-----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, RGw1ZUwN4KXUGX2+02WMLJp3DRRFCRhEc4xP2NU0QE0PTa2oEtPXlNxoonVyU/lz cCivlZQ0T0I9CvOGUK+g5w== 0000950110-01-000356.txt : 20010410 0000950110-01-000356.hdr.sgml : 20010410 ACCESSION NUMBER: 0000950110-01-000356 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010228 FILED AS OF DATE: 20010406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TSR INC CENTRAL INDEX KEY: 0000098338 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 132635899 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-08656 FILM NUMBER: 1596777 BUSINESS ADDRESS: STREET 1: 400 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5162310333 MAIL ADDRESS: STREET 1: 400 OSER AVENUE CITY: HAUPPAUGE STATE: NY ZIP: 11788 FORMER COMPANY: FORMER CONFORMED NAME: TIME SHARING RESOURCES INC DATE OF NAME CHANGE: 19840129 10-Q 1 0001.txt FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended February 28, 2001 ----------------- [ ] Transition Report Pursuant to 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) 631-231-0333 ---------------------------------------------------- (Registrant's telephone number) None ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 [ ] No SHARES OUTSTANDING 4,418,012 shares of common stock, par value $.01 per share, as of March 31, 2001 ================================================================================ Page 1 TSR, INC. AND SUBSIDIARIES INDEX Page Number ------ Part I. Financial Information: Item 1. Financial Statements (unaudited): Consolidated Condensed Balance Sheets -- February 28, 2001 and May 31, 2000................. 3 Consolidated Condensed Statements of Earnings -- For the three months and nine months ended February 28, 2001 and February 29, 2000............ 4 Consolidated Condensed Statements of Cash Flows -- For the nine months ended February 28, 2001 and February 29, 2000.................................. 5 Notes to Consolidated Condensed Financial Statements.... 6 Item 2. Management's Discussion and Analysis.................... 7 Part II. Other Information............................................... 12 Signatures................................................................ 12 Page 2 Part I. Financial Information Item 1. Financial Statements TSR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
ASSETS February 28, May 31, 2001 2000 ----------- ----------- Current Assets: Cash and cash equivalents (Note 6) ................................ $ 3,678,583 $ 4,110,283 Marketable securities (Note 7) .................................... 4,050,334 3,279,232 Accounts receivable (net of allowance for doubtful accounts of $273,000 and $173,000) .................. 14,016,754 12,816,762 Other receivables ................................................. 82,566 146,318 Prepaid expenses .................................................. 42,659 39,700 Prepaid and recoverable income taxes .............................. 20,630 39,158 Deferred income taxes ............................................. 93,000 59,000 ----------- ----------- Total current assets ......................................... 21,984,526 20,490,453 Equipment and leasehold improvements, at cost (net of accumulated depreciation and amortization of $661,000 and $577,000) ........... 158,375 183,356 Other assets ........................................................... 46,145 40,302 Deferred income taxes .................................................. 231,000 231,000 ----------- ----------- $22,420,046 $20,945,111 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts and other payables ....................................... $ 103,790 $ 178,077 Accrued and other liabilities ..................................... 2,893,630 3,563,024 Advances from customers ........................................... 1,943,256 1,234,660 Income taxes payable .............................................. 215,719 220,823 ----------- ----------- Total current liabilities .................................... 5,156,395 5,196,584 ----------- ----------- Shareholders' Equity: Preferred stock, $1 par value, authorized 1,000,000 shares; none issued ................................ -- -- Common stock, $.01 par value, authorized 25,000,000 shares; issued 6,078,326 shares ................... 60,783 60,783 Additional paid-in capital ........................................ 4,134,053 4,134,053 Retained earnings ................................................. 25,100,116 22,165,851 ----------- ----------- 29,294,952 26,360,687 Less: Treasury Stock, 1,660,314 and 1,397,914 shares at cost ...... 12,031,301 10,612,160 ----------- ----------- 17,263,651 15,748,527 ----------- ----------- $22,420,046 $20,945,111 =========== ===========
The accompanying notes are an integral part of these consolidated condensed financial statements. Page 3 TSR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000 (UNAUDITED)
