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, 2000
[ ] 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, 2000
$.05 Par Value Common Stock 10,482,892 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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TSI, INC.
INDEX
SEPTEMBER 30, 2000
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
September 30, 2000 2
Statements of Income and Comprehensive Income -
Three Months and Nine Months Ended
September 30, 2000 and 1999 3
Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 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, 2000
ASSETS
Current Assets
Cash $ 16,855,208
Marketable Securities, at Fair Value 1,620,491
Receivables - Net 43,191
Total Current Assets 18,518,890
0ther Assets
Noncurrent Investments 6,009,870
Other Assets 2,238
Property, Plant and Equipment, Net 870,182
TOTAL ASSETS $ 25,401,180
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 229,055
Income Taxes Payable 314,397
Due To Parent Company 171,418
Deferred Income Taxes 194,100
Total Current Liabilities 908,970
Provision For Estimated Title and Escrow Losses 892,340
Minority Interests 369,058
Excess Of Fair Value Of Net Assets Acquired Over Cost 34,250
Deferred Income Taxes 1,026,900
Stockholder's Equity
Common Stock, $.05 Par Value,
(30,000,000 shares authorized,
10,483,142 shares issued 524,157
Additional Paid-In Capital 16,165,957
Retained Earnings 3,709,544
Accumulated Other Comprehensive Income 1,770,254
Treasury Stock, at Cost (250)
Total Stockholders' Equity 22,169,662
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,401,180
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,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating Revenues $ 817,543 $ 732,544 $2,268,666 $2,458,921
Operating Expenses
Salaries and Payroll
Costs 212,844 241,771 654,836 768,084
Depreciation 27,809 20,434 83,425 61,302
Other Expenses 192,518 229,506 616,650 651,913
Total Expenses 433,171 491,711 1,354,911 1,481,299
384,372 240,833 913,755 977,622
Amortization of
Deferred Credit 2,055 2,055 6,165 6,165
Minority Portion of
(Income) Loss (2,618) 864 (1,806) (5,737)
383,809 243,752 918,114 978,050
Income Tax Expense (135,000) (80,000) (315,000) (350,000)
Net Income 248,809 163,752 603,114 628,050
Other Comprehnesive Income (Loss)
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes 949,000 (73,706) 719,851 (340,716)
Comprehensive Income
(Loss) $1,197,809 $ 90,046 $ 1,322,965 $ 287,334
</TABLE>
See Notes To Consolidated Financial Statements
3
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TSI, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 985,602 $ 638,162
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sales of Property,
Plant and Equipment 4,990 -
Capital Expenditures Paid in Cash (16,350) (35,923)
Cash Purchases of Minority Interests - (457)
Cash Used for Purchases of Marketable
Securities Available For Sale (28,537) (28,652)
Cash Received on Dispositions of Marketable
Securities Available For Sale 9,793 137,603
Net Cash Provided By Investing
Activities (30,104) 72,571
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (250) -
Cash Advances From (To) Parent Company 134,320 64,918
Net Cash Provided By
Financing Activities 134,070 64,918
NET INCREASE IN CASH 1,089,568 775,651
CASH - BEGINNING OF PERIOD 15,765,640 15,043,805
CASH - END OF PERIOD $16,855,208 $15,819,456
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
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, 2000
and the results of the Company's operations for the three months and nine
months ended September 30, 2000 and 1999 and cash flows for the nine months
ended September 30, 2000 and 1999.
The results of operations for the three months and nine months ended
September 30, 2000 and 1999 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. In accordance with
SFAS No. 115 the Company's portfolios, current and noncurrent, are carried
at fair value in the Company's balance sheet at September 30, 2000. The net
unrealized holding gain at September 30, 2000, 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, 2000 in
accordance with the provisions of Financial Accounting Standards No. 130.
Sales to outside concerns, interest revenues and segment operating profit
for the Company's reportable segments were as follows for the period ended
September 30, 2000:
Sales To Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 41,509 $ 85,497 $109,012
Title Insurance Operations 416,693 154,819 235,577
Rental Properties 119,025 - 35,633
Consolidated $577,227 $240,316 $380,222
5
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TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 2000
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,
2000 AND 1999 2000 AND 1999
INCREASES (DECREASES)
Revenues $ 84,999 11.6% $ (190,255) (7.7%)
Expenses (58,540) (11.9%) (126,388) (8.5%)
Net Income 85,057 51.9% (24,936) (4.0%)
Revenues decreased $190,255 (7.7%) in the first nine months of 2000 as
compared with the first nine months of 1999 due primarily to decreases in
title insurance premiums and related fees and rent revenues partially offset
by an increase in interest income and other revenues. The decrease
in title insurance premiums and related fees in the first nine months of
2000 as compared with the first nine months of 1999 was due primarily to the
pirating of key employees from one of the Company's consolidated subsidiaries
by the competition. Operating expenses decreased $126,388, 8.5%, in the
first nine months of 2000 as compared with the first nine months of 1999.
Salaries and related payroll costs decreased $113,248, 14.7%, in the first
nine months of 2000 as compared with the first nine months of 1999 due
primarily to decreases in the number of employees in the Company's title
insurance operations. The provision for income tax expense decreased $35,000
(10.0%) in the first nine months of 2000 as compared with the first nine
months of 1999 due to the decrease in pretax income.
6
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TSI, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 2000
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
A meeting of shareholders was held on September 28,
2000 at which the Company's board of directors
was elected.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
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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, 2000 s/Michael J. Yakos
Michael J. Yakos,
Secretary-Treasurer
Date: October 30, 2000 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
