-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IpIR72mV6tWQpfrK7yES2sPmCgFSpLU+DlnXfHpYtjiLpe6tN4+5LO9UXoqQR6uG PAtEL+asV5EyXVVnyCHDAw== 0000897101-97-000075.txt : 19970225 0000897101-97-000075.hdr.sgml : 19970225 ACCESSION NUMBER: 0000897101-97-000075 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970205 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TSI INC /MN/ CENTRAL INDEX KEY: 0000100063 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 410843524 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02958 FILM NUMBER: 97518502 BUSINESS ADDRESS: STREET 1: 500 CARDIGAN ROAD CITY: SHOREVIEW STATE: MN ZIP: 55126 BUSINESS PHONE: 6124830900 MAIL ADDRESS: STREET 1: 500 CARDIGAN ROAD STREET 2: D CITY: ST PAUL STATE: MN ZIP: 55126-3996 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 10549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED DECEMBER 31, 1996 Commission File Number 0-2958 TSI INCORPORATED (Exact name of registrant as specified in its charter) Minnesota 41-0843524 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 500 Cardigan Road, Shoreview, Minnesota 55126 (Address of principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 20 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 ____ Indicate number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Date: January 31, 1997 Number of Common Shares Outstanding 11,350,249 ------------------- ------------ TSI INCORPORATED FORM 10-Q For the Quarter Ended December 31, 1996 Page PART I. FINANCIAL INFORMATION 2 Item 1. Financial Statements Consolidated Statement of Earnings 3 Consolidated Balance Sheets 4 Consolidated Statements of Cash Flows 5 Note to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 7 - 8 PART II. OTHER INFORMATION 9 EXHIBIT 11 Computation of Per Share Earnings 12
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31 DECEMBER 31 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales $22,329,666 $20,730,421 $61,141,510 $49,074,279 Cost of products sold 9,926,126 9,859,355 26,914,037 22,026,769 ----------- ----------- ----------- ----------- GROSS PROFIT 12,403,540 10,871,066 34,227,473 27,047,510 Operating expenses Research and product development 2,789,140 2,218,232 8,066,926 6,418,638 Selling 4,833,647 4,499,977 13,294,698 11,874,824 Administrative 1,520,823 1,349,419 4,421,760 3,798,801 ----------- ----------- ----------- ----------- 9,143,610 8,067,628 25,783,384 22,092,263 ----------- ----------- ----------- ----------- OPERATING INCOME 3,259,930 2,803,438 8,444,089 4,955,247 Other income 114,168 80,529 287,255 228,666 ----------- ----------- ----------- ----------- EARNINGS BEFORE INCOME TAXES 3,374,098 2,883,967 8,731,344 5,183,913 Provision for income taxes 1,181,000 1,009,000 3,056,000 1,814,000 ----------- ----------- ----------- ----------- NET EARNINGS $ 2,193,098 $ 1,874,967 $ 5,675,344 $ 3,369,913 =========== =========== =========== =========== EARNINGS PER COMMON SHARE $ .19 $ .17 $ .49 $ .31 =========== =========== =========== =========== Weighted average number of shares for computation of earnings per common share 11,713,802 11,307,888 11,690,791 10,999,314
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS DEC. 31 March 31 Dec. 31 1996 1996 1995 (UNAUDITED) (unaudited) ----------- ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,205,382 $ 688,055 $ 1,200,385 Accounts receivable 17,436,596 15,533,541 14,783,514 Prepaid expenses 431,638 310,483 296,974 Inventories Finished products 2,455,016 2,462,381 2,108,783 Work-in-process 2,886,050 1,782,462 1,741,381 Materials and supplies 7,490,468 6,635,571 5,687,838 ----------- ----------- ----------- 12,831,534 10,880,414 9,538,002 ----------- ----------- ----------- TOTAL CURRENT ASSETS 33,905,150 27,412,493 25,818,875 INTANGIBLES AND OTHER ASSETS Goodwill 2,856,179 2,991,222 3,158,611 Note receivable 595,577 610,000 610,000 Deferred income tax benefit 721,020 721,020 289,073 Other assets 2,392,392 2,377,558 2,380,876 ----------- ----------- ----------- 6,565,168 6,699,800 6,438,560 PROPERTY, PLANT AND EQUIPMENT Land 128,503 128,503 128,503 Buildings 3,568,981 3,564,863 1,039,070 Construction in progress 439,124 236,747 4,187,556 Machinery and equipment 17,912,736 16,301,710 14,485,686 ----------- ----------- ----------- 