UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 2000
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to _________
----------------------------------------------------
Commission File Number 0-13928
U.S. GLOBAL INVESTORS, INC.
(Exact name of registrant as specified in its charter)
----------------------------------------------------
TEXAS 74-1598370
(State Or Other Jurisdiction Of (IRS Employer Identification Number)
Incorporation Or Organization)
7900 CALLAGHAN ROAD 78229-1234
San Antonio, Texas (Zip Code)
(Address Of Principal Executive Offices)
(210) 308-1234
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Not Applicable
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES [x] NO [x]
On November 10, 2000, there were 6,299,474 shares of Registrant's class A common
stock issued and 6,034,794shares of Registrant's class A common stock issued and
outstanding, no shares of Registrant's class B non-voting common shares
outstanding and 1,496,800 shares of Registrant's class C common stock issued and
outstanding.
<PAGE>
I N D E X
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -- September 30, 2000,
(Unaudited) and June 30, 2000 ................................. 3
Consolidated Statements of Operations and Comprehensive
Income (Unadited) -- Three-Month Period Ended
September 30, 2000 and 1999 ................................... 5
Consolidated Statements of Cash Flows (Unaudited) --
Three-Month Period Ended September 30, 2000 and 1999 .......... 6
Notes to Consolidated Financial Statements (Unaudited) ........... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .............................. 8
ITEM 3. MARKET RISK DISCLOSURES ....................................... 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................. 10
SIGNATURES ............................................................... 11
EXHIBIT 11 -- SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE ............ 12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30, JUNE 30,
2000 2000
---------- ----------
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $1,895,908 $1,356,903
Trading securities, at fair value 1,584,036 1,424,120
Receivables:
Mutual funds 95,531 779,809
Other 613,385 447,548
Prepaid expenses 274,814 350,729
Deferred tax asset 173,299 215,077
---------- ----------
TOTAL CURRENT ASSETS 4,636,973 4,574,186
---------- ----------
NET PROPERTY AND EQUIPMENT 2,244,791 2,278,744
---------- ----------
OTHER ASSETS
Restricted investments 240,000 240,000
Long-term deferred tax asset 796,317 836,056
Investment securities available-for-sale,
at fair value 1,045,857 1,159,042
Other 30,596 30,596
---------- ----------
TOTAL OTHER ASSETS 2,112,770 2,265,694
---------- ----------
TOTAL ASSETS $8,994,534 $9,118,624
========== ==========
The accompanying notes are an integral part of these statements.
3
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
SEPTEMBER 30, JUNE 30,
2000 2000
------------ ------------
(UNAUDITED)
CURRENT LIABILITIES
Accounts payable $ 280,390 $ 498,632
Accrued compensation and related costs 238,831 298,826
Current portion of notes payable 1,120,644 68,257
Current portion of annuity and
contractual obligation 8,487 8,487
Other accrued expenses 518,227 561,975
------------ ------------
TOTAL CURRENT LIABILITIES 2,166,579 1,436,177
------------ ------------
Notes payable-net of current portion -- 1,066,705
Annuity and contractual obligations 129,189 131,256
------------ ------------
TOTAL NON-CURRENT LIABILITIES 129,189 1,197,961
------------ ------------
TOTAL LIABILITIES 2,295,768 2,634,138
------------ ------------
SHAREHOLDERS' EQUITY
Common stock (Class A) - $.05 par value;
non-voting; authorized, 7,000,000
shares 314,974 314,974
Common stock (Class C) - $.05 par value;
voting; authorized, 1,750,000 shares 74,840 74,840
Additional paid-in-capital 10,590,919 10,578,419
Treasury stock, class A shares at cost;
264,680 and 282,350 shares at
September 30, 2000 and June 30,
2000, respectively (598,951) (637,298)
Accumulated other comprehensive gain (loss),
net of tax 18,722 (51,771)
Accumulated deficit (3,701,738) (3,794,678)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 6,698,766 6,484,486
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 8,994,534 $ 9,118,624
============ ============
The accompanying notes are an integral part of these statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2000 1999
---------- -----------
REVENUE
Investment advisory fees $1,605,629 $ 1,466,242
Transfer agent fees 681,204 760,166
Custodial and administrative fees 89,250 129,373
Investment income (loss) 361,705 (58,877)
Other 111,872 95,592
---------- -----------
2,849,660 2,392,496
---------- -----------
EXPENSES
General and administrative 2,602,145 2,209,363
Depreciation and amortization 71,335 88,194
Interest expense 29,850 13,468
---------- -----------
2,703,330 2,311,025
---------- -----------
INCOME BEFORE EQUITY INTEREST
AND INCOME TAXES 146,330 81,471
---------- -----------
Equity In Net Income of Affiliate -- 51,739
---------- -----------
INCOME BEFORE INCOME TAXES 146,330 133,210
PROVISION FOR FEDERAL INCOME TAXES
Tax Expense 45,203 23,773
---------- -----------
NET INCOME $ 101,127 $ 109,437
Other comprehensive income (loss),
net of tax:
Unrealized gains (losses) on
available-for-sale securities 70,493 (12,233)
---------- -----------
COMPREHENSIVE INCOME $ 171,620 $ 97,204
========== ===========
BASIC AND DILUTED NET INCOME PER SHARE $ 0.01 $ 0.02
========== ===========
The accompanying notes are an integral part of these statements.
