<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
---------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED NOVEMBER 30, 1996
COMMISSION FILE NUMBER 0-19433
[LOGO]
TECHNOLOGY SOLUTIONS COMPANY
INCORPORATED IN THE STATE OF DELAWARE
EMPLOYER IDENTIFICATION NO. 36-3584201
205 NORTH MICHIGAN AVENUE
SUITE 1500
CHICAGO, ILLINOIS 60601
(312) 861-9600
TSC (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, AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
AS OF JANUARY 3, 1997, THERE WERE OUTSTANDING 15,767,817 SHARES OF TSC COMMON
STOCK, PAR VALUE $.01.
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<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
INDEX TO FORM 10-Q
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PART I
PAGE
NUMBER
------
FINANCIAL INFORMATION (UNAUDITED)
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets at
November 30, 1996 and May 31, 1996. . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Income
For the Three Months Ended and Six Months Ended
November 30, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows
For the Six Months Ended November 30, 1996 and 1995 . . . . . . . . . 4
Notes to Consolidated Financial Information . . . . . . . . . . . . . . 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . 7
PART II
OTHER INFORMATION
Item 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Exhibit No. 11 -- Calculation of Earnings per Share . . . . . . . . . .11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
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PAGE i
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
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INTRODUCTION
The financial information included herein has been prepared by Technology
Solutions Company ("TSC"), pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted or condensed pursuant to such
rules and regulations. The quarterly financial information included herein is
unaudited but, in the opinion of TSC's Management, all adjustments, consisting
only of normal recurring accruals necessary for the fair presentation of the
financial position and results of operations and cash flows for such periods,
have been made. Audited financial statements for the year ended May 31, 1996 are
included in TSC's Annual Report on Form 10-K for the year ended May 31, 1996.
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PAGE 1
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
November 30, May 31,
1996 1996
------------ -------
unaudited audited
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 17,593 $ 12,990
Marketable securities . . . . . . . . . . . . . . . . . . . 14,697 11,580
Accounts receivable, net. . . . . . . . . . . . . . . . . . 38,222 23,537
Refundable income taxes . . . . . . . . . . . . . . . . . . 7,011 5,117
Deferred income taxes . . . . . . . . . . . . . . . . . . . 3,457 1,194
Other current assets. . . . . . . . . . . . . . . . . . . . 6,043 6,166
-------- --------
Total current assets. . . . . . . . . . . . . . . . . . . 87,023 60,584
COMPUTERS, FURNITURE AND EQUIPMENT, NET. . . . . . . . . . . 4,513 4,443
LONG-TERM INVESTMENTS. . . . . . . . . . . . . . . . . . . . 11,044 17,140
COST IN EXCESS OF NET ASSETS OF ACQUIRED
BUSINESS AND OTHER INTANGIBLES. . . . . . . . . . . . . . . 3,625 3,079
LONG-TERM RECEIVABLES AND OTHER. . . . . . . . . . . . . . . 4,239 4,191
-------- --------
Total assets. . . . . . . . . . . . . . . . . . . . . . . $110,444 $ 89,437
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 1,937 $ 1,344
Accrued compensation and related costs 10,537 11,621
Capitalized lease obligations. . . . . . . . . . . . . . . . 1,918 2,616
Deferred compensation. . . . . . . . . . . . . . . . . . . . 5,426 2,660
Other current liabilities. . . . . . . . . . . . . . . . . . 2,205 1,167
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . 22,023 19,408
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; shares authorized --
10,000,000; none issued . . . . . . . . . . . . . . . . . -- --
Common stock, $.01 par value; shares authorized --
50,000,000; shares issued -- 17,903,593 . . . . . . . . . 179 179
Capital in excess of par value . . . . . . . . . . . . . . . 58,405 50,344
Retained earnings 41,854 35,983
Unrealized holding loss. . . . . . . . . . . . . . . . . . . (450) (642)
Cumulative translation adjustment. . . . . . . . . . . . . . (19) --
-------- --------
99,969 85,864
Less: Treasury Stock, at cost (2,199,440 and 3,014,045
shares, respectively) . . . . . . . . . . . . . . . . . . (11,548) (15,835)
-------- --------
Total stockholders' equity. . . . . . . . . . . . . . . . 88,421 70,029
-------- --------
Total liabilities and stockholders' equity. . . . . . . . $110,444 $ 89,437
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this financial information.
