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, 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 June 30, 2000
$.05 Par Value Common Stock 10,482,892 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
TSI, INC.
INDEX
JUNE 30, 2000
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
June 30, 2000 2
Statements of Income and Comprehensive Income -
Six Months and Three Months Ended June 30, 2000 and 1999 3
Statements of Cash Flows -
Six Months Ended June 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
TSI, INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
ASSETS
Current Assets
Cash $ 16,336,140
Marketable Securities, at Fair Value 1,597,382
Receivables - Net 67,850
Total Current Assets 18,001,372
Other Assets
Noncurrent Investments, at Fair Value 4,420,810
Other Assets 2,238
Property, Plant and Equipment, Net 897,990
TOTAL ASSETS $ 23,322,410
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 179,306
Income Taxes Payable 179,397
Deferred Income Taxes 187,000
Due to Parent Company 123,018
Total Current Liabilities 668,721
Provison For Estimated Title and Escrow Losses 902,737
Minority Interests 363,594
Deferred Income Taxes 379,200
Excess of Fair Value of Net Assets Acquired Over Cost 36,305
Stockholders' 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 3,460,735
Accumulated Other Comprehensive Income 821,254
Treasury Stock, at Cost (250)
Total Stockholders' Equity 20,971,853
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,322,410
See Notes to Consolidated Financial Statements
2
TSI, INC.
STATEMENTS OF INCOME
For The Three Months For The Six Months
Ended Ended
June 30, June 30,
2000 1999 2000 1999
Operating Revenues $ 729,013 $ 828,845 $1,451,123 $1,726,377
Operating Expenses
Salaries and Payroll
Costs 218,972 257,486 441,992 526,313
Depreciation 26,976 20,434 55,616 40,868
Other Expenses 227,617 238,938 424,132 422,407
Total Expenses 473,565 516,858 921,740 989,588
255,448 311,987 529,383 736,789
Amortization of
Deferred Credit 2,055 2,055 4,110 4,110
Minority Portion of
(Income) (15) (1,331) 812 (6,601)
Income Tax Expense (85,000) (115,000) (180,000) (270,000)
Net Income 172,488 197,711 354,305 464,298
Other Comprehensive Income (Loss)
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes 10,342 (115,526) (229,149) (267,010)
Comprehensive Income $ 182,830 $ 82,185 $ 125,156 $ 197,288
See Notes to Consolidated Financial Statements
3
TSI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By
Operating Activities $ 509,410 $ 540,500
CASH FLOWS FROM INVESTING ACTIVITIES
Cash REceived on Sales and Redemptions
of Property and Equipment 4,990 -
Capital Expenditures Paid In Cash (16,350) (5,923)
Cash Purchases of Minority Interests - (457)
Cash Used for Purchases of Marketable
Securities Available For Sale (23,013) (21,652)
Cash Received Upon Dispositions of Marketable
Securities Available For Sale 9,793 6,373
Net Cash (Used)
By Investing Activities (24,580) (21,659)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (250) -
Cash Provided From Parent Company 85,920 52,997
Net Cash Provided By
Financing Activities 85,670 52,997
NET INCREASE IN CASH 570,500 571,838
CASH - BEGINNING OF PERIOD 15,765,640 15,043,805
CASH - END OF PERIOD $16,336,140 $15,615,643
See Notes to Consolidated Financial Statements
4
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 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 June 30, 2000 and
the results of the Company's operations for the six months and three months
ended June 30, 2000 and 1999 and cash flows for the six months ended June 30,
2000 and 1999.
The results of operations for the six months and three months ended June 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 June 30, 2000. The net
unrealized holding gain at June 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 June 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 quarter ended
June 30, 2000:
Sales To Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 25,767 $ 78,873 $102,334
Title Insurance Operations 364,688 140,580 123,207
Rental Properties 119,105 - 31,962
Consolidated $509,560 $219,453 $257,503
5
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
JUNE 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 SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2000 AND 1999 2000 AND 1999
INCREASES (DECREASES)
Revenues $ (99,832) (12.0%) $ (275,254) (15.9%)
Expenses (43,293) (8.4%) (67,848) (6.9%)
Net Income (25,223) (12.8%) (109,993) (23.7%)
Revenues decreased $275,254, 15.9%, in the first six months of 2000 as
compared with the first six 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 six months of 2000 as
compared with the first six months 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. Operating expenses decreased $67,848, 6.9%, in the first six months
of 2000 as compared with the first six months of 1999. Salaries and related
payroll costs decreased $84,321, 16.0%, in the first six months of 2000 as
compared with the first six 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 $90,000 (33.3%) in the first six
months of 2000 as compared with the first six months of 1999 due to the
decrease in pretax income.
6
TSI, INC.
PART II
OTHER INFORMATION
JUNE 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
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
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 11, 2000 s/H. Contway
H. Contway,
Assistant Secretary-Treasurer
Date: August 11, 2000 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8