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 June 30, 1996
[ ] 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 81-0268769
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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 June 30, 1996
$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
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
June 30, 1996 2
Statements of Income -
Three Months and Six Months Ended June 30, 1996
and 1995. 3
Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 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
1
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M CORP
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
ASSETS
Current Assets
Cash $ 8,844,576
Marketable Securities, at Market 2,584,180
Receivables - Net 114,514
Income Tax Prepayments 74,367
Prepaid Expenses 10,900
Total Current Assets 11,628,537
Marketable Securities and Other Investments 7,597,425
Noncurrent Receivables 110,113
Property, Plant and Equipment, Net 1,324,856
TOTAL ASSETS $ 20,660,931
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 194,685
Deferred Income Taxes 349,800
Total Current Liabilities 544,485
Provision for Estimated Title and
Escrow Losses 1,092,233
Minority Interests 2,025,023
Excess of Fair Value of Net Assets
Acquired Over Cost 69,185
Deferred Income Taxes 1,608,800
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 10,028,122
Unrealized Gains on Investments 2,673,861
Treasury Stock, at Cost (2,366,344)
Total Stockholders' Equity 15,321,205
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,660,931
See Notes to Consolidated Financial Statements
2
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M CORP
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months For the Six Months
Ended Ended
June 30, June 30,
1996 1995 1996 1995
Operating Revenues $ 778,778 $ 692,405 $1,616,335 $1,339,023
Operating Expenses
Salaries and Payroll
Costs 198,548 190,927 382,205 371,046
Other Expenses 243,498 218,801 415,114 427,228
442,046 409,728 797,319 798,274
Operating Income 336,732 282,677 819,016 540,749
Gain (Loss) on Sales of
Equipment - 37,353 - 37,353
Minority Portion of
(Income) (24,277) (25,220) (56,727) (42,120)
Income Before Income
Taxes 312,455 294,810 762,289 535,982
Income Tax Expense (118,000) (106,500) (290,000) (188,000)
Net Income $ 194,455 $ 188,310 $ 472,289 $ 347,982
Earnings Per Weighted
Average Shares
Outstanding (867,358 in
1996 and 867,876 in
1995) $ .22 $ .22 $ .54 $ .40
Dividends Per Share $ -- $ -- $ -- $ --
See Notes To Consolidated Financial Statements
3
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M CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided (Used) By Operating
Activities $ 265,027 $ (409,620)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 5,523 83,262
Cash Received on Principal of
Notes Receivable 1,914 1,896
Cash Purchases of Minority Interests (1,496) (1,728)
Capital Expenditures Paid in Cash - (25,889)
Cash Used for Purchases of Marketable
Securities Available for Sale (71,887) (21,813)
Cash Received on Dispostion of Marketable
Securities Available for Sale 206,100 82,915
Net Cash Provided By Investing Activities 140,154 118,643
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Payments Received From Affiliates 306,878 -
Cash Purchases of Treasury Stock - (3,322)
Net Cash Provided (Used) By
Financing Activities 306,878 (3,322)
NET INCREASE (DECREASE) IN CASH 712,059 (294,299)
CASH - BEGINNING OF PERIOD 8,132,517 7,782,896
CASH - END OF PERIOD $ 8,844,576 $ 7,488,597
See Notes to Consolidated Financial Statements
4
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M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 June 30, 1996 and
the results of the Company's operations for the three months and six months
ended June 30, 1996 and 1995 and cash flows for the six months ended June 30,
1996 and 1995.
The results of operations for the three months and six months ended June 30,
1996 and 1995 are not necessarily indicative of the results to be expected
for the full year.
The consolidated financial statements include the accounts of the Company 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 -
M Corp is engaged in the title insurance business and in the ownership and
rental of properties.
GNI, Inc. owns approximately 81% of the Company's issued and outstanding
common stock.
The Company adopted the provisions of Statement of Finanacial 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 Availabe-For-Sale investments are carried at fair value in the
Company's balance sheet at June 30, 1996. The net unrealized holding gain at
June 30, 1996, net of the estimated income tax effects and minority interests
in the unrealized holding gains, is reported as a separate component of
stockholders's equity at June 30, 1996.
5
<PAGE>
M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
JUNE 30, 1996
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 AND 1995 1996 AND 1995
INCREASES (DECREASES)
Operating
Revenues $ 86,373 12.5% $ 277,312 20.7%
Operating
Expenses 32,318 7.9% (955) .1%
Net Income 6,145 3.3% 124,307 35.7%
Operating revenues increased $277,312, 20.7%, in the first six months of
1996 as compared with the first six months of 1995. During the first six
months of 1996, the Company realized net gains on the disposition of
available-for-sale investments in the amount of $135,728 whereas a net loss
in the amount of $19,392 was incurred on the disposition of available-for-
sale investments during the first six months of 1995. Revenues from the
Company's title insurance operations increased $137,106, 20.2%, in the first
six months of 1996 as compared with the first six months of 1995 due
primarily to an increase in the real estate economies within which the
Company operates.
Salaries and payroll costs increased $11,159, 3.0%, in the first six months
of 1996 as compared with the first six months of 1995 due primarily to an
increase in payroll rates and an increase in the number of employees
employed in the Company's title insurance operations.
The provision for income taxes increased $102,000, 54.3%, in the first six
months of 1996 as compared with the first six months of 1995 due primarily
to the increase in pre-tax income.
6
<PAGE>
M CORP
PART II
OTHER INFORMATION
JUNE 30, 1996
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
7
<PAGE>
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: July 29, 1996 s/N. Scott Atchison
N. Scott Atchison,
Assistant Secretary-Treasurer
Date: July 29, 1996 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
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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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,844,576
<SECURITIES> 2,584,180
<RECEIVABLES> 114,514
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,628,537
<PP&E> 1,324,856
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,660,931
<CURRENT-LIABILITIES> 544,485
<BONDS> 0
<COMMON> 3,051,004
0
0
<OTHER-SE> 12,270,201
<TOTAL-LIABILITY-AND-EQUITY> 20,660,931
<SALES> 0
<TOTAL-REVENUES> 1,616,315
<CGS> 0
<TOTAL-COSTS> 797,319
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 762,289
<INCOME-TAX> 290,000
<INCOME-CONTINUING> 472,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 472,289
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
