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, 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 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, 1999
$.05 Par Value Common Stock 10,483,142 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
TSI, INC.
INDEX
JUNE 30, 1999
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
June 30, 1999 2
Statements of Income and Comprehensive Income -
Six Months and Three Months Ended June 30, 1999 and 1998 3
Statements of Cash Flows -
Six Months Ended June 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
<PAGE>
TSI, INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
ASSETS
Current Assets
Cash $ 15,615,643
Marketable Securities, at Fair Value 1,767,752
Receivables - Net 82,628
Total Current Assets 17,466,023
Other Assets
Noncurrent Investments, at Fair Value 5,076,509
Other Assets 2,238
Property, Plant and Equipment, Net 835,842
TOTAL ASSETS $ 23,380,612
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 242,445
Income Taxes Payable 95,647
Deferred Income Taxes 241,900
Due to Parent Company 31,247
Total Current Liabilities 611,239
Provison For Estimated Title and Escrow Losses 945,859
Minority Interests 376,781
Excess of Fair Value of Net Assets Acquired Over Cost 44,525
Deferred Income Taxes 646,400
Stockholders' 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 2,782,787
Accumulated Other Comprehensive Income 1,282,907
Total Stockholders' Equity 20,755,808
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,380,612
See Notes to Consolidated Financial Statements
2
<PAGE>
TSI, INC.
STATEMENTS OF INCOME
For The Three Months For The Six Months
Ended Ended
June 30, June 30,
1999 1998 1999 1998
Operating Revenues $ 828,845 $1,401,124 $1,726,377 $2,293,649
Operating Expenses
Salaries and Payroll
Costs 257,486 223,398 526,313 436,499
Depreciation 20,434 23,485 40,868 43,957
Other Expenses 238,938 731,987 422,407 906,018
Total Expenses 516,858 978,870 989,588 1,386,474
311,987 422,254 736,789 907,175
Amortization of
Deferred Credit 2,055 2,055 4,110 4,110
Minority Portion of
(Income) (1,331) (19,308) (6,601) (28,039)
Income Tax Expense (115,000) 18,000 (270,000) (162,000)
Net Income 197,711 423,001 464,298 721,246
Other Comprehensive Income
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes (115,526) (508,706) (267,010) (211,862)
Comprehensive Income $ 82,185 $ (85,705) $ 197,288 $ 509,384
See Notes to Consolidated Financial Statements
3
<PAGE>
TSI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By
Operating Activities $ 540,500 $ 591,211
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures Paid In Cash (5,923) (23,710)
Cash Purchases of Minority Interests (457) (343)
Cash Used for Purchases of Marketable
Securities Available For Sale (21,652) (27,272)
Cash Received Upon Dispositions of Marketable
Securities Available For Sale 6,373 45,237
Net Cash (Used)
By Investing Activities (21,659) (6,088)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 52,997 62,801
Net Cash Provided By
Financing Activities 52,997 62,801
NET INCREASE IN CASH 571,838 647,924
CASH - BEGINNING OF PERIOD 15,043,805 13,084,936
CASH - END OF PERIOD $15,615,643 $13,732,860
See Notes to Consolidated Financial Statements
4
<PAGE>
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 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 June 30, 1999 and
the results of the Company's operations for the six months and three months
ended June 30, 1999 and 1998 and cash flows for the six months ended June 30,
1999 and 1998.
The results of operations for the six months and three months ended June 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 June 30, 1999.
The net unrealized holding gains at June 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 June 30, 1999
in accordance with the provisions of Financial Accounting Standards N0. 130.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
JUNE 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 SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1999 AND 1998 1999 AND 1998
INCREASES (DECREASES)
Revenues $ (572,279) (40.8%) $ (567,272) (24.7%)
Expenses (462,012) (47.2%) (396,886) (28.6%)
Net Income (225,290) (53.3%) (256,948) (35.6%)
Revenues decreased $567,272 (24.7%) in the first six months of 1999 as
compared with the first six months of 1998 due primarily to gains in the
amount of approximately $417,000 recognized by the Company on the
contribution of assets in kind to a charitable organization during the
first six months of 1998. No such contributions were made and no such gains
recognized during the first six months of 1999. Revenues from the Company's
title insurance operations decreased $157,971 (13.7%) in the first six
months of 1999 as compared with the first six 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 $396,886 in the first six months of 1999 as compared
with the first six months of 1998 due primarily to charitable contributions
made by the Company during 1998. The provision for income tax expense
increased $108,000 (66.7%) in the first six months of 1999 as compared
with the first six months of 1998 due primarily to income tax deductions
related to the contributions made during 1998 and referred to above.
6
<PAGE>
TSI, INC.
PART II
OTHER INFORMATION
JUNE 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>
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: August 9, 1999 s/P. Cunningham
P. Cunningham
Assistant Secretary-Treasurer
Date: August 9, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 15,615,643
<SECURITIES> 1,767,752
<RECEIVABLES> 82,628
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,466,023
<PP&E> 835,842
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,380,612
<CURRENT-LIABILITIES> 611,239
<BONDS> 0
<COMMON> 524,157
0
0
<OTHER-SE> 20,231,651
<TOTAL-LIABILITY-AND-EQUITY> 23,380,612
<SALES> 0
<TOTAL-REVENUES> 1,726,377
<CGS> 0
<TOTAL-COSTS> 989,588
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 734,298
<INCOME-TAX> 270,000
<INCOME-CONTINUING> 464,298
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 464,298
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
