UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-K/A
(Amendment
No. 2)
|
x
|
Annual
Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of
1934
|
For
the
fiscal year ended May 31, 2007
or
|
o
|
Transition
Report Under Section 13 or 15(d) of The
Securities Exchange Act of 1934
|
For
the
transition period from _____________________ to
______________________
| Commission File Number: |
0-8656
|
|
TSR,
Inc.
|
(Exact
name of registrant as specified in its charter)
|
Delaware
|
13-2635899
|
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
|
|
incorporation
or organization)
|
|
400
Oser Avenue, Hauppauge, NY 11788
|
|
(Address
of principal executive offices)
|
| Registrant's telephone number: |
631-231-0333
|
| Securities registered pursuant to Section 12(b) of the Exchange Act: |
Common
Stock, par value $0.01 per share
|
|
(Title
of Class)
|
Securities registered pursuant to Section 12(g) of the Exchange Act:
|
None
|
|
(Title
of Class)
|
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. o
Yes x
No
Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. o Yes x No
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 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. x
Yes o No
Indicate
by check mark if there is no disclosure of delinquent filers in response to
Item
405 of Regulation S-K contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
the
Exchange Act).
|
o
Large
accelerated filer
|
o
Accelerated
filer
|
x
Non-accelerated filer
|
Indicate
by check mark whether the Registrant is a shell Company (as defined in Rule
12b-2 of the Act). oYes
No x.
The
aggregate market value of voting and non-voting common equity held by
non-affiliates of the Registrant based upon the closing price of $4.00 at
November 30, 2006 was $11,102,000.
The
number of shares of the Registrant's common stock outstanding as of July
31,
2007 was 4,568,012.
Documents
incorporated by Reference:
None
–
2
–
EXPLANATORY
NOTE
This
Form 10-K/A for the year ended May
31, 2007 is being filed for the purpose of providing the information required
by
Part III of this Annual Report on Form 10-K/A and restate the amendment to
Item
5.
–
3
–
|
ITEM
5.
|
Market
for Registrants Common Equity, Related Stockholder Matters and
Issuer
Purchase of Equities
Securities.
|
The
Company's shares of Common Stock trade on the NASDAQ Global Market under
the
symbol TSRI. The following are the high and low sales prices for each
quarter during the fiscal years ended May 31, 2007 and 2006:
|
June
1, 2006 - May 31, 2007
|
||||||||||||||||
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
|||||||||||||
|
High
Sales Price
|
5.50
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4.75
|
4.79
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4.53
|
||||||||||||
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Low
Sales Price
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3.55
|
3.80
|
3.85
|
3.80
|
||||||||||||
|
June
1, 2005 - May 31, 2006
|
||||||||||||||||
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
|||||||||||||
|
High
Sales Price
|
6.38
|
6.00
|
11.16
|
6.04
|
||||||||||||
|
Low
Sales Price
|
5.10
|
4.35
|
4.50
|
4.30
|
||||||||||||
There
were 133 holders of record of the Company's Common Stock as of July 31,
2007. Additionally, the Company estimates that there were
approximately 1,500 beneficial holders as of that date. On June
23, 2003, the Company declared a special, large nonrecurring dividend of
$2.00
per share payable on July 28, 2003 to holders of record as of July 11,
2003. Additionally, the Company declared quarterly dividends of $0.15
during the fiscal years ended May 31, 2004 and 2005. The dividend was
$0.08 per quarter for fiscal 2006 and 2007. The Company has not
determined its dividend policy for fiscal 2008. There can be no
assurance that the Company will continue to pay dividends.
Securities
authorized for issuance under equity compensation plans.
The
1997
Employee Stock Option Plan, the Company’s lone equity compensation plan, expired
on April 30, 2007.
