þ
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
DELAWARE
|
48-1129619
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
7300 COLLEGE BLVD., SUITE 302, OVERLAND PARK, KS
|
66210
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer ¨
|
|
Accelerated filer ¨
|
|
Non-accelerated filer ¨
(Do not check if a smaller reporting
company)
|
|
Smaller reporting company þ
|
PAGE
|
||
PART I. FINANCIAL INFORMATION:
|
||
ITEM 1. Condensed Consolidated Financial Statements (unaudited):
|
||
Condensed Consolidated Balance Sheets — October 1, 2011 and January 1, 2011
|
3
|
|
Condensed Consolidated Statements of Operations and Comprehensive Loss — Thirteen and Thirty-nine weeks ended October 1, 2011 and October 2, 2010
|
4
|
|
Condensed Consolidated Statements of Cash Flows — Thirty-nine weeks ended October 1, 2011 and October 2, 2010
|
5
|
|
Notes to Condensed Consolidated Financial Statements
|
6
|
|
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
14
|
|
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
|
22
|
|
ITEM 4. Controls and Procedures
|
23
|
|
PART II. OTHER INFORMATION
|
||
ITEM 1. Legal Proceedings
|
23
|
|
ITEM 1A. Risk Factors
|
23
|
|
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
23
|
|
ITEM 3. Defaults Upon Senior Securities
|
23
|
|
ITEM 4. Removed and Reserved
|
23
|
|
ITEM 5. Other Information
|
23
|
|
ITEM 6. Exhibits
|
23
|
|
Signatures
|
24
|
|
Exhibits
|
25
|
ITEM 1.
|
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
October 1,
|
January 1,
|
|||||||
2011
|
2011
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 10,142 | $ | 6,786 | ||||
Accounts receivable, net
|
16,252 | 16,531 | ||||||
Prepaid and other current assets
|
900 | 1,173 | ||||||
Total current assets
|
27,294 | 24,490 | ||||||
NONCURRENT ASSETS:
|
||||||||
Property and equipment, net
|
1,785 | 1,983 | ||||||
Goodwill and intangible assets, net
|
8,030 | 8,489 | ||||||
Noncurrent investments
|
- | 5,926 | ||||||
Other assets
|
204 | 207 | ||||||
Total Assets
|
$ | 37,313 | $ | 41,095 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade accounts payable
|
$ | 1,243 | $ | 995 | ||||
Accrued payroll, bonuses and related expenses
|
4,119 | 5,087 | ||||||
Deferred revenue
|
368 | 860 | ||||||
Other accrued liabilities
|
1,367 | 1,453 | ||||||
Total current liabilities
|
7,097 | 8,395 | ||||||
NONCURRENT LIABILITIES:
|
||||||||
Deferred income tax liabilities
|
336 | 246 | ||||||
Other noncurrent liabilities
|
697 | 737 | ||||||
Total noncurrent liabilities
|
1,033 | 983 | ||||||
Commitments and contingencies (Note 9)
|
||||||||
Total stockholders’ equity
|
29,183 | 31,717 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 37,313 | $ | 41,095 |
Thirteen Weeks Ended
|
Thirty-nine Weeks Ended
|
|||||||||||||||
October 1,
|
October 2,
|
October 1,
|
October 2,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues
|
$ | 15,472 | $ | 16,384 | $ | 49,542 | $ | 50,814 | ||||||||
Cost of services
|
9,925 | 10,171 | 30,927 | 31,356 | ||||||||||||
Gross Profit
|
5,547 | 6,213 | 18,615 | 19,458 | ||||||||||||
Operating Expenses:
|
||||||||||||||||
Selling, general and administrative
|
6,261 | 6,558 | 20,776 | 20,433 | ||||||||||||
Intangible asset amortization
|
71 | 340 | 496 | 1,061 | ||||||||||||
Total operating expenses
|
6,332 | 6,898 | 21,272 | 21,494 | ||||||||||||
Loss from operations
|
(785 | ) | (685 | ) | (2,657 | ) | (2,036 | ) | ||||||||
Other income (expense)
|
10 | - | (269 | ) | 150 | |||||||||||
Loss before income taxes
|
(775 | ) | (685 | ) | (2,926 | ) | (1,886 | ) | ||||||||
Income tax provision
|
(30 | ) | (38 | ) | (90 | ) | (87 | ) | ||||||||
Net loss
|
(805 | ) | (723 | ) | (3,016 | ) | (1,973 | ) | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Foreign currency translation adjustment
|
(354 | ) | 443 | 36 | (374 | ) | ||||||||||
Unrealized gain on marketable securities
|
- | 49 | 324 | 50 | ||||||||||||
Comprehensive loss
|
$ | (1,159 | ) | $ | (231 | ) | $ | (2,656 | ) | $ | (2,297 | ) | ||||
Loss per common share
|
||||||||||||||||
Basic and diluted
|
$ | (0.11 | ) | $ | (0.10 | ) | $ | (0.43 | ) | $ | (0.28 | ) | ||||
Weighted average shares used in calculation of net loss per basic and diluted common share
|
7,085 | 7,062 | 7,079 | 7,043 |
For the Thirty-nine Weeks Ended
|
||||||||
October 1,
|
October 2,
|
|||||||
2011
|
2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$ | (3,016 | ) | $ | (1,973 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
1,143 | 2,076 | ||||||
Share-based compensation
|
104 | 258 | ||||||
Deferred income taxes
|
90 | 98 | ||||||
Realized losses (gains) on investments
|
312 | (6 | ) | |||||
Other
|
- | (22 | ) | |||||
Other changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
328 | (169 | ) | |||||
Prepaid and other assets
|
284 | 163 | ||||||
Trade accounts payable
|
254 | 157 | ||||||
Deferred revenue
|
(492 | ) | (658 | ) | ||||
Accrued liabilities
|
(936 | ) | (434 | ) | ||||
Net cash used in operating activities
|
(1,929 | ) | (510 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from sales of investments
|
5,938 | 6,450 | ||||||
Acquisition of property and equipment
|
(566 | ) | (543 | ) | ||||
Net cash provided by investing activities
|
5,372 | 5,907 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Borrowings on line of credit
