<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From ________ to ____________
Commission file number 1-12145
SNYDER COMMUNICATIONS, INC.
(Exact name of registrant as specified in its character)
Delaware 52-1983617
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
Two Democracy Center
6903 Rockledge Drive
15th Floor 20817
Bethesda, Maryland
(Address of principal (Zip Code)
executive office)
(301) 468-1010
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
---- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.001 Par Value--33,496,562 shares outstanding as of November 1,
1996.
<PAGE> 2
SNYDER COMMUNICATIONS, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet-- December 31, 1995 and September 30, 1996. 3
Condensed Consolidated Statement of Income--Three months ended September 30, 1995
and 1996; Nine months ended September 30, 1995 and 1996. 4
Condensed Consolidated Statement of Cash Flows--Nine months ended September 30, 1995
and 1996. 5
Notes to Condensed Consolidated Financial Statements--September 30, 1996. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
SNYDER COMMUNICATIONS, INC.
(SEE NOTE 1)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents........................ $ 3,881,512 $62,708,725
Accounts receivable, net of allowance
for doubtful accounts of $100,000
at December 31, 1995 and $150,000
at September 30, 1996.................... 3,046,460 5,508,329
Deferred tax asset.......................... 58,000 644,623
Prepaid expenses and other assets........... 124,837 180,984
----------- -----------
Total current assets................... 7,110,809 69,042,661
Notes and advances to stockholders.............. 2,770,426 --
Property and equipment, net..................... 2,336,254 4,741,624
Deferred financing costs, net................... 496,001 416,605
Deposits and other assets....................... 313,025 790,028
----------- -----------
Total assets........................... $13,026,515 $74,990,918
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Subordinated debentures due to related
parties.................................... $ -- $ 5,280,985
Accounts payable and accrued expenses......... 3,348,051 9,093,910
Accrued payroll............................... 2,854,630 4,901,616
Current portion of long-term debt and
obligations under capital leases........... 204,047 1,318,307
Unearned revenue.............................. 2,209,809 6,961,674
----------- -----------
Total current liabilities.............. 8,616,537 27,556,492
Subordinated debentures due to related parties 5,125,821 --
Long-term debt and obligations under capital
leases.......................................... 334,418 1,717,273
----------- -----------
Total liabilities...................... 14,076,776 29,273,765
Equity:
Common stock, no stated par value, 3,000
shares authorized, 2,000 shares issued
and outstanding at December 31, 1995;
$.001 par value, 120,000,000 shares
authorized, 33,496,562 shares issued
and outstanding at September 30, 1996 500 33,497
Additional paid-in capital.................. 1,359,703 44,970,946
Retained earnings (deficit)................. (960,134) 712,710
Limited partners' (deficit) equity.......... (1,450,330) --
----------- -----------
Total (deficit) equity................. (1,050,261) 45,717,153
----------- -----------
Total liabilities and equity........... $13,026,515 $74,990,918
=========== ===========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
3
<PAGE> 4
SNYDER COMMUNICATIONS, INC.
(SEE NOTE 1)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------- --------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues............................................... $11,936,927 $21,465,020 $25,917,771 $56,326,296
Operating expenses:
Cost of services................................... 7,523,349 15,185,589 16,569,519 38,819,283
Selling, general and administrative expenses....... 1,935,782 4,525,442 4,705,398 11,096,926
----------- ----------- ----------- -----------
9,459,131 19,711,031 21,274,917 49,916,209
----------- ----------- ----------- -----------
Income from operations................................. 2,477,796 1,753,989 4,642,854 6,410,087
Interest expense--substantially all to related parties. (278,702) (309,838) (493,963) (862,242)
Interest income........................................ 68,978 36,184 81,455 133,021
----------- ----------- ----------- -----------
Income before taxes.................................... 2,268,072 1,480,335 4,230,346 5,680,866
Income tax (provision) benefit......................... (278,000) 600,076 (661,000) 600,076
---------- ----------- ---------- -----------
Net income............................................. $ 1,990,072 $ 2,080,411 $ 3,569,346 $ 6,280,942
=========== =========== =========== ===========
Pro forma income data (unaudited):
Historical income before income taxes as reported.. $ 2,268,072 $ 1,480,335 $ 4,230,346 $ 5,680,866
Pro forma provision for income taxes............... 897,022 585,472 1,673,102 2,246,783
----------- ----------- ----------- -----------
Pro forma net income........................... $ 1,371,050 $ 894,863 $ 2,557,244 $ 3,434,083
=========== =========== =========== ===========
Pro forma net income per share................. $ 0.05 $ 0.03 $ 0.09 $ 0.12
=========== =========== =========== ===========
Shares used in computing pro forma net income per
share....................................... 29,458,400 29,765,651 29,458,400 29,561,943
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
4
<PAGE> 5
SNYDER COMMUNICATIONS, INC.
