##### Table of Contents



UNITED STATES 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 quarterly period ended September 30, 2005
Commission file number 019433
 
 Technology Solutions Company
 Incorporated in the State of Delaware  I.R.S. Employer Identification No. 36-3584201
 205 North Michigan Avenue
Suite 1500
Chicago, Illinois 60601
(312) 228-4500
 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. Yes þ No o
 Indicate by check mark whether the registrant is an accelerated filer (as defined by Exchange Act Rule
12b-2). Yes o No þ
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange
Act). Yes o No þ
 As of
November 9, 2005 there were outstanding 2,354,356 shares of TSC Common Stock, par value
$.01.




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TECHNOLOGY SOLUTIONS COMPANY  Index to Form 10-Q
 PageNumberPart IFINANCIAL INFORMATION (UNAUDITED)ITEM 1. FINANCIAL STATEMENTSConsolidated
Balance Sheets as of  September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2005 and 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    13ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
    
    
    26ITEM 4. CONTROLS AND PROCEDURES
    
    
    26Part IIOTHER INFORMATIONITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    27ITEM
4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
    
    
    27ITEM 6. EXHIBITS
    
    
    28SIGNATURE
    
    
    29Restated Certificate of IncorporationCertificationCertificationCertificationCertification
   Page 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 TECHNOLOGY SOLUTIONS COMPANY
 
 CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2005
    
    
    2004(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    20,951
    
    
    $
    30,032Receivables, less allowance for doubtful receivables
of $72 and $73
    
    
    7,840
    
    
    
    6,182Other current assets
    
    
    945
    
    
    
    708Total current assets
    
    
    29,736
    
    
    
    36,922COMPUTERS, FURNITURE AND EQUIPMENT, NET
    
    
    332
    
    
    
    509GOODWILL
    
    
    7,298
    
    
    
    7,884INTANGIBLE ASSETS, NET
    
    
    1,232
    
    
    
    2,090LONG-TERM RECEIVABLES AND OTHER
    
    
    3,614
    
    
    
    5,679Total assets
    
    $
    42,212
    
    
    $
    53,084LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    1,054
    
    
    $
    960Line of credit
    
    
    
    
    
    
    649Accrued compensation and related costs
    
    
    3,665
    
    
    
    4,987Restructuring accruals
    
    
    589
    
    
    
    696Other current liabilities
    
    
    2,743
    
    
    
    3,998Total current liabilities
    
    
    8,051
    
    
    
    11,290COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $.01 par value; shares authorized 
10,000,000; none issued
    
    
    
    
    
    
    Common stock, $.01 par value; shares authorized 
100,000,000; shares issued  50,533,970;
shares outstanding 47,092,548 and 46,851,460
    
    
    505
    
    
    
    505Capital in excess of par value
    
    
    127,378
    
    
    
    127,583Stock based compensation
    
    
    89
    
    
    
    Accumulated deficit
    
    
    (89,167
    )
    
    
    (81,282
    )Treasury stock, at cost, 3,441,422 and 3,682,510 shares
    
    
    (4,875
    )
    
    
    (5,217
    )Accumulated other comprehensive income:Cumulative translation adjustment
    
    
    231
    
    
    
    205Total stockholders equity
    
    
    34,161
    
    
    
    41,794Total liabilities and stockholders equity
    
    $
    42,212
    
    
    $
    53,084
  Page 3




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TECHNOLOGY SOLUTIONS COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(unaudited)
    
    
    (unaudited)REVENUES:Revenues before reimbursements
    
    $
    9,347
    
    
    $
    7,741
    
    
    $
    28,341
    
    
    $
    24,043Reimbursements
    
    
    1,213
    
    
    
    1,071
    
    
    
    3,762
    
    
    
    3,22010,560
    
    
    
    8,812
    
    
    
    32,103
    
    
    
    27,263COSTS AND EXPENSES:Project personnel
    
    
    5,487
    
    
    
    4,992
    
    
    
    18,516
    
    
    
    15,713Other project expenses
    
    
    1,706
    
    
    
    1,442
    
    
    
    6,103
    
    
    
    4,172Reimbursable expenses
    
    
    1,213
    
    
    
    1,071
    
    
    
    3,762
    
    
    
    3,220Bad debt expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Management and administrative support
    
    
    3,224
    
    
    
    3,948
    
    
    
    11,818
    
    
    
    10,735Intangible asset amortization
    
    
    253
    
    
    
    
    
    
    
    765
    
    
    
    Goodwill and intangible asset impairment
    
    
    
    
    
    
    
    
    
    
    679
    
    
    
    Restructuring and other charges (credits)
    
