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, 1998
[ ] 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)
Not Applicable
(Former name, former address and former fiscal year, if changed sinc 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 March 31, 1998
$1.00 Par Value Common Stock 1,078,358 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
M CORP
INDEX
MARCH 31, 1998
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
March 31, 1998 2
Statements of Income -
Three Months Ended March 31, 1998 and 1997 3
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 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, 1998
ASSETS
Current Assets
Cash $ 15,422,726
Marketable Securities, at Fair Value 2,178,277
Receivables - Net 55,763
Prepaid Expenses 17,900
Total Current Assets 17,674,666
Noncurrent Investments, at Fair Value 8,860,819
Noncurrent Receivables 3,359
Property, Plant and Equipment, Net 1,013,664
TOTAL ASSETS $ 27,552,508
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 213,431
Income Taxes Payable 190,691
Deferred Income Taxes 444,700
Total Current Liabilities 848,822
Provision for Estimated Title and
Escrow Losses 1,023,383
Minority Interests 2,350,474
Deferred Income Taxes 1,891,300
Excess of Fair Value of Net Assets
Acquired Over Cost 54,800
STOCKHOLDERS' EQUITY
Common Stock - $1.00 Par Value,
5,000,000 shares authorized,
3,262,004 shares issued 3,262,004
Paid-In-Capital 15,778,562
Retained Earnings 1,492,221
Unrealized Gains on Investments 3,217,286
Treasury Stock, at Cost (2,366,344)
Total Stockholders' Equity 21,383,729
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,552,508
See Notes to Consolidated Financial Statements
2
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M CORP
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1998 1997
Operating Revenues $ 935,074 $ 6,475,334
Operating Expenses
Salaries & Payroll Costs 213,168 190,803
Other Expenses 181,981 705,706
Total Expenses 395,149 896,609
539,925 5,578,725
Minority Portion of Income (33,198) (309,352)
Income Before Income Taxes 506,727 5,269,373
Income Tax Expense (200,000) (2,251,000)
Net Income $ 306,727 $ 3,018,373
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,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 205,104 $ 316,583
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Purchases of Furniture and Equipment (7,896) -
Proceeds From Sales and Redemptions
of Property, Plant and Equipment - 6,994
Cash Received on Principal of
Notes Receivable 5,599 447
Cash Purchases of Minority Interests (3,234) (255)
Cash Used for Purchases of Marketable
Securities Available For Sale (16,047) (9,041)
Cash Received on Disposition of Marketable
Securities Available For Sale 44,728 5,356,537
Net Cash Provided By
Investing Activities 31,046 5,354,682
NET INCREASE IN CASH 236,150 5,671,265
CASH - BEGINNING OF PERIOD 15,186,576 9,617,265
CASH - END OF PERIOD $15,422,726 $15,288,350
See Notes to Consolidated Financial Statements
4
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M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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, 1998 and the results of the Company's operations and cash flows
for the three months ended March 31, 1998 and 1997.
The results of operations for the three months ended March 31, 1998 and 1997
are not 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.
M Corp is engaged in the title insurance agency business and in the ownership
and rental of properties.
GNI, Inc. owns approximately 65% 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, 1998. The net unrealized holding
gains at March 31, 1998, 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, 1998.
5
<PAGE>
M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1998
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,
1998 and 1997
Increases
(Decreases)
Operating Revenues $(5,540,260) (85.6%)
Operating Expenses $ (501,460) (55.9%)
Net Income $(2,711,646) (89.8%)
Revenues decreased $5,540,260 in the first quarter of 1998 as compared with
the first quarter of 1997 primarily due to the 1997 gain realized by the
Company on the merger of Security Bancorp with and into WesterFed Financial
Corporation which was completed during the first quarter of 1997. During 1997,
the Company recognized a gain on the merger in the pretax amount of
approximately $5,351,000. No such gains were realized during the first
quarter of 1998. The gains recognized during the first quarter of 1997 were
the primary reason for the decrease in revenues and the decrease in net
income in the first quarter of 1998 as compared with the first quarter of
1997. The provision for income tax expense decreased $2,051,000 (91.1%) in
the first quarter of 1998 as compared with the first quarter of 1997 due to
the decrease in pretax income.
6
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M CORP
PART II
OTHER INFORMATION
MARCH 31, 1998
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES NAD USE OF PROCEEDS
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 30, 1998 s/K. King
K. King
Assistant
Secretary-Treasurer
Date: April 30, 1998 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 15422726
<SECURITIES> 2178277
<RECEIVABLES> 55763
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17674666
<PP&E> 1013664
<DEPRECIATION> 0
<TOTAL-ASSETS> 27552508
<CURRENT-LIABILITIES> 848822
<BONDS> 0
<COMMON> 3262004
0
0
<OTHER-SE> 18121725
<TOTAL-LIABILITY-AND-EQUITY> 27552508
<SALES> 0
<TOTAL-REVENUES> 935074
<CGS> 0
<TOTAL-COSTS> 395149
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 506727
<INCOME-TAX> 200000
<INCOME-CONTINUING> 306727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 306727
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