–
4
–
COMPARISON
OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
The
following graph compares cumulative five-year stockholder returns (including
reinvestment of dividends) on an indexed basis with the Center for Research
in
Security Prices ("CRSP") Index for the NASDAQ Stock Market (US Companies)
and
the CRSP Index for NASDAQ Computer and Data Processing Stocks (SIC Code
737). These indices are included for comparative purposes only and do
not necessarily reflect management's opinion that such indices are an
appropriate measure of the relative performance of the stock involved,
and are
not intended to forecast or be indicative of possible future performance
of the
Common Stock.
Performance
Graph of TSR, Inc. Common Stock Versus Broad Market and Peer Group
Indices
|
5/02
|
5/03
|
5/04
|
5/05
|
5/06
|
5/07
|
||||||
|
TSR,
Inc.
|
100
|
117
|
118
|
105
|
88
|
69
|
|||||
|
NASDAQ
(US)
|
100
|
99
|
123
|
129
|
137
|
164
|
|||||
|
Computer
and Data Processing
|
100
|
104
|
119
|
132
|
132
|
172
|
Notes:
|
A.
|
The index level for all series was set to $100 at May 31, 2002. |
|
B.
|
The
lines represent monthly index levels derived from compounded
daily returns
that include all dividends.
|
|
C.
|
If
the monthly interval based on the fiscal year-end is not a trading
day,
the preceding trading day
is used.
|
–
5
–
|
ITEM
10.
|
Directors
and Executive Officers of the
Registrant.
|
The
following table sets forth certain information concerning the executive
officers
and directors of the Company:
|
Name
|
Age
|
Position
|
Year
First Officer or Director
|
|||
|
Joseph
F. Hughes
|
76
|
Chairman
of the Board, Chief Executive Officer, President, Treasurer
and
Director
|
1969
|
|||
|
John
G. Sharkey
|
48
|
Vice
President, Finance, Controller and Secretary
|
1990
|
|||
|
James
J. Hill (1,2,3,4)
|
74
|
Director
|
1989
|
|||
|
John
H. Hochuli, Jr. (1,2,3)
|
77
|
Director
|
1993
|
|||
|
Robert
A. Esernio (1,2,3,5)
|
78
|
Director
|
2001
|
|||
|
Christopher
Hughes
|
46
|
Sr.
VP , Pres., TSR Consulting Services, Inc. and Director
|
2000
|
|||
|
Raymond
A. Roel.(1,2,3)
|
52
|
Director
|
2005
|
(1) Member
of the Compensation Committee of the Board of Directors.
(2) Member
of the Audit Committee of the Board of Directors.
(3) Member
of the Nominating Committee of the Board of Directors.
(4) Mr.
Hill is Chairman of the Compensation Committee.
(5) Mr.
Esernio is Chairman of the Audit and Nominating Committees.
Mr.
Joseph F. Hughes, from 1953 until forming the Company in 1969, was employed
by
International Business Machines Corporation (“IBM”) in various systems
engineering, marketing and administrative positions. Immediately prior
to his
employment with the Company, Mr. Hughes was responsible for managing
the market
and technical sales group serving colleges and universities with IBM
in Long
Island and Westchester County.
Mr.
John
G. Sharkey has a Masters Degree in Finance. He received his Certified
Public Accountant certification from the State of New York. From 1987
until joining the Company in October 1990, Mr. Sharkey was Controller
of a
publicly held electronics manufacturer. From 1984 to 1987, he served
as Deputy Auditor of a commercial bank, having responsibility over the
internal
audit department. Prior to 1984, Mr. Sharkey was employed by KPMG LLP
as a senior accountant.
Mr.
John
H. Hochuli, Jr. has been a Director of the Company since April
1993. In 1994 he retired from Diamond Manufacturing Corp., a maker of
aluminum windows and doors, which he founded in 1955 and served as
President.
Mr.
James
J. Hill has been a Director of the Company since December 1989. In
1998, he retired from MRA Publications, Inc., a medical publishing business
for
which he had been Executive Vice President of Sales and Marketing since
1979. Mr. Hill received a Bachelor of Science Degree in Business
Administration from the University of Arizona in 1958 and a Bachelor
of Foreign
Trade Degree from the American Institute of Foreign Trade in Arizona
in
1959.
