U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
Commission File Number 0-24634
TRACK DATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-3181095
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 PINE STREET
NEW YORK, NY 10005
(Address of principal executive offices)
(212) 422-4300
(Registrant's telephone number)
Indicate by check mark 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 past 12 months (or 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 /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of July 31, 1997 there
were 14,477,237 shares of common stock outstanding.
1
<PAGE>
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PART I. FINANCIAL INFORMATION
- -------- ----------------------
Item I. Financial Statements
---------------------
See pages 2-6
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
-----------------------
See pages 7-9
PART II. OTHER INFORMATION
- --------- ------------------
See page 105
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, DECEMBER 31,
1997 1996
----------- -------------
Unaudited Derived
from
audited
financial
statements
ASSETS
CASH AND EQUIVALENTS $ 201,158 $ 63,482
ACCOUNTS RECEIVABLE - net 1,578,832 1,596,628
FIXED ASSETS - net 8,822,324 9,561,083
INVESTMENT IN AFFILIATE 1,807,662 2,577,662
DUE FROM RELATED PARTIES 995,011 878,084
EXCESS OF COST OVER NET ASSETS ACQUIRED 3,446,821 3,581,029
NET DEFERRED INCOME TAX ASSETS (Note 2) 160,059 511,450
OTHER ASSETS 2,373,392 2,535,937
----------- -------------
TOTAL $19,385,259 $ 21,305,355
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 4,865,105 $ 4,258,944
Note payable - bank 2,215,265 2,787,082
Notes payable - other 1,364,607 1,695,283
Capital lease obligations 3,237,993 4,185,017
Other liabilities 707,954 722,878
----------- -------------
12,390,924 13,649,204
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STOCKHOLDERS' EQUITY (Note 3)
Common stock - $.01 par value; 30,000,000
shares authorized; Issued and
outstanding - 14,508,237 shares in 1997
and 14,782,552 shares in 1996 145,083 147,826
Additional paid-in capital 13,442,312 13,915,989
Foreign currency translation adjustment 33,023 44,085
Deficit (6,626,083) (6,451,749)
----------- -------------
Total stockholders' equity 6,994,335 7,656,151
----------- -------------
TOTAL $19,385,259 $ 21,305,355
=========== =============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
=========== ===========
REVENUES $23,336,243 $23,394,909
OPERATING COSTS AND EXPENSES:
Direct operating costs 12,844,476 12,768,425
Selling and administrative expenses 9,167,671 10,095,139
Deferred compensation expense - 294,894
Interest expense - net 378,208 442,514
----------- -----------
Total 22,390,355 23,600,972
----------- -----------
INCOME (LOSS) FROM OPERATIONS 945,888 (206,063)
OTHER INCOME (PRINCIPALLY GAIN ON SECURITIES) 1,169 288,418
----------- -----------
INCOME BEFORE INCOME TAXES (BENEFIT)
AND EQUITY IN NET (LOSS) INCOME OF AFFILIATE 947,057 82,355
INCOME TAXES (BENEFIT) (Note 2) 351,391 (364,058)
----------- -----------
INCOME BEFORE EQUITY IN NET (LOSS) INCOME
OF AFFILIATE 595,666 446,413
EQUITY IN NET (LOSS) INCOME OF AFFILIATE (770,000) 92,582
----------- -----------
NET (LOSS) INCOME $ (174,334) $ 538,995
=========== ===========
NET (LOSS) INCOME PER SHARE (Note 4) $(.01) $.04
===== ====
WEIGHTED AVERAGE SHARES OUTSTANDING 14,683,000 14,426,000
=========== ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
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REVENUES $11,626,767 $11,626,615
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OPERATING COSTS AND EXPENSES:
Direct operating costs 6,339,408 6,098,811
Selling and administrative expenses 4,666,869 5,203,719
Interest expense - net 180,659 219,806
Total 11,186,936 11,522,336
----------- -----------
INCOME FROM OPERATIONS 439,831 104,279
OTHER LOSS (2,865) -
----------- -----------
INCOME BEFORE INCOME TAXES AND
EQUITY IN NET (LOSS) INCOME OF AFFILIATE 436,966 104,279
INCOME TAXES 141,517 47,000
----------- -----------
INCOME BEFORE EQUITY IN NET (LOSS) INCOME
OF AFFILIATE 295,449 57,279
EQUITY IN NET (LOSS) INCOME OF AFFILIATE (664,000) 3,500
----------- -----------
NET (LOSS) INCOME $ (368,551) $ 60,779
=========== ===========
NET (LOSS) INCOME PER SHARE (Note 4) $(.03) $ -
===== ===
WEIGHTED AVERAGE SHARES OUTSTANDING 14,614,000 14,875,000
=========== ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (174,334) $ 538,995
Adjustments to reconcile net (loss) income
to net cash provided by
operating activities:
Depreciation and amortization 1,837,475 1,680,787
Equity in net loss (income) of affiliate 770,000 (92,582)
Deferred compensation - 294,893
Gain on sale and transfer of marketable
securities - (335,340)
Allowance for decline in market value
of securities - 46,922
Deferred income taxes 351,391 (498,329)
Changes in operating assets and liabilities:
Accounts receivable 17,796 397,311
Other assets (20,419) 62,170
Accounts payable and accrued
expenses 606,161 457,380
