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, 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 March 31, 1999
$.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, 1999
Page Number
PART I
Condensed Financial Statements:
Balance Sheet -
March 31, 1999 2
Statements of Income and Comprehensive Income -
Three Months Ended March 31, 1999 and 1998 3
Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 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, 1999
ASSETS
Current Assets
Cash $ 15,440,359
Marketable Securities, at Fair Value 1,785,262
Receivables, Net 110,515
Total Current Assets 17,336,136
Other Assets
Noncurrent Investments, at Fair Value 5,259,066
Other Assets 2,238
Property, Plant and Equipment, Net 856,276
TOTAL ASSETS $ 23,453,716
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 251,548
Income Taxes Payable 150,147
Deferred Income Taxes 250,900
Due to Parent Company 20,641
Total Current Liabilities 673,236
Provison For Estimated Title and Escrow Losses 958,181
Minority Interests 381,196
Deferred Income Taxes 720,900
Excess of Fair Value of Net Assets Acquired Over Cost 46,580
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 2,585,076
Accumulated Other Comprehensive Income 1,398,433
Total Stockholders' Equity 20,673,623
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,453,716
See Notes to Consolidated Financial Statements
2
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TSI, INC.
STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1999 1998
Operating Revenues $ 897,532 $ 892,525
Operating Expenses
Salaries & Payroll Costs 268,827 213,101
Depreciation 20,434 20,472
Other Expenses 183,469 174,031
Total Expenses 472,730 407,604
424,802 484,921
Amorizatation of Deferred Credit 2,055 2,055
Minority Portion of Income (5,270) (8,731)
421,587 478,245
Income Tax Expense (155,000) (180,000)
Net Income 266,587 298,245
Other Comprehensive Income
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes (151,484) 296,844
Comprehensive Income $ 115,103 $ 595,089
See Notes to Consolidated Financial Statements
3
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TSI, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 371,552 $ 408,023
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Purchases of Furniture and Equipment (5,923) (7,896)
Cash Purchases of Minority Interests (457) -
Cash Used for Purchases of Marketable
Securities Available For Sale (16,932) (16,047)
Cash Received for Sales of Marketable
Securities Available For Sale - 44,728
Net Cash Provided (Used) By
Investing Activities (17,389) 26,681
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 42,391 41,400
Net Cash Provided By
Financing Activities 42,391 41,400
NET INCREASE IN CASH 396,554 478,104
CASH - BEGINNING OF PERIOD 15,043,805 13,084,936
CASH - END OF PERIOD $15,440,359 $13,563,040
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 Company's financial position as of March 31,
1999 and the results of the Company's operations and cash flows for the three
months ended March 31, 1999 and 1998.
The results of operations for the three months ended March 31, 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, 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, 1999.
The net unrealized holding gain at March 31, 1999, net of the estimated
income tax effects and minority interests in the unrealized holding gains,
is included in Accumulated Other Comprehensive Income at March 31, 1999
in accordance with the provisions of Financial Accounting Standards
No. 130.
5
<PAGE>
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1999
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,
1999 and 1998
Increases
(Decreases)
Revenues $ 5,007 .6%
Operating Expenses $ 65,126 16.0%
Net Income $ (31,658) (10.6%)
Revenues increased $5,007, .6%, in the first quarter of 1999 as compared
with the first quarter of 1998 due primarily to increases in rent and other
revenues partially offset by a decrease in title insurance revenues.
Operating expenses increased $65,126, 16.0%, in the first quarter of 1999
as compared with the first quarter of 1998. Salaries and related payroll
costs increased $55,726, 26.2%, in the first quarter of 1999 as compared
with the first quarter of 1998 due primarily to increases in the number of
employees and in salary rates paid by the Company in its title insurance
operations. The provision for income tax expense decreased $25,000 (13.9%)
in the first quarter of 1999 as compared with the first quarter of 1998 due
to the decrease in pretax income.
6
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TSI, INC.
PART II
OTHER INFORMATION
MARCH 31, 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: April 30, 1999 s/P. Cunningham
P. Cunningham,
Assistant
Secretary-Treasurer
Date: April 30, 1999 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-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 15440359
<SECURITIES> 1785262
<RECEIVABLES> 110515
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17336136
<PP&E> 856276
<DEPRECIATION> 0
<TOTAL-ASSETS> 23453716
<CURRENT-LIABILITIES> 673236
<BONDS> 0
<COMMON> 524157
0
0
<OTHER-SE> 20149466
<TOTAL-LIABILITY-AND-EQUITY> 23453716
<SALES> 0
<TOTAL-REVENUES> 897532
<CGS> 0
<TOTAL-COSTS> 472730
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 421587
<INCOME-TAX> 155000
<INCOME-CONTINUING> 266587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 266587
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