Mr.
Robert A. Esernio has been a Director of the Company since April
2001. From 1969 through 1990 Mr. Esernio was a partner in the
international accounting and consulting firm of Grant Thornton
LLP. Mr. Esernio is a certified public accountant and was also a
professor of Accounting at St John’s and Long Island Universities from 1958
through 1985 when he retired with Emeritus status. Mr. Esernio
received a Bachelor of Business Administration Degree; Magna cum Laude
from St.
John’s University in 1956 and a Master of Business Administration Degree from
New York University in 1963.
–
6
–
Mr.
Christopher Hughes has been a Director of the Company from April 2000
until
September 2004 and again from January 2005 until the present. He has
been employed by the Company since 1985 and was a Vice President-Sales
for the
Company’s computer programming services subsidiary from 1991 through 2006. In
2007 he was appointed Senior Vice President of the Company and President
of the
subsidiary. He is the son of Mr. Joseph F. Hughes, Chairman of the
Board. Mr. Christopher Hughes is a 1984 graduate of St. Bonaventure
University.
Mr.
Raymond A. Roel has been a Director of the Company since January
2005. Since 1996, Mr. Roel has been employed by McCann Worldgroup, a
unit of Interpublic Group of Companies, Inc. His most recent position
is Associate Director of Worldwide Communications. Mr. Roel is a 1977
graduate of Brown University.
The
Company’s executive officers are elected by, and serve at the discretion of,
the
Board of Directors.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company’s
officers and directors and persons who own more than ten percent of a
registered
class of the Company’s equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the
“Commission”). Officers, directors and greater than ten percent
Stockholders are required by regulation of the Commission to furnish
the Company
with copies of all Section 16(a) forms they file.
Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons that no Forms 5 were required
for
those persons, the Company believes that, during the fiscal year ended
May 31,
2007, all filing requirements applicable to its officers, directors and
greater
than ten percent beneficial owners were satisfied.
Code
of Ethics
The
Company has adopted a code of ethics that applies to all of the employees,
including the chief executive officer and chief financial and accounting
officers. The code of ethics is posted on the Home Page of its
website at http://www.tsrconsulting.com. The Company intends to post
on its website all disclosures that are required by law or NASDAQ stock
market
listing standards concerning any amendments to, or waivers from, our
code of
ethics. Stockholders may request a free copy of the code of ethics by
writing to Corporate Secretary, TSR, Inc., 400 Oser Avenue, Hauppauge,
NY
11778. Disclosure regarding any amendments to, or waivers from,
provisions of the code of ethics that apply to the Company’s directors or
principal executive and financial officers will be included in a Current
Report
on Form 8-K within five business days following the date of the amendment
or waiver, unless website posting of such amendments or waivers is then
permitted by the rules of the NASDAQ Stock Market.
Independence
Determination
The
Board
of Directors has determined that each member of each
committee meets the applicable laws and regulations,
including those of The NASDAQ Stock Market, regarding
“independence”.
The
Audit Committee
The
Audit
Committee’s current members are Robert A. Esernio (Chairman), James J. Hill,
John H. Hochuli Jr. and Raymond A. Roel. The Audit Committee’s primary functions
are to assist the Board in monitoring the integrity of the Company’s financial
statements and systems of internal control. The Audit Committee has direct
responsibility for the appointment, independence and performance of the
Company’s independent auditors. The Audit Committee is responsible for
pre-approving any engagements of our independent auditors. The Audit
Committee
operates under a written charter approved by the Board on September 16,
2004, a
copy of which was attached as an appendix to the Company’s proxy statement for
its 2004 annual meeting. The Board of Directors also has determined
that Robert A. Esernio, an independent director who serves as the Chair
of the
Board’s Audit Committee, is an “audit committee financial expert” as such term
is defined in applicable regulations of the Securities and Exchange
Commission.
