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 March 31, 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 (IRS Employer Identification No.)
of incorporation or organization)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
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 March 31, 1996
$1.00 Par Value Common Stock 867,358 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
M CORP
INDEX
MARCH 31, 1996
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
March 31, 1996 2
Statements of Income -
Three Months Ended March 31, 1996 and 1995 3
Statements of Cash Flows -
Three Months Ended March 31, 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 MARCH 31, 1996
ASSETS
Current Assets
Cash $ 8,951,564
Marketable Securities, at Fair Value 2,570,006
Receivables - Net 56,783
Prepaid Expenses 22,300
Total Current Assets 11,600,653
Marketable Securities and Other Investments,
at Fair Value 7,287,088
Noncurrent Receivables 111,209
Property, Plant and Equipment, Net 1,347,858
TOTAL ASSETS $ 20,346,808
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 250,961
Income Taxes Payable 148,783
Deferred Income Taxes 344,400
Total Current Liabilities 744,144
Provision for Estimated Title and
Escrow Losses 1,110,293
Minority Interests 1,984,293
Excess of Fair Value of Net Assets
Acquired Over Cost 71,240
Deferred Income Taxes 1,483,400
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 9,833,217
Unrealized Gains on Investments 2,500,999
Teasury Stock, at Cost (2,366,344)
Total Stockholders' Equity 14,953,438
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,346,808
See Notes to Consolidated Financial Statements
2
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M CORP
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1996 1995
Operating Revenues $ 835,502 $ 644,563
Operating Expenses
Salaries & Payroll Costs 183,657 180,119
Other Expenses 171,616 208,427
Total Expenses 355,273 388,546
480,229 256,017
Amortization of Deferred Credit 2,055 2,055
Minority Portion of (Income) (32,450) (16,900)
Income Tax Expense (172,000) (81,500)
Net Income $ 277,384 $ 159,672
Earnings Per Weighted Average Shares
Outstanding: (867,358 in 1996 and
868,210 in 1995) $ .32 $ .18
Dividends Per Share $ -- $ --
See Notes to Consolidated Financial Statements
3
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M CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided (Used) By Operating
Activities $ 372,464 $ (212,385)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 1,289 -
Cash Received on Principal of
Notes Receivable 945 940
Cash Purchases of Minority Interests - (497)
Capital Expenditures Paid in Cash - (1,339)
Cash Used for Purchases of Marketable
Securities Available For Sale (66,904) (4,910)
Cash Received on Disposition of Marketable
Securities Available For Sale 204,375 82,840
Net Cash Provided By Investing
Activities 139,705 77,034
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Payments Received From Affiliates 306,878 -
Cash Purchases of Treasury Stock - (2,176)
Net Cash Provided (Used) By
Financing Activities 306,878 (2,176)
NET INCREASE (DECREASE) IN CASH 819,047 (137,527)
CASH - BEGINNING OF PERIOD 8,132,517 7,782,896
CASH - END OF PERIOD $8,951,564 $7,645,369
See Notes to Consolidated Financial Statements
4
<PAGE>
M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
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 Company's financial position as of
March 31, 1996 and the results of the Company's operations and cash flows
for the three months ended March 31, 1996 and 1995.
The results of operations for the three months ended March 31, 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,
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.
M Corp 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 March 31, 1996. The net unrealized holding
gains at March 31, 1996, 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 March 31, 1996.
5
<PAGE>
M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1996
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
Three Months
Ended
March 31,
1996 and 1995
Increases
(Decreases)
Operating Revenues $ 190,939 29.6%
Operating Expenses $ (33,273) (8.6%)
Net Income $ 117,712 73.7%
Operating revenues increased $190,939, 29.6%, in the first quarter of 1996 as
compared with the first quarter of 1995. During the first quarter of 1996,
the Company realized net gains on the disposition of avaliable-for-sale
investments in the amount of $134,091 whereas a net loss on the disposition
of available-for-sale investments was incurred in the first quarter of 1995
in the amount of $19,418. Revenues from the Company's title insurance
operations increased $57,991, 18.1%, in the first quarter of 1996 as compared
with the first quarter of 1995 due primarily to an increase in the real estate
economies within which the Company operates.
Depreciation expense decreased $10,211, 30.8%, in the first quarter of 1996
as compared wqith the first quarter of 1995 due in part to the sale of
properties during 1995 and in part to the full depreciation of equipment
during 1995.
Other expenses decreased $26,149, 14.9%, in the first quarter of 1996 as
compared with the first quarter of 1995 due in part to the sale of
properties during 1995 and in part to lower maintenance and repair expenses.
The provision for income tax expense increased $90,500, 111.0%, in the first
quarter of 1996 as compared with the first quarter of 1995 due primarily to
the increase in pre-tax income which was primarily the result of the net gains
realized on the disposition of available-for-sale investments.
6
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M CORP
PART II
OTHER INFORMATION
MARCH 31, 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
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
M CORP
Registrant
Date: April 29, 1996 s/N. Scott Atchison
N. Scott Atchison
Assistant Secretary-Treasurer
Date: April 29, 1996 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
<PAGE>
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,951,564
<SECURITIES> 2,570,006
<RECEIVABLES> 56,783
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,600,653
<PP&E> 1,347,858
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,346,808
<CURRENT-LIABILITIES> 744,144
<BONDS> 0
<COMMON> 3,051,004
0
0
<OTHER-SE> 11,902,434
<TOTAL-LIABILITY-AND-EQUITY> 20,346,808
<SALES> 0
<TOTAL-REVENUES> 835,502
<CGS> 0
<TOTAL-COSTS> 355,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 449,384
<INCOME-TAX> 172,000
<INCOME-CONTINUING> 277,384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 277,384
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
