8-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 27, 2014

The Management Network Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 001-34006  (Commission File Number) 48-1129619 (I.R.S. Employer Identification No.)

7300 College Boulevard, Suite 302

Overland Park, Kansas 66210

 (Address of principal executive office)(Zip Code)

(913) 345-9315

 (Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

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:

¨   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))

Explanatory Note

This Current Report on Form 8-K/A ("Amendment No. 1") amends the Current Report on Form 8-K filed by The Management Network Group, Inc. (the "Company") with the Securities and Exchange Commission ("SEC") on February 27, 2014 (the "Initial Filing").  The purpose of this Amendment No. 1 is to amend the Initial Filing to reflect events occurring after February 27, 2014.

Item 2.02             Results of Operations and Financial Condition.

On February 27, 2014, the Company issued a press release announcing its financial results for its 2013 fourth quarter and full year ended December 28, 2013 and reporting on certain Company developments, which was furnished as Exhibit 99.1 to the Initial Filing.

On March 3, 2014, the arbitrator in Richard P. Nespola v. The Management Network Group, Inc. issued an interim award, finding that Mr. Nespola's employment was terminated by the Company without cause and that Mr. Nespola was entitled to severance under his employment agreement with the Company. In the second phase of the proceedings, the arbitrator will rule on Mr. Nespola's claim for damages, attorneys' fees and costs based upon the interim award and the Company's claim for certain attorneys' fees and costs.

In a Form 8-K filed with the SEC on March 6, 2014, the Company reported the interim award and stated that it was evaluating the interim award to determine the timing and amount of any accrual that may be appropriate as a result of the arbitrator's findings. In connection with the preparation of its Annual Report on Form 10-K for the fiscal year ended December 28, 2013, the Company has determined that based on the interim ruling, it is probable that a liability exists for contractual severance, attorneys' fees and costs at December 28, 2013 related to this action. The Company has recorded a liability of $1.5 million during the thirteen weeks ended December 28, 2013 for the amount of severance which may be payable under the terms of Mr. Nespola’s employment agreement. The Company has not recorded a liability relating to any amounts that may be awarded to Mr. Nespola in the arbitration with respect to his attorneys’ fees and costs because such amounts are not currently reasonably estimable. As a result, the amount of any award granted by the arbitrator could be materially higher than the liability recorded.

Attached as Exhibit 99.2 are revised financial tables reflecting the Company's financial results for its 2013 fourth quarter and full year ended December 28, 2013, taking into account the subsequent events described above. The Company's reported GAAP results for Selling, general and administrative expenses, Income (loss) from operations, Income (loss) before income taxes, Net income (loss) and Net income (loss) per common share as well as the Company's GAAP Current liabilities and Total Stockholders' Equity were impacted by the recorded liability. The Company's Non-GAAP adjusted net income (loss) for the fourth quarter and full year ended December 28, 2013 contained in the Initial Filing remain unchanged. The revised financial statements for the fourth quarter and fiscal year 2013 and revised reconciliation of GAAP to Non-GAAP measures are set forth in Exhibit 99.2 to this Form 8-K/A.

The information in this Item 2.02 and Exhibit 99.2 attached hereto 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 the Company under the Securities Act of 1933, as amended, or the Exchange Act made after the date hereof, the information contained in this Item 2.02 and Exhibit 99.2 attached hereto shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01             Financial Statements and Exhibits.

Exhibit No.                                Description

  99.2       Revised Financial Tables for 2013 Fourth Quarter and Full Year

SIGNATURES

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.
By:	/s/ Donald E. Klumb
	Donald E. Klumb Chief Executive Officer, President and Chief Financial Officer

Date: March 26, 2014

EXHIBIT INDEX

Exhibit Number	Description
99.2	Revised Financial Tables for 2013 Fourth Quarter and Full Year

EX-99.2

Exhibit 99.2

Cartesian Reports Revised Fourth Quarter and Full Year 2013 Financial Results

Cartesian, the trading name of The Management Network Group, Inc. ("Cartesian" or the "Company"), issued a press release providing information on its results of operations for the three months and fiscal year ended December 28, 2013 (the “Earnings Release”), which was issued on February 27, 2014. The following revised financial tables reflect the impact of the subsequent events described in Item 2.02 of the Form 8-K/A filed on March 26, 2014.

On March 3, 2014, the arbitrator in Richard P. Nespola v. The Management Network Group, Inc. issued an interim award, finding that Mr. Nespola's employment was terminated by the Company without cause and that Mr. Nespola was entitled to severance under his employment agreement with the Company.  In the second phase of the proceedings, the arbitrator will rule on Mr. Nespola's claim for damages, attorneys' fees and costs based upon the interim award and the Company's claim for certain attorneys' fees and costs.  Based on this information, Cartesian has recorded a charge of $1.5 million to selling, general and administrative expenses during the thirteen weeks ended December 28, 2013 for the amount of severance which may be payable under the terms of Mr. Nespola’s employment agreement. The Company has not recorded a liability relating to any amounts that may be awarded to Mr. Nespola in the arbitration with respect to his attorneys’ fees and costs because such amounts are not currently reasonably estimable. As a result, the amount of any award granted by the arbitrator could be materially higher than the liability recorded. This subsequent event occurred after Cartesian’s issuance of the Earnings Release, but prior to the filing of its Annual Report on Form 10-K for the year ended December 28, 2013.