–
7
–
|
ITEM 11.
|
Executive
Compensation
|
Compensation
Discussion and Analysis
Compensation
Objectives and Strategy
The
Company’s executive officer compensation program is designed to attract and
retain the caliber of officers needed to ensure the Company’s continued growth
and profitability and to reward them for their performance, the Company’s
performance and for creating longer term value for shareholders. The
primary
objectives of the program are to:
|
·
|
align
rewards with performance that creates shareholder
value;
|
|
·
|
support
the Company’s strong team
orientation;
|
|
·
|
encourage
high potential team players to build a career at the Company;
and
|
|
·
|
provide
rewards that are cost-efficient, competitive with other organizations
and
fair to employees and shareholders.
|
The
Company’s executive compensation programs, as detailed in the executives’
employment agreements, are approved and administered by the Compensation
Committee of the Board of Directors. Working with management, the Compensation
Committee has developed a compensation and benefits strategy that rewards
performance and reinforces a culture that the Compensation Committee
believes
will drive long-term success.
The
compensation program rewards team accomplishments while promoting individual
accountability. Compensation depends in significant measure on Company
results,
but individual accomplishments and responsibilities are also very important
factors in determining each executive’s compensation. We seek to
provide compensation that is commensurate with performance.
Role
of
the Compensation Committee
General
The
Compensation Committee provides overall guidance for our executive compensation
policies and determines the amounts and elements of compensation for
our
executive officers.
The
Compensation Committee currently consists of four members of our Board
of
Directors, Robert A. Esernio, James J Hill (Chair), John H. Hochuli,
Jr, and
Raymond A. Roel. Each current member of the Compensation Committee is
independent, as independence is defined for purposes of Compensation
Committee
membership by the listing standards of Nasdaq.
Joseph
Hughes, Chairman of the Board and Chief Executive Officer, makes recommendations
to the Compensation Committee with respect to the establishment of salaries
and
granting of bonuses to other executives of the Company.
Use
of
Outside Advisors
In
making
its determinations with respect to executive compensation, the Compensation
Committee has not historically engaged the services of a compensation
consultant. The Compensation Committee has the authority to retain, terminate
and set the terms of the Company’s relationship with any outside advisors who
assist the Committee in carrying out its responsibilities.
–
8
–
Compensation
Structure
Pay
Elements — Overview
The
Company utilizes three main
components of compensation:
|
·
|
Base
Salary — fixed pay that takes into account an individual’s role and
responsibilities, experience, expertise and individual
performance.
|
|
·
|
Annual
Incentive — variable pay that is designed to reward attainment of annual
business and individual performance
goals.
|
|
·
|
Benefits
and Perquisites — these include club dues, automobile allowances and
medical insurance benefits.
|
Pay
Elements — Details
1.
Base Salary
The
Compensation Committee reviews officer salaries and makes adjustments
as
warranted based on individual responsibilities and performance, Company
performance in light of market conditions and competitive practice.
2.
Annual Incentive Compensation
Annual
incentive compensation for the
executive officers is paid under an incentive arrangement as detailed
in the
officer’s employment agreement. The incentive arrangements are designed to grant
bonus awards to such individuals as an incentive to contribute to our
profitability. The Compensation Committee administers the incentive arrangements
which, in some cases, include establishment of targets in area of responsibility
and payment of bonus based on the extent to which the targets have been
met or
exceeded, or which, in some cases, are based on meeting overall profits
targets.
The
Company also previously provided incentive compensation through the grant
of
stock options, but its stock option plan has expired, and in view of
the recent
market prices of the Company’s common stock, the Compensation Committee does not
consider stock-based incentive plans to provide an effective
incentive.
3.
Other Benefits and Perquisites
The
Company’s executive compensation program also includes other benefits and
perquisites. These benefits include those available to all full-time
employees,
such as medical benefits, dental benefits, life insurance and disability
insurance. Perquisites also include, in some instances, automobile allowances,
club memberships and an executive medical plan. The Company annually
reviews
these other benefits and perquisites and makes adjustments as warranted
based on
competitive practices, the Company’s performance and the individual’s
responsibilities and performance.