Three Months Ended Nine Months Ended February 28, February 29, February 28, February 29, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Revenues .......................................................... $ 19,392,765 $ 18,432,266 $ 60,528,268 $ 60,067,905 Cost of sales ..................................................... 15,233,999 14,056,550 47,236,700 45,855,484 Selling, general and administrative expenses ...................... 2,839,951 2,937,205 8,442,749 8,838,590 ------------ ------------ ------------ ------------ 18,073,950 16,993,755 55,679,449 54,694,074 ------------ ------------ ------------ ------------ Income from operations ............................................ 1,318,815 1,438,511 4,848,819 5,373,831 Other income: Interest and dividend income ................................... 144,644 103,637 351,758 313,584 Unrealized gain (loss) from marketable securities, net ......... (25,369) 1,103 17,688 10,076 Gain from sales of assets ...................................... -- 22,000 -- 23,950 ------------ ------------ ------------ ------------ Income before income taxes ........................................ 1,438,090 1,565,251 5,218,265 5,721,441 Provision for income taxes ........................................ 638,000 683,000 2,284,000 2,470,000 ------------ ------------ ------------ ------------ Net income ..................................................... $ 800,090 $ 882,251 $ 2,934,265 $ 3,251,441 ============ ============ ============ ============ Basic and diluted net income per common share ..................... $ 0.18 $ 0.18 $ 0.65 $ 0.63 ============ ============ ============ ============ Weighted average number of basic and diluted common shares outstanding ....................................... 4,423,945 4,925,962 4,519,990 5,128,198 ============ ============ ============ ============
The accompanying notes are an integral part of these consolidated condensed financial statements. Page 4 TSR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000 (UNAUDITED)
Nine Months Ended February 28, February 29, 2001 2000 ------------ ------------ Cash flows from operating activities: Net income .......................................................... $ 2,934,265 $ 3,251,441 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts ................................. 100,000 -- Depreciation and amortization ................................... 84,469 106,287 Unrealized gain from marketable securities, net ................. (17,688) (10,076) Deferred income taxes ........................................... (34,000) 25,000 Gain on sales of assets ......................................... -- (23,950) Changes in assets and liabilities: Accounts receivable ............................................. (1,299,992) 1,410,276 Other receivables ............................................... 63,752 (36,912) Prepaid expenses ................................................ (2,959) 11,612 Prepaid and recoverable income taxes ............................ 18,528 (310,108) Other assets .................................................... (5,843) (7,610) Accounts payable and accrued expenses ........................... (743,681) (716,911) Income taxes payable ............................................ (5,104) 70,224 Advances from customers ......................................... 708,596 185,984 ----------- ----------- Net cash provided by operating activities .......................... 1,800,343 3,955,257 ----------- ----------- Cash flows from investing activities: Proceeds from maturities and sales of marketable securities ..... 4,109,937 4,336,181 Purchases of marketable securities .............................. (4,863,351) (3,389,263) Purchases of fixed assets ....................................... (59,488) (158,519) Proceeds from sales of assets ................................... -- 23,950 ----------- ----------- Net cash provided by (used in) investing activities ................ (812,902) 812,349 ----------- ----------- Cash flows from financing activities: Purchase of treasury stock ...................................... (1,419,141) (6,023,793) ----------- ----------- Net cash used in financing activities .............................. (1,419,141) (6,023,793) ----------- ----------- Net decrease in cash and cash equivalents .............................. (431,700) (1,256,187) Cash and cash equivalents at beginning of period ....................... 4,110,283 2,234,723 ----------- ----------- Cash and cash equivalents at end of period ............................. $ 3,678,583 $ 978,536 =========== =========== Supplemental Disclosures: Income tax payments ................................................ $ 2,305,000 $ 2,710,000 =========== =========== Interest paid ...................................................... $ -- $ -- =========== ===========
