SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
December 23, 2002
Date of Report
(Date of earliest event reported)
MEMBERWORKS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 0-21527 06-1276882
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
680 Washington Blvd
Stamford, Connecticut 06901
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(Address of principal executive offices,
including zip code)
(203) 324-7635
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(Registrant's telephone number,
including area code)
MEMBERWORKS INCORPORATED
Item 5. Other Events.
MemberWorks Incorporated (the "Company" or "MemberWorks") announced on December
23, 2002, that it signed a marketing agreement with America Online, Inc.
("AOL"), the world's leading interactive services company, to promote its
membership programs to tens of millions of AOL members.
Under the agreement, MemberWorks will market nine of its membership programs
across the AOL service, providing AOL members access to merchandise offers and
savings on a comprehensive mix of top-tier, brand-name benefits. The agreement
provides for minimum payments to AOL of $1 million in December 2002 and $3
million throughout the 2003 calendar year in exchange for minimum advertising
commitments.
MemberWorks expects revenues before deferral from members enrolled under the
one-year agreement to be at least $7 million during calendar 2003 and $3 million
during fiscal 2003. However, in accordance with the Company's revenue
recognition policy, these revenues will be deferred and recognized as the refund
privileges expire. MemberWorks also expects this relationship to be profitable
during calendar 2003 before the application of Staff Accounting Bulletin 101,
"Revenue Recognition in the Financial Statements". The Company will be required
to expense the $1 million and $3 million minimum payments in the December 2002
and March 2003 quarters, respectively.
Accordingly, MemberWorks is revising its fiscal 2003 earnings and operating
cash flow guidance to reflect the minimum payments. The Company now expects
earnings per share of $0.13 to $0.16 for the December quarter and $1.15 to $1.25
for the 2003 fiscal year compared to previous guidance of $0.19 to $0.22 and
$1.40 to $1.50, respectively. Operating cash flow before working capital is now
expected to be $9 to $11 million for the December quarter and $46 to $50 million
for the 2003 fiscal year compared to previous guidance of $10 to $12 million and
$48 to $52 million, respectively.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
The following exhibits are included as part of this report:
99.1 Press release of Registrant, dated December 23, 2002.
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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 hereunto duly authorized.
MEMBERWORKS INCORPORATED
(Registrant)
Date: December 23, 2002 By: /s/ Gary A. Johnson
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Gary A. Johnson, President and
Chief Executive Officer
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