<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the
- ----- Securities Exchange Act of 1934: For the quarterly period ended
September 30, 1995.
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 0-18529
-------------------------------------
TDX Corporation
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3014698
- ------------------------------------ ----------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
29 Sawyer Road
Waltham, Massachusetts 02154
- ---------------------- -----
(Address of principal (Zip code)
executive offices)
(617) 736-0939
--------------
(Registrant's telephone number, including area code)
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 preceding 12 months (or for 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 November 10, 1995, there
were 7,334,524 shares of common stock, $.01 par value, outstanding.
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Number
------
Item 1. Financial Statements
Consolidated Balance Sheet - September 30, 1995
(unaudited) and June 30, 1995 (audited) 3
Consolidated Statement of Operations - For the
three months ended September 30, 1995
and 1994 (unaudited) 4
Consolidated Statement of Cash Flows - For the
three months ended September 30, 1995 and
1994 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
1995 1995
---- ----
Current assets: (Unaudited) (Audited)
<S> <C> <C>
Cash & cash equivalents $513,590 $714,411
Accounts receivable, net of allowance for doubtful
accounts of $158,000 ($158,000 at June 30, 1995) 133,841 90,656
Inventories 329,425 351,466
Production costs, net of accumulated
amortization of $333,000 ($331,000 at June 30, 1995) 16,667 18,667
Prepaid expenses and other assets 34,625 15,502
------ ----------
Total current assets 1,028,148 1,190,702
Fixed assets, net 385,781 424,538
Assets held for sale - discontinued operations 914,524 914,524
Goodwill, net of accumulated amortization of $20,679
($15,206 at June 30, 1995) 189,927 195,400
Other assets 117,194 116,686
----------- -----------
Total assets $2,635,574 $2,841,850
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $567,396 $509,019
Accrued payroll 89,945 148,226
Accrued professional fees 33,900 70,500
Other accrued liabilities 129,849 140,129
Notes payable 39,051 38,861
Deferred revenue 227,752 144,594
Liabilities of discontinued operations 447,249 447,250
------- ----------
Total current liabilities 1,535,142 1,498,579
Other accrued liabilities 2,900 4,200
Notes payable 89,753 99,815
Commitments --- ---
Stockholders' equity:
Preferred stock - Authorized 1,000,000 shares, $.01 par value; --- ---
none issued and outstanding
Common stock - Authorized 10,000,000 shares, $.01 par value; 73,345 73,345
7,334,524 issued and outstanding
Additional paid-in capital 16,505,266 16,505,266
Accumulated deficit (15,570,832) (15,339,355)
----------- -----------
Total stockholders' equity 1,007,779 1,239,256
---------- ----------
Total liabilities and stockholders' equity $2,635,574 $2,841,850
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
1995 1994
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales: $1,487,319 $1,728,151
---------- ----------
Costs and expenses:
Cost of sales 920,694 1,041,844
Selling, general & administrative 797,636 954,993
---------- ----------
1,718,330 1,996,837
---------- ----------
Loss from operations (231,011) (268,686)
Other income (expense):
Interest income 5,984 9,252
Interest expense (3,009) (477)
---------- ----------
Loss before provision for income taxes (228,036) (259,911)
Provision for income taxes 3,441 8,160
---------- ----------
Loss from continuing operations (231,477) (268,071)
---------- ----------
Discontinued operations:
Income from discontinued
operations (net of tax of $0) --- 8,085
Loss on disposal of discontinued
operations, (net of tax of $0) --- ---
---------- ----------
Income from discontinued operations --- 8,085
---------- ----------
Net loss $(231,477) $(259,986)
--------- ---------
--------- ---------
Net loss per share:
Continuing $ (0.03) $ (0.04)
Discontinued --- ---
---------- ----------
Net income (loss) per share $ (0.03) $ (0.04)
---------- ----------
---------- ----------
Weighted average common shares
outstanding 7,334,524 7,334,524
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements
4
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
1995 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $(231,477) $(259,986)
---------- ---------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 52,067 112,544
Income from discontinued operations --- (8,085)
Changes in assets and liabilities:
Accounts receivable (43,185) (12,087)
Inventories 22,041 5,349
Prepaid expenses and other assets (20,073) 9,349
Accounts payable and accrued expenses (46,780) 70,279
Deferred revenue 83,158 (197,721)
Net assets of discontinued operations -- (379,126)
---------- ---------
Total adjustments 47,228 (399,498)
---------- ---------
Net cash used in operating activities (184,249) (659,484)
