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 March 31, 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 March 31, 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
MARCH 31, 1997
Page Number
PART I
Condensed Financial Statements:
Balance Sheet -
March 31, 1997 2
Statements of Income -
Three Months Ended March 31, 1997 and 1996 3
Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 4
Notes to 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.
BALANCE SHEET
AS OF MARCH 31, 1997
ASSETS
Current Assets
Cash $ 14,224,216
Marketable Securities, at Fair Value 1,648,792
Receivables, Net 67,785
Total Current Assets 15,940,793
Other Assets
Noncurrent Investments, at Fair Value 6,689,420
Other Assets 2,238
Property, Plant and Equipment, Net 977,115
TOTAL ASSETS $ 23,609,566
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 246,210
Income Taxes Payable 2,222,930
Deferred Income Taxes 144,800
Due to Parent Company 591,180
Total Current Liabilities 3,205,120
Provison For Estimated Title and Escrow Losses 1,052,286
Minority Interests 323,143
Deferred Income Taxes 1,206,600
Excess of Fair Value of Net Assets Acquired Over Cost 63,020
Stockholders' Equity
Common Stock - $.05 Par Value,
30,000,000 shares authorized,
9,423,142 shares outstanding 471,157
Additional Paid-In Capital 8,082,957
Retained Earnings 7,256,615
Unrealized Gain on Investments 1,948,668
Total Stockholders' Equity 17,759,397
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,609,566
See Notes to Consolidated Financial Statements
2
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TSI, INC.
STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1997 1996
Operating Revenues $ 6,435,482 $ 804,356
Operating Expenses
Salaries & Payroll Costs 190,833 183,657
Depreciation 25,632 19,624
Other Expenses 693,440 163,187
Total Expenses 909,905 366,468
5,525,577 437,888
Amorizatation of Deferred Credit 2,055 2,055
Minority Portion of Income (12,211) (6,550)
5,515,421 433,393
Income Tax Expense (2,230,000) (155,000)
Net Income $ 3,285,421 $ 278,393
Earnings Per Weighted
Average Shares Outstanding:
9,423,142 Shares in 1997
and 1996 $ .35 $ .03
Dividends Per Share $ -- $ --
See Notes to Consolidated Financial Statements
3
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TSI, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 300,377 $ 314,200
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales and Redemptions
of Property, Plant and Equipment 6,994 1,289
Cash Received on Principal of
Notes Receivable - 530
Cash Purchases of Minority Interests (150) -
Cash Used for Purchases of Marketable
Securities Available For Sale (9,041) (66,904)
Cash Received for Sales of Marketable
Securities Available For Sale 5,356,537 204,375
Net Cash Provided By
Investing Activities 5,354,340 139,290
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 43,800 22,511
Net Cash Provided By
Financing Activities 43,800 22,511
NET INCREASE IN CASH 5,698,517 476,001
CASH - BEGINNING OF PERIOD 8,525,699 7,090,429
CASH - END OF PERIOD $14,224,216 $ 7,566,430
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 Company's financial position as of March 31,
1997 and the results of the Company's operations and cash flows for the three
months ended March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997 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, Great Falls, Montana, 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 March 31, 1997. The net unrealized holding
gains at March 31, 1997, net of the estimated income tax effects and minority
interests in the unrealized holding gains, is reported as a separate
component of stockholders' equity at March 31, 1997.
5
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TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1997
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
Three Months
Ended
March 31,
1997 and 1996
Increases
(Decreases)
Revenues $ 5,631,126 700.1%
Operating Expenses $ 543,437 148.3%
Net Income $ 3,007,028 1,008.0%
Revenues increased $5,631,126 in the first quarter of 1997 as compared with
the first quarter of 1996 due to the gain realized 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 quarter 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 quarter of 1997 were the primary reason for the
increase in net income in the first quarter of 1997 as compared with the
first quarter of 1996. Operating expenses increased $543,437 (148.3%) in the
first quarter of 1997 as compared with the first quarter 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
$2,075,000 (1,338.7%) in the first quarter of 1997 as compared with the first
quarter of 1996 due to the increase in pretax income.
6
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TSI, INC.
PART II
OTHER INFORMATION
MARCH 31, 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: April 29, 1997 s/N. Scott Atchison
N. Scott Atchison
Assistant
Secretary-Treasurer
Date: April 29, 1997 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,224,216
<SECURITIES> 1,648,792
<RECEIVABLES> 67,785
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,940,793
<PP&E> 977,115
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,609,566
<CURRENT-LIABILITIES> 3,205,120
<BONDS> 0
<COMMON> 471,157
0
0
<OTHER-SE> 17,288,240
<TOTAL-LIABILITY-AND-EQUITY> 23,609,566
<SALES> 0
<TOTAL-REVENUES> 6,435,482
<CGS> 0
<TOTAL-COSTS> 909,905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,515,421
<INCOME-TAX> 2,230,000
<INCOME-CONTINUING> 3,285,421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,285,421
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
