-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wf0X9VFbVa1LwaWvrYBFr763zid7YRSgSVBTIUXAQBcos1yj+P9636KVGNVVrgEi Gx1es8NhiicYQqHEodGpSg== 0001013816-03-000337.txt : 20031031 0001013816-03-000337.hdr.sgml : 20031031 20031031161938 ACCESSION NUMBER: 0001013816-03-000337 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030927 ITEM INFORMATION: FILED AS OF DATE: 20031031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANAGEMENT NETWORK GROUP INC CENTRAL INDEX KEY: 0001094814 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 481129619 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27617 FILM NUMBER: 03970165 BUSINESS ADDRESS: STREET 1: 7300 COLLEGE BLVD., STE 302 CITY: OVERLAND PARK STATE: KS ZIP: 66210 BUSINESS PHONE: 9133459315 MAIL ADDRESS: STREET 1: 7300 COLLEGE BLVD., STE 302 CITY: OVERLAND PARK STATE: KS ZIP: 66210 8-K 1 form8k_103003.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 30, 2003 THE MANAGEMENT NETWORK GROUP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-27617 48-1129619 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 7300 College Boulevard, Suite 302, Overland Park, KS 66210 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (913) 345-9315 Item 7. Financial Statements and Exhibits The following exhibit is filed herewith: Exhibit No. Description 99.1 Press Release dated October 30, 2003. Item 12. Results of Operations and Financial Condition On October 30, 2003, The Management Network Group, Inc. announced its results of operations and financial condition for the quarter ended September 27, 2003. The public announcement was made by means of a press release, the text of which is set forth in Exhibit 99.1 hereto. This information is being furnished pursuant to Item 12 of Form 8-K. 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 hereunto duly authorized. THE MANAGEMENT NETWORK GROUP, INC. -------------------------------------------- (Registrant) Date: October 31, 2003 By: /s/ Donald E. Klumb -------------------------------------------- Donald E. Klumb Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description of Document 99.1 Press Release of Registrant, Dated October 30, 2003 Announcing Financial Results for its Second Quarter Ended September 27, 2003 EX-99 3 form8k_103003-ex991.txt EXH. 99.1 Exhibit 99.1 [GRAPHIC OMITTED] FOR IMMEDIATE RELEASE CONTACT: THE MANAGEMENT NETWORK GROUP, INC. OR BRAINERD COMMUNICATORS Carolyn Covey Morris Brian Schaffer (Investors) The Management Network Group, Inc. SCHAFFER@BRAINCOMM.COM CAROLYN.COVEYMORRIS@TMNG.COM Ray Yeung (Media) 888.480.TMNG (8664) YEUNG@BRAINCOMM.COM 212.986.6667 TMNG REPORTS 2003 THIRD QUARTER RESULTS OVERLAND PARK, KS - OCTOBER 30, 2003 -- 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 2003 third quarter ended September 27, 2003. Revenue in the third quarter of 2003 was $4.7 million, compared with $8.8 million in the third quarter of 2002. Net loss for the quarter was $2.7 million, or $0.08 per diluted share, compared with a net loss of $0.6 million, or $0.02 per diluted share in last year's third quarter. In the third quarter of 2003, a valuation allowance of $0.8 million was recorded, offsetting all income tax benefits associated with pre-tax losses generated in the third 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 intangible asset impairment, all in accordance with GAAP and assuming a standard 40% effective income tax rate) for the quarter was $1.3 million, or $0.04 per diluted share, compared with pro forma non-GAAP net loss of $0.2 million, or $0.01 per diluted share in the third quarter of 2002. During the quarter, gross margin was 46.8% compared with 48.8% in the third quarter of 2002, due primarily to decreased revenues, which led to lower consultant utilization. The company continues to maintain a sound balance sheet, including a cash position of $49.4 million, virtually no long-term debt, stockholders' equity of $92.7 million, and working capital of approximately $59.9 million. Cash and working capital have been reduced by $4.4 million and $3.6 million, respectively, since year-end due to the weak revenue environment; however, the company anticipates that it will substantially reverse the year-to-date negative cash flow in the fourth quarter. Revenue for the first nine months of fiscal 2003 totaled $17.1 million, compared with $26.0 million in the first nine months of 2002. Gross margin year-to-date in 2003 was 48.6% compared with 49.5% in the comparable period of 2002. Net loss for the first nine months was $22.6 million, or $0.68 per diluted share, compared with a net loss of $5.3 million, or $0.16 per diluted share in the comparable period of 2002. Pro forma non-GAAP net loss was $3.6 million, or $0.11 per diluted share, compared to a loss of $2.4 million, or $0.07 per diluted share a year ago. Results for the first nine months of fiscal 2003 included a non-cash goodwill and intangible asset impairment charge of $18.9 million and $6.0 million valuation reserve partially offsetting income tax benefits generated on pre-tax losses incurred in fiscal 2003. "Third quarter results were disappointing, but were most impacted by a softer-than-expected August that masked a pickup in new business and pipeline activity since Labor Day," said Rich Nespola, Chairman and CEO. "We see clear signs that leading wireless and wireline providers are preparing to embark on major projects, though timing of capital allocation remains unpredictable. We signed nine new customers in the third quarter and have seen improved sales momentum in recent weeks. In addition, we continue to aggressively reduce expenses. We have also worked diligently as a company and in concert with our channel partners to position TMNG for several promising potential