|
2,625 | 880 | ||||||
Payments on line of credit
|
(2,625 | ) | (3,680 | ) | ||||
Payments made on long-term obligations
|
(61 | ) | (531 | ) | ||||
Issuance of common stock through employee stock purchase plan
|
18 | 23 | ||||||
Net cash used in financing activities
|
(43 | ) | (3,308 | ) | ||||
Effect of exchange rate on cash and cash equivalents
|
(44 | ) | (119 | ) | ||||
Net increase in cash and cash equivalents
|
3,356 | 1,970 | ||||||
Cash and cash equivalents, beginning of period
|
6,786 | 6,301 | ||||||
Cash and cash equivalents, end of period
|
$ | 10,142 | $ | 8,271 | ||||
Supplemental disclosure of non-cash investing and and financing transactions
|
||||||||
Acquisition of business: Common Stock
|
$ | - | $ | 53 | ||||
Acquisition of business: Consideration Payable
|
$ | - | $ | 344 | ||||
Accrued property and equipment additions
|
$ | 154 | $ | 323 |
Issuer
|
Cost Basis
|
Unrealized
Loss
|
Fair Value at
January 1, 2011
(Noncurrent)
|
|||||||||
(In thousands)
|
||||||||||||
Available-for-Sale Securities
|
||||||||||||
Education Funding Capital Education Loan Backed Notes
|
$ | 6,250 | $ | (324 | ) | $ | 5,926 |
For the
|
For the
|
|||||||
thirty-nine
weeks
|
thirty-nine
weeks
|
|||||||
ended
October 1,
2011
|
ended
October 2,
2010
|
|||||||
Fair value at beginning of period
|
$ | 5,926 | $ | 12,296 | ||||
Total unrealized and realized gains (losses) included in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
(312 | ) | 6 | |||||
Total unrealized gains included in Other comprehensive income (loss) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
12 | - | ||||||
Reclassification of unrealized loss from Other comprehensive income (loss) to realized loss included in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
312 | 50 | ||||||
Sales
|
(5,938 | ) | (6,450 | ) | ||||
Fair value at end of period
|
$ | - | $ | 5,902 |
For the
thirteen
weeks
ended
October 2,
2010
|
||||
Fair value at beginning of period
|
$ | 6,853 | ||
Total unrealized and realized losses included in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
(50 | ) | ||
Total unrealized losses included in Other comprehensive income (loss) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
(1 | ) | ||
Reclassification of unrealized loss from Other comprehensive income (loss) to realized loss included in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss
|
50 | |||
Sales
|
(950 | ) | ||
Fair value at end of period
|
$ | 5,902 |
North
|
||||||||||||
America
|
EMEA
|
Total
|
||||||||||
Balance as of January 1, 2011
|
$ | 3,947 | $ | 4,046 | $ | 7,993 | ||||||
Changes in foreign currency exchange rates
|
- | 37 | 37 | |||||||||
Balance as of October 1, 2011
|
$ | 3,947 | $ | 4,083 | $ | 8,030 |
October 1, 2011
|
January 1, 2011
|
|||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||
Cost
|
Amortization
|
Cost
|
Amortization
|
|||||||||||||
Customer relationships
|
$ | 3,400 | $ | (3,400 | ) | $ | 3,400 | $ | (2,904 | ) |
Shares
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding at January 1, 2011
|
641,093 | $ | 11.18 | |||||
Forfeited/cancelled
|
(122,964 | ) | $ | 12.59 | ||||
Outstanding at October 1, 2011
|
518,129 | $ | 10.84 | |||||
Options vested and expected to vest at October 1, 2011
|
513,431 | $ | 10.87 | |||||
Options exercisable at October 1, 2011
|
505,633 | $ | 10.92 |
Shares
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding at January 1, 2011
|
247,437 | $ | 11.74 | |||||
Exercised
|
(500 | ) | $ | 1.20 | ||||
Forfeited/cancelled
|
(88,787 | ) | $ | 12.01 | ||||
Outstanding at October 1, 2011
|
158,150 | $ | 11.62 | |||||
Options vested and expected to vest at October 1, 2011
|
154,339 | $ | 11.69 | |||||
Options exercisable at October 1, 2011
|
148,550 | $ | 11.78 |
North
America
|
EMEA
|
Not
Allocated to
Segments
|
Total
|
|||||||||||||
As of and for the thirty-nine weeks ended October 1, 2011:
|
||||||||||||||||
Revenues
|
$ | 37,782 | $ | 11,760 | $ | 49,542 | ||||||||||
Income (loss) from operations
|
9,925 | 1,507 | $ | (14,089 | ) | (2,657 | ) | |||||||||
Total assets
|
$ | 10,765 | $ | 5,487 | $ | 21,061 | $ | 37,313 | ||||||||
For the thirteen weeks ended October 1, 2011:
|
||||||||||||||||
Revenues
|
$ | 11,474 | $ | 3,998 | $ | 15,472 | ||||||||||
Income (loss) from operations
|
3,132 | 297 | $ | (4,214 | ) | $ | (785 | ) | ||||||||
As of January 1, 2011
|
||||||||||||||||
Total assets
|
$ | 11,124 | $ | 5,406 | $ | 24,565 | $ | 41,095 | ||||||||
As of and for the thirty-nine weeks ended October 2, 2010:
|
||||||||||||||||
Revenues
|
$ | 38,716 | $ | 12,098 | $ | 50,814 | ||||||||||
Income (loss) from operations
|
10,030 | 2,286 | $ | (14,352 | ) | (2,036 | ) | |||||||||
Total assets
|
$ | 10,373 | $ | 5,448 | $ | 26,561 | $ | 42,382 | ||||||||
For the thirteen weeks ended October 2, 2010:
|
||||||||||||||||
Revenues
|
$ | 12,274 | $ | 4,110 | $ | 16,384 | ||||||||||
Income (loss) from operations
|
2,909 | 820 | $ | (4,414 | ) | (685 | ) |
For the Thirteen Weeks
Ended
|
For the Thirty-nine Weeks
Ended
|
|||||||||||||||
October 1,
2011
|
October 2,
2010
|
October 1,
2011
|
October 2,
2010
|
|||||||||||||
United States
|
$ | 11,117 | $ | 11,943 | $ | 36,278 | $ | 37,657 | ||||||||
International:
|