(SEE NOTE 1)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------------------
1995 1996
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................ $3,569,346 $6,280,942
Adjustments to reconcile net income to
net cash provided by operating
activities--
Depreciation and amortization........................................ 460,664 718,471
(Gain) Loss on disposal of assets.................................... (20,207) 181,210
Deferred tax provision............................................... 47,000 (644,623)
Changes in assets and liabilities--
Accounts receivable.................................................. (3,540,632) (2,461,869)
Deposits and other assets............................................ (285,840) (477,003)
Prepaid expenses and other
assets............................................................. (19,035) (56,147)
Accrued payroll...................................................... 900,667 2,046,986
Accounts payable..................................................... 2,522,520 5,745,859
Unearned revenue..................................................... 2,326,778 4,751,865
---------- -----------
Net cash provided by operating
activities..................................................... 5,961,261 16,085,691
---------- -----------
Cash flows from investing activities:
Purchases of property and equipment....................................... (895,305) (1,404,718)
Note and net advances to SMS
stockholders............................................................ (2,725,000) --
---------- -----------
Net cash used in investing
activities..................................................... (3,620,305) (1,404,718)
---------- -----------
Cash flows from financing activities:
Repayment of notes payable to limited
partner................................................................. (2,606,151) --
Repayment of note payable................................................. (35,817) --
Proceeds from issuance of subordinated
debentures due to related parties....................................... 5,000,000 --
Proceeds from sale of partnership
interest................................................................ 2,050,000 --
Tax effect of equity transaction.......................................... (815,000) --
Debt issuance costs....................................................... (557,000) --
Distributions............................................................. (1,200,000) (15,904,225)
Proceeds from line of credit borrowing ................................... -- 1,958,910
Repayment of line of credit borrowing..................................... -- (850,000)
Payments on capital lease obligations..................................... (92,438) (232,142)
Proceeds from initial public offering..................................... -- 59,173,697
---------- -----------
Net cash provided by
financing activities........................................... 1,743,594 44,146,240
---------- -----------
Net increase in cash and
equivalents................................................................. 4,084,550 58,827,213
Cash and equivalents, beginning of
period...................................................................... 596,977 3,881,512
---------- -----------
Cash and equivalents, end of period........................................... $4,681,527 $62,708,725
========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest................................................................ $387,173 $627,681
Supplemental disclosure of noncash
activities:
Equipment purchased during the period
under capital leases.................................................... $261,823 $1,620,319
Distribution of note receivable from
stockholder to SMS stockholders......................................... -- 2,725,000
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
5
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SNYDER COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION:
On October 19, 1988, Collegiate Marketing and Communications, Inc., a
Delaware corporation (the "General Partner"), and a Delaware limited
partnership beneficially owned by Mortimer B. Zuckerman and Fred Drasner (the
"Original Limited Partner") entered into a partnership agreement (the
"Partnership Agreement") pursuant to the provisions of the Delaware Act, under
the name Collegiate Marketing and Communications, L.P. (the "Partnership"). On
September 1, 1989, the name of the Partnership was changed to Snyder
Communications, L.P., and the name of the General Partner was changed to Snyder
Communications, Inc. On May 18, 1995, the Partnership Agreement was amended to
admit several new limited partners into the Partnership. On June 25, 1996, the
name of the General Partner was changed to Snyder Marketing Services, Inc.
("SMS").
Snyder Communications, Inc., a Delaware corporation, was incorporated on June
25, 1996, to continue the business operations of the Partnership. Snyder
Communications, Inc., in conjunction with all of the existing partners in the
Partnership, reorganized on September 24, 1996, (the "Reorganization") upon the
effectiveness of the initial public offering of its common stock.
Prior to the Reorganization, SMS owned 63.85 percent of the Partnership and
the limited partners owned the remaining 36.15 percent. The Reorganization
resulted in the stockholders of SMS exchanging 100 percent of their SMS common
stock for common stock of Snyder Communications, Inc. simultaneously with the
limited partners exchanging their limited partnership interests in the
Partnership for common stock of Snyder Communications, Inc. After consummation
of the Reorganization, Snyder Communications, Inc. owns 100 percent of the
stock of SMS and, directly and indirectly (through its ownership of SMS), 100
percent of the interests in the Partnership. In connection with the
Reorganization, 29,458,400 shares of common stock were issued to the
shareholders of Snyder Communications, Inc.
The Reorganization was accounted for by combining the assets, liabilities and
operations of SMS, the Partnership and Snyder Communications, Inc., at their
historical cost basis. Accordingly, the accompanying condensed combined
balance sheet at December 31, 1995 and the condensed combined financial
statements for the interim periods ended September 30, 1995 include a
combination of the accounts of SMS and the Partnership after elimination of all
significant intercompany transactions. The accompanying condensed consolidated
financial statements as of and for the interim periods ended September 30, 1996
include the consolidated accounts of Snyder Communications, Inc., SMS and the
Partnership (the consolidated entity will be referred to herein as the
"Company" or "Snyder Communications") after elimination of all significant
intercompany transactions. Certain amounts previously presented have been
reclassified to conform to the September 30, 1996 presentation.
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. As a result, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The Company
believes that the disclosures made are adequate to make the information
presented not misleading. The condensed consolidated financial statements
reflect all adjustments (consisting of only normal recurring accruals) which,
in the opinion of management, are necessary to present fairly the financial
position, results of operations and cash flows of Snyder Communications as of
September 30, 1996 and 1995 and for the periods then ended. Operating results
for the three and nine month periods ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. The unaudited condensed consolidated financial statements
should be read in conjunction with the financial statements and footnotes
thereto included in the Company's Registration Statement on Form S-1
(Registration No. 333-7495) as filed with the Securities and Exchange
Commission.
6
<PAGE> 7
2. LINE OF CREDIT
The Company obtained a $2.5 million line of credit in September 1996. The line
of credit has a variable rate of interest and expires in September 1999. At
September 30, 1996, $1.1 million was outstanding, and the interest rate was
6.7%.
3. INITIAL PUBLIC OFFERING OF COMMON STOCK:
On September 30, 1996 the Company completed the initial public offering of
8,970,000 shares of its common stock, par value $0.001 per share (the "Common
Stock") at an offering price of $17.00 per share. The offering included
4,038,162 newly issued shares of Common Stock sold by the Company and 4,931,838
previously outstanding shares of Common Stock sold by selling stockholders.
The Company received net proceeds of $59.2 million from the offering (after
deducting the estimated costs associated with the offering). The Company did
not receive any proceeds from the sale of shares of Common Stock in the
offering by the selling stockholders.
4. INCOME TAXES:
The accompanying combined financial statements reflect no provision for
Federal or state income taxes related to income earned by the Partnership prior
to the Reorganization since each of the partners of the Partnership reflected
their share of the Partnership's net income on their respective tax returns.
