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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required] FOR THE YEAR ENDED DECEMBER 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required] FOR THE TRANSITION PERIOD FROM
______ TO ______.
Commission file number 0-22010
THOMAS GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-0843540
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5215 NORTH O'CONNOR BOULEVARD, SUITE 2500, IRVING, TEXAS 75039-3714
(Address of principal executive offices) (Zip Code)
(972) 869-3400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, par value $.01 per share NASDAQ-NMS
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes / No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |_|
As of February 28, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $34,811,000, based on the NASDAQ-NMS
closing price.
As of February 28, 1996, the following number of shares of the registrant's
stock were outstanding:
Common Stock 5,893,134
Class B Common Stock 186,567
---------
Total 6,079,701
=========
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the 1996 Annual Report to Stockholders are incorporated by
reference into Part II.
Portions of the definitive Proxy Statement for the 1997 Annual Meeting of
Stockholders are incorporated by reference into Part III.
2
PART I
ITEM 1. BUSINESS.
GENERAL
Thomas Group, Inc., a Delaware corporation (the "Company"), is an
implementor of a proven management methodology that enables organizations to
continuously become more competitive, more efficient and to improve financial
performance. The Company's systematic approach to business process design and
operating performance enhancement utilizes its proprietary Total Cycle Time(R)
methodology to deliver Speed Driven Results(SM). The Company's experienced
professionals lead clients in effecting internal change that maximizes
responsiveness. From the Company's United States, Asia/Pacific and European
offices, the Company has successfully completed projects enabling large
corporations in the United States, Asia and Western Europe to outpace global
competition. The Company's Interlink Technologies subsidiary specializes in
paperless warehousing and distribution systems. The Company's Bermac
Communications subsidiary specializes in custom multimedia applications in the
training and sales force automation areas.
The Company's specific methodology, known as Total Cycle Time, focuses
on reducing the time to complete and improve the effectiveness of
revenue-production, product development and administrative processes, resulting
in improvements in financial performance, quality, and response time. The
Company's services are based on time management concepts and are applied to
business processes throughout industry.
Utilizing Total Cycle Time methodology, the Company analyzes a
client's business, works with the client's senior management in a four day
executive workshop to define the potential performance improvement, and works
with the client to implement actions to obtain the improvement. Total Cycle
Time services are designed to enable the Company's clients to achieve
quantifiable results, such as higher growth, improved profitability, greater
productivity, more effective asset utilization and reduced time in developing
and delivering new products to market, thereby making clients more competitive.
Due to the Company's prior success with and confidence in Total Cycle Time
services, the Company generally provides its clients with the option of paying
the Company fixed fees or a combination of fixed fees and performance-oriented
fees based on improvements in mutually determined measurements, such as cycle
time or financial criteria.
CLIENTS
The Company's clients are typically large, well-established companies,
or distinct business units of such companies, in North America, Western Europe,
and the Asia/Pacific region. Within the largest clients, multiple programs have
been performed for different business units, however, the Company has not
historically performed repeat programs for specific client business units for
which the Company has completed a Total Cycle Time program. The Company has
begun to diversify its product offerings in order to increase the potential for
continuous client engagements.
TOTAL CYCLE TIME
The Total Cycle Time methodology developed and employed by the Company
is used to analyze a client's business into components of three basic
processes: the development of new products and services; the production and
delivery of goods and services; and the definition and implementation of
strategies to capitalize on fast response. By defining such processes and
working directly with the top management team in a four day workshop, the
Company is able to analyze and quantify a client's existing performance levels
using measures of time, productivity, asset utilization, cost and quality. In
addition the Company is able to establish operating and financial improvements
the Company believes can be obtained by the client utilizing the Thomas Group
methodology and tools and existing or reduced resources.
Frequently, business and cultural "barriers" restrict or hinder a
client's operating processes. These barriers may consist of excessive
inspections, inappropriate lot/batch sizes, improper measures or a client's
view of its business as departments or functions rather than as integrated
processes. Cultural and business process barriers appear in a wide variety of
manufacturing, project and service businesses, and their removal can have a
significant, positive impact on a
3
client's business. Because these barriers are ingrained in a client's business
and culture, they may be difficult for a client's management to identify and
address without the assistance of outside, experienced business professionals.
At an early stage of a Total Cycle Time program's implementation, the
Company identifies each of a client's business processes, analyzes the inter
relationship of each process to another, identifies the cultural barriers
restricting a client's performance, and determines the actions required to
remove these barriers. As barriers to improved performance and unnecessary
steps in the business processes are removed, cycle times are reduced and
activities or actions are more rapidly and efficiently completed.
