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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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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 0-4028
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TRANSMEDIA NETWORK INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 84-6028875
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11900 Biscayne Boulevard, Miami, Florida 33181
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(Address of principal executive offices) (zip code)
305-892-3300
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(Registrant's telephone number,
including area code)
Indicate by (X) whether the 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 and (2) has been subject to such filing requirements for the
past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the issuer's Common Stock, $.02 par value,
as of July 31, 1995: 9,840,383.
1 of 11
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I N D E X
TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements:
Consolidated Balance Sheets-- 3, 4
June 30, 1995 (unaudited)
and September 30, 1994 (audited)
Consolidated Statements of Operations-- 5
Three months and nine months ended
June 30, 1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows-- 6, 7
Nine months ended June 30, 1995
and 1994 (unaudited)
Notes to Unaudited Consolidated 8
Financial Statements
Item 2. Managements Discussion and Analysis 9, 10
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 11
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SIGNATURES
2 of 11
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Part I-Item 1
Financial Information
TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
June 30, * September 30,
1995 1994
(unaudited)
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<S> <C> <C>
ASSETS
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Current assets:
Cash and cash equivalents $ 873,107 $ 2,478,899
Accounts receivable, less
allowance for doubtful accounts:
June 30, 1995: $25,000
September 30, 1994: $25,000 1,850,975 2,278,305
Rights to receive 23,455,046 17,472,712
Prepaid expenses and other
current assets 1,002,427 570,964
Deferred income taxes 568,200 568,200
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Total current asssets 27,749,755 23,369,080
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Securities available for sale,
at fair value 2,084,862 2,341,141
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Property and equipment 3,461,399 2,572,614
Less accumulated depreciation 944,558 425,138
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2,516,841 2,147,476
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Other assets 101,742 320,983
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Total assets $32,453,200 $28,178,680
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</TABLE>
(continued)
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND SEPTEMBER 30, 1994
(continued)
<TABLE>
<CAPTION>
June 30, * September 30,
1995 1994
(unaudited)
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<S> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
Current liabilities:
Accounts payable - Rights to receive $ 3,229,396 $ 3,642,331
Accounts payable - reimbursable
tax and tips 448,912 551,630
Accounts payable - other 853,159 1,297,312
Income taxes payable 339,880 653,666
Accrued expenses 507,645 844,479
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Total current liabilities 5,378,992 6,989,418
Notes payable 1,500,000 --
Deferred membership fee income 1,200,787 836,632
Deferred income taxes 1,033,077 1,197,200
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Total liabilities 9,112,856 9,023,250
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Stockholders' equity:
Preferred stock - par value $.10 per share;
authorized 1,000,000 shares; none issued -- --
Common stock - par value $.02 per share;
authorized 20,000,000 shares; issued and
outstanding: 9,840,383 shares at
June 30, 1995 and 9,618,478 shares
at September 30, 1994 196,808 192,370
Additional paid-in capital 10,508,623 9,478,193
Unrealized gain on securities
available for sale 1,082,917 1,275,073
Retained earnings 11,551,996 8,209,794
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Total stockholders' equity 23,340,344 19,155,430
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Total liabilities and stockholders'
equity $32,453,200 $28,178,680
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</TABLE>
See notes to consolidated financial statements
* The balance sheet at September 30, 1994 is derived from the registrant's
audited financial statements.