||||||||||||||||
United Kingdom
|
3,991 | 4,296 | 12,111 | 12,465 | ||||||||||||
Other
|
364 | 145 | 1,153 | 692 | ||||||||||||
Total
|
$ | 15,472 | $ | 16,384 | $ | 49,542 | $ | 50,814 |
Revenues
|
||||||||||||||||
For the thirty-nine weeks
|
For the thirty-nine weeks
|
|||||||||||||||
ended October 1, 2011
|
ended October 2, 2010
|
|||||||||||||||
North
America
|
EMEA
|
North
America
|
EMEA
|
|||||||||||||
Customer A
|
$ | 3,162 | $ | 5,388 | ||||||||||||
Customer B
|
$ | 13,009 | $ | 13,350 | ||||||||||||
Customer C
|
$ | 7,784 | $ | 7,653 | ||||||||||||
Customer D
|
$ | 5,313 | $ | 4,755 |
Revenues
|
||||||||||||||||
For the thirteen weeks
|
For the thirteen weeks
|
|||||||||||||||
ended October 1, 2011
|
ended October 2, 2010
|
|||||||||||||||
North
|
North
|
|||||||||||||||
America
|
EMEA
|
America
|
EMEA
|
|||||||||||||
Customer A
|
$ | 840 | $ | 1,829 | ||||||||||||
Customer B
|
$ | 4,363 | $ | 3,240 | ||||||||||||
Customer C
|
$ | 2,521 | $ | 2,578 | ||||||||||||
Customer D
|
$ | 890 | $ | 2,676 |
Accounts Receivable
|
||||||||
As of
October 1,
2011
|
As of
October 2,
2010
|
|||||||
Customer A
|
$ | 1,787 | $ | 1,583 | ||||
Customer B
|
$ | 3,492 | $ | 2,388 | ||||
Customer C
|
$ | 3,111 | $ | 2,019 | ||||
Customer D
|
$ | 1,030 | $ | 2,418 |
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
·
|
Marketable Securities;
|
|
·
|
Impairment of Goodwill and Long-lived Assets;
|
|
·
|
Revenue Recognition;
|
|
·
|
Accounting for Income Taxes; and
|
|
·
|
Research and Development and Capitalized Software Costs.
|
|
·
|
Anticipated future cash flows and terminal value for each reporting unit — The income approach to determining fair value relies on the timing and estimates of future cash flows, including an estimate of terminal value. The projections use management's estimates of economic and market conditions over the projected period including growth rates in revenues and estimates of expected changes in operating margins. Our projections of future cash flows are subject to change as actual results are achieved that differ from those anticipated. Because management frequently updates its projections, we would expect to identify on a timely basis any significant differences between actual results and recent estimates.
|
|
·
|
Selection of an appropriate discount rate — The income approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace participants. The discount rate is determined based on assumptions that would be used by marketplace participants, and for that reason, the capital structure of selected marketplace participants was used in the weighted average cost of capital analysis. Given the current volatile economic conditions, it is possible that the discount rate will fluctuate in the near term.
|
|
·
|
Selection of an appropriate multiple – The market approach requires the selection of an appropriate multiple to apply to revenue or EBITDA based on comparable guideline company multiples. It is often difficult to identify companies with a similar profile in regards to revenue, geographic operations, risk profile and other factors. Given the current volatile economic conditions, it is possible that multiples of guideline companies will fluctuate in the near term.
|
Thirteen Weeks Ended
|
Twenty-six Weeks Ended
|
|||||||||||||||
October 1,
|
October 2,
|
October 1,
|
October 2,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Reconciliation of GAAP net loss to non-GAAP adjusted net income (loss):
|
||||||||||||||||
GAAP net loss
|
$ | (805 | ) | $ | (723 | ) | $ | (3,016 | ) | $ | (1,973 | ) | ||||
Realized (gain) loss on auction rate securities
|
- | 50 | 312 | (6 | ) | |||||||||||
Depreciation and amortization
|
285 | 683 | 1,143 | 2,076 | ||||||||||||
Non-cash share based compensation expense
|
3 | 61 | 104 | 258 | ||||||||||||
Tax effect of applicable non-GAAP adjustments
|
30 | 30 | 90 | 98 | ||||||||||||
Adjustments to GAAP net loss
|
318 | 824 | 1,649 | 2,426 | ||||||||||||
Non-GAAP adjusted net income (loss)
|
$ | (487 | ) | $ | 101 | $ | (1,367 | ) | $ | 453 | ||||||
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
|
$ | (0.11 | ) | $ | (0.10 | ) | $ | (0.43 | ) | $ | (0.28 | ) | ||||
Realized (gain) loss on auction rate securities
|
- | 0.00 | 0.05 | (0.00 | ) | |||||||||||
Depreciation and amortization
|
0.04 | 0.10 | 0.16 | 0.29 | ||||||||||||
Non-cash share based compensation expense
|
0.00 | 0.01 | 0.02 | 0.04 | ||||||||||||
Tax effect of applicable non-GAAP adjustments
|
0.00 | 0.00 | 0.01 | 0.01 | ||||||||||||
Adjustments to GAAP net loss per diluted common share
|
0.04 | 0.11 | 0.24 | 0.34 | ||||||||||||
Non-GAAP adjusted net income (loss) per diluted common share
|
$ | (0.07 | ) | $ | 0.01 | $ | (0.19 | ) | $ | 0.06 | ||||||
Weighted average shares used in calculation of diluted net income (loss) per common share
|
7,085 | 7,062 | 7,079 | 7,043 |
Non-GAAP EBITDA
(Post Bonus) Exceeds
|
Payout Amount
|
|||||
$ | 2,750,000 | $ | 450,000 | |||
$ | 3,025,000 | $ | 575,000 | |||
$ | 3,330,000 | $ | 700,000 | |||
$ | 3,630,000 | $ | 770,000 | |||
$ | 3,970,000 | $ | 830,000 | |||
$ | 4,310,000 | $ | 890,000 |
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
REMOVED AND RESERVED
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit 31.
