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 DECEMBER 31, 1995
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
TRANSMEDIA NETWORK INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 84-6028875
------------------------------- -------------------
(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 January 31, 1996: 10,119,333.
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I N D E X
TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements:
Consolidated Balance Sheets-- 3, 4
December 31, 1995 (unaudited)
and September 30, 1995 (audited)
Consolidated Statements of Income-- 5
Three months ended December 31,
1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows-- 6, 7
Three months ended December 31, 1995
and 1994 (unaudited)
Notes to Unaudited Consolidated 8, 9
Financial Statements
Item 2. Managements Discussion and Analysis 9, 10
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 11
SIGNATURE 11
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Part I-Item 1
Financial Information
TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
DECEMBER 31, * SEPTEMBER 30,
1995 1995
(UNAUDITED)
------------ ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,496,098 $ 2,270,322
Accounts receivable, less
allowance for doubtful accounts:
December 31, 1995: $15,000
September 30, 1995: $15,000 2,293,633 1,714,421
Rights to receive 27,703,112 26,147,400
Prepaid expenses and other
current assets 688,220 708,253
Deferred income taxes 441,285 441,285
---------- ----------
Total current asssets 32,622,348 31,281,681
---------- ----------
Securities available for sale,
at fair value 2,657,065 2,899,691
---------- ----------
Property and equipment 5,313,152 4,565,283
Less accumulated depreciation 1,360,283 1,093,583
---------- ----------
3,952,869 3,471,700
---------- ----------
Other assets 138,027 133,430
---------- ----------
Total assets $39,370,309 $37,786,502
========== ==========
(continued)
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
(continued)
DECEMBER 31, * SEPTEMBER 30,
1995 1995
(UNAUDITED)
------------ ---------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Rights to receive $ 3,587,187 $ 4,933,070
Accounts payable - reimbursable
tax and tips 551,749 428,000
Accounts payable - other 1,476,170 1,663,754
Income taxes payable 305,426 --
Accrued expenses 560,057 1,028,561
---------- ----------
Total current liabilities 6,480,589 8,053,385
Line of credit 4,500,000 2,000,000
Deferred membership fee income 1,166,337 1,178,234
Deferred income taxes 1,607,047 1,701,670
---------- ----------
Total liabilities 13,753,973 12,933,289
---------- ----------
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: 10,119,333 shares at
December 31, 1995 and 10,118,770 shares
at September 30, 1995 202,387 202,375
Additional paid-in capital 10,517,235 10,513,055
Unrealized gain on securities available
for sale 1,450,009 1,598,011
Retained earnings 13,446,705 12,539,772
---------- ----------
Total stockholders' equity 25,616,336 24,853,213
---------- ----------
Total liabilities and stockholders'
equity $39,370,309 $37,786,502
========== ==========
See notes to consolidated financial statements
* The balance sheet at September 30, 1995 is derived from the registrant's
audited financial statements.
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited)
THREE MONTHS ENDED,
DECEMBER 31,
1995 1994
---- ----
Revenues:
Net sales $15,474,748 $13,313,903
Membership and renewal fee income 1,146,469 771,452
Continuing franchise fee and
royalty income 549,482 679,400
Commissions income 168,292 155,655
---------- ----------
17,338,991 14,920,410
Cost of sales 10,353,183 8,931,060
---------- ----------
Gross profit 6,985,808 5,989,350
Selling, general and administrative
expenses 5,468,447 4,195,379
---------- ----------
Operating income 1,517,361 1,793,971
---------- ----------
Other income (expense):
Interest and other income 42,960 58,555
Interest expense and financing costs (74,288) (1,875)
Initial franchise fee and license
income, net of expenses -- 95,000
---------- ----------
(31,328) 151,680
---------- ----------
Income before income taxes 1,486,033 1,945,651
Income taxes 579,100 778,100
---------- ----------
Net income $ 906,933 $ 1,167,551
========== ==========
Income per common and common
equivalent share:
Primary $ .09 $ .12
===== =====
Fully diluted $ .09 $ .12
===== =====
Weighted average number of common and
common equivalent shares outstanding:
Primary 10,343,211 10,011,418
========== ==========
Fully diluted 10,343,211 10,011,418
========== ==========
See notes to consolidated financial statements
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited)
1995 1994
------ ------
Cash flows from operating activities:
Net income $ 906,933 $ 1,167,551
---------- ----------
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 269,200 174,385
Changes in assets and liabilities:
Accounts receivable (579,212) 88,792
Rights to receive (1,555,712) (1,285,708)
Prepaid expenses 20,033 80,427
Other assets (7,097) (50,415)
Accounts payable - Rights to
receive (1,345,883) (676,890)
Accounts payable - reimbursable
tax and tips 123,749 (5,964)
Accounts payable - other (187,583) (119,707)
Income taxes payable 305,426 152,352
Accrued expenses (267,847) (136,499)
Deferred membership income (11,897) (229)
---------- ----------
Total adjustments (3,236,823) (1,779,456)
---------- ----------
Net cash used in operating
activities (2,329,890) (611,905)
---------- ----------
Cash flows from investing activities:
Additions to property and equipment (747,869) (314,039)
---------- ----------
Net cash used in investing activities (747,869) (314,039)
---------- ----------
(Continued)
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TRANSMEDIA NETWORK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Continued)
1995 1994
------ ------
Cash flows from financing activities:
Borrowings on note payable to bank
under revolving line of credit 2,500,000 --
Dividends paid (200,657) (190,594)
Conversion of warrants and
options for common stock,
net of tax benefits 4,192 --
---------- ----------
Net cash provided by (used in)
financing activities 2,303,535 (190,594)
---------- ----------
Net decrease in cash and
cash equivalents (774,224) (1,116,538)
Cash and cash equivalents at beginning
of period 2,270,322 2,478,899
---------- ----------
Cash and cash equivalents at
end of period $ 1,496,098 $ 1,362,361
========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the periods for:
Interest $ 57,119 $ --
========== ==========
Income taxes $ 69,474 $ 612,313
========== ==========
See notes to consolidated financial statements
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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, 1995 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 months ended December 31, 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, 1995
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
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 December 31, 1995, the outstanding balance was
$4,500,000.
