10-Q

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 March 31, 2004

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 o No

Indicate by check mark whether the registrant is an accelerated filer (as defined by Exchange Act Rule 12b-2). Yes            No o

As of April 30, 2004, there were outstanding 40,859,705 shares of TSC Common Stock, par value $.01.

TECHNOLOGY SOLUTIONS COMPANY

Index to Form 10-Q

	Page
	Number
Part I
FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003		3
Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and 2003		4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003		5
Notes to Consolidated Financial Statements		6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		23
ITEM 4. CONTROLS AND PROCEDURES		23
Part II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS		24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K		24
SIGNATURE		25
Employment Agreement with Michael R. Gorsage
Employment Agreement with Stephen B. Oresman
CEO Certification
CFO Certification
Certification of Michael R. Gorsage
Certification of Timothy P. Dimond

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

TECHNOLOGY SOLUTIONS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	March 31,			December 31,
	2004			2003
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	38,797		$	41,104
Marketable securities held in trust		—			6,712
Receivables, less allowance for doubtful receivables of $146 and $239		5,988			5,802
Other current assets		166			696
Total current assets		44,951			54,314
COMPUTERS, FURNITURE AND EQUIPMENT, NET		461			201
LONG-TERM RECEIVABLES AND OTHER		5,638			5,654
Total assets	$	51,050		$	60,169
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	300		$	330
Accrued compensation and related costs		3,537			3,575
Deferred compensation		—			6,712
Restructuring accruals		1,357			2,417
Other current liabilities		2,480			2,744
Total current liabilities		7,674			15,778
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ 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 - 44,695,788; shares outstanding 40,859,705 and 40,818,469		447			447
Capital in excess of par value		121,954			121,974
Accumulated deficit		(73,774	)		(72,735	)
Treasury stock, at cost, 3,836,083 and 3,877,319 shares		(5,466	)		(5,525	)
Accumulated other comprehensive income:
Cumulative translation adjustment		215			230
Total stockholders’ equity		43,376			44,391
Total liabilities and stockholders’ equity	$	51,050		$	60,169

The accompanying Notes to Consolidated Financial Statements are an integral part of this financial information.

Page 3

TECHNOLOGY SOLUTIONS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	For the Three
	Months Ended
	March 31,
	2004			2003
	(unaudited)
REVENUES:
Revenues before reimbursements	$	8,635		$	15,181
Reimbursements		1,092			1,390
		9,727			16,571
COSTS AND EXPENSES:
Project personnel		5,540			8,963
Other project expenses		1,454			1,672
Reimbursable expenses		1,092			1,390
Bad debt (credit) expense		(120	)		121
Management and administrative support		3,378			4,197
Restructuring and other credits		(579	)		—
Incentive compensation		228			311
		10,993			16,654
OPERATING LOSS		(1,266	)		(83	)
OTHER INCOME:
Net investment income		227			314
(LOSS) INCOME BEFORE INCOME TAXES		(1,039	)		231
INCOME TAX PROVISION		—			92
NET (LOSS) INCOME	$	(1,039	)	$	139
BASIC NET (LOSS) EARNINGS PER COMMON SHARE	$	(0.03	)	$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		40,819			40,589
DILUTED NET (LOSS) EARNINGS PER COMMON SHARE	$	(0.03	)	$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING		40,819			41,154

The accompanying Notes to Consolidated Financial Statements are an integral part of this financial information.

Page 4

TECHNOLOGY SOLUTIONS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the
	Three Months Ended
	March 31,
	2004			2003
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,039	)	$	139
Restructuring and other credits		(579	)		—
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation and amortization		107			140
Provisions for receivable valuation allowances and reserves for possible losses, net of recoveries		(120	)		121
Deferred income taxes		—			22
Changes in assets and liabilities:
Receivables		(66	)		2,329
Purchases of trading securities related to deferred compensation plan, net of market adjustments		(2,201	)		(22	)
Sales of trading securities related to deferred compensation plan		8,913			—
Other current assets		530			224
Accounts payable		(30	)		236
Accrued compensation and related costs		(42	)		(4,249	)
Deferred compensation liability		(6,712	)		22
Restructuring accruals		(481	)		(31	)
Other current liabilities		(225	)		(52	)
Other assets		17			387
Net cash used in operating activities		(1,928	)		(734	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from available-for-sale securities		—			275
Capital expenditures		(367	)		(24	)
Net cash (used in) provided by investing activities		(367	)		251
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan		38			75
Purchase of Company stock for treasury		—			(251	)
Net cash provided by (used in) financing activities		38			(176	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(50	)		4
DECREASE IN CASH AND CASH EQUIVALENTS		(2,307	)		(655	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		41,104			47,004
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	38,797		$	46,349

The accompanying Notes to Consolidated Financial Statements are an integral part of this financial information.

Page 5

TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(In thousands, except share and per share data)

NOTE 1 — BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Technology Solutions Company and its subsidiaries (“TSC” or the “Company”). The consolidated balance sheet as of March 31, 2004, the consolidated statements of operations for the three months ended March 31, 2004 and 2003 and the consolidated statements of cash flows for the three months ended March 31, 2004 and 2003 have been prepared by the Company without audit. In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows as of March 31, 2004 and for all periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 filed with the United States Securities and Exchange Commission (“SEC”) on March 19, 2004.

NOTE 2 — THE COMPANY

Technology Solutions Company (“TSC”) is a consulting company that focuses on rapid results. TSC helps clients plan, select, install, upgrade and optimize the software systems that run their business operations. TSC’s range of services include project planning, software selection, reengineering, implementation, systems integration, upgrades, training, and outsourcing. The Company’s clients are primarily located throughout the United States but the Company also supports global deployments.

Page 6

TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

NOTE 3 — NEW ACCOUNTING STANDARDS

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of Accounting Research Bulletin No. 51” (“FIN 46”). FIN 46 clarified the application of Accounting Research Bulletin Number 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Qualifying special purpose entities as defined by FASB Statement Number 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” are excluded from the scope of Interpretation No. 46. Interpretation No. 46 applied immediately to all variable interest entities created after January 31, 2003 and was originally effective for fiscal periods beginning after July 1, 2003 for existing variable interest entities. In October 2003, the FASB postponed the effective date of Interpretation No. 46 to December 31, 2003. The Company does not have any variable interest entities and, therefore, the adoption of the provisions of FIN 46 did not have a material impact on the Company’s results of operations or financial position.

In December 2003, a revised version of Interpretation 46 (“Revised Interpretation No. 46”) was issued by the FASB. The revisions clarify some requirements, ease some implementation problems, add new scope exceptions, and add applicability judgments. Revised Interpretation No. 46 is required to be adopted by most public companies no later than March 31, 2004. The adoption of Revised Interpretation No. 46 did not have a material impact on the Company’s results of operations or financial position.

In December 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS No. 132 improves financial statement disclosures for defined benefit plans and requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. SFAS No. 132 is effective for fiscal years ending after December 15, 2003 and for quarters beginning after December 15, 2003. The adoption of SFAS No. 132 did not have a material impact on the Company’s results of operations or financial position.

NOTE 4 — STOCK OPTIONS

The Company accounts for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Compensation costs for employee stock options is measured as the excess, if any, of the quoted market price of the Company’s common stock at the date of grant over the amount an employee must pay to acquire the stock.

Page 7

TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

The following table illustrates the effect on net (loss) income and (loss) earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based compensation. The following table also provides the amount of Stock-Based compensation cost included in net (loss) income as reported.

	For the Three Months
	Ended March 31,
	2004			2003
Net (loss) income:
As reported	$	(1,039	)	$	139
Less: Stock-based compensation expense determined under fair value method for all awards, net of related taxes (as applicable)		(485	)		(563	)
Pro forma	$	(1,524	)	$	(424	)
Basic net (loss) earnings per common share:
As reported	$	(0.03	)	$	0.00
Pro forma	$	(0.04	)	$	(0.01	)
Diluted net (loss) earnings per common share:
As reported	$	(0.03	)	$	0.00
Pro forma	$	(0.04	)	$	(0.01	)

As of March 31, 2004 and 2003, options to purchase 9,988,063 and 10,602,965 shares of common stock were outstanding, respectively, and options to purchase an additional 3,036,920 and 2,596,770 shares of common stock were available for grant, respectively, under the Technology Solutions Company 1996 Stock Incentive Plan.

