Exhibit 99.1
[GRAPHIC OMITTED]
CONTACT:
The Management Network Group, Inc. Brainerd Communicators
Janet Hall Michele Clarke (Media)
Janet.Hall@tmng.com clarke@braincomm.com
800.876.5329 212.986.6667
Corey Kinger (Investors)
kinger@braincomm.com
212.986.6667
TMNG GLOBAL REPORTS 2007 FIRST QUARTER RESULTS
- Cartesian Helps Drive 111% Revenue Growth, Company Returns to Profitability
on Non-GAAP Adjusted Basis -
- Company To Host Conference Call on May 31st -
Overland Park, KS - May 30, 2007 - TMNG Global (Nasdaq: TMNG) a leading provider
of management consulting and software solution services to the global
communications, media and entertainment industries, today reported financial
results for its 2007 first quarter ended March 31, 2007.
Revenue in the first quarter of 2007 was $15.1 million, more than doubling
revenue of $7.2 million in the prior year period. During the quarter, gross
margin was 45.0%, compared with 50.4% in the first quarter of 2006. Gross margin
comparisons reflect revenues in the 2007 period from TMNG Global Software
Solutions segment, which includes the recently acquired Cartesian Ltd., a higher
mix of traditional management consulting revenues, and a relatively lower mix
from higher-margin strategy consulting.
TMNG Global reported a net loss of $1.7 million, or $0.05 per diluted share for
the first quarter of 2007, compared to a net loss of $1.6 million, or $0.05 per
diluted share in last year's first quarter. After adjusting for approximately
$1.6 million in expenses related to the review of the Company's
option granting practices by a special committee of the Board of Directors,
depreciation and amortization expense, as well as non-cash benefits related to
share-based compensation, TMNG Global generated non-GAAP adjusted net income of
approximately $0.3 million, or $0.01 per diluted share, during the first quarter
of 2007. The comparable non-GAAP adjusted net loss for the first quarter of
fiscal 2006 was $0.6 million, or $0.02 per diluted share.
The Company ended the first quarter with a strong cash and short-term
investments position of $30.5 million, total assets of $72.8 million, no
long-term debt, and stockholders' equity of $54.5 million.
"TMNG is building what we believe is a sustainable model for revenue growth and
profitability highlighted by: strategic investments in key markets like cable,
where we have demonstrated considerable organic growth; the acquisition of
complementary businesses such as Cartesian, thereby creating new and
annuity-based revenue streams; and the expansion of our international
opportunities - especially in Europe and Asia - that correspond to our
traditional areas of expertise," said Rich Nespola, TMNG Global Chairman and
CEO. "In addition to Cartesian's strong contribution, which significantly
strengthens our management consulting practice, the Company also produced
organic revenue growth of 24% year-over-year led by our cable practice. Looking
ahead, we see a healthy pipeline of new opportunities as we expand our footprint
in China and throughout Europe. We are approaching these markets with realigned
consulting resources that better match market demand, enabling us to better
leverage our fixed costs as we grow the top line.
"We also completed a rigorous special committee review during the first quarter
of the year that will result in enhanced governance practices and internal
controls that we believe will strengthen the Company moving forward," Nespola
continued. "With the filing of our first quarter 10-Q, we believe TMNG has
regained full compliance with Nasdaq listing standards and is current on all SEC
filings. We are focused fully on the strong business and growth opportunities
that lie ahead and look forward to building on the significantly improved
performance generated in the first quarter of this year."
In addition to reporting net loss and net loss per share on a GAAP basis, this
press release contains certain non-GAAP adjustments which are described in the
attached schedule entitled "Reconciliation of GAAP Net Loss to Non-GAAP Adjusted
Net Income (Loss)" that accompanies this press release. In making these non-GAAP
adjustments, the Company took into account the impact of items that are
not expected to be on-going in nature and non-cash expenses and benefits.
Management believes the exclusion of these items provides a useful basis for
evaluating underlying business performance, but should not be considered in
isolation and is not in accordance with, or a substitute for, evaluating Company
performance utilizing GAAP financial information. The Company believes that
providing such adjusted results allows investors and other users of the
Company's financial statements to better understand TMNG's comparative operating
performance for the periods presented.
TMNG's management used each of these non-GAAP financial measures in its own
evaluation of the Company's performance, particularly when comparing performance
to the prior year's period. TMNG's non-GAAP measures may differ from similar
measures by other companies, even if similar terms are used to identify such
measures. Although TMNG's management believes non-GAAP financial measures are
useful in evaluating the performance of its business, TMNG acknowledges that
items excluded from such measures may have a material impact on the Company's
net income (loss) and net income (loss) per share calculated in accordance with
GAAP. Therefore, management uses non-GAAP measures in conjunction with GAAP
results. Investors and other users of our financial information should also
consider the above factors when evaluating TMNG's results.
CONFERENCE CALL
The Company will host a conference call at 5:00 p.m. EDT on Thursday, May 31,
2007 to discuss its first quarter earnings results. Investors can access the
conference call via a live webcast on the company's website, www.tmng.com, or by
dialing 973-935-8757, passcode 8847522. A replay of the conference call will be
archived on the company's website for one week. Additionally, a replay of the
call will be available by dialing 877-519-4471, passcode 8847522, through June
6, 2007.