    
    
    
    
    
    
    
    
    
    1,674
    
    
    
    (579
    )Gain on litigation settlement
    
    
    
    
    
    
    
    
    
    
    (2,722
    )
    
    
    Incentive compensation
    
    
    
    
    
    
    233
    
    
    
    
    
    
    
    78911,883
    
    
    
    11,686
    
    
    
    40,595
    
    
    
    34,062OPERATING LOSS
    
    
    (1,323
    )
    
    
    (2,874
    )
    
    
    (8,492
    )
    
    
    (6,799
    )OTHER INCOME:Net investment income
    
    
    247
    
    
    
    279
    
    
    
    607
    
    
    
    594LOSS BEFORE INCOME TAXES
    
    
    (1,076
    )
    
    
    (2,595
    )
    
    
    (7,885
    )
    
    
    (6,205
    )INCOME TAX PROVISION
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (1,076
    )
    
    $
    (2,595
    )
    
    $
    (7,885
    )
    
    $
    (6,205
    )BASIC NET LOSS
PER COMMON SHARE
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.17
    )
    
    $
    (0.15
    )WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
    
    
    47,023
    
    
    
    40,875
    
    
    
    46,936
    
    
    
    40,851DILUTED NET LOSS
PER COMMON SHARE
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.17
    )
    
    $
    (0.15
    )WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING
    
    
    47,023
    
    
    
    40,875
    
    
    
    46,936
    
    
    
    40,851
  Page 4




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TECHNOLOGY SOLUTIONS COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For theNine Months EndedSeptember 30,2005
    
    
    2004(unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (7,885
    )
    
    $
    (6,205
    )Restructuring and other charges (credits)
    
    
    1,674
    
    
    
    (579
    )Goodwill and intangible asset impairment
    
    
    679
    
    
    
    Adjustments to reconcile net loss to net
cash from operating activities:Depreciation and amortization
    
    
    1,087
    
    
    
    313Provision for receivable valuation allowances and
reserves for possible losses
    
    
    
    
    
    
    12Non-cash stock compensation
    
    
    89
    
    
    
    Changes in assets and liabilities:Receivables
    
    
    (1,658
    )
    
    
    (231
    )Sales of trading securities related to deferred
compensation plan
    
    
    
    
    
    
    6,712Other current assets
    
    
    (284
    )
    
    
    (562
    )Accounts payable
    
    
    102
    
    
    
    312Accrued compensation and related costs
    
    
    (1,315
    )
    
    
    1,363Deferred compensation liability
    
    
    
    
    
    
    (6,712
    )Restructuring accruals
    
    
    (1,674
    )
    
    
    (981
    )Other current liabilities
    
    
    (1,196
    )
    
    
    (500
    )Other assets
    
    
    2,068
    
    
    
    11Net cash used in operating activities
    
    
    (8,313
    )
    
    
    (7,047
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (208
    )
    
    
    (422
    )Net cash used in investing activities
    
    
    (208
    )
    
    
    (422
    )CASH FLOWS FROM FINANCING ACTIVITIES:Line of credit
    
    
    (649
    )
    
    
    Proceeds from exercise of stock options
    
    
    9
    
    
    
    1Proceeds from employee stock purchase plan
    
    
    128
    
    
    
    103Purchase of Company stock for treasury
    
    
    
    
    
    
    (76
    )Net cash (used in) provided by financing activities
    
    
    (512
    )
    
    
    28EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
    
    
    (48
    )
    
    
    (61
    )DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (9,081
    )
    
    
    (7,502
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    30,032
    
    
    
    41,104CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    20,951
    
    
    $
    33,602
  Page 5




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 NOTE 1  BASIS OF PRESENTATION
  NOTE 2  THE COMPANY
  NOTE 3  NEW ACCOUNTING STANDARDS
  Page 6




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
(Continued)
  NOTE 4  STOCK OPTIONS
   For the Three Months
    
    
    For the Nine Months EndedEnded September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss:As reported
    
    $
    (1,076
    )
    
    $
    (2,595
    )
    
    $
    (7,885
    )
    
    $
    (6,205
    )Less: Stock-based compensation expense
determined under fair value method for
all awards, net of related taxes (as
applicable)
    
    
    (348
    )
    
    
    (479
    )
    
    
    (852
    )
    
    
    (1,422
    )Pro forma
    
    $
    (1,424
    )
    
    $
    (3,074
    )
    
    $
    (8,737
    )
    
    $
    (7,627
    )Basic net loss per common share:As reported
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.17
    )
    
    $
    (0.15
    )Pro forma
    
    $
    (0.03
    )
    
    $
    (0.08
    )
    
