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 SEPTEMBER 30, 1999.

                          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 proceeding 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:  October 28, 1999          Number of Common Shares Outstanding: 11,339,322

                                      -1-
<PAGE>


                                TSI INCORPORATED

                                    FORM 10-Q
                    For the Quarter Ended September 30, 1999

                                                                          Page
                                                                          ----

PART I                  FINANCIAL INFORMATION                               2

Item 1                  Financial Statements

                              Consolidated Statements of Earnings           3

                              Consolidated Balance Sheets                   4

                              Consolidated Statements of Cash Flows         5

                              Notes to Consolidated Financial Statements   6-8

Item 2                  Management's Discussion and Analysis of Results of

                        Operations and Financial Condition                9-11

PART II                 OTHER INFORMATION                                  13

EXHIBIT 11              Computation of Per Share Earnings                  15

EXHIBIT 99              Stay-in-Place Agreements                          16-30

                                      -2-
<PAGE>


CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                   SEPTEMBER 30                     SEPTEMBER 30
                                                              1999             1998            1999             1998
------------------------------------------------------    ------------     ------------    ------------     ------------
<S>                                                       <C>              <C>             <C>              <C>
Net sales                                                 $ 28,680,358     $ 22,945,742    $ 52,380,394     $ 41,528,814
Cost of products sold                                       13,684,477       10,411,788      24,268,119       18,641,018
------------------------------------------------------    ------------     ------------    ------------     ------------
                               GROSS PROFIT                 14,995,881       12,533,954      28,112,275       22,887,796

Operating expenses
  Research and product development                           2,893,977        2,635,685       5,712,135        5,441,986
  Selling                                                    5,305,825        4,703,280      10,209,620        9,252,373
  Administrative                                             2,294,505        1,779,186       4,195,825        3,261,692
------------------------------------------------------    ------------     ------------    ------------     ------------
                                                            10,494,307        9,118,151      20,117,580       17,956,051
------------------------------------------------------    ------------     ------------    ------------     ------------
                           OPERATING INCOME                  4,501,574        3,415,803       7,994,695        4,931,745

Other income (expense)                                         (42,004)         100,254         150,131          259,262
Proxy contest and related costs                               (344,977)               0        (436,088)               0
------------------------------------------------------    ------------     ------------    ------------     ------------
               EARNINGS BEFORE INCOME TAXES                  4,114,593        3,516,057       7,708,738        5,191,007

Provision for income taxes                                   1,439,000        1,160,000       2,697,000        1,713,000
------------------------------------------------------    ------------     ------------    ------------     ------------
                               NET EARNINGS               $  2,675,593     $  2,356,057    $  5,011,738     $  3,478,007
                                                          ============     ============    ============     ============

BASIC EARNINGS PER COMMON SHARE                           $        .24     $        .21    $        .45     $        .31
------------------------------------------------------    ============     ============    ============     ============
DILUTIVE EARNINGS PER COMMON SHARE                        $        .23     $        .20    $        .44     $        .30
------------------------------------------------------    ============     ============    ============     ============

Weighted average common shares outstanding                  11,293,630       11,385,894      11,238,138       11,398,859
       Dilutive effect of employee stock options and
         purchase awards                                       337,796          167,081         281,864          175,093
                                                          ------------     ------------    ------------     ------------

       Weighted average common shares outstanding
         and dilutive shares                                11,631,426       11,552,975      11,520,002       11,573,952
                                                          ============     ============    ============     ============
</TABLE>



See notes to consolidated financial statements.

                                      -3-
<PAGE>


CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
                                                SEPTEMBER 30       March 31       September 30
                                                    1999             1999             1998
--------------------------------------------    ------------     ------------     ------------
<S>                                             <C>              <C>              <C>
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                     $  3,437,804     $ 13,437,396     $  7,530,169
  Accounts receivable                             23,313,430       14,461,708       18,111,779
  Net assets held for sale                         3,878,506                0                0
  Recoverable income taxes                         2,617,009                0                0
  Prepaid expenses                                   675,997          307,852          335,794
  Inventories
    Finished products                              2,924,708        3,309,948        2,980,320
    Work-in-process                                3,198,985        2,530,098        3,148,620
    Materials and supplies                         9,628,186        9,698,650        9,638,030
--------------------------------------------    ------------     ------------     ------------
                                                  15,751,879       15,538,696       15,766,970
--------------------------------------------    ------------     ------------     ------------
                        TOTAL CURRENT ASSETS      49,674,625       43,745,652       41,744,712

