Exhibit 99.1
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
CONTACT:
THE MANAGEMENT NETWORK GROUP, INC. OR BRAINERD COMMUNICATORS
Carolyn Covey Morris Brian Schaffer (Investors)
The Management Network Group, Inc. SCHAFFER@BRAINCOMM.COM
CAROLYN.COVEYMORRIS@TMNG.COM Ray Yeung (Media)
888.480.TMNG (8664) YEUNG@BRAINCOMM.COM
212.986.6667
TMNG REPORTS 2003 THIRD QUARTER RESULTS
OVERLAND PARK, KS - OCTOBER 30, 2003 -- The Management Network Group, Inc.
(Nasdaq: TMNG), a leading provider of management consulting services to the
global communications industry, today reported financial results for its 2003
third quarter ended September 27, 2003.
Revenue in the third quarter of 2003 was $4.7 million, compared with $8.8
million in the third quarter of 2002. Net loss for the quarter was $2.7 million,
or $0.08 per diluted share, compared with a net loss of $0.6 million, or $0.02
per diluted share in last year's third quarter. In the third quarter of 2003, a
valuation allowance of $0.8 million was recorded, offsetting all income tax
benefits associated with pre-tax losses generated in the third quarter. Pro
forma non-GAAP net loss (defined as GAAP net loss as reported in the unaudited
condensed consolidated statements of operations plus equity-related charges,
intangibles amortization, and intangible asset impairment, all in accordance
with GAAP and assuming a standard 40% effective income tax rate) for the quarter
was $1.3 million, or $0.04 per diluted share, compared with pro forma non-GAAP
net loss of $0.2 million, or $0.01 per diluted share in the third quarter of
2002.
During the quarter, gross margin was 46.8% compared with 48.8% in the third
quarter of 2002, due primarily to decreased revenues, which led to lower
consultant utilization. The company continues to maintain a sound balance sheet,
including a cash position of $49.4 million, virtually no long-term debt,
stockholders' equity of $92.7 million, and working capital of approximately
$59.9 million. Cash and working capital have been reduced by $4.4 million and
$3.6 million, respectively, since year-end due to the weak revenue environment;
however, the company anticipates that it will substantially reverse the
year-to-date negative cash flow in the fourth quarter.
Revenue for the first nine months of fiscal 2003 totaled $17.1 million, compared
with $26.0 million in the first nine months of 2002. Gross margin year-to-date
in 2003 was 48.6% compared with 49.5% in the comparable period of 2002. Net loss
for the first nine months was $22.6 million, or $0.68 per diluted share,
compared with a net loss of $5.3 million, or $0.16 per diluted share in the
comparable period of 2002. Pro forma non-GAAP net loss was $3.6 million, or
$0.11 per diluted share, compared to a loss of $2.4 million, or $0.07 per
diluted share a year ago. Results for the first nine months of fiscal 2003
included a non-cash goodwill and intangible asset impairment charge of $18.9
million and $6.0 million valuation reserve partially offsetting income tax
benefits generated on pre-tax losses incurred in fiscal 2003.
"Third quarter results were disappointing, but were most impacted by a
softer-than-expected August that masked a pickup in new business and pipeline
activity since Labor Day," said Rich Nespola, Chairman and CEO. "We see clear
signs that leading wireless and wireline providers are preparing to embark on
major projects, though timing of capital allocation remains unpredictable. We
signed nine new customers in the third quarter and have seen improved sales
momentum in recent weeks. In addition, we continue to aggressively reduce
expenses. We have also worked diligently as a company and in concert with our
channel partners to position TMNG for several promising potential engagement
opportunities in the near future. In light of these developments and our signed
engagements to date, we are optimistic that TMNG's fourth quarter will show
significant sequential improvement in quarterly revenue performance, as well as
significant positive cash flow."
CONFERENCE CALL
TMNG will host a conference call at 5:00 p.m. ET today to discuss third quarter
2003 results. Investors can access the conference call via a live webcast on the
Company's Web site, WWW.TMNG.COM, or by dialing 877-375-2162. A replay of the
conference call will be archived on the Company's Web site for one week.
