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, 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
(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, 1997
$.05 Par Value Common Stock 10,483,142 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
TSI, INC.
INDEX
SEPTEMBER 30, 1997
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
September 30, 1997 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 1997 and 1996 3
Statements of Cash Flows -
Nine Months Ended September 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
<PAGE>
TSI, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 1997
ASSETS
Current Assets
Cash $ 13,046,841
Marketable Securities, at Fair Value 2,418,132
Receivables - Net 106,614
Due From Parent Company 486,220
Total Current Assets 16,057,807
Other Assets
Noncurrent Investments 6,875,660
Other Assets 2,238
Property, Plant and Equipment, Net 950,245
TOTAL ASSETS $ 23,885,950
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 207,295
Income Taxes Payable 1,405,130
Deferred Income Taxes 257,200
Total Current Liabilities 1,869,625
Provision For Estimated Title and Escrow Losses 1,006,808
Minority Interests 348,375
Excess Of Fair Value Of Net Assets Acquired Over Cost 58,910
Deferred Income Taxes 1,282,500
Stockholder's Equity
Common Stock, $.05 Par Value,
(30,000,000 shares authorized,
10,483,142 shares outstanding 524,157
Additional Paid-In Capital 8,665,957
Retained Earnings 7,914,549
Unrealized Gains on Investments 2,215,069
Total Stockholders' Equity 19,319,732
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,885,950
See Notes to Consolidated Financial Statements
2
<PAGE>
<TABLE>
TSI, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Operating Revenues $ 844,467 $ 733,695 $8,096,103 $2,284,150
Operating Expenses
Salaries and Payroll
Costs 210,246 196,742 591,450 577,467
Depreciation 28,095 19,623 84,286 58,978
Other Expenses 179,210 198,723 1,097,800 592,423
Total Expenses 417,551 415,088 1,773,536 1,228,868
426,916 318,607 6,322,567 1,055,282
Amortization of
Deferred Credit 2,055 2,055 6,165 6,165
Minority Portion of
(Income) (7,828) (8,244) (30,377) (20,855)
421,143 312,418 6,298,355 1,040,592
Income Tax Expense (305,000) (107,000) (2,355,000) (362,000)
Net Income $ 116,143 $ 205,418 $ 3,943,355 $ 678,592
Earnings Per Share
(Earnings Per Weighted
Average Shares:
9,658,698 Shares in 1997
and 9,423,142 Shares
in 1996) $ .01 $ .02 $ .41 $ .07
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,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 82,715 $ 835,434
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 6,994 1,289
Capital Expenditures Paid in Cash (31,784) -
Cash Received on Principal of
Notes Receivable - 106,125
Cash Purchases of Minority Interests (304) (150)
Cash Used for Purchases of Marketable
Securities Available For Sale (521,953) (184,209)
Cash Received on Dispositions of Marketable
Securities Available For Sale 5,383,074 372,453
Net Cash Provided By Investing
Activities 4,836,027 295,508
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Advanced From (To) Parent Company (1,033,600) 73,180
Issuance of Stock For Cash 636,000 -
Net Cash Provided (Used) By
Financing Activities (397,600) 73,180
NET INCREASE IN CASH 4,521,142 1,204,122
CASH - BEGINNING OF PERIOD 8,525,699 7,090,429
CASH - END OF PERIOD $13,046,841 $8,294,551
See Notes to Consolidated Financial Statements
4
<PAGE>
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 September 30, 1997
and the results of the Company's operations for the three months and nine
months ended September 30, 1997 and 1996 and cash flows for the nine months
ended September 30, 1997 and 1996.
The results of operations for the three months and nine months ended
September 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 92% 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, 1997. The net unrealized holding
gains at September 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 September 30, 1997.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 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 NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 AND 1996 1997 AND 1996
INCREASES (DECREASES)
Revenues $ 110,772 15.1% $5,811,953 254.4%
Expenses 2,463 .6% 544,668 44.3%
Net Income (89,275) (56.5%) 3,264,793 481.1%
Revenues increased $5,811,953 in the first nine months of 1997 as compared
with the first nine 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 nine
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 nine months of 1997 were the primary
reason for the increase in revenues and the increase in net income in the
first nine months of 1997 as compared with the first nine months of 1996.
Operating expenses increased $544,668 (44.3%) in the in the first nine months
of 1997 as compared with the first nine 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 $1,993,000 (550.6%) in the
first nine months of 1997 as compared with the first nine months of 1996 due
to the increase in pretax income.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
SEPTEMBER 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>
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, 1997 s/K. King
K. King
Assistant Secretary-Treasurer
Date: October 30, 1997 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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,046,841
<SECURITIES> 2,418,132
<RECEIVABLES> 592,834
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,057,807
<PP&E> 950,245
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,885,950
<CURRENT-LIABILITIES> 1,869,625
<BONDS> 0
<COMMON> 524,157
0
0
<OTHER-SE> 18,795,575
<TOTAL-LIABILITY-AND-EQUITY> 23,885,950
<SALES> 0
<TOTAL-REVENUES> 8,096,103
<CGS> 0
<TOTAL-COSTS> 1,773,536
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,298,355
<INCOME-TAX> 2,355,000
<INCOME-CONTINUING> 3,943,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,943,355
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
