U.S. Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen,
We are transmitting herewith Form 10-QSB for the quarter ended March 31, 2002
for TSI, Inc.
TSI, Inc.
s/Lori Olson
Lori Olson,
Accountant
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, 2002
[ ] 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 59401
(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, 2002
$.05 Par Value Common Stock 10,474,010 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
TSI, INC.
INDEX
MARCH 31, 2002
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet
March 31, 2002 2
Statements of Income and Comprehensive Income -
Three Months Ended March 31, 2002 and 2001 3
Statements of Cash Flows -
Three Months Ended March 31, 2002 and 2001 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
Certification 9-10
1
TSI, INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2002
ASSETS
Current Assets
Cash $ 22,725,595
Marketable Securities, at Fair Value 1,969,919
Receivables - Net 71,817
Prepaid Expenses 1,800
Total Current Assets 24,769,131
Other Assets
Noncurrent Investments, at Fair Value 508,970
Other Assets 2,238
Property, Plant and Equipment, Net 687,173
TOTAL ASSETS $ 25,967,512
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 386,318
Income Taxes Payable 211,738
Deferred Income Taxes 118,600
Due to Parent Company 254,868
Total Current Liabilities 971,524
Provison For Estimated Title and Escrow Losses 838,133
Minority Interests 390,300
Excess of Fair Value of Net Assets Acquired Over Cost 21,920
Deferred Income Taxes 97,600
Stockholders' Equity
Common Stock - $.05 Par Value,
30,000,000 shares authorized,
10,483,142 shares issued 524,157
Additional Paid-In Capital 13,165,957
Retained Earnings 3,658,287
Accumulated Other Comprehensive Income 312,793
Treasury Stock, at Cost (13,159)
Total Stockholders' Equity 23,648,035
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,967,512
See Notes to Consolidated Financial Statements
2
TSI, INC.
STATEMENTS OF INCOME
For The Three Months
Ended
March 31,
2002 2001
Operating Revenues $ 556,982 $3,578,692
Operating Expenses
Salaries and Payroll
Costs 206,348 211,067
Depreciation 20,898 21,462
Other Expenses 155,783 196,069
Total Expenses 383,029 428,598
173,953 3,150,094
Amortization of
Deferred Credit 2,055 2,055
Minority Portion of
(Income) (2,213) (9,078)
173,795 3,413,071
Income Tax Expense (55,700) (1,275,000)
Net Income 118,095 1,868,071
Other Comprehensive Income (Loss)
Increase (Decrease) in
Unrealized Holding Gains,
Net of Income Taxes 43,470 (1,838,478)
Comprehensive Income $ 161,565 $ 29,593
See Notes to Consolidated Financial Statements
3
TSI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By
Operating Activities $ 129,703 $ 333,117
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Purchases of Furniture and Equipment - (4,276)
Cash Used for Purchases of Marketable
Securities Available For Sale (339,828) (2,372,957)
Cash Received Upon Dispositions of Marketable
Securities Available For Sale 645,592 6,543,446
Net Cash (Used)
By Investing Activities 305,764 4,166,213
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (1,941) (5,863)
Cash Provided From Parent Company 151,150 3,400
Net Cash Provided By
Financing Activities 149,209 (2,463)
NET INCREASE IN CASH 584,676 4,496,867
CASH - BEGINNING OF PERIOD 22,140,919 16,867,357
CASH - END OF PERIOD $22,725,595 $21,364,224
See Notes to Consolidated Financial Statements
4
TSI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
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 March 31, 2002 and
the results of the Company's operations for the three months
ended March 31, 2002 and 2001 and cash flows for the three months
ended March 31,
2002 and 2001.
The results of operations for the three months ended March 31,
2002 and 2001 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 March 31, 2002. The net
unrealized holding gain at March 31, 2002, 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, 2002 in accordance
with the provisions of Financial Accounting Standards No. 130.
Slaes to outside concerns, interest revenues and segemnt operating profit
for the Company's reportable segements were as follows for the period ended
March 31, 2002:
Sales to Segment
Outside Interest Operating
Concerns Revenues Profit
Financial Holding Company $ 30,208 $ 10,888 $ 23,808
Title Insurance Operations 394,979 21,111 114,618
Rental Properties 101,851 - 37,582
Consolidated $ 527,038 $ 31,999 $ 176,008
5
TSI, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
MARCH 31, 2002
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,
2002 AND 2001
INCREASES (DECREASES)
Revenues $ (3,021,710) (84.4%)
Expenses (45,569) (10.6%)
Net Income (1,749,975) (93.7%)
Revenues decreased $3,021,710 in the first quarter of 2002 as compared
with the first quarter of 2001 due primarily to a decrease in the security
sales ($2,872,963). Other factors include: decrease in rent of $14,035
(12.1%), a decrease in interest and dividends of $158,078 (65.0%), increase
in title revenue of $44,451 (13.8%), and a decrease in other revenues of
$21,084 (83.1%). Operating expenses decreased $45,569 in the first quarter
of 2002 as compared with the first quarter of 2001 due to the decrease in
salaries of $4,718 (2.2%) and depreciation of $565 (2.6%). The provision
for income tax expense decreased by $1,219,300 (94.7%) in the first
quarter of 2002 as compared with the first quarter of 2001 due primarily to
the substantial decrease in pretax income.
6
TSI, INC.
PART II
OTHER INFORMATION
MARCH 31, 2002
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: September 27, 2002 s/D. Mellinger
D. Mellinger,
Assistant Secretary-Treasurer
Date: September 27, 2002 s/Lori Olson
Lori Olson,
Accountant
8
CERTIFICATION
I, Paul J. McCann, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
TSI, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circomstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
inforamtion included in quarterly annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of TSI, Inc. as of, and for, the
periods presented in this annual report.
4. TSI, Inc.'s other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Eschange Act Rules 13a-14 and 15d-14) for TSI, Inc. We have:
a. designed such disclosure controls and procedures to ensure that material
information relating to TSI, Inc., including its consolidated
subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this quarterly report is being prepared.
b. evaluated the effectiveness TSI, Inc. disclosure controls
and prodecures as of a date with 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. TSI, Inc.'s other certifying officers and I have disclosed,
based on our most recent evaluation, to TSI, Inc. auditors
and the audit committee of TSI, Inc. board of directors
(or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect TSI, Inc.'s
ability to record, process, summarize and report financial data, and
I have identified for Diversified Realty, Inc.'s auditors any
material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in TSI, Inc.'s
internal control; and
6. TSI, Inc.'s other certifying officers and I have indicated
in this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: September 27, 2002 s/Paul J. McCann
Paul J. McCann
9
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED UPRSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Diversified Realty, In. on Form
10-QSB for the period ending March 31, 2002 as filed with the Securites
and Exchange Commission on the date hereof (the "Report"), I, Paul J. McCann,
Representative of Diversified Realty, Inc., certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Subanes-
Oxley Act of 2002, that:
1. The report fully compiles with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of Diversified Realty, Inc.
Date: September 27, 2002 s/Paul J. McCann
Paul J. McCann,
Representative
10