    $
    (0.19
    )
    
    $
    (0.19
    )Diluted net loss per common share:As reported
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.17
    )
    
    $
    (0.15
    )Pro forma
    
    $
    (0.03
    )
    
    $
    (0.08
    )
    
    $
    (0.19
    )
    
    $
    (0.19
    )
  Page 7




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
(Continued)
 NOTE 5  CAPITAL STOCK
   NOTE 6  LOSS PER COMMON SHARE
   September 30, 2005
    
    
    September 30, 2004Per
    
    
    
    
    
    
    
    
    
    
    PerNet
    
    
    Shares
    
    
    Common
    
    
    Net
    
    
    Shares
    
    
    CommonLoss
    
    
    (In Thousands)
    
    
    Share
    
    
    Loss
    
    
    (In Thousands)
    
    
    ShareBasic loss per share
    
    $
    (1,076
    )
    
    
    47,023
    
    
    $
    (0.02
    )
    
    $
    (2,595
    )
    
    
    40,875
    
    
    $
    (0.06
    )Effect of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted loss per share
    
    $
    (1,076
    )
    
    
    47,023
    
    
    $
    (0.02
    )
    
    $
    (2,595
    )
    
    
    40,875
    
    
    $
    (0.06
    )
 Page 8




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
(Continued)
  September 30, 2005
    
    
    September 30, 2004Per
    
    
    
    
    
    
    
    
    
    
    PerNet
    
    
    Shares
    
    
    Common
    
    
    Net
    
    
    Shares
    
    
    CommonLoss
    
    
    (In Thousands)
    
    
    Share
    
    
    Loss
    
    
    (In Thousands)
    
    
    ShareBasic loss per share
    
    $
    (7,885
    )
    
    
    46,936
    
    
    $
    (0.17
    )
    
    $
    (6,205
    )
    
    
    40,851
    
    
    $
    (0.15
    )Effect of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted loss per share
    
    $
    (7,885
    )
    
    
    46,936
    
    
    $
    (0.17
    )
    
    $
    (6,205
    )
    
    
    40,851
    
    
    $
    (0.15
    )
 NOTE 7  COMPREHENSIVE (LOSS) INCOME
  For the Three Months
    
    
    For the Nine Months EndedEnded September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
    
    $
    (1,076
    )
    
    $
    (2,595
    )
    
    $
    (7,885
    )
    
    $
    (6,205
    )Other comprehensive income (loss):Translation adjustment
    
    
    7
    
    
    
    1
    
    
    
    26
    
    
    
    (8
    )Other comprehensive income (loss)
    
    
    7
    
    
    
    1
    
    
    
    26
    
    
    
    (8
    )Total comprehensive loss
    
    $
    (1,069
    )
    
    $
    (2,594
    )
    
    $
    (7,859
    )
    
    $
    (6,213
    )
 NOTE 8  GOODWILL AND INTANGIBLE ASSETS, NET
  Balance as of December 31, 2004
    
    $
    7,884Impairment loss
    
    
    (586
    )Balance as of September 30, 2005
    
    $
    7,298
  Balance as of December 31, 2004
    
    $
    2,090Amortization
    
    
    (765
    )Impairment loss
    
    
    (93
    )Balance as of September 30, 2005
    
    $
    1,232
  Page 9




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
(Continued)
  NOTE 9  OTHER EVENTS
  Restructuring and Other
    
    
    
    
    
    Cash(1)
    
    
    Non-cash
    
    
    Balance as ofCharges - 2005
    
    Charge
    
    
    Payments
    
    
    Usage
    
    
    Sept. 30, 2005Severance costs (23
employees)
    
    $
    1,173
    
    
    $
    878
    
    
    $
    
    
    
    $
    295Office closures
    
    
    511
    
    
    
    175
    
    
    
    45
    
    
    
    291Other costs
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Total
    
    $
    1,687
    
    
    $
    1,053
    
    
    $
    45
    
    
    $
    589
 
 (1)Net cash payments totaling $1,053 were made during the nine months ended
September 30, 2005.  Restructuring and Other
    
    
    
    
    
    Cash(2)
    
    
    Non-cash
    
    
    Balance as ofCharges  2003
    
    Charge
    
    
    Payments
    
    
    Usage
    
    
    Sept. 30, 2005Severance costs
(approximately 30
employees)
    
    $
    3,917
    
    
    $
    3,860
    
    
    $
    33
    
    
    $
    24Office reductions
    
    
    921
    
    
    
    592
    
    
    
    64
    
    
    
    265Professional fees
    
    
    373
    
    
    
    383
    
    
    
    
    
    
    