The accompanying notes are an integral part of these consolidated condensed financial statements. Page 5 TSR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FEBRUARY 28, 2001 1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions of Form 10- Q of Regulation S-X. Accordingly, they do not include all the information and notes required by generally accepted accounting principles for complete financial statements. For further information refer to the Company's consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 31, 2000. 2. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the consolidated financial position, the consolidated results of operations, and consolidated cash flows for the periods presented. 3. The Company is primarily engaged in the business of providing computer programming consulting services. The Company provides technical computer personnel to companies to supplement their in-house information technology capabilities. In addition, the Company provided services converting software applications to be year 2000 compliant utilizing Catch/21 a year 2000 software solution which automated to a significant extent the conversion process. 4. The consolidated condensed financial statements include the accounts of TSR, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 5. The Company recognizes computer programming consulting services revenues as services are provided. Provided that acceptance was probable, revenue from Catch/21 code conversion was recognized when the converted code was delivered. 6. The Company considers short-term highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents were comprised of the following as of February 28, 2001: Cash in banks ............................. $ 718,519 Money Market Funds......................... 1,972,771 United States Treasury Bills............... 987,293 --------- $3,678,583 ========== 7. Marketable securities consists of United States Treasury Bills and equity securities. The treasury bills with maturities at acquisition in excess of 90 days, are classified as held to maturity investments. The Company's equity securities are classified as trading securities. The amortized cost, gross unrealized holding gains, gross unrealized holding losses and carrying value for marketable securities by major security type at February 28, 2001 are as follows: Gross Gross Unrealized Unrealized Amortized Holding Holding Carrying Cost Gains Losses Value ---------- ------- ------- ---------- United States Treasury Bills........ $3,893,736 -- -- 3,893,736 Equity Securities ...... 133,289 25,302 (1,993) 156,598 ---------- ------- ------- ---------- $4,027,025 $25,302 $(1,993) $4,050,334 ========== ======= ======= ========== 8. In October 2000, the Board of Directors authorized an additional buy-back of up to 250,000 shares of the Company's common stock. During the nine months ended February 28, 2001, the Company repurchased 262,400 shares of its common stock at a cost of $1,419,141. Page 6 Part I. Financial Information Item 2. TSR, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion and analysis should be read in conjunction with the consolidated condensed financial statements and the notes to the consolidated condensed financial statements. Results of Operations The following table sets forth for the periods indicated certain financial information derived from the Company's consolidated statements of earnings. There can be no assurance that trends in sales growth or operating results will continue in the future: Three months ended February 28, 2001 compared with three months ended February 29, 2000 (Dollar amounts in Thousands) 3 Months Ended February 28, February 29, 2001 2000 % of % of Amount Revenues Amount Revenues ------- -------- ------- -------- Revenues ........................ $19,393 100.0 $18,432 100.0 Cost of Sales ................... 15,234 78.6 14,057 76.3 ------- ----- ------- ----- Gross Profit .................... 4,159 21.4 4,375 23.7 Selling, General, and Administrative expenses ....... 2,840 14.6 2,937 15.9 ------- ----- ------- ----- Income from Operations .......... 1,319 6.8 1,438 7.8 Other Income .................... 119 0.6 127 0.7 ------- ----- ------- ----- Income Before Income Taxes ...... 1,438 7.4 1,565 8.5 Provision for Income Taxes ...... 