Prior to January 1, 1996, SMS was taxed as a C corporation for Federal and
state corporate income tax purposes. For the period from January 1, 1996 until
the Reorganization, SMS had elected to be treated for Federal and certain state
income tax purposes as an S corporation. As a result, SMS does not have an
obligation to pay income taxes for the period from January 1, 1996 until the
Reorganization. Effective with the Reorganization, the Company will be treated
as a C corporation for Federal and state income tax purposes. At the date of
the Reorganization, the Company recognized an asset and an associated tax
benefit equal to the cumulative net deductible temporary differences existing
at that date. The income tax benefit reflected in the interim period ended
September 30, 1996 includes the tax effect of the net deductible temporary
differences existing at the date of the Reorganization offset by a provision
for income taxes for the period from September 24, 1996, the date of the
Reorganization, through September 30, 1996.
5. PRO FORMA NET INCOME PER SHARE:
Pro forma net income includes a provision for Federal and state income taxes
as if the Company had been a taxable C corporation for all periods presented.
The shares used in computing pro forma net income per share assume that the
Reorganization had occurred at the beginning of each of the periods presented
and reflect the issuance of additional shares as a result of the initial public
offering.
6. SUBSEQUENT EVENT:
On October 28, 1996 the Company used approximately $7.0 million of cash to
redeem in full the subordinated debentures ("the Debentures") due to related
parties. The Debentures were originally issued on May 18, 1995, and had an
original maturity date of December 31, 2001. The Debentures were classified as
long term at December 31, 1995, because the Company did not have the intent or
ability to repay them at December 31, 1995. The nonrecurring payment consisted
of the face amount of the Debentures, a prepayment penalty and accrued
interest. A nonrecurring charge of $1.2 million, net of a $795,000 tax
benefit, will be recorded during the quarter ended December 31, 1996 as an
extraordinary loss related to this early debt extinguishment. The nonrecurring
charge consists of prepayment penalties, and the write-off of unamortized
discount and debt issuance costs.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Snyder Communications provides innovative and high value-added outsourced
marketing services. The Company's clients are primarily Fortune 500 companies
with large annual marketing expenditures facing competitive pressures to retain
or expand market share. The Company utilizes its direct sales, which consists
of field sales, teleservices, and direct mail, and marketing services
capabilities to provide targeted product distribution to its customers.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Condensed
Consolidated Financial Statements of the Company and the accompanying notes
thereto included elsewhere in the Quarterly Report on Form 10-Q.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain forward-looking statements that involve risks and
uncertainties. These forward-looking statements consist of all statements
other than statements that are historical in nature, and reflect management's
best current view with respect to future events and financial performance.
There are many factors which could cause actual results to differ materially,
the most important of which are discussed in Item 5 under the caption, "Safe
Harbor For Forward-Looking Statements Under Private Securities Litigation
Reform Act of 1995; Certain Cautionary Statements." The forward-looking
statements made herein are qualified by reference to the discussion of the
factors made therein.
Overview
The Company's revenues grew significantly during the nine months ended
September 30, 1996. This continued rapid growth in the first nine months of
1996 is primarily the result of the continued expansion of the Company's Direct
Sales division. In the latter part of 1994, the Company entered into a
contract with AT&T Communications, Inc. ("AT&T") to sell telecommunications
services to residential customers using direct sales. The scope of the
services provided to AT&T by the Company increased in 1995 and in the first
nine months of 1996. In 1996, the Company has continued to add staff to its
field and teleservices sales forces, including field sales supervisors and
senior executives, to improve the quality of its sales force, training programs
and support systems for the continued expansion of existing services and the
introduction of additional clients.
The Company has been marketing business-to-business telecommunications services
using direct sales on behalf of MCI Telecommunications Corporation ("MCI")
since late 1994. The Company's revenue from these services grew through 1995
and the nine months ended September 30, 1996. In the third quarter of 1996,
the Company and MCI negotiated certain changes to their contractual
relationship. Commencing January 1, 1997, the Company will earn revenues based
on a percentage of revenues generated for MCI by the subscribers obtained by
the Company. The amount paid to the Company per subscriber is expected to be
lower under the new pricing formula than under the existing pricing formula and
therefore could result in lower gross revenues being generated under the
contract.
The Company recently has been successful in its efforts to expand the clients
to which it provides direct sales services. In the third quarter of 1996, the
Company entered into contracts with Lucent Technologies, BCS to market and sell
certain Lucent telecommunications equipment, DHL Airways, Inc. to market and
sell overnight package delivery services, and Echostar Communications
Corporation to market and sell satellite broadcast services. Also in the
third quarter of 1996, the Company entered into two contracts with Foundation
Health, a California health plan, to market and sell memberships in certain
managed health care plans to residential customers in designated areas. The
Company does not anticipate that these new contracts will begin to produce any
significant revenues until 1997.
Results of Operations
Revenues increased $9.6 million, or 80.7%, from $11.9 million in the third
quarter of 1995 to $21.5 million in the third quarter of 1996. For the nine
months ended September 30, 1996 revenues of $56.3 million were 117% greater
than the same period in 1995. Substantially all of the increase in revenues is
due to increased sales volumes in the direct sales business. The increase in
8
<PAGE> 9
revenues and sales volumes corresponds with the increase during 1995 and 1996
in the number of sales offices, the number of field sales personnel and the
number of teleservices representatives.
Cost of services increased $7.7 million from $7.5 million in the third quarter
of 1995 to $15.2 million in the third quarter of 1996. Cost of services as a
percentage of revenues increased from 63% in the third quarter of 1995 to 71%
in third quarter of 1996. For the nine months ended September 30, 1996 cost of
services as a percentage of revenues was 69% as compared to 64% during the same
period in 1995. The increase in the cost of services as a percentage of
revenues resulted from expenses incurred to build and expand upon the existing
infrastructure to support the continued growth of the Company's direct sales
business.