During implementation of a Total Cycle Time program, the Company works
with the client to internalize Total Cycle Time methodologies, with the
objective of sustaining change in the client's culture after Company personnel
complete the bulk of the program. The Company provides its clients a limited
license to use Total Cycle Time methodologies internally.
In response to client demand, the Company has been developing
continuous improvement services, consisting of ongoing assessments and upgrades
to Total Cycle Time methodology. Continuous improvement services are designed
to sustain and improve upon the successes of the original Total Cycle Time
programs, and provide clients with an extended means of assessing, monitoring
and improving their businesses utilizing Total Cycle Time. Continuous
improvement services will also afford the Company the opportunity for
additional revenues in subsequent years. The Company has also developed a major
new product to address the need for rapid strategic implementation capability.
This product is a natural second major step for the client and enhances the
Company's Total Cycle Time program. This new product is being launched in
1997.
SALES AND MARKETING
The Company's services are marketed through its own sales and
marketing organization. As part of its marketing efforts, the Company employs
and uses outside consultants as sales executives whose primary focus is
acquiring new business through specific relationships. Additionally, sales and
marketing efforts include a fully integrated marketing program including
magazine advertising, direct mail pieces and the sponsorship of prestigious
business conferences.
In addition to its traditional marketing and sales efforts, the
Company relies upon references and referrals from existing and former clients,
and the use of lectures and publications including five books authored by Mr.
Thomas (Competitiveness Through Total Cycle Time, Getting Competitive, Time
Warrior, Quality Alone Is Not Enough, and Survival at Nodulex).
CONTRACTUAL ARRANGEMENTS
The Company performs Total Cycle Time services for a client pursuant
to agreements generally having terms of 18 months to three years. A client
agrees to compensate the Company for its services in the form of fixed fees or
a combination of fixed and performance-oriented fees. The Company's fee
structure is based on a client's size, the complexity and geographic deployment
of a client's business, the level of improvement opportunity available to a
client, and certain other factors.
Fixed fees are recognized as revenue when earned, generally on a
straight-line basis over the life of the contract. Performance-oriented fees
are based on agreed-upon objective measures (such as cycle time reduction,
inventory reduction, accounts receivable reduction, profit improvement or other
quantifiable objectives) calculated monthly, and are recognized as revenue when
earned and approved by the client.
PROFESSIONAL STAFF
At December 31, 1996, the Company had a total of 349 employees,
consisting of 192 business professionals who apply Total Cycle Time methodology
and are known as Resultants(SM), 51 computer software development and
implementation professionals, and 106 administrative employees. The Company's
employees are not represented by a labor union nor are they subject to any
collective bargaining agreement. The Company has entered into nondisclosure and
noncompetition or nonsolicitation agreements with Mr. Philip R. Thomas, the
Company's Chairman and Chief Executive Officer, and substantially all of its
employees.
4
EUROPEAN OPERATIONS
The Company had revenues attributable to European clients of $18.4
million in 1996 (26% of revenues), $27.1 million in 1995 (40% of revenues), and
$22.7 million in 1994 (43% of revenues). The majority of the Company's European
agreements are denominated in European currencies.
CLIENT CONCENTRATION
The Company had revenues exceeding 10% of its total consolidated
revenues from LSG Sky Chefs, Inc., Siemens A.G., and Moore Business Forms, Inc.
in 1996, and Siemens A.G. in 1995 and 1994. The loss, without replacement, of
any of the Company's large clients could have a material adverse effect on the
Company.
COMPETITION
The Company believes that the competitive factors most important to
its business are the unique quality of its Total Cycle Time methodology, the
quality of its professional staff, its willingness to be compensated on a
performance-oriented basis and its referenceable reputation for achieving
targeted results. Traditional consulting firms provide services similar in some
respects to the services provided by the Company, as a part of their overall
practice, but generally do not offer performance-oriented fees.
TRADEMARKS AND SERVICE MARKS
The Company has secured federal registration for the service marks
"Total Cycle Time(R)," "TCT(R)," "5 I's Process(R)" and "Cycles of
Learning(R)." These registrations expire from August 2002 to January 2003. The
Company has filed an application for a federal servicemark registration for
"Resultants," "AIP Management," "AIPs," "Actions-In-Process" and "Speed Driven
Results." The Company considers each of these service marks or trademarks to be
significant to the Company's business.