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PAGE 2
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended November 30, Ended November 30,
-------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
unaudited unaudited
<S> <C> <C> <C> <C>
REVENUES:
Professional fees. . . . . . . . . . . . . . . . . . . . . $39,521 $23,128 $71,336 $43,860
Software and hardware products . . . . . . . . . . . . . . -- 172 347 172
------- ------- ------- -------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,521 23,300 71,683 44,032
------- ------- ------- -------
COSTS AND EXPENSES:
Project personnel. . . . . . . . . . . . . . . . . . . . . 17,746 10,583 33,823 20,646
Other project expenses . . . . . . . . . . . . . . . . . . 5,266 3,651 10,059 6,154
Cost of products sold. . . . . . . . . . . . . . . . . . . -- 21 54 21
Management and administrative support. . . . . . . . . . . 7,960 5,684 13,643 11,211
Shareholder litigation settlement. . . . . . . . . . . . . -- 2,345 -- 2,345
Incentive compensation . . . . . . . . . . . . . . . . . . 2,621 1,576 5,025 2,974
------- ------- ------- -------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,593 23,860 62,604 43,351
------- ------- ------- -------
OPERATING INCOME (LOSS). . . . . . . . . . . . . . . . . . . 5,928 (560) 9,079 681
------- ------- ------- -------
OTHER INCOME (EXPENSE):
Net investment income. . . . . . . . . . . . . . . . . . . 539 472 1,059 972
Interest expense . . . . . . . . . . . . . . . . . . . . . (49) (32) (106) (65)
------- ------- ------- -------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 440 953 907
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES. . . . . . . . . . . . . . 6,418 (120) 10,032 1,588
INCOME TAX PROVISION (BENEFIT) . . . . . . . . . . . . . . . 2,672 (163) 4,161 390
------- ------- ------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,746 $ 43 $ 5,871 $ 1,198
------- ------- ------- -------
------- ------- ------- -------
EARNINGS PER COMMON SHARE. . . . . . . . . . . . . . . . . . $ 0.21 $ 0.01 $ 0.34 $ 0.08
------- ------- ------- -------
------- ------- ------- -------
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . . 17,721,736 15,882,476 17,400,407 15,845,439
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of this financial information.
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PAGE 3
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the
Six Months Ended
November 30,
-------------------
1996 1995
---- ----
unaudited
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 5,871 $ 1,198
Adjustments to reconcile net income to net
cash from operating activities:
Provisions for receivable valuation allowances and
reserves for possible losses . . . . . . . . . . . . 1,109 887
Gain on sales of marketable securities. . . . . . . . . -- (18)
Deferred income taxes . . . . . . . . . . . . . . . . . (2,367) (884)
Depreciation and amortization . . . . . . . . . . . . . 1,634 1,224
Changes in assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . (15,794) (6,299)
Purchases of trading securities related to
deferred compensation program. . . . . . . . . . . . (2,766) (1,468)
Other current assets. . . . . . . . . . . . . . . . . 68 (2,848)
Accounts payable. . . . . . . . . . . . . . . . . . . 593 (464)
Accrued compensation and related costs. . . . . . . . (1,084) 551
Income taxes payable/refundable . . . . . . . . . . . 5,784 1,379
Accrued legal costs . . . . . . . . . . . . . . . . . 335 (54)
Capitalized lease obligations . . . . . . . . . . . . (698) 596
Other current liabilities . . . . . . . . . . . . . . 703 190
Cumulative translation adjustment . . . . . . . . . . (19) --
Deferred compensation funds from employees. . . . . . 2,766 1,468
-------- --------
Net cash (used in) operating activities . . . . . . (3,865) (4,542)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from available-for-sale securities. . . . . . . . -- 1,075
Proceeds from maturity of held-to-maturity investments . . 6,060 4,015
Capital expenditures, net. . . . . . . . . . . . . . . . . (937) (1,371)
Net assets of acquired business and other intangibles. . . (1,277) --
Change in other assets . . . . . . . . . . . . . . . . . . (48) 10
-------- --------
Net cash provided by investing activities . . . . . 3,798 3,729
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employees stock purchase plan. . . . . . . . 580 --
Proceeds from exercise of stock options. . . . . . . . . . 4,090 2,512
-------- --------
Net cash provided by financing activities . . . . . 4,670 2,512
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . 4,603 1,699
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . 12,990 7,595
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . $ 17,593 $ 9,294
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this financial information.
