<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-1008
M CORP
(Exact name of small business issuer as specified in its charter)
Montana
(State or other jurisdiction of incorporation or organization)
81-0268769
(IRS Employer Identification No.)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at September 30, 1995
$1.00 Par Value Common Stock 867,358 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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M CORP
INDEX
SEPTEMBER 30, 1995
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
September 30, 1995 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 1995 and 1994 3
Statements of Cash Flows -
Nine Months Ended September 30, 1995 and 1994 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of the
Consolidated Statements of Income 6
PART II
Other Information 7
Signatures 8
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M CORP
CONSOLIDATED BALANCE SHEET
September 30, 1995
ASSETS
Current Assets
Cash $ 7,902,407
Marketable Securities, at Fair Value 2,431,892
Receivables - Net 95,737
Due From Related Parties 325,878
Total Current Assets 10,755,914
Marketable Securities and Other Investments,
at Fair Value 7,289,113
Noncurrent Receivables 109,502
Property, Plant and Equipment, Net 1,419,698
TOTAL ASSETS $ 19,574,227
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 331,173
Deferred Income Taxes 288,000
Total Current Liabilities 619,173
Provision for Estimated Title and
Escrow Losses 1,143,738
Minority Interests 1,931,098
Excess of Fair Value of Net Assets
Acquired Over Cost 75,350
Deferred Income Taxes 1,486,700
STOCKHOLDERS' EQUITY
Common Stock - $1.00 Par Value, 5,000,000
shares authorized, 3,051,004 shares issued 3,051,004
Paid-In-Capital 1,934,562
Retained Earnings 9,266,373
Unrealized Gains on Investments 2,432,573
Less: Treasury Stock, at Cost (2,366,344)
Total Stockholders' Equity 14,318,168
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,574,227
See Notes to Consolidated Financial Statements
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M CORP
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenues $ 768,672 $1,274,160 $2,107,695 $3,518,726
Operating Expenses
Salaries and Payroll
Costs 284,208 213,833 655,254 671,627
Other Expenses 211,232 265,634 638,460 706,184
495,440 479,467 1,293,714 1,377,811
Operating Income 273,232 794,693 813,981 2,140,915
Gain (Loss) on Sales of
Equipment 10,500 -- 47,853 (1,016)
Minority Portion of
(Income) (30,626) (24,945) (72,746) (81,945)
Income Before Income
Taxes 253,106 769,748 789,088 2,057,954
Income Tax Expense (92,000) (280,000) (280,000) (800,000)
Net Income $ 161,106 $ 489,748 $ 509,088 $1,257,954
Earnings Per Weighted
Average Shares
Outstanding:867,703 in
1995 and 870,869 in
1994) $ .19 $ .56 $ .59 $ 1.44
Dividends Per Share $ .10 $ -- $ .10 $ --
</TABLE>
See Notes To Consolidated Financial Statements
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M CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 9,651 $ 1,901,710
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 93,762 4,876
Cash Received on Principal of
Notes Receivable 2,790 49,193
Cash Purchases of Minority Interests (2,049) (2,190)
Capital Expenditures Paid in Cash (29,481) (6,194)
Cash Used for Purchases of Marketable
Securities Available for Sale (24,795) (111,606)
Cash Received on Disposition of Marketable
Securities Available For Sale 84,515 541,043
Net Cash Provided By Investing
Activities 124,742 475,122
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid in Cash (11,560) --
Cash Purchases of Treasury Stock (3,322) (2,732)
Net Cash (Used) By Financing Activities (14,882) (2,732)
NET INCREASE IN CASH $ 119,511 $ 2,374,100
CASH - BEGINNING OF PERIOD 7,782,896 5,073,852
CASH - END OF PERIOD $ 7,902,407 $ 7,447,952
See Notes to Consolidated Financial Statements
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M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
In the opinion of management, all adjustments necessary (consisting of
only normal recurring accruals) have been made to the unaudited financial
statements to present fairly the financial position as of September 30,
1995 and the results of the Company's operations for the three months and
nine months ended September 30, 1995 and 1994 and cash flows for the nine
months ended September 30, 1995 and 1994.
