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, 1999
[ ] 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, 1999
$.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, 1999
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
September 30, 1999 2
Statements of Income and Comprehensive Income -
Three Months and Nine Months Ended
September 30, 1999 and 1998 3
Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998 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.
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
ASSETS
Current Assets
Cash $ 15,819,456
Marketable Securities, at Fair Value 1,528,694
Receivables - Net 81,265
Total Current Assets 17,429,415
0ther Assets
Noncurrent Investments 5,061,519
Other Assets 2,238
Property, Plant and Equipment, Net 845,408
TOTAL ASSETS $ 23,338,580
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 236,407
Income Taxes Payable 28,247
Due To Parent Company 43,168
Deferred Income Taxes 195,400
Total Current Liabilities 503,222
Provision For Estimated Title and Escrow Losses 933,538
Minority Interests 373,196
Excess Of Fair Value Of Net Assets Acquired Over Cost 42,470
Deferred Income Taxes 640,300
Stockholder's Equity
Common Stock, $.05 Par Value,
(30,000,000 shares authorized,
10,483,142 shares outstanding 524,157
Additional Paid-In Capital 16,165,957
Retained Earnings 2,946,539
Accumulated Other Comprehensive Income 1,209,201
Total Stockholders' Equity 20,845,854
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,338,580
See Notes to Consolidated Financial Statements
2
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<TABLE>
TSI, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Revenues $ 732,544 $1,346,983 $2,458,921 $3,640,632
Operating Expenses
Salaries and Payroll
Costs 241,771 249,086 768,084 685,585
Depreciation 20,434 27,848 61,302 71,805
Other Expenses 229,506 200,285 651,913 1,106,303
Total Expenses 491,711 477,219 1,481,299 1,863,693
240,833 869,764 977,622 1,776,939
Amortization of
Deferred Credit 2,055 2,055 6,165 6,165
Minority Portion of
(Income) Loss 864 (6,546) (5,737) (34,585)
243,752 865,273 978,050 1,748,519
Income Tax Expense (80,000) (338,000) (350,000) (500,000)
Net Income 163,752 527,273 628,050 1,248,519
Other Comprehnesive Income (Loss)
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes (73,706) (1,035,485) (340,716) (1,247,347)
Comprehensive Income
(Loss) $ 90,046 $ (508,212) $ 287,334 $ 1,172
</TABLE>
See Notes To Consolidated Financial Statements
3
<PAGE>
TSI, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 638,162 $ 933,308
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment - 8,695
Capital Expenditures Paid in Cash (35,923) (62,769)
Cash Purchases of Minority Interests (457) (681)
Cash Used for Purchases of Marketable
Securities Available For Sale (28,652) (76,462)
Cash Received on Dispositions of Marketable
Securities Available For Sale 137,603 592,148
Net Cash Provided By Investing
Activities 72,571 460,931
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Advances From (To) Parent Company 64,918 72,170
Net Cash Provided By
Financing Activities 64,918 72,170
NET INCREASE IN CASH 775,651 1,466,409
CASH - BEGINNING OF PERIOD 15,043,805 13,084,936
CASH - END OF PERIOD $15,819,456 $14,551,345
See Notes to Consolidated Financial Statements
4
<PAGE>
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
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, 1999
and the results of the Company's operations for the three months and nine
months ended September 30, 1999 and 1998 and cash flows for the nine months
ended September 30, 1999 and 1998.
The results of operations for the three months and nine months ended
September 30, 1999 and 1998 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, 1999.
The net unrealized holding gain at September 30, 1999, net of the estimated
income tax effects and minority interests in the unrealized holding gains,
is included in Accumulated Other Comprehensive Income at September 30, 1999
in accordance with the provisions of Financial Accounting Standards No. 130.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 1999
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,
1999 AND 1998 1999 AND 1998
INCREASES (DECREASES)
Revenues $(614,439) (45.6%) $(1,181,711) (32.5%)
Expenses 14,492 3.0% (382,394) (20.5%)
Net Income (363,521) (68.9%) (620,469) (49.7%)
Revenues decreased $1,181,711 (32.5%) in the first nine months of 1999 as
compared with the first nine months of 1998 due primarily to gains in the
amount of approximately $786,359 recognized by the Company on the disposition
of securities, including a gain of approximately $417,000 recognized on the
contribution of assets in kind to a charitable organization during the first
nine months of 1998. No such contributions were made during the first nine
months of 1999. Revenues from the Company's title insurance operations
decreased $410,025 (23.3%) in the first nine months of 1999 as compared with
the first nine months of 1998. The decrease was primarily due to a decrease
in revenues of one of the Company's consolidated subsidiaries resulting from
the pirating of key employees by the competition in a manner which the
Company considers unfair. Operating expenses decreased $382,394 (20.5%) in
the first nine months of 1999 as compared with the first nine months of 1998
due primarily to charitable contributions made by the Company during 1998.
The provision for income tax expense decreased $150,000 (30.0%) in the
first nine months of 1999 as compared with the first nine months of 1998 due
primarily to the decrease in pretax income.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 1999
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
<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 29, 1999 s/S. C. Lee
S. C. Lee
Assistant Secretary-Treasurer
Date: October 29, 1999 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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 15,819,456
<SECURITIES> 1,528,694
<RECEIVABLES> 81,265
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,429,415
<PP&E> 845,408
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,338,580
<CURRENT-LIABILITIES> 503,222
<BONDS> 0
<COMMON> 524,157
0
0
<OTHER-SE> 20,321,697
<TOTAL-LIABILITY-AND-EQUITY> 23,338,580
<SALES> 0
<TOTAL-REVENUES> 2,458,921
<CGS> 0
<TOTAL-COSTS> 1,481,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 978,050
<INCOME-TAX> 350,000
<INCOME-CONTINUING> 628,050
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 628,050
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
