Exhibit 99.1
[GRAPHIC OMITTED]
CONTACT:
THE MANAGEMENT NETWORK GROUP, INC. OR BRAINERD COMMUNICATORS
Regina Whitley Brian Schaffer (Investors)
regina.whitley@tmng.com schaffer@braincomm.com
800.876.5329 x340 Ray Yeung (Media)
yeung@braincomm.com
212.986.6667
TMNG REPORTS 2004 FOURTH QUARTER AND YEAR-END RESULTS
OVERLAND PARK, KS - FEBRUARY 10, 2005 - 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 2004
fourth quarter and year ended January 1, 2005. Results for the fourth quarter
2004 were in line with expectations.
Revenue in the fourth quarter of 2004 was $6.2 million, compared with $6.4
million in the fourth quarter of 2003 (a fourteen week quarter). Year-ago
results included $0.7 million in revenue and gross margin recognized on a
guaranteed contract that was not utilized by the client. Excluding that benefit,
revenue for the 2004 fourth quarter increased 10% over the prior-year period.
Revenue for the 2004 third quarter was $6.5 million. During the 2004 fourth
quarter gross margin was 47.2%, compared with 51.5% in the fourth quarter of
2003, or 45.5% excluding the revenue from the guaranteed contract described
above.
TMNG reported a net loss of $1.2 million, or $0.03 per diluted share, compared
with a net loss of $19.7 million, or $0.58 per diluted share in last year's
fourth quarter. Fourth quarter 2004 net loss included a gain of $1.3 million
from a cash settlement on the guaranteed contract noted above and a non-cash
charge of $1.5 million related to office consolidation and a sublease of real
estate. Fourth quarter 2003 net loss includes a charge of $17.3 million
attributable to recording a valuation allowance on previously reported deferred
income tax assets.
Revenue for the year ended January 1, 2005 increased 2% to $23.7 million,
compared with $23.2 million in 2003. Gross margin was 47.2% in 2004, compared
with 48.9% in 2003. Excluding the above mentioned $0.7 million in fourth quarter
2003 revenue related to the guaranteed contract, revenue would have increased 5%
and gross margin for 2003 would have been 47.3%. Net loss for 2004 was $8.7
million, or $0.25 per diluted share, which in addition to the fourth quarter
2004 items noted above, included a $2.3 million, or $0.07 per diluted share loss
from discontinued operations related to the former hardware segment of the
business. Net loss for 2003 was $42.3 million, or $1.26 per diluted share.
Results for 2003 include goodwill and intangible asset impairment charges of
$19.5 million and a charge of $13.0 million for valuation allowances on
previously reported deferred income tax assets.
The company ended the fourth quarter and year with a strong cash position of
$52.2 million, virtually no long-term debt, stockholders' equity of $66.7
million, and working capital of approximately $55.1 million.
"TMNG delivered revenue growth of 16% in the second half of 2004 compared to the
first half and ended the year with a modest increase over 2003 as a result of
expanding our consultative offerings with a wireless emphasis and a general
improvement in the communications sector," said Rich Nespola, TMNG Chairman and
CEO. "Entering 2005 we are encouraged both by the pace of bookings and pipeline
opportunities. Meanwhile, fourth quarter actions, including savings from our
office consolidation and sublease, will have the effect of reducing our 2005
non-payroll related SG&A run-rate by another $1 million, bringing us closer to
achieving profitability. Our focus in 2005 will be to leverage the inroads we
have made in wireless and emerging technologies to drive revenue over a
streamlined cost base, while continuing to position the company in growth areas
of the rapidly evolving, and consolidating, telecom industry."
CONFERENCE CALL
TMNG will host a conference call at 5:00 p.m. ET today to discuss 2004 fourth
quarter and year-end results. Investors can access the conference call via a
live webcast on the company's website, www.tmng.com, or by dialing 877-297-4509.
A replay of the conference call will be archived on the company's website for
one week. Additionally, a replay of the call can be accessed by dialing
877-519-4471, pin number 5636957, through February 16, 2005.
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 400 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 1,000 clients worldwide, including all the Fortune 500
telecommunications companies. TMNG is headquartered in Overland Park, Kansas,
with offices in Boston, Chicago, Dallas, San Diego, 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 BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
ASSETS
January 1, 2005 January 3, 2004
CURRENT ASSETS:
Cash and cash equivalents $ 52,182 $ 52,875
Receivables, net 6,178 6,864
Refundable income taxes 769 2,167
Other assets 1,176 710
---------------- ----------------
Total current assets 60,305 62,616
GOODWILL 13,365 15,528
INTANGIBLES, net 487 1,478
PROPERTY & EQUIPMENT, net 896 1,558
OTHER ASSETS 300 402
---------------- ----------------
TOTAL ASSETS $ 75,353 $ 81,582
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 845 $ 635
Accrued liabilities and other 4,339 4,750
---------------- ----------------
Total current liabilities
5,184 5,385
NONCURRENT LIABILITIES 3,422 2,828
STOCKHOLDERS' EQUITY 66,747 73,369
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 75,353 $ 81,582
================ ================
THE MANAGEMENT NETWORK GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED YEAR-TO-DATE
January 1, 2005 January 3, 2004 January 1, 2005 January 3, 2004
Revenues $ 6,195 $ 6,351 $ 23,704 $ 23,245
Cost of services:
Direct cost of services 3,226 3,024 12,319 11,927
Equity related charges (benefit) 48 57 205 (57)
--------------- ---------------- --------------- ---------------
Total 3,274 3,081 12,524 11,870
Gross profit 2,921 3,270 11,180 11,375
Operating expenses:
Selling, general and administrative 3,560 4,408 15,358 18,505
Legal settlement (1,294) (1,294)
Real estate restructuring 1,545 1,545
Goodwill and intangible asset impairment 542 19,484
Equity related charges 182 132 958 142
Depreciation and amortization 377 672 1,671 3,197
--------------- ----------------- --------------- ---------------
Total 4,370 5,754 18,238 41,328
--------------- ----------------- --------------- ---------------
Loss from continuing operations (1,449) (2,484) (7,058) (29,953)
Other income, net 243 140 688 573
--------------- ----------------- --------------- ---------------
Loss from continuing operations before
income tax provision (1,206) (2,344) (6,370) (29,380)
Income tax provision (2) (17,345) (49) (12,978)
--------------- ----------------- --------------- ---------------
Loss from continuing operations (1,208) (19,689) (6,419) (42,358)
--------------- ----------------- --------------- ---------------
Net income (loss) from discontinued operations (15) (2,276) 34
--------------- ----------------- --------------- ---------------
Net loss $ (1,208) (19,704) $ (8,695) $ (42,324)
=============== ================= =============== ===============
Loss from continuing operations per common share
Basic and diluted $ (0.03) $ (0.58) $ (0.18) $ (1.26)
=============== ================= =============== ===============
Loss from discontinued operations per common share
Basic and diluted $ (0.07)
=============== ================= =============== ===============
Net loss per common share
Basic and diluted $ (0.03) $ (0.58) $ (0.25) $ (1.26)
=============== ================= =============== ===============
Shares used in calculation of net loss per common
share
Basic and diluted 34,716 33,972 34,619 33,545
=============== ================= =============== ===============