INTANGIBLES AND OTHER ASSETS
  Goodwill                                        16,707,385        4,438,845        3,714,339
  Note receivable                                    464,752          451,981          583,323
  Deferred income tax benefit                        127,661        1,225,246          528,180
  Other assets                                     4,209,472        3,085,388        2,716,289
--------------------------------------------    ------------     ------------     ------------
                                                  21,509,270        9,201,460        7,542,131
PROPERTY, PLANT AND EQUIPMENT
  Land                                               779,278          128,503          128,503
  Buildings                                        6,999,041        3,713,160        3,713,160
  Construction in progress                           434,014           70,396           43,422
  Machinery and equipment                         23,651,342       20,444,388       20,355,763
--------------------------------------------    ------------     ------------     ------------
                                                  31,863,675       24,356,447       24,240,848
  Less allowance for depreciation                 18,432,001       16,335,860       16,165,788
--------------------------------------------    ------------     ------------     ------------
                                                  13,431,674        8,020,587        8,075,060
--------------------------------------------    ------------     ------------     ------------
                                TOTAL ASSETS    $ 84,615,569     $ 60,967,699     $ 57,361,903
                                                ============     ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES

  Notes payable                                 $ 10,000,000     $          0     $          0
  Accounts payable and accrued expenses           12,172,150        5,338,538        4,976,859
  Employee compensation                            3,751,379        4,411,871        3,297,689
  Taxes, other than income taxes                     842,114          472,982          467,266
  Income taxes  payable                              927,724        1,349,827          960,411
  Current portion of long-term debt                  153,333                0                0
--------------------------------------------    ------------     ------------     ------------
                   TOTAL CURRENT LIABILITIES      27,846,700       11,573,218        9,702,225
Long-term debt, less current portion               2,004,465                0                0
--------------------------------------------    ------------     ------------     ------------
                           TOTAL LIABILITIES      29,851,165       11,573,218        9,702,225

SHAREHOLDERS' EQUITY
  Common shares, $.10 par value                    1,132,613        1,115,179        1,134,931
  Additional paid-in capital                      12,472,186       11,408,516       11,372,407
  Retained earnings                               41,431,848       37,094,220       35,223,537
  Equity adjustment from translation                (272,243)        (223,434)         (71,197)
--------------------------------------------    ------------     ------------     ------------
                  TOTAL SHAREHOLDERS' EQUITY      54,764,404       49,394,481       47,659,678
--------------------------------------------    ------------     ------------     ------------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $ 84,615,569     $ 60,967,699     $ 57,361,903
                                                ============     ============     ============
</TABLE>

See notes to consolidated financial statements.

                                      -4-
<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30                                               1999             1998
----------------------------------------------------------------    ------------     ------------
<S>                                                                 <C>              <C>
OPERATING ACTIVITIES
  Net earnings                                                      $  5,011,738     $  3,478,007
  Adjustments to reconcile net earnings to net cash
   provided by operating activities:
    Provision for losses on accounts receivable                          (95,732)          29,923
    Depreciation and amortization of property, plant & equipment       1,143,239          935,161
    Amortization of intangibles                                          337,243          279,253
    Amortization of goodwill                                             374,489          120,564
    Gain on sale of assets                                                19,607            1,514
    Provision for deferred income tax                                  2,600,308          (72,011)
    Changes in operating assets and liabilities:
      Accounts receivable                                             (1,868,578)      (1,633,342)
      Recoverable income taxes                                        (2,617,009)               0
      Prepaid expenses                                                  (122,437)        (112,081)
      Inventories                                                       (892,461)        (250,688)
      Other assets                                                       (74,454)         (67,977)
      Accounts payable and accrued expenses                            1,452,900           52,379
      Employee compensation payable                                     (498,156)        (620,921)
      Taxes, other than income taxes                                     223,113          (52,019)
      Current income taxes payable                                      (209,492)         (68,246)
    Foreign currency translation gain (loss)                             (33,041)         225,453
----------------------------------------------------------------    ------------     ------------
                   NET CASH PROVIDED BY OPERATING ACTIVITIES           4,751,277        2,244,969
----------------------------------------------------------------    ------------     ------------

INVESTING ACTIVITIES
  Additions to property, plant and equipment                            (912,138)        (572,155)
  Proceeds from disposal of property, plant and equipment                  6,267              213
  Purchase of companies, net of cash acquired                        (23,661,105)               0
----------------------------------------------------------------    ------------     ------------
                       NET CASH USED IN INVESTING ACTIVITIES         (24,566,976)        (571,942)
----------------------------------------------------------------    ------------     ------------