638 3.3 683 3.7 ------- ----- ------- ----- Net Income ...................... $ 800 4.1 $ 882 4.8 ======= ===== ======= ===== Revenues Revenues for the quarter ended February 28, 2001 increased $961,000 or 5.2% from the comparable period in fiscal 2000. For the current quarter 100% of revenues were derived from computer programming consulting services as compared with 97.7% from computer programming consulting services and 2.3% from Year 2000 services in fiscal 2000. Computer programming consulting services revenues increased $1,381,000 or 7.7% from $18,012,000 in the quarter ended February 29, 2000 to $19,393,000 in the quarter ended February 28, 2001. This increase resulted primarily from an increase in billing rates, which increase is attributable to increased costs of consultants. The Company had an average of approximately 470 consultants on billing during the quarter ended February 29, 2000. The Company experienced a low-point in the number of consultants on billing of approximately 450 in March 2000 and from April 2000 the Company experienced an increase in new business to approximately 520 consultants on billing as of November 30, 2000. Since then, the numbers have decreased to 470 consultants. The Company believes that this decline is primarily attributable to a decrease in the levels of IT spending for 2001 due to the current economic climate. Revenues from the Company's Catch/21 Year 2000 compliance services, were $421,000 for the fiscal 2000 third quarter while there were no Year 2000 revenues in the fiscal 2001 third quarter. The Company's Year 2000 projects have been completed. Page 7 Cost of Sales Cost of sales as a percentage of revenues increased from 76.3% in the quarter ended February 29, 2000 to 78.6% in the quarter ended February 28, 2001. This increase is primarily attributable to the decrease in Year 2000 revenues for which cost of sales as a percentage of revenues was less than the computer programming consulting services business. In the computer programming consulting services business, cost of sales as a percentage of sales increased from 77.7% in the quarter ended February 29, 2000 to 78.6% in the quarter ended February 28, 2001. This increase is attributable to increases in the amounts being paid to qualified programming professionals outpacing the Company's ability to pass the increases onto customers due to competitive market pressures in the industry. The Year 2000 business incurred no cost of sales in the quarter ended February 28, 2001 versus $62,000 in the prior year quarter. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of expenses relating to account executives, technical recruiters, facilities costs, management and corporate overhead. These expenses decreased $97,000 or 3.3% from $2,937,000 in the quarter ended February 29, 2000 to $2,840,000 in the quarter ended February 28, 2001. Selling, general and administrative expenses related to computer programming consulting services decreased $72,000 from the prior year period to $2,840,000. This decrease was primarily attributable to lower compensation expense as a result of a decrease in sales and recruiting staff. Additionally in the quarter ended February 28, 2001, the Company added $100,000 to its allowance for doubtful accounts due to a small exposure to dot-com businesses and due to the trend whereby the Company's customers are outsourcing their IT departments to third parties who may not be as creditworthy as the original customers. In the quarter ended February 28, 2001, no selling, general and administrative expenses were attributable to Year 2000 services. Year 2000 selling, general and administrative expenses in the quarter ended February 29, 2000 were $26,000. Income from Operations In the quarter ended February 28, 2001, the computer programming consulting service business contributed $1,319,000 or 100% of the income from operations. In the prior year quarter, the computer programming consulting service business contributed $1,106,000 or 76.9% of income from operations and the Year 2000 business contributed $332,000 or 23.1%. Other Income Other income resulted primarily from interest and dividend of $145,000. The decrease in other income by $8,000 to $119,000 was due to higher interest income in the current period offset by unrealized mark to market losses of $25,000 in the current period and a gain on sale of assets of $24,000 in fiscal 2000. Income Taxes The effective income tax rate increased to 44.4% in the quarter ended February 28, 2001 from 43.6% in the quarter ended February 29, 2000 because of higher state and local taxes. Page 8 Nine months ended February 28, 2001 compared with nine months ended February 29, 2000. (Dollar amounts in Thousands) 9 Months Ended February 28, February 29, 2001 2000 % of % of Amount Revenues Amount Revenues ------- -------- ------- -------- Revenues ........................ $60,528 100.0 $60,068 100.0 Cost of Sales ................... 47,237 78.0 45,855 76.3 ------- ----- ------- ----- Gross Profit .................... 13,291 22.0 14,213 23.7 Selling, General, and Administrative expenses ....... 8,442 14.0 8,839 14.7 ------- ----- ------- ----- Income from Operations .......... 4,849 8.0 5,374 8.9 Other Income .................... 369 0.6 347 0.6 ------- ----- ------- ----- Income Before Income Taxes ...... 5,218 8.6 5,721 9.5 Provision for Income Taxes ...... 