The following are revised financial tables reflecting the Company's financial results for its 2013 fourth quarter and full year ended December 28, 2013, taking into account the subsequent events described above. The Company's reported GAAP results for Selling, general and administrative expenses, Income (loss) from operations, Income (loss) before income taxes, Net income (loss) and Net income (loss) per common share as well as the Company's GAAP Current liabilities and Total Stockholders' Equity were impacted by the recorded liability. The Company's Non-GAAP adjusted net income (loss) for the fourth quarter and full year ended December 28, 2013 contained in the Initial Filing remain unchanged.

THE MANAGEMENT NETWORK GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

	Thirteen Weeks Ended						Fifty-Two Weeks Ended
	December 28,			December 29,			December 28,			December 29,
	2013			2012			2013			2012
Revenues	$	13,931		$	12,932		$	55,371		$	53,009
Cost of services		8,589			7,933			34,529			32,951
Gross profit		5,342			4,999			20,842			20,058
Selling, general and administrative expenses (includes non-cash share-based compensation expense of $205 and $11 for the thirteen weeks ended December 28, 2013 and December 29, 2012, respectively and $737 and $20 for the fifty two weeks ended December 28, 2013 and December 29, 2012, respectively)		6,761			4,726			22,784			21,155
Income (loss) from operations		(1,419	)		273			(1,942	)		(1,097	)
Other income		2			8			4			16
Income (loss) before income taxes		(1,417	)		281			(1,938	)		(1,081	)
Income tax provision		(55	)		(16	)		(114	)		(106	)
Net income (loss)	$	(1,472	)	$	265		$	(2,052	)	$	(1,187	)
Net income (loss) per common share:
Basic and diluted	$	(0.20	)	$	0.04		$	(0.29	)	$	(0.17	)
Weighted average shares used in calculation of net income (loss) per common share
Basic		7,150			7,113			7,131			7,103
Diluted		7,150			7,118			7,131			7,103

THE MANAGEMENT NETWORK GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	December 28,		December 29,
	2013		2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	13,780	$	12,177
Accounts receivable, net		11,716		12,762
Prepaid and other current assets		1,751		658
Total current assets		27,247		25,597
NONCURRENT ASSETS:
Property and equipment, net		1,202		1,355
Goodwill		8,225		8,160
Other noncurrent assets		150		204
Total Assets	$	36,824	$	35,316
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade accounts payable	$	2,036	$	975
Accrued payroll, bonuses and related expenses		4,249		4,003
Deferred revenue		591		605
Accrued severance liability		1,491		-
Other accrued liabilities		1,631		1,809
Total current liabilities		9,998		7,392
NONCURRENT LIABILITIES:
Deferred income tax liabilities		586		472
Other noncurrent liabilities		342		441
Total noncurrent liabilities		928		913
TOTAL STOCKHOLDERS' EQUITY		25,898		27,011
Total Liabilities and Stockholders’ Equity	$	36,824	$	35,316

THE MANAGEMENT NETWORK GROUP, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED NET INCOME (LOSS)

(unaudited)

(in thousands, except per share data)

	Thirteen Weeks Ended					Fifty-Two Weeks Ended
	December 28,			December 29,		December 28,			December 29,
	2013			2012		2013			2012
Reconciliation of GAAP net income (loss) to non-GAAP adjusted net income (loss):
GAAP net income (loss)	$	(1,472	)	$	265	$	(2,052	)	$	(1,187	)
Depreciation and amortization		167			178		670			767
Non-cash share based compensation expense		205			11		737			21
Accrued executive severance		1,491			-		1,491			-
Tax effect of applicable non-GAAP adjustments 1		55			16		114			106
Adjustments to GAAP net income (loss)		1,918			205		3,012			894
Non-GAAP adjusted net income (loss)	$	446		$	470	$	960		$	(293	)
Reconciliation of GAAP net income (loss) per diluted common share to non-GAAP adjusted net income (loss) per diluted common share:
GAAP net income (loss) per diluted common share	$	(0.20	)	$	0.04	$	(0.28	)	$	(0.17	)
Depreciation and amortization		0.02			0.03		0.09			0.11
Non-cash share based compensation expense		0.03			0.00		0.10			0.00
Accrued executive severance		0.20			-		0.20			-
Tax effect of applicable non-GAAP adjustments 1		0.01			0.00		0.02			0.02
Adjustments to GAAP net income (loss) per diluted common share		0.26			0.03		0.41			0.13
Non-GAAP adjusted net income (loss) per diluted common share	$	0.06		$	0.07	$	0.13		$	(0.04	)
Weighted average shares used in calculation of Non-GAAP adjusted net income (loss) per diluted common share		7,248			7,118		7,203			7,103
Footnote 1: The Company calculated the tax effect of non-GAAP adjustments by applying an applicable estimated jurisdictional tax rate to each specific non-GAAP item after consideration of the Company's valuation allowance.

Non-GAAP Adjustments

In making the non-GAAP adjustments in the table set forth above, the Company took into account certain non-cash expenses and expenses unrelated to its core operations, including tax effects as applicable.  Management believes non-GAAP financial information provides a useful basis for evaluating underlying business performance, but should not be considered in isolation and is not a substitute for 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 Cartesian’s comparative operating performance for the periods presented.

Cartesian’s management uses the non-GAAP financial measure in its own evaluation of the Company’s performance, particularly when comparing performance to the prior year’s period and on a sequential basis.  Cartesian’s non-GAAP measure may differ from similar measures used by other companies, even if similar terms are used to identify such measures.  Although Cartesian’s management believes the non-GAAP financial measure is useful in evaluating the performance of its business, Cartesian acknowledges that items excluded from such measure 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 Cartesian’s results.