Other liabilities (28,355) (33,055)
Net cash provided by
operating activities 3,359,715 2,519,152
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (339,387) (532,663)
Repayment of related party loans 238,400 639,673
Loans to related parties (585,339) (900,509)
Loans from (to) others 35,795 (30,743)
Purchase of marketable securities - (76,931)
----------- -----------
Net cash used in
investing activities (650,531) (901,173)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under capital lease obligations (1,430,811) (1,404,863)
Net payments on note payable - bank (571,817) (1,976,803)
Net proceeds from notes payable - other 24,335 13,713
Net (payments) proceeds on loans from
employee savings program 13,430 (3,247)
Purchase of treasury stock (476,420) -
Payments of acquisition notes (125,000) (125,000)
----------- -----------
Net cash used in
financing activities (2,566,283) (3,496,200)
----------- -----------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH (5,225) (5,659)
----------- -----------
NET INCREASE (DECREASE) IN CASH 137,676 (1,883,880)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 63,482 2,004,827
----------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 201,158 $ 120,947
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 368,573 $ 491,051
Income taxes 16,946 16,149
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Equipment acquisitions financed by
capital leases $ 483,787 $ 1,311,274
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(unaudited)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of June 30, 1997, and the results of operations for the three and six month
periods ended June 30, 1997 and 1996 and of cash flows for the six months
ended June 30, 1997 and 1996. The results of operations for the six months
ended June 30, 1997 are not necessarily indicative of results that may be
expected for any other interim period or for the full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1996 included in
the Company's Annual Report on Form 10-K. The accounting policies used in
preparing these financial statements are the same as those described in the
December 31, 1996 financial statement.
2. Deferred taxes which were previously provided at state and local rates
and which related to Track Data prior to its merger into Global Market
Information, Inc. (the "Merger") were recalculated based on the changed status
to a C corporation. This resulted in a recognition of additional deferred tax
assets deemed realizable by management of approximately $400,000 for the three
months ended March 31, 1996.
3. During the six months ended June 30, 1997 the Company purchased and
retired 274,315 shares for $476,420. In May 1997 the Company granted options
to employees to purchase 230,500 shares of the Company's common stock at $2.00
per share.
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," which changes the methodology of calculating earnings per share. SFAS
No. 128 requires the disclosure of diluted earnings per share regardless of
its difference from basic earnings per share. The Company plans to adopt SFAS
No. 128 in December 1997. Early adoption is not permitted. Had the Company
adopted SFAS No. 128 as of June 30, 1997 it would not have had a material
affect on the reported amounts.
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company provides real-time financial market data, fundamental
research, charting and analytical services to both institutional and
individual investors. The Company also disseminates news and third party data
base information from more than 100 sources worldwide. The Company's lead
products include MarkeTrack MX and MarkeTrack NT, Dial/Data, Track OnLine and
InfoVest. Its AIQ Systems division provides expert systems software,
including artificial intelligence products for market timing and stock
selection.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Revenues for the three months ended June 30, 1997 and 1996 were
$11,626,767 and $11,626,615, respectively.
Direct operating costs were $6,339,408 for the second quarter of 1997 and
$6,098,811 for the similar period in 1996, an increase of 4%. Direct
operating costs as a percentage of revenues was 55% in 1997 and 52% in 1996.
Direct operating costs include direct payroll, direct telecommunication costs,
computer supplies, depreciation and equipment lease expense and the
amortization of software development costs.
Selling and administrative expenses were $4,666,869 and $5,203,719 in the
1997 and 1996 periods, respectively, a decrease of 10% in the 1997 period from
the 1996 period. Selling and administrative expenses as a percentage of
revenues was 40% in the 1997 period and 45% in the 1996 period. The dollar
and percentage decrease primarily reflects a reduction of approximately
$200,000 in salary expense in the 1997 period as well as reductions in
advertising, professional fees and telephone expense.
Interest expense decreased to $180,659 in the 1997 period compared to
$219,806 in 1996 due to decreased borrowings.