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PAGE 4
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
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NOTE 1--THE COMPANY
Technology Solutions Company and Subsidiaries ("TSC" or the "Company") delivers
business benefits through consulting and systems integration services that help
clients transform customer relationships and improve operations. The Company's
clients generally are located throughout the United States and in Europe,
Mexico, and Canada.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies is presented to assist the reader
in understanding and evaluating TSC's consolidated financial statements. These
policies are in conformity with generally accepted accounting principles
consistently applied in all material respects.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial statements
include the accounts of TSC and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
REVENUE RECOGNITION--The Company recognizes revenue on contracts as work is
performed primarily based on hourly billing rates. Out-of-pocket expenses are
presented net of amounts billed to clients in the accompanying statements of
income. Substantially all of the Company's revenues are generated from contracts
for consulting services. These contracts are performed in phases. Losses on
contracts, if any, are reserved in full when determined. Revenue from licensing
of software is recognized upon acceptance of the product by the customer. The
Company does not presently have any significant maintenance contracts for
software licensed to clients. Revenue from hardware sales is recognized upon
delivery.
CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments
readily convertible into cash to be cash equivalents with original maturities of
three months or less. These short-term investments are carried at cost plus
accrued interest, which approximates market.
MARKETABLE SECURITIES--The Company's marketable securities primarily consist of
preferred stocks. These preferred stocks, all of which are classified as
available-for-sale, are reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a net after-tax amount in a separate
component of stockholders' equity until realized. The Company's investments
related to the executive deferred compensation plan are classified as trading
securities, with unrealized gains and losses included in net investment income.
Realized gains or losses are determined on the specific identification method.
COMPUTERS, FURNITURE AND EQUIPMENT--Computers, furniture and equipment are
stated at cost, less accumulated
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<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
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depreciation. Depreciation is generally provided over five years or less, using
the straight-line method.
LONG-TERM INVESTMENTS--The Company's long-term investments consist of municipal
bonds with maturities primarily through 1998. Since the Company has the ability
and intent to hold the bonds to maturity, the investments are classified as
held-to-maturity under the provisions of SFAS 115 and, accordingly, are
accounted for at cost, net of accumulated amortization. Municipal bonds held by
the Company are regarded as investment grade by independent nationally
recognized rating agencies.
INCOME TAXES--The Company files its federal and state income tax returns on a
calendar year basis. The current income tax provision represents the Company's
federal and state income taxes for the fiscal year as though tax returns were
filed on a fiscal year basis ending on May 31. Deferred income taxes are
provided for the temporary differences between the financial reporting basis and
the tax basis of the Company's assets and liabilities in accordance with SFAS
109.
EARNINGS PER COMMON SHARE--Earnings per common share are computed by dividing
net income per the modified treasury stock method by the weighted average number
of common shares outstanding during each period presented, including common
share equivalents arising from the assumed exercise of stock options.
RECLASSIFICATIONS--Certain reclassifications have been made to the prior
period's financial statements to conform to the current period classification.
NOTE 3--STOCKHOLDERS' EQUITY
During the first six months of fiscal 1997, the Company issued 781,124 treasury
shares from exercise of stock options and 33,481 shares from purchases through
the employee stock purchase plan. The Company had a balance of 2,199,440 shares
of Treasury Stock carried at $11.5 million.
NOTE 4--STOCK OPTIONS
On September 26, 1996, the Company's stockholders approved the 1996 Stock
Incentive Plan (the "1996 Plan"). All awards made after this date have been made
under the 1996 Plan. Additionally, all shares available for award under the
Technology Solutions Company 1992 Stock Incentive Plan and the Technology
Solutions Company 1993 Outside Director Stock Option Plan immediately prior to
the effectiveness of the 1996 Plan became available for award under the 1996
Plan on September 26, 1996.
During the first half of fiscal 1997, the Company authorized the grant to
employees, pursuant to Technology Solutions Company 1992 Stock Incentive Plan
and the 1996 Plan, of options to purchase 1,022,040 shares of the Company's
Common Stock.
At November 30, 1996, options to purchase 4.8 million shares of common stock
were outstanding and options to purchase an additional 2.1 million shares of
common stock were available for grant under the 1996 Plan.
