Management Network Group Inc. (TMNG, Financial) filed Quarterly Report for the period ended 2010-07-03.
Management Network Group Inc. has a market cap of $18.8 million; its shares were traded at around $2.67 with a P/E ratio of 44.5 and P/S ratio of 0.3. TMNG is in the portfolios of Jim Simons of Renaissance Technologies LLC, Jim Simons of Renaissance Technologies LLC.
we recognized realized holding gains of $232,000 and $342,000, respectively, offset by realized losses on the Companys ARS Rights of $202,000 and $286,000, respectively, during the thirteen and twenty-six weeks ended July 3, 2010. For auction rate securities classified as trading securities, we recognized realized holding gains of $229,000 and $398,000, respectively, offset by realized losses on the Companys ARS Rights of $147,000 and $293,000, respectively, during the thirteen and twenty-six weeks ended July 4, 2009. The ARS Rights were measured at fair value under FASB ASC 825. During the thirteen weeks ended July 3, 2010, all of the auction rate securities classified as available-for-sale were sold at par value of $5.5 million.
Revenue Recognition We recognize revenues from time and materials consulting contracts in the period in which our services are performed. We recognized $6.4 million and $6.9 million in revenues from time and materials contracts during the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively. We recognized $12.7 million and $13.1 million in revenues from time and materials contracts during the twenty-six weeks ended July 3, 2010 and July 4, 2009, respectively. In addition to time and materials contracts, our other types of contracts include fixed fee contracts and contingent fee contracts. During the thirteen weeks ended July 3, 2010 and July 4, 2009, we recognized $10.6 million and $9.9 million in revenues on these other types of contracts. We recognized $21.7 million and $17.9 million in revenues from these other types of contracts during the twenty-six weeks ended July 3, 2010 and July 4, 2009, respectively. 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-like method described by FASB ASC 605-35, "Revenue Recognition Construction-Type and Production-Type Contracts (formerly AICPA Statement of Position (SOP) No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts"). 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.
EMEA Segment EMEA segment revenues decreased by 21.6% to $3.6 million for the thirteen weeks ended July 3, 2010 from $4.6 million for the thirteen weeks ended July 4, 2009. All revenues were generated internationally. During the thirteen weeks ended July 3, 2010 and July 4, 2009, this segment provided services on 92 and 99 customer projects, respectively. Average revenue per project was approximately $33,000 and $40,000, respectively, for the thirteen weeks ended July 3, 2010 and July 4, 2009. The decrease in revenue per project for the thirteen weeks ended July 3, 2010 as compared to the 2009 period is primarily due to a decline in demand for technology and software services. Revenues from post-contract software related support services were approximately $631,000 and $556,000 for the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively. There were no revenues from software licensing during the thirteen weeks ended July 3, 2010. Revenues from software licensing during the thirteen weeks ended July 4, 2009 were $117,000.
Costs of services increased 8.8% to $10.3 million for the thirteen weeks ended July 3, 2010 from $9.5 million for the thirteen weeks ended July 4, 2009. Our gross margin was 39.1% for the thirteen weeks ended July 3, 2010 compared to 43.6% for the thirteen weeks ended July 4, 2009. Cost of services during the thirteen weeks ended July 3, 2010 were $7.9 million and $2.4 million, respectively, in our North America and EMEA segments. Cost of services during the thirteen weeks ended July 4, 2009 were $6.7 million and $2.8 million, respectively, in our North America and EMEA segments. Our North America segment gross margin was 40.8% for the thirteen weeks ended July 3, 2010 compared to 45.0% for the thirteen weeks ended July 4, 2009. The decrease in gross margin in the second quarter of 2010 as compared to the same period of 2009 in our North America segment is primarily due to longer term and lower margin management consulting projects and the completion of a large management consulting project in 2009, partially offset by an increase in strategy engagements resulting in higher utilization of our fixed employee consulting base. Our EMEA segment gross margin was 33.1% for the thirteen weeks ended July 3, 2010, compared to 39.9% for the thirteen weeks ended July 4, 2009. Margin reductions in the EMEA segment are primarily related to lower revenue volumes driven by a reduction in demand for software services. Costs of services in the EMEA segment included amortization of intangible assets of $140,000 and $146,000, respectively, for the thirteen weeks ended July 3, 2010 and July 4, 2009, related to acquired software. The reduction in intangible amortization is due to exchange rate movements.
Interest income was $44,000 and $56,000 for the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively, and represented interest earned on invested balances. Interest income decreased for the thirteen weeks ended July 3, 2010 as compared to the thirteen weeks ended July 4, 2009 due primarily to reductions in interest rates and reductions in invested balances. We primarily invest in money market funds and have holdings in auction rate securities. For the thirteen weeks ended July 3, 2010, other income includes $232,000 in realized holding gains for auction rate securities classified as trading securities, offset by realized losses on our ARS Rights of $202,000. For the thirteen weeks ended July 4, 2009, other income includes $229,000 in realized holding gains for auction rate securities classified as trading securities, offset by realized losses on our ARS Rights of $147,000.
