OVERLAND PARK, Kan., Aug. 7, 2008 (PRIME NEWSWIRE) -- TMNG Global (Nasdaq:TMNG), a leading provider of management consulting and software solution services to the global communications, media and entertainment industries, reported financial results for its 2008 second quarter ended June 28, 2008.
Revenues in the second quarter of 2008 were $20.6 million, up 36.1% over revenues of $15.1 million in the prior year period, reflecting solid contributions from both the Management Consulting and Software Solutions segments. During the quarter, TMNG Global's gross margin was 46.2%, compared with 43.9% in the second quarter of 2007.
TMNG Global reported a net loss of ($8.9) million or ($0.25) per diluted share for the second quarter of 2008, compared to a net loss of ($1.7) million, or ($0.05) per diluted share in last year's second quarter. Net loss in the quarter was impacted by a non-cash goodwill impairment charge of $9.1 million related to the March 2002 acquisition of CSMG. After adjusting for the after-tax impact of the impairment charge as well as other non-cash charges, including depreciation, amortization and share-based compensation, TMNG Global generated non-GAAP adjusted net income of $2.1 million, or $0.06 per diluted share, during the second quarter of 2008. The comparable non-GAAP adjusted net income for the second quarter of fiscal 2007, which included an adjustment for expenses related to the review of the Company's option granting practices, was $0.1 million, or break even on a diluted share basis.
TMNG Global generated cash flow from operations of $4.3 million in the second quarter 2008, compared to $1.9 million in last year's second quarter.
The Company ended the second quarter with cash and cash equivalents of $12.6 million, long-term investments of $14.3 million, no long-term debt, and stockholders' equity of $44.8 million.
"Our continued revenue growth year-over-year and improved non-GAAP profitability demonstrate that our strategy is working well, even in a challenging environment for corporate spending," said Richard Nespola, TMNG Global Chairman and CEO. "Our Ascertain(tm) revenue-assurance software and our self-amortizing consulting services remain in demand, particularly in the cable sector, and we continue to see solid new customer and total engagement activity overall. While an increasingly uncertain economy is causing a few select large service providers to tighten their belts and others to exercise caution in the timing of purchase decisions as we move into the second half of the year, we are in an excellent competitive position with strong customer interest in our unique offerings. We remain focused on driving revenue growth and positive cash flow from operations."
Financial Results for the Twenty-Six Weeks Ended June 30, 2007
For the twenty-six weeks ended June 28, 2008, revenues increased 39.3% to $42.1 million, compared with $30.2 million in the comparable year-ago period. TMNG Global's gross margin was 46.6% during the twenty-six weeks ended June 28, 2008, compared with 44.5% in the comparable year-ago period.
Net loss for the twenty-six weeks ended June 28, 2008 was ($8.6) million or ($0.24) per diluted share, compared with a net loss of ($3.3) million or ($0.09) per diluted share in the comparable year-ago period. GAAP results included the goodwill impairment charge in the second quarter of 2008, as discussed above. Non-GAAP adjusted net income, adjusted for the after tax impact of non-cash expenses, including the impairment charge, depreciation and amortization expense, and share-based compensation, was approximately $4.4 million, or $0.12 per diluted share, for the twenty-six weeks ended June 28, 2008. The comparable non-GAAP adjusted net income for the twenty-six weeks ended June 30, 2007 was $0.2 million, or $0.01 per diluted share, which excluded expenses related to the review of the Company's option granting practices.
For the twenty-six weeks ended June 28, 2008, cash flow from operations was $6.8 million, compared to ($0.5) million in the comparable year-ago period.
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 schedule entitled "Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Income" that accompanies this press release. In making these non-GAAP adjustments, the Company took into account certain non-cash expenses and benefits, including tax effects as applicable, and the impact of certain items that are generally not expected to be on-going in nature. 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 Global's comparative operating performance for the periods presented.
TMNG Global's management uses the non-GAAP financial measure in its own evaluation of the Company's performance, particularly when comparing performance to the prior year's period. TMNG Global's non-GAAP measure may differ from similar measures by other companies, even if similar terms are used to identify such measures. Although TMNG Global's management believes the non-GAAP financial measure is useful in evaluating the performance of its business, TMNG Global acknowledges that items excluded from such measure have a material impact on the Company's net loss and net 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 Global's results.
Conference Call
The Company will host a conference call at 5:00 p.m. ET today to discuss 2008 second quarter results. Investors can access the conference call via a live webcast on the Company's website, www.tmng.com, or by dialing 800-860-2442 in the United States or 412-858-4600 from international locations and referencing the TMNG Global call. 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 877-344-7529, pass code 421587, through August 14, 2008.
About TMNG Global
TMNG Global (Nasdaq:TMNG) is a leading provider of professional services to the converging communications industry. Its companies, TMNG, CSMG, Cartesian, and TWG 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 Boston, Chicago, London, New Jersey, New York, Shanghai and Washington, D. C.
Cautionary Statement Regarding Forward Looking Information
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, any statements that do not relate to historical or current facts constitute forward-looking statements, including any statements contained herein regarding expectations with respect to the Company's future business, financial condition and results of operations. Forward-looking statements 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, the ability of the Company to successfully integrate recent acquisitions, 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, technological advances and competitive factors in the markets in which the Company competes, and the factors described in this press release and in TMNG Global's filings with the Securities and Exchange Commission, including the risks described in TMNG Global's periodic reports filed with the SEC, including, but not limited to, "Cautionary Statement Regarding Forward Looking Information" under Part I of its Annual Report on Form 10-K for the fiscal year ended December 29, 2007 and subsequent periodic reports containing updated disclosures of such risks. These filings are available at the SEC's web site at www.sec.gov. TMNG Global does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances.