Pay
Mix
We
utilize the elements of compensation described above because we believe
that it
provides a well-proportioned mix of retention value and at-risk compensation
which produces short-term and long-term performance incentives and
rewards. By following this approach, we provide the executive a
measure of security in the minimum level of compensation that the individual
is
eligible to receive, while motivating the executive to focus on the business
metrics that will produce a high level of performance for the
Company.
Pay
Levels
Pay
levels for executives are determined based on a number of factors, including
the
individual’s roles and responsibilities within the Company, the individual’s
experience and expertise, pay levels in the marketplace for similar positions
and performance of the individual and the Company as a whole. The Compensation
Committee is responsible for approving pay levels for the executive officers.
In
determining the pay levels, the Compensation Committee considers all
forms of
compensation and benefits.
–
9
–
As
noted
above, notwithstanding the Company’s overall pay positioning objectives, pay
opportunities for specific individuals vary based on a number of factors
such as
scope of duties, tenure, institutional knowledge and/or difficulty in
recruiting
a new executive. Actual total compensation in a given year will vary
above or
below the target compensation levels based primarily on the attainment
of
operating goals and the creation of shareholder value.
Post-Termination
Compensation and Benefits
Change
in control or severance
arrangements are negotiated in the employment agreements of the executive
officers. They range from none up to two years of salary, bonus and
benefits.
Employment
agreements
We
have entered into employment
agreements with two of the Named Executives and the employment agreement
with
Joseph F. Hughes recently terminated and the Compensation Committee will
consider whether to authorize a new employment agreement with Mr.
Hughes.
In
June 2002, an employment agreement
was entered into with Joseph F. Hughes, which terminated May 31, 2007.
This
agreement provided for an initial base salary of $437,000 with annual
adjustments based upon increases in the Consumer Price Index, such increases
to
be no less than 3% and no more than 8% per year. Additionally, the
agreement provided for an annual discretionary bonus for each fiscal
year, up to
a maximum of $50,000 if pre-tax profits were less than $1,000,000 and
a minimum
of 7.5% of pre-tax profits if such profits exceeded $1,000,000. In
fiscal 2007, Mr. Hughes received the minimum bonus of 7.5% of pre-tax
profits or
$189,000 as incentive compensation. The Compensation Committee authorized
Mr.
Hughes to continue to be compensated on the basis of this employment
agreement,
pending its consideration of a new employment agreement or
arrangement.
In
June 2005, an employment agreement
was entered into with John G. Sharkey, which terminates May 31,
2010. This agreement provides for an initial annual base salary of
$150,000, subject to increase in the discretion of the President of the
Company
and an annual discretionary bonus, which bonus was $50,000 for the fiscal
year
ended May 31, 2007. The agreement also contains a change in control
agreement pursuant to which Mr. Sharkey may receive a payment equal to
two times
his prior year’s total compensation.
In
March 2007, an employment agreement
was entered into with Christopher Hughes, which terminates February 28,
2012.
This agreement provides for an annual base salary of $ 200,000 and an
annual
discretionary bonus as approved by the Compensation Committee of the
Board of
Directors. The agreement also contains a change in control agreement
pursuant to
which Mr. Hughes may receive a payment equal to two times his prior year’s total
compensation.
Compensation
Committee Discretion
The
Compensation Committee retains the
discretion to decrease all forms of incentive payouts based on significant
individual or Company performance shortfalls. Likewise, the Compensation
Committee retains the discretion to increase payouts and/or consider
special
awards for significant achievements or special circumstances.
Conclusion
The
Compensation Committee believes
that each of the compensation packages of the executive officers is within
the
competitive range of practices.