5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2000 1999
---------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 101,127 $ 109,437
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 71,335 88,194
Net gain on sales of
available-for-sale securities (32,662) --
Provision for deferred taxes 45,203 23,773
Changes in assets and liabilities,
impacting cash from operations:
Accounts receivable 518,441 (275,547)
Prepaid expenses and other 75,915 91,000
Trading securities (14,742) (32,708)
Accounts payable and accrued
expenses (321,985) (65,360)
---------- -----------
Total adjustments 341,505 (170,648)
---------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 442,632 (61,211)
---------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (37,382) (34,349)
Proceeds from redemption of
equity affiliate -- 100,000
Purchase of available-for-sale
securities (130,134) --
Proceeds on sale of
available-for-sale securities 237,614 --
---------- -----------
NET CASH PROVIDED BY INVESTING
ACTIVITIES 70,098 65,651
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on annuity (2,067) (1,928)
Payments on note payable (14,318) (11,931)
Proceeds from issuance or
exercise of stock, warrants,
and options 42,660 38,263
Purchase of treasury stock -- (1,741)
---------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 26,275 22,663
---------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 539,005 27,103
BEGINNING CASH AND CASH EQUIVALENTS 1,356,903 1,025,247
---------- -----------
ENDING CASH AND CASH EQUIVALENTS $1,895,908 $ 1,052,350
========== ===========
Supplemental Disclosures of
Cash Flow Information:
Cash paid for interest $ 29,850 $ 13,468
The accompanying notes are an integral part of these statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods presented. U.S. Global
Investors, Inc. (the Company or U.S. Global) has consistently followed the
accounting policies set forth in the Notes to the Consolidated Financial
Statements in the Company's Form 10-K for the year ended June 30, 2000.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, United Shareholder Services, Inc. (USSI),
Security Trust & Financial Company (STFC), A&B Mailers, Inc. (A&B), U.S. Global
Investors (Guernsey) Limited (USGG), U.S. Global Brokerage, Inc. (USGB), and
U.S. Global Administrators, Inc. (USGA).
All significant inter-company balances and transactions have been eliminated in
consolidation. Certain amounts have been reclassified for comparative purposes.
The results of operations for the three-month period ended September 30, 2000,
are not necessarily indicative of the results to be expected for the entire
year.
NOTE 2. INVESTMENTS
The Company accounts for its investment securities in accordance with SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities. Accordingly,
the cost of investments classified as trading at September 30, 2000, and June
30, 2000, was $1,875,886 and $1,832,282, respectively. The market value of
investments classified as trading at September 30, 2000, and June 30, 2000, was
$1,584,036 and $1,424,120, respectively. The net change in unrealized holding
gains (losses) on trading securities held at September 30, 2000, and 1999, which
has been included in income for the quarter is $116,312 and ($80,914),
respectively. Sales of trading securities generated realized gains of $183,027
and $0 for the quarter ended September 30, 2000, and 1999, respectively.