22,049,344 20,231,823 19,840,815 Less allowance for depreciation 13,105,193 11,831,980 11,488,964 ----------- ----------- ----------- 8,944,151 8,399,843 8,351,851 ----------- ----------- ----------- TOTAL ASSETS $49,414,469 $42,512,136 $40,609,286 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 5,294,937 $ 4,863,403 $ 5,743,744 Notes payable -- -- 302,221 Employee compensation 4,020,752 3,118,417 3,099,048 Taxes, other than income taxes 634,693 306,227 376,536 Income taxes payable 402,812 626,139 438,696 ----------- ----------- ----------- TOTAL CURRENT LIABILITIES 10,353,194 8,914,186 9,960,245 ----------- ----------- ----------- TOTAL LIABILITIES 10,353,194 8,914,186 9,960,245 SHAREHOLDERS' EQUITY Common shares, $.10 par value 1,129,767 559,083 543,686 Additional paid-in capital 8,573,413 8,800,846 7,654,668 Retained earnings 29,146,109 24,202,036 22,337,169 Equity adjustment from translation 211,986 35,985 113,518 ----------- ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 39,061,275 33,597,950 30,649,041 ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $49,414,469 $42,512,136 $40,609,286 =========== =========== ===========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) SIX MONTHS ENDED DECEMBER 31 1996 1995 ----------- ----------- OPERATING ACTIVITIES Net earnings $ 5,675,344 $ 3,369,913 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 6,994 14,003 Depreciation and amortization of property, plant and equipment 1,414,525 1,019,077 Amortization of goodwill 137,899 118,443 Gain on sale of assets 4,337 235 Changes in operating assets and liabilities: Accounts receivable (1,565,906) (4,468,740) Prepaid expenses (121,155) 78,081 Inventories (1,422,492) (1,226,657) Other assets 272,361 458,253 Accounts payable and accrued expenses 360,506 1,146,474 Employee compensation payable 831,037 227,997 Taxes, other than income taxes 304,273 103,579 Current income taxes payable (223,327) 258,698 Foreign currency translation gain (loss) 162,749 (239,570) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 5,837,145 859,786 ----------- ----------- INVESTING ACTIVITIES Additions to property, plant and equipment (1,881,813) (3,294,031) Proceeds from disposal of property, plant and equipment 4,526 -- Purchase of companies, net of cash acquired (1,081,764) (5,817,721) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (2,959,051) (9,111,752) ----------- ----------- FINANCING ACTIVITIES Proceeds from note -- (41,105) Proceeds from stock options exercised 343,249 401,424 Dividends paid (731,269) (476,326) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (388,020) (116,007) ----------- ----------- Effect of exchange rate changes on cash and cash equivalents 27,253 16,806 ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,517,327 (8,351,167) ----------- ----------- Cash and cash equivalents at beginning of year 688,055 9,551,552 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF SIX MONTH PERIOD $ 3,205,382 $ 1,200,385 =========== ===========
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1996 (Unaudited) Note 1. Basis of Presentation The information included in the accompanying interim financial statements is unaudited. In the opinion of management, all adjustments, consisting of normal recurring accruals necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year. Note 2. Earnings Per Share See Exhibit 11, Computation of Per Share Earnings, on page 12 of this document. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales for the three month period ended December 31, 1996 were $22,330,000, which was up 8 percent over the $20,730,000 net sales level for the same period a year ago. For the first nine months of fiscal 1996, the Company's net sales were $61,142,000, up 25 percent from $49,074,000, for the same nine-month period a year ago. Sales of products for the Safety, Comfort and Health of People increased 14 percent and accounted for 66 percent of the Company's total business during the third quarter, compared to 62 percent for the same quarter a year ago. For the nine months ended December 31, 1996, sales of Safety, Comfort and Health products increased 31 percent and represented 68 percent of total sales compared with 65 percent for last year's first nine months. This area