The results of operations for the three months and nine months ended
September 30, 1995 and 1994 are not necessarily indicative of the results
to be expected for the full year.
The consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries and its majority owned subsidiaries.
All significant intercompany transactions and balances have been eliminated
in consolidation.
Earnings Per Share -
The computation of earnings per share in the accompanying statements
is based on the weighted average number of shares outstanding during each
period.
Lines of Business -
The Company is engaged in the title insurance agency business and in
the ownership and rental of properties.
GNI, Inc. owns approximately 80% of the Company's issued and
outstanding common stock.
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115 (SFAS No. 115) effective January 1, 1994. The
Company has classified its investments, both current and noncurrent, in
debt and equity securities as Available-For-Sale, in accordance with the
various classifications of securities contained in SFAS No. 115.
In accordance with SFAS No. 115, the Company's portfolios, current and
noncurrent, of Available-For-Sale investments are carried at fair value in
the Company's balance sheet at September 30, 1995. The net unrealized
holding gains at September 30, 1995, net of the estimated income tax
effects and minority interests in the unrealized holding gains, is
reported as a separate component of stockholders' equity at September 30,
1995.
During 1994, the Company recovered $1,060,000 in full settlement of an
obligation owed to the Company which had been reserved in a previous year
as uncollectible.
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M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 1995
A summary of the period to period changes in items included in the
statements of income is shown below.
COMPARISON OF
THREE MONTHS NINE MONTHS
ENDED ENDED
September 30, September 30,
1995 AND 1994 1995 AND 1994
INCREASES (DECREASES)
Operating
Revenues $ (505,488) (39.7%) $(1,411,031) (40.1%)
Operating
Expenses 15,973 3.3% (84,097) (6.1%)
Net Income (328,642) (67.1%) (748,866) (59.5%)
Net income decreased $748,866 (59.5%) in the first nine months of 1995
as compared with the first nine months of 1994 due primarily to the recovery
in 1994 of $1,060,000 of an obligation which was owed to the Company and
which had been reserved in a previous year as uncollectible. Revenues
decreased $1,411,031 (40.1%) in the first nine months of 1995 as compared
with the first nine months of 1994 partially as a result of the 1994 recovery
referred to above and partially due to a decrease, $367,645 (25.0%), in title
insurance and related revenues. The decrease in title insurance and related
revenues was due primarily to a decrease in the real estate economies within
which the Company operates.
Operating expenses decreased $84,097 (6.1%) in the first nine months
of 1995 as compared with the first nine months of 1994 due primarily to a
decrease in expenses associated with the Company's title insurance operations.
The provision for income taxes decreased $520,000 (65.0%) in the first
nine months of 1995 as compared with the first nine months of 1994 due to a
decrease in pre-tax income.
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M CORP
PART II
OTHER INFORMATION
SEPTEMBER 30, 1995
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
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M CORP
SIGNATURES
In accordance with the requirements of
the Exchange Act, the registrant has caused
this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
M CORP
Registrant
Date: October 30, 1995 s/T. D. Lampkins
T. D. Lampkins
Assistant Secretary-Treasurer
Date: October 30, 1995 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the unaudited financial statements contained in the Company's Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 7,902,407
<SECURITIES> 2,431,892
<RECEIVABLES> 95,737
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,755,914
<PP&E> 1,419,698
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,574,227
<CURRENT-LIABILITIES> 619,173
<BONDS> 0
<COMMON> 3,051,004
0
0
<OTHER-SE> 11,267,164
<TOTAL-LIABILITY-AND-EQUITY> 19,574,227
<SALES> 0
<TOTAL-REVENUES> 2,107,695
<CGS> 0
<TOTAL-COSTS> 1,293,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 789,088
<INCOME-TAX> 280,000
<INCOME-CONTINUING> 509,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 509,088
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