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit 32.
|
Certifications furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit 101.
|
101.INS XBRL Instance Document
|
|
101.SCH XBRL Taxonomy Extension Schema
|
||
101.CAL XBRL Taxonomy Extension Calculation Linkbase
|
||
101.DEF XBRL Taxonomy Extension Definition Linkbase
|
||
101.LAB XBRL Taxonomy Extension Label Linkbase
|
||
101.PRE XBRL Taxonomy Extension Presentation Linkbase
|
The Management Network Group, Inc.
|
||
(Registrant)
|
||
Date: November 14, 2011
|
By
|
/s/ Richard P. Nespola
|
(Signature)
|
||
Richard P. Nespola
|
||
Chairman and Chief Executive Officer
|
||
(Principal executive officer)
|
||
Date: November 14, 2011
|
By
|
/s/ Donald E. Klumb
|
(Signature)
|
||
Donald E. Klumb
|
||
Chief Financial Officer and Treasurer
|
||
(Principal financial officer and principal
|
||
accounting officer)
|
Exhibit No.
|
|
Description of Exhibit
|
Exhibit 31.
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit 32.
|
Certifications furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit 101.
|
101.INS XBRL Instance Document
|
|
101.SCH XBRL Taxonomy Extension Schema
|
||
101.CAL XBRL Taxonomy Extension Calculation Linkbase
|
||
101.DEF XBRL Taxonomy Extension Definition Linkbase
|
||
101.LAB XBRL Taxonomy Extension Label Linkbase
|
||
101.PRE XBRL Taxonomy Extension Presentation Linkbase
|
By:
|
/s/ Richard P. Nespola
|
|
Chairman and Chief Executive Officer
|
By:
|
/s/ Donald E. Klumb
|
|
Chief Financial Officer and Treasurer
|
By:
|
/s/ Richard P. Nespola
|
|
Chairman and Chief Executive Officer
|
By:
|
/s/ Donald E. Klumb
|
|
Chief Financial Officer and Treasurer
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2011 | Oct. 02, 2010 | Oct. 01, 2011 | Oct. 02, 2010 | |
Revenues | $ 15,472 | $ 16,384 | $ 49,542 | $ 50,814 |
Cost of services | 9,925 | 10,171 | 30,927 | 31,356 |
Gross Profit | 5,547 | 6,213 | 18,615 | 19,458 |
Operating Expenses: | ||||
Selling, general and administrative | 6,261 | 6,558 | 20,776 | 20,433 |
Intangible asset amortization | 71 | 340 | 496 | 1,061 |
Total operating expenses | 6,332 | 6,898 | 21,272 | 21,494 |
Loss from operations | (785) | (685) | (2,657) | (2,036) |
Other income (expense) | 10 | 0 | (269) | 150 |
Loss before income taxes | (775) | (685) | (2,926) | (1,886) |
Income tax provision | (30) | (38) | (90) | (87) |
Net loss | (805) | (723) | (3,016) | (1,973) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (354) | 443 | 36 | (374) |
Unrealized gain on marketable securities | 0 | 49 | 324 | 50 |
Comprehensive loss | $ (1,159) | $ (231) | $ (2,656) | $ (2,297) |
Loss per common share | ||||
Basic and diluted (in dollars per share) | $ (0.11) | $ (0.10) | $ (0.43) | $ (0.28) |
Weighted average shares used in calculation of net loss per basic and diluted common share (in shares) | 7,085 | 7,062 | 7,079 | 7,043 |
TC6=*!=
MPAFU#90=9@;1A.Z`8XH5A!)>P>C)(*@*RF7A2:H\FY&Q!VYXB'C'0SHMC#]2
M#?2]#!2`C3T1M68P>HI?,/-8#"3FM&3JQ=0G22[8-=E*1U):*^WTS .=I@'=()R9!\PQ1)3A])*Y`O1-R_+\"14XT,7#
M[Z]NWHJKFVO1[;=R5ZLN+X7B+?X;5B.$E;,R*Y]MY90J@Z!1<(UG#O#-9,#V
MC^*72,9WFCM>0+7D?\D'0( >S/&P`ZMN@M-DW44CD-UM5NG
MB[$R.0.[V&X9@TN.8AC2IP/IOM$;UMLJ,J(9T5ER.VVC==EF2#.D3P;2W8'1
M;7?/`M+;G=*L"4;V.Y&MBY-9'D]M4V'/[*Z:<#*D&=(,Z
=Y+_8
M5-(/,I'_PGT2)PPJ<9V4ME#?SO)F9^K26;=W=MD]G\M@B0O;!/'R-JL=O.ND
M_SQ5ZB+"%SR$1QB=9!^_/=YMBU$6=P(:=;(V'1*&>">%X4.\F,+'4TFC:0CY
MM8F`42G%_/X*^3N%^3O56V-/@9F!H89P&,R"R,&\2VW7=#2'E$*&L':-KU
M7CB3+LXBB(8@F@2YUN\^""<(1OBS(9PMB3>(LZCW?=`R'O<;G3)9APFF'%!5
MYW'$QMA#M]O%-2WIY9K[,Z07]UEPPV(:+^[8B(LH6:).3S;9*52JCW.?1YV$
MEE9^3VQ/,8E!=7X_NJ4,UUQ*P@0!G-V.O$1O7(^N.3UV"^XX]@VSJD:NF,[N9>0T\
;2YP^WH3Q5YWJ%$HQ
MT-+`2O7E>JA%+3B*7R:`N(0#ZZG)#8&MW]H/*KF2:R^B0/>Q,27NV59`G_@7
M+Y^I[UI$Y7&AN9<%3R([VL^5`9W![H@S-[5M8Q='8=$-6K^@UY^%P_\.5[7]#=_?7#?+6X_8CFEZO%K_:O#AN.Y99=
M<<.`#%@9HGPYG:[B!\*&*`C)T7:^53P>M2=Y'&05BFF&2ZI=43V&O:$H'X3D
M[;;TZV_/D=@9QJ02X75>*5Z(?=N2VX;JP@N);^HQ%5141FLE<5X174!)1
M0%T[L@A`M(_Q*+K6+%];_(Q"&65<1)V&@P!'UWZ$[&,BF5$4]=UA-M<5X3L*
M/U^3=J2_%2E*\,:3F%3/_VM..%8^RZM3(.-)7)>45ZLW5F17?09V>Z_
%HA3\=;C\)$3]1QN`@%^HYD8,8,H)C!)XR
M,H#<^(Q"JZT4<8P?A/".P[OJ.#B3"/,86:.H;!6MS*+<[NF,SWB.)8%-E<0=
MD2X(5Z5#^!:9E_.K*N<6C"P:E>&G0^W'3,'Z5VI,9G;1PX2^P_\(V
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended | |
---|---|---|
Oct. 01, 2011 | Nov. 11, 2011 | |
Entity Registrant Name | MANAGEMENT NETWORK GROUP INC | |
Entity Central Index Key | 0001094814 | |
Current Fiscal Year End Date | --01-01 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | tmng | |
Entity Common Stock, Shares Outstanding | 7,093,872 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 01, 2011 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2012 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Loan to Officer | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 8. Loan to Officer
As of October 1, 2011, there was one outstanding line of credit between the Company and its Chief Executive Officer, Richard P. Nespola, which originated in fiscal year 2001. Aggregate borrowings outstanding against the line of credit at October 1, 2011 and January 1, 2011 totaled approximately $212,000 and $300,000, respectively. The outstanding principal amount and accrued interest were paid in full to the Company by Mr. Nespola after the end of the third quarter.