The cost of investments in securities classified as available-for-sale, which
may not be readily marketable at September 30, 2000, and June 30, 2000, was
$1,017,491 and $1,237,483, respectively. These investments are reflected as
non-current assets on the consolidated balance sheet at their fair value at
September 30, 2000, and June 30, 2000, of $1,045,857 and $1,159,042,
respectively, with $18,722 and ($51,771), respectively, net of tax, in
unrealized gains (losses) being recorded as a separate component of
shareholders' equity. These investments are in private placements, which are
restricted for sale as of the balance sheet dates.
Due to corporate actions during the quarter ended September 30, 2000, certain
securities, which were formerly classified as available-for-sale, were converted
into different securities, which were classified as trading. A transfer of
$145,173 in cost basis from the available-for-sale to trading category occurred
as a result.
NOTE 3. INVESTMENT ADVISORY, TRANSFER AGENT AND OTHER FEES
The Company serves as investment adviser to U.S. Global Investors Funds (USGIF)
and U.S. Global Accolade Funds (USGAF) and receives a fee based on a specified
percentage of net assets under management. The Company also serves as transfer
agent to USGIF and USGAF and receives a fee based on the number of shareholder
accounts. Additionally, the Company provides in-house legal services to USGIF
and USGAF, and the Company also receives certain miscellaneous fees directly
from USGIF and USGAF shareholders. Fees for providing services to USGIF and
USGAF continue to be the Company's primary revenue source.
The Company receives additional revenue from several sources including custodian
and administrative fee revenues, revenues from miscellaneous transfer agency
activities including lockbox functions, mailroom operations from A&B, as well as
gains on marketable securities transactions.
The Company has voluntarily waived or reduced its advisory fee and/or has agreed
to pay expenses on several USGIF funds through June 30, 2001, or such later date
as the Company determines. The aggregate amount of fees waived and expenses
borne by the Company for the three-month period ended September 30, 2000, and
1999, was $547,812 and $530,442, respectively.
The investment advisory and related contracts between the Company and USGIF will
expire on February 28, 2001, and the contracts between the Company and USGAF
will expire on March 8, 2001, respectively. Management anticipates the board of
trustees of both USGIF and USGAF will renew the contracts.
NOTE 4. BORROWINGS
The Company has a note payable to a bank which is secured by land, an office
building and related improvements. As of September 30, 2000, the balance on the
note was $1,117,656. The loan is currently amortizing over a twenty-year period
with payments of both principal and interest due monthly based on a floating
rate of Bank OneTexas Prime plus 0.25%. The current monthly payment is $11,750,
and matures on July 1, 2001. Under this agreement, the Company must maintain
certain financial covenants. The Company is in full compliance with its
financial covenants at September 30, 2000.
Effective July 1, 2000, the note payable was moved entirely into current
liabilities. The Company is currently in the process of negotiating an extension
to the note. Additionally, the Company believes it has adequate cash, cash
equivalents, and equity in the underlying asset to retire the obligation if
necessary.
NOTE 5. INCOME TAXES
Provisions for income taxes include deferred taxes for temporary differences in
the bases of assets and liabilities for financial and tax purposes, resulting
from the use of the liability method of accounting for income taxes. For federal
income tax purposes at September 30, 2000, the Company has net operating losses
(NOLs) of approximately $1.4 million, which will expire in fiscal 2007 and 2010,
charitable contribution carry-overs of approximately $209,000 expiring between
2000 and 2005, and alternative minimum tax credits of $132,128 with indefinite
expirations. Certain changes in the Company's ownership may result in a
limitation on the amount of NOLs that could be utilized under Section 382 of the
Internal Revenue Code. If certain changes in the Company's ownership occur
subsequent to September 30, 2000, there could be an annual limitation on the
amount of NOLs that could be utilized.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax amount will not be realized. Management included a
valuation allowance of approximately $278,000 and $293,000 at September 30,
2000, and June 30, 2000,respectively, providing for the utilization of NOLs,
charitable contributions, and investment tax credits against future taxable
income.