BUSINESS AND GEOGRAPHIC SEGMENTS
Business and geographic segment information appearing on pages 28 and
29 of the Company's 1996 Annual Report to Stockholders is herein incorporated
by reference.
ITEM 2. PROPERTIES.
The Company's principal executive office is located in Irving, Texas.
The Company also leases space in a building adjacent to its principal executive
offices in Irving, Texas and space for its offices in Princeton, New Jersey;
Troy, Michigan; Maumee, Ohio; Frankfurt, Germany; and Singapore. The Company
currently leases 60 acres of land near Baton Rouge, Louisiana, on which the
Company's conference and training center ("CEO Center") is located. The Company
considers these properties to be adequate for their business purposes.
ITEM 3. LEGAL PROCEEDINGS.
On December 29, 1993, the Company filed suit against Revlon Consumer
Products Corporation ("Revlon"), claiming the Company was entitled to unpaid
incentive (or performance-oriented) fees and expenses totaling approximately
$3,900,000. Other than the inability to invoice Revlon for further fees, the
litigation had little immediate effect on the Company's business. The Company
was able to productively redeploy the personnel assigned to the Revlon program.
Additionally, the Revlon legal proceedings had no discernible impact upon the
Company's other programs or upon the Company's relations with its other
clients. Due to timing differences, however, potential earnings from the Revlon
program were not immediately replaced. This litigation and all related
litigation was settled in early 1995, and the Company has to date received two
of five settlement payments to be received over a five-year period.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET FOR REGISTRANT'S COMMON EQUITY
The Company's Common Stock is traded on the over the counter market on
the NASDAQ National Market System under the symbol TGIS. The stock prices set
forth represent the highest and lowest sales prices per share of the Company's
Common Stock as reported by the NASDAQ National Market System. The prices
reported in the following table by the NASDAQ National Market System reflect
inter-dealer prices without retail mark-up, mark-down or commissions.
Quarter Ended High Low
------------- ---- ---
March 31, 1995 $10.50 $ 6.25
June 30, 1995 $11.00 $ 9.50
September 30, 1995 $16.00 $10.50
December 31, 1995 $15.87 $11.75
March 31, 1996 $15.75 $12.00
June 30, 1996 $20.00 $14.13
September 30, 1996 $18.63 $14.00
December 31, 1996 $14.63 $ 7.00
There is no established public market for the Company's Class B Common
Stock.
HOLDERS OF RECORD
As of February 28, 1997 there were approximately 130 holders of record
of the Company's Common Stock.
DIVIDENDS
The Company has not paid cash dividends on its Common Stock. The
Company intends to retain future earnings in order to provide funds for use in
the operation and expansion of the business, and, accordingly, does not
anticipate paying cash dividends on its Common Stock in the foreseeable future.
ITEM 6. SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA.
Selected historical and pro forma financial data appearing on page 13
of the Company's 1996 Annual Report to Stockholders is herein incorporated by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and
results of operations appearing on pages 14 through 17 of the Company's 1996
Annual Report to Stockholders is herein incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and notes thereto, together with
the report of independent certified public accountants thereon, appearing on
pages 18 through 33 of the Company's 1996 Annual Report to Stockholders, are
herein incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
6
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to the Company's directors and nominees for
election as directors, and the information relating to executive officers of
the Company, is incorporated herein by reference from the Company's Proxy
Statement (herein so called) for its 1997 Annual Meeting of Stockholders. It is
currently anticipated that the Proxy Statement will be publicly available and
mailed to stockholders in April 1997.
ITEM 11. EXECUTIVE COMPENSATION.
The discussion under "Executive Compensation" in the Company's Proxy
Statement for its 1997 Annual Meeting is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The discussion under "Security Ownership of Certain Beneficial Owners
and Management" in the Company's Proxy Statement for its 1997 Annual Meeting is
incorporated herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The discussion under "Certain Transactions" in the Company's Proxy
Statement for its 1997 Annual Meeting is incorporated herein by reference.
7
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report.
1. Financial Statements
The Consolidated Financial Statements and the Report of
Independent Public Accountants thereon are included on pages 18
through 33 of the Company's 1996 Annual Report to Stockholders
included as Exhibit 13 to this Form 10-K and are incorporated herein
by reference.
2. Financial Statement Schedules
SEQUENTIAL
SCHEDULE DESCRIPTION PAGE NUMBER
II. Valuation and Qualifying Accounts and Reserves. ____
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Amended and Restated Certificate of Incorporation
of the Company filed August 13, 1993, with the
State of Delaware Office of the Secretary of State
(filed as Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December
31, 1994 (the "1994 Form 10-K") and incorporated
herein by reference)..