Selling, general and administrative expenses increased $2.6 million from $1.9
million in the third quarter of 1995 to $4.5 million in the third quarter of
1996. For the nine months ended September 30, 1996 selling, general and
administrative expenses were $11.1 million, an increase of $6.4 million from
the same period in 1995. Selling, general and administrative expenses
increased to 21% of revenue in the third quarter of 1996 from 16% in the third
quarter of 1995 and increased to 20% for the nine months ended September 30,
1996 as compared to 18% in the same period of 1995. The increase in selling,
general and administrative expenses is due primarily to additional personnel
and corporate expenses incurred to support the Company's growth.
Interest expense increased $31,000 to $310,000 in the third quarter of 1996
from $279,000 in the third quarter of 1995 due to an increase in the Company's
outstanding capital lease obligations during the third quarter of 1996. For
the nine months ended September 30, 1996 interest expense increased $368,000 to
$862,000 from $494,000 during the same period in 1995. Interest expense
increased during the nine months ended September 30, 1996 as compared to the
same period in 1995 because the subordinated debentures were not issued until
May 1995 resulting in only four months of interest expense during the nine
months ended September 30, 1995.
For the three months and nine months ended September 30, 1996 a net tax benefit
of $600,000 was recorded. This resulted from the $645,000 deferred tax asset
recorded in conjunction with the Reorganization and the change in the tax
status of the Company offset by the $45,000 tax provision recorded for the
period subsequent to the Reorganization during which the Company operated as a
C corporation for Federal and state income tax purposes. The tax provisions
recorded for the three months and nine months ended September 30, 1995 of
$278,000 and $661,000, respectively, reflect the tax liability of SMS, the
general partner of Snyder Communications, L.P. prior to the Reorganization.
The partners of Snyder Communications, L.P., and not the Partnership, were
responsible for the taxes on the income generated by the Partnership. See Note
3 to the September 30, 1996 condensed consolidated financial statements.
Pro forma net income decreased $476,000 to $895,000 in the third quarter of
1996 from $1.371 million in the third quarter of 1995 due primarily to the
increase in cost of services as previously discussed. For the nine months
ended September 30, 1996 pro forma net income increased $877,000 to $3.434
million from $2.557 million due primarily to the growth of the Company. For
the period from January 1, 1996 until the Reorganization, the Company had
elected to be treated for Federal and certain state income tax purposes as an S
corporation, and therefore, the stockholders of the Company were taxed on their
proportionate share of the Company's taxable income, and the Company did not
have an obligation to pay income taxes. Pro forma net income includes a
provision for Federal and state income taxes as if the Company had been a C
corporation for all periods presented.
Liquidity and Capital Resources
At September 30, 1996, the Company has $62.7 million in cash and equivalents.
Cash and equivalents increased $58.8 million during the nine months ended
September 30, 1996, due primarily to the $44.1 million provided by financing
activities and the $16.1 million provided by operating activities. The cash
flow from financing activities was provided by the $59.2 million in proceeds
from the initial public offering of common stock and $1.1 million in net
borrowings under a line of credit during the third quarter offset by $15.9
million in distributions to the SMS stockholders and limited partners, of which
$10 million was paid during the third quarter prior to the Reorganization and
the initial public offering.
9
<PAGE> 10
The Company experienced significant growth during the nine months ended
September 30, 1996 and expects to continue to grow through both internal
expansion and complementary acquisitions. The Company believes that the
proceeds from the initial public offering and cash provided by operations will
be sufficient to fund the Company's current operations and planned capital
expenditures.
On October 28, 1996 the Company redeemed the Debentures due to related parties.
The total payment of approximately $7 million consisted of the face amount of
the Debentures, a prepayment penalty, and accrued interest. The Debentures had
a stated interest rate of 12.25 percent, an effective interest rate of 17
percent, and an original maturity date of December 31, 2001. An extraordinary
loss of $1.2 million, net of a $795,000 tax benefit, will be recorded during
the fourth quarter related to the early redemption of the Debentures. At
October 28, 1996 the Company's only debt outstanding was a $1.1 million line of
credit and approximately $2.2 million in capital lease obligations.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 5. Other Information.
Safe Harbor For Forward-Looking Statements Under Private Securities Litigation
Reform Act of 1995; Certain Cautionary Statements
The Company and its representatives may from time to time make certain
forward-looking statements, both orally and in writing, including, without
limitation, statements made in the Company's Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in its
periodic reports filed with the Securities and Exchange Commission, including
this Quarterly Report on Form 10-Q. The Company wishes to take advantage of
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995, and is hereby filing cautionary statements identifying important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements made by or on behalf of the Company.
The Company's forward-looking statements are qualified in their entirety by
reference to and are accompanied by the following discussion.
The Company cautions the reader that this list of factors may not be
exhaustive. The Company operates in a rapidly changing industry, and new risk
factors emerge from time to time. Management cannot predict with accuracy all
such risk factors, the impact, if any, of such risk factors on the Company's
business, or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those projected in any
forward-looking statements. Accordingly, forward-looking statements should not
be relied upon as a prediction of actual results.
Many of the important factors discussed below were previously discussed in the
Company's Registration Statement on Form S-1 (Registration Statement No.
333-7495), which was declared effective by the Securities and Exchange
Commission on September 24, 1996.
Reliance on Major Clients; Risks Associated With Contracts. The Company's
largest client, AT&T, accounted for 59% of its revenues in 1995 and 61% of its
revenues in the first nine months of 1996. The Company also has a number of
other significant clients, each of which generated revenues ranging from
approximately 1% of revenues to 8% of revenues in 1995. In the first nine
months of 1995, MCI accounted for approximately 21% of the Company's revenues,
although the Company believes that the results for any particular period may
not necessarily be indicative of the results for the entire year. The loss of
AT&T, or any of the Company's other significant clients, would have a material
adverse effect on the Company. All of the Company's clients currently have
contracts with the Company for at least one year and, in certain cases,
multi-year duration, with renewal options. There can be no assurance that the
Company's clients will renew or extend such contracts. In addition, the
Company's contract with MCI and certain other significant clients may be
terminated upon relatively short notice, and all of the Company's significant
contracts prohibit the Company from providing services to a direct competitor
of a client during the term of the contract and, in certain cases, for a period
thereafter. If any significant client were to terminate or not renew its
contract with the Company, and the Company was unable to replace its business
with a new or existing client, it would have a material adverse effect on the
Company.
