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, 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 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, 2000
$.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, 2000
Page Number
PART I
Condensed Financial Statements:
Balance Sheet -
March 31, 2000 2
Statements of Income and Comprehensive Income -
Three Months Ended March 31, 2000 and 1999 3
Statements of Cash Flows -
Three Months Ended March 31, 2000 and 1999 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, 2000
ASSETS
Current Assets
Cash $ 16,098,643
Marketable Securities, at Fair Value 1,757,246
Receivables, Net 69,103
Total Current Assets 17,924,992
Other Assets
Noncurrent Investments, at Fair Value 4,246,977
Other Assets 2,238
Property, Plant and Equipment, Net 908,616
TOTAL ASSETS $ 23,082,823
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 234,533
Income Taxes Payable 94,398
Deferred Income Taxes 254,300
Due to Parent Company 81,618
Total Current Liabilities 664,849
Provison For Estimated Title and Escrow Losses 913,134
Minority Interests 368,807
Deferred Income Taxes 308,400
Excess of Fair Value of Net Assets Acquired Over Cost 38,360
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 3,288,247
Accumulated Other Comprehensive Income 810,912
Total Stockholders' Equity 20,789,273
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,082,823
See Notes to Consolidated Financial Statements
2
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TSI, INC.
STATEMENTS OF INCOME
For The Three Months Ended
March 31,
2000 1999
Operating Revenues $ 722,110 $ 897,532
Operating Expenses
Salaries & Payroll Costs 223,020 268,827
Depreciation 28,640 20,434
Other Expenses 196,515 183,469
Total Expenses 448,175 472,730
273,935 424,802
Amorizatation of Deferred Credit 2,055 2,055
Minority Portion of (Income) Loss 827 (5,270)
276,817 421,587
Income Tax Expense (95,000) (155,000)
Net Income 181,817 266,587
Other Comprehensive Income (Loss)
Decrease in Unrealized
Holding Gains,
Net of Income Taxes (239,491) (151,484)
Comprehensive Income (Loss) $ (57,674) $ 115,103
See Notes to Consolidated Financial Statements
3
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TSI, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 301,150 $ 377,475
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received on Sales and Redemptions
of Property and Equipment 4,990 -
Cash Purchases of Furniture and Equipment - (5,923)
Cash Purchases of Minority Interests - (457)
Cash Used for Purchases of Marketable
Securities Available For Sale (17,667) (16,932)
Net Cash (Used) By
Investing Activities (12,667) (17,389)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Provided From Parent Company 44,520 42,391
Net Cash Provided By
Financing Activities 44,520 42,391
NET INCREASE IN CASH 333,003 396,554
CASH - BEGINNING OF PERIOD 15,765,640 15,043,805
CASH - END OF PERIOD $16,098,643 $15,440,359
See Notes to Consolidated Financial Statements
4
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TSI, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 Company's financial position as of March 31,
2000 and the results of the Company's operations and cash flows for the three
months ended March 31, 2000 and 1999.
The results of operations for the three months ended March 31, 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, 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. 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 March 31, 2000. The net
unrealized holding gain at March 31, 2000, 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, 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
March 31, 2000:
Sales To Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 51,980 $ 68,476 $ 96,214
Title Insurance Operations 348,433 131,289 132,608
Rental Properties 121,932 - 47,168
Consolidated $ 522,345 $ 199,765 $ 275,990
5
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TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 2000
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,
2000 and 1999
Increases
(Decreases)
Revenues $ (175,422) (19.5%)
Operating Expenses $ (24,555) (5.2%)
Net Income $ (84,770) (31.8%)
Revenues decreased $175,422, 19.5%, in the first quarter of 2000 as compared
with the first quarter of 1999 due primarily to decreases in title insurance
premiums and related fees ($218,028; 41.3%) and rent revenues ($8,932; 6.8%)
partially offset by a increase in interest income and other revenues. The
decrease in title insurance premiums and related fees in the first quarter
of 2000 as compared with the first quarter of 1999 was due primarily to the
pirating of key employees from one of the Company's consolidated subsidiaries
by the competition in a manner which the Company considers unfair trade
practices and for which the Company is considering legal action for the
recovery of damages. There also was some decline in the real estate
economies within the Montana communities within which the Company operates.
Operating expenses decreased $24,555, 5.2%, in the first quarter of
2000 as compared with the first quarter of 1999. Salaries and related
payroll costs decreased $45,807, 17.0%, in the first quarter of 2000 as
compared with the first quarter 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 $60,000 (38.7%) in the first
quarter of 2000 as compared with the first quarter of 1999 due to the
decrease in pretax income.
6
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TSI, INC.
PART II
OTHER INFORMATION
MARCH 31, 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
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 28, 2000 s/H. Contway
H. Contway,
Assistant
Secretary-Treasurer
Date: April 28, 2000 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 16098643
<SECURITIES> 1757246
<RECEIVABLES> 69103
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17924992
<PP&E> 908616
<DEPRECIATION> 0
<TOTAL-ASSETS> 23082823
<CURRENT-LIABILITIES> 664849
<BONDS> 0
<COMMON> 524157
0
0
<OTHER-SE> 20265116
<TOTAL-LIABILITY-AND-EQUITY> 23082823
<SALES> 0
<TOTAL-REVENUES> 722110
<CGS> 0
<TOTAL-COSTS> 448175
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 276817
<INCOME-TAX> 95000
<INCOME-CONTINUING> 181817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-BASIC> 0
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</TABLE>