As a result of the above mentioned factors, the Company realized income
before equity in net (loss) income from affiliate of $295,449 in the 1997
period compared to $57,279 in 1996.
The equity in loss from an affiliate was $664,000 in the 1997 period.
The loss included a significant charge by the affiliate for restructuring
costs and an asset impairment write-down. As a result of this loss the
Company incurred a net loss of $368,551 for the 1997 quarter.
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Revenues for the six months ended June 30, 1997 and 1996 were $23,336,243
and $23,394,909, respectively.
Direct operating costs were $12,844,476 for the first six months of 1997
and $12,768,425 for the similar period in 1996, an increase of 1%. Direct
operating costs as a percentage of revenues was 55% in both 1997 and 1996.
Selling and administrative expenses were $9,167,671 and $10,095,139 in
the 1997 and 1996 periods, respectively, a decrease of 9% in the 1997 period
from the 1996 period. Selling and administrative expenses as a percentage of
revenues was 39% in 1997 and 43% in 1996. The dollar and percentage decrease
primarily reflects a reduction of approximately $350,000 in salary expense, as
well as a reduction in advertising, professional fees and telephone expense.
Deferred compensation expense was $294,894 in 1996 related to the
Company's phantom stock plan which was discontinued as of March 31, 1996.
Interest expense decreased to $378,208 in the 1997 period compared to
$442,514 in 1996 due to decreased borrowings.
Other income was $1,169 and $288,418 for the six months ended June 30,
1997 and 1996, respectively. The gains in 1996 are principally due from
Innodata Corporation common stock placed in a trust to satisfy obligations to
employees in 1996. The gain represents the difference between the carrying
value of such securities and the market price at date of disposition.
The income tax benefit in the 1996 period of $364,058 was due to the
recognition of the anticipated realizable amount of tax benefits from a change
in tax status, effective upon the merger of Track at March 31, 1996, from an S
corporation, for which the majority of taxes were paid by the former sole
stockholder, to a C corporation.
As a result of the above mentioned factors, the Company realized income
before equity in net (loss) income from affiliate of $595,666 in the 1997
period compared to $446,413 in 1996.
The equity in loss from an affiliate was $770,000 in the 1997 period.
The loss included a significant charge by the affiliate for restructuring
costs and an asset impairment write-down. As a result of this loss the
Company incurred a net loss of $174,334 for the six months ended June 30,
1997.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997 and 1996 cash provided by
operating activities was $3,359,715 and $2,519,152, respectively. The
increase was due principally to increased income from operations. Cash flows
used in investing activities was $650,531 and $901,173 for the six months
ended June 30, 1997 and 1996, respectively. Purchases of fixed assets
decreased by approximately $200,000 in 1997 compared to 1996. Cash used in
financing activities was $2,566,283 and $3,496,200 for the six months ended
June 30, 1997 and 1996, respectively. The decrease was due principally to
lower payments on bank debt in 1997.
The Company has a line of credit with a bank. The line is collateralized
by the assets of the Company and is guaranteed by its principal stockholder.
Interest is charged at 1.75% above the bank's prime rate and is due on demand.
The Company may borrow up to 80% of eligible accounts receivable and is
required to maintain a compensating balance of 10% of the outstanding loans.
The line of credit is sufficient for the Company's cash requirements. There
are no major capital expenditures anticipated beyond the normal replacement of
equipment and additional equipment to meet increased customer demand.
INFLATION AND SEASONALITY
To date, inflation has not had a significant impact on the Company's
operations. The Company's revenues are not affected by seasonality.
<PAGE>
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PART II. OTHER INFORMATION
- --------- ------------------
Item 1. Legal Proceedings. Not Applicable
------------------
Item 2. Changes in Securities. Not Applicable
-----------------------
Item 3. Defaults upon Senior Securities. Not Applicable
----------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. Not
-------------------------------------------------------
Applicable.
Item 5. Other Information. Not Applicable.
------------------
Item 6. (a) Exhibits.
--------
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K.
-------------------
There were no reports on Form 8-K filed during
the second quarter of 1997.
<PAGE>
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.
TRACK DATA CORPORATION
Date: 8/8/97 /s/
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Barry Hertz
Chairman of the Board
Chief Executive Officer
Date: 8/8/97 /s/
------ -----------------------------------------
Martin Kaye
V.P. Finance, Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000922811
<NAME> TRACK DATA CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 201,158
<SECURITIES> 0
<RECEIVABLES> 1,578,832
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,822,324
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,385,259
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 145,083
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,385,259
<SALES> 0
<TOTAL-REVENUES> 23,336,243
<CGS> 0
<TOTAL-COSTS> 22,390,355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 378,208
<INCOME-PRETAX> 947,057
<INCOME-TAX> 351,391
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (174,334)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
