities Dealers, Inc. or the
Municipal Securities Rulemaking Board and in accordance with the rules
obtaining of the selected organization. Customer may elect in the first
instance whether arbitration shall be by the American Arbitration
Association, or by an exchange or self-regulatory organization of which JPMS
is a member, but if customer fails to make such election, by registered
letter or telegram addressed to JPMS at the address shown above, before the
expiration of ten days after receipt of a written request from JPMS to make
such election, then JPMS may make such election. The award of the
arbitrators, or of the majority of them, shall be final, and judgment upon
the award rendered may be entered in any court, state or federal, having
jurisdiction.
10. Customer, if an individual, represents that he or she is of legal age,
and is not an employee of any corporation, firm or individual engaged in the
business of dealing, either as a broker or as principal, in securities,
options, commodity futures, bills of exchange, acceptances or other forms of
commercial paper. Customer further represents that neither Customer nor any
member of his or her immediate family is associated with a firm that is a
member of the NASD, and that Customer is not an employee of an exchange or of
any corporation of which any exchange owns a majority of the capital stock or
of the NASD. Customer further represents that no one except Customer has an
interest in the account or accounts of Customer with JPMS.
11. Communications may be sent to Customer at the address of Customer given
below, or at such other address as Customer may hereafter give to JPMS in
writing, and all communication so sent, whether by mail, telegraph, messenger
or otherwise, shall be deemed given to Customer personally, whether actually
received or not.
12. Customer understands that JPMS may be required to disclose to securities
issuers the name, address and securities positions with respect to securities
held in the subject account in JPMS' name or JPMS' nominee's name unless JPMS
is notified that Customer objects. Customer hereby notifies JPMS that
Customer wishes such disclosure to be made.
Customer should strike out and initial the immediately preceding sentence if
Customer does not consent to such disclosure.
Customer acknowledges that
(i) the securities in Customer's margin account may be loaned to JPMS
or to others, and
(ii) Customer has received a copy of this agreement.
This agreement contains a predispute arbitration clause in paragraph 9 on
page 2.
Page 10 of 16 Pages
<PAGE>
Signature Additional signature(if necessary)
- ------------------------------------ ------------------------------------
Print name Print name
- ------------------------------------ ------------------------------------
Date Date
- ------------------------------------ ------------------------------------
For. J.P. Morgan Securities Inc. use only
Registered Representative
Receiving Account Principal approval by
- ------------------------------------ ------------------------------------
Date Date
- ------------------------------------ ------------------------------------
SPN:
-------------------------------
Page 11 of 16 Pages
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Interest Charges to Customers
Until further notice and except as set forth below, the annual rate of
interest which is charged customers on credit extended to or maintained for
them by J.P. Morgan Securities Inc. ("JPMSI") will be dependent upon the
amount of the debit balance and will be based on the prime broker's loan rate
plus a percentage as shown below:
<TABLE>
<CAPTION>
Debit balance Percentage premium over
Prime broker's loan rate
- ---------------------------------------------------------
<S> <C>
Under $75,000 1 1/4%
$75,001 - $1 million 3/4%
Above $1 million 1/2%
- ---------------------------------------------------------
</TABLE>
The "prime brokers' loan rate" will be computed on a daily basis and
determined by JPMSI for this purpose, in its sole discretion, in accordance
with prevailing money market conditions. In making such determination, JPMSI
will consider, among other things, the rates quoted for brokers' loans by one
or more New York banks which are members of the New York Clearing House
Association. Credit "extended to or maintained" for a customer is any net
debit balance resulting from aggregating the balances in all margin accounts
of the customer and any free credit balances in the cash accounts of the
customer. Credit balances in short accounts are not included in such
computation. Since the foregoing charges are dependent upon the prime
brokers' loan rate, they will change automatically without prior notice to
customers in accordance with changes in the prime brokers' loan rate.
Interest on the basis of the charges described above is computed daily using
a 360 day base year. At the close of each month in which interest is charged
to a customer, the charges will appear on the monthly statement which JPMSI
will mail to the customer. Information with respect to the balances from
which the interest charge is derived will be maintained by JPMSI and will be
made available to the customer upon request.
JPMSI may, but does not necessarily, credit interest on prepayments in cash
accounts (i.e., the payment or crediting to customers of the proceeds of sale
prior to settlement date or prior to the receipt by JPMSI of the item sold in
good deliverable form) at the rate charged on net debit balances in general
margin accounts. Similarly, JPMSI may, but does not necessarily, charge
interest on late payments by customers for securities purchased in cash
accounts at the rate charged on net debit balances in general margin accounts.
Short positions will be "marked to the market" daily. If the aggregate value
of all the securities sold short by the customer appreciates, an amount equal
to such appreciation will be transferred from the customer's general margin
account to his short account resulting in a debit entry in the general margin
account. If the aggregate value of all securities sold short depreciates, an
amount equal to such decline in value will be transferred from the customer's
short account to his general margin account resulting in a credit entry in
the general margin account. The closing price from the previous business day
is used to determine any appreciation or depreciation in the market value of
any security sold short.