NOTE 5 — CAPITAL STOCK

The Company has a stock repurchase program, which allows for share repurchases of up to 11,525,327 shares of outstanding Company common stock (the “Repurchase Program”). During the three months ended March 31, 2004, the Company did not purchase any shares. During the three months ended March 31, 2003, the Company purchased 242,700 shares for $251. The Company has repurchased an aggregate total of 6,762,627 shares since the inception of this Repurchase Program in September 2000. As of March 31, 2004, there were 4,762,700 shares available to be purchased under the Repurchase Program.

The timing and size of any future stock repurchases are subject to market conditions, stock prices, cash position and other cash requirements.

Page 8

TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

NOTE 6 — (LOSS) EARNINGS PER COMMON SHARE

The Company discloses basic and diluted (loss) earnings per share in the consolidated statements of operations under the provisions of SFAS No. 128, "(Loss) Earnings Per Share.” Diluted (loss) earnings per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during each period presented, plus the dilutive effect of common equivalent shares arising from the assumed exercise of stock options using the treasury stock method. Common equivalent shares of 1,633,574 were not included in the diluted loss per share calculation as they were antidilutive for the three months ended March 31, 2004. Basic (loss) earnings per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during each period presented.

Reconciliation of basic and diluted (loss) earnings per share for the three months ended:

	March 31, 2004								March 31, 2003
				Shares							Shares		Per
	Net			(In		Per			Net		(In		Common
	Loss			Thousands)		Common Share			Income		Thousands)		Share
Basic (loss) earnings per share	$	(1,039	)		40,819	$	(0.03	)	$	139		40,589	$	0.00
Effect of stock options		—			—					—		565
Diluted (loss) earnings per share	$	(1,039	)		40,819	$	(0.03	)	$	139		41,154	$	0.00

NOTE 7 — COMPREHENSIVE (LOSS) INCOME

The Company’s comprehensive (loss) income was as follows:

	For the Three Months
	Ended March 31,
	2004			2003
Net (loss) income	$	(1,039	)	$	139
Other comprehensive (loss) income:
Net unrealized holding gains on available-for-sale securities, net of tax		—			127
Translation adjustment		(15	)		21
Other comprehensive (loss) income		(15	)		148
Total comprehensive (loss) income	$	(1,054	)	$	287

Page 9

TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

NOTE 8 — BUSINESS SEGMENTS

The Company operates in a single business segment. The Company’s clients are primarily located throughout the United States but the Company also supports global deployments. The following is revenue, including reimbursements, and long-lived asset information by geographic area:

For and as of the
Three Months Ended
March 31, 2004	United States		Foreign Subsidiary		Total
Revenues	$	9,727		—	$	9,727
Identifiable assets	$	50,826	$	224	$	51,050

For and as of the
Three Months Ended
March 31, 2003	United States		Foreign Subsidiary		Total
Revenues	$	16,281	$	290	$	16,571
Identifiable assets	$	94,081	$	1,177	$	95,258

Foreign revenues and identifiable assets are based on the country in which the legal subsidiary is domiciled. No single foreign country’s revenues or identifiable assets were material to the consolidated revenues or identifiable assets of the Company.

NOTE 9 — OTHER EVENTS

In the second quarter of 2003, the Company recorded $5,211 in restructuring and other charges as a result of organizational changes announced in June 2003. These charges consisted of the severance costs of professional personnel and executives as well as office reductions and professional fees incurred in connection with terminated negotiations with a party that had expressed interest in acquiring the Company. During the three months ended March 31, 2004, this charge was reduced by $266 to $4,945 as the Company was able to favorably terminate one of their office leases. As of March 31, 2004, there was an accrual balance of $1,350. The Company expects to utilize this balance by the end of 2005. The following table provides the components of this charge.

Restructuring and Other				Cash(1)		Non-cash		Balance as of
Charges - 2003	Charge			Payments		Usage		Mar. 31, 2004
Severance costs (approximately 30 employees)	$	3,917		$	2,800	$	33	$	1,084
Office reductions		921			377		2		542
Professional fees		373			383		—		(10	)
Total original charge		5,211			3,560		35		1,616
2004 adjustment		(266	)		—		—		(266	)
Total	$	4,945		$	3,560	$	35	$	1,350

⁽¹⁾Net cash payments totaling $473 were made during the three months ended March 31, 2004.

In 2000, the Company recorded a pre-tax charge of $4,701 for the closure of its Latin American operations. Subsequently in 2000, the Company collected $400 of accounts receivable previously written-off and, as a result, the cumulative charge was reduced to $4,301. This charge was further

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TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

reduced by $181 to $4,120 during the three months ended March 31, 2004 as the Company completed the closure of its Latin American operations and, accordingly, no further payments are due. The following table provides the components of this charge.

				Cash(2)			Non-cash		Balance as of
Latin America Charge - 2000	Charge			Payments			Usage		Mar. 31, 2004
Severance costs (approximately 40 employees)	$	1,785		$	1,574		$	—	$	211
Other costs		—			30			—		(30	)
Asset write-offs		2,916			—			2,916		—
Total original charge		4,701			1,604			2,916		181
Accounts receivable collections - 2000		(400	)		(400	)		—		—
2004 adjustment		(181	)		—			—		(181	)
Total	$	4,120		$	1,204		$	2,916	$	—

⁽²⁾ There were no net cash payments during the three months ended March 31, 2004.

In 1999, the Company recorded $6,967 in restructuring and other charges associated with lease terminations, former executive severance costs, CourseNet Systems, Inc. acquisition costs and asset write-offs. On February 15, 2000, the Company distributed the common stock of eLoyalty Corporation (“eLoyalty”) owned by the Company to the Company’s stockholders (the “Spin-Off”). eLoyalty operated within the Company prior to the Spin-Off and is now a separate, publicly traded company. The Company determined that a portion of the lease terminations became unnecessary due to changes in TSC office usage by TSC and eLoyalty and also determined that the actual costs for these lease terminations would be less than previously anticipated and, as a result, the cumulative charge was reduced by $2,036 to $4,931 during 2000, 2001 and 2002 and by $132 to $4,799 during the quarter ended March 31, 2004. As of March 31, 2004, there was an accrual balance of $7, which relates to the net amount that the Company is contractually obligated to pay through 2004 as a result of the lease terminations. The following table provides the components of this charge.

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TECHNOLOGY SOLUTIONS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)
(Continued)

Restructuring and Other				Cash(3)		Non-cash		Balance as of
Charges - 1999	Charge			Payments		Usage		Mar. 31, 2004
Lease terminations	$	3,011		$	718	$	35	$	2,258
Former 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			2,465		2,327		2,175
2000 adjustment		(404	)		—		—		(404	)
2001 adjustment		(1,488	)		—		—		(1,488	)
2002 adjustment		(144	)		—		—		(144	)
2004 adjustment		(132	)		—		—		(132	)
Total	$	4,799		$	2,465	$	2,327	$	7

⁽³⁾ Net cash payments totaling $8 were made during the three months ended March 31, 2004.

NOTE 10 — RELATED PARTY

During the three months ended March 31, 2004 and 2003, the Company provided services to Bausch & Lomb, Inc (B&L). One of the Company’s directors, John R. Purcell and a former director, William H. Waltrip, also serve as directors for B&L. The services performed related to B&L’s global IT integration project and were awarded following a competitive bidding process. The amount of revenues recognized for such services during the three months ended March 31, 2004 and 2003 represented 4 percent and 12 percent of the Company’s total revenues before reimbursements, respectively. The net accounts receivable balances from these services as of March 31, 2004 and December 31, 2003 were $285 and $272, respectively.

Page 12

\

TECHNOLOGY SOLUTIONS COMPANY

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

OVERVIEW

On May 6, 2004, we announced that Michael R. Gorsage became our President and Chief Executive Officer as well as a member of our Board of Directors. Stephen B. Oresman, who was serving as our CEO, remains with the Company and is now our Chairman of the Board. John R. Purcell resigned his position as Chairman of the Board, but remains a member of our Board of Directors.

The results of our operations are affected by general economic conditions as well as the level of economic activity and changes in the industries the we serve. While the general economy and the information technology (“IT”) consulting services market is improving, there is no assurance that these improving conditions will result in an increase in our future revenues given the fundamental changes in the IT service industry as set forth below. In addition, increases in demand for our services generally tend to lag behind economic cycles. Accordingly, any benefit to our business of any economic recovery may take longer to realize.