---------- ---------
Cash flows from investing activities:
Purchase of fixed assets (5,400) (25,199)
---------- ---------
Net cash used in investing activities (5,400) (25,199)
---------- ---------
Cash flows from financing activities:
Repayment of notes payable (11,172) ---
---------- ---------
Net cash used in financing activities (11,172) ---
---------- ---------
Net decrease in cash and cash equivalents (200,821) (684,683)
Cash and cash equivalents, beginning of period 714,411 1,959,480
---------- ---------
Cash and cash equivalents, end of period $513,590 $ 1,274,797
---------- ---------
---------- ---------
Supplemental disclosures of cash flow information
Cash paid during the three month period for:
Income taxes $4,302 $11,444
Interest $3,009 $477
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Basis of Presentation
The unaudited financial information furnished herein reflects all
adjustments (consisting solely of normal recurring adjustments) which, in the
opinion of management, are necessary to fairly state TDX Corporation's (the
"Company") consolidated financial position, results of operations, and cash
flows for the periods presented. This information should be read in conjunction
with the Company's audited financial statements for the fiscal year ended June
30, 1995, included in the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on September 28, 1995, (the "Form 10-K").
The results of operations for the three months ended September 30, 1995 are not
necessarily indicative of the results to be expected for the fiscal year ended
June 30, 1996.
The Company's principal business segment, weight control services,
continued to experience operating losses for the first quarter of fiscal 1996.
Management continued to cut operating overhead and has embarked on a new
marketing and promotional strategy to enhance classroom attendance in an effort
to return the business to profitability. However, the outlook for profitable
operating results remains uncertain. As a result, there is substantial doubt
as to the Company's ability to continue as a going concern.
NOTE 2 - Safe Way Disposal Systems, Inc.
In September 1995, Stericycle , Inc. ("Stericycle") completed a
recapitalization of all of its preferred stock to common stock. After giving
effect to the recapitalization, Safe Way Disposal Systems, Inc. ("Safe Way")
now holds approximately 3% of the outstanding common stock of Stericycle. This
3% includes and gives effect to the conversion to common stock of the shares of
Stericycle preferred stock into which the $2,480,000 note of Stericycle payable
to Safeway may be converted upon maturity.
The Company continues to monitor Stericycle's operations and financial
position for indications of impairment in its investment in Stericycle. The
valuation of Stericycle's common stock is based in part on an estimate of the
market value of Stericycle. The realization of the carrying value of this
investment on the consolidated balance sheet of the Company is dependent upon
numerous factors, including Stericycle's ability to achieve profitability, raise
additional equity from investors or form alliances with strategic partners.
NOTE 3 - Reclassifications
Certain reclassifications have been made to the 1994 quarterly financial
statements to conform such financial statements to the 1995 consolidated
quarterly financial statement presentation. Such reclassifications had no
effect on the reported loss for the three month period ended September 30,
1994.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The results of operations shown on the Company's consolidated statements of
operations reflect the Company's investment in Safe Way, a Connecticut
corporation and majority-owned subsidiary of the Company and Transactional
Media, Inc. ("TMI") as discontinued operations. Accordingly, prior year
financial statements have been restated to reflect the operations of Safe Way
and TMI below the loss from continuing operations. The financial statements and
the notes thereto contained herein are based on the Company's consolidated
results of operations and should be read in conjunction with the Company's
consolidated financial statements for the fiscal year ended June 30, 1995,
contained in the Company's Form 10-K.
Sales
Total sales decreased by 14%, from $1,728,151 for the three months ended
September 30, 1994 to $1,487,319 for the three months ended September 30, 1995.
This decrease is primarily attributable to the reduction in sales from
Xenejenex, Inc. ("Xenejenex") as a result of Xenejenex's redirecting its
corporate strategy to focus principally on the distribution of its existing
healthcare videotapes and a continued reduction in product and program sales
from the Diet Workshop Companies ("Diet Workshop") as a result of an overall
decline in paid attendances.
Costs and Expenses
Cost of sales decreased by 12% from $1,041,844 for the three months ended
September 30, 1994 to $920,694 for the three months ended September 30, 1995.