    (10
    )Total original charge
    
    
    5,211
    
    
    
    4,835
    
    
    
    97
    
    
    
    2792004 adjustment
    
    
    (266
    )
    
    
    
    
    
    
    
    
    
    
    (266
    )2005 adjustment
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )Total
    
    $
    4,932
    
    
    $
    4,835
    
    
    $
    97
    
    
    $
    
 
 (2)Net cash payments totaling $621 were made during the nine months ended
September 30, 2005. Page 10




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
(Continued)
  Cash
    
    
    Non-cash
    
    
    Balance as ofLatin America Charge  2000
    
    Charge
    
    
    Payments
    
    
    Usage
    
    
    Sept. 30, 2005Severance costs
(approximately
40 employees)
    
    $
    1,785
    
    
    $
    1,574
    
    
    $
    
    
    
    $
    211Other costs
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    (30
    )Asset write-offs
    
    
    2,916
    
    
    
    
    
    
    
    2,916
    
    
    
    Total original charge
    
    
    4,701
    
    
    
    1,604
    
    
    
    2,916
    
    
    
    181Accounts receivable
collections  2000
    
    
    (400
    )
    
    
    (400
    )
    
    
    
    
    
    
    2004 adjustment
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Total
    
    $
    4,120
    
    
    $
    1,204
    
    
    $
    2,916
    
    
    $
    
  Restructuring and Other
    
    
    
    
    
    Cash
    
    
    Non-cash
    
    
    Balance as ofCharges  1999
    
    Charge
    
    
    Payments
    
    
    Usage
    
    
    Sept. 30, 2005Lease terminations
    
    $
    3,011
    
    
    $
    725
    
    
    $
    35
    
    
    $
    2,251Former executive severance
costs
    
    
    1,814
    
    
    
    1,747
    
    
    
    150
    
    
    
    (83
    )CourseNet Systems, Inc.
acquisition costs
    
    
    1,300
    
    
    
    
    
    
    
    1,300
    
    
    
    Asset write-offs
    
    
    842
    
    
    
    
    
    
    
    842
    
    
    
    Total original charge
    
    
    6,967
    
    
    
    2,472
    
    
    
    2,327
    
    
    
    2,1682000 adjustment
    
    
    (404
    )
    
    
    
    
    
    
    
    
    
    
    (404
    )2001 adjustment
    
    
    (1,488
    )
    
    
    
    
    
    
    
    
    
    
    (1,488
    )2002 adjustment
    
    
    (144
    )
    
    
    
    
    
    
    
    
    
    
    (144
    )2004 adjustment
    
    
    (132
    )
    
    
    
    
    
    
    
    
    
    
    (132
    )Total
    
    $
    4,799
    
    
    $
    2,472
    
    
    $
    2,327
    
    
    $
    
 Page 11




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
 (Continued)
 NOTE 10  SUBSEQUENT EVENTS
   Page 12




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS
 OVERVIEW
 ®
    Page 13




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    REVENUES
  Page 14




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##### Table of Contents



TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 COSTS AND EXPENSES
 Project Personnel
  Other Project Expenses
  Reimbursable Expenses
  Bad Debt Expense
  Management and Administrative Support
  Intangible asset amortization
  Page 15




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Incentive Compensation
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Revenue Recognition
  Allowance for Doubtful Receivables
  Page 16




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Accounting for Income Taxes
  Valuation of Stock Options and Warrants
   Goodwill and Intangible Assets
  Page 17




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   Restructuring and Other Charges
  THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2004
 Revenues
   Page 18




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Costs and Expenses
       Operating Loss
  Page 19




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 Other Income
  Income Tax Provision
 Shares Outstanding
  NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2004
 Revenues
  Costs and Expenses
   Page 20




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
       Restructuring and Other
    
    
    
    
    
    Cash(1)
    
    
    Non-cash
    
    
    Balance as ofCharges - 2005 (in thousands)
    
    Charge
    
    
    Payments
    
    
    Usage
    
    
    Sept. 30, 2005Severance costs (23
employees)
    
    $
    1,173
    
    
    $
    878
    
    
    $
    
    
    
    $
    295Office closures
    
    
    511
    
    
    
    175
    
    
    
    45
    
    
    
    291Other costs
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Total
    
    $
    1,687
    
    
    $
    1,053
    
    
    $
    45
    
    
    $
    589
 
 (1)Paid during the nine months ended September 30, 2005.    Page 21




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
  Operating Loss
  Other Income
  Income Tax Provision
  Shares Outstanding
  LIQUIDITY AND CAPITAL RESOURCES
  Page 22