Management of Growth. The Company has experienced significant growth over the
past several years. Continued growth depends on its ability to successfully
utilize the Company's existing infrastructure and databases to perform services
for other clients, as well as the Company's ability to develop and successfully
implement new marketing methods and channels for new and existing clients and a
number of other factors, including the ability to recruit and retain qualified
personnel, the ability to effectively and economically train new and existing
personnel to sell new products and services, and the ability of the Company to
open new sales offices and call centers in a timely and economic fashion.
There can be no assurance that the Company will be able to maintain its
significant growth or that it will be able to manage its expanding operations
effectively, which could have a material adverse effect on its business,
financial condition and results of operations.
Growth Through Acquisitions; International Expansion. The Company intends to
expand its business, in part, through complementary acquisitions. There can be
no assurance that the Company will be able to successfully identify, complete
11
<PAGE> 12
or integrate acquisitions or that any particular acquisition will perform as
expected or contribute to any significant extent to the revenues or profits of
the Company. The Company is in the process of expanding its operations to the
United Kingdom. There can be no assurance that this or any other international
expansion will generate revenues or profits for the Company. Further, any
international operations will be subject to currency fluctuations and other
risks, including adverse developments in the operating environment in such
country, difficulties in staffing and managing foreign operations, and
potentially adverse tax consequences.
Competitive and Fragmented Industry; Potential Consumer Saturation. The
industry in which the Company competes is highly competitive and fragmented. A
number of the Company's competitors have capabilities and resources equal to,
or greater than, the Company's. There can be no assurance that, as the
industry continues to evolve, additional competitors with greater resources
than the Company will not enter the industry or that the Company's clients will
not choose to conduct more of their marketing services internally. In
addition, the effectiveness of marketing by telephone could also decrease as a
result of consumer saturation and increased consumer resistance to this
marketing method.
Dependence on Labor Force, Dependence on Key Personnel. The Company's industry
is highly labor intensive and experiences high personnel turnover. A higher
turnover rate increases the Company's recruiting and training costs and
decreases operating efficiencies and productivity. The Company's operations
require specially trained employees and growth in the Company's business will
require it to recruit and train qualified personnel to meet its needs. There
can be no assurance that the Company will be able to hire, train and retain a
sufficient labor force of qualified employees, particularly bilingual
employees. Also, an increase in hourly wages, costs of employee benefits,
employment taxes or commission rates could have a material adverse effect on
the Company. The success of the Company also is largely dependent on the
abilities and continued services of its executive officers and other key
employees, including Mr. Daniel M. Snyder, President, Chief Executive Officer
and Chairman of the Board of Directors. There can be no assurance that the
Company will be able to retain the services of such officers and employees.
Government Regulation. The Company's industry has become subject to an
increasing amount of Federal and state regulation in the past five years. The
Federal Communications Commission ("FCC") has rules under the Federal Telephone
Consumer Protection Act of 1991 that limit the hours during which telemarketers
may call consumers and prohibit the use of automated telephone dialing
equipment to call certain telephone numbers. The Federal Telemarketing and
Consumer Fraud and Abuse Prevention Act of 1994 (the "TCFAPA") broadly
authorizes the Federal Trade Commission ("FTC") to issue regulations
prohibiting misrepresentation in telephone sales. In addition, a number of
states have enacted or are considering enacting legislation to regulate
telephone and door-to-door solicitations. The Company believes that its
operations currently comply with the telephone solicitation rules of the FCC
and the FTC. However, there can be no assurance that additional Federal and
state legislation, or changes in regulatory implementation, would not limit the
activities of the Company or its clients in the future or significantly
increase the cost of regulatory compliance.
Several of the industries in which the Company's clients operate are subject to
varying degrees of government regulations, particularly the telecommunications
industries. Generally, compliance with these regulations is the responsibility
of the Company's clients. However, the Company could be subject to a variety
of enforcement or private actions for its failure or the failure of its clients
to comply with such regulations. One of the significant regulations of the FCC
applicable to long distance carriers, such as AT&T and MCI, prohibits the
unauthorized switching of subscribers' long distance carriers, also known in
the industry as "slamming." A fine of up to $100,000 may be imposed by the FCC
for each instance of slamming. In order to prevent unauthorized switches,
federal law requires that switches authorized over the telephone be verified
contemporaneously by a third party. The Company believes that its procedures
comply with this verification requirement. Effective August 1, 1996, the
Company became subject to third-party verification procedures for switches
obtained by the Company's field sales force for MCI. The Company expects that
the implementations of such third party verification will increase the
Company's costs to some extent. The Company's training and other procedures
are designed to prevent unauthorized switching, however, the Company cannot
completely ensure that each employee will always follow the Company's mandated
procedures. Accordingly, it is possible, and perhaps probable, that employees
may in some instance engage in unauthorized activities, including "slamming."
To the Company's knowledge, no FCC complaint has been brought against any of
12
<PAGE> 13
its clients as a result of the Company's services, although the Company
believes that the FCC is examining the activities of outside vendors used by
such providers. If complaints were brought, the Company's clients might assert
that such complaints constituted a breach of its agreement with the Company and
seek to terminate the contract. Any termination would likely have a material
adverse effect on the Company's operations. If such complaints resulted in
fines being assessed against the Company's clients, the clients could seek to
recover such fines from the Company, which, if recovered, could reduce the
Company's net income.