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended, Nine Months Ended,
June 30, June 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $14,705,586 $12,297,619 $42,900,264 $32,959,987
Membership and renewal fee income 880,867 679,126 2,468,572 1,807,947
Continuing franchise fee and
royalty income 671,454 421,035 2,034,364 848,134
Commissions income 118,917 221,256 411,927 221,256
----------- ----------- ----------- -----------
16,376,824 13,619,036 47,815,127 35,837,324
Cost of sales 9,898,426 8,256,867 28,802,975 22,124,387
----------- ----------- ----------- -----------
Gross profit 6,478,398 5,362,169 19,012,152 13,712,937
Selling, general and administrative
expenses 4,658,419 3,588,418 13,463,989 9,548,949
----------- ----------- ----------- -----------
Operating income 1,819,979 1,773,751 5,548,163 4,163,988
----------- ----------- ----------- -----------
Other income (expense):
Interest and other income 86,250 125,004 211,459 228,422
Interest expense and financing costs (28,547) (1,250) (53,422) (3,750)
Initial franchise fee and license
income, net of expenses 95,000 719,000 190,000 1,168,600
----------- ----------- ----------- -----------
152,703 842,754 348,037 1,393,272
----------- ----------- ----------- -----------
Income before income taxes 1,972,682 2,616,505 5,896,200 5,557,260
Income taxes 799,100 1,072,700 2,358,500 2,278,400
----------- ----------- ----------- -----------
Net income $ 1,173,582 $ 1,543,805 $ 3,537,700 $ 3,278,860
=========== =========== =========== ===========
Income per common and common
equivalent share:
Primary $.12 $.15 $.35 $.33
==== ==== ==== ====
Fully diluted $.12 $.15 $.35 $.33
==== ==== ==== ====
Weighted average number of common and
common equivalent shares outstanding:
Primary 10,106,583 10,023,558 10,055,150 9,966,536
=========== =========== =========== ===========
Fully diluted 10,106,583 10,023,558 10,055,150 9,966,810
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
5 of 11
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,537,700 $ 3,278,860
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Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 526,920 286,000
Provision for losses on accounts
receivable -- 5,000
Changes in assets and liabilities:
Accounts receivable 427,330 (971,510)
Rights to receive (5,982,334) (4,888,956)
Prepaid expenses (431,463) (246,473)
Other assets 211,741 (157,851)
Accounts payable - rights to
receive (412,935) 1,030,641
Accounts payable - reimbursable
tax and tips (102,718) 105,582
Accounts payable - other (444,153) (124,770)
Income taxes payable (313,786) 123,958
Accrued expenses (147,974) (162,964)
Deferred membership income 364,155 243,793
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Total adjustments (6,305,217) (4,757,550)
Net cash used in operating
activities (2,767,517) (1,478,690)
Cash flows from investing activities:
Proceeds from sale of equipment -- 6,500
Additions to property and equipment (888,785) (1,303,249)
Purchase of securities available
for sale (100,000) --
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Net cash used in investing activities (988,785) (1,296,749)
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</TABLE>
(Continued)
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(Continued)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from financing activities:
Borrowings on note payable to bank
under revolving line of credit 1,500,000 --
Dividends paid (384,358) (371,807)
Conversion of warrants and options
for common stock, net of tax
benefits 1,034,868 1,085,358
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Net cash provided by financing
activities 2,150,510 713,551
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Net decrease in cash and cash
equivalents (1,605,792) (2,061,888)
Cash and cash equivalents at beginning
of period 2,478,899 5,005,045
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Cash and cash equivalents at
end of period $ 873,107 $ 2,943,157
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</TABLE>
Supplemental disclosure of cash flow
information:
Cash paid during the periods for:
Interest $ 39,875 $ --
============ ===========
Income taxes $ 1,983,677 $ 1,576,855
============ ===========
See notes to consolidated financial statements
7 of 11
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The balance sheet as of September 30, 1994 was derived from the registrant's
audited consolidated financial statements.
The information presented in each of the included unaudited consolidated
financial statements, in the opinion of management, reflects all adjustments
necessary to a fair statement of the results for all interim periods. The
results for the three and nine months ended June 30, 1995 are not necessarily
indicative of the results to be expected for the full year.
The consolidated financial statements, as presented, are in summarized form,
and footnote disclosures normally included in financial statements presented in
accordance with generally accepted accounting principles, have been condensed or
omitted. Complete disclosures for the year ended September 30, 1994 are
presented in the Company's 10K filing which includes audited consolidated
financial statements.
2. Line of Credit
In June 1995, the Company signed a revolving credit agreement with
NationsBank of Florida, N.A. The funds available to the Company under the new
agreement amount to $6,000,000.00, increasing to $7,500,000 on May 15, 1996. The
agreement terminates on May 15, 1997 and bears interest at the floating prime
rate and is unsecured. At June 30, 1995, the outstanding balance was $1,500,000.
3. Income per Common and Common Equivalent Share
Primary earning per share were based on the weighted average number of
common and common equivalent shares outstanding during the periods presented.
Equivalent shares consist of those shares issuable upon the assumed exercise of
stock options and warrants calculated under the treasury stock method, based on
average stock market prices in the periods.
Fully diluted earnings per share were computed using the weighted average
number of common and common equivalent shares outstanding in the periods,
assuming exercise of options and warrants calculated under the treasury stock
method, based on stock market price at the end of the periods.