The outstanding principal is included in Prepaid and Other Current Assets in the current assets section of the Condensed Consolidated Balance Sheets as of October 1, 2011 and January 1, 2011. The interest rate charged for each advance under the loan was based upon the Applicable Federal Rate (AFR), as announced by the Internal Revenue Service, for short-term obligations (with annual compounding) in effect for the month in which the advance was made. Pursuant to the Sarbanes-Oxley Act, no further loan agreements or draws against the line may be made by the Company to, or arranged by the Company for its executive officers. Interest payments on this loan were current as of October 1, 2011. |
Goodwill and Other Identifiable Intangible Assets | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | 4. Goodwill and Other Identifiable Intangible Assets
The changes in the carrying amount of goodwill for the thirty-nine weeks ended October 1, 2011 are as follows (in thousands):
Intangible assets included in Goodwill and intangible assets, net in the Condensed Consolidated Balance Sheets are as follows (in thousands):
Intangible amortization expense for the thirteen weeks ended October 1, 2011 and October 2, 2010 was $71,000 and $485,000, respectively, including $145,000 reported in cost of services for the thirteen weeks ended October 2, 2010 for acquired software technology that became fully amortized during 2010. Intangible amortization expense for the thirty-nine weeks ended October 1, 2011 and October 2, 2010 was $496,000 and $1.5 million, respectively, including $432,000 reported in cost of services for the thirty-nine weeks ended October 2, 2010 for acquired software technology that became fully amortized during 2010.
The Company evaluates goodwill for impairment on an annual basis on the last day of the first fiscal month of the fourth quarter and whenever events or circumstances indicate that these assets may be impaired. The Company performs its impairment testing for goodwill in accordance with FASB ASC 350, “Intangibles-Goodwill and Other .” Due to the loss of key leadership personnel and results of operations in the EMEA reporting unit during the thirteen weeks ended October 1, 2011, management performed step one of the goodwill impairment evaluation as of October 1, 2011. Based on the results of the step one impairment test, management concluded that the EMEA reporting unit’s carrying amount did not exceed its fair value as of October 1, 2011 and therefore the reporting unit’s goodwill was deemed not impaired.
The Company reviews long-lived assets and certain identifiable intangibles to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets might not be recoverable in accordance with the provisions of FASB ASC 360, “Property, Plant and Equipment ” and FASB ASC 350, “Intangibles-Goodwill and Other .” Management determined that there were no events or changes in circumstances during the thirteen or thirty-nine weeks ended October 1, 2011 which indicated that long-lived assets and intangible assets needed to be reviewed for impairment during the period.
|
Commitments and Contingencies | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 9. Commitments and Contingencies
The Company is not subject to any material litigation as of October 1, 2011. However, the Company may become involved in various legal and administrative actions arising in the normal course of business. These could include actions brought by taxing authorities challenging the employment status of consultants utilized by the Company. In addition, future customer bankruptcies could result in additional claims on collected balances for professional services near the bankruptcy filing date. The resolution of any of such actions, claims, or the matters described above may have an impact on the financial results for the period in which they occur.
During fiscal year 2009, the Company entered into an agreement under which it has a commitment to purchase a minimum of $401,000 in computer software over a three year period. As of October 1, 2011, the Company has an obligation of $55,000 remaining under this commitment.
During fiscal year 2010, the Company entered into an agreement to purchase telecommunications equipment in the amount of $99,000 over a three year period. As of October 1, 2011, the Company has an obligation of $72,000 remaining under this commitment.
|
Auction Rate Securities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | 2. Auction Rate Securities
As of January 1, 2011, the Company’s auction rate securities portfolio consisted of the following:
On April 27, 2011, the Company sold 100% of its Education Funding Capital Education Loan Backed Notes with a par value of $6.3 million held with Citigroup Global Markets, Inc. (“Citigroup”). These were the last remaining auction rate securities held by the Company. The total proceeds from the transaction were $5.9 million. Proceeds from the sale were applied first to the $2.6 million outstanding balance of the line of credit with Citigroup described below in Note 3, “Line of Credit Agreements.” The Company received the remaining $3.3 million in proceeds. Upon the disposition of the underlying collateral, the loan agreement with Citigroup was terminated.
As a result of this transaction, $312,000 in losses were reclassified from accumulated other comprehensive loss in stockholders’ equity and recognized in other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss for the thirty-nine weeks ended October 1, 2011. After this reclassification, there was no accumulated other comprehensive gain or loss related to auction rate securities included in Total Stockholders’ Equity in the Condensed Consolidated Balance Sheet as of October 1, 2011. Accumulated other comprehensive loss resulting from unrealized losses of available-for-sale securities included in Total Stockholders’ Equity in the Condensed Consolidated Balance Sheet was $324,000 as of January 1, 2011.
