-----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, ORqBmby6surc2VdMUeSYjxLqIuPzzUd881TzjqVWNhWSX3cPRlWjZrnuhyqsdgNZ WEQic9tV9CaGUT4+LMC9Cw== 0001013816-07-000362.txt : 20070814 0001013816-07-000362.hdr.sgml : 20070814 20070814162803 ACCESSION NUMBER: 0001013816-07-000362 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070814 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20070814 DATE AS OF CHANGE: 20070814 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: 071055647 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_081407.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) August 14, 2007 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 -------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On August 14, 2007, The Management Network Group, Inc. announced its results of operations and financial condition for the second quarter which ended June 30, 2007. The public announcement was made by means of a press release, the text of which is set forth in Exhibit 99.1 hereto. The information in this Item 2.02, and Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed "filed" for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless expressly incorporated into a filing of TMNG under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act made after the date hereof, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any filing of TMNG, whether made before or after the date hereof, regardless of any general incorporation language in such filing. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (D). EXHIBITS. EXHIBIT NUMBER DESCRIPTION - ------------------- -------------------------------------------------------- 99.1 Press Release dated August 14, 2007 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: August 14, 2007 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 August 14, 2007 announcing financial results for its Second Quarter Ended June 30, 2007 EX-35 2 form8k_081407ex991.txt EXH. 99.1 PRESS RELEASE Exhibit 99.1 GRAPHIC OMITTED] CONTACT: The Management Network Group, Inc. Brainerd Communicators Janet Hall Michele Clarke (Media) Janet.Hall@tmng.com clarke@braincomm.com 800.876.5329 212.986.6667 Corey Kinger (Investors) kinger@braincomm.com 212.986.6667 TMNG GLOBAL REPORTS 2007 SECOND QUARTER RESULTS Overland Park, KS - August 14, 2007 - TMNG Global (Nasdaq: TMNG) a leading provider of management consulting and software solution services to the global communications, media and entertainment industries, today reported financial results for its 2007 second quarter ended June 30, 2007. Revenue in the second quarter of 2007 was $15.1 million, a 58.5% increase over revenue of $9.5 million in the prior year period. The 2007 period results include $5.7M of revenue from the Company's new TMNG Global Software Solutions segment that consists of the recently acquired Cartesian Ltd. During the quarter, gross margin was 43.9%, compared with 48.7% in the second quarter of 2006. The lower gross margin reflected a richer mix of traditional management consulting revenues, which feature a number of larger and longer term projects. TMNG Global reported a net loss of ($1.7) million, or ($0.05) per diluted share for the second quarter of 2007, compared to a net loss of ($2.6) million, or ($0.07) per diluted share in last year's second quarter. After adjusting for expenses related to the completion of the review of the Company's option granting practices by a special committee of the Board of Directors, depreciation and amortization expense, as well as non-cash expense related to share-based compensation, TMNG Global generated non-GAAP adjusted net income of approximately $0.3 million, or $0.01 per diluted share, during the second quarter of 2007. The comparable non-GAAP adjusted net loss for the second quarter of fiscal 2006 was ($1.3) million, or ($0.04) per diluted share. For the six months ended June 30, 2007, revenue increased 81.0% to $30.2 million, compared with $16.7 million in the first six months of 2006. During the period, the Software Solutions segment contributed $10.9 million in revenue. During the 2007 six month period, gross margin was 44.5%, compared with 49.5% in the comparable year-ago period. Net loss for the first six months of 2007 was ($3.3) million or ($0.09) per diluted share, compared with a net loss of ($4.2) million or ($0.12) per diluted share in first six months of 2006. After adjusting for expenses related to the completion of the review of the Company's option granting practices by a special committee of the Board of Directors, depreciation and amortization expense, as well as non-cash benefits related to share-based compensation, TMNG Global generated non-GAAP adjusted net income of approximately $0.7 million, or $0.02 per diluted share, during the first six months of 2007. The comparable non-GAAP adjusted net loss for the 2006 six month period was ($1.9) million, or ($0.05) per diluted share. The Company ended the second quarter with cash and short-term investments of $30.3 million, working capital of approximately $34.5 million, no long-term debt, and stockholders' equity of $53.5 million. "Our second quarter results keep us on track with our expectations for the year and affirm that TMNG is poised to return to profitability in 2007 on a non-GAAP basis," said Rich Nespola, TMNG Global Chairman and CEO. "As shown by our acquisitions of Cartesian in the first quarter and RVA Consulting in the third quarter, we continue to aggressively bolster our business and extend and strengthen our transformational offerings to our expanding client base. We have continued to increase our market penetration in key industries such as cable and wireless. We also have broadened our geographical footprint, as evidenced by a greater than 50% revenue contribution from international engagements in the second quarter. We enter the second half of 2007 with excellent revenue momentum and substantial opportunities for growth both domestically and in key overseas markets." In addition to reporting net loss and net loss per share on a GAAP basis, this press release contains certain non-GAAP adjustments which are described in the attached schedule entitled "Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Income (Loss)" that accompanies this press release. In making these non-GAAP adjustments, the Company took into account the impact of items that are generally not expected to be on-going in nature and certain non-cash expenses and benefits. Management believes the exclusion of these items provides a useful basis for evaluating underlying business performance, but should not be considered in isolation and is not in accordance with, or a substitute for, evaluating Company performance utilizing GAAP financial information. The Company believes that providing such adjusted results allows investors and other users of the Company's financial statements to better understand TMNG's comparative operating performance for the periods presented. TMNG's management used each of these non-GAAP financial measures in its own evaluation of the Company's performance, particularly when comparing performance to the prior year's period. TMNG's non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Although TMNG's management believes non-GAAP financial measures are useful in evaluating the performance of its business, TMNG acknowledges that items excluded from such measures may have a material impact on the Company's net income (loss) and net income (loss) per share calculated in accordance with GAAP. Therefore, management uses non-GAAP measures in conjunction with GAAP results. Investors and other users of our financial information should also consider the above factors when evaluating TMNG's results. Conference Call The Company will host a conference call at 5:00 p.m. ET today to discuss 2007 second quarter results. Investors can access the conference call via a live webcast on the company's website, www.tmng.com, or by dialing 973-935-8711, passcode 9031102. 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 9031102, through August 21, 2007. About TMNG Global TMNG Global (NASDAQ: TMNG) is a leading provider of professional services to the converging communications industry. Its companies, TMNG, CSMG Adventis, Cartesian, and RVA Consulting, and its base of over 500 consultants, have provided strategy, management, and technical consulting, as well as products and services, to more than 1200 communications service providers, entertainment, media, and technology companies and financial services firms worldwide. The company is headquartered in Overland Park, Kansas, with offices in Berlin, Boston, Chicago, London, New Jersey, New York, Shanghai and Washington, D. C. 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 stock market conditions, 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, the level of cash and non-cash expenditures incurred by the Company, 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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) (unaudited)