Adjustment
or Recovery of Awards
Under
Section 304 of Sarbanes-Oxley, if
the Company is required to restate its financial results due to material
non-compliance with any financial reporting requirements as a result
of
misconduct, the Chief Executive Officer and Chief Financial Officer must
reimburse the Company for (1) any bonus or other incentive-based or equity-based
compensation received during the 12 months following the first public
issuance
of the non-complying document, and (2) any profits realized from the
sale of
securities of the Company during those 12 months.
–
10
–
Impact
of Tax and Accounting
As
a general matter, the Compensation
Committee always takes into the account the various tax and accounting
implications of compensation vehicles employed by the Company.
When
determining amounts of Stock
Incentive Plan grants to executives and employees, the Compensation Committee
considered the accounting cost associated with the grants. Under Statement
of
Financial Accounting Standard 123 (revised 2004), grants of stock options,
restricted stock, restricted stock units and other share-based payments
result
in an accounting charge for the Company. The accounting charge is equal
to the
fair value of the instruments being issued. For restricted stock and
restricted
stock units, the cost is equal to the fair value of the stock on the
date of
grant times the number of shares or units granted. This expense is amortized
over the requisite service period, or vesting period of the instruments.
The
Company’s lone share based plan expired in April 2007. There were no grants or
exercises from this plan in fiscal 2007.
Section
162(m) of the Internal Revenue
Code generally prohibits any publicly held corporation from taking a
federal
income tax deduction for compensation paid in excess of $1 million in
any
taxable year to the chief executive officer and the next four highest
compensated officers. Exceptions are made for qualified performance-based
compensation, among other things. It is the Compensation Committee’s policy to
maximize the effectiveness of our executive compensation plans in this
regard.
Compensation
Committee Report
The
Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis with management
and based
on the review and discussions, the Compensation Committee recommended
to our
Board of Directors that the Compensation Discussion and Analysis be included
in
this proxy statement and incorporated by reference into our annual report
on
Form 10-K.
Compensation
Committee
Robert
A.
Esernio
James
J.
Hill (Chair)
John
H.
Hochuli Jr.
Raymond
A. Roel
–
11
–
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compen-sation
|
Change
in Pension
Value
and Nonqualified Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
|||||||||
|
Joseph
F. Hughes
President and
Chief
Executive Officer
|
2007
|
$498,000
|
$189,000
|
—
|
—
|
—
|
—
|
$54,000
(1)
|
$741,000
|
|||||||||
|
John
G. Sharkey
Vice
President, Finance
|
2007
|
156,000
|
50,000
|
—
|
—
|
—
|
—
|
7,000
(2)
|
213,000
|
|||||||||
|
Christopher
Hughes
Sr.
Vice President
|
2007
|
$156,000
|
$119,000
|
—
|
—
|
—
|
—
|
$11,000
(3)
|
$286,000
|
|
(1)
|
Other
Compensation for Mr. J. Hughes consists of $18,000 club
dues, $26,000 in benefits from an executive medical plan and
$10,000 from personal use of a company owned
vehicle.
|
|
(2)
|
Other
Compensation for Mr. Sharkey consists of $7,000 from personal
use of a
company leased vehicle.
|
|
(3)
|
Other
Compensation for Mr. C. Hughes consists of $8,000 in benefits
from an executive medical plan and $3,000 from personal
use of a company
leased vehicle.
|
GRANTS OF PLAN-BASED AWARDS: There were no grants of plan-based awards in fiscal 2007.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END: There were no outstanding equity
awards at the end of fiscal 2007.
OPTIONS
EXERCISED AND VESTED: There were no options exercised or vested during
fiscal 2007.
PENSION
BENEFITS: The Company does not maintain a defined benefit pension plan.
The Company maintains a 401(K) defined contribution plan: however, no
amounts
have been contributed by the Company for the Named Executives.
