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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, 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
(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, 2000
$1.00 Par Value Common Stock 1,565,250 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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M CORP
INDEX
SEPTEMBER 30, 2000
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
September 30, 2000 2
Statements of Income and Comprehensive Income -
Three Months and Nine Months Ended
September 30, 2000 and 1999 3
Statements of Cash Flows -
Nine Months Ended September 30, 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
September 30, 2000
ASSETS
Current Assets
Cash $ 19,140,720
Marketable Securities, at Fair Value 1,620,492
Receivables - Net 43,191
Prepaid Expenses 8,900
Total Current Assets 20,813,303
Marketable Securities and
Other Investments, at Fair Value 6,009,870
Property, Plant and Equipment, Net 952,033
TOTAL ASSETS $ 27,775,206
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 303,689
Income Taxes 117,058
Deferred Income Taxes 176,100
Total Current Liabilities 596,847
Provision for Estimated Title and
Escrow Losses 892,340
Minority Interests 2,372,520
Excess of Fair Value of Net Assets
Acquired Over Cost 34,250
Deferred Income Taxes 835,900
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 1,771,581
Accumulated Other Comprehensive Income 1,634,654
Treasury Stock, at Cost (2,380,034)
Total Stockholders' Equity 23,043,349
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,775,206
See Notes to Consolidated Financial Statements
2
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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,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating Revenues $ 872,395 $ 779,323 $2,433,676 $2,611,725
Operating Expenses
Salaries and Payroll
Costs 219,398 242,992 662,890 770,321
Other Expenses 209,475 235,189 664,240 670,143
428,873 478,181 1,327,130 1,440,464
Operating Income 443,522 301,142 1,106,546 1,171,261
Minority Portion of
(Income) Loss (22,797) (12,699) (51,162) (57,092)
Income Before Income
Taxes 420,725 288,443 1,055,384 1,114,169
Income Tax Expense (155,000) (105,000) (390,000) (425,000)
Net Income 265,725 183,443 665,384 689,169
Other Comprehensive Income (Loss)
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes 876,307 (67,816) 665,479 (313,872)
Comprehensive Income (Loss) $1,142,032 $ 115,627 $1,330,863 $ 375,297
</TABLE>
See Notes To Consolidated Financial Statements
3
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M CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By
Operating Activities $ 1,231,353 $ 598,390
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received on Sales and Redemptions
of Property, Plant and Equipment 4,990 -
Capital Expenditures Paid in Cash (16,350) (36,645)
Cash Purchases of Minority Interests (5,164) (2,977)
Cash Used for Purchases of Marketable
Securities Available for Sale (28,537) (28,652)
Cash Received on Disposition of Marketable
Securities Available For Sale 9,793 137,603
Net Cash Provided (Used) By
Investing Activities (35,268) 69,329
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (4,690) (10,220)
Dividends Paid in Cash (156,729) (393,412)
Net Cash (Used) By
Financiang Activities (161,419) (403,632)
NET INCREASE IN CASH 1,034,666 264,087
CASH - BEGINNING OF PERIOD 18,106,054 17,931,372
CASH - END OF PERIOD $19,140,720 $18,195,459
See Notes to Consolidated Financial Statements
4
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M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 financial position as of September 30, 2000
and the results of the Company's operations for the three months and nine
months ended September 30, 2000 and 1999 and cash flows for the nine months
ended September 30, 2000 and 1999.
The results of operations for the three months and nine months ended
September 30, 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. Neither Anne Marie McCann nor Paul J. McCann personally own any
shares of stock of the Company. Paul J. McCann disclaims beneficial
ownership in any shares of stock not directly owned of record by him. Anne
Marie McCann disclaims beneficial ownership in any shares of stock not
directly owned of record by her.
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 September 30, 2000.
The net unrealized holding gain at September 30, 2000, net of the estimated
income tax effects and minority interests in the unrealized holding gains,
is included in Accumulated Other Comprehensive Income at September 30,
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
September 30, 2000:
Sales To Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 40,582 $119,656 $139,157
Title Insurance Operations 416,693 154,819 235,577
Rental Properties 140,645 - 68,788
Consolidated $597,920 $274,475 $443,522
5
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M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 2000
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,
2000 AND 1999 2000 AND 1999
INCREASES (DECREASES)
Revenues $ 93,072 11.9% $ (178,049) (6.8%)
Expenses (49,308) (10.3%) (113,334) (7.9%)
Net Income 82,282 44.9% (23,785) (3.5%)
Revenues decreased $178,049 (6.8%) in the first nine months of 2000 as
compared with the first nine months of 1999 due primarily to decreases in
title insurance premiums and related fees and rent revenues partially offset
by an increase in interest income and other revenues. The decrease in
title insurance premiums and related fees in the first nine months of 2000
as compared with the first nine months of 1999 was due primarily to
the pirating of key employees from one of the Company's consolidated
subsidiaries by the competition. Operating expenses decreased $113,334, 7.9%,
in the first nine months of 2000 as compared with the first nine months of
1999. Salaries and related payroll costs decreased $107,431, 14.0%, in the
first nine months of 2000 as compared with the first nine months 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 $35,000
(8.2%) in the first nine months of 2000 as compared with the first nine
months of 1999 due to the decrease in pretax income.
6
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M CORP
PART II
OTHER INFORMATION
SEPTEMBER 30, 2000
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A meeting of shareholders was held on
September 28, 2000 at which the Company's board
of directors was elected.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
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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, 2000 s/L. K. Smith
L. K. Smith,
Assistant Secretary-Treasurer
Date: October 30, 2000 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
