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, 2000
[ ] 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 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 March 31, 2000
$1.00 Par Value Common Stock 1,565,250 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
M CORP
INDEX
MARCH 31, 2000
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
March 31, 2000 2
Statements of Income and Comprehensive Income -
Three Months Ended March 31, 2000 and 1999 3
Statements of Cash Flows -
Three Months Ended March 31, 2000 and 1999 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, 2000
ASSETS
Current Assets
Cash $ 18,327,598
Marketable Securities, at Fair Value 1,757,246
Receivables - Net 69,103
Income Tax Prepayments 147,941
Prepaid Expenses 31,600
Total Current Assets 20,333,488
Noncurrent Investments, at Fair Value 4,246,977
Property, Plant and Equipment, Net 995,070
TOTAL ASSETS $ 25,575,535
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 307,244
Deferred Income Taxes 27,300
Total Current Liabilities 334,544
Provision for Estimated Title and
Escrow Losses 913,134
Minority Interests 2,265,901
Deferred Income Taxes 326,400
Excess of Fair Value of Net Assets
Acquired Over Cost 38,360
STOCKHOLDERS' EQUITY
Common Stock - $1.00 Par Value,
5,000,000 shares authorized,
3,750,295 shares issued 3,750,295
Capital Surplus 18,266,853
Retained Earnings 1,311,387
Accumulated Other Comprehensive Income 748,695
Treasury Stock, at Cost (2,380,034)
Total Stockholders' Equity 21,697,196
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,575,535
See Notes to Consolidated Financial Statements
2
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M CORP
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months Ended
March 31,
2000 1999
Operating Revenues $ 781,570 $ 955,646
Operating Expenses
Salaries & Payroll Costs 223,770 269,732
Other Expenses 213,366 188,078
437,136 457,810
Operating Income 344,434 497,836
Minority Portion of Income (14,244) (26,973)
Income Before Income Taxes 330,190 470,863
Income Tax Expense (125,000) (190,000)
Net Income 205,190 280,863
Other Comprehensive Income (Loss)
Decrease in Unrealized
Holding Gains,
Net of Income Taxes (220,480) (139,571)
Comprehensive Income (Loss) $ (15,290) $ 141,292
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,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 399,493 $ 462,837
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received on Sales and Redemptions
of Property and Equipment 4,990 -
Cash Purchases of Furniture and Equipment - (5,923)
Cash Purchases of Minority Interests (3,863) (1,677)
Cash Used for Purchases of Marketable
Securities Available For Sale (17,657) (16,932)
Net Cash (Used) By
Investing Activities (16,530) (24,532)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (4,690) -
Dividends Paid In Cash (156,729) (393,254)
Net Cash Provided (Used) By
Financing Activities (161,419) (393,254)
NET INCREASE IN CASH 221,544 45,051
CASH - BEGINNING OF PERIOD 18,106,054 17,931,372
CASH - END OF PERIOD $18,327,598 $17,976,423
See Notes to Consolidated Financial Statements
4
<PAGE>
M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
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, 2000 and the results of the Company's operations and cash flows
for the three months ended March 31, 2000 and 1999.
The results of operations for the three months ended March 31, 2000 and 1999
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.
Members of the Anne Marie and Paul J. McCann family control, directly or
indirectly, approximately 93% 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. In accordance
with SFAS No. 115, the Company's portfolios, current and noncurrent, are
carried at fair value in the Company's balance sheet at March 31, 2000.
The net unrealized holding gain at March 31, 2000, net of the estimated
income tax effects and minority interests in the unrealized holding gains,
is included in Accumulated Other Comprehensive Income at March 31, 2000 in
accordance with the provisions of Financial Accounting Standards No. 130.
Sales to outside concerns, interest revenues and segment operating profit
for the Company's reportable segments were as follows for the period ended
March 31, 2000:
Sales To Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 62,096 $ 99,847 $ 133,166
Title Insurance Operations 348,433 131,289 132,608
Rental Properties 139,905 - 78,660
Consolidated $ 550,434 $ 231,136 $ 344,434
5
<PAGE>
M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 2000
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,
2000 and 1999
Increases
(Decreases)
Operating Revenues $ (174,076) (18.2%)
Operating Expenses $ (20,674) (4.5%)
Net Income $ (75,673) (26.9%)
Revenues decreased $174,076, 18.2%, in the first quarter of 2000 as compared
with the first quarter of 1999 due primarily to decreases in title insurance
premiums and related fees ($218,028; 41.3%) and rent revenues ($11,106; 7.4%)
partially offset by an increase in interest income and other revenues.
The decrease in title insurance premiums and related fees in the first
quarter of 2000 as compared with the first quarter of 1999 was due primarily
to the pirating of key employees from one of the Company's consolidated
subsidiaries by the competition in a manner which the Company considers
unfair trade practices and for which the Company is considering legal
action for the recovery of damages. There also was some decline in the real
estate economies within the Montana communities within which the Company
operates. Operating expenses decreased $20,674, 4.5%, in the first quarter of
2000 as compared with the first quarter of 1999. Salaries and related payroll
costs decreased $45,962, 17.0%, in the first quarter of 2000 as compared with
the first quarter of 1999 due primarily to decreases in the number of
employees in the Company's title insurance operations. The provision for
income tax expense decreased $65,000 (34.2%) in the first quarter of 2000 as
compared with the first quarter of 1999 due to the decrease in pretax income.
6
<PAGE>
M CORP
PART II
OTHER INFORMATION
MARCH 31, 2000
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 28, 2000 s/T. Burnside
T. Burnside,
Assistant
Secretary-Treasurer
Date: April 28, 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 18327598
<SECURITIES> 1757246
<RECEIVABLES> 69103
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20333488
<PP&E> 995070
<DEPRECIATION> 0
<TOTAL-ASSETS> 25575535
<CURRENT-LIABILITIES> 334544
<BONDS> 0
<COMMON> 3750295
0
0
<OTHER-SE> 17946901
<TOTAL-LIABILITY-AND-EQUITY> 25575535
<SALES> 0
<TOTAL-REVENUES> 781570
<CGS> 0
<TOTAL-COSTS> 437434
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 330190
<INCOME-TAX> 125000
<INCOME-CONTINUING> 205190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205190
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
