Management Network Group Inc. (TMNG, Financial) filed Quarterly Report for the period ended 2009-04-04.
The Management Network Group Inc. provides management consulting services to the global telecommunications and e-business industries including communications service providers technology companies and financial services firms in the United States Canada Europe Latin America and other major international markets. TMNG provides comprehensive business solutions from initial strategic client needs assessments through improvements in operations. Management Network Group Inc. has a market cap of $12.5 million; its shares were traded at around $0.36 with a P/E ratio of 9 and P/S ratio of 0.2.
Prior to accepting the UBS settlement offer, we recorded all of our auction rate securities as available-for-sale investments. Upon accepting the UBS settlement, the Company made a one-time election to transfer its UBS auction rate securities holdings from available-for-sale securities to trading securities under SFAS No. 115. For auction rate securities classified as available-for-sale we recognized unrealized holding gains of $397,000 million during the thirteen weeks ended April 4, 2009 and recognized unrealized holding losses of $458,000 million during the thirteen weeks ended March 29, 2008. For auction rate securities classified as trading securities we recognized unrealized holding gains of $169,000 million offset by realized losses on the Companys ARS Rights of $146,000 million during the thirteen weeks ended April 4, 2009. The ARS Rights will continue to be measured at fair value under SFAS No. 159 until the earlier of our exercise of the ARS Rights or UBSs purchase of the auction rate securities at par value in connection with the ARS Rights Agreement.
Revenue Recognition We recognize revenues from time and materials consulting contracts in the period in which our services are performed. We recognized $6.2 million and $9.6 million in revenues from time and materials contracts during the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. In addition to time and materials contracts, our other types of contracts include time and materials contracts not to exceed contract price, fixed fee contracts, and contingent fee contracts. During the thirteen weeks ended April 4, 2009 and March 29, 2008, we recognized $8.0 million and $11.9 million in revenues on these other types of contracts. We recognize revenues on milestone or deliverables-based fixed fee contracts and time and materials contracts not to exceed contract price using the percentage of completion method prescribed by AICPA Statement of Position (SOP) No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP No. 81-1). For fixed fee contracts where services are not based on providing deliverables or achieving milestones, we recognize revenues on a straight-line basis over the period during which such services are expected to be performed. In connection with some fixed fee contracts, we receive payments from customers that exceed recognized revenues. We record the excess of receipts from customers over recognized revenue as deferred revenue. Deferred revenue is classified as a current liability to the extent it is expected to be earned within twelve months from the date of the balance sheet.
Management Consulting Services Segment - Management Consulting Services segment revenues decreased 33.5% to $10.6 million for the first quarter of 2009 from $16.0 million for the same period of 2008. Revenues in our global operational consulting practices decreased by $4.7 million and revenues in our global strategy consulting practices decreased by $0.7 million.
During the thirteen weeks ended April 4, 2009, this segment provided services on 78 customer projects, compared to 120 projects performed in the thirteen weeks ended March 29, 2008. Average revenue per project was $136,000 in the thirteen weeks ended April 4, 2009, a slight increase compared to $133,000 in the thirteen weeks ended March 29, 2008. Our international revenues from this segment decreased to $1.1 million for the thirteen weeks ended April 4, 2009 from $2.5 million for the thirteen weeks ended March 29, 2008. International revenues have decreased as a percentage of total revenues of the segment from 15.7% to 10.5%. The decrease in international revenues was due to the completion of a major international project and unfavorable exchange rate movements.
Software Solutions Segment Software Solutions segment revenues decreased by 35.9% to $3.6 million for the thirteen weeks ended April 4, 2009 from $5.6 million for the thirteen weeks ended March 29, 2008. All revenues were generated internationally. During the thirteen weeks ended April 4, 2009 and March 29, 2008, this segment provided services on 75 and 84 customer projects, respectively. Average software and services revenue per project was approximately $37,000 and $60,000, respectively, for the thirteen weeks ended April 4, 2009 and March 29, 2008. The decrease in revenue per project for the thirteen weeks ended April 4, 2009 as compared to the 2008 period is primarily due to unfavorable exchange rate movements and decline in demand for software services. In addition, revenues from post-contract support services were approximately $515,000 and $551,000 for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively.
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The Management Network Group Inc. provides management consulting services to the global telecommunications and e-business industries including communications service providers technology companies and financial services firms in the United States Canada Europe Latin America and other major international markets. TMNG provides comprehensive business solutions from initial strategic client needs assessments through improvements in operations. Management Network Group Inc. has a market cap of $12.5 million; its shares were traded at around $0.36 with a P/E ratio of 9 and P/S ratio of 0.2.