FINANCING ACTIVITIES
  Net proceeds from short-term notes                                   9,462,317                0
  Payment on long-term note                                              (38,334)               0
  Proceeds from stock options exercised                                  601,053           96,544
  Proceeds from employee stock purchases                                 480,051                0
  Dividends paid                                                        (674,109)        (684,570)
  Purchases of common stock                                                    0       (2,886,875)
----------------------------------------------------------------    ------------     ------------
       NET CASH PROVIDED BY AND USED IN FINANCING ACTIVITIES           9,830,978       (3,474,901)
----------------------------------------------------------------    ------------     ------------

Effect of exchange rate changes on cash and cash equivalents             (14,871)         (53,466)
----------------------------------------------------------------    ------------     ------------
                       DECREASE IN CASH AND CASH EQUIVALENTS          (9,999,592)      (1,855,340)
----------------------------------------------------------------    ------------     ------------

Cash and cash equivalents at beginning of year                        13,437,396        9,385,509
----------------------------------------------------------------    ------------     ------------
        CASH AND CASH EQUIVALENTS AT END OF SIX MONTH PERIOD        $  3,437,804     $  7,530,169
                                                                    ============     ============
</TABLE>

See notes to consolidated financial statements.

                                      -5-
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 1999
                                   (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 15 of this document.

Note 3.                 Comprehensive Income

                        Effective fiscal 1999, the Company has adopted Statement
                        of Financial Accounting Standards No. 130 "Reporting
                        Comprehensive Income". This statement requires companies
                        to classify items of other comprehensive income by their
                        nature in a financial statement and display the
                        accumulated balance of other comprehensive income
                        separately from retained earnings and additional
                        paid-in-capital in the equity section of the balance
                        sheet, and is effective for the Company's fiscal year
                        ending March 31, 1999. The Company's only item of other
                        comprehensive income is foreign currency translation
                        adjustments. This item is separately displayed in the
                        equity section of the balance sheet. At September 30,
                        comprehensive income, net of tax, differs from net
                        income by the following:

                                                        Increase (Decrease)
                                                        -------------------
                                                     1999                 1998
                                                     ----                 ----

                        Quarter Ended              (110,290)            163,088
                                                   ========            ========

                        Six Months Ended             48,809            (213,282)
                                                   ========            ========


Note 4.                 Segment Information

                        The Company develops, manufactures, and markets
                        measuring and control instruments for a variety of
                        applications. The Company's products can best be divided
                        into two market segments. These are the Safety, Comfort,
                        and Health segment and the Productivity and Quality
                        Improvement segment. The Safety, Comfort, and Health
                        segment consists of instruments that monitor and control
                        the environment in which people work and live. These
                        include analytical and research instruments used to
                        characterize very small particles, products that monitor
                        indoor air quality, and products that help to protect
                        people from toxic airborne substances. The Productivity
                        and Quality Improvement

                                      -6-
<PAGE>


                        segment produces instruments that help customers enhance
                        their industrial processes and improve their products.
                        These include flow-related measuring instruments,
                        noncontact measuring devices for manufacturers of metals
                        and wire, filter testers, and instruments for measuring
                        the speed and concentration of droplets in industrial
                        sprays. The Company evaluates performance based on
                        operating profit or loss before other income, interest,
                        and taxes. Revenue from sales between the segments is
                        not material.

Three Months Ended September 30,

                                                      1999            1998
                                                      ----            ----
Net Sales
      Safety, Comfort, and Health             $ 22,918,000    $ 17,129,000
      Productivity and Quality Improvement    $  5,762,000    $  5,817,000
                                              ------------    ------------
                                              $ 28,680,000    $ 22,946,000
                                              ============    ============

Operating Income (Loss)
      Safety, Comfort, and Health             $  4,215,000    $  4,631,000
      Productivity and Quality Improvement    $    287,000    $ (1,215,000)
                                              ------------    ------------
                                              $  4,502,000    $  3,416,000
                                              ============    ============

Six Months Ended September 30,

                                                      1999            1998
                                                      ----            ----
Net Sales
      Safety, Comfort, and Health             $ 41,815,000    $ 30,831,000
      Productivity and Quality Improvement    $ 10,565,000    $ 10,698,000
                                              ------------    ------------
                                              $ 52,380,000    $ 41,529,000
                                              ============    ============