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PAGE 6
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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FINANCIAL CONDITION
Cash and cash equivalent balances increased to $17.6 million at November 30,
1996 from $13.0 million at May 31, 1996. The $5.2 million second quarter
increase and $4.6 million first half increase was the result of the following
($ in millions):
SECOND FIRST
QUARTER HALF
$ 3.7 $ 5.9 Net income
(9.3) (14.7) Client receivables
.6 .1 Prepaid insurance and other current assets
2.6 5.0 Accrual of bonuses
-- (6.4) Payment of bonuses
4.0 5.8 Accrued taxes
2.0 4.1 Proceeds from exercise of stock options
(1.4) (1.3) Other, net
----- -----
2.2 (1.5) Subtotal
3.0 6.1 Proceeds from investments
----- -----
$ 5.2 $ 4.6 Total increase in cash and cash equivalents
----- -----
----- -----
Net receivables increased $14.7 million from $23.5 million at May 31, 1996 to
$38.2 million at November 30, 1996. This increase is primarily the result of the
growth in existing clients, several new client engagements / projects, and a
lengthening of the collection period.
During the first six months of fiscal 1997 approximately $6.1 million of cash
was received from the maturity of long-term investments. Also during the first
half of fiscal 1997 the Company received proceeds of approximately $4.1 million
from the exercise of 781,124 employee stock options.
The Company entered into a $5.0 million unsecured revolving credit facility with
Bank of America Illinois. The agreement expires September 5, 1997. The terms of
the agreement are not materially different from the previous agreement.
RESULTS OF OPERATIONS
SECOND QUARTER ENDED NOVEMBER 30, 1996
Revenues for the second quarter ended November 30, 1996 were $39.5 million,
compared with $23.3 million for the same period last fiscal year. The increase
in revenues is attributable to the increase in billable hours which is a result
of the high growth in the overall information technology professional services
market combined with the Company's increase in consulting staff and marketing
efforts. The increase in average hourly billing rates is primarily due to the
impact of hiring and the resulting change in the mix of personnel to include a
greater percentage of more senior personnel. The increase in revenue includes a
47 percent increase in domestic billable hours, a 6 percent increase in the
domestic billing rate and international revenues of $4.9 million.
Second quarter project personnel costs increased to $17.7 million in fiscal 1997
from $10.6 million in fiscal 1996. This increase is consistent with higher
revenues and higher headcount in fiscal 1997.
Average headcount during the second quarter of fiscal 1997 was 803 compared to
the second quarter of fiscal 1996 which was 512. Total Company headcount at
November 30, 1996 was 836 compared to 537 at November 30, 1995. The total number
of project managers at November 30, 1996 was 94 compared to 56 at November 30,
1995.
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PAGE 7
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
(CONTINUED)
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TSC charges most of its project expenses directly to the client. Other project
expenses consist of non-billable expenses directly incurred for client projects
and business development efforts including recruiting fees, personnel training,
travel and provisions for valuation allowances and reserves for potential losses
on continuing projects. Other project expenses for the fiscal 1997 second
quarter increased $1.6 million to $5.3 million, as compared to $3.7 million
during the second quarter of fiscal 1996. This increase is primarily related to
an increase in hiring, training and related costs of $0.5 million and an
increase in non-billable travel costs of $1.1 million in the second quarter of
fiscal 1997 as compared to the same period in fiscal 1996. The increase in
non-billable travel expense is primarily due to travel associated with increased
client proposal and business development activity, as well as travel related to
consultants' training activity in first quarter 1997 as compared to the same
period in fiscal 1996.
Management and administrative suport costs increased from $5.7 million in the
second quarter of fiscal 1996 to $8.0 million in fiscal 1997. This increase of
$2.3 million is primarily due to the international expansion of $1.4 million;
growth in the domestic regional practice area management, travel and hiring
costs of $0.4 million; and increased domestic administrative support of $0.3
million. During the second quarter of fiscal 1997, no expense was accrued for
the employee retention program. This compares to $1.0 million in the second
quarter of fiscal 1996.
During the second quarter of fiscal 1996, the Company settled the shareholder
litigation resulting in a pre-tax charge to earnings of $2.3 million.
Incentive compensation of $2.6 million was accrued during the second quarter of
fiscal 1997 while $1.6 million was accrued during the second quarter of fiscal
1996. The Company expects to continue to accrue incentive compensation
throughout the fiscal year in order to retain our high quality work force.
Common and common equivalent shares increased, primarily due to the exercise of
stock options during the period from the second quarter of fiscal 1996 to the
second quarter of fiscal 1997.
SIX MONTHS ENDED NOVEMBER 30, 1996
Revenues for the six months ended November 30, 1996 were $71.7 million, compared
with $44.0 million for the same period last fiscal year. The principal source of
the increase was a 35 percent increase in domestic billable hours. Average
hourly billing rates increased 5 percent domestically from last fiscal year.