Beginning in the second half of 2003, we took steps to refocus and rebuild our business. These steps included investing in a range of specialty services in order to differentiate us from our competition and investing in marketing initiatives to support these specialty services as well as maintaining our project personnel headcount at a level to enable us to grow our business. While our revenues in the first quarter increased as compared to the fourth quarter of 2003, we completed several projects during the first quarter of 2004 that have not yet been fully replaced with new projects. Accordingly, we expect quarterly revenues in the second quarter to decline as compared to the first quarter of 2004. Despite our revenue improvement in the first quarter, we incurred an operating loss in the first quarter of 2004 as well as all four quarters during 2003 and we will likely continue to incur operating losses during the remainder of 2004 as we continue our efforts to refocus and rebuild our business.

In addition to the challenges described above, we also believe that the information technology services industry is undergoing some fundamental changes, resulting in increased competitive pressure. These changes include competition from application software firms as they continue to enhance services and implementation capabilities to increase their revenue; offshore application development and system consulting and support firms which typically have much lower labor costs and billing rates; and the proliferation of Enterprise Resource Planning (“ERP”) expertise within the IT departments of organizations, reducing the need to engage outside consulting help. The availability of off shore technical expertise has and will have an impact on the IT consulting market. However, we believe the demand for “high end” technically competent innovative consultants will increase over time. The complexity of corporate IT functions is not diminishing. In addition, we believe that the up coming “baby boomer“retirement will impact the supply of trained consultants in the market.

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TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

Our business is also driven by the pace of technological change, our ability to differentiate ourselves from our competitors through specialty services that address targeted industry and business concerns, and the type and level of spending by our clients in the areas in which we provide services. Many factors can result in a deferral, reduction or cancellation of services requested by our prospective or current clients including budget constraints, economic conditions and perceived project progress, success or value. The economic uncertainties of recent years has lead many corporations to reassess their IT goals and budgets. This, combined with the lack of significant new technology to stimulate spending, has had a further dampening impact on demand for our services. However, we also believe that many companies have very old systems and technology and that “real time” business decision making will fuel growth in many of our markets.

During periods of decreased demand, pricing pressures emerge as companies try to minimize costs and negotiate lower prices for our services. Our ability to successfully identify and prepare for these changes is a key driver of our performance. Therefore, our strategy is to try to anticipate these trends and identify cost-management initiatives that will allow us to manage costs relative to expected revenues as well as identifying opportunities to increase revenues. Although we remain committed to spending our funds wisely, there is a point at which further cost cutting can be counter-productive.

Project personnel costs constitute the majority of our operating costs. Since project personnel costs are primarily driven by the cost of billable personnel, mainly compensation and benefits, maintaining these costs at a reasonable and predictable percentage of revenue is critical to our financial performance. Project personnel costs as a percentage of revenues are driven by utilization and average hourly billing rates. Utilization represents the percentage of time our billable professionals spend on billable work. It is our strategy to try to match our project personnel supply with demand. At times this requires us to reduce headcount and reassign employees to other active projects when they are no longer needed on a particular project. However, because of the mix of skills needed and project duration, implementation of this strategy may be delayed at times. Accordingly, any decline in revenues without a corresponding and timely reduction in staffing, or a staffing increase that is not accompanied by a corresponding increase in revenues, would have an adverse effect on our business, operating results and financial condition, which could be material.

REVENUES

For presentation purposes, we show two components of revenues: 1) revenues before reimbursements, which consists of revenue for performing consulting services; and 2) reimbursements, consisting of reimbursements we receive from clients for out-of-pocket expenses incurred. We believe revenues before reimbursements is a more meaningful representation of our economic activity since it excludes pass-through, zero-margin expense reimbursements.

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TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

COSTS AND EXPENSES

Project Personnel

Project personnel costs consist primarily of professional salaries and benefits.

Other Project Expenses

Other project expenses consist of the cost for subcontractors hired for use on our client projects and billed to our clients; employee termination costs; and nonbillable expenses incurred for client projects and business development. Nonbillable expenses include recruiting fees, certain selling expenses, and personnel training.

Reimbursable Expenses

Reimbursable expenses represent project related and other out-of-pocket expenses that are reimbursable by the client. An equivalent amount is included in revenues under the caption “Reimbursements.”

Bad Debt Expense

We maintain an allowance for doubtful receivables resulting from the failure of our customers to make required payments. We also analyze our notes receivable, which are included in Long-Term Receivables and Other on our Consolidated Balance Sheet.

Management and Administrative Support

Management and administrative support costs consist of client officer costs and infrastructure costs. Client officer costs include client officer salaries and travel, marketing costs and recruiting costs. Infrastructure costs include senior corporate management and our board of directors; accounting; financial reporting; finance; tax; legal; treasury; human resources; employee benefits; marketing; public and investor relations; office operations; staffing of our project personnel; recruiting; training; internal communications; internal technology applications; management of new business opportunities; planning; quality assurance; and risk management.

Incentive Compensation

Incentive compensation, if any, is accrued at a set percentage of base salary, which varies by level of employee, and adjusted to reflect the amounts needed for active employees and for performance against targets, goals and objectives. Payments of incentive compensation, if any, are performance based and are determined by both objective (financial-based) and subjective measures. These objectives include both quarterly and full fiscal year parameters.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

Page 15

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and other assumptions, which it believes are reasonable. If actual amounts are ultimately different from these estimates, the revisions are included in the Company’s results of operations for the period in which the actual amounts become known.

Accounting policies are considered critical when they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and when different estimates than management reasonably could have used have a material impact on the presentation of the Company’s financial condition, changes in financial condition or results of operations.

Revenue Recognition

We derive our revenues from a variety of information technology services, including systems integration, packaged software integration and implementation services, programming, training and extended support services. Our services are contracted on either a time and materials basis or a fixed price basis. For our time and materials contracts, we recognize revenues as work is performed, primarily based on hourly billing rates. For our fixed price contracts, we recognize revenues using the percentage-of-completion method, which is based on the percentage of work performed in the period compared to the total estimated work to be performed over the entire contract. Revenues are subject to revision as the contract progresses to completion. Any revisions in the estimate are charged to operations in the period in which the facts that give rise to the revision become known. Contracts are performed in phases. Losses on contracts, if any, are reserved in full when determined. Contract losses are determined by the amount by which the estimated cost of the contract exceeds the estimated total revenues that will be generated by the contract. Extended support revenues are recognized as services are rendered.

Allowance for Doubtful Receivables

An allowance for doubtful receivables is maintained for potential credit losses. When evaluating the adequacy of our allowance for doubtful receivables, management specifically analyzes accounts receivable on a client by client basis, including customer credit worthiness and current economic trends, and records any necessary bad debt expense based on the best estimate of the facts known to date. Should the facts regarding the collectability of receivables change, the resulting change in the allowance would be charged or credited to income in the period such determination is made. Such a change could materially impact our financial position and results of operations.

Accounting for Income Taxes

We use an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes are provided using currently enacted tax rates when tax laws and financial accounting standards differ with respect to the amount of income for a year and the basis of assets and liabilities. Significant management judgement is required in determining our provision

Page 16

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have generated certain deferred tax assets as a result of operating losses and temporary differences between book and tax accounting, as well as tax benefits resulting from the exercise of employee stock options that were recorded as additional paid-in capital in the period of exercise. Statement of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for Income Taxes,” requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. During 2003, we recorded a full valuation allowance against our deferred tax assets. If the realization of our deferred tax assets in future periods is considered more likely than not, an adjustment to our deferred tax asset would increase net income in the period such determination is made. The amount of deferred tax assets considered realizable is based on significant estimates. Changes in these estimates could materially affect our financial condition and results of operations in future periods.

Stock-Based Compensation

We account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Compensation costs for employee stock options is measured as the excess, if any, of the quoted market price of the Company’s common stock at the date of grant over the amount an employee must pay to acquire the stock.