You have agreed in your Margin Account Application and Agreement to maintain
at all times margins for your accounts as required by JPMSI from time to
time. JPMSI's general policy is to require the deposit of cash or collateral
on initial transactions as prescribed under Regulation T of the Board of
Governors of the Federal Reserve System. JPMSI will also require the deposit
of cash or additional eligible collateral at such times as may be necessary
to prevent the equity in your accounts from dropping below 35%. The initial
and minimum equity requirement for corporate debt securities which are
determined by JPMSI to be margin eligible will be 30% of the current market
value thereof. For direct U.S. Government obligations and agencies, the
initial margin requirement will be 10% of the principal amount
Page 12 of 16 Pages
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on maturities of one year or greater, and 5% of the principal amount on
maturities of less than one year. Should your equity fall below 5% of the
principal amount on maturities of one year or greater, you will be required
to restore the equity on such positions to 5% of the principal amount. JPMSI
may in any individual case make exceptions to its general policy by requiring
more or less cash or collateral at such time as under the circumstances
appear necessary or appropriate to JPMSI. JPMSI's determination of the
eligibility of collateral and the valuation thereof shall be conclusive.
Page 13 of 16 Pages
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EXHIBIT 2
03-11-99
Board of Directors
TSI Incorporated
Attn: Mr. James E. Doubles
Chairman and Chief Executive Officer
500 Cardigan Road
Shoreview, Minnesota 55126-3996
Gentlemen:
I have for some time been an admirer of TSI and currently own 361,400
shares of its common stock, or approximately 3% of the outstanding shares.
TSI's business prospects seem exciting, and it is disappointing that the
public stock market for micro-capitalization companies like TSI does not
reflect its past results and future prospects. Unfortunately, this does not
seem likely to change in the near future.
As you know, I have had a "get acquainted" meeting with a committee of
your Board (consisting of Messrs. Carlson and Sullivan) and a similar meeting
with Jim Doubles. The purpose of this letter is to convey to you my strong
interest in forming with TSI's current management a private company to
acquire TSI by means of a cash merger. Such a transaction would allow TSI to
proceed with its business under its current management without the need to
address the demands of the public stock market. It would also provide
liquidity to TSI's stockholders at an attractive price.
With your permission, we would like to promptly (i) enter into a
nondisclosure agreement with TSI, so that we can carry our due diligence
beyond publicly filed documents, and (ii) enter into negotiations with your
representatives with the objective of signing a definitive merger agreement.
We anticipate that the cash price per share specified in the merger agreement
would represent a significant premium over the $8 per share average price of
TSI common stock in the past 52 weeks. Typically such premiums have been in
the 30% range, and could be more if due diligence reveals greater values. Our
attorneys have prepared a draft agreement and we are ready to sit down as
soon as possible with your representatives.
We anticipate that the merger agreement would provide for multi-year
employment agreements and meaningful equity participation in the acquiring
entity for current management. The merger agreement would provide that after
the merger agreement was signed and announced, TSI would be entitled to
consider offers from others. As a corollary, the merger agreement would
provide a "break-up fee" to us in the event that another offer resulted in
the merger agreement with us not
Page 14 of 16 Pages
<PAGE>
being consummated. Our goal would be to have the merger agreement signed
within 30 days and then promptly announced.
We ask that you not disclose this letter (other than to your
professional advisors) or make a public announcement concerning this letter
without our consent. While we are not asking for a formal exclusivity period
while we negotiate and attempt to arrive at a merger agreement, we are not
interested in creating or entering into a bidding contest. Our view is that
if we can reach an agreement, that is the appropriate point for TSI to make
an announcement. There is then something to which the market can react.
I would be happy to provide you with further information concerning
Churchill, its track record and its financial capacity. We have acquired two
public companies in the past and are proud of our record as owner of those
businesses.
We look forward to hearing from you as soon as possible. Please
contact me at (612) 673-6701, or John Kopchik at (612) 673-6691.
Sincerely,
John J. Fauth
Page 15 of 16 Pages
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EXHIBIT 3
April 27, 1999
Mr. John J. (Hap) Fauth
Churchill Industries
3100 Metropolitan Cente
333 South Seventh Street
Minneapolis, MN 55402
Dear Mr. Fauth:
The TSI Board of Directors has now had an opportunity to consider your letter
of March 11, 1999, and to re-evaluate the future direction of the company.
We have concluded that it is in the long-term best interest of TSI's
shareholders, employees and other constituencies for us to continue as an
independent, publicly-held corporation.
We thank you for your interest and we welcome you as a shareholder, but we
have decided not to pursue acquisition discussions.
Sincerely,
James E. Doubles
Chairman and CEO
Page 16 of 16 Pages
