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, 1998
[ ] 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, 1998
$.05 Par Value Common Stock 10,483,142 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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TSI, INC.
INDEX
MARCH 31, 1998
Page Number
PART I
Condensed Financial Statements:
Balance Sheet -
March 31, 1998 2
Statements of Income -
Three Months Ended March 31, 1998 and 1997 3
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 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, 1998
ASSETS
Current Assets
Cash $ 13,563,040
Marketable Securities, at Fair Value 2,178,277
Receivables, Net 53,255
Total Current Assets 15,794,572
Other Assets
Noncurrent Investments, at Fair Value 8,860,819
Other Assets 2,238
Property, Plant and Equipment, Net 907,530
TOTAL ASSETS $ 25,565,159
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 158,695
Income Taxes Payable 184,730
Deferred Income Taxes 338,600
Due to Parent Company 78,330
Total Current Liabilities 760,355
Provison For Estimated Title and Escrow Losses 1,023,383
Minority Interests 370,437
Deferred Income Taxes 2,091,400
Excess of Fair Value of Net Assets Acquired Over Cost 54,800
Stockholders' 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 8,580,367
Unrealized Gain on Investments 3,494,303
Total Stockholders' Equity 21,264,784
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,565,159
See Notes to Consolidated Financial Statements
2
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TSI, INC.
STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1998 1997
Operating Revenues $ 892,525 $6,435,482
Operating Expenses
Salaries & Payroll Costs 213,101 190,833
Depreciation 20,472 25,632
Other Expenses 174,031 693,440
Total Expenses 407,604 909,905
484,921 5,525,577
Amorizatation of Deferred Credit 2,055 2,055
Minority Portion of Income (8,731) (12,211)
478,245 5,515,421
Income Tax Expense (180,000) (2,230,000)
Net Income $ 298,245 $3,285,421
See Notes to Consolidated Financial Statements
3
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TSI, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 408,023 $ 300,377
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Purchases of Furniture and Equipment (7,896) -
Proceeds From Sales and Redemptions
of Property, Plant and Equipment - 6,994
Cash Purchases of Minority Interests - (150)
Cash Used for Purchases of Marketable
Securities Available For Sale (16,047) (9,041)
Cash Received for Sales of Marketable
Securities Available For Sale 44,728 5,356,537
Net Cash Provided By
Investing Activities 26,681 5,354,340
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 41,400 43,800
Net Cash Provided By
Financing Activities 41,400 43,800
NET INCREASE IN CASH 478,104 5,698,517
CASH - BEGINNING OF PERIOD 13,084,936 8,525,699
CASH - END OF PERIOD $13,563,040 $14,224,216
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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,
1998 and the results of the Company's operations and cash flows for the three
months ended March 31, 1998 and 1997.
The results of operations for the three months ended March 31, 1998 and 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 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 March 31, 1998. The net unrealized holding
gains at March 31, 1998, 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, 1998.
5
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TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1998
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,
1998 and 1997
Increases
(Decreases)
Revenues $(5,542,957) (86.1%)
Operating Expenses $ (502,031) (55.2%)
Net Income $(2,987,176) (90.9%)
Revenues decreased $5,542,957 in the first quarter of 1998 as compared with
the first quarter of 1997 primarily due to the 1997 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. During
1997, the Company recognized a gain on the merger in the pretax amount of
approximately $5,351,000. No such gains were realized during the first
quarter of 1998. The gains recognized during the first quarter of 1997 were
the primary reason for the decrease in revenues and the decrease in net
income in the first quarter of 1998 as compared with the first quarter of
1997. The provision for income tax expense decreased $2,050,000 (91.9%)
in the first quarter of 1998 as compared with the first quarter of 1997 due
to the decrease in pretax income.
6
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TSI, INC.
PART II
OTHER INFORMATION
MARCH 31, 1998
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
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
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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 30, 1998 s/Kathleen King
Kathleen King
Assistant
Secretary-Treasurer
Date: April 30, 1998 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 13563040
<SECURITIES> 2178277
<RECEIVABLES> 53255
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15794572
<PP&E> 907530
<DEPRECIATION> 0
<TOTAL-ASSETS> 25565159
<CURRENT-LIABILITIES> 760355
<BONDS> 0
<COMMON> 524157
0
0
<OTHER-SE> 20740627
<TOTAL-LIABILITY-AND-EQUITY> 25565159
<SALES> 0
<TOTAL-REVENUES> 892525
<CGS> 0
<TOTAL-COSTS> 407604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 478245
<INCOME-TAX> 180000
<INCOME-CONTINUING> 298245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 298245
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