Operating Income (Loss)
      Safety, Comfort, and Health             $  7,718,000    $  7,243,000
      Productivity and Quality Improvement    $    277,000    $ (2,311,000)
                                              ------------    ------------
                                              $  7,995,000    $  4,932,000
                                              ============    ============


Note 5.                 Proxy Contest and Related Expenses

                        A shareholder made an unsolicited bid for the Company
                        that was rejected by the Company's Board of Directors.
                        The shareholder then initiated a proxy contest to elect
                        an alternate slate to the Company's Board of Directors
                        rather than the incumbents up for re-election as
                        recommended by the Company. In addition, the
                        shareholder's proxy sought changes to the Company's
                        articles and bylaws making it easier for a change of
                        control to occur without the approval of the Company's
                        Board. The Company hired public relations professionals,
                        attorneys, investment bankers, and a proxy solicitor to
                        assist it in its efforts to oppose the shareholder's
                        proxy, which was ultimately defeated. In addition, the
                        Company continues to use these advisors to help review
                        strategic alternatives, including seeking offers of
                        higher value. Costs associated with these advisors have
                        been recorded as incurred and have been reported as a
                        separate line on the consolidated statement of earnings.

                                      -7-
<PAGE>


Note 6.                 Acquisition of Environmental Systems Corporation

                        Effective June 1, 1999, the Company acquired the stock
                        of Environmental Systems Corporation of Knoxville,
                        Tennessee. Environmental Systems Corporation specializes
                        in technology-based products and services relating to
                        environmental monitoring, power production and waste
                        management. The acquisition was accounted for by the
                        purchase method of accounting. The acquisition price of
                        $25 million was paid in cash. To finance the
                        acquisition, the Company used its existing cash along
                        with bank financing of $15 million made available under
                        its line of credit. The initial debt is short-term with
                        the ability to extend the term for periods not to exceed
                        five years. The debt was paid off on October 1, 1999
                        using cash from operations and the proceeds from the
                        Handar sale (see Note 7). The Company filed a Form 8-K
                        with pro forma fiscal 1999 financial statements
                        reflecting the acquisition.

Note 7.                 Subsequent Event

                        Effective October 1, 1999, the Company sold the net
                        assets of its wholly owned subsidiary, Handar to an
                        independent third party for $12,469,000. Of the total,
                        $11,200,000 was paid in cash, with the remaining
                        $1,269,000 held in escrow to be paid in two installments
                        of $634,500 on the first two anniversaries of the sale.
                        The Company will record a pre-tax gain on the sale of
                        $8,590,000 in the quarter ended December 31, 1999.

                                      -8-
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements

From time to time, in written and oral statements, TSI Incorporated discusses
expectations regarding its future performance, including such things as sales
and expense trends, global economic issues, future order potentials and Year
2000 risks. These "forward-looking statements" are based on currently available
competitive, financial and economic data and the Company's operating plans. They
are inherently uncertain, and investors must recognize that events could turn
out to be significantly different from expectations.

Acquisition of Environmental Systems Corporation

Effective June 1, 1999, the Company acquired Environmental Systems Corporation
(ESC) of Knoxville, Tennessee for approximately $25 million in cash. Since ESC's
operations represent approximately 20 to 25 percent of the Company's total
business, ESC's impact, where significant, has been noted below in order to
present a more meaningful comparison between periods.

Results of Operations

Following is a quarterly sales breakdown by segment:


                                              Second Quarter
                                              --------------       Percent
                                           1999           1998      Change
                                           ----           ----      ------
Safety, Comfort, and Health             $22,918,000    $17,129,000    34%
Productivity and Quality Improvement      5,762,000      5,817,000    (1)
                                        -----------    -----------    ---
                                         28,680,000     22,946,000    25
                                        ===========    ===========    ===

The increase in sales was due to the June 1, 1999 acquisition of Environmental
Systems Corporation (ESC). For the quarter, excluding ESC, sales were
essentially flat with the prior year. Year-to-date sales have increased
$10,852,000 or 26%. Excluding ESC, year-to-date sales have increased 6.8%. This
increase is mostly attributable to increased demand for particle research
instruments.

Sales to U.S. and state government agencies, including defense, shown as a
percent of total sales, were:

                          September 30,
                       1999           1998
                       ----           ----
Quarter                 21%            25%
Year-to-date            23%            23%

While the government percentage to total sales is high, the Company sells many
different products to a very diverse range of government agencies. Consequently,
government sales during the past several years have been quite stable as a
percentage of total sales. We consider the current percentages to be within the
normal range.