accounted for 66 percent of the Company's business in fiscal 1996, ended March 31, 1996. Contributing to this growth was shipments of about $11 million this year compared to $1 million in the prior year under contracts with the U.S. Army and German army to furnish PortaCount(R) respirator fit testers for bio-hazard protection. Sales of products for Productivity and Quality Improvement decreased 3 percent and were at 34 percent of total sales for the fiscal 1997 third quarter compared with 38 percent a year ago. For the nine months ended December 31, 1996, sales of Productivity and Quality Improvement products increased 13 percent, making up 32 percent of total sales compared with 35 percent for last year's nine-month period. For fiscal 1996, ended March 31, 1996, this category accounted for 34 percent of the Company's business. The nine-month sales increase in this category came from increased sales of LaserSpeed(R) process instruments along with the partial year effect of the October, 1996 acquisition of Aerometrics, Inc., partially offset by a decrease in sales of other productivity and quality measuring instruments. This decrease resulted from some weakness in sales bookings of fluid mechanics instrumentation during the first half of the year followed by higher bookings during the third quarter, which should lead to higher fourth quarter shipments. Sales to U.S. and state government agencies including defense, comprised about 20 percent of the Company's net sales for the fiscal 1997 third quarter as compared to 21 percent for the same quarter last year. For the nine months ended December 31, 1996 and 1995, sales to the U.S. and state government agencies were at 22 percent and 21 percent, respectively. Since sales to government gencies represent a significant portion of the Company's sales, it is important to consider the potential effects of change in government spending. Due to the Company's diverse line of products, sales of the Company's commerical product lines usually occur in a wide range of U.S. and state government agencies resulting in a fairly stable sales rate at about 15 to 20 percent of sales for the commercial product lines. However, higher sales rates and shifts have occurred during the last several years because of changes from quarter-to-quarter and year-to-year in shipments under contracts with the U.S. military agencies for the Company's PortaCount(R) respirator fit testers. Also the typical percentage was lowered by approximately 3 percent due to a normally lower percentage of sales to government agencies for the three acquisitions made during fiscal 1996 and 1997. During the third quarter, backlog of orders increased from $25.7 million at September 30, 1996 to $26.6 million at December 31, 1996, and compared to backlog of $34.6 million at December 31, 1995. The largest single order during the third quarter this year was for $7.1 million for additional PortaCount respirator fit testers to be used by the U.S. Army, which will be shipped mostly during fiscal year 1998, ending March 31, 1998. Of the total backlog at December 31, 1996, about $9 million is for sales of PortaCount fit testers for military use. This compared with a backlog of about $14 million for military PortaCount fit testers at December 31, 1995. Gross profit margin for the third quarter ended December 31, 1996 was 55.5 percent of net sales compared with the 52.4 percent gross profit margin in the third quarter last year. Nine-month gross profit margin was 56.0 percent this year compared to 55.1 percent a year ago. The higher gross profit percentage this year was due to variation in product mix. Research and product development expenses as a percentage of net sales were 12.5 percent for the third quarter and 13.2 percent for the nine month period ended December 31, 1996, compared to 10.7 percent and 13.1 percent of net sales, respectively, for the same periods last year. Actual research and product development spending was up about 26 percent in the first nine months and, of that, about 40 percent was due to the fiscal 1996 acquisitions. The Company continues its commitment to growth through development of new technologies and products. For all of fiscal 1997, research and development expenses are expected to continue in the