In January 1996, the revolving credit was amended to increase the funds
available to the Company under the agreement to $20,000,000. The amended
agreement terminates on January 26, 1999.
3. Income per Common and Common Equivalent Share
Primary earnings 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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4. Reclassification
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
a. Results of Operations - Comparison of Three Months ended December 31,
1995 and 1994.
Net sales for the three-month period ended December 31, 1995 increased
by $2,160,845 or 16%, compared with 1994. The sales increase was due to
a greater number of cardmembers supported by additional participating
restaurants and from sales recorded in a formerly franchised territory
which was repurchased in July 1995. Membership and renewal fee income
increased by $375,017 or 49% in the three-month period ended December
31, 1995, compared with the prior period because of an increased number
of new cardmembers as well as renewals.
Continuing franchise fee income decreased by $129,918 or 19% in the
three months ended December 31, 1995, versus the prior year's
comparable period, primarily because one of the franchises from which
continuing franchise fee income was obtained was reacquired by the
Company in July 1995.
As a result of the growth in the components of revenue, gross profit
increased by $996,458 to $6,985,808 for the three month
period ended December 31, 1995.
Selling, general and administrative expenses for the three months ended
December 31, 1995 increased by $1,273,068 compared to the prior year
and represented an increase of 30%. Expenses contributing to the
increase in the current period included costs associated with operating
new areas started up or reacquired since the first quarter of last
year. These areas include Chicago, Detroit, Tampa, Milwaukee and
Indianapolis and costs directly related to sales such as sales
commission and processing costs. Additionally, promotional costs and
mailing and printing costs also increased.
Income before income taxes amounted to $1,486,033 in the three months
ended December 31, 1995, compared with $1,945,651 in
the 1994 comparable period.
Net income for the three months ended December 31, 1995 was $906,933 or
$.09 per share, compared with $1,167,551 or $.12 in the comparable
period of the prior year.
9 of 11
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b. Liquidity and Capital Resources
The Company's working capital at December 31, 1995 was $26,141,759,
compared with $23,228,296 at September 30, 1995. The increase of
$2,913,463 was due primarily to the Company's profit during the period
and borrowings under the Company's line of credit which were used to
acquire Rights to Receive. Cash in the amount of $747,869 was used to
continue to upgrade the Company's computer hardware and software. Cash
and cash equivalents amounted to $1,496,098 at December 31, 1995. The
Company has available at February 5, 1996, $14,000,000 under a
revolving line of credit. 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, 4 AND 5
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
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 December 31, 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)
February 8, 1996 /S/ DAVID L. WEINBERG
-----------------------------------
Vice President and
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,496,098
<SECURITIES> 0
<RECEIVABLES> 2,293,633
<ALLOWANCES> 0
<INVENTORY> 27,703,112
<CURRENT-ASSETS> 32,622,348
<PP&E> 5,313,152
<DEPRECIATION> 1,360,283
<TOTAL-ASSETS> 39,370,309
<CURRENT-LIABILITIES> 6,480,589
<BONDS> 0
0
0
<COMMON> 202,387
<OTHER-SE> 25,413,949
<TOTAL-LIABILITY-AND-EQUITY> 39,370,309
<SALES> 15,474,748
<TOTAL-REVENUES> 17,338,991
<CGS> 10,353,183
<TOTAL-COSTS> 15,821,630
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,288
<INCOME-PRETAX> 1,486,033
<INCOME-TAX> 579,100
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 906,933
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