3.2 Amended and Restated By-Laws (filed as Exhibit 3.5
to the Company's 1993 Form S-1 (File No. 33-64492)
and incorporated herein by reference).
4.1 Specimen Certificate evidencing Common Stock
(filed as Exhibit 4.1 to the Company's 1993 Form
S-1 (File No. 33-64492) and incorporated herein by
reference).
4.2 Form of Warrant Issued by the Company to the
Representative (filed as Exhibit 4.2 to the
Company's 1993 Form S-1 (File No. 33-64492) and
incorporated herein by reference).
10.1 Registration Rights Agreement dated February 23,
1990, among the Company, EDS, Philip R. Thomas,
individually and acting in a representative
capacity (filed as Exhibit 10.7 to the Company's
1993 Form S-1 (File No. 33-64492) and incorporated
herein by reference).
10.2 Agreement dated July 14, 1992, by and among the
Company, Philip R. Thomas and EDS (filed as
Exhibit 10.11 to the Company's 1993 Form S-1 (File
No. 33-64492) and incorporated herein by
reference).
10.3 Amended and Restated Employment Agreement dated
effective January 1, 1994 between the Company and
Philip R. Thomas (filed as Exhibit 10.3 to the
Company's 1994 Form 10-K and incorporated herein
by reference)..
10.4 Amendment No. 1 to Amended and Restated Employment
Agreement between the Company and Philip R.
Thomas, dated effective December 1, 1994 (filed as
Exhibit 10.4 to the Company's 1994 Form 10-K and
incorporated herein by reference)..
8
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.5 Employment Agreement between the Company and Alex
W. Young (filed as Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1993 (the "1993 Form 10-K") and
incorporated herein by reference).
10.6 Amendment to Employment Agreement between the
Company and Alex W. Young (filed as Exhibit 10.13
to the Company's 1993 Form 10-K and incorporated
herein by reference).
*10.7 Employment Agreement between the Company and
Leland L. Grubb, Jr.
10.8 Amended and Restated 1988 Stock Option Plan (filed
as Exhibit 10.14 to the Company's 1993 Form S-1
(File No. 33-64492) and incorporated herein by
reference).
10.9 Amended and Restated 1992 Stock Option Plan.
(Filed as Exhibit 10.8 to the Company's Form S-1
(File No. 33-64492) and incorporated herein by
reference
10.10 401(k) Plan (filed as Exhibit 10.16 to the
Company's 1993 Form S-1 (File No. 33-64492) and
incorporated herein by reference).
10.11 Form of Indemnification Agreement (filed as
Exhibit 10.18 to the Company's 1993 Form S-1 (File
No. 33-64492) and incorporated herein by
reference).
*10.12 First Amended and Restated Revolving Credit Loan
Agreement dated December 4, 1996 between Comerica
Bank-Texas and the Company.
10.13 Supplemental Registration Rights Agreement dated
April 5, 1993 among the Company, Allen & Company
Incorporated, EDS and Philip R. Thomas,
individually and acting in a representative
capacity (filed as Exhibit 10.22 to the Company's
1993 Form S-1 (File No. 33-64492) and incorporated
herein by reference).
10.14 Commercial lease dated December 31, 1991 between
Philip R. Thomas and Wayne Heirtzler Thomas, as
owners, and the Company, as lessee (filed as
Exhibit 10.31 to the Company's 1993 Form S-1 (File
No. 33-64492) and incorporated herein by
reference).
10.15 Amendment No. 1 to Commercial Lease between Philip
R. Thomas and Wayne Heirtzler Thomas, as owners,
and the Company, as lessee, dated February 8, 1992
(filed as Exhibit 10.32 to the Company's 1993 Form
S-1 (File No. 33-64492) and incorporated herein by
reference).
10.16 Amendment No. 2 to Commercial Lease between Philip
R. Thomas and Wayne Heirtzler Thomas, as owners,
and the Company, as lessee, dated February 1, 1993
(filed as Exhibit 10.33 to the Company's 1993 Form
S-1 (File No. 33-64492) and incorporated herein by
reference).
10.17 Amendment No. 3 to Commercial Lease between Philip
R. Thomas and Wayne Heirtzler Thomas, as owners,
and the Company, as lessee (filed as Exhibit 10.34
to the Company's 1993 Form S-1 (File No. 33-64492)
and incorporated herein by reference).
9
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.18 Registration Rights Agreement, dated as of August
18, 1993, between the Company and Philip R. Thomas
(filed as Exhibit 10.37 to the Company's 1993 Form
S-1 (File No. 33-64492) and incorporated herein by
reference).