ABOUT TMNG GLOBAL
TMNG Global (NASDAQ: TMNG) is a leading provider of professional services to the
converging communications industry. Its companies, TMNG, CSMG Adventis, and
Cartesian, and its base of over 500 consultants, have provided strategy,
management, and technical consulting, as well as products and services, to more
than 1200 communications service providers, entertainment, media, and technology
companies and financial services firms worldwide. The company is headquartered
in
Overland Park, Kansas, with offices in Berlin, Boston, Chicago, London, New
York, Shanghai and Washington, D. C.
Statements in this press release other than historical data and information,
including statements of belief, constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may also be made during the conference call. 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 services and products offered
by TMNG and Cartesian; technological advances and competitive factors in the
markets in which the Company competes; the restatement of the Company's
historical financial statements, any adverse tax impact resulting from such
restatement, the impact of the Special Committee's review of TMNG's historical
practices regarding its stock option programs and related accounting, the
conclusions resulting from that review, the matters described in the Company's
current reports on Form 8-K filed on November 13, 2006, November 20, 2006,
January 19, 2007, February 15, 2007, February 28, 2007, April 4, 2007, April 9,
2007, April 27, 2007 and May 25, 2007, and the potential impact of these matters
on the Company's business, operations or expenses. These risks and uncertainties
are described in detail from time to time in TMNG's 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
press release.
(Please see attached financial tables)
THE MANAGEMENT NETWORK GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED
=============== ================
March 31, 2007 April 1, 2006
=============== ================
Revenues $ 15,113 $ 7,163
Cost of services [includes net non-cash share-
based compensation (credits) expense of $(148)
and $201 for the thirteen weeks ended March 31,
2007 and April 1, 2006, respectively] 8,319 3,552
--------------- ----------------
Gross Profit 6,794 3,611
Operating Expenses:
Selling, general and administrative [includes
net non-cash share-based compensation
(credits) expense of $(296) and $567 for the
thirteen weeks ended March 31, 2007 and April 1,
2006, respectively] 6,780 5,638
Special Committee investigation 1,559 -
Intangible asset amortization 540 115
--------------- ----------------
Total operating expenses 8,879 5,753
--------------- ----------------
Loss from operations (2,085) (2,142)
Interest income 417 535
--------------- -----------------
Loss before income tax benefit (provision) (1,668) (1,607)
Income tax benefit (provision) 1 (21)
--------------- -----------------
Net loss $ (1,667) $ (1,628)
=============== =================
Loss per common share
Basic and diluted $ (0.05) $ (0.05)
=============== =================
Weighted average shares used in calculation of
net loss per common share
Basic and diluted 35,716 35,625
=============== =================
THE MANAGEMENT NETWORK GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
March 31, 2007 December 30, 2006
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,212 $ 11,133
Short-term investments 25,300 27,200
Receivables:
Accounts receivable 11,828 5,063
Accounts receivable - unbilled 5,028 3,654
---------------- ----------------
16,856 8,717
Less: Allowance for doubtful accounts (445) (378)
---------------- ----------------
16,411 8,339
Prepaid and other assets 2,016 2,257
---------------- ----------------
Total current assets 48,939 48,929
---------------- ----------------
Property and equipment, net 1,268 846
Goodwill 13,365 13,365
Licenses and other identifiable intangible
assets, net 8,336 1,189
Other assets 882 967
---------------- ----------------
Total Assets $ 72,790 $ 65,296
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 2,014 $ 1,446
Accrued payroll, bonuses and related
expenses 3,145 1,965
Other accrued liabilities 3,287 2,019
Income tax liabilities 947 271
Accrued contingent consideration 3,532 -
Unfavorable and other lease obligations 658 649
---------------- ----------------
Total current liabilities 13,583 6,350
---------------- ----------------
Noncurrent Liabilities 4,704 2,189
---------------- ----------------
Stockholders' Equity 54,503 56,757
---------------- ----------------
Total Liabilities and Stockholder's Equity $ 72,790 $ 65,296
================ ================
THE MANAGEMENT NETWORK GROUP, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)
QUARTER ENDED
---------------- ----------------
March 31, April 1,
2007 2006
---------------- ----------------
Reconciliation of GAAP net loss to non-GAAP adjusted net income (loss):
GAAP net loss $ (1,667) $ (1,628)
---------------- ----------------
Special Committee investigation 1,559 -
Depreciation and amortization 872 214
Non-cash share based compensation (credit) expense (444) 768
---------------- ----------------
Adjustments to GAAP net loss 1,987 982
---------------- ----------------
Non-GAAP adjusted net income (loss) $ 320 $ (646)
================ ================
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 $ (0.05) $ (0.05)
---------------- ----------------
Special Committee investigation 0.05 -
Depreciation and amortization 0.02 0.01
Non-cash share based compensation (credit) expense (0.01) 0.02
---------------- ----------------
Adjustments to GAAP net loss per diluted common share 0.06 0.03
---------------- ----------------
Non-GAAP adjusted net income (loss) per diluted common share $ 0.01 $ (0.02)
================ ================
Weighted average shares used in calculation of net loss per common share
Basic and diluted 35,716 35,625
================ ================
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