THREE MONTHS ENDED MARCH 31, 2004 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2003

Revenues

Consolidated net revenues were $9.7 million for the three months ended March 31, 2004, a decrease of 41 percent from the same period in the prior year. Revenues before reimbursements decreased 43 percent to $8.6 million from $15.2 million. We believe that this decline in revenues was primarily due to decreased demand for our services and an increase in competitive pricing arising out of the continuing economic uncertainties, fundamental changes in the IT services industry, and a decline in corporate information technology capital expenditures as large and small companies reassessed their goals and budgets.

During the three months ended March 31, 2004, no client accounted for more than 10 percent of revenues before reimbursements. During the three months ended March 31, 2003, three clients accounted for 38 percent of revenues before reimbursements (ExxonMobil Corp. — 15 percent, Bausch &Lomb Inc. — 12 percent and Caterpillar Inc. — 11 percent). We added 7 new clients and 27 new projects during the three months ended March 31, 2004 compared to 10 new clients and 24 new projects during the same period in the prior year. In addition, we performed work for 48 clients and 80 projects during the three months ended March 31, 2004 compared to 50 clients and 107 projects during the same period in the prior year.

Page 17

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

During the three months ended March 31, 2004 and 2003, we provided services to Bausch & Lomb, Inc (B&L). One of our directors, John R. Purcell, and a former director, William H. Waltrip, also serve as directors for B&L. The services performed related to B&L’s global IT integration project and were awarded following a competitive bidding process. The amount of revenues recognized for such services during the three months ended March 31, 2004 and 2003 represented 4 percent and 12 percent of our total revenues before reimbursements, respectively. The net accounts receivable balances from these services as of March 31, 2004 and December 31, 2003 were $285 thousand and $272 thousand, respectively.

Costs and Expenses

Project personnel costs were $5.5 million for the three months ended March 31, 2004, a decrease of 38 percent from the same period in the prior year. This decrease was largely attributable to staff reductions in response to our declining revenues and our ongoing efforts to keep headcount and costs in line with demand for our services, as described earlier in this item. Professional domestic headcount decreased to 167 as of March 31, 2004 compared to 248 as of March 31, 2003. Annualized voluntary turnover increased to 36 percent from 9 percent for the three months ended March 31, 2003. Project personnel costs as a percentage of revenues before reimbursements increased to 64 percent for the three months ended March 31, 2004 from 59 percent from the same period in the prior year primarily due to a decline in average hourly billing rates. Average hourly billing rates decreased 18 percent to $141. The decline in average hourly billing rates primarily reflects the increased competitive environment in the information technology consulting market as well as lower rates for post-go-live activities. Staff utilization improved to 72 percent from 63 percent for the three months ended March 31, 2003 as a result of our staff reductions.

Other project expenses were $1.5 million for the three months ended March 31, 2004, a decrease of 13 percent from the same period in the prior year. The decrease in other project expenses consisted of the following: a decrease in headcount related costs of $0.3 million, which includes travel, computer and communication costs; a decrease in other project related costs of $0.1 million, due to reduced revenues; and a decrease in employee termination costs of $0.1 million. These reductions were partially offset by an increase in subcontractor costs of $0.3 million. Other project expenses as a percentage of revenues before reimbursements increased to 17 percent for the three months ended March 31, 2004 from 11 percent for the same period in the prior year mainly due to the increased use of subcontractors for certain specialized skills.

Bad debt expense was a credit of $0.1 million for the three months ended March 31, 2004 compared to an expense of $0.1 million for the same period in the prior year. This decrease was a result of recoveries of previously reserved receivables as well as fewer collection issues during the three months ended March 31, 2004.

Management and administrative support costs decreased 20 percent to $3.4 million for the three months ended March 31, 2004 from $4.2 million in the same period in the prior year. This decrease resulted from a decrease in labor costs of $0.8 million as we reduced headcount as a result of our organizational changes during the quarter ended June 30, 2003.

Page 18

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

During the quarter ended March 31, 2004, we reversed restructuring and other charges of $0.6 million. This amount consisted of $0.3 million related to certain lease terminations recorded during the three months ended June 30, 2003, $0.2 million related to the closure of our Latin American operations recorded in 2000 and $0.1 million related to certain lease terminations recorded in 1999.

Incentive compensation expense was $0.2 million for the three months ended March 31, 2004 compared with $0.3 million in the same period in the prior year. Incentive compensation as a percentage of revenues excluding reimbursements increased slightly to 3 percent during the three months ended March 31, 2004 compared to 2 percent in the same period in the prior year. If the Company and our employees meet their 2004 quarterly and annual quantitative and qualitative objectives, we expect to continue to accrue incentive compensation during 2004.

Operating Loss/Income

Consolidated operating loss was $1.3 million for the three months ended March 31, 2004 compared to $0.1 million for the same period in the prior year. Our operating loss for 2004 included restructuring and other credits of $0.6 million. The operating loss, excluding these credits, mainly resulted from the decline in revenues as well as higher project personnel costs as a percent of revenues due to lower billing rates.

Other Income

Other income for the three months ended March 31, 2004 was $0.2 million compared to $0.3 million for the same period in the prior year. This decrease was a result of lower cash balances as well as lower interest rates year over year. Our cash and cash equivalents were primarily invested in overnight money market type accounts. Average interest rates were approximately 0.90 percent for the three months ended March 31, 2004 compared to approximately 1.23 percent during the same period in the prior year.

Income Tax Provision

We did not recognize an income tax benefit for the three months ended March 31, 2004 since we recorded a full valuation allowance against our deferred taxes in 2003.

Shares Outstanding

Weighted average number of common shares outstanding and weighted average number of common and common equivalent shares outstanding increased due to the issuance of shares under our employee stock purchase plan and stock option plans. In addition, since the three months ended June 30, 2003, we have not repurchased any of our outstanding shares under our previously announced repurchase program. During the three months ended March 31, 2003, we repurchased 242,700 shares of our Common Stock at an average price of $1.03 per share.

Page 19

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $1.9 million and $0.7 million for the three months ended March 31, 2004 and 2003, respectively. Net cash used in operating activities for the three months ended March 31, 2004 primarily related to the loss for the quarter, net of the non-cash restructuring and other credits, as well as payments related to the June 30, 2003 restructuring and other charges. These credits and payments resulted in a decrease in the restructuring accruals.

While days sales outstanding increased by 4 days to 55 days at March 31, 2004 as compared to March 31, 2003, it improved by 5 days from 60 days at December 31, 2003.

Cash commitments relating to remaining restructuring and other charges are $1.1 million in severance costs and $0.3 million in office costs. The anticipated cash outflows for these restructuring and other charges are as follows: $0.7 million for the remaining quarters in 2004 and the remaining balance of $0.7 million in 2005. Other estimated future cash commitments include various office facilities, property and office equipment under operating leases and other costs that expire at various dates. In the second quarter of 2004, we renewed one of our office leases and also signed a lease for a new office. The minimum cash commitments under these non-cancelable operating leases and other obligations with terms in excess of one year, net of restructuring and other charges, are as follows: $0.4 million for the remaining quarters in 2004, $0.9 million in 2005, $0.8 million in 2006 and $0.4 million in 2007. In addition, we have an annual commitment for telecommunications of $0.1 million for the remaining quarters in 2004 and $0.1 million for 2005 and 2006. The Company has no guarantees of third party debt as of March 31, 2004 or other off-balance sheet commitments.

Net cash used in investing activities was $0.4 million for the three months ended March 31, 2004 for computer purchases. We currently have no material commitments for capital expenditures.

Net cash provided by financing activities was virtually zero for the three months ended March 31, 2004.

Our primary sources of liquidity are our existing cash and cash equivalents. Our cash and cash equivalents at March 31, 2004 were $38.8 million. Depending on revenues and cash collections, we expect our cash and cash equivalent balance at June 30, 2004 to be approximately $33 million to $35 million. While we will likely continue to incur operating losses in 2004, we believe that our cash and cash equivalents will be sufficient to meet our cash requirements. Our investment policy is to maintain most of our cash and cash equivalents in highly liquid, large money market type funds. This policy exposes us to short-term interest rate fluctuations.

Operating results and liquidity, including our ability to raise additional capital if necessary, may be materially and adversely affected by continued low demand for the Company’s services. In addition, a number of other factors, including general economic conditions, technological changes, competition and other factors affecting the IT industry generally, and the suspension or cancellation of a large project could have an adverse effect on future results and liquidity. These aforementioned factors, as well as other factors, are more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 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.”