Potential Fluctuations in Quarterly Operating Results; Seasonality. The
Company has experienced, and in the future may experience, quarterly variation
in revenues due to a number of factors, many of which are outside of the
Company's control, including; the timing of new contracts, the timing of
clients's promotional campaigns and the seasonal patterns of certain businesses
services by the Company. Certain costs incurred by the Company may be
recognized in periods prior to the recognition of revenues under existing
contracts. Historically, seasonal variations in the Company's business have
been overshadowed by the Company's growth. The Company expects that in the
future its sales will reflect seasonal effects in the first and third quarters
due to weather related impact on the field sales force and the impact of the
Company's teleservices operations of the decreased ability to reach potential
customers as a result of summer vacations.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as an exhibit to this report.
10.1 Employment agreement between Snyder Communications, L.P. and
Shaun Gilmore dated July 31, 1996.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended September 30, 1996.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SNYDER COMMUNICATIONS, INC.
(Registrant)
Date: November 12, 1996 /s/ DANIEL M. SNYDER
------------------- -------------------
Daniel M. Snyder
Chairman, President, and
Chief Executive Officer
Date: November 12, 1996 /s/ MICHELE D. SNYDER
-------------------- --------------------
Michele D. Snyder
Vice Chairman, and
Chief Operating Officer
Date: November 12, 1996 /s/ A. CLAYTON PERFALL
-------------------- ---------------------
A. Clayton Perfall
Chief Financial Officer
(Principal Financial Officer)
14
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 31
day of July, 1996, by Snyder Communications, L. P., a Delaware limited
partnership with its principal place of business at 6903 Rockledge Drive,
Bethesda, Maryland 20817 (the "Partnership"); Snyder Communications, Inc., a
Delaware corporation, having the same principal place of business and having
been formed to succeed to the businesses of the Partnership by becoming a
holding company of the Partnership (the "Corporation"); and Shaun Gilmore
residing at 38 Country Lane, Basking Ridge, NJ 07920 (the "Executive"). The
Partnership and the Corporation shall be referred to herein as the "Employer."
WHEREAS, the parties wish to set forth the terms and
conditions upon which the Employer will employ the Executive;
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. Term of Employment; Title; Duties.
The Employer hereby employs the Executive, and the Executive
hereby accepts employment with the Employer, upon the terms set forth in this
Agreement. The Executive shall serve as the President of Direct Sales during
the term of his employment under this Agreement. The Executive shall report
directly to the Chairman and Chief Executive Officer, who shall have the
authority to direct, control and supervise the activities of the Executive.
The Executive shall perform such services consistent with his position as may
be assigned to him from time to time by such person.
2. Extent of Services.
The Executive agrees to devote his entire business time and
attention to the performance of his duties under this Agreement. He shall
perform his duties to the best of his ability and shall use his best efforts to
further the interests of the Employer. The Executive shall work at the
principal office of the Employer located in the Washington, D.C. metropolitan
area. The Executive represents and warrants to the Employer that he is able to
enter into this Agreement and that his ability to enter into this Agreement and
to fully perform his duties hereunder are not limited to or restricted by any
agreements or understandings between the Executive and any other person,
including, but not limited to, AT&T Communications, Inc. For the purposes of
this Agreement, the term "person"
<PAGE> 2
means any natural person, corporation, partnership, limited liability
partnership, limited liability company, or any other entity of any nature.
3. Base Salary.
The Employer shall pay the Executive a base annual salary of
$300,000.00. The salary shall be payable in biweekly installments of
$11,538.46, minus such deductions as may be required by law or reasonably
requested by the Executive. The Employer will review the Executive's base
salary no less often than annually in conjunction with its regular review of
executive salaries.
4. Bonus.
The Executive shall be guaranteed a bonus of $100,000 for the
remainder of 1996. Thereafter, the Executive shall be eligible for an annual
bonus of up to $200,000 in each calendar year based on the Executive's success
in reaching or exceeding certain performance objectives as set forth in, or
established in connection with, the annual business plan or budget by the Chief
Executive Officer or the Compensation Committee of the Board of Directors of
the Corporation.
5. Severance.
The Executive is an employee "at will" and may be terminated
by the Employer at any time with or without cause.
If the Executive is terminated by the Employer without cause
at any time, (i) the Executive shall receive from the Employer within ninety
(90) days of the date of his termination a severance payment equal to his
annual base salary at the date of termination minus such deductions as may be
required by law or reasonably requested by the Executive, and (ii) all of the
Executive's non-vested stock options that would have vested as set forth in
Section 6 of this Agreement during the calendar year in which the termination
occurred shall immediately vest as of the date of termination. If the
Executive voluntarily terminates his employment with the Employer or is
terminated for cause, no such severance payment shall be paid and no such stock
options shall vest.
If the Executive is involuntarily terminated in connection
with an acquisition of the Employer, whether through merger, sale of
substantially all of Employer's assets or otherwise, Executive shall receive a
severance payment of $500,000 within thirty (30) days following such
termination.
6. Stock Options.
On the date that the initial public offering of the common
stock of the Corporation (the "IPO") is consummated, the Executive shall be
granted by the
-2-
<PAGE> 3
Corporation two nonqualified stock options for the purchase of 100,000 shares
and 400,000 shares, respectively, for an aggregate of 500,000 shares of the
common stock of the Corporation each with an exercise price equal to the
initial public offering price of the common stock of the Corporation. The
stock option agreement for an award of 100,000 shares shall provide that the
option is fully vested from the date of grant, shall become exercisable six (6)
months from the date of grant, and shall provide that the option shall remain
exercisable through the fourth anniversary of the date of grant whether or not
the Executive's employment with the Employer continues. Accordingly, such
option shall remain exercisable through such fourth anniversary even if
Executive voluntarily terminates his employment with the Employer or is
terminated by the Employer with or without cause. Following such fourth
anniversary, if the Executive continues to be employed by the Employer, such
stock option shall remain exercisable through, and shall terminate on, the
earlier of ninety (90) days following the Executive's termination of employment
or the tenth anniversary of the date of grant.