10.19 Non-Employee Director Retainer Fee Plan (filed as
Exhibit 10.38 to the Company's 1993 Form S-1 (File
No. 33-64492) and incorporated herein by
reference).
10.20 Commercial Lease dated February 8, 1994 between
Philip R. Thomas and Wayne Heirtzler Thomas, as
owners, and the Company, as lessee (filed as
Exhibit 10.41 to the Company's registration
statement on Form S-1 (File No. 33-79418) and
incorporated herein by reference).
* 11 Statement of Computation of Earnings Per Share.
* 13 1996 Annual Report to Stockholders.
* 21 Subsidiaries of the Company.
* 23 Consent of BDO Seidman, LLP.
24 Power of Attorney (set forth on the signature page
of this Form 10-K).
* 27 Financial Data Schedule
---------------
* Filed herewith.
(b) Reports on Form 8-K.
None
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Irving, State of Texas, on March 28th, 1997.
THOMAS GROUP, INC.
By: /s/ PHILIP R. THOMAS
----------------------------
Philip R. Thomas
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each individual whose signature appears below constitutes and appoints
Philip R. Thomas and Alex W. Young, and each of them, such person's true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for such person and in such person's name, place, and stead, in
any and all capacities, to sign any and all amendments to this Form 10-K and to
file the same with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
11
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Form 10-K has been signed by the following persons
on behalf of the Registrant in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
/s/ PHILIP R. THOMAS
- ------------------------
Philip R. Thomas Director, Chairman of the Board and Chief Executive Officer March 31, 1997
/s/ ALEX W. YOUNG
- ------------------------
Alex W. Young President, Chief Operating Officer and Director March 31, 1997
/s/ LELAND L. GRUBB, JR.
- ------------------------
Leland L. Grubb, Jr. Vice President, Chief Financial Officer and Treasurer March 31, 1997
(Principal Financial and Accounting Officer)
/s/ GERALD K. BECKMANN
- ------------------------
Gerald K. Beckmann Director March 31, 1997
/s/ J. FRED BUCY
- ------------------------
J. Fred Bucy Director March 31, 1997
/s/ HOLLIS L. CASWELL
- ------------------------
Hollis L. Caswell Director March 31, 1997
/s/ JOHN T. CHAIN, JR.
- ------------------------
John T. Chain, Jr. Director March 31, 1997
/s/ JAMES E. DYKES
- ------------------------
James E. Dykes Director March 31, 1997
12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Thomas Group, Inc.
Irving, Texas
The audits referred to in our report dated March 3, 1997 relating to the
consolidated financial statements of Thomas Group, Inc., which is incorporated
in Item 8 of the Form 10-K by reference to the annual report to stockholders
for the year ended December 31, 1996 included the audits of the financial
statement schedule listed under Item 14 of this Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement schedule
based upon our audits.
In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.
BDO SEIDMAN, LLP
Dallas, Texas
March 3, 1997
13
THOMAS GROUP, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
BALANCE AT ADDITIONS
BEGINNING CHARGED BALANCE AT
DESCRIPTION OF YEAR TO EXPENSES DEDUCTIONS END OF YEAR
- --------------------------------------------------------------------- ----------- ----------- ----------
(IN THOUSANDS)
December 31, 1994
Allowance for doubtful accounts .............. $ 400 $ 890 $ 400 $ 890
Reserve for performance guarantees ........... $ 60 $ -- $ 60 $ --
Allowance for doubtful accounts, long term ... $ -- $1,500 $ -- $1,500
December 31, 1995
Allowance for doubtful accounts .............. $ 890 $ 245 $ 890 $ 245
Allowance for doubtful accounts, long term ... $1,500 $ -- $1,118 $ 382
December 31, 1996
Allowance for doubtful accounts .............. $ 245 $ 215 $ 154 $ 306
Allowance for doubtful accounts, long term ... $ 382 $ 182 $ -- $ 564
14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.7 Employment Agreement between the Company and
Leland L. Grubb, Jr.
10.12 First Amended and Restated Revolving Credit Loan
Agreement dated December 4, 1996 between Comerica
Bank-Texas and the Company.
11 Statement of Computation of Earnings Per Share.
13 1996 Annual Report to Stockholders.
21 Subsidiaries of the Company.
23 Consent of BDO Seidman, LLP.
24 Power of Attorney (set forth on the signature page
of this Form 10-K).
27 Financial Data Schedule.