UNITED STATES
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) January 19, 2007
THE MANAGEMENT NETWORK GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27617 48-1129619
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
7300 College Boulevard, Suite 302, Overland Park, KS 66210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 345-9315
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review
As previously disclosed, a special committee of the Company's Board of
Directors, together with its independent legal counsel and accountants, is
conducting a review of the Company's historical practices regarding its stock
option programs and related accounting. Although the review is not yet complete,
based on the special committee's review to date, management and the audit
committee of the Board of Directors have reached a preliminary conclusion that
the appropriate measurement dates for financial accounting purposes of certain
stock option grants differ from the recorded grant dates of those awards. The
evaluation of the accounting impact resulting from the change in measurement
dates for these stock option grants is still ongoing. However, in light of these
preliminary findings, management has concluded, and the audit committee of the
Company's Board of Directors has agreed, that the Company may need to restate
its historical financial statements to record additional non-cash charges for
compensation expense relating to past stock option grants. The Company has not
yet completed its assessment of materiality for each prior period, nor has it
determined the full amount of any such charges, the resulting tax and accounting
impact, or which periods may require restatement. Stock-based compensation
charges may have the effect of increasing loss from operations and increasing
net loss and net loss per share (basic and diluted) in the affected financial
statements. The Company does not expect any such restatement would have any
impact on its previously reported revenues.
Accordingly, on January 19, 2007, management of the Company concluded, and
the audit committee of the Company's Board of Directors agreed, that the
Company's financial statements and the related reports or interim reviews of the
Company's independent registered public accounting firm and all earnings press
releases and similar communications issued by the Company relating to the
periods 1999 through 2005 and the first and second quarter of 2006 should no
longer be relied upon.
The impact of this matter on the Company's internal control over financial
reporting and disclosure controls and procedures is being evaluated by the
Company.
Because the special committee's review and any additional reviews by
management have not been completed, it is possible that additional issues may be
identified.
The Company's management and the audit committee of the Company's Board of
Directors have discussed the matters described in this report with Deloitte &
Touche LLP, the Company's independent registered public accounting firm.
Cautionary note regarding forward-looking statements
This report 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 in this
report regarding the special committee's review, the possible restatement of the
Company's financial statements, the potential impact of any such restatement,
the identification of potential accounting errors or corrections, and/or
recommendations of the special committee or measures adopted by management are
subject to the special committee's review and other known and unknown risks,
uncertainties and contingencies. Factors that might affect actual results,
performance or achievements include, among other things, the outcome, timing and
impact of the special committee's review and the other matters discussed in this
report, the conclusions of the special committee resulting from that review, any
adverse tax or accounting adjustments resulting from that review and any
restatement of the Company's financial statements. In addition to the matters
described in this report, risks and uncertainties are described from time to
time in our filings with the Securities and Exchange Commission. You should not
place undue reliance on any forward-looking statements, which speak only as of
the date on which they are made. We undertake no responsibility to update any of
these forward-looking statements to reflect events or circumstances occurring
after the date of this report.
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.
(Registrant)
Date: January 19, 2007 By: /s/ Donald E. Klumb
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Donald E. Klumb
Vice President and Chief Financial Officer