Page 20

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

We had a nonqualified deferred compensation plan. All Company executives (defined as those at the level of Vice President and above) were eligible to participate in this voluntary program, which permitted participants to defer receipt of a portion of their compensation. We held deferred amounts in a “rabbi trust” for the benefit of plan participants and investment earnings (or losses) were credited to the participants’ accounts based on investment allocation options selected by the participants. We did not guarantee these investments or earnings thereon. These investments remained assets of the Company and were available to the general creditors of the Company in the event of our insolvency. On February 10, 2004, the Company announced that the Compensation Committee of its Board of Directors decided to terminate the Company’s nonqualified executive deferred compensation plan. Because of dwindling participation, coupled with recent and proposed changes in tax and other legislation, the Compensation Committee decided the existence of the plan was no longer a significant factor in attracting and retaining key executive talent. Accordingly, the plan was terminated and all funds were distributed to the participants in late February 2004.

NEW ACCOUNTING STANDARDS

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of Accounting Research Bulletin No. 51” (“FIN 46”). FIN 46 clarified the application of Accounting Research Bulletin Number 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Qualifying special purpose entities as defined by FASB Statement Number 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” are excluded from the scope of Interpretation No. 46. Interpretation No. 46 applied immediately to all variable interest entities created after January 31, 2003 and was originally effective for fiscal periods beginning after July 1, 2003 for existing variable interest entities. In October 2003, the FASB postponed the effective date of Interpretation No. 46 to December 31, 2003. We do not have any variable interest entities and, therefore, the adoption of the provisions of FIN 46 did not have a material impact on our results of operations or financial position.

In December 2003, a revised version of Interpretation 46 (“Revised Interpretation No. 46”) was issued by the FASB. The revisions clarify some requirements, ease some implementation problems, add new scope exceptions, and add applicability judgments. Revised Interpretation No. 46 is required to be adopted by most public companies no later than March 31, 2004. The adoption of Revised Interpretation No. 46 did not have a material impact on the our results of operations or financial position.

Page 21

TECHNOLOGY SOLUTIONS COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)

In December 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS No. 132 improves financial statement disclosures for defined benefit plans and requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. SFAS No. 132 is effective for fiscal years ending after December 15, 2003 and for quarters beginning after December 15, 2003. The adoption of SFAS No. 132 did not have a material impact on our results of operations or financial position.

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 including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” 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. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements in this Form 10-Q include, among others, 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 the economy in general, 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, our ability to accommodate a changing business environment, general business and economic conditions in our operating regions, market conditions and competitive and other factors, 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, 2003 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. Such forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we would make additional updates or corrections with respect thereto or with respect to other forward-looking statements. Actual results may vary materially.

Page 22

TECHNOLOGY SOLUTIONS COMPANY

PART I. FINANCIAL INFORMATION

(Continued)

ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

TSC is exposed to interest rate fluctuations. Changes in interest rates affect interest income and expense on cash and cash equivalents. The Company’s cash and cash equivalents are primarily invested in overnight money market type accounts. Average interest rates were approximately 0.90 percent during the three months ended March 31, 2004 compared to approximately 1.23 percent during the same period in the prior year. Based on the cash and cash equivalents balances as of March 31, 2004 and 2003, a hypothetical 1.00 percent increase in interest rates would have resulted in approximately $0.1 million in additional net investment income during each of the three months ended March 31, 2004 and 2003.

The financial statements of the Company’s non-U.S. subsidiaries are remeasured into U.S. dollars using the local currency as the functional currency. The market risk associated with the foreign currency exchange rates is not material in relation to the Company’s consolidated financial position, results of operations or cash flows. The Company does not have any significant accounts payable, account receivable or commitments in a currency other than that of the reporting unit’s functional currency. The Company does not utilize derivative financial instruments to manage the exposure in non-U.S. operations.

ITEM 4-CONTROLS AND PROCEDURES

The management of the Company, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 (b) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that all material information relating to the Company that is required to be included in the reports that the Company files with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There have been no changes in the Company’s internal controls over financial reporting that were identified during the evaluation that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 23

TECHNOLOGY SOLUTIONS COMPANY

PART II. OTHER INFORMATION

ITEM 2-CHANGES IN SECURITIES AND USE OF PROCEEDS

(e) The Company has a stock repurchase program, which allows for share repurchases of up to 11,525,327 shares of outstanding Company common stock (the “Repurchase Program”). During the three months ended March 31, 2004, the Company did not purchase any shares. The Company has repurchased an aggregate total of 6,762,627 shares since the inception of this Repurchase Program in September 2000. As of March 31, 2004, there were 4,762,700 shares available to be purchased under the Repurchase Program. The timing and size of any future stock repurchases are subject to market conditions, stock prices, cash position and other cash requirements.

ITEM 6-EXHIBITS AND REPORT ON FORM 8-K

(a) Exhibits

Exhibit #	Description of Document
10.01*	Employment Agreement with Michael R. Gorsage
10.02*	Employment Agreement with Stephen B. Oresman
31.1*	CEO Certification
31.2*	CFO Certification
32.1*	Certification of Michael R. Gorsage Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2*	Certification of Timothy P. Dimond Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

(b)	Reports on Form 8-K
	One report on Form 8-K was filed during the quarter ended March 31, 2004. This report, dated February 11, 2004, announced the Company’s year ended December 31, 2003 results of operations.
	All other items in Part II are either not applicable to the Company during the quarter ended March 31, 2004, the answer is negative, or a response has been previously reported and an additional report of the information is not required, pursuant to the instructions to Part II.

*Filed herewith

Page 24

SIGNATURE

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.

	TECHNOLOGY SOLUTIONS COMPANY
Date: May 11, 2004	By:	/s/ TIMOTHY P. DIMOND
		Timothy P. Dimond
		Chief Financial Officer

Page 25

EX-10.1

EXHIBIT 10.01

EMPLOYMENT AGREEMENT

     Technology Solutions Company, a Delaware corporation doing business as TSC, and Michael R. Gorsage (“Employee”) enter into this Employment Agreement (“Agreement”) as of May 6, 2004.

     In consideration of the agreements and covenants contained in this Agreement, TSC and Employee agree as follows:

     1. Employment Duties: TSC shall employ Employee as President, Chief Executive Officer, and Employee shall be elected by TSC’s Board of Directors as a Director. Employee shall perform all duties incident to the office of the President and such other duties as from time to time may be prescribed by the Board of Directors. Employee shall perform faithfully these duties to the best of his ability and shall devote his full and undivided business time and attention to the transaction of TSC’s business.

     2. Term of Employment: The term of employment (“Term of Employment”) covered by this Agreement shall commence as of the effective date of this Agreement and continue until terminated pursuant to Section 3 below.

     3. Termination: TSC may terminate Employee’s employment for any reason upon giving Employee 90 days notice of the termination. TSC may make such termination effective at any time within such 90 day notice period. TSC must, however, for two years following the effective date of his termination: continue to pay a salary to Employee, equal to 60% of his salary at the effective date of termination; and, continue to pay TSC’s share of Employee’s health insurance benefits. Notwithstanding the aforementioned, if Employee is terminated after he has been employed by TSC for two years, TSC’s salary continuation obligation shall be reduced to 50% of Employee’s salary at the effective date of termination for a period of two years. Employee shall be entitled to receive the salary and benefit payments without any mitigation obligations.

     TSC may terminate Employee’s employment and this Agreement immediately without notice and with no salary and benefit continuation if Employee engages in “Serious Misconduct.” For purposes of this Agreement, “Serious Misconduct” means embezzlement or misappropriation of corporate funds, other acts of dishonesty, significant activities materially harmful to TSC’s reputation, willful refusal to perform or substantial disregard of Employee’s assigned duties (including, but not limited to, refusal to travel or work the requested hours), or any significant violation of any statutory or common law duty of loyalty to TSC. Employee may terminate his employment upon giving TSC 90 days prior written notice. Upon receiving notice, TSC may waive its rights under this paragraph and make Employee’s termination effective immediately or anytime before the 90 day notice period ends. Employee agrees that if and when his

termination of employment with TSC becomes effective, he shall tender his resignation as a Director of TSC’s Board of Directors immediately thereafter, which tender may be accepted at the sole discretion of TSC’s Board of Directors.

