SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
AUGUST 25, 2004
THE MANAGEMENT NETWORK GROUP
(Exact name of company as specified in its charter)
DELAWARE 1-27617 48-1129619
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification Number)
7300 COLLEGE BOULEVARD, SUITE 302, OVERLAND PARK, KS 66210
(Address of principal executive offices) (Zip Code)
(913) 345-9315
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address if changed since last report)
ITEM 8.01. OTHER EVENTS
On August 25, 2004, we entered into a mediated settlement agreement to settle
pending claims in litigation brought by us against a significant customer,
WilTel, arising from a consulting services agreement.
On December 10, 1999, we entered into a consulting services agreement with
WilTel under which WilTel committed to purchase an aggregate of up to $22
million of consulting services from us over a three year period commencing
January 1, 2000. During fiscal year 2002, the agreement was extended for two
additional years beyond the original term of the agreement. At the end of
calendar year 2003, we invoiced WilTel for amounts due under the agreement. Such
amounts were not paid when due and WilTel failed to cure such default after
receiving a notice and opportunity to cure.
On March 4, 2004, we filed suit against WilTel for breach of the agreement,
seeking damages of approximately $5.7 million against WilTel. WilTel responded
to the suit on March 26, 2004 with its answer and two counterclaims, neither of
which sought money damages. WilTel requested a declaration that we breached the
agreement first, and that WilTel was therefore not liable for any damages and/or
excused from performing its obligations under the agreement. Additionally,
during the first quarter of fiscal year 2004, WilTel informed us of its decision
to cancel the consulting agreement, which eliminated their obligation to
purchase additional consulting services from us during 2004 (and reduced our
damage claim), but which triggered a termination fee payable to us.
Pursuant to the terms of the settlement agreement, neither party has admitted
any liability for the claims made against them and WilTel has agreed to make a
settlement payment to us on October 1, 2004, in the amount of $2 million to
settle all claims and disputes arising under the consulting services agreement.
TMNG has no obligation to render further services to WilTel.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MANAGEMENT NETWORK GROUP, INC.
Date: August 31, 2004 By: /S/ Donald E. Klumb
-------------------------------------
Donald E. Klumb
Chief Financial Officer and Treasurer
(Principal Financial Officer
and Principal Accounting Officer)