NONQUALIFIED
DEFERRED COMPENSATION: The Company does not maintain any nonqualified
deferred compensation plans.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL: Under
employment agreements entered into between the Company and one of the
Named
Executive Officers, Christopher Hughes, if the Named Executive Officer’s
employment is terminated by the Company for any reason other than for
cause, the
Employee would be entitled to receive a severance payment equal two
years base
salary, payable in equal semi-monthly installments and would continue
to be
provided all employee benefits for 18 months at the Company’s expense. The
employment agreements for two of the Named Executives, also contain
change in
control agreements pursuant to which, in the case of Mr. Sharkey, if
he
terminates his employment or his employment is terminated following
a change of
control and, in the case of Christopher Hughes, if his employment is
terminated
without cause following a change of control, the Named Executives
would receive a payment equal to two times his prior year’s total compensation
(base salary and bonus) in a lump sum payment and would continue to
be provided
all benefits for 18 months after termination in the case of Mr. Hughes
and 24
months in the case of Mr. Sharkey.
–
12
–
DIRECTOR
COMPENSATION
|
Name
|
Fees
Earned
Or
Paid
In
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in Pension
Value
and Nonqualified Deferred Compensation Earnings
|
.
All
Other Compensation
|
Total
|
|
Robert
A. Esernio
|
$10,000
|
—
|
—
|
—
|
—
|
—
|
$10,000
|
|
James
J.
Hill
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
|
John
H. Hochuli, Jr.
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
|
Raymond
A. Roel
|
$10,000
|
—
|
—
|
—
|
—
|
—
|
$10,000
|
For
their
service, members of the Board of Directors who are not salaried employees
of the
Company received an annual retainer of $10,000, payable quarterly during
fiscal
2007.
|
ITEM
12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related
Stockholder Matters.
|
Certain
Beneficial Owners
As
of
September 20, 2007 the following persons were known to Management to
be
beneficial owners of more than five percent of the Company's Common
Stock:
|
Name
and Address
of
Beneficial Owner
|
Amount
and Nature
of
Beneficial Ownership
at
September 20, 2007 (1)
|
Percent
of Class
|
||
|
Joseph
F. Hughes (2)
400
Oser Avenue
Hauppauge,
New York 11788
Daniel
Zeff (4)
50
California Street Suite 1500
San
Francisco, CA 94111
|
1,839,267(3)
456,023
|
40.3%
10.0%
|
|
(1)
|
Unless otherwise stated herein, each beneficial owner has sole voting power and sole investment power. |
|
(2)
|
The
beneficial owner is an officer and director of the
Company.
|
|
(3)
|
Mr.
Hughes' ownership includes 270,928 shares of common stock
held of record
by his wife, as to which Mr. Hughes disclaims beneficial
ownership.
|
|
(4)
|
Information
furnished in reliance on the Schedule 13D filed September
17,
2007.
|
All
executive officers and directors of the Company as a group (7 persons)
beneficially owned shares of the Company's common stock as of September
20, 2007
as follows:
|
Amount
of Shares
Beneficially
Owned
|
Percent
of Class
|
|
|
1,854,187
|
40.6%
|
–
13
–
Directors
and Executive Officers of the Company
The
following table sets forth certain information concerning equity securities
beneficially owned as of September 20, 2007 by the executive officers
and
directors of the Company. The statements as to securities
beneficially owned are based upon information furnished by the officers
and
directors of the Company:
|
Name
|
Position
|
Common
Stock
of
the Company
Owned
Beneficially
Directly
or Indirectly
|
Percentage
Of
Class
|
|||
|
Joseph
F. Hughes
|
Chairman
of the Board, Chief Executive Officer, President, Treasurer
and
Director
|
1,839,267 (1)
|
40.3%
|
|||
|
John
G. Sharkey
|
Vice
President, Finance, Controller and Secretary
|
13,500
|
0.3%
|
|||
|
James
J. Hill
|
Director
|
—
|
—
|
|||
|
John
H. Hochuli, Jr.
|
Director
|
—
|
—
|
|||
|
Robert
A. Esernio
|
Director
|
—
|
—
|
|||
|
Christopher
Hughes
|
Sr.