     If following a Change in Control (which is defined as (i) the acquisition by any individual, entity or group, of beneficial ownership (within the meaning of Rule 13 d-3 promulgated under the Securities Exchange Act of 1934) of 40% or more of the outstanding shares of the common stock of TSC; (ii) the approval of the stockholders of TSC of a merger, where immediately after the merger, persons who were the holders of a majority of TSC’s outstanding common stock immediately prior to the merger fail to own at least a majority of the outstanding common stock of the surviving entity in substantially the same proportions as their holdings of TSC common stock immediately prior to the merger; or, (iii) the sale of substantially all the assets of TSC other than to a corporation in which more that 60% of the outstanding shares are beneficially owned by the individuals and entities who are the beneficial owners of the Company stock prior to the acquisition, Employee’s title, position, duties, or salary is diminished and Employee provides notice of resignation within 90 days after the diminishment becomes effective which is thereafter accepted, or if Employee is ordered to relocate permanently from his residence as of the time of the Change in Control and Employee declines and is terminated, Employee shall be entitled to receive within (5) days following the acceptance of his resignation or his termination: Employee’s base salary as of the time of the Change in Control for one year; a bonus equal to the average annual bonus earned during the two years immediately preceding the Change in Control (which in no event shall be less that $150,000); and health insurance benefits for one year. Notwithstanding anything to the contrary in any of Employee’s stock option agreements, Employee’s unvested TSC shares at option shall vest automatically upon a Change in Control.

     If it appears reasonably likely that any of the payments to Employee provided for in this Agreement, together with any other payments which Employee has the right to receive from TSC or any corporation which is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Internal Revenue Code) of which TSC is a member, could constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Internal Revenue Code), TSC shall retain an independent expert appraiser who shall determine the value of Employee’s non-compete which could be deducted when calculating the value of the parachute payment.

     4. Salary: As compensation for his services, TSC shall pay Employee a base salary in the amount listed in Exhibit A to this Agreement. Employee’s base salary shall be subject to annual review by the Compensation Committee of the Board of Directors and may, at their discretion, be adjusted upward from that listed in Exhibit A.

     5. Bonuses: The Compensation Committee of the Board of Directors may, at its sole discretion, elect to pay Employee an annual bonus pursuant to a plan similar to the plan covering TSC’s senior employees . If an annual bonus is to be paid, Employee is to receive 50% of his salary if he achieves his target objectives and 100% of his salary if he achieves his “stretch” objectives. The objectives are to be set by the Compensation

2

Committee of the Board. Notwithstanding the aforementioned, Employee shall be guaranteed a bonus of at least $150 thousand for 2004, payable when bonuses a would normally be paid in 2005.

     6. Employee Benefits: During the Term of Employment, Employee shall be entitled to participate in such employee benefit plans, including group pension, life and health insurance and other medical benefits, and shall receive all other fringe benefits as TSC may make available generally to its Senior Vice Presidents.

     7. Business Expenses: TSC shall reimburse Employee for all reasonable and necessary business expenses incurred by Employee in performing his duties. Employee shall provide TSC with supporting documentation sufficient to satisfy reporting requirements of the Internal Revenue Service and TSC. TSC’s determination as to reasonableness and necessary shall be final.

     8. Noncompetition and Nondisclosure: Employee acknowledges that the successful development and marketing of TSC’s professional services and products require substantial time and expense. Such efforts generate for TSC valuable and proprietary information (“Confidential Information”) which gives TSC a business advantage over others who do not have such information. Confidential Information of TSC and its clients and prospects includes, but is not limited to, the following: business strategies and plans; proposals; deliverables; prospects and customer lists; methodologies; training materials; and computer software. Employee acknowledges that during the Term of Employment, he will obtain knowledge of such Confidential Information. Accordingly, Employee agrees to undertake the following obligations which he acknowledges to be reasonably designed to protect TSC’s legitimate business interests without unnecessarily or unreasonably restricting Employee’s post-employment opportunities:

     (a) Upon termination of the Term of Employment for any reason, Employee shall return all TSC property, including but not limited to computer programs, files, notes, records, charts, or other documents or things containing in whole or in part any of TSC’s Confidential Information;

     (b) During the Term of Employment and subsequent to termination, Employee agrees to treat all such Confidential Information as confidential and to take all necessary precautions against disclosure of such information to third parties during and after Employee’s employment with TSC. Employee shall refrain from using or disclosing to any person, without the prior written approval of TSC’s Chief Executive Officer any Confidential Information unless at that time the information has become generally and lawfully known to TSC’s competitors;

     (c) Without limiting the obligations of paragraph 8(b), Employee shall not, for a period of one year following his termination of employment for any reason, for himself or as an agent, partner or employee of any person, firm or corporation, engage in the practice of consulting for any client of TSC for whom Employee performed services, or

3

prospective TSC client to whom Employee submitted, or assisted in the submission of a proposal during the one year period preceding his termination of employment;

     (d) During a one year period immediately following Employee’s termination of employment for any reason, Employee shall not induce or assist in the inducement of any TSC employee away from TSC’s employ or from the faithful discharge of such employee’s contractual and fiduciary obligations to serve TSC’s interests with undivided loyalty;

     (e) For one year following his termination of employment for any reason, Employee shall keep TSC currently advised in writing of the name and address of each business organization for which he acts as agent, partner, representative or employee.

     9. Remedies: Employee recognizes and agrees that a breach of any or all of the provisions of paragraph 8 will constitute immediate and irreparable harm to TSC’s business advantage, including but not limited to TSC’s valuable business relations, for which damages cannot be readily calculated and for which damages are an inadequate remedy. Accordingly, Employee acknowledges that TSC shall therefore be entitled to an order enjoining any further breaches by the Employee. In an action brought to enforce this Agreement, the prevailing party shall be entitled to recover all costs and expenses, including reasonable attorneys’ fees incurred in connection with the enforcement of its rights under any provision of this Agreement.

     10. Intellectual Property: During the Term of Employment, Employee shall disclose to TSC all ideas, inventions and business plans which he develops during the course of his employment with TSC which relate directly or indirectly to TSC’s business, including but not limited to any computer programs, processes, products or procedures which may, upon application, be protected by patent or copyright. Employee agrees that any such ideas, inventions or business plans shall be the property of TSC and that Employee shall at TSC’s request and cost, provide TSC with such assurances as is necessary to secure a patent or copyright.

     11. Assignment: Employee acknowledges that the services to be rendered pursuant to this Agreement are unique and personal. Accordingly, Employee may not assign any of his rights or delegate any of his duties or obligations under this Agreement. TSC’s rights, duties or obligations under this Agreement may be assigned to a subsidiary or affiliated company of TSC and shall be binding upon any purchaser or transferee of a majority of TSC’s outstanding capital stock or a purchaser of all, or substantially all, of the assets of TSC.

     12. Notices: All notices shall be in writing, except for notice of termination of employment, which may be oral if confirmed in writing within 14 days. Notices intended for TSC shall be sent by registered or certified mail addressed to it at 205 North Michigan Avenue, 15th Floor, Chicago, Illinois 60601 or its current principal office, and notices intended for Employee shall be either delivered personally to him or sent by registered or certified mail addressed to his last known address.

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     13. Entire Agreement: With the exception of TSC’s Stock Option Agreement, this Agreement and Exhibit A attached hereto constitute the entire agreement between TSC and Employee. Neither Employee nor TSC may modify this Agreement by oral agreements, promises or representations. The parties may modify this Agreement only by a written instrument signed by the parties.

     14. Applicable Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois.

     15. Mediation of Disputes: Neither party shall initiate arbitration or other legal proceedings (except for any claim under Paragraph 8 of this Agreement for temporary injunctive relief), against the other party, or, in the case of TSC, any of its directors, officers, employees, agents, or representatives, relating in any way to this Agreement, to Employee’s employment with TSC, the termination of his employment or any or all other claims that one party might have against the other party until 30 days after the party against whom the claim[s] is made (“Respondent”) receives written notice from the claiming party of the specific nature of any purported claim and the amount of any purported damages. Employee and TSC further agree that if Respondent submits the claiming party’s claim to the Center for Public Resources, 680 Fifth Avenue, New York, New York 10019, for nonbinding mediation prior to the expiration of such 30 day period, the claiming party may not institute arbitration or other legal proceedings against Respondent until the earlier of (i) the completion of nonbinding mediation efforts, or (ii) 90 days after the date on which the Respondent received written notice of the claimant’s claim.

