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, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-2054
TSI, INC.
(Exact name of small business issuer as specified in its charter)
Montana
(State or other jurisdiction of incorporation or organization)
81-0267738
(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, 1996
$.05 Par Value Common Stock 9,423,142 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
TSI, INC.
INDEX
SEPTEMBER 30, 1996
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
September 30, 1996 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 1996 and 1995 3
Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of the
Statements of Income 6
PART II
Other Information 7
Signatures 8
1
<PAGE>
TSI, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 1996
ASSETS
Current Assets
Cash $ 8,294,551
Marketable Securities 2,534,366
Receivables - Net 88,710
Total Current Assets 10,917,627
Other Assets
Noncurrent Investments 10,257,457
Other Assets 2,238
Property, Plant and Equipment, Net 1,041,021
TOTAL ASSETS $ 22,218,343
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 198,389
Income Taxes Payable 337,930
Due To Parent Company 235,099
Deferred Income Taxes 340,000
Total Current Liabilities 1,111,418
Provision For Estimated Title and Escrow Losses 1,073,947
Minority Interests 320,175
Excess Of Fair Value Of Net Assets Acquired Over Cost 67,130
Deferred Income Taxes 2,778,700
Stockholder's Equity
Common Stock - $.05 Par Value;(30,000,000
shares authorized; 9,423,142 shares issued) 471,157
Additional Paid-In Capital 8,082,957
Retained Earnings 3,806,074
Unrealized Gains on Investments 4,506,785
Total Stockholders' Equity 16,866,973
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,218,343
See Notes to Consolidated Financial Statements
2
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<TABLE>
TSI, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenues $ 733,695 $ 735,814 $2,284,150 $1,978,386
Operating Expenses
Salaries and Payroll
Costs 196,742 184,138 577,467 540,464
Depreciation 19,623 26,174 58,978 78,987
Other Expenses 198,723 193,796 592,423 572,555
Total Expenses 415,088 404,108 1,228,868 1,192,006
318,607 331,706 1,055,282 786,380
Gain (Loss) on Sales of
Assets - 10,500 - 47,853
Amortization of
Deferred Credit 2,055 2,055 6,165 6,165
Minority Portion of
(Income) (8,244) (7,792) (20,855) (18,092)
Income Tax Expense (107,000) (95,000) (362,000) (250,000)
Net Income $ 205,418 $ 241,469 $ 678,592 $ 572,306
Earnings Per Share
(Earnings Per Weighted
Average Shares
Outstanding: 9,423,142
shares in 1996 and
1995) $ .02 $ .03 $ .07 $ .06
Dividends Per Share $ -- $ -- $ -- $ --
</TABLE>
See Notes To Consolidated Financial Statements
3
<PAGE>
TSI, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 835,434 $ 596,545
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 1,289 93,762
Cash Received on Principal of
Notes Receivable 106,125 1,650
Cash Purchases of Minority Interests (150) (500)
Capital Expenditures Paid in Cash - (29,481)
Cash Used for Purchases of Marketable
Securities Available For Sale (184,209) (24,795)
Cash Received on Dispositions of Marketable
Securities Available For Sale 372,453 84,515
Net Cash Provided By Investing
Activities 295,508 125,151
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Advanced (To) Parent Company 73,180 (58,364)
Net Cash (Used) By Financing
Activities 73,180 (58,364)
NET INCREASE IN CASH 1,204,122 663,332
CASH - BEGINNING OF PERIOD 7,090,429 6,181,974
CASH - END OF PERIOD $8,294,551 $6,845,306
See Notes to Consolidated Financial Statements
4
<PAGE>
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 financial position as of September 30, 1996
and the results of the Company's operations for the three months and nine
months ended September 30, 1996 and 1995 and cash flows for the nine months
ended September 30, 1996 and 1995.
The results of operations for the three months and nine months ended
September 30, 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.
M Corp owns approximately 91% of the Company's issued and outstanding
common stock.
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities (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 September 30, 1996. The net unrealized holding
gains at September 30, 1996, net of the estimated income tax effects and
minority interests in the unrealized holding gains, is reported as a
separate component of stockholder's equity at September 30, 1996.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 1996
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,
1996 AND 1995 1996 AND 1995
INCREASES (DECREASES)
Revenues $ (2,119) .3% $ 305,764 15.6%
Expenses 10,980 2.7% 36,862 3.1%
Gain on Sales
of Assets (10,500) (100.0%) (47,853) (100.0%)
Net Income (36,051) (14.9%) 106,286 18.6%
Operating revenues increased $305,764, 15.6%, in the first nine months of 1996
as compared with the first nine months of 1995. During the first nine months
of 1996, the Company realized net gains on the disposition of available-for-
sale investments in the amount of $135,728 whereas a net loss in the amount
of $20,392 was incurred on the disposition of available-for-sale investments
during the first nine months of 1995. Revenues from the Company's title
insurance operations increased $144,710, 13.1%, in the first nine months of
1996 as compared with the first nine months of 1995 due primarily to an
increase in the real estate economies within which the Company operates.
Depreciation expense decreased $20,009, 25.3%, in the first nine months of
1996 as compared with the first nine months of 1995 due in part to a sale of
properties during 1995.
Salaries and payroll costs increased $37,003, 6.9%, in the first nine months
of 1996 as compared with the first nine months of 1995 due primarily to an
increase in payroll rates and an increase in the number of employees in the
Company's title insurance operations.
The provision for income tax expense increased $112,000, 44.8%, in the first
nine months of 1996 as compared with the first nine months of 1995 due
primarily to the increase in pre-tax income.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 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
No matters were submitted to a vote of security holders during the
third quarter of 1996. However, on October 22, 1996, a meeting of
shareholders was held at which the Company's entire Board of
Directors was elected. The Company's shareholders also authorized
the Board of Directors to select an independent certified public
accounting firm to audit the Company's financial statements for
1996.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
<PAGE>
TSI INC.
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.
TSI, INC.
Registrant
Date: October 30, 1996 s/N. Scott Atchison
N. Scott Atchison
Assistant Secretary-Treasurer
Date: October 30, 1996 s/Jerry K. Mohland
Jerry K.Mohland,
Accountant
8
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 8,294,551
<SECURITIES> 2,534,366
<RECEIVABLES> 88,710
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,917,627
<PP&E> 1,041,021
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,218,343
<CURRENT-LIABILITIES> 1,111,418
<BONDS> 0
<COMMON> 471,157
0
0
<OTHER-SE> 16,395,816
<TOTAL-LIABILITY-AND-EQUITY> 22,218,343
<SALES> 0
<TOTAL-REVENUES> 2,284,150
<CGS> 0
<TOTAL-COSTS> 1,228,868
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,040,592
<INCOME-TAX> 362,000
<INCOME-CONTINUING> 678,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 678,592
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