Highlight of Business Operations:
Our noncurrent investments included $13.8 million ($14.8 million par value) in auction rate securities guaranteed through the Federal Family Education Loan Program of the U.S. Department of Education. As discussed in Note 2, Auction Rate Securities, in notes to condensed consolidated financial statements, during 2008, we reached a settlement agreement on $7.55 million of the auction rate securities allowing us to sell these auction rate securities held in accounts with UBS AG (UBS) and UBS affiliates at par value beginning June 30, 2010 and enabling us to borrow up to 75% of the fair value of the securities at zero net interest cost prior to the sales date. In addition, during the first quarter of 2009, we entered into a loan agreement with Citigroup to provide liquidity for the remainder of our $7.25 million auction rate securities portfolio held with Citigroup. Under the loan agreement, we have access to a revolving line of credit of up to 50% of the par value of the auction rate securities that we have pledged as collateral, or $3.625 million. As of April 4, 2009, we had borrowed $4.8 million against the line of credit with UBS. We have made no borrowings under the line of credit with Citigroup.Prior to accepting the UBS settlement offer, we recorded all of our auction rate securities as available-for-sale investments. Upon accepting the UBS settlement, the Company made a one-time election to transfer its UBS auction rate securities holdings from available-for-sale securities to trading securities under SFAS No. 115. For auction rate securities classified as available-for-sale we recognized unrealized holding gains of $397,000 million during the thirteen weeks ended April 4, 2009 and recognized unrealized holding losses of $458,000 million during the thirteen weeks ended March 29, 2008. For auction rate securities classified as trading securities we recognized unrealized holding gains of $169,000 million offset by realized losses on the Companys ARS Rights of $146,000 million during the thirteen weeks ended April 4, 2009. The ARS Rights will continue to be measured at fair value under SFAS No. 159 until the earlier of our exercise of the ARS Rights or UBSs purchase of the auction rate securities at par value in connection with the ARS Rights Agreement.
Revenue Recognition We recognize revenues from time and materials consulting contracts in the period in which our services are performed. We recognized $6.2 million and $9.6 million in revenues from time and materials contracts during the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. In addition to time and materials contracts, our other types of contracts include time and materials contracts not to exceed contract price, fixed fee contracts, and contingent fee contracts. During the thirteen weeks ended April 4, 2009 and March 29, 2008, we recognized $8.0 million and $11.9 million in revenues on these other types of contracts. We recognize revenues on milestone or deliverables-based fixed fee contracts and time and materials contracts not to exceed contract price using the percentage of completion method prescribed by AICPA Statement of Position (SOP) No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP No. 81-1). For fixed fee contracts where services are not based on providing deliverables or achieving milestones, we recognize revenues on a straight-line basis over the period during which such services are expected to be performed. In connection with some fixed fee contracts, we receive payments from customers that exceed recognized revenues. We record the excess of receipts from customers over recognized revenue as deferred revenue. Deferred revenue is classified as a current liability to the extent it is expected to be earned within twelve months from the date of the balance sheet.
Management Consulting Services Segment - Management Consulting Services segment revenues decreased 33.5% to $10.6 million for the first quarter of 2009 from $16.0 million for the same period of 2008. Revenues in our global operational consulting practices decreased by $4.7 million and revenues in our global strategy consulting practices decreased by $0.7 million.
During the thirteen weeks ended April 4, 2009, this segment provided services on 78 customer projects, compared to 120 projects performed in the thirteen weeks ended March 29, 2008. Average revenue per project was $136,000 in the thirteen weeks ended April 4, 2009, a slight increase compared to $133,000 in the thirteen weeks ended March 29, 2008. Our international revenues from this segment decreased to $1.1 million for the thirteen weeks ended April 4, 2009 from $2.5 million for the thirteen weeks ended March 29, 2008. International revenues have decreased as a percentage of total revenues of the segment from 15.7% to 10.5%. The decrease in international revenues was due to the completion of a major international project and unfavorable exchange rate movements.
Software Solutions Segment Software Solutions segment revenues decreased by 35.9% to $3.6 million for the thirteen weeks ended April 4, 2009 from $5.6 million for the thirteen weeks ended March 29, 2008. All revenues were generated internationally. During the thirteen weeks ended April 4, 2009 and March 29, 2008, this segment provided services on 75 and 84 customer projects, respectively. Average software and services revenue per project was approximately $37,000 and $60,000, respectively, for the thirteen weeks ended April 4, 2009 and March 29, 2008. The decrease in revenue per project for the thirteen weeks ended April 4, 2009 as compared to the 2008 period is primarily due to unfavorable exchange rate movements and decline in demand for software services. In addition, revenues from post-contract support services were approximately $515,000 and $551,000 for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively.
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