The stock option agreement for the grant of the 400,000 shares
shall provide that the option shall vest at the rate of twenty-five percent
(25%) per year on each anniversary date of the consummation of the IPO of the
Corporation (subject to partial acceleration as provided in Section 5 of this
Agreement) such that the stock option shall be fully vested on the fourth
anniversary of such date, provided that the Executive continues to be employed
by the Employer. In addition, if Employer is acquired, whether through merger,
sale of substantially all of its assets or otherwise, the unvested portion of
such option shall vest and become exercisable immediately prior to the
acquisition of Employer. Such stock option shall terminate on the earlier of
ninety (90) days following the Executive's termination of employment or the
tenth anniversary of the date of grant.
The Employer shall register the common stock that may be
acquired upon exercise of the options on Form S-8 no later than thirty (30)
days following the initial public offering of the common stock of the
Corporation. The stock options shall be issued under a stock option plan that
complies with the provisions of Rule 16b-3 of the Securities and Exchange
Commission. The stock option agreements may contain such other and further
terms as are not inconsistent with this Agreement or the stock option plan.
7. Fringe Benefits.
(a) The Executive shall be entitled to all benefits generally
available to employees of the Employer. The Employer shall pay for one parking
space permit for the Executive.
(b) The Executive shall be entitled to four (4) weeks of
vacation during each year of employment. Such vacation shall be taken at such
times as the
-3-
<PAGE> 4
Executive and the Chairman and Chief Executive Officer of the Employer shall
agree. The Executive shall be entitled to sick leave and holidays in
accordance with the policy of the Employer as to its executive employees.
(c) For the calendar year 1997 and each calendar year
thereafter, the Executive shall be entitled to reimbursement of up to $8,000 in
financial counseling and tax preparation expenses incurred by the Executive in
such calendar year, upon submission to the Employer of invoices and other
documentation as may reasonably be requested by the Employer.
(d) The Executive shall be entitled for reimbursement for all
costs associated with relocating to the Washington, D.C. metropolitan area,
including temporary living expenses and closing costs (other than real estate
commissions) related to the sale of Executive's current primary residence and
the purchase of a new primary residence in the Washington, D.C. metropolitan
area. In addition, the Executive shall be entitled to reimbursement for up to
$150,000 in the aggregate for real estate commissions paid, and any capital
loss incurred, by the Executive as a result of the sale of the Executive's
current primary residence. The Executive shall be entitled for reimbursement
for such amounts upon submission to the Employer of such documentation as the
Employer may reasonably request.
8. Reimbursement of Business Expenses.
The Employer shall reimburse the Executive in accordance with
Employer's policies for all reasonable out-of-pocket costs incurred or paid by
the Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Executive of documentation, expense statements, vouchers, and/or such other
supporting information as the Employer may reasonably request
9. Automobile Allowance.
The Executive shall receive an automobile allowance of $450.00
per month which shall be paid with and in addition to the Executive's base
salary. The Executive shall not be required to account for the Executive's use
of such allowance.
10. Non-Solicitation and Non-Competition.
(a) The Executive agrees that while the Executive is employed
pursuant to this Agreement and for a period of twelve (12) months following
termination of the Executive's employment by the Employer for any reason (the
"Non-Competition Period"), whether by action of the Executive or the Employer,
the Executive will not, except as otherwise provided herein, engage or
participate, directly or indirectly, as principal, agent, executive, employee,
employer,
-4-
<PAGE> 5
consultant, stockholder, partner or in any other individual capacity
whatsoever, in the conduct or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business conducted by the Employer.
For the purpose of this Agreement, a business shall be
considered to be competitive with the business of the Employer if such business
is engaged in providing outsourced marketing services or any other business in
which the Employer is engaged at the time of termination of the Executive's
employment; provided, however, that any common carrier providing long-distance
telecommunications services shall not be deemed to be a business competitive
with the Employer. Accordingly, the non-competition provisions of this Section
10(a) shall not apply to such entities and Executive may be employed by, or be
otherwise associated with, any such entity during the Non-Competition Period.
(b) Employees. During the Non-Competition Period, the
Executive will not, for his/her own benefit or for the benefit of any person or
entity other than the Employer, (i) solicit, or assist any person or entity
other than the Employer to solicit, any officer, director, executive or
employee of the Employer to leave his/her employment, (ii) hire or cause to be
hired any present or former officer, director, executive or employee of the
Employer, or (iii) engage any present or former officer, director, executive or
employee of the Employer as a partner, contractor, sub-contractor, employee or
consultant.
(c) Customer and Business Relationships. During the
Non-Competition Period, the Executive will not (i) solicit, or assist any
person or entity other than the Employer to solicit, any person or entity that
is a client of the Employer, or has been a client of the Employer during the
prior twelve months, to purchase outsourced marketing services or any other
products or services the Employer provides to a client, or (ii) interfere with
any of Employer's business relationships.
(d) Reasonableness. The Executive acknowledges that (i) the
markets served by the Employer are national in scope and are not dependent on
the geographic location of the executive personnel or the businesses by which
they are employed; and (ii) the above covenants are manifestly reasonable on
their face, and the parties expressly agree that such restrictions have been
designed to be reasonable and no greater than is required for the protection of
the Employer.
(e) Investment. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with the
Employer, provided that such investments (i) are passive investments and
constitute one percent (1%) or less of the outstanding equity securities of
such an entity the equity securities of
-5-
<PAGE> 6
which are traded on a national securities exchange or other public market, and
(ii) are approved by the Employer.
(f) Enforceability of Restrictions. The parties to this
Agreement mutually agree that, in recognition of Employer's dependence on
Executive's experience to carry out its business plan and Executive's senior
and key position in the Employer, the restrictions detailed in Section 10 of
this Agreement are necessary and appropriate to give effect to the intended
relationships of the parties. Executive agrees that because damages arising
from violations of Section 10 of this Agreement are extremely difficult to
quantify with certainty, injunctive relief will be necessary to effect the
intent of such Section. Accordingly, Executive hereby consents to the
imposition of a preliminary or permanent injunction as a remedy to his breach
of Section 10 of this Agreement.
