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 June 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 81-0267730
(State or other jurisdiction of (IRS Employer Identification No.)
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 June 30, 1996
$.05 Par Value Common Stock 9,423,142 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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TSI, INC.
INDEX
JUNE 30, 1996
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
June 30, 1996 2
Statements of Income -
Six Months and Three Months Ended June 30, 1996 and 1995 3
Statements of Cash Flows -
Six Months Ended June 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
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TSI, INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
ASSETS
Current Assets
Cash $ 7,770,794
Marketable Securities, at Fair Value 2,584,174
Receivables - Net 107,217
Total Current Assets 10,462,185
Other Assets
Noncurrent Investments, at Fair Value 7,597,425
Noncurrent Receivables 97,702
Other Assets 2,238
Property, Plant and Equipment, Net 1,060,645
TOTAL ASSETS $ 19,220,195
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 165,402
Income Taxes Payable 237,939
Deferred Income Taxes 340,800
Due to Parent Company 221,230
Total Current Liabilities 965,371
Provison For Estimated Title and Escrow Losses 1,092,007
Minority Interests 306,399
Excess of Fair Value of Net Assets Acquired Over Cost 69,185
Deferred Income Taxes 1,694,800
Stockholders' 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 3,600,656
Unrealized Gains on Investments 2,937,663
Total Stockholders' Equity 15,092,433
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,220,195
See Notes to Consolidated Financial Statements
2
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TSI, INC.
STATEMENTS OF INCOME
For The Three Months For The Six Months
Ended Ended
June 30, June 30,
1996 1995 1996 1995
Operating Revenues $ 746,099 $ 655,177 $1,550,455 $1,242,572
Operating Expenses
Salaries and Payroll
Costs 197,068 181,710 380,725 356,326
Depreciation 19,731 26,407 39,355 52,813
Other Expenses 230,513 193,263 393,700 378,759
Total Expenses 447,312 401,380 813,780 787,898
298,787 253,797 736,675 454,674
Gain (Loss) on Sales
of Assets - 37,353 - 37,353
Amortization of
Deferred Credit 2,055 2,055 4,110 4,110
Minority Portion of
(Income) (6,061) (7,000) (12,611) (10,300)
Income Tax Expense (100,000) (95,600) (255,000) (155,000)
Net Income $ 194,781 $ 190,605 $ 473,174 $ 330,837
Earnings Per Share
(Earnings Per Weighted
Average Shares
Outstanding: 9,423,142
shares in 1996 and
1995) $ .02 $ .02 $ .05 $ .04
Dividends Per Share $ -- $ -- $ -- $ --
See Notes to Consolidated Financial Statements
3
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TSI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided (Used) By Operating
Activities $ 484,472 $ 235,571
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 1,289 83,262
Cash Received on Principal of
Notes Receivable 1,080 1,140
Cash Purchases of Minority Interests - (500)
Capital Expenditures Paid in Cash - (25,889)
Cash Used for Purchases of Marketable
Securities Available For Sale (71,887) (21,813)
Cash Received Upon Disposition of Marketable
Securities Available For Sale 206,100 82,915
Net Cash Provided By Investing
Activities 136,582 119,115
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From (Advanced To) Parent Company 59,311 (83,984)
Net Cash Provided (Used) By Financing
Activities 59,311 (83,984)
NET INCREASE IN CASH 680,365 270,702
CASH - BEGINNING OF PERIOD 7,090,794 6,181,974
CASH - END OF PERIOD $ 7,770,429 $ 6,452,676
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 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 June 30, 1996 and
the results of the Company's operations for the six months and three months
ended June 30, 1996 and 1995 and cash flows for the six months ended June 30,
1996 and 1995.
The results of operations for the six months and three months ended June 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 June 30, 1996. The net unrealized holding
gains at June 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 June 30, 1996.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
JUNE 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 SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 AND 1995 1996 AND 1995
INCREASES (DECREASES)
Revenues $ 90,922 13.9% $ 307,883 24.8%
Expenses 45,932 11.4% 25,882 3.3%
Gain on Sales
of Assets (37,353) (100.0%) (37,353) (100.0%)
Net Income 4,176 2.2% 142,337 43.0%
Operating revenues increased $307,883, 24.8%, in the first six months of
1996 as compared with the first six months of 1995. During the first six
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 six months of 1995. Revenues from the
Company's title insurance operations increased $137,106, 20.2%, in the
first six months of 1996 as compared with the first six months of 1995
due primarily to an increase in the real estate economies within which the
Company operates.
Depreciation expense decreased $13,458, 25.5%, in the first six months of
1996 as compared with the first six months of 1995 due in part to the sale
of properties during 1995.
Salaries and payroll costs increased $24,399, 6.8%, in the first six months
of 1996 as compared with the first six months of 1995 due primarily to an
increase in payroll rates and an increase in the number of employees employed
in the Company's title insurance operations.
The provision for income tax expense increased $100,000, 64.5%, in the first
six months of 1996 as compared with the first six months of 1995 due
primarily to the increase in pre-tax income.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
JUNE 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
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.
TSI, INC.
Registrant
Date: July 29, 1996 s/K. Kings
K. King
Assistant Secretary-Treasurer
Date: July 29, 1996 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
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<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,770,794
<SECURITIES> 2,584,174
<RECEIVABLES> 107,217
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,462,185
<PP&E> 1,060,645
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,220,195
<CURRENT-LIABILITIES> 965,371
<BONDS> 0
<COMMON> 471,157
0
0
<OTHER-SE> 14,621,276
<TOTAL-LIABILITY-AND-EQUITY> 19,220,195
<SALES> 0
<TOTAL-REVENUES> 1,550,455
<CGS> 0
<TOTAL-COSTS> 813,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 728,174
<INCOME-TAX> 255,000
<INCOME-CONTINUING> 473,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 473,174
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