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Management Network Group Inc. has a market cap of $18.8 million; its shares were traded at around $2.67 with a P/E ratio of 44.5 and P/S ratio of 0.3. TMNG is in the portfolios of Jim Simons of Renaissance Technologies LLC, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
As of July 3, 2010 and January 2, 2010, $6.9 million in auction rate securities ($7.3 million par value) is reflected as non-current assets on our Condensed Consolidated Balance Sheet (unaudited). All of these auction rate securities are classified as available-for-sale investments. For auction rate securities classified as available-for-sale, we recognized unrealized holding (losses) gains of ($62,000) and $1,000, respectively during the thirteen and twenty-six weeks ended July 3, 2010 and recognized unrealized holding gains of $292,000 and $689,000, respectively during the thirteen and twenty-six weeks ended July 4, 2009.we recognized realized holding gains of $232,000 and $342,000, respectively, offset by realized losses on the Companys ARS Rights of $202,000 and $286,000, respectively, during the thirteen and twenty-six weeks ended July 3, 2010. For auction rate securities classified as trading securities, we recognized realized holding gains of $229,000 and $398,000, respectively, offset by realized losses on the Companys ARS Rights of $147,000 and $293,000, respectively, during the thirteen and twenty-six weeks ended July 4, 2009. The ARS Rights were measured at fair value under FASB ASC 825. During the thirteen weeks ended July 3, 2010, all of the auction rate securities classified as available-for-sale were sold at par value of $5.5 million.
Revenue Recognition We recognize revenues from time and materials consulting contracts in the period in which our services are performed. We recognized $6.4 million and $6.9 million in revenues from time and materials contracts during the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively. We recognized $12.7 million and $13.1 million in revenues from time and materials contracts during the twenty-six weeks ended July 3, 2010 and July 4, 2009, respectively. In addition to time and materials contracts, our other types of contracts include fixed fee contracts and contingent fee contracts. During the thirteen weeks ended July 3, 2010 and July 4, 2009, we recognized $10.6 million and $9.9 million in revenues on these other types of contracts. We recognized $21.7 million and $17.9 million in revenues from these other types of contracts during the twenty-six weeks ended July 3, 2010 and July 4, 2009, respectively. 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-like method described by FASB ASC 605-35, "Revenue Recognition Construction-Type and Production-Type Contracts (formerly AICPA Statement of Position (SOP) No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts"). 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.
EMEA Segment EMEA segment revenues decreased by 21.6% to $3.6 million for the thirteen weeks ended July 3, 2010 from $4.6 million for the thirteen weeks ended July 4, 2009. All revenues were generated internationally. During the thirteen weeks ended July 3, 2010 and July 4, 2009, this segment provided services on 92 and 99 customer projects, respectively. Average revenue per project was approximately $33,000 and $40,000, respectively, for the thirteen weeks ended July 3, 2010 and July 4, 2009. The decrease in revenue per project for the thirteen weeks ended July 3, 2010 as compared to the 2009 period is primarily due to a decline in demand for technology and software services. Revenues from post-contract software related support services were approximately $631,000 and $556,000 for the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively. There were no revenues from software licensing during the thirteen weeks ended July 3, 2010. Revenues from software licensing during the thirteen weeks ended July 4, 2009 were $117,000.
Costs of services increased 8.8% to $10.3 million for the thirteen weeks ended July 3, 2010 from $9.5 million for the thirteen weeks ended July 4, 2009. Our gross margin was 39.1% for the thirteen weeks ended July 3, 2010 compared to 43.6% for the thirteen weeks ended July 4, 2009. Cost of services during the thirteen weeks ended July 3, 2010 were $7.9 million and $2.4 million, respectively, in our North America and EMEA segments. Cost of services during the thirteen weeks ended July 4, 2009 were $6.7 million and $2.8 million, respectively, in our North America and EMEA segments. Our North America segment gross margin was 40.8% for the thirteen weeks ended July 3, 2010 compared to 45.0% for the thirteen weeks ended July 4, 2009. The decrease in gross margin in the second quarter of 2010 as compared to the same period of 2009 in our North America segment is primarily due to longer term and lower margin management consulting projects and the completion of a large management consulting project in 2009, partially offset by an increase in strategy engagements resulting in higher utilization of our fixed employee consulting base. Our EMEA segment gross margin was 33.1% for the thirteen weeks ended July 3, 2010, compared to 39.9% for the thirteen weeks ended July 4, 2009. Margin reductions in the EMEA segment are primarily related to lower revenue volumes driven by a reduction in demand for software services. Costs of services in the EMEA segment included amortization of intangible assets of $140,000 and $146,000, respectively, for the thirteen weeks ended July 3, 2010 and July 4, 2009, related to acquired software. The reduction in intangible amortization is due to exchange rate movements.
Interest income was $44,000 and $56,000 for the thirteen weeks ended July 3, 2010 and July 4, 2009, respectively, and represented interest earned on invested balances. Interest income decreased for the thirteen weeks ended July 3, 2010 as compared to the thirteen weeks ended July 4, 2009 due primarily to reductions in interest rates and reductions in invested balances. We primarily invest in money market funds and have holdings in auction rate securities. For the thirteen weeks ended July 3, 2010, other income includes $232,000 in realized holding gains for auction rate securities classified as trading securities, offset by realized losses on our ARS Rights of $202,000. For the thirteen weeks ended July 4, 2009, other income includes $229,000 in realized holding gains for auction rate securities classified as trading securities, offset by realized losses on our ARS Rights of $147,000.
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