Additionally, the archived call can be accessed by dialing 973-341-3080, pin
number 4236809, through November 4, 2003.
ABOUT TMNG
The Management Network Group, Inc. (Nasdaq: TMNG) is a leading provider of
strategy, management, marketing, operational and technology consulting services
to the global communications industry. With more than 500 consultants worldwide,
TMNG serves communications service providers, technology companies, and
financial services firms. Since the company's inception in 1990, TMNG and its
subsidiaries - TMNG Strategy, TMNG Marketing, TMNG Technologies and TMNG Europe
- - have served more than 600 clients worldwide, including all the Fortune 500
telecommunications companies. TMNG is headquartered in Overland Park, Kansas,
with offices in Boston, Chicago, Columbus, Dallas, La Jolla, London, New York,
San Francisco, Toronto, Utrecht and Washington, D.C. TMNG can be reached at
1.888.480.TMNG (8664) or online at http://www.tmng.com.
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS
INVOLVE RISKS AND UNCERTAINTIES. IN PARTICULAR, ANY STATEMENTS CONTAINED HEREIN
REGARDING EXPECTATIONS WITH RESPECT TO FUTURE BUSINESS, REVENUES OR
PROFITABILITY ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, WHICH MAY CAUSE
ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT
AFFECT ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS INCLUDE, AMONG OTHER THINGS,
CONDITIONS IN THE TELECOMMUNICATIONS INDUSTRY, OVERALL ECONOMIC AND BUSINESS
CONDITIONS, THE DEMAND FOR THE COMPANY'S GOODS AND SERVICES, AND TECHNOLOGICAL
ADVANCES AND COMPETITIVE FACTORS IN THE MARKETS IN WHICH THE COMPANY COMPETES.
THESE RISKS AND UNCERTAINTIES ARE DESCRIBED IN DETAIL FROM TIME TO TIME IN
TMNG'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
(Please see attached financial tables)
THE MANAGEMENT NETWORK GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Quarter Ended Year-to-Date
September 27, September 29, September 27, September 28
2003 2002 2003 2002
Revenues $ 4,691 $ 8,756 $17,117 $25,952
Cost of services:
Direct cost of services 2,506 4,372 8,912 12,311
Equity related charges (10) 110 (113) 782
--------- --------- ---------- ---------
Total 2,496 4,482 8,799 13,093
Gross profit 2,195 4,274 8,318 12,859
Operating expenses:
Selling, general and administrative 4,165 4,737 13,918 15,822
Goodwill and intangible asset impairment 18,942
Severance costs 89 289 1,933
Equity related charges 7 32 10 312
Depreciation and amortization 711 739 2,525 2,309
--------- --------- ---------- ---------
Total 4,972 5,508 35,684 20,376
Loss from operations (2,777) (1,234) (27,366) (7,517)
Other income, net 126 235 433 743
Income tax benefit 351 4,313 2,638
--------- --------- ---------- ---------
Loss before change in accounting principle (2,651) (648) (22,620) (4,136)
Change in accounting principle (net of tax) (1,140)
--------- --------- ---------- ---------
Net loss $ (2.651) $ (648) $(22,620) $(5,276)
========= ========= ========== =========
Loss per common share before change
in accounting principle
Basic and diluted $ (0.08) $ (0.02) $ (0.68) $ (0.13)
========= ========= ========== =========
Change in accounting principle
per common share
Basic and diluted ($0.03)
========= ========= ========== =========
Net loss per common share
Basic and diluted $ ($0.08) $ (0.02) $ (0.68) ($0.16)
========= ========= ========== =========
Shares used in calculation
of net loss per common share
Basic and diluted 33,458 33,297 33,392 32,535
========= ========= ========== =========
THE MANAGEMENT NETWORK GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
Unaudited
(in thousands)
ASSETS
September 27, December 28,
2003 2002
CURRENT ASSETS:
Cash and cash equivalents $49,411 $53,786
Receivables, net 6,714 9,358
Refundable and deferred income taxes 7,635 4,771
Other assets 770 1,723
-------- --------
Total current assets 64,530 69,638
GOODWILL 15,528 31,308
INTANGIBLES, net 2,500 7,454
DEFERRED TAXES 15,610 14,272
PROPERTY & EQUIPMENT, net 1,720 2,285
OTHER ASSETS 402 502
-------- --------
TOTAL ASSETS $100,290 $125,459
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 590 $ 1,170
Accrued liabilities and other 4,034 4,990
-------- --------
Total current liabilities 4,624 6,160
NONCURRENT LIABILITIES 2,995 3,573
STOCKHOLDERS' EQUITY 92,671 115,726
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $100,290 $125,459
======== ========
INFORMATION WITH RESPECT TO NON-GAAP FINANCIAL MEASURES
The following table shows, for each non-GAAP financial measure used in the
accompanying press release, the most directly comparable financial measure
calculated and presented in accordance with GAAP.