NOTE 6. FINANCIAL INFORMATION BY BUSINESS SEGMENT
The Company operates principally in two business segments: providing mutual fund
investment management services to its clients, and investing for its own account
in an effort to add growth and value to its cash position. The following
schedule details total revenues and income (loss) by business segment:
INVESTMENT
MANAGEMENT CORPORATE CONSOLI-
SERVICES INVESTMENT DATED
----------- ----------- ----------
THREE MONTHS ENDED SEPTEMBER 30, 2000:
Net revenues $ 2,517,659 $ 332,001 $2,849,660
=========== =========== ==========
Net income (loss) before
income taxes $ (185,671) $ 332,001 $ 146,330
=========== =========== ==========
Depreciation and amortization $ 71,335 $ -- $ 71,335
=========== =========== ==========
Interest expense $ 29,850 $ -- $ 29,850
=========== =========== ==========
Capital expenditures $ 37,383 $ -- $ 37,383
=========== =========== ==========
Gross identifiable assets at
September 30, 2000 $ 5,375,737 $ 2,658,259 $8,033,996
Deferred tax asset 979,260
Accumulated other
comprehensive gain (18,722)
----------
Consolidated total assets at
September 30, 2000 $8,994,534
==========
INVESTMENT
MANAGEMENT CORPORATE CONSOLI-
SERVICES INVESTMENT DATED
----------- ----------- ----------
THREE MONTHS ENDED SEPTEMBER 30, 1999:
Net revenues $ 2,473,410 $ (80,914) $2,392,496
=========== =========== ==========
Income (loss) before income
taxes and equity interest $ 162,385 $ (80,914) $ 81,471
Equity in net loss of affiliate -- 51,739 51,739
----------- ----------- ----------
Net income (loss) before income
taxes $ 162,385 $ (29,175) $ 133,210
=========== =========== ==========
Depreciation and amortization $ 88,194 $ -- $ 88,194
=========== =========== ==========
Interest expense $ 13,468 $ -- $ 13,468
=========== =========== ==========
Capital expenditures $ 34,349 $ -- $ 34,349
=========== =========== ==========
Gross identifiable assets at
September 30, 1999 $ 5,658,770 $ 1,790,244 $7,449,014
Deferred tax asset 1,002,170
Accumulated other
comprehensive loss 87,171
----------
Consolidated total assets at
September 30, 1999 $8,538,356
==========
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company has made forward-looking statements concerning the Company's
performance, financial condition, and operations in this quarterly report. The
Company from time to time may also make forward-looking statements in its public
filings and press releases. Such forward-looking statements are subject to
various known and unknown risks and uncertainties and do not guarantee future
performance. Actual results could differ materially from those anticipated in
such forward-looking statements due to a number of factors, some of which are
beyond the Company's control, including (i) the volatile and competitive nature
of the investment management industry, (ii) changes in domestic and foreign
economic conditions, (iii) the effect of government regulation on the Company's
business, and (iv) market, credit, and liquidity risks associated with the
Company's investment management activities. Due to such risks, uncertainties,
and other factors, the Company cautions each person receiving such forward
looking information not to place undue reliance on such statements. All such
forward looking statements are current only as of the date on which such
statements were made.
BUSINESS SEGMENTS
U.S. Global Investors, Inc. (the Company), with principal operations located in
San Antonio, Texas manages two business segments: (1) the Company offers a broad
range of investment management products and services to meet the needs of
individual and institutional investors, and (2) the Company invests for its own
account in an effort to add growth and value to its cash position.
The Company generates substantially all its operating revenues from the
investment management of products and services for the U.S. Global Investors
Funds (USGIF) and U.S. Global Accolade Funds (USGAF). Notwithstanding that the
Company generates the majority of its revenues from this segment, the Company
holds a significant amount of its total assets in investments. The following is
a brief discussion of the Company's two business segments.
INVESTMENT MANAGEMENT PRODUCTS AND SERVICES
As noted above, the Company generates substantially all of its revenues from
managing and servicing USGIF and USGAF. These revenues are largely dependent on
the total value and composition of assets under its management. Fluctuations in
the markets and investor sentiment directly impact the funds' asset levels,
thereby, affecting income and results of operations. During the quarter ended
September 30, 2000, assets under management in USGIF averaged $1.08 billion
versus $1.20 billion for the quarter ended September 30, 1999. This decline was
primarily due to declines in gold-related and money market assets. Assets under
management in USGAF averaged $265 million for the quarter ended September 30,
2000 versus $146 million for the quarter ended September 30, 1999. This increase
was primarily attributable to growth in the Bonnel Growth Fund.