                                      -9-
<PAGE>


International sales rose $1,173,000 or 18 percent for the quarter compared with
last year. ESC accounted for $925,000 of the increase with the remainder
attributable to various other safety, comfort, and health products. Year-to-date
international sales were $3,807,000 above the prior year. This was primarily due
to three factors: (1) the addition of ESC, (2) strong sales of particle research
products, and (3) sales of process instruments to the metals industry.

Order bookings were as follows:


                          Second Quarter            Percent
                          --------------            -------
                       1999            1998         Change
                       ----            ----         ------
Quarter             $30,604,000     $21,651,000       41%
Year-to-date        $51,488,000     $39,271,000       31%

Excluding ESC and Handar (which was sold October 1, 1999) we saw a 12% increase
in incoming orders for the quarter and 14% year-to-date. Orders were
particularly strong for (1) particle research instruments, and (2) flowmeters
sold to the medical industry. Both are within our safety, comfort, and health
area.

For the six-months ended September 30, 1999 and 1998, Handar had sales of
$3,885,000 and $4,278,000, respectively. For the same six-month periods, Handar
had bookings of $4,122,000 and $5,127,000 in 1999 and 1998, respectively. These
are included in the Company's consolidated financial results. For all of fiscal
year 1999, Handar had sales of $9,186,000 and bookings of $7,992,000.

Gross profit has ranged between 55.6% and 56.0% over the last three fiscal
years. For the quarter it was 52.3%, and 53.7% for the six-months. The lower
percentages are due to the acquisition of ESC. ESC's business includes air
monitoring systems with a heavy buy/resell component. In addition, ESC does
environmental consulting which is more labor intensive than the Company's
traditional instrument sales. Consequently, we anticipate the Company's gross
margin for the remainder of the current year will be closer to the current
quarter's level than historical levels. This will, however, be somewhat
dependent on product mix.

Research and development costs dropped to 10.1% of sales for the quarter,
bringing the year-to-date costs to 10.9% of sales. The Company continues its
commitment to growth through development of new technologies and products.
Again, these percentages are impacted by the ESC business, which is not as
reliant on research and product development spending. Excluding ESC, research
and development expenses were near the low end of the historical range. For all
of fiscal 2000, research and development expenses are expected to be between 10%
and 11% of sales.

For the last three years, selling expenses have ranged between 21.6% and 23.3%
of sales. Selling expenses were 18.5% of net sales for the second quarter
compared to 20.5% last year. For the first six months of fiscal 2000, selling
expenses were 19.5% compared to 22.3% a year ago. Excluding ESC, selling
expenses were near the low end of the historical range. For all of fiscal 2000,
we would expect selling expenses to be between 18.5% and 20% of sales.

Administrative expenses were 8.0% of sales for the quarter compared to 7.8% last
year. For the first six months of fiscal 2000, administrative expenses were 8.0%
compared to 7.9% in fiscal 1999. The

                                      -10-
<PAGE>


Company expects administrative costs to continue within our normal operating
range between 7 and 8 percent for the rest of the year.

Other income varies depending on foreign currency fluctuations, interest rates
and invested cash balances and borrowing levels. The first half of fiscal 2000
included significant interest expense related to borrowings made to acquire ESC.
Fiscal 1999 did not include any borrowings.

Income taxes represent 35% of pre-tax income this year compared to 33% last
year. The increase in the fiscal 2000 tax rate is primarily due to the
intangible assets from the ESC acquisition. The intangibles are permanent
differences and not deductible for tax purposes. We would expect the rate for
the rest of the year to be 34% to 36% exclusive of the Handar gain, depending on
our international sales level and the benefit the Company receives from its
foreign tax credit. We expect to recognize an effective tax rate of between 41
and 43 percent on the Handar gain.

Liquidity and Capital Resources

TSI's cash decreased $10,000,000 since March 31, 1999. As shown on the statement
of cash flows, the Company generated $4,751,000 of cash from operating
activities offset primarily by $912,000 in capital expenditures, and $674,000 in
dividends, and cash paid to acquire ESC. The Company had net short-term
borrowings of $9,462,000 primarily used to fund the ESC acquisition. At
September 30, 1999, the Company had $3,438,000 cash on hand and believes
operations will continue to generate sufficient cash to fund current operating
needs. Additionally, on October 1, 1999 the Company used the proceeds from the
sale of the net assets of its Handar subsidiary to pay-off its bank line of
credit. The Company believes it has sufficient borrowing capacity should the
need arise.