     16. Binding Arbitration: Employee and TSC agree that all claims or disputes relating to his employment with TSC or the termination of such employment, and any and all other claims that Employee might have against TSC, any TSC director, officer, employee, agent, or representative, and any and all claims or disputes that TSC might have against Employee (except for any claims for temporary injunctive relief under Paragraph 8 of this Agreement) shall be resolved under the Expedited Commercial Rules of the American Arbitration Association. Any arbitration held pursuant to this paragraph shall be conducted at a mutually approved geographic location and all arbitration costs shall be shared equally by the parties. If either party pursues a claim and such claim results in an Arbitrator’s decision, both parties agree to accept such decision as final and binding. TSC and Employee agree that any action seeking temporary injunctive relief under Paragraph 8 of this Agreement shall be brought in the Circuit Court for Cook County, Illinois.

     17. Severability: Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

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     18. Employee acknowledges that he has read, understood and accepts the provisions of this Agreement.

Technology Solutions Company		Employee
By:	/s/Timothy P. Dimond	/s/ Michael R. Gorsage
Position: Sr. Vice President and CFO
Date: May 6, 2004		Date: May 6, 2004

6

EXHIBIT A

EMPLOYEE: Michael R. Gorsage

POSITION: President, Chief Executive Officer, and Director

BASE SALARY: $350 Thousand Per Annum

EFFECTIVE DATE: May 6, 2004

      /s/ Michael R. Gorsage

Michael R. Gorsage

      May 6, 2004

Date

      /s/ Timothy P. Dimond

Technology Solutions Company

      May 6, 2004

Date

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EX-10.2

EXHIBIT 10.02

EMPLOYMENT AGREEMENT

     Technology Solutions Company, a Delaware corporation doing business as TSC, and Stephen B. Oresman (“Employee”) enter into this Employment Agreement (“Agreement”) as of May 6, 2004.

     In consideration of the agreements and covenants contained in this Agreement, TSC and Employee agree as follows:

     1. Employment Duties: The Board of Directors has elected Mr. Oresman as the Chairman of the Board of Directors and has agreed that he shall serve as an Employee of the Company. As an Employee he shall have such responsibilities, duties and authority as the Board of Directors may reasonably designate. Employee shall perform faithfully the duties assigned to him to the best of his ability.

     2. Term of Employment: The term of employment (“Term of Employment”) covered by this Agreement shall commence as of the effective date of this Agreement and continue until terminated pursuant to Paragraph 3 below.

     3. Termination: This Agreement may be terminated as follows:

          (a) Mr. Oresman may be removed as a Director in accordance with the terms of the Company’s By Laws. The Board may terminate his role as the Chairman of the Board. The Board may terminate Employee’s employment and this Agreement for any reason upon giving Employee 90 days notice of termination. The Board may make the termination effective at any time within the 90 day notice period (“Termination Date”). During this period Employee shall make a good faith effort to satisfy those professional obligations requested to be performed by the Board, which may include transferring duties and confidential material. TSC must, however, unless Employee is terminated for Serious Misconduct, continue Employee’s salary for one year following the Termination Date; continue Employee’s health benefits for one year following the Termination Date; and automatically vest his unvested options.

          (b) The Board may terminate Employee’s employment and this Agreement immediately without notice and with no salary and benefit continuation if Employee engages in “Serious Misconduct.” For purposes of this Agreement, “Serious Misconduct” means embezzlement or misappropriation of corporate funds, other acts of dishonesty, significant activities materially harmful to TSC’s reputation, or any significant violation of any statutory or common law duty of loyalty to TSC.

          (c) If, following a Change in Control, Employee’s title, position, salary, or benefits is reduced or Employee’s duties or status is materially reduced, and Employee resigns as an Employee within 90 days after the reduction becomes effective, or if Employee is ordered to

relocate his residence for a period in excess of six months to any location outside of the metropolitan area where he resides when the Change in Control occurs and Employee declines and is terminated, Employee shall receive one year’s salary and the continuation of his health benefits for one year. Notwithstanding anything to the contrary in any of Employee’s stock option agreements, Employee’s unvested shares at option shall vest automatically upon a Change in Control. (A Change in Control is defined as (i) the acquisition by any individual, entity or group, of beneficial ownership (within the meaning of Rule 13 d-3 promulgated under the Securities Exchange Act of 1934) of 40% or more of the outstanding shares of the common stock of TSC; (ii) the approval of the stockholders of TSC of a merger, where immediately after the merger, persons who were the holders of a majority of TSC’s outstanding common stock immediately prior to the merger fail to own at least a majority of the outstanding common stock of the surviving entity in substantially the same proportions as their holdings of TSC common stock immediately prior to the merger; or (iii) the sale of substantially all the assets of TSC other than to a corporation in which more than 60% of the outstanding shares are beneficially owned by the individuals and entities who are the beneficial owners of the Company stock prior to the acquisition.

          (d) If Employee dies, TSC must continue Employee’s Current Salary for a period of 90 days following the date of his death. If Employee becomes permanently disabled and unable to continue to work at TSC, TSC must pay Employee’s Current Salary for 90 days following the date Employee is declared permanently disabled, and his dental insurance and term insurance for a period of one year following the date Employee is declared permanently disabled.

          (e) If either party materially breaches this Agreement and fails to cure the breach within 30 days after receiving notice of the breach from the breached party, the breached party may consider this Agreement as terminated by the breaching party.

          (f) Employee may terminate his employment upon giving the Board of TSC 90 days notice. The Board may make the termination effective at any time within the 90 day notice period. During this period Employee shall make a good faith effort to satisfy those professional obligations requested to be performed by the Board, which may include transferring duties and confidential material.

          (g) Notwithstanding anything in the foregoing to the contrary, if any of the payments to Employee provided for in this Agreement, together with any other payments which Employee has the right to receive from TSC or any corporation which is a member of an “affiliated group” as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Internal Revenue Code) of which TSC is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Internal Revenue Code), the payments pursuant to this Agreement shall be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code; provided, however, that in determining whether any reduction in the payments under this Agreement pursuant to this sentence is necessary, the mutually agreed upon value for the non-compete provision as determined by an outside expert shall be deducted from the value of the parachute payment. If after applying the value for the non-compete provision, a reduction in payment is still necessary, the Employee shall determine what portion of the parachute payment shall be reduced, and such

2

determination shall be conclusive and binding on TSC with respect to its treatment of the payment for tax reporting purposes.

     4. Salary: As compensation for his services, TSC shall pay Employee a base salary of not less than the amount listed in Exhibit A to this Agreement. Employee’s base salary shall be subject to annual review and may, at the discretion of the Board of Directors, be adjusted from that listed in Exhibit A according to Employee’s responsibilities, capabilities and performance during the preceding year.

     5. Bonus and Stock Options: Employee may be awarded a bonus of 50% of one year’s salary if he achieves his target objectives and 100% of one year’s salary if he achieves his “stretch” objectives, at the discretion of the Board of Directors. Employee shall participate in the Company’s Stock Incentive Program and may be awarded options in TSC Stock at the discretion of the Board of Directors.

     6. Employee Benefits: During the Term of Employment, Employee shall be entitled to participate in such employee benefit plans, including group life, health and dental insurance, and shall receive all other fringe benefits as TSC may make available generally to its Vice Presidents.

     7. Business Expenses: TSC shall reimburse Employee for all reasonable and necessary business expenses incurred by Employee in performing his duties. Employee shall provide TSC with supporting documentation sufficient to satisfy reporting requirements of the Internal Revenue Service and TSC. TSC’s determination as to reasonableness and necessary shall be final.