VP , Pres., TSR Consulting Services, Inc. and Director
|
1,420
|
—
|
|||
|
Raymond
A. Roel
|
Director
|
—
|
—
|
(1) Mr.
Hughes' ownership includes 270,928 shares of common stock held of record
by his
wife, as to which Mr. Hughes disclaims beneficial ownership
|
ITEM
13.
|
Certain
Relationships and Related
Transactions.
|
The
Company was not a participant in, since the beginning of the Company's
last
fiscal year, any transaction, and there are no currently proposed transactions,
in which the Company is to be a participant, and in which the amount
involved
exceeds $120,000, and in which any related party (as defined in SEC
Regulation
S-K, Item 404) had or will have a direct or indirect material
interest.
On
an
ongoing basis, the Audit Committee is required by its charter to review
all
“related party transactions” (those transactions that are required to be
disclosed in this proxy statement by SEC Regulation S-K, Item 404 and
under
Nasdaq’s rules), if any, for potential conflicts of interest and all such
transactions must be approved by the Audit Committee.
–
14
–
|
ITEM 14.
|
Principal
Accountant Fees and Services.
|
AUDIT
FEES
The
aggregate fees billed by BDO Seidman, LLP for professional services
related to
the audit of the Company’s consolidated financial statements for the fiscal
years ended May 31, 2007, 2006, and 2005 were $50,634, $51,817 and
$41,981,
respectively. The fees associated with the reviews of the consolidated
condensed
financial statements included in the Company’s Quarterly reports on Form 10-Q
for the fiscal years ended May 31, 2007, 2006, and 2005 were $18,327,
$15,229, and $15,255, respectively.
AUDIT
RELATED FEES
There
were no fees billed by BDO Seidman, LLP for audit related services
for the
fiscal years ended May 31, 2007, 2006 or 2005.
TAX
SERVICES
There
were no fees billed by BDO Seidman, LLP for tax services during the
fiscal years
ended May 31, 2007, 2006 or 2005.
ALL
OTHER SERVICES
There
were no fees billed by BDO Seidman, LLP related to any other non-audit
services
for the fiscal years ended May 31, 2007, 2006 or 2005.
PRE-APPROVAL
The
Audit
Committee is responsible for approving engagement of the auditors to
render
audit or non-audit services prior to the engagement of the auditors
to render
such services.
–
15
–
PART
IV
|
Item
15.
|
Exhibits
and Financial Statement
Schedules.
|
(a)(3) Exhibits
|
Exhibit
No.
|
Description
|
|
|
31.1
|
Certification
by J.F. Hughes Pursuant to Securities Exchange Act Rule
13a-14
|
|
|
31.2
|
Certification
by John G. Sharkey Pursuant to Securities Exchange Act Rule
13a-14
|
|
|
32.1
|
Certification
of J.F. Hughes Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification
of John G. Sharkey Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
–
16
–
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of
1934, the Company has duly caused this report to be signed on its behalf
by the
Undersigned, thereunto duly authorized.
| TSR, INC. | ||||
|
By: /s/
J.F.
Hughes
|
||||
|
J.
F. Hughes,
Chairman
|
|
|||
| Dated: September 26, 2007 |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report
has been
signed below by the following persons on behalf of the Company and
in the
capacities and on the dates indicated.
|
/s/ J.F.
Hughes
|
||||
|
J.
F. Hughes,
President, Treasurer and Director
|
|
|||
| /s/ John G. Sharkey | ||||
| John G. Sharkey, Vice President, Finance, Controller and Secretary |
|
|||
| /s/ John H. Hochuli, Jr. | ||||
| John H. Hochuli, Jr., Director |
|
|||
| /s/ James J. Hill | ||||
| James J. Hill, Director |
|
|||
| /s/ Christopher Hughes | ||||
| Christopher Hughes, Senior Vice President and Director |
|
|||
| Robert A. Esernio, Director |
|
|||
| /s/ Raymond A. Roel | ||||
| Raymond A. Roel, Director |
|
|||
Dated: September
26, 2007