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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGES ACT OF 1934
FEBRUARY 24, 1998
Date of Report (Date of earliest event reported)
THOMAS GROUP, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 72-0843540
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5215 NORTH O'CONNOR BOULEVARD, SUITE 2500, IRVING, TEXAS 75039-3714
(Address of principal executive offices) (Zip Code)
(972) 869-3400
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
The company has recently issued a press release that describes (a) an update to
earnings estimates for the quarter and year ended December 31,
1997, and (b) the repurchase of common shares from Philip R. Thomas, Chairman
and Chief Executive Officer, in exchange for cash and forgiveness of outstanding
debt to the company.
See the press release attached as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit
99.1 Press Release dated February 24, 1998 regarding 1997
earnings estimates and stock repurchase.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be filed on its behalf by the
undersigned hereunto duly authorized.
Thomas Group, Inc.
Date: February 25, 1998 By: /s/ Alexander W. Young
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Alexander W. Young
President and Chief Operating Officer
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EXHIBIT INDEX
99.1 Press Release dated February 24, 1998 regarding 1997 earnings estimates
and stock repurchase.
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Exhibit 99.1
Contact: Lee Grubb, Chief Financial Officer
(972) 869-3400
or
Melissa Moore, Manager, Investor Relations
(972) 401-4435
For Release
7:00AM February 24, 1998
THOMAS GROUP UPDATES 1997 ESTIMATES AND ANNOUNCES COMMON SHARE REPURCHASE
DALLAS - FEBRUARY 24, 1998 - Thomas Group, Inc. [Nasdaq - TGIS] today announced
further guidance on 1997 earnings estimates given on January 7, 1998. The
company had anticipated fourth quarter earnings of no less than $0.05 per share
including a $0.09 to $0.10 per share loss on its Software Solutions business
segment. The software operating loss projection is being revised to $0.14 to
$0.16 per share, bringing the total company quarter to an approximate break even
prior to an impairment charge related to the software business.
In light of the historical operating losses for the Software Solutions segment,
the company will take an impairment charge of $2.3 million to write off a
significant portion of its capitalized software and related goodwill. This write
off is in compliance with accounting rules that establish standards for
recognizing and measuring impairment of assets, reducing such amounts to fair
value. This charge will produce an additional loss to the total company of $0.18
per share in the fourth quarter of 1997, but will have the positive effect of
reducing 1998 and 1999 non-cash expenses by $1.1 and $0.5 million, respectively.
Management anticipates that the Software Solutions segment will be marginally
profitable in 1998 after having a full year pre-tax loss of approximately $7.1
million in 1997.
Commenting on the write down of the Software Solutions segment assets, Chairman
and Chief Executive Officer, Philip R. Thomas, said, "The entities comprising
our software segment were acquired with a particular purpose in mind: to provide
additional tools for improvement and added value to our services for our current
clients while providing additional opportunities to introduce ourselves to new
clients. We continue to believe that with the removal of the problems from the
acquired software, identification of the correct sales markets, and a
professional salesforce in place, these companies will ultimately become as
beneficial to Thomas Group as we anticipated upon their acquisition. In 1997 we
changed the name of these companies to emphasize the synergy between our core
business and our software segment. Thomas Group Information Technologies has the
potential to be a positive contributor to the total company's earnings in 1998."
In other news, the company has taken receipt of 1.4 million shares of common
stock owned by Mr. Thomas in exchange for $8.2 million in cash and the
satisfaction of a $2.3 million outstanding debt to the company. The number of
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shares ultimately repurchased from Mr. Thomas will be adjusted in late April to
reflect an average of the trading prices of the common stock over a 90-day
period. The Thomas Group Board of Directors established a Special Committee to
counsel the company regarding the advisability of the transaction. The Special
Committee retained an investment banking firm to advise the committee as to
certain aspects of the transaction.
Lee Grubb, Chief Financial Officer, commented on the transaction, "We feel that
the company's purchase of Mr. Thomas' shares is the best use of the company's
strong cash position at the current time. It is an excellent opportunity to
invest in the company at a time when the stock price is lower than it has been
in recent months; thereby increasing shareholder value. Mr. Thomas' sale of a
portion of his shares was for personal reasons. He remains a stockholder who is
strongly committed to the growth and continued success of Thomas Group."
These statements regarding estimated results are preliminary and based on
partial information and management assumptions. The company plans to announce
its actual results for the year and fourth quarter of 1997 on March 11, 1998.
"Safe Harbor" Statement Under The Private Securities Litigation Reform Act:
Statements in this release that are not strictly historical are "forward
looking" statements which should be considered as subject to the many
uncertainties that exist in the company's operations and business environment.
These uncertainties, which include economic and business conditions that may
impact clients and the company's performance-oriented fees, timing of contracts
and revenue recognition, competitive and cost factors, and the like, are set
forth in the Thomas Group, Inc. Form 10-K for the 1996 fiscal year and Amendment
No. 1 to Form S-3 dated December 3, 1997 filed with the Securities and Exchange
Commission.
* * *
Thomas Group, Inc. is an international, publicly-traded company (TGIS) providing
solutions to significantly improve many business processes for major corporate
clients. Thomas Group's ResultantsSM work on-site with client companies to
analyze operations, and to develop and implement speed-based improvement
strategies. Thomas Group has offices in Dallas, Detroit, Frankfurt, and
Singapore. For additional information on Thomas Group, Inc. please visit the
company on the World Wide Web at www.thomasgroup.com.