2,284 3.8 2,470 4.1 ------- ----- ------- ----- Net Income ...................... $ 2,934 4.8 $ 3,251 5.4 ======= ===== ======= ===== Revenues Revenues for the nine months ended February 28, 2001 increased $460,000 or 0.8% from the comparable period in fiscal 2000. For the current period 99.9% of revenues were derived from computer programming consulting services and 0.1% from Year 2000 services, as compared with 97.1% and 2.9% respectively in fiscal 2000. Computer programming consulting services revenues increased $2,160,000 or 3.7% from $58,301,000 in the nine months ended February 29, 2000 to $60,461,000 in the nine months ended February 28, 2001. This increase resulted primarily from an increase in billing rates, which increase is attributable to increased costs of consultants. The Company had an average of approximately 510 consultants on billing for the nine months ending February 29, 2000. The Company experienced a low-point in the number of consultants on billing of approximately 450 in March 2000 and from April 2000 the Company experienced an increase in new business to approximately 520 consultants on billing as of November 30, 2000. Since then, the numbers have decreased to 470 consultants. The Company believes that the decline is primarily attributable to a decrease in the levels of IT spending for 2001 due to the current economic climate. Revenues from the Company's Catch/21 Year 2000 compliance services, were $67,000 for the current period versus $1,767,000 in the fiscal 2000 nine month period. The Company's Year 2000 projects have been completed. Page 9 Cost of Sales Cost of sales as a percentage of revenues increased from 76.3% in the nine months ended February 29, 2000 to 78.0% in the nine months ended February 28, 2001. This increase is primarily attributable to the decrease in Year 2000 revenues for which cost of sales as a percentage of revenues was less than the computer programming consulting services business. In the computer programming consulting services business, cost of sales as a percentage of sales increased from 77.7% in the nine months ended February 29, 2000 to 78.1% in the nine months ended February 28, 2001. This increase is primarily attributable to increases in the amounts being paid to qualified programming professionals outpacing the Company's ability to pass the increases onto customers due to competitive market pressures in the industry. The Year 2000 business incurred cost of sales of $30,000 in the nine months ended February 28, 2001 versus $563,000 in the prior year period. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of expenses relating to account executives, technical recruiters, facilities costs, management and corporate overhead. These expenses decreased $397,000 or 4.5% from $8,839,000 in the nine months ended February 29, 2000 to $8,442,000 in the nine months ended February 28, 2001. Selling, general and administrative expenses related to computer programming consulting services decreased $291,000 from the prior year period to $8,427,000. This decrease was primarily attributable to lower compensation expenses as a result of a decrease in sales and recruiting staff. Additionally in the nine months ended February 28, 2001, the Company added $100,000 to its allowance for doubtful accounts due to a small exposure to dot-com businesses and due to the trend whereby the Company's customers are outsourcing their IT departments to third parties who may not be as creditworthy as the original customers. In the nine months ended February 28, 2001, approximately $16,000 in selling, general and administrative expenses were attributable to Year 2000 services. These expenses consist primarily of general overhead, and facilities expenses. Comparable Year 2000 selling, general and administrative expenses in the nine months ended February 29, 2000 were $121,000. Income from Operations In the nine months ended February 28, 2001, the computer programming consulting service business contributed $4,828,000 or 99.6% of the income from operations, while the Year 2000 business contributed the remaining $21,000 or 0.4%. In the prior year period, the computer programming consulting service business contributed $4,291,000 or 79.8% of income from operations and the Year 2000 business contributed $1,083,000 or 20.2%. Other Income Other income resulted primarily from interest and dividend income of $352,000. The increase of $22,000 in other income was primarily attributable to a higher average investable balance and higher interest rates. Income Taxes The effective income tax rate increased to 43.8% in the nine months ended February 28, 2001 from 43.2% in the nine months ended February 29, 2000 because of higher state and local taxes. Page 10 Liquidity, Capital Resources and Changes in Financial Condition The Company expects that cash flow generated from operations together with its cash and marketable securities will be sufficient to provide the Company with adequate resources to meet its cash requirements. At February 28, 2001, the Company had working capital of $16,828,000 and cash and cash equivalents of $3,679,000 as compared to working capital of $15,294,000 and