INVESTMENT ACTIVITIES
Management believes it can more effectively manage the Company's cash position
by broadening the types of investments used in cash management, and continues to
believe that such activities are in the best interest of the Company. These
activities are reviewed and monitored by Company compliance personnel and
various reports are provided to investment advisory clients. On September 30,
2000, the Company held approximately $2.6 million in investment securities. The
value of these investments is approximately 29 percent of total assets and 39
percent of shareholders' equity at period end. Investment income from these
investments includes realized gains and losses, unrealized gains and losses on
trading securities, and dividend and interest income. This source of revenue
does not remain at a consistent level and is dependent on market fluctuations,
the Company's ability to participate in investment opportunities, and timing of
transactions. For the quarter ended September 30, 2000, the Company had realized
gains of approximately $216,000 compared with no gains or losses for the quarter
ended September 30, 1999. The Company expects that gains will continue to
fluctuate in the future.
8
<PAGE>
RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 2000 AND 1999
The Company posted net after-tax income of $101,127 ($0.01 income per share) for
the quarter ended September 30, 2000, compared to net income of $109,437 ($0.02
income per share) for the quarter ended September 30, 1999. Net income remained
relatively flat as an increase in investment income of $421,000 was offset by
increased general and administrative expenses of $393,000.
REVENUES
Total consolidated revenues for the quarter ended September 30, 2000, increased
approximately $457,000, or 19%, compared to the quarter ended September 30,
1999. This was primarily due to the increase in investment income discussed
above. During the quarter ended September 30, 2000, the Company also experienced
an increase in investment advisory fees of $139,000, or 10%, compared to the
quarter ended September 30, 1999. The growth in assets of the Bonnel Growth Fund
is responsible for this increase, though it was offset somewhat by declines in
gold-related and money market assets. Transfer agent fees for the quarter ended
September 30, 2000, decreased $79,000, or 10%, compared to the quarter ended
September 30, 1999. This is due to a decline in the consolidated number of
shareholder accounts.
EXPENSES
Total consolidated expenses for the quarter ended September 30, 2000, increased
approximately $392,000, or 17 percent, compared to the quarter ended September
30, 1999. This increase, as noted above, was largely due to increased general
and administrative expenses. Specifically, the Company saw increases in
sub-advisory fees ( which grew proportionately with the asset growth in the
Bonnel Growth Fund), health insurance costs, and consulting fees.
INCOME TAXES
Provisions for income taxes include deferred taxes for temporary differences in
the bases of assets and liabilities for financial and tax purposes, resulting
from the use of the liability method of accounting for income taxes. For federal
income tax purposes at September 30, 2000, the Company has net operating losses
(NOLs) of approximately $1.4 million, which will expire in fiscal 2007 and 2010,
charitable contribution carry-overs of approximately $209,000 expiring between
2000 and 2001, and alternative minimum tax credits of $131,128 with indefinite
expirations. Certain changes in the Company's ownership may result in a
limitation on the amount of NOLs that could be utilized under Section 382 of the
Internal Revenue Code. If certain changes in the Company's ownership occur,
there could be an annual limitation on the amount of NOLs that could be
utilized.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax amount will not be realized. As such, management has
continued to include a valuation allowance of approximately $278,000 at
September 30, 2000, providing for the utilization of NOLs, charitable
contributions, and investment tax credits against future taxable income.
LIQUIDITY AND CAPITAL STRUCTURE
LIQUIDITY
At September 30, 2000, the Company had net working capital (current assets minus
current liabilities) of approximately $2.5 million and a current ratio of 2.1 to
1. With approximately $1.9 million in cash and cash equivalents and
approximately $2.6 million in marketable securities, the Company has adequate
liquidity to meet its current debt obligations. Total shareholders' equity was
approximately $6.7 million and cash, cash equivalents, and marketable securities
comprise 50.0% of total assets. With the exception of operating expenses, the
Company=s only material commitment is the mortgage on its corporate
headquarters. During the first quarter, this obligation became a current
liability. The Company is in the process of negotiating an extension to the
mortgage. The Company's cash flow is expected to be sufficient to cover current
expenses, including debt service.