For auction rate securities classified as available-for-sale, the Company recognized no gains or losses during the thirteen weeks ended October 1, 2011 and unrealized holding gains of $12,000 during the thirty-nine weeks ended October 1, 2011. For auction rate securities classified as available-for-sale, the Company recognized unrealized holding losses of $1,000 during the thirteen weeks ended October 2, 2010 and no unrealized holding gains or losses during the thirty-nine weeks ended October 2, 2010. During the thirteen and thirty-nine weeks October 2, 2010, the Company sold its Brazos Student Finance Corporation Student Loan Asset Backed Notes with a par value of $1.0 million held as part of its auction rate securities portfolio with Citigroup. These auction rate securities were classified as available-for-sale. The Company received $950,000 in proceeds from the transaction. As a result of this transaction, $50,000 in losses were reclassified from accumulated other comprehensive loss in stockholders’ equity and recognized in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Unrealized holding gains and losses on securities classified as available-for-sale are included as a separate component of stockholders’ equity, net of applicable taxes, and have been recognized in other comprehensive income (loss) in the Condensed Consolidated Statements of Operations and Comprehensive Loss. During the second quarter of fiscal year 2010, all of the auction rate securities held with a UBS affiliate, with a par value of $5.5 million and classified as trading securities, were sold by the Company. The Company recognized no gains or losses
on auction rate securities classified as trading securities during the thirteen or thirty-nine weeks ended October 1, 2011. The Company recognized no gains or losses
on auction rate securities classified as trading securities during the thirteen weeks ended October 2, 2010
and recognized gains of $56,000 on auction rate securities classified as trading securities during the thirty-nine weeks ended October 2, 2010.
Gains and losses on securities classified as trading securities have been recognized in other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The following is a reconciliation of the beginning and ending balances of the Company’s auction rate securities portfolio for the thirty-nine weeks ended October 1, 2011 and October 2, 2010 (in thousands):
There were no beginning or ending balances of the Company’s auction rate securities for the thirteen weeks ended October 1, 2011.The following is a reconciliation of the beginning and ending balances of the Company’s auction rate securities portfolio for the thirteen weeks ended October 2, 2010 (in thousands):
|
Share Based Compensation | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 5. Share-Based Compensation
The Company issues stock option awards and non-vested share awards under its share-based compensation plans. The key provisions of the Company's share-based compensation plans are described in Note 6 to the Company's consolidated financial statements included in the 2010 Form 10-K.
The Company recognized no income tax benefits related to share-based compensation arrangements during the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010.
1998 Equity Incentive Plan
Stock Options
A summary of the option activity under the Company's Amended and Restated 1998 Equity Incentive Plan (the "1998 Plan"), as of October 1, 2011 and changes during the thirty-nine weeks then ended is presented below:
Non-vested Shares
There were 375 shares of non-vested stock issued under the 1998 Plan as of January 1, 2011 with a weighted average grant date fair value of $11.25 per share. These shares of restricted stock vested during the thirteen weeks ended October 1, 2011. No shares of non-vested stock were issued during the thirty-nine weeks ended October 1, 2011.
2000 Supplemental Stock Plan
A summary of the option activity under the Company's 2000 Supplemental Stock Plan (the "Supplemental Stock Plan") as of October 1, 2011 and changes during the thirty-nine weeks then ended is presented below:
The Supplemental Stock Plan expired on May 23, 2010. No new awards will be issued pursuant to the plan. The outstanding awards issued pursuant to the Supplemental Stock Plan remain subject to the terms of the Supplemental Stock Plan following expiration of the plan.
|
Business Segments and Major Customers | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | 6. Business Segments and Major Customers
The Company identifies its segments based on the way management organizes the Company to assess performance and make operating decisions regarding the allocation of resources. In accordance with the criteria in FASB ASC 280 "Segment Reporting," the Company has concluded it has two reportable segments: the North America segment and the EMEA segment. The North America segment is comprised of three operating segments (North America Cable and Broadband, North America Telecom and Strategy), which are aggregated into one reportable segment based on the similarity of their economic characteristics. The EMEA segment is a single reportable, operating segment that encompasses the Company’s operational, technological and software consulting services outside of North America. Both reportable segments offer management consulting, custom developed software, and technical services.
Management evaluates segment performance based upon income (loss) from operations, excluding share-based compensation (benefits), depreciation and intangibles amortization. Inter-segment revenues during the thirteen and thirty-nine weeks ended October 1, 2011 were approximately $74,000 and $753,000, respectively. There were no inter-segment revenues in the thirteen or thirty-nine weeks ended October 2, 2010. In addition, in its administrative division, entitled “Not Allocated to Segments,” the Company accounts for non-operating activity and the costs of providing corporate and other administrative services to all the segments. Summarized financial information concerning the Company’s reportable segments is shown in the following table (amounts in thousands):
Segment assets, regularly reviewed by management as part of its overall assessment of the segments’ performance, include both billed and unbilled trade accounts receivable, net of allowances, and certain other assets. Assets not assigned to segments include cash and cash equivalents, current and non-current investments, property and equipment, goodwill and intangible assets and deferred tax assets, excluding deferred tax assets recognized on accounts receivable reserves, which are assigned to their segments.
In accordance with the provisions of FASB ASC 280-10, revenues earned in the United States and internationally based on the location where the services are performed are shown in the following table (amounts in thousands):
Major customers in terms of significance to TMNG’s revenues (i.e. in excess of 10% of revenues) and accounts receivable were as follows (amounts in thousands):
Revenues from the Company’s ten most significant customers accounted for approximately 83.5% and 83.4% of revenues during the thirteen and thirty-nine weeks ended October 1, 2011, respectively. Revenues from the Company’s ten most significant customers accounted for approximately 86.2% and 83.3% of revenues during the thirteen and thirty-nine weeks ended October 2, 2010.
|
Income Taxes | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 7. Income Taxes
In the thirteen and thirty-nine weeks ended October 1, 2011, the Company recorded income tax provisions of $30,000 and $90,000, respectively. In the thirteen and thirty-nine weeks ended October 2, 2010, the Company recorded income tax provisions of $38,000 and $87,000, respectively. The tax provisions for the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010 are primarily due to deferred taxes recognized on intangible assets amortized for income tax purposes but not for financial reporting purposes and interest recognized on reserves for uncertain tax positions, respectively. The Company has reserved all of its domestic and international net deferred tax assets with a valuation allowance as of October 1, 2011 and January 1, 2011 in accordance with the provisions of FASB ASC 740, "
Income Taxes
," which requires an estimation of the recoverability of the recorded income tax asset balances
. As of October 1, 2011, the Company has recorded $33.7 million of valuation allowances attributable to its net deferred tax assets.