cash and cash equivalents of $4,110,000 at May 31, 2000. Working capital increased primarily due to the Company's net income of $2,934,000 in the nine months ended February 28, 2001. The Company had net cash flow of $1,800,000 from operations during the nine months ended February 28, 2001 as compared to net cash flow from operations of $3,955,000 in the nine months ended February 29, 2000. Cash flow from operations consisted primarily of net income of $2,934,000 in the nine months ended February 28, 2001. However, the Company used cash to support an increase in accounts receivable of $1,300,000. The increase in accounts receivable occurred primarily because of slowness in collections due to system changes at several customers. Additionally, in the nine months ended February 28, 2001, the Company added $100,000 to its allowance for doubtful accounts due to a small exposure to dot-com businesses and due to the trend whereby the Company's customers are outsourcing their IT departments to third parties who may not be as creditworthy as the original customers. To date, the Company has not sustained any specific write-offs. Cash flow used in investing activities resulted primarily from the purchase of United States Treasury Bills in the current period. Cash flow used in financing activities of $1,419,000 in the nine months ended February 28, 2001 resulted from the repurchase of 262,400 shares of common stock. As of February 28, 2001, the Company has repurchased a total of 1,660,314 shares at an average price of $7.25 or a total cost of $12,031,301. The Company has completed the buy back authorizations totaling 1,600,000 shares and the Company's board of directors has authorized the repurchase of up to an additional 250,000 shares of its common stock. No time limit has been placed on the duration of the share repurchases. Subject to applicable securities laws, such purchases will be at times and in amounts as the Company deems appropriate and may be discontinued at any time. The Company has no obligation or commitment to repurchase all or any portion of the shares covered by the authorization. The Company's capital resource commitments at February 28, 2001 consisted of lease obligations on its branch and corporate facilities. The Company intends to finance these lease commitments from cash flow provided by operations, available cash and short-term marketable securities. The Company's cash and marketable securities were sufficient to enable it to meet its cash requirements during the period ended February 28, 2001. The Company has available a revolving line of credit of $5,000,000 with a major money center bank, which the Company believes provides sufficient financing if the need arose. As of February 28, 2001, no amounts were outstanding under this line of credit. Recent Accounting Pronouncements Effective June 1, 2001, the Company will adopt SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. This statement requires companies to record derivatives on the balance sheet as assets or liabilities at their fair value. In certain circumstances changes in the value of such derivatives may be required to be recorded as gains or losses. The impact of this statement is not expected to have a material effect on the Company's consolidated financial statements. Page 11 Forward-Looking Statements Certain statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations", including statements concerning the Company's future prospects, the anticipated increase in consulting projects, and the Company's future cash flow requirements are forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projections in the forward looking statements which statements involve risks and uncertainties, including but not limited to the following: risks relating to the competitive nature of the markets for computer programming consulting services, the effect of current economic conditions on IT budgets, the extent to which growth in the Company's contract computer programming services will offset the loss of Year 2000 profits, concentration of the Company's business with certain customers and uncertainty as to the Company's ability to bring in new customers. Item 3. Quantitative and Qualitative Disclosure About Market Risk The Company's earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds and marketable securities. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes. TSR, INC. AND SUBSIDIARIES Part II. Other Information Item 6. Exhibits and Reports on Form 8K (a) Reports on Form 8K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TSR, INC. ---------------------- (Registrant) Date: April 2, 2001 /s/ J.F. HUGHES -------------------------------------------- J.F. Hughes, Chairman, President and Treasurer Date: April 2, 2001 /s/ JOHN G. SHARKEY -------------------------------------------- John G. Sharkey, Vice President, Finance Page 12 -----END PRIVACY-ENHANCED MESSAGE-----