NON-GAAP FINANCIAL MEASURE MOST DIRECTLY COMPARABLE FINANCIAL MEASURE
Pro forma non-GAAP net loss Net loss
Pro forma non-GAAP net loss Net loss per diluted share
per diluted share
The following table contains a reconciliation of the difference between the
non-GAAP financial measures described above and the most directly comparable
financial measures calculated and presented in accordance with GAAP.
THE MANAGEMENT NETWORK GROUP, INC.
RECONCILIATION TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share data)
Quarter Ended Year-to-Date
September 27, September 28, September 27, September 28,
2003 2002 2003 2002
RECONCILIATION TO PRO FORMA NON-GAAP NET LOSS
GAAP Loss from operations $ (2,777) $ (1,234) $ (27,366) $ (7,517)
Addback
Goodwill and intangible asset impairment 18,942
Equity related charges (benefit) (3) 142 (103) 1,094
Tax deductible intangible amortization 422 380 1,618 1,338
---------- ----------- ----------- -----------
GAAP Loss from operations, excluding above
pro forma items (2,358) (712) (6,909) (5,085)
Add: Other income, net 126 235 433 743
---------- ----------- ----------- -----------
Pre-tax pro forma loss (2,232) (477) (6,476) (4,342)
Assumed after tax rate 60% 60% 60% 60%
---------- ----------- ----------- -----------
Pro forma loss, net of assumed tax benefit (1,339) (286) (3,886) (2,605)
Intangible amortization exempt
from tax benefit 82 82 244 244
---------- ----------- ----------- -----------
Pro forma non-GAAP net loss $ (1,257) $ (204) $ (3,642) $ (2,361)
========== =========== =========== ===========
Pro forma non-GAAP net loss per common share
Basic and diluted $ (0.04) $ (0.01) $ (0.11) $ (0.07)
========== =========== =========== ===========
Quarter Ended Year-to-Date
RECONCILIATION TO PRO FORMA NON-GAAP September 27, September 28, September 27, September 28,
NET LOSS PER DILUTED COMMON SHARE 2003 2002 2003 2002
GAAP Loss from operations $ (0.08) $ (0.04) $ (0.82) $ (0.23)
Addback
Goodwill and intangible asset impairment 0.57
Equity related charges 0.03
Tax deductible intangible amortization 0.01 0.02 0.04 0.04
---------- ----------- ----------- -----------
GAAP Loss from operations, excluding above
pro forma items (0.07) (0.02) (0.21) (0.16)
Add: Other income, net 0.01 0.01 0.02
---------- ----------- ----------- -----------
Pre-tax pro forma loss (0.07) (0.01) (0.20) (0.14)
Assumed after tax rate 60% 60% 60% 60%
---------- ----------- ----------- -----------
Pro forma loss, net of assumed tax benefit (0.04) (0.01) (0.12) (0.08)
Intangible amortization exempt from tax
benefit 0.01 0.01
---------- ----------- ----------- -----------
Proforma non-GAAP net loss per common share
---------- ----------- ----------- -----------
Basic & Diluted $ (0.04) $ (0.01) $ (0.11) $ (0.07)
========== =========== =========== ===========
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