The investment advisory and related contracts between the Company and USGIF and
USGAF, will expire on February 28, 2001, and March 8, 2001, respectively.
Management anticipates the board of trustees of both USGIF and USGAF will renew
the contracts.
Management believes current cash reserves, financing obtained and/or available,
and cash flow from operations will be sufficient to meet foreseeable cash needs
or capital necessary for the above mentioned activities and allow the Company to
take advantage of investment opportunities whenever available.
CAPITAL STRUCTURE
The Company has three classes of common equity - class A, class B, and class C
common stock, par value $0.05 per share. There is no established public trading
market for the Company's class B and class C common stock. The Company's class A
common stock is traded over-the-counter and is quoted daily under the Nasdaq
Small Cap Issues. Trades are reported under the symbol "GROW."
The Company's current capital structure, as of November 10, 2000, included
6,299,474 shares of class A common stock issued and 6,034,794 shares of class A
common stock issued and outstanding; no shares of class B common stock issued
and outstanding; and 1,496,800 shares of class C common stock issued and
outstanding.
ITEM 3. MARKET RISK DISCLOSURES
The Company's balance sheet includes assets whose fair value is subject to
market risks. Due to the Company's investments in equity securities, equity
price fluctuations represent a market risk factor affecting the Company's
consolidated financial position. The carrying values of investments subject to
equity price risks are based on quoted market prices or management's estimate of
fair value as of the balance sheet date. Market prices fluctuate, and the amount
realized in the subsequent sale of an investment may differ significantly from
the reported market value. The Company's investment activities are reviewed and
monitored by Company compliance personnel and various reports are provided to
investment advisory clients.
The table below summarizes the Company's equity price risks at September 30,
2000, and shows the effects of a hypothetical 25% increase and a 25% decrease in
market prices.
ESTIMATED INCREASE
FAIR VALUE (DECREASE)
FAIR VALUE AT HYPOTHETICAL AFTER IN
SEPTEMBER 30, PERCENTAGE HYPOTHETICAL SHAREHOLDERS'
2000 CHANGE PERCENT CHANGE EQUITY
---------- ------------ ---------- ---------
Trading Securities $1,584,036 25% increase $1,980,045 $ 261,366
25% decrease $1,188,027 $(261,366)
Available-for-Sale $1,045,857 25% increase $1,307,321 $ 172,566
25% decrease $ 784,393 $(172,566)
The selected hypothetical change does not reflect what could be considered best-
or worst-case scenarios. Results could be significantly worse due to both the
nature of equity markets and the concentration of the Company=s investment
portfolio.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
1. Exhibits
11 Statement re: Computation of Per Share Income
27 Financial Data Schedule
2. Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
U.S. GLOBAL INVESTORS, INC.
DATED: November 14, 2000 BY: /s/ Frank E. Holmes
---------------------------
Frank E. Holmes
Chief Executive Officer
DATED: November 14, 2000 BY: /s/ Susan B. McGee
---------------------------
Susan B. McGee
President
General Counsel
DATED: November 14, 2000 BY: /s/ Tracy C. Peterson
---------------------------
Tracy C. Peterson
Chief Accounting Officer
11
<PAGE>
EXHIBIT 11 - SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
2000 1999
---------- ----------
Net income $ 101,127 $ 109,437
========== ==========
BASIC
Weighted average number shares
outstanding during the year 7,516,777 7,078,439
Basic income per share $ 0.01 $ 0.02
========== ==========
DILUTED
Weighted average number
shares outstanding during
the year 7,516,777 7,078,439
Effect of dilutive securities:
Common stock equivalent
shares (determined using
the "treasury stock" method)
representing shares issuable
upon exercise of preferred or
common stock options
6,633 --
---------- ----------
Weighted average number of
shares used in calculation
of diluted earnings per share 7,523,410 7,078,439
========== ==========
Diluted income per
share $ 0.01 $ 0.02
========== ==========
12
