EX-99 3 form8k_42903-ex991.txt EXH. 99.1 EXHIBIT 99.1 TMNG Reports 2003 First Quarter Results Tuesday April 29, 4:09 pm ET OVERLAND PARK, Kan., April 29 /PRNewswire-FirstCall/ -- The Management Network Group, Inc. (Nasdaq: TMNG - News), a leading provider of management consulting services to the global communications industry, today reported financial results for its 2003 first quarter ended March 29, 2003. Revenue in the first quarter of 2003 was $7.4 million, compared with $7.3 million in the first quarter of 2002. Net loss on a GAAP-reported basis for the quarter was $1.2 million, or $0.04 per diluted share, compared with a GAAP net loss of $2.8 million, or $0.09 per diluted share in last year's first quarter. Pro forma non-GAAP net loss (defined as GAAP net loss as reported in the unaudited condensed consolidated statements of operations plus equity-related charges, intangibles amortization, and goodwill impairment, all in accordance with GAAP) for the quarter was $0.8 million, or $0.02 per diluted share, compared with pro forma non-GAAP net loss of $1.0 million, or $0.03 per diluted share in the first quarter of 2002. During the quarter, gross margin was 50.6% compared to 42.6% in the first quarter of 2002. The company reported a sound balance sheet with a cash position of $54.4 million, virtually no long-term debt, stockholders' equity of $114.3 million, and working capital of approximately $63.2 million. The company generated cash flow from operations of approximately $730,000 in the first quarter of 2003. "First quarter results reflect continued challenges in the broader telecom industry environment, but were also adversely affected by the decision of a large customer late in the quarter to suspend expenditures on consultants," said Rich Nespola, Chairman and CEO. "There continues to be significant executive management change among our large communication provider clients, which results in further uncertainties and delays in project opportunities for TMNG. We are seeing increased activity in key areas such as wireless, where the explosive growth of Wi-Fi and the move toward wireless number portability are creating demand for our expertise. We added eight new customers during the quarter, compared with four in the 2002 fourth quarter. Looking ahead, we continue to see unpredictability near term but remain encouraged that as the telecom operating environment stabilizes further and expected changes materialize on the regulatory front, TMNG is both strategically and financially well positioned to capitalize." Conference Call TMNG will host a conference call at 5:00 p.m. ET today to discuss first quarter 2003 results. Investors can access the conference call via a live webcast on the Company's Web site, www.tmng.com, or by dialing 877-375-2162. A replay of the conference call will be archived on the Company's Web site for one week. Additionally, the archived call can be accessed by dialing 973-341-3080, pin number 3877544, which will be available through May 2, 2003. Non-GAAP Financial Measures Management believes the presentation of pro forma non-GAAP net loss and pro forma non-GAAP net loss per diluted share provides useful information to investors regarding the Company's financial condition and results of operations because they illustrate the short-term impact on our cash reserves of the cash generated or used in our operations. Management uses these non-GAAP financial measures as an internal analytical tool to evaluate our cash requirements and cash availability. About TMNG The Management Network Group, Inc. is a leading provider of strategy, management, marketing, operational and technology consulting services to the global communications industry. With more than 500 consultants, TMNG serves communications service providers, technology companies, and financial services firms. Since the company's inception in 1990, TMNG and its subsidiaries -- TMNG Strategy, TMNG Marketing, TMNG Technologies and TMNG Europe -- have served more than 600 clients worldwide, including all the Fortune 500 telecommunications companies. TMNG is headquartered in Overland Park, Kansas, with offices in Boston, Chicago, Columbus, Dallas, La Jolla, London, New York, San Francisco, Toronto, Utrecht and Washington, D.C. 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 goods and 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. THE MANAGEMENT NETWORK GROUP, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Quarter Ended March 29, 2003 March 30, 2002 Revenues $7,406 $7,268 Cost of services: Direct cost of services 3,682 3,674 Equity related charges (benefit) (20) 495 Total 3,662 4,169 Gross profit 3,744 3,099 Operating expenses: Selling, general and administrative 4,880 5,510 Equity related charges 11 163 Depreciation and amortization 945 581 Total 5,836 6,254 Loss from operations (2,092) (3,155) Other income, net 160 299 Income tax benefit 701 1,191 Loss before change in accounting principle (1,231) (1,665) Change in accounting principle (net of tax) (1,140) Net loss ($1,231) ($2,805) Loss per common share before change in accounting principle Basic and diluted ($0.04) ($0.05) Change in accounting principle per common share Basic and diluted ($0.04) Net loss per common share Basic and diluted ($0.04) ($0.09) Shares used in calculation of net loss per common share Basic and diluted 33,347 31,032 THE MANAGEMENT NETWORK GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In thousands) ASSETS March 29, 2003 December 28, 2002 CURRENT ASSETS: Cash and cash equivalents $54,385 $53,786 Receivables, net 7,574 9,358 Refundable and deferred income taxes 5,764 4,771 Other assets 1,370 1,723 Total current assets 69,093 69,638 GOODWILL, net 31,308 31,308 INTANGIBLES, net 6,763 7,454 PROPERTY & EQUIPMENT, net 2,065 2,285 DEFERRED TAXES 13,904 14,272 OTHER ASSETS 452 502 TOTAL ASSETS $123,585 $125,459 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable $820 $1,170 Accrued liabilities and other 5,102 4,990 Total current liabilities 5,922 6,160 NONCURRENT LIABILITIES 3,366 3,573 STOCKHOLDERS' EQUITY 114,297 115,726 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $123,585 $125,459 INFORMATION WITH RESPECT TO NON-GAAP FINANCIAL MEASURES The following table shows, for each non-GAAP financial measure used in the accompanying press release, the most directly comparable financial measure calculated and presented in accordance with GAAP: Non-GAAP Financial Measure Most Directly Comparable Financial Measure Pro forma non-GAAP net loss Net loss Pro forma non-GAAP net loss Net loss per diluted share per diluted share The following table contains a reconciliation of the difference between the non-GAAP financial measures described above and the most directly comparable financial measures calculated and presented in accordance with GAAP. THE MANAGEMENT NETWORK GROUP, INC. (Unaudited) (In thousands, except per share data) Reconciliation of GAAP net loss to Quarter Ended pro forma non-GAAP net loss March 29, 2003 March 30, 2002 Pro forma items Items subject to tax Equity related charges (benefit) ($9) $658 Goodwill impairment 1,900 Tax deductible intangible amortization 633 392 Pro forma items tax effected at 40% statutory rate 624 2,950 After tax rate 60% 60% Pro forma items, net of tax benefit 374 1,770 Intangible amortization exempt from tax benefit 81 Pro forma addition to net loss 455 1,770 GAAP net loss (1,231) (2,805) Pro forma non-GAAP net loss ($776) ($1,035) Pro forma non-GAAP net loss per common share Basic and diluted ($0.02) ($0.03) Reconciliation of GAAP net loss per diluted common share to pro forma non-GAAP Quarter Ended net loss per diluted common share March 29, 2003 March 30, 2002 Pro forma items Items subject to tax Equity related charges (benefit) $0.02 Goodwill impairment 0.06 Tax deductible intangible amortization $0.02 0.02 Pro forma items tax effected at 40% statutory rate 0.02 0.10 After tax rate 60% 60% Pro forma items, net of tax benefit 0.01 0.06 Intangible amortization exempt from tax benefit 0.01 Pro forma addition to net loss 0.02 0.06 GAAP net loss (0.04) (0.09) Pro forma non-GAAP net loss ($0.02) ($0.03) Source: The Management Network Group, Inc.