This decrease in cost for the three month period ended September 30, 1995 from
the comparable period a year ago is primarily attributable to the reduction in
revenue associated with Diet Workshop and Xenejenex.
Total selling, general and administrative expenses decreased by 16% from
$954,993 for the three months ended September 30, 1994 to $797,636 for the three
months ended September 30,1995. The decrease for the three months ended
September 30, 1995 as compared to the three months ended September 30, 1994
reflects reductions in Xenejenex's overhead as a result of its restructuring.
Sales by Business Segment
The Company operates in two principal business segments: "Weight Control
Services," which consists of the operations of Diet Workshop and "Healthcare
Communications," which consists of the operations of Xenejenex.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
The following is a summary of sales by segment for the three months ended
September 30, 1995 and 1994:
- --------------------------------------------------------------------------------
Sales Three months Three months
ended ended
(Dollars in thousands) September September
30, 1995 30, 1994
- --------------------------------------------------------------------------------
Weight Control Services $1,374 $ 1,477
Healthcare Communications 113 251
- --------------------------------------------------------------------------------
Total $1,487 $1,728
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WEIGHT CONTROL SERVICES
Total sales in the weight control services segment decreased by 7% from
$1,477,019 for the three months ended September 30, 1994 to $1,373,895 for the
three months ended September 30,1995. This decrease reflects a continuing
decline in paid attendance at Diet Workshop, which resulted in lower product and
program sales. Revenue decreases were somewhat offset by sales from the
Company's fresh food company, Diet Fresh Worldwide Corporation ("Diet Fresh").
The Company believes that the decreases for the three month period ended
September 30, 1995 as compared to the comparable period a year ago is the
result of a general decline in the overall diet industry and continued
widespread media criticism of the industry. The Company believes that this
trend will continue for at least the near future.
Healthcare Communications
Total sales in the healthcare communications segment decreased by 55%, from
$251,132 for the three months ended September 30, 1994 to $113,424 for the three
months ended September 30, 1995. This decrease is primarily attributable to a
September 1994 restructuring of Xenejenex which resulted in the narrowing of its
focus from production contracts and other services to principally videotape
sales. Consequently, it is expected that revenues from production contracts
will decline to a minimum level and that Xenejenex will have a continued lower
level of sales for the foreseeable future.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
COST OF SALES BY BUSINESS SEGMENT
The following is a summary of cost of sales by segment for the three months
ended September 30, 1995 and 1994.
- --------------------------------------------------------------------------------
Costs of Sales Three Months Three Months
Ended Ended
(Dollars in Thousands) September September
30, 1995 30, 1994
- --------------------------------------------------------------------------------
Weight Control Services $878 $913
Healthcare Communications 42 129
- --------------------------------------------------------------------------------
Total $920 $1,042
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WEIGHT CONTROL SERVICES
Cost of sales as a percentage of sales for the three months ended September
30, 1995 was 64% as compared to 62% for the three months ended September 30,
1994. The increase in the cost of sales as a percentage of revenue for the
three month period ended September 30, 1995 as compared to the comparable period
a year ago primarily reflects the inclusion of the operating costs of Diet
Workshop's fresh food company, Diet Fresh, which was acquired on January 23,
1995.
HEALTHCARE COMMUNICATIONS
Cost of sales as a percentage of sales was 37% for the three months ended
September 30, 1995, compared to 51% for the three months ended September 30,
1994. This decrease is primarily attributable to a change in product mix
towards higher margin videotape sales.
INCOME (LOSS) FROM OPERATIONS BY BUSINESS SEGMENT
The following is a summary of income (loss) by segment for the three months
ended September 30, 1995 and 1994.
- --------------------------------------------------------------------------------
Income (Loss) by Business Segment Three Months Three Months
(Dollars in Thousands) Ended Ended
September September
30, 1995 30, 1994
- --------------------------------------------------------------------------------
Weight Control Services $(182) $(84)
Healthcare Communications 43 (144)
- --------------------------------------------------------------------------------
Total $(139) $(228)
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
9
<PAGE>
WEIGHT CONTROL SERVICES
The loss from operations for the three months ended September 30, 1995 was
$182,513 as compared to $83,984 for the three months ended September 30, 1994.
The increase in the loss from operations for the three months ended September
30, 1995 as compared to the three months ended September 30, 1994 principally
reflects the loss from operations associated with Diet Fresh and continued
declines in class room attendance and