THE MANAGEMENT NETWORK GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Thirteen Twenty-six
Weeks Ended Weeks Ended
------------------- -------------------
June 28 June 30 June 28 June 30
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 20,576 $ 15,120 $ 42,117 $ 30,233
Cost of services
(includes net non-cash
share-based compensation
expense (credits) of
$189 and $81 for the
thirteen weeks ended
June 28, 2008 and June
30, 2007, respectively
and $382 and $(67) for
the twenty-six weeks
ended June 28, 2008 and
June 30, 2007,
respectively) 11,072 8,475 22,486 16,794
-------- -------- -------- --------
Gross Profit 9,504 6,645 19,631 13,439
Operating Expenses:
Selling, general and
administrative
(includes net non-cash
share-based compensation
expense of $407 and
$307 for the thirteen
weeks ended June 28,
2008 and June 30, 2007,
respectively and $843
and $11 for the
twenty-six weeks ended
June 28, 2008 and June
30, 2007, respectively) 8,120 7,054 16,962 13,834
Goodwill impairment 9,079 9,079
Special Committee
investigation 789 2,348
Intangible asset
amortization 1,246 552 2,494 1,092
-------- -------- -------- --------
Total operating expenses 18,445 8,395 28,535 17,274
-------- -------- -------- --------
Loss from operations (8,941) (1,750) (8,904) (3,835)
Interest income 211 381 517 798
-------- -------- -------- --------
Loss before income tax
provision (8,730) (1,369) (8,387) (3,037)
Income tax provision (160) (285) (242) (284)
-------- -------- -------- --------
Net Loss $ (8,890) $ (1,654) $ (8,629) $ (3,321)
======== ======== ======== ========
Net Loss per common
share:
Basic and diluted $ (0.25) $ (0.05) $ (0.24) $ (0.09)
======== ======== ======== ========
Weighted average shares
used in calculation of
net loss per common
share:
Basic and diluted 36,117 35,766 36,225 35,741
======== ======== ======== ========
THE MANAGEMENT NETWORK GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
June 28, Dec. 29,
2008 2007
-------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,594 $ 10,022
Short-term investments 17,125
Receivables:
Accounts receivable 12,800 13,044
Accounts receivable -- unbilled 5,641 7,804
-------- --------
18,441 20,848
Less: Allowance for doubtful accounts (663) (562)
-------- --------
17,778 20,286
Prepaid and other current assets 1,312 1,763
-------- --------
Total current assets 31,684 49,196
Property and equipment, net 1,717 1,784
Goodwill 5,084 13,365
Licenses and identifiable intangible
assets, net 8,736 11,605
Non-current investments 14,338
Other assets 632 616
-------- --------
Total Assets $ 62,191 $ 76,566
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 2,119 $ 1,927
Accrued payroll, bonuses and related
expenses 5,120 5,038
Other accrued liabilities 2,311 2,466
Income tax liabilities 697 861
Deferred revenue 3,053 3,554
Accrued contingent consideration 161 1,616
Unfavorable and other contractual
obligations 1,172 1,668
-------- --------
Total current liabilities 14,633 17,130
NONCURRENT LIABILITIES:
Deferred income tax liabilities 767 1,368
Unfavorable and other contractual
obligations 1,407 1,716
Other noncurrent liabilities 540 524
-------- --------
Total noncurrent liabilities 2,714 3,608
Total stockholders' equity 44,844 55,828
-------- --------
Total Liabilities and Stockholders' Equity $ 62,191 $ 76,566
======== ========
THE MANAGEMENT NETWORK GROUP, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME
(unaudited)
(in thousands, except per share data)
Thirteen Weeks Twenty-six Weeks
Ended Ended
------------------ ------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Reconciliation of GAAP
net loss to non-GAAP
adjusted net income:
GAAP net loss $ (8,890) $ (1,654) $ (8,629) $ (3,321)
-------- -------- -------- --------
Special Committee
investigation 789 2,348
Goodwill impairment 9,079 9,079
Depreciation and
amortization 1,594 809 3,186 1,681
Non-cash share based
compensation expense
(credits) 596 388 1,225 (56)
Tax effect of
applicable non-GAAP
adjustments (252) (222) (511) (427)
-------- -------- -------- --------
Adjustments to GAAP
net loss 11,017 1,764 12,979 3,546
-------- -------- -------- --------
Non-GAAP adjusted net
income $ 2,127 $ 110 $ 4,350 $ 225
======== ======== ======== ========
Reconciliation of GAAP
net loss per diluted
common share to non-
GAAP adjusted net
income per diluted
common share:
GAAP net loss per
diluted common share $ (0.25) $ (0.05) $ (0.24) $ (0.09)
-------- -------- -------- --------
Special Committee
investigation 0.02 0.06
Goodwill impairment 0.25 0.25
Depreciation and
amortization 0.05 0.03 0.09 0.05
Non-cash share based
compensation expense
(credits) 0.02 0.01 0.03
Tax effect of
applicable non-GAAP
adjustments (0.01) (0.01) (0.01) (0.01)
-------- -------- -------- --------
Adjustments to GAAP
net loss per diluted
common share 0.31 0.05 0.36 0.10
-------- -------- -------- --------
Non-GAAP adjusted net
income per diluted
common share $ 0.06 $ 0.00 $ 0.12 $ 0.01
======== ======== ======== ========
Weighted average shares
used in calculation of
diluted net loss per
common share 36,117 35,766 36,225 35,741
======== ======== ======== ========