8 of 11
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Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
a. Results of Operations - Comparison of Three Months and Nine Months ended
June 30, 1995 and 1994.
Net sales for the three and nine months ended June 30, 1995 increased by
$2,407,967 (20% increase) and $9,940,277 (30% increase) compared with the
same periods in 1994. The sales increase was due to a greater number of
cardmembers supported by additional participating restaurants. Membership
and renewal fee income increased by $201,741 (30% increase) and $660,625
(37% increase) in the three and nine month periods ended June 30, 1995,
compared with the prior year's periods because of an increased number of new
cardmembers as well as renewals.
Continuing franchise fee income increased by $250,419 (59% increase) and
$1,186,230 (140% increase) in the three and nine month periods ended June
30, 1995, versus the prior year's comparable periods because of the growth
of the franchises and the greater numbers of franchises operating in the
current periods.
As a result of the growth in the components of revenue, gross profit
increased by $1,116,229 to $6,478,398 for the three month period ended June
30, 1995 and by $5,299,215 to $19,012,152 for the nine month period ended
June 30, 1995.
Selling, general and administrative expenses for the three and nine months
ended June 30, 1995 increased by $1,070,001 and $3,915,040, compared to the
prior year's comparable periods and represented increases of 30% and 41%
respectively. Expenses contributing to the increase in the two current
periods included costs directly related to sales such as sales commission
and processing costs. Additionally, promotional costs and mailing and
printing costs increased.
Other income, net of expense for the three and nine months ended June 30,
1995 was $152,703 and $348,037, compared to $842,754 and $1,393,272 in the
comparable periods of the prior year. The 1994 periods included income, net
of expenses, from one-time license fees amounting to $720,000 and $932,500,
respectively.
Income before income taxes amounted to $1,972,682 and $5,896,200 in the
three and nine months ended June 30, 1995, compared with $2,616,505 and
$5,557,260 in the 1994 comparable periods.
9 of 11
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Net income for the three and nine months ended June 30, 1995 was $1,173,582
and $3,537,700, or $.12 and $.35 per share respectively, compared with
$1,543,805 and $3,278,860 or $.15 and $.33 per share respectively, in the
comparable periods of the prior year.
b. Liquidity and Capital Resources
The Company's working capital at June 30, 1995 was $22,370,763, compared
with $16,379,662 at September 30, 1994. The increase of $5,991,101 was due
primarily to the Company's profit during the period and borrowings under the
Company's revolving credit line. Cash and cash equivalents amounted to
$1,663,238 at June 30, 1995. The Company has available a $6,000,000
revolving line of credit, of which $1,500,000 is outstanding at June 30,
1995. The Company believes that cash generated from operations, cash on hand
and cash available under its line of credit will satisfy its cash
requirements.
10 of 11
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PART II - OTHER INFORMATION
Items 1, 2, 3, and 5
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Items 1, 2, 3, 4 and 5 of Part II are either inapplicable or are answered in
the negative and are omitted pursuant to the instructions to Part II.
Item 6
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Exhibits and reports on Form 8K
(a) Exhibits
None
(b) Reports on Form 8K
No reports on Form 8K were filed during the Quarter Ending June 30,
1995.
S I G N A T U R E S
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.
TRANSMEDIA NETWORK INC.
(Registrant)
August 10, 1995 \s\ David L. Weinberg
---------------------------------
David L. Weinberg, Vice President
and Chief Financial Officer
11 of 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 873,107
<SECURITIES> 0
<RECEIVABLES> 1,850,975
<ALLOWANCES> 0
<INVENTORY> 23,455,046
<CURRENT-ASSETS> 27,749,755
<PP&E> 3,461,399
<DEPRECIATION> 944,558
<TOTAL-ASSETS> 32,453,200
<CURRENT-LIABILITIES> 5,378,992
<BONDS> 0
<COMMON> 196,808
0
0
<OTHER-SE> 23,143,536
<TOTAL-LIABILITY-AND-EQUITY> 32,453,200
<SALES> 42,900,264
<TOTAL-REVENUES> 47,815,127
<CGS> 28,802,975
<TOTAL-COSTS> 42,266,964
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,422
<INCOME-PRETAX> 5,896,200
<INCOME-TAX> 2,358,500
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,537,700
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
