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, 1997
[ ] 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 81-0267738
(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, 1997
$.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, 1997
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
June 30, 1997 2
Statements of Income -
Six Months and Three Months Ended June 30, 1997 and 1996 3
Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 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, 1997
ASSETS
Current Assets
Cash $ 13,254,367
Marketable & Government Securities,
at Fair Value 2,264,724
Receivables - Net 57,572
Total Current Assets 15,576,663
Other Assets
Noncurrent Investments, at Fair Value 6,949,702
Other Assets 2,238
Property, Plant and Equipment, Net 970,206
TOTAL ASSETS $ 23,498,809
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 164,457
Income Taxes Payable 1,241,130
Deferred Income Taxes 197,300
Due to Parent Company 622,980
Total Current Liabilities 2,225,867
Provison For Estimated Title and Escrow Losses 1,034,548
Minority Interests 337,305
Excess of Fair Value of Net Assets Acquired Over Cost 60,965
Deferred Income Taxes 1,312,700
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 7,798,406
Unrealized Gains on Investments 2,174,904
Total Stockholders' Equity 18,527,424
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,498,809
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,
1997 1996 1997 1996
Operating Revenues $ 816,154 $ 746,099 $ 7,251,636 $1,550,455
Operating Expenses
Salaries and Payroll
Costs 190,371 197,068 381,204 380,725
Depreciation 30,559 19,731 56,191 39,355
Other Expenses 225,150 230,513 918,590 393,700
Total Expenses 446,080 447,312 1,355,985 813,780
370,074 298,787 5,895,651 736,675
Amortization of
Deferred Credit 2,055 2,055 4,110 4,110
Minority Portion of
(Income) (10,338) (6,061) (22,549) (12,611)
Income Tax Expense 180,000 (100,000) (2,050,000) (255,000)
Net Income $ 541,791 $ 194,781 $ 3,827,212 $ 473,174
Earnings Per Share
(Earnings Per Weighted
Average Shares
Outstanding: 9,423,142
shares in 1997 and
1996) $ .06 $ .02 $ .41 $ .05
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,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided (Used) By Operating
Activities $ (197,506) $ 484,472
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales and Redemptions
of Property, Plant and Equipment 6,994 1,289
Capital Expenditures Paid in Cash (23,650) -
Cash Received on Principal of
Notes Receivable - 1,080
Cash Purchases of Minority Interests (150) -
Cash Used for Purchases of Marketable &
Government Securities Available For Sale (515,694) (71,887)
Cash Received Upon Dispositions of Marketable
Securities Available For Sale 5,383,074 206,100
Net Cash Provided By Investing
Activities 4,850,574 136,582
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 75,600 59,311
Net Cash Provided By Financing
Activities 75,600 59,311
NET INCREASE IN CASH 4,728,668 680,365
CASH - BEGINNING OF PERIOD 8,525,699 7,090,429
CASH - END OF PERIOD $13,254,367 $ 7,770,794
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
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, 1997 and
the results of the Company's operations for the six months and three months
ended June 30, 1997 and 1996 and cash flows for the six months ended June 30,
1997 and 1996.
The results of operations for the six months and three months ended June 30,
1997 and 1996 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.
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, 1997. The net unrealized holding
gains at June 30, 1997, 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, 1997.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
JUNE 30, 1997
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,
1997 AND 1996 1997 AND 1996
INCREASES (DECREASES)
Revenues $ 70,055 9.4% $5,701,181 367.7%
Expenses (1,232) (.3%) 542,205 66.6%
Net Income 347,010 178.2% 3,354,038 708.8%
Revenues increased $5,701,181 in the first six months of 1997 as compared
with the first six months of 1996 due to the gain recognized by the Company
on the merger of Security Bancorp with and into WesterFed Financial
Corporation which was completed during the first quarter of 1997. The
Company recognized a gain on the merger in the pretax amount of approximately
$5,351,000. Pursuant to the terms of the merger, the Company received
approximately 275,000 shares of WesterFed Financial Corporation common stock
and cash in the amount of approximately $5,351,000. During the first six
months of 1997 the Company recognized a gain on the contribution of assets in
kind to a charitable organization in the amount of approximately $408,000.
The gains recognized during the first six months of 1997 were the primary
reason for the increase in revenues and the increase in net income in the
first six months of 1997 as compared with the first six months of 1996.
Operating expenses increased $542,205 (66.6%) in the first six months of 1997
as compared with the first six months of 1996 due primarily to the
contribution in kind by the Company of assets having a fair market value of
approximately $525,000 to a charitable organization which resulted in an
income tax savings to the Company in the amount of approximately $215,000.
The provision for income tax expense increased $1,795,000 (703.9%) in the
first six months of 1997 as compared with the first six months of 1996 due to
the increase in pretax income.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
JUNE 30, 1997
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 28, 1997 s/K. King
K. King
Assistant Secretary-Treasurer
Date: July 28, 1997 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,254,367
<SECURITIES> 2,264,724
<RECEIVABLES> 57,572
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,576,663
<PP&E> 970,206
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,498,809
<CURRENT-LIABILITIES> 2,225,867
<BONDS> 0
<COMMON> 471,157
0
0
<OTHER-SE> 18,056,267
<TOTAL-LIABILITY-AND-EQUITY> 23,498,809
<SALES> 0
<TOTAL-REVENUES> 7,251,636
<CGS> 0
<TOTAL-COSTS> 1,355,985
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,877,212
<INCOME-TAX> 2,050,000
<INCOME-CONTINUING> 3,827,212
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,827,212
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