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
    Payments Due By Period (In thousands)FourthQuarter2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    TotalOperating leases (net of
restructuring and other
charges)
    
    $
    240
    
    
    $
    687
    
    
    $
    332
    
    
    $
    8
    
    
    $
    1,267Cash outlay for
restructuring and
Other charges
    
    
    273
    
    
    
    288
    
    
    
    28
    
    
    
    
    
    
    
    589Purchase obligations (net of
restructuring and other
charges)
    
    
    164
    
    
    
    39
    
    
    
    10
    
    
    
    
    
    
    
    213Total
    
    $
    677
    
    
    $
    1,014
    
    
    $
    370
    
    
    $
    8
    
    
    $
    2,069
    Page 23




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
   NEW ACCOUNTING STANDARDS
  ASSUMPTIONS UNDERLYING CERTAIN FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE
RESULTS
 This Form 10-Q contains or may contain certain forward-looking statements concerning our financial
position, results of operations, cash flows, business strategy, budgets, projected costs and plans
and objectives of management for future operations as well as other statements. Forward-looking
statements may be preceded by, followed by or include the words may, will, should, could,
would, potential, possible, believe, expect, anticipate, intend, plan, estimate,
hope, project, and other similar expressions. These forward-looking statements involve
significant risks and uncertainties. Although we believe that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, readers are cautioned that no
assurance can be given that such expectations will prove correct and that actual results and
developments may differ materially from those conveyed in such forward-looking statements. We claim
the protection of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 for all forward-looking statements. Factors which could
cause our actual financial and other results to differ materially from any results that we might
project, forecast, estimate or budget in the forward-
 Page 24




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TECHNOLOGY SOLUTIONS COMPANY
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
 looking statements in this Form 10-Q include,
but are not limited to, our ability to successfully
introduce new service offerings, our ability to manage the pace of technological change including
our ability to refine and add to our service offerings to adapt to technological changes, our
ability to manage the current downturn in our business and in our industry and changes in the
economy, our ability to manage our current decreased revenue levels, our ability to attract new
business and increase revenues, our ability to attract and retain employees, the limited level of
options available for grants to attract new employees and to retain existing employees, our ability
to accommodate a changing business environment, general business and economic conditions in our
operating regions, market conditions and competitive factors, our dependence on a limited number of
clients and the potential loss of significant clients, our ability to continue to attract new
clients and sell additional work to existing clients, and our ability to manage costs and headcount
relative to expected revenues all as more fully described herein and in our Annual Report on Form
10-K for the year ended December 31, 2004 under Managements Discussion and Analysis of Financial
Condition and Results of Operations Assumptions Underlying Certain Forward-Looking Statements and
Factors that May Affect Future Results and elsewhere from time to time in our other SEC reports.
Forward-looking statements are not guarantees of performance. Forward-looking statements speak
only as of the date on which they are made and, except as may be otherwise required by law, we do
not undertake any obligation to update any forward-looking statement to reflect subsequent events
or circumstances. If we do update or correct one or more forward-looking statements, readers,
investors and others should not conclude that we will make additional updates or corrections with
respect thereto or with respect to other forward-looking statements. The outcomes expressed or
implied in these forward-looking statements could be affected by many important factors. Actual
results may vary materially.
 Page 25




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TECHNOLOGY SOLUTIONS COMPANY
 PART I. FINANCIAL INFORMATION
(Continued)
 
 ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4CONTROLS AND PROCEDURES
  Page 26




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TECHNOLOGY SOLUTIONS COMPANY
 
 PART II. OTHER INFORMATION
 
 ITEM 2UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Votes For
    

Votes Against
    

Votes
Abstained43,074,970
    

    1,274,273
    
    219,917
 Page 27




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TECHNOLOGY SOLUTIONS COMPANY
 PART II. OTHER INFORMATION  (Continued)
 
 ITEM 6EXHIBITS
  Exhibit #
    
    Description of Document3.1*
    
    Restated Certificate of Incorporation of Technology Solutions
Company, as amended.3.2
    
    By-Laws of Technology Solutions Company, as amended, filed as
Exhibit 3.2 to TSCs Current Report on Form 8-K dated October
14, 2005, file no. 0-19433, is hereby incorporated by reference.31.1*
    
    CEO Certification31.2*
    
    CFO Certification32.1*
    
    Certification of Michael R. Gorsage Pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code32.2*
    
    Certification of Sandor Grosz Pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code
  
 *
    
    Filed herewith Page 28




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##### Table of Contents



SIGNATURE
  TECHNOLOGY SOLUTIONS COMPANYDate: November 14, 2005
    By:
    /s/ SANDOR GROSZSandor GroszChief Financial
Officer Page 29