EX-99.1 2 c02555exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [TMNG GLOBAL LOGO] CONTACT: THE MANAGEMENT NETWORK GROUP, INC. OR BRAINERD COMMUNICATORS Janet Hall Corey Kinger (Investors) Janet.Hall@tmng.com kinger@braincomm.com 800.876.5329 Olga Shmuklyer (Media) shmuklyer@braincomm.com 212.986.6667 TMNG REPORTS 2005 FOURTH QUARTER AND YEAR-END RESULTS OVERLAND PARK, KS -- FEBRUARY 16, 2006 -- The Management Network Group, Inc. (Nasdaq: TMNG), a leading provider of management consulting services to the global communications industry, today reported financial results for its 2005 fourth quarter and year ended December 31, 2005. Revenue in the fourth quarter of 2005 was $6.2 million, comparable with revenue of $6.2 million in the fourth quarter of 2004. During the quarter, gross margin was 50.4%, compared with 47.2% in the fourth quarter of 2004. TMNG reported a net loss of $1.8 million, or $0.05 on a diluted share basis for the fourth quarter of 2005, compared with a net loss of $1.2 million, or $0.03 per diluted share in last year's fourth quarter. Prior year fourth quarter net loss included a legal settlement gain and real estate restructuring charges. Revenue for the year ended December 31, 2005 increased 28.2% to $30.4 million, compared with $23.7 million in 2004. Gross margin improved to 50.8% in 2005, compared with 47.2% in 2004. Net loss for 2005 was $2.3 million, or $0.07 per diluted share, compared with a net loss of $8.7 million or $0.25 per diluted share in 2004, which included a $2.3 million or $0.07 per diluted share loss from discontinued operations, along with a legal settlement gain and real estate restructuring charges. The company ended the fourth quarter and year with a strong cash and short-term investments position of $49.7 million, working capital of $52.6 million, virtually no long-term debt, and stockholders' equity of $66.1 million. "Along with our improved performance in 2005, we were able to make strategic investments which we believe position TMNG to take advantage of the burgeoning markets in converged global communications, media and entertainment," said Rich Nespola, TMNG Chairman and CEO. "With 28% revenue growth in 2005 and firm gross margins despite the traditional seasonal weakness of the fourth quarter, we believe we are clearly heading in the right direction. We strengthened our go-to-market offerings targeted to wireless, Internet Protocol migration and cable with key investments in our business offerings and the executives to drive them. These investments, while impacting bottom-line performance near-term, place us in an improved position to drive future growth and profitability which are our key priorities." "As we enter 2006 we are helping companies across the convergence spectrum -- in communications, technology, and media content -- evaluate new business cases, develop new market models and delivery platforms," Mr. Nespola continued. "We are also pursuing attractive managed services opportunities in wireless and IP network migration, and we continue to play a vital role in helping newly combined communications players manage network integration challenges. In short, in 2006 we expect to drive the benefits of leveraging strong relationships, new partnerships, and our unmatched expertise into continued growth for our company and our shareholders." CONFERENCE CALL TMNG will host a conference call at 5:00 p.m. ET today to discuss 2005 fourth quarter and year-end results. Investors can access the conference call via a live webcast on the company's website, www.tmng.com, or by dialing 877-297-4509, passcode 6988950. A replay of the conference call will be archived on the company's website for one week. Additionally, a replay of the call will be available by dialing 877-519-4471, passcode 6988950, through February 24, 2005. ABOUT TMNG The Management Network Group, Inc. (Nasdaq: TMNG) is a leading provider of professional services to the converging communications industry and the financial services firms that support it. With more than 400 consultants worldwide, TMNG's clients include communications service providers, media and technology companies, and financial services firms. Founded in 1990, TMNG has provided strategic and management consulting, as well as managed services, to more than 1000 clients worldwide, including all the Fortune 500 telecommunications companies. The company is headquartered in Overland Park, Kansas, with offices in Boston, Chicago, London, New York, Denver, Dallas, and Washington, DC. TMNG can be reached at 1.888.480.TMNG (8664) or online at http://www.tmng.com. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. In particular, any statements contained herein regarding expectations with respect to future business, revenues or profitability are subject to known and unknown risks, uncertainties, and contingencies, many of which are beyond the Company's control, which may cause actual results, performance, or achievements to differ materially from those projected or implied in such forward-looking statements. Factors that might affect actual results, performance, or achievements include, among other things, conditions in the telecommunications industry, overall economic and business conditions, the demand for the Company's services, and technological advances and competitive factors in the markets in which the Company competes. These risks and uncertainties are described in detail from time to time in TMNG's filings with the Securities and Exchange Commission. (Please see attached financial tables) THE MANAGEMENT NETWORK GROUP, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED YEAR ENDED ----------------------------------- ----------------------------------- December 31, 2005 January 1, 2005 December 31, 2005 January 1, 2005 Revenues ................................. $ 6,237 $ 6,195 $30,378 $23,704 Cost of services: Direct cost of services ................ 3,075 3,226 14,834 12,319 Equity related charges ................. 19 48 100 205 ------- ------- ------- ------- Total ................................ 3,094 3,274 14,934 12,524 Gross profit ............................. 3,143 2,921 15,444 11,180 Operating expenses: Selling, general and administrative .... 5,060 3,560 17,976 15,358 Legal settlement ....................... (1,294) (1,294) Real estate restructuring .............. 1,545 75 1,545 Equity related charges ................. 170 182 618 958 Depreciation and amortization .......... 200 377 822 1,671 ------- ------- ------- ------- Total ................................ 5,430 4,370 19,491 18,238 ------- ------- ------- ------- Loss from continuing operations .......... (2,287) (1,449) (4,047) (7,058) Other income, net ........................ 521 243 1,758 688 ------- ------- ------- ------- Loss from continuing operations before income tax provision ................... (1,766) (1,206) (2,289) (6,370) Income tax provision ..................... (5) (2) (36) (49) ------- ------- ------- ------- Loss from continuing operations .......... (1,771) (1,208) (2,325) (6,419) Net loss from discontinued operations .... (2,276) ------- ------- ------- ------- Net loss ................................. $(1,771) $(1,208) $(2,325) $(8,695) ======= ======= ======= ======= Loss from continuing operations per common share Basic and diluted ...................... $ (0.05) $ (0.03) $ (0.07) $ (0.18) ======= ======= ======= ======= Net loss from discontinued operations per common share Basic and diluted ...................... $ (0.07) ======= Net loss per common share Basic and diluted ...................... $ (0.05) $ (0.03) $ (0.07) $ (0.25) ======= ======= ======= ======= Shares used in calculation of net loss per common share Basic and diluted ...................... 35,476 34,716 35,175 34,619 ======= ======= ======= =======
THE MANAGEMENT NETWORK GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS)
ASSETS December 31, 2005 January 1, 2005 CURRENT ASSETS: Cash and cash equivalents $10,951 $10,882 Short-term investments 38,700 41,300 Receivables, net 6,149 6,178 Refundable income taxes 117 769 Other assets 1,262 1,176 ------- ------- Total current assets 57,179 60,305 GOODWILL 13,365 13,365 INTANGIBLES, net 1,651 487 PROPERTY & EQUIPMENT, net 900 896 OTHER ASSETS 454 300 ------- ------- TOTAL ASSETS $73,549 $75,353 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable $ 1,025 $ 845 Accrued liabilities and other 3,562 4,339 ------- ------- Total current liabilities 4,587 5,184 NONCURRENT LIABILITIES 2,819 3,422 STOCKHOLDERS' EQUITY 66,143 66,747 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $73,549 $75,353 ======= =======
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