The Company analyzes its uncertain tax positions pursuant to the provisions of FASB ASC 740 “Income Taxes
.” The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. There was no material activity related to the liability for uncertain tax positions during the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010. As of October 1, 2011, the Company has $199,000 accrued for uncertain income tax positions, including interest and penalties. As of October 1, 2011, the Company believes that it is reasonably possible that the entire liability for uncertain tax positions will be released in the fourth quarter of fiscal 2011 due primarily to the expiration of the statute of limitations of tax filings in foreign jurisdictions.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. As of October 1, 2011, the Company has no income tax examinations in process.
|
Basis of Reporting | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | 1. Basis of Reporting
The condensed consolidated financial statements and accompanying notes of The Management Network Group, Inc. and its subsidiaries (“TMNG,” “TMNG Global,” “we,” “us,” “our,” or the “Company”) as of October 1, 2011, and for the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010 are unaudited and reflect all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of the Company’s condensed consolidated financial position, results of operations, and cash flows as of these dates and for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements nor those normally made in the Company’s annual report on Form 10-K. Accordingly, reference should be made to the Company’s annual consolidated financial statements and notes thereto for the fiscal year ended January 1, 2011, included in the 2010 Annual Report on Form 10-K (“2010 Form 10-K”) for additional disclosures, including a summary of the Company’s accounting policies. The Condensed Consolidated Balance Sheet as of January 1, 2011 has been derived from the audited Consolidated Balance Sheet at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Company has evaluated subsequent events for recognition or disclosure through the date these unaudited consolidated financial statements were issued.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management of the Company, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation of the financial statements have been included. The results of operations for the thirteen and thirty-nine weeks ended October 1, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.
Revenue Recognition — The Company recognizes revenue from time and materials consulting contracts in the period in which its services are performed. In addition to time and materials contracts, the Company's other types of contracts may include fixed fee contracts and contingent fee contracts. The Company recognizes revenues on milestone or deliverables-based fixed fee contracts and time and materials contracts not to exceed contract price using the percentage of completion-like method described by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-35, "Revenue Recognition — Construction-Type and Production-Type Contracts". For fixed fee contracts where services are not based on providing deliverables or achieving milestones, the Company recognizes revenue on a straight-line basis over the period during which such services are expected to be performed. In connection with some fixed fee contracts, the Company may receive payments from customers that exceed revenues recognized related to the contracts up to that point in time. The Company records the excess of receipts from customers over recognized revenue as deferred revenue. Deferred revenue is classified as a current liability to the extent it is expected to be earned within twelve months from the date of the balance sheet.
The Company develops, installs and supports customer software in addition to the provision of traditional consulting services. The Company recognizes revenue in connection with its software sales agreements utilizing the percentage of completion method prescribed by ASC 605-35. These agreements include software right-to-use licenses ("RTU's") and related customization and implementation services. Due to the long-term nature of the software implementation and the extensive software customization based on normal customer specific requirements, both the RTU and implementation services are treated as a single element for revenue recognition purposes.
The percentage-of-completion-like methodology involves recognizing revenue using the proportion of services completed, on either a current cumulative cost to total cost or effort to total effort basis, using a reasonably consistent profit margin over the period. Due to the nature of these projects, developing the estimates of costs often requires significant judgment. Factors that must be considered in estimating the progress of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor productivity, the nature and complexity of the work to be performed, and the impact of delayed performance. If changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, the Company revises its cost and revenue estimates, which may result in increases or decreases in revenues and costs, and such revisions are reflected in income in the period in which the facts that give rise to that revision become known.
In addition to the professional services related to the customization and implementation of its software, the Company may also provide post-contract support ("PCS") services, including technical support and maintenance services as well as other professional services not essential to the functionality of the software. For those contracts that include PCS service and professional services arrangements which are not essential to the functionality of the software solution, the Company separates the ASC 605-35 software services and PCS services utilizing the multiple-element arrangement model prescribed by ASC 605-25 , "Revenue Recognition — Multiple-Element Arrangements". ASC 605-25 addresses the accounting treatment for an arrangement to provide the delivery or performance of multiple products and/or services where the delivery of a product or system or performance of services may occur at different points in time or over different periods of time. The Company utilizes ASC 605-25 to separate the PCS service elements and allocate total contract consideration to the contract elements based on the relative fair value of those elements utilizing PCS renewal terms as evidence of fair value. Revenues from PCS services are recognized ratably on a straight-line basis over the term of the support and maintenance agreement.
The Company may also enter into contingent fee contracts, in which revenue is subject to achievement of savings or other agreed upon results, rather than time spent. Due to the nature of contingent fee contracts, the Company recognizes costs as they are incurred on the project and defers revenue recognition until the revenue is realizable and earned as agreed to by its clients. Although these contracts can be very rewarding, the profitability of these contracts is dependent on the Company's ability to deliver results for its clients and control the cost of providing these services. These types of contracts are typically more results-oriented and are subject to greater risk associated with revenue recognition and overall project profitability than traditional time and materials contracts. Revenues associated with contingent fee contracts were not material during the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010.
Fair Value Measurement — For cash and cash equivalents, current trade receivables and current trade payables, the carrying amounts approximate fair value because of the short maturity of these items.
The Company utilizes the methods of fair value measurement as described in ASC 820 to value its financial assets and liabilities. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
Level 1 : Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 : Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3 : Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to level 3 inputs.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
Research and Development and Software Development Costs — During the thirteen and thirty-nine weeks ended October 1, 2011, software development costs of $142,000 and $427,000, respectively, were expensed as incurred. During the thirteen and thirty-nine weeks ended October 2, 2010, software development costs of $116,000 and $439,000, respectively, were expensed as incurred. No software development costs were capitalized during the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010.