Additionally, fiscal 1997 contained $8.4 million in international revenues
compared to none in 1996.
Project personnel costs for the first half increased to $33.8 million in fiscal
1997 from $20.6 million in fiscal 1996. This increase is consistent with higher
revenues and higher headcount in fiscal 1997.
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PAGE 8
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
(CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other project expenses for the first half of fiscal 1997 were $10.1 million as
compared to $6.2 million for the first half of fiscal 1996. This increase is
primarily related to an increase in hiring, training and related costs of
$1.2 million and an increase in non-billable travel costs of $2.0 million in the
first half of fiscal 1997 as compared to the comparable period in 1996.
Management and administrative support costs increased from $11.2 million in the
first half of last fiscal year to $13.6 million this fiscal year. This increase
of $2.4 million is principally due to the international expenses of
$2.2 million; growth in the domestic regional practice area management, travel
and hiring costs of $0.8 million; and increased domestic administrative support
of $0.4 million. During the first half of fiscal 1997, no expense was
accrued for the employee retention program which expired in fiscal 1996. This
compares to $2.3 million accrued for the employee retention program during
the first half of fiscal 1996.
Incentive compensation of $5.0 million was accrued for the first half of fiscal
1997 as compared to $3.0 million in fiscal 1996. The Company expects to continue
to accrue incentive compensation throughout fiscal 1996.
The increase in common and common equivalent shares is primarily due to the
exercise of options.
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PAGE 9
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
PART II. OTHER INFORMATION
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ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 -- Computation of earnings per share
(b) Reports on Form 8-K
During the quarter ended November 30, 1996, TSC filed a report on
Form 8-K dated December 19, 1996. This report contained
information reported under Item 7 related to summary financial
information for the first quarter of fiscal 1997.
All other items in Part II are either not applicable to the Company during the
quarter ended November 30, 1996, the answer is negative, or a response has been
previously reported and an additional report of the information need not be
made, pursuant to the instructions to Part II.
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PAGE 10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, TSC has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TECHNOLOGY SOLUTIONS COMPANY
Date: January 14, 1997 By: /s/ Martin T. Johnson
------------------------ --------------------------
Martin T. Johnson
Senior Vice President
and Chief Financial Officer
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PAGE 11
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Paper (P) or
Number Description Electronic (E)
- ------ --------------------------------- --------------
11 Calculation of Earnings per Share (P)
27 Financial Data Schedule (E)
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PAGE 12
<PAGE>
EXHIBIT 11
TECHNOLOGY SOLUTIONS COMPANY
AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
November 30, November 30,
--------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
unaudited unaudited
<S> <C> <C> <C> <C>
Net income per statements of income. . . . . . . . . . . . . $3,746 $ 43 $5,871 $1,198
Earnings resulting from modified treasury
stock method . . . . . . . . . . . . . . . . . . . . . . -- 62 -- 133
------ ------ ------ ------
Net earnings per modified treasury
stock method . . . . . . . . . . . . . . . . . . . . . . . $3,746 $ 105 $5,871 $1,331
------ ------ ------ ------
------ ------ ------ ------
Shares:
Weighted average shares outstanding. . . . . . . . . . . . 15,561 13,682 15,303 13,583
Common stock equivalents . . . . . . . . . . . . . . . . . 2,161 2,200 2,097 2,262
------ ------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . 17,722 15,882 17,400 15,845
------ ------ ------ ------
------ ------ ------ ------
Earnings per share . . . . . . . . . . . . . . . . . . . . . $ 0.21 $ 0.01 $ 0.34 $ 0.08
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 17,593
<SECURITIES> 14,697
<RECEIVABLES> 40,889
<ALLOWANCES> 2,667
<INVENTORY> 0
<CURRENT-ASSETS> 87,023
<PP&E> 12,370
<DEPRECIATION> 7,857
<TOTAL-ASSETS> 110,444
<CURRENT-LIABILITIES> 22,023
<BONDS> 0
0
0
<COMMON> 179
<OTHER-SE> 88,242
<TOTAL-LIABILITY-AND-EQUITY> 110,444
<SALES> 39,521
<TOTAL-REVENUES> 39,521
<CGS> 0
<TOTAL-COSTS> 33,593
<OTHER-EXPENSES> (539)
<LOSS-PROVISION> 1,109
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> 6,418
<INCOME-TAX> 2,672
<INCOME-CONTINUING> 3,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,746
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