Twenty-six Thirteen Weeks Ended Weeks Ended ----------------------- ---------------------- June 30, July 1 June 30 July 1 2007 2006 2007 2006 --------- --------- --------- --------- Revenues $ 15,120 $ 9,541 $ 30,233 $ 16,704 Cost of services [includes net non-cash share-based compensation expense (credits) of $81 and $170 for the thirteen weeks ended June 30, 2007 and July 1, 2006, respectively, and $(67) and $371 for the twenty-six weeks ended June 30, 2007 and July 1, 2006, respectively] 8,475 4,890 16,794 8,442 --------- --------- --------- --------- Gross Profit 6,645 4,651 13,439 8,262 Operating Expenses: Selling, general and administrative [includes net non-cash share-based compensation expense of $307 and $784 for the thirteen weeks ended June 30, 2007 and July 1, 2006, respectively, and $11 and $1,351 for the twenty-six weeks ended June 30, 2007 and July 1, 2006, respectively] 7,054 7,516 13,834 13,154 Special Committee investigation 789 2,348 Intangible asset amortization 552 236 1,092 351 --------- --------- --------- --------- Total operating expenses 8,395 7,752 17,274 13,505 --------- --------- --------- --------- Loss from operations (1,750) (3,101) (3,835) (5,243) Other income: Interest income 381 546 798 1,081 Other, net (1) (1) --------- --------- --------- --------- Total other income 381 545 798 1,080 --------- --------- --------- --------- Loss before income tax provision (1,369) (2,556) (3,037) (4,163) Income tax provision (285) (13) (284) (34) --------- --------- --------- --------- Net loss $ (1,654) $ (2,569) $ (3,321) $ (4,197) Loss per common share Basic and diluted $ (0.05) $ (0.07) $ (0.09) $ (0.12) ========= ========= ========= ========= Weighted average shares used in calculation of net loss per common share Basic and diluted 35,766 35,731 35,741 35,678
THE MANAGEMENT NETWORK GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (unaudited)
June 30, December 30, 2007 2006 ----------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,992 $ 11,133 Short-term investments 20,325 27,200 Receivables: Accounts receivable 11,361 5,063 Accounts receivable -- unbilled 4,866 3,654 ----------- ------------ 16,227 8,717 Less: Allowance for doubtful accounts (530) (378) ----------- ------------ 15,697 8,339 Prepaid and other assets 1,668 2,257 ----------- ------------ Total current assets 47,682 48,929 ----------- ------------ Property and equipment, net 1,279 846 Goodwill 13,365 13,365 Licenses and other identifiable intangible assets, net 7,930 1,189 Other assets 922 967 ----------- ------------ Total Assets $ 71,178 $ 65,296 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable $ 2,391 $ 1,446 Accrued payroll, bonuses and related expenses 3,765 1,965 Other accrued liabilities 3,016 2,019 Income tax liabilities 1,475 271 Accrued contingent consideration 1,880 Unfavorable and other lease obligations 666 649 ----------- ------------ Total current liabilities 13,193 6,350 NONCURRENT LIABILITIES: Deferred income tax liability 2,074 Unfavorable and other lease obligations 1,951 2,189 Other noncurrent liabilities 508 ----------- ------------ Total noncurrent liabilities 4,533 2,189 Total stockholders' equity 53,452 56,757 ----------- ------------ Total Liabilities and Stockholders' Equity $ 71,178 $ 65,296 =========== ============
THE MANAGEMENT NETWORK GROUP, INC. RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME (LOSS) (unaudited) (in thousands, except per share data)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED ---------------------------- ---------------------------- June 30, July 1, June 30, July 1, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- Reconciliation of GAAP net loss to non-GAAP adjusted net income (loss) GAAP net loss $ (1,654) $ (2,569) $ (3,321) $ (4,197) ----------- ----------- ----------- ----------- Special Committee investigation 789 - 2,348 - Depreciation and amortization 809 341 1,681 555 Non-cash share based compensation expense (credit) 388 954 (56) 1,722 ----------- ----------- ----------- ----------- Adjustments to GAAP net loss 1,986 1,295 3,973 2,277 ----------- ----------- ----------- ----------- Non-GAAP adjusted net income (loss) $ 332 $ (1,274) $ 652 $ (1,920) =========== =========== =========== =========== Reconciliation of GAAP net loss per diluted common share to non-GAAP adjusted net income (loss) per diluted common share: GAAP net loss per diluted common share $ (0.05) $ (0.07) $ (0.09) $ (0.12) ----------- ----------- ----------- ----------- Special Committee investigation 0.02 - 0.06 - Depreciation and amortization 0.03 0.01 0.05 0.02 Non-cash share based compensation expense (credit) 0.01 0.02 - 0.05 ----------- ----------- ----------- ----------- Adjustments to GAAP net loss per diluted common share 0.06 0.03 0.11 0.07 ----------- ----------- ----------- ----------- Non-GAAP adjusted net income (loss) per diluted common share $ 0.01 $ (0.04) $ 0.02 $ (0.05) =========== =========== =========== =========== Weighted average shares used in calculation of net loss per common share Basic and diluted 35,766 35,731 35,741 35,678 =========== =========== =========== ===========
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