     8. Noncompetition and Nondisclosure: Employee acknowledges that the successful development and marketing of TSC’s professional services and products require substantial time and expense. Such efforts generate for TSC valuable and proprietary information (“Confidential Information”) which gives TSC a business advantage over others who do not have such information. Confidential Information of TSC and its clients and prospects includes, but is not limited to, the following: business strategies and plans; proposals; deliverables; prospects and customer lists; methodologies; training materials; and computer software. Employee acknowledges that during the Term of Employment, he will obtain knowledge of such Confidential Information. Accordingly, Employee agrees to undertake the following obligations which he acknowledges to be reasonably designed to protect TSC’s legitimate business interests without unnecessarily or unreasonably restricting Employee’s post-employment opportunities:

          (a) Upon termination of the Term of Employment for any reason, Employee shall return all TSC property, including but not limited to computer programs, files, notes, records, charts, or other documents or things containing in whole or in part any of TSC’s Confidential Information;

3

          (b) During the Term of Employment and subsequent to termination, Employee agrees to treat all such Confidential Information as confidential and to take all necessary precautions against disclosure of such information to third parties during and after Employee’s employment with TSC;

          (c) Without limiting the obligations of Paragraph 8(b), Employee shall not, for himself or as an agent, partner or employee of any person, firm or corporation: (i) for a period of one year following his termination of employment for any reason, engage in the practice of consulting or related services for any client of TSC for whom Employee performed services, or prospective TSC client to whom Employee submitted, or assisted in the submission of a proposal during the two year period preceding his termination of employment; or (ii) for a period of one years following any termination for any reason, participate in or have a financial, management or other interest in any business enterprise that engages in, or within one year of the termination of Employee’s employment has plans to engage in, substantial and direct competition with TSC if such participation will likely involve the use by Employee of business plans, strategies and other confidential TSC business information developed or acquired by Employee during his employment as a senior officer of TSC;

          (d) During a one year period immediately following Employee’s termination of employment for any reason, Employee shall not induce or assist in the inducement of any TSC employee away from TSC’s employ or from the faithful discharge of such employee’s contractual and fiduciary obligations to serve TSC’s interests with undivided loyalty;

          (e) For one years following his termination of employment for any reason, Employee shall keep TSC currently advised in writing of the name and address of each business organization for which he acts as agent, partner, representative or employee.

     9. Remedies: Employee recognizes and agrees that a breach of any or all of the provisions of Paragraph 8 will constitute immediate and irreparable harm to TSC’s business advantage, including but not limited to TSC’s valuable business relations, for which damages cannot be readily calculated and for which damages are an inadequate remedy. Accordingly, Employee acknowledges that TSC shall therefore be entitled to an order enjoining any further breaches by the Employee. Employee agrees to reimburse TSC for all costs and expenses, including reasonable attorneys’ fees incurred by TSC in connection with the enforcement of its rights under any provision of this Agreement.

     10. Intellectual Property: During the Term of Employment, Employee shall disclose to TSC all ideas, inventions and business plans which he develops during the course of his employment with TSC which relate directly or indirectly to TSC’s business, including but not limited to any computer programs, processes, products or procedures which may, upon application, be protected by patent or copyright. Employee agrees that any such ideas, inventions or business plans shall be the property of TSC and that Employee shall at TSC’s request and cost, provide TSC with such assurances as is necessary to secure a patent or copyright.

4

     11. Principles and Policies: Employee agrees to be bound by TSC’s principles and policies, including its Code of Ethics and its Principles and Policies of Business Conduct, as amended from time to time, which are incorporated herein by reference.

     12. Assignment: Employee acknowledges that the services to be rendered pursuant to this Agreement are unique and personal. Accordingly, Employee may not assign any of his rights or delegate any of his duties or obligations under this Agreement. Subject to Paragraph 3(c) above, TSC may assign its rights, duties or obligations under this Agreement to a subsidiary or affiliated company of TSC or purchaser or transferee of a majority of TSC’s outstanding capital stock or a purchaser of all, or substantially all, of the assets of TSC.

     13. Notices: All notices shall be in writing, except for notice of termination of employment, which may be oral if confirmed in writing within 14 days. Notices intended for TSC shall be sent by registered or certified mail addressed to it at 205 North Michigan Avenue, 15th Floor, Chicago, Illinois 60601 or its current principal office, and notices intended for Employee shall be either delivered personally to him or sent by registered or certified mail addressed to his last known address.

     14. Entire Agreement: This Agreement and Exhibit A attached hereto constitute the entire agreement between TSC and Employee. Neither Employee nor TSC may modify this Agreement by oral agreements, promises or representations. The parties may modify this Agreement only by a written instrument signed by the parties.

     15. Applicable Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois.

     16. Mediation of Disputes: Neither party shall initiate arbitration or other legal proceedings (except for any claim under Paragraph 8 of this Agreement), against the other party, or, in the case of TSC, any of its directors, officers, employees, agents, or representatives, relating in any way to this Agreement, to Employee’s employment with TSC, the termination of his employment or any or all other claims that one party might have against the other party until 30 days after the party against whom the claim[s] is made (“Respondent”) receives written notice from the claiming party of the specific nature of any purported claim and the amount of any purported damages. Employee and TSC further agree that if Respondent submits the claiming party’s claim to the Center for Public Resources, 680 Fifth Avenue, New York, New York 10019, for nonbinding mediation prior to the expiration of such 30 day period, the claiming party may not institute arbitration or other legal proceedings against Respondent until the earlier of (i) the completion of nonbinding mediation efforts, or (ii) 90 days after the date on which the Respondent received written notice of the claimant’s claim.

5

     17. Binding Arbitration: Employee and TSC agree that all claims or disputes relating to his employment with TSC or the termination of such employment, and any and all other claims that Employee might have against TSC, any TSC director, officer, employee, agent, or representative, and any and all claims or disputes that TSC might have against Employee (except for any claims under Paragraph 8 of this Agreement) shall be resolved by expedited arbitration. The party pursuing a claim should submit the claim to Jams/Endispute, Inc., Three First National Plaza, 70 West Madison, Suite 200, Chicago, IL 60602. Such arbitration shall be conducted in Chicago before a single arbitrator within twenty days of the submission of a claim. The parties shall select an arbitrator by mutual agreement from a panel of arbitrators proposed by Jams/Endispute, Inc. The panel shall consist of former judges experienced in arbitrating employment disputes. If the parties are unable to agree on an arbitrator, Jams/Endispute, Inc. shall select an arbitrator in accordance with its procedures.

     The parties shall exchange documents relevant to the claims alleged, but shall undertake no additional discovery. The parties may submit pre-hearing briefs only. The arbitration proceeding shall not be transcribed or otherwise recorded. The arbitrator shall render an award within seven days of completion of the hearing. Both parties agree that the arbitrator’s award shall be final and binding, and the parties waive any right to appeal.

     18. Severability: Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

     19. Employee acknowledges that he has read, understood and accepts the provisions of this Agreement.

Technology Solutions Company		Stephen B. Oresman
By:	/s/Timothy P. Dimond	/s/ Stephen B. Oresman
Position: Sr. Vice President and CFO
Date: May 6, 2004		Date: May 6, 2004

6

EXHIBIT A

EMPLOYEE: Stephen B. Oresman

POSITION: Chairman of the Board and Employee

BASE SALARY: $125 thousand per annum

EFFECTIVE DATE: May 6, 2004

      /s/ Stephen B. Oresman

Employee

      May 6, 2004

Date

      /s/Timothy P. Dimond

Technology Solutions Company

      May 6, 2004

Date

7

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Michael R. Gorsage, the Chief Executive Officer of Technology Solutions Company, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Technology Solutions Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2004	By:	/s/ MICHAEL R. GORSAGE
		Michael R. Gorsage
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Timothy P. Dimond, the Chief Financial Officer of Technology Solutions Company, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Technology Solutions Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2004	By:	/s/ TIMOTHY P. DIMOND
		Timothy P. Dimond
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Form of Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the
United States Code

I, Michael R. Gorsage, the Chief Executive Officer of Technology Solutions Company, certify that:

(i)	The Form 10-Q for the quarter ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	The information contained in the Form 10-Q for the quarter ended March 31, 2004 fairly presents, in all material respects, the financial condition and results of operations of Technology Solutions Company.

Date: May 11, 2004	By:	/s/ MICHAEL R. GORSAGE
		Michael R. Gorsage
		Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Technology Solutions Company and will be retained by Technology Solutions Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Form of Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the
United States Code

I, Timothy P. Dimond, the Chief Financial Officer of Technology Solutions Company, certify that:

(i)	The Form 10-Q for the quarter ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	The information contained in the Form 10-Q for the quarter ended March 31, 2004 fairly presents, in all material respects, the financial condition and results of operations of Technology Solutions Company.

Date: May 11, 2004	By:	/s/ TIMOTHY P. DIMOND
		Timothy P. Dimond
		Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Technology Solutions Company and will be retained by Technology Solutions Company and furnished to the Securities and Exchange Commission or its staff upon request.