engagement opportunities in the near future. In light of these developments and our signed engagements to date, we are optimistic that TMNG's fourth quarter will show significant sequential improvement in quarterly revenue performance, as well as significant positive cash flow." CONFERENCE CALL TMNG will host a conference call at 5:00 p.m. ET today to discuss third 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 4236809, through November 4, 2003. ABOUT TMNG The Management Network Group, Inc. (Nasdaq: TMNG) is a leading provider of strategy, management, marketing, operational and technology consulting services to the global communications industry. With more than 500 consultants worldwide, 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. (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-to-Date September 27, September 29, September 27, September 28 2003 2002 2003 2002 Revenues $ 4,691 $ 8,756 $17,117 $25,952 Cost of services: Direct cost of services 2,506 4,372 8,912 12,311 Equity related charges (10) 110 (113) 782 --------- --------- ---------- --------- Total 2,496 4,482 8,799 13,093 Gross profit 2,195 4,274 8,318 12,859 Operating expenses: Selling, general and administrative 4,165 4,737 13,918 15,822 Goodwill and intangible asset impairment 18,942 Severance costs 89 289 1,933 Equity related charges 7 32 10 312 Depreciation and amortization 711 739 2,525 2,309 --------- --------- ---------- --------- Total 4,972 5,508 35,684 20,376 Loss from operations (2,777) (1,234) (27,366) (7,517) Other income, net 126 235 433 743 Income tax benefit 351 4,313 2,638 --------- --------- ---------- --------- Loss before change in accounting principle (2,651) (648) (22,620) (4,136) Change in accounting principle (net of tax) (1,140) --------- --------- ---------- --------- Net loss $ (2.651) $ (648) $(22,620) $(5,276) ========= ========= ========== ========= Loss per common share before change in accounting principle Basic and diluted $ (0.08) $ (0.02) $ (0.68) $ (0.13) ========= ========= ========== ========= Change in accounting principle per common share Basic and diluted ($0.03) ========= ========= ========== ========= Net loss per common share Basic and diluted $ ($0.08) $ (0.02) $ (0.68) ($0.16) ========= ========= ========== ========= Shares used in calculation of net loss per common share Basic and diluted 33,458 33,297 33,392 32,535 ========= ========= ========== =========
THE MANAGEMENT NETWORK GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS Unaudited (in thousands) ASSETS September 27, December 28, 2003 2002 CURRENT ASSETS: Cash and cash equivalents $49,411 $53,786 Receivables, net 6,714 9,358 Refundable and deferred income taxes 7,635 4,771 Other assets 770 1,723 -------- -------- Total current assets 64,530 69,638 GOODWILL 15,528 31,308 INTANGIBLES, net 2,500 7,454 DEFERRED TAXES 15,610 14,272 PROPERTY & EQUIPMENT, net 1,720 2,285 OTHER ASSETS 402 502 -------- -------- TOTAL ASSETS $100,290 $125,459 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable $ 590 $ 1,170 Accrued liabilities and other 4,034 4,990 -------- -------- Total current liabilities 4,624 6,160 NONCURRENT LIABILITIES 2,995 3,573 STOCKHOLDERS' EQUITY 92,671 115,726 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $100,290 $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. RECONCILIATION TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except per share data)
Quarter Ended Year-to-Date September 27, September 28, September 27, September 28, 2003 2002 2003 2002 RECONCILIATION TO PRO FORMA NON-GAAP NET LOSS GAAP Loss from operations $ (2,777) $ (1,234) $ (27,366) $ (7,517) Addback Goodwill and intangible asset impairment 18,942 Equity related charges (benefit) (3) 142 (103) 1,094 Tax deductible intangible amortization 422 380 1,618 1,338 ---------- ----------- ----------- ----------- GAAP Loss from operations, excluding above pro forma items (2,358) (712) (6,909) (5,085) Add: Other income, net 126 235 433 743 ---------- ----------- ----------- ----------- Pre-tax pro forma loss (2,232) (477) (6,476) (4,342) Assumed after tax rate 60% 60% 60% 60% ---------- ----------- ----------- ----------- Pro forma loss, net of assumed tax benefit (1,339) (286) (3,886) (2,605) Intangible amortization exempt from tax benefit 82 82 244 244 ---------- ----------- ----------- ----------- Pro forma non-GAAP net loss $ (1,257) $ (204) $ (3,642) $ (2,361) ========== =========== =========== =========== Pro forma non-GAAP net loss per common share Basic and diluted $ (0.04) $ (0.01) $ (0.11) $ (0.07) ========== =========== =========== =========== Quarter Ended Year-to-Date RECONCILIATION TO PRO FORMA NON-GAAP September 27, September 28, September 27, September 28, NET LOSS PER DILUTED COMMON SHARE 2003 2002 2003 2002 GAAP Loss from operations $ (0.08) $ (0.04) $ (0.82) $ (0.23) Addback Goodwill and intangible asset impairment 0.57 Equity related charges 0.03 Tax deductible intangible amortization 0.01 0.02 0.04 0.04 ---------- ----------- ----------- ----------- GAAP Loss from operations, excluding above pro forma items (0.07) (0.02) (0.21) (0.16) Add: Other income, net 0.01 0.01 0.02 ---------- ----------- ----------- ----------- Pre-tax pro forma loss (0.07) (0.01) (0.20) (0.14) Assumed after tax rate 60% 60% 60% 60% ---------- ----------- ----------- ----------- Pro forma loss, net of assumed tax benefit (0.04) (0.01) (0.12) (0.08) Intangible amortization exempt from tax benefit 0.01 0.01 ---------- ----------- ----------- ----------- Proforma non-GAAP net loss per common share ---------- ----------- ----------- ----------- Basic & Diluted $ (0.04) $ (0.01) $ (0.11) $ (0.07) ========== =========== =========== ===========
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