<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-10541
PROSPECTUS SUPPLEMENT NO. 1
DATED OCTOBER 31, 1996
TO
PROSPECTUS OF MEMBERWORKS INCORPORATED
DATED OCTOBER 18, 1996
RECENT OPERATING RESULTS
The Company has recently completed its quarter ended September 30, 1996.
The following table sets forth certain unaudited consolidated financial data of
the Company for the three months ended September 30, 1995 and 1996. In the
opinion of the Company's management, this unaudited information has been
prepared on a basis consistent with the audited Consolidated Financial
Statements appearing elsewhere in the Prospectus and includes all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the interim period results set forth. The operating results for any quarter are
not necessarily indicative of the results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
-----------------------------------
1995 1996
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(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C>
Revenues........................................... $ 12,679 $ 17,196
Expenses:
Operating........................................ 2,488 3,777
Marketing........................................ 9,127 11,224
General and administrative....................... 2,060 3,801
Interest expense (income), net................... 300 (8)
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Total expenses..................................... 13,975 18,794
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Loss before income taxes........................... (1,296) (1,598)
Provision for income taxes......................... -- --
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Net loss........................................... $ (1,296) $ (1,598)
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Pro forma net loss per share(1).................... $ (0.11) $ (0.13)
=========== ===========
Pro forma weighted average common and common
equivalent shares outstanding(1)................. 12,741 12,741
=========== ===========
</TABLE>
(1) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the computation of pro forma net loss per share and the shares used in
computing pro forma net loss per share.
The Company believes that its quarterly revenues, expenses and operating
results are likely to vary significantly in the future, that period to period
comparisons of its operating results are not necessarily meaningful and that
such comparisons cannot be relied upon as indicators of future performance. It
is also likely that in some future quarter the Company's operating results will
be below the expectations of public market analysts and investors, which, in
turn, could have a severe adverse affect on the price of the Company's Common
Stock. See "Risk Factors" commencing on page 6 of the Prospectus.