Year 2000 Conversion

The Company has reviewed and modified critical information technology ("IT")
business systems and believe these systems are Year 2000 compliant. We have
tested all major systems and they are compliant. While there may be some
unidentified problems, we do not expect any issues that would represent
significant business risk.

The Company has also identified all non-IT systems and tested systems considered
to be critical to the business. Certain of these systems required updating and
the Company has made substantially all the updates.

An initial list of key third party providers was made and direct discussions
have been held in order to determine their state of Year 2000 readiness. Most
critical vendors have indicated they will be Year 2000 compliant at various
points during calendar 1999 and we will not have a stoppage in the flow of
critical goods or services. The Company has extended the number of vendors
identified to insure vendors significant to our business were identified and
contacted. No problems have been found that we believe represent significant
business risk. We believe alternative suppliers can be identified should our
current suppliers fail to become Year 2000 compliant.

A committee was formed to study current product lines to determine if hardware
and software are Year 2000 compliant. We have conducted reviews, using both
internal staff and external consultants, to assess our state of Year 2000
readiness. The reviews included reviewing Year 2000 instrumentation

                                      -11-
<PAGE>


testing, critical vendor correspondence, a facility tour, and a questionnaire
assessing each operation's readiness. These reviews were completed in July 1999.

The Company's products fall into the following categories:

YEAR 2000 COMPLIANT - the Company has identified several products and made them
Year 2000 compliant. We have responded to customers' requests to provide these
upgrades and, in some cases, customers can download updated software from our
internet web site to make the products Year 2000 compliant.

NON-COMPLIANT INSTRUMENTS OR INSTRUMENTS NOT RELYING ON DATE INFORMATION - the
Company has identified several instruments that do not rely on any internal or
external date coding. It is anticipated no modification will be required to
these instruments. In addition, the Company has fielded several instruments in
the past using date information that the Company does not intend making Year
2000 compliant. The Company is responding to specific customer requests on these
instruments as well as providing information on our Internet web site.

OTHER - there are still some products where the Year 2000 review has not been
completed. It is expected the remaining reviews will be completed before the end
of calendar 1999. It is anticipated any products not tested to this point will
not be made Year 2000 compliant. However, we do not feel this will be a
deterrent from the customer purchasing these instruments because it will only
affect the dating information and not the performance of the instrument. There
can be no assurance regarding the customers' response to any Year 2000 issues we
have yet to identify.

Our Year 2000 compliance program is being carried out with internal staff
without significant additional outside expenditures. However, Year 2000 issues
have accelerated approximately 10 to 15 percent of our capital purchases by one
to two years. For example, during the third quarter of fiscal 1999, the Company
replaced the main IBM AS400 computer system at corporate headquarters with one
meeting the requirements of Year 2000. Additionally, the Company made similar
replacements at its domestic subsidiaries during the fourth quarter of fiscal
1999. Foreign subsidiary systems comprise a small portion of the overall system
and their systems are currently under review. It is expected this review will be
completed by early December 1999. The Company estimates that historical and
future costs associated with its Year 2000 program will not exceed $200,000
annually for fiscal years 1998 through 2000. Such costs are expensed as
incurred. Management does not believe the focus on Year 2000 compliance has
caused us to ignore other types of upgrades to any critical systems.

Failure to complete upgrades to existing systems, or third party providers being
unable to supply us with inventory, could result in the company being unable to
ship certain products. However, management believes the remaining system changes
required can be readily implemented well before January 1, 2000 and, therefore,
will not subject the Company to significant business risks.

The Company has developed a corporate contingency plan to mitigate possible
disruptions in services or business operations. Additional contingency plans
will be developed within the operating units during the remainder of calendar
1999 and the company will monitor the need for implementing such plans.

                                      -12-
<PAGE>


PART II.       OTHER INFORMATION

Item 6.        Item 6. Exhibits and Reports on Form 8-K

               (a)      Exhibits
                        Exhibit 11 - Computation of Per Share Earnings
                        Exhibit 27 - Financial Data Schedule
                        Exhibit 99 - Stay-in-Place Agreements

               (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.

                                      -13-
<PAGE>


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:  November 15, 1999                        By: /s/ James E. Doubles
                                                       -------------------------
                                                       James E. Doubles
                                                       President & CEO


Date:  November 15, 1999                        By: /s/ Robert F. Gallagher
                                                       -------------------------
                                                       Robert F. Gallagher
                                                       Vice President & CFO

                                      -14-