Exhibit 99.1
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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 SECOND QUARTER RESULTS
Overland Park, KS - August 14, 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 second quarter ended June 30, 2007.
Revenue in the second quarter of 2007 was $15.1 million, a 58.5% increase over
revenue of $9.5 million in the prior year period. The 2007 period results
include $5.7M of revenue from the Company's new TMNG Global Software Solutions
segment that consists of the recently acquired Cartesian Ltd. During the
quarter, gross margin was 43.9%, compared with 48.7% in the second quarter of
2006. The lower gross margin reflected a richer mix of traditional management
consulting revenues, which feature a number of larger and longer term projects.
TMNG Global reported a net loss of ($1.7) million, or ($0.05) per diluted share
for the second quarter of 2007, compared to a net loss of ($2.6) million, or
($0.07) per diluted share in last year's second quarter. After adjusting for
expenses related to the completion of 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 expense 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
second quarter of 2007. The comparable non-GAAP adjusted net loss for the second
quarter of fiscal 2006 was ($1.3) million, or ($0.04) per diluted share.
For the six months ended June 30, 2007, revenue increased 81.0% to $30.2
million, compared with $16.7 million in the first six months of 2006. During the
period, the Software Solutions segment contributed $10.9 million in revenue.
During the 2007 six month period, gross margin was 44.5%, compared with 49.5% in
the comparable year-ago period. Net loss for the first six months of 2007 was
($3.3) million or ($0.09) per diluted share, compared with a net loss of ($4.2)
million or ($0.12) per diluted share in first six months of 2006. After
adjusting for expenses related to the completion of 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 $0.7 million, or $0.02 per diluted share, during the first six
months of 2007. The comparable non-GAAP adjusted net loss for the 2006 six month
period was ($1.9) million, or ($0.05) per diluted share.
The Company ended the second quarter with cash and short-term investments of
$30.3 million, working capital of approximately $34.5 million, no long-term
debt, and stockholders' equity of $53.5 million.
"Our second quarter results keep us on track with our expectations for the year
and affirm that TMNG is poised to return to profitability in 2007 on a non-GAAP
basis," said Rich Nespola, TMNG Global Chairman and CEO. "As shown by our
acquisitions of Cartesian in the first quarter and RVA Consulting in the third
quarter, we continue to aggressively bolster our business and extend and
strengthen our transformational offerings to our expanding client base. We have
continued to increase our market penetration in key industries such as cable and
wireless. We also have broadened our geographical footprint, as evidenced by a
greater than 50% revenue contribution from international engagements in the
second quarter. We enter the second half of 2007 with excellent revenue momentum
and substantial opportunities for growth both domestically and in key overseas
markets."
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
generally not expected to be on-going in nature and certain 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. ET today to discuss 2007
second quarter results. Investors can access the conference call via a live
webcast on the company's website, www.tmng.com, or by dialing 973-935-8711,
passcode 9031102. 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 9031102, through August 21, 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,
Cartesian, and RVA Consulting, 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 Jersey, New York, Shanghai and Washington, D. C.