Foreign Currency Transactions and Translation — TMNG Europe Ltd., Cartesian Ltd. (“Cartesian”) and the international operations of Cambridge Strategic Management Group, Inc. conduct business primarily denominated in their respective local currency, which is their functional currency. Assets and liabilities have been translated to U.S. dollars at the period-end exchange rate. Revenues and expenses have been translated at exchange rates which approximate the average of the rates prevailing during each period. Translation adjustments are reported as a separate component of other comprehensive income (loss) in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Accumulated other comprehensive loss resulting from foreign currency translation adjustments totaled $4.4 million as of October 1, 2011 and January 1, 2011, and is included in Total Stockholders’ Equity in the Condensed Consolidated Balance Sheets. Assets and liabilities denominated in other than the functional currency of a subsidiary are re-measured at rates of exchange on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Company’s results of operations. Realized and unrealized exchange losses included in results of operations were $38,000 and $46,000, respectively, during the thirteen and thirty-nine weeks ended October 1, 2011. Realized and unrealized exchange losses included in results of operations were $2,000 and $38,000, respectively, during the thirteen and thirty-nine weeks ended October 2, 2010.
Derivative Financial Instruments — As of October 1, 2011, the Company had one open foreign currency forward contract with a notional amount of $185,000. This forward contract provides an economic hedge of fluctuations in exchange rates between the British pound and Australian dollar denominated accounts receivables, but has not been designated as a hedge for accounting purposes. This contract expired on October 10, 2011. The Company utilizes valuation models for these forward contracts that rely exclusively on level 2 inputs, as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures . Gains and losses on foreign currency forward contracts are included in selling, general, and administrative expenses in the Condensed Consolidated Statement of Operations and Comprehensive Loss. The change in fair value of this contract was not material to the Company’s results of operations or financial position for the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010.
Net Loss Per Share — The Company has not included the effect of stock options and non-vested shares in the calculation of diluted loss per share for the thirteen and thirty-nine weeks ended October 1, 2011 and October 2, 2010 as the Company reported a net loss for these periods and the effect would have been anti-dilutive.
Recent Accounting Pronouncements — In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The guidance seeks further convergence of the fair value recognition standards between U.S GAAP and that of the International Financial Reporting Standards (IFRS). The ASU contains clarification of certain terminology to match the guidance provided by the IFRS standard, but also provides more specific guidance related to the treatment of premiums or discounts in the measurement of fair value, among other guidance, as well as prescribes additional disclosure requirements, including the level in the fair value hierarchy of assets or liabilities that are not measured at fair value in the balance sheet, but yet have fair value disclosure requirements. This update is effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact that the adoption of this guidance will have on the consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which revises the manner in which entities present comprehensive income in their financial statements by removing the existing options available for the presentation of comprehensive income but rather requiring comprehensive income to be reported in either a separate continuous statement of comprehensive income or in a two statement presentation format that would highlight the components of income as the first statement and then a separate but yet consecutive statement presenting the components and totals of comprehensive income. This update is effective for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact that the adoption of this guidance will have on the presentation of the consolidated financial statements.
In September 2011, the FASB issued ASU 2011-08, Intangibles-Goodwill and Other: Testing Goodwill for Impairment. The ASU includes changes to the accounting guidance for the purpose of simplifying the approach to test goodwill for impairment. The guidance allows an entity to first assess whether facts or circumstances at an interim date indicate that there is greater than 50% likelihood that a reporting unit’s carrying amount exceeds its fair value. If the totality of the facts and circumstances, in management’s judgment, do not result in greater than 50% likelihood, the goodwill impairment testing need not be performed. Likewise, the guidance also allows for entities to perform the goodwill impairment test at an interim date without considering the qualitative facts and circumstances that, when taken together, may indicate that a reporting unit’s carrying amount exceeds its fair value. The amendment is effective for goodwill impairment tests performed for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact that the adoption of this guidance will have on the consolidated financial statements.
|
Line of Credit Agreements | 9 Months Ended |
---|---|
Oct. 01, 2011 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | 3. Line of Credit Agreements
In November 2008, the Company entered into a settlement with UBS to provide liquidity for the Company’s auction rate securities portfolio then held with a UBS affiliate. As provided for in the settlement, the Company entered into a line of credit from UBS. During the second quarter of fiscal year 2010, the Company liquidated the auction rate securities with a par value of $5.5 million pledged as collateral for the line of credit with UBS. Proceeds from the liquidation were applied first to the $3.7 million outstanding balance of the line of credit as of the date of the transaction. The Company received the remaining $1.8 million in proceeds. Upon liquidation of the relevant auction rate securities, the line of credit with UBS was terminated.
On March 19, 2009, the Company entered into a loan agreement with Citigroup to provide liquidity for the Company's auction rate securities portfolio held with Citigroup. Under the loan agreement, the Company was provided access to a revolving line of credit of up to $2.63 million with its auction rate securities pledged as collateral. The line of credit was not for any specific term. During the thirty-nine weeks ended October 1, 2011, the Company borrowed $2.63 million under the line of credit which was repaid upon liquidation of the Education Funding
Capital Education Loan Backed Notes on April 27, 2011. The line of credit was terminated upon disposition of the underlying auction rate securities. No amounts were borrowed against the line during the thirteen and thirty-nine weeks ended October 2, 2010. The borrowings against the line of credit were used to fund short-term liquidity needs.
See Note 2, “Auction Rate Securities” for further information.
|
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands | Oct. 01, 2011 | Jan. 01, 2011 |
---|---|---|
ASSETS | ||
Cash and cash equivalents | $ 10,142 | $ 6,786 |
Accounts receivable, net | 16,252 | 16,531 |
Prepaid and other current assets | 900 | 1,173 |
Total current assets | 27,294 | 24,490 |
NONCURRENT ASSETS: | ||
Property and equipment, net | 1,785 | 1,983 |
Goodwill and intangible assets, net | 8,030 | 8,489 |
Noncurrent investments | 0 | 5,926 |
Other assets | 204 | 207 |
Total Assets | 37,313 | 41,095 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Trade accounts payable | 1,243 | 995 |
Accrued payroll, bonuses and related expenses | 4,119 | 5,087 |
Deferred revenue | 368 | 860 |
Other accrued liabilities | 1,367 | 1,453 |
Total current liabilities | 7,097 | 8,395 |
NONCURRENT LIABILITIES: | ||
Deferred income tax liabilities | 336 | 246 |
Other noncurrent liabilities | 697 | 737 |
Total noncurrent liabilities | 1,033 | 983 |
Commitments and contingencies (Note 9) | ||
Total stockholders' equity | 29,183 | 31,717 |
Total Liabilities and Stockholders' Equity | $ 37,313 | $ 41,095 |