Company's historical range of 12 to 14 percent of sales. Selling expenses were 21.6 percent of net sales for the third quarter compared to 21.7 percent for the year earlier period. For the first nine months of fiscal 1997, selling expenses were 21.7 percent compared with 24.2 percent for the same period in fiscal 1996. Selling expenses for the first nine months were up about 12 percent compared to the same period a year ago and about 40 percent of the increase was due to the fiscal 1996 acquisitions. The decrease in selling expenses as a percentage of net sales corresponded to higher sales volume in this year's first nine months. Administrative expenses were 6.8 percent and 7.2 percent of net sales for the three and nine-month periods ended December 31, 1996, respectively. For the same periods ended December 31, 1995, administrative expenses were 6.5 and 7.7 percent of net sales. The Company expects administrative costs to continue in a normal operating range of 7 to 9 percent of net sales through the remainder of fiscal 1997. Other income was $114,000 in the third quarter and $287,000 in the first nine months of fiscal 1997 compared with $81,000 and $119,000, respectively, for the same periods in fiscal 1996. The increases for the current fiscal year are due to higher interest income due to higher cash balance. The provision for income taxes was at the rate of 35 percent of pre-tax earnings for the third quarter and nine month periods of both fiscal 1997 and 1996. Liquidity and Capital Resources Cash and cash equivalents increased by $2,517,000 to $3,205,000 at December 33, 1996 from $688,000 at March 31, 1996. The increase is mainly attributable to increased net earnings and partially offset by increases in accounts receivable, inventory and property, plant and equipment. The ratio of current assets to current liabilities was 3.3 as of December 31, 1996, compared to 3.1 as of March 31, 1996. Working capital increased $5,053,000 to $23,551,000 at the end of the third quarter of fiscal 1997, compared to $18,498,000 at the end of fiscal 1996. Management believes internally-generated funds and short-term borrowings on existing credit lines will provide adequate resources for supporting operations during the remainder of fiscal 1997. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 - Computation of Per Share Earnings (b) Reports on Form 8-K: No reports on Form 8-K have been filed by the Registrant during the quarter for which this report is being filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned thereunto duly authorized. Registrant: TSI Incorporated Date: February 5, 1997 By:s/s________________________________ James E. Doubles President & COO Date: February 5, 1997 By:/s/________________________________ Lowell D. Nystrom Vice President & CFO EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11 TSI Incorporated Computation of Per Share Earnings Three Months Ended Dec. 31, Nine Months Ended Dec. 31, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Primary Average shares outstanding 11,276,305 10,840,844 11,245,038 10,590,676 Net effect of dilutive stock options, based on the treasury stock method using average market price 437,497 467,044 445,753 408,638 ----------- ----------- ----------- ----------- Total 11,713,802 11,307,888 11,690,791 10,999,314 Net Earnings $ 2,193,098 $ 1,874,967 $ 5,675,344 $ 3,369,913 Primary per share amounts $ .19 $ .17 $ .49 $ .31 Fully Diluted Average shares 11,276,305 10,840,844 11,245,038 10,590,676 Net effect of dilutive stock options, based on the treasury stock method using the period-end market price, if higher than the average market price 491,403 538,518 516,387 576,290 ----------- ----------- ----------- ----------- Total 11,767,708 11,379,362 11,761,425 11,166,966 Net Earnings $ 2,193,098 $ 1,874,967 $ 5,675,344 $ 3,369,913 Fully diluted per share amounts $ .19 $ .16 $ .49 $ .30
EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS MAR-31-1997 DEC-31-1996 3,205,382 0 17,707,723 271,127 12,831,534 33,920,386 22,049,344 13,105,194 49,414,469 10,353,194 0 0 0 1,129,767 37,931,508 49,414,469 61,141,510 61,141,510 26,914,037 25,783,384 (287,255) 0 0 8,731,344 3,056,000 5,675,344 0 0 0 5,675,344 .49 .49
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