It is the desire and intent of the parties hereto that the
restrictions set forth in Section 10 of this Agreement shall be enforced and
adhered to in every particular, and in the event that any provision, clause or
phrase shall be declared by a court of competent jurisdiction to be judicially
unenforceable either in whole or in part - whether the fault be in duration,
geographic coverage or scope of activities precluded - the parties agree that
they will mutually petition the court to sever or limit the unenforceable
provision so as to retain and effectuate to the greatest extent legally
permissible the intent of the parties as expressed in Section 10 of this
Agreement.
11. Confidential Information.
(a) The Executive shall not (for his own benefit or the
benefit of any person or entity other than the Employer) use or disclose any of
the Employer's trade secrets or other confidential information. The term
"trade secrets or other confidential information" includes, by way of example,
matters of a technical nature, "know-how", computer programs (including
documentation of such programs), research projects, and matters of a business
nature, such as proprietary information about costs, profits, markets, sales,
lists of customers, and other information of a similar nature to the extent not
available to the public, and plans for future development. After termination
of this Agreement, the Executive shall not use or disclose trade secrets or
other confidential information unless such information becomes a part of the
public domain other than through a breach of this Agreement or is disclosed to
the Executive by a third party who is entitled to receive and disclose such
information.
(b) Upon the effective date of notice of the Executive's or
the Employer's election to terminate this Agreement, or at any time upon the
request of the Employer, the Executive (or his heirs or personal
representatives) shall deliver to the Employer all documents and materials
containing trade secrets and confidential information relating to the
Employer's business and all documents, materials and
-6-
<PAGE> 7
other property belonging to the Employer, which in either case are in the
possession or under the control of the Executive (or his heirs or personal
representatives).
(c) All discoveries and works made or conceived by the
Executive during his employment by the Employer, jointly or with others, that
relate to the Employer's activities shall be owned by the Employer. The terms
"discoveries and works" include, by way of example, inventions, computer
programs (including documentation of such programs), technical improvements,
processes, drawings, and works of authorship, including sales materials which
relate to direct sales, telemarketing, wall media products, sampling/comparing
or services. The Executive shall promptly notify and make full disclosure to,
and execute and deliver any documents requested by, the Employer to evidence or
better assure title to such discoveries and works by the Employer, assist the
Employer in obtaining or maintaining for itself at its own expense United
States and foreign patents, copyrights, trade secret protection and other
protection of any and all such discoveries and works, and promptly execute,
whether during his employment or thereafter, all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Employer and to protect its title thereto. Any discoveries and works
which, within six months after the termination of the Executive's employment by
the Employer, are made, disclosed, reduced to a tangible or written form or
description, or are reduced to practice by the Executive and which pertain to
work performed by the Executive while with the Employer shall, as between the
Executive and the Employer, be presumed to have been made during the
Executive's employment by the Employer.
12. Enforcement.
The Executive agrees that the Employer's remedies at law for
any breach or threat of breach by him of the provisions of Section 10 and 11
hereof will be inadequate, and that the Employer shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of Section 10
and 11 hereof and to enforce specifically the terms and provisions thereof, in
addition to any other remedy to which the Employer may be entitled at law or
equity.
13. Miscellaneous.
(a) Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit with the United States Postal Service, by registered
or certified mail, postage prepaid, addressed to the other party at the address
shown above, or at such other address or addresses as either party shall
designate to the other in writing from time to time.
-7-
<PAGE> 8
(b) Pronouns. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
(d) Amendment. This Agreement may be amended or modified only
by a written instrument executed by both the Employer and the Executive.
(e) Governing Law. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
without regard to its conflicts of laws principles.
(f) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns; provided, however, that the obligations of the Executive are
personal and shall not be assigned or delegated by him.
(g) Waiver. No delays or omission by the Employer or the
Executive in exercising any right under this Agreement shall operate as a
waiver of that or any other right. A waiver or consent given by the Employer
or the Executive on any one occasion shall be effective only in that instance
and shall not be construed as a bar or waiver of any right on any other
occasion.
(h) Captions. The captions appearing in this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
-8-
<PAGE> 9
(i) Severability. In case any provision of this Agreement
shall be held by a court with jurisdiction over the parties to this Agreement
to be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
EMPLOYER EXECUTIVE
SNYDER COMMUNICATIONS, L. P.
By: Snyder Marketing Communications,
Inc., Its General Partner
By: /s/ DANIEL M. SNYDER /s/ SHAUN GILMORE
------------------------------- ------------------------
Daniel M. Snyder, President and Shaun Gilmore
Chief Executive Officer
SNYDER COMMUNICATIONS, INC.
By: /s/ DANIEL M. SNYDER
-------------------------------
Daniel M. Snyder, President and
Chief Executive Officer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED FINANCIAL STATEMENTS FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 62,708,725
<SECURITIES> 0
<RECEIVABLES> 5,658,329
<ALLOWANCES> 150,000
<INVENTORY> 0
<CURRENT-ASSETS> 69,042,661
<PP&E> 6,621,660
<DEPRECIATION> 1,880,036
<TOTAL-ASSETS> 74,990,918
<CURRENT-LIABILITIES> 27,556,942
<BONDS> 0
0
0
<COMMON> 33,497
<OTHER-SE> 45,683,656
<TOTAL-LIABILITY-AND-EQUITY> 74,990,918
<SALES> 56,326,296
<TOTAL-REVENUES> 56,326,296
<CGS> 38,819,283
<TOTAL-COSTS> 38,819,283
<OTHER-EXPENSES> 11,096,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 862,242
<INCOME-PRETAX> 5,680,866
<INCOME-TAX> (600,076)
<INCOME-CONTINUING> 6,280,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,280,942
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