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 stock market conditions, 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, the level of cash
and non-cash expenditures incurred by the Company, 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(unaudited)
Twenty-six
Thirteen Weeks Ended Weeks Ended
----------------------- ----------------------
June 30, July 1 June 30 July 1
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues $ 15,120 $ 9,541 $ 30,233 $ 16,704
Cost of services [includes net non-cash share-based
compensation expense (credits) of $81 and $170 for
the thirteen weeks ended June 30, 2007 and July 1,
2006, respectively, and $(67) and $371 for the twenty-six
weeks ended June 30, 2007 and July 1, 2006, respectively] 8,475 4,890 16,794 8,442
--------- --------- --------- ---------
Gross Profit 6,645 4,651 13,439 8,262
Operating Expenses:
Selling, general and administrative [includes net non-cash
share-based compensation expense of $307 and $784 for the
thirteen weeks ended June 30, 2007 and July 1, 2006,
respectively, and $11 and $1,351 for the twenty-six weeks
ended June 30, 2007 and July 1, 2006, respectively] 7,054 7,516 13,834 13,154
Special Committee investigation 789 2,348
Intangible asset amortization 552 236 1,092 351
--------- --------- --------- ---------
Total operating expenses 8,395 7,752 17,274 13,505
--------- --------- --------- ---------
Loss from operations (1,750) (3,101) (3,835) (5,243)
Other income:
Interest income 381 546 798 1,081
Other, net (1) (1)
--------- --------- --------- ---------
Total other income 381 545 798 1,080
--------- --------- --------- ---------
Loss before income tax provision (1,369) (2,556) (3,037) (4,163)
Income tax provision (285) (13) (284) (34)
--------- --------- --------- ---------
Net loss $ (1,654) $ (2,569) $ (3,321) $ (4,197)
Loss per common share
Basic and diluted $ (0.05) $ (0.07) $ (0.09) $ (0.12)
========= ========= ========= =========
Weighted average shares used in calculation of net loss
per common share
Basic and diluted 35,766 35,731 35,741 35,678
THE MANAGEMENT NETWORK GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
June 30, December 30,
2007 2006
----------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,992 $ 11,133
Short-term investments 20,325 27,200
Receivables:
Accounts receivable 11,361 5,063
Accounts receivable -- unbilled 4,866 3,654
----------- ------------
16,227 8,717
Less: Allowance for doubtful accounts (530) (378)
----------- ------------
15,697 8,339
Prepaid and other assets 1,668 2,257
----------- ------------
Total current assets 47,682 48,929
----------- ------------
Property and equipment, net 1,279 846
Goodwill 13,365 13,365
Licenses and other identifiable intangible assets, net 7,930 1,189
Other assets 922 967
----------- ------------
Total Assets $ 71,178 $ 65,296
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 2,391 $ 1,446
Accrued payroll, bonuses and related expenses 3,765 1,965
Other accrued liabilities 3,016 2,019
Income tax liabilities 1,475 271
Accrued contingent consideration 1,880
Unfavorable and other lease obligations 666 649
----------- ------------
Total current liabilities 13,193 6,350
NONCURRENT LIABILITIES:
Deferred income tax liability 2,074
Unfavorable and other lease obligations 1,951 2,189
Other noncurrent liabilities 508
----------- ------------
Total noncurrent liabilities 4,533 2,189
Total stockholders' equity 53,452 56,757
----------- ------------
Total Liabilities and Stockholders' Equity $ 71,178 $ 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)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
---------------------------- ----------------------------
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Reconciliation of GAAP net loss to non-GAAP adjusted net income
(loss)
GAAP net loss $ (1,654) $ (2,569) $ (3,321) $ (4,197)
----------- ----------- ----------- -----------
Special Committee investigation 789 - 2,348 -
Depreciation and amortization 809 341 1,681 555
Non-cash share based compensation expense (credit) 388 954 (56) 1,722
----------- ----------- ----------- -----------
Adjustments to GAAP net loss 1,986 1,295 3,973 2,277
----------- ----------- ----------- -----------
Non-GAAP adjusted net income (loss) $ 332 $ (1,274) $ 652 $ (1,920)
=========== =========== =========== ===========
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) $ (0.07) $ (0.09) $ (0.12)
----------- ----------- ----------- -----------
Special Committee investigation 0.02 - 0.06 -
Depreciation and amortization 0.03 0.01 0.05 0.02
Non-cash share based compensation expense (credit) 0.01 0.02 - 0.05
----------- ----------- ----------- -----------
Adjustments to GAAP net loss per diluted common share 0.06 0.03 0.11 0.07
----------- ----------- ----------- -----------
Non-GAAP adjusted net income (loss) per diluted common share $ 0.01 $ (0.04) $ 0.02 $ (0.05)
=========== =========== =========== ===========
Weighted average shares used in calculation of net loss per
common share
Basic and diluted 35,766 35,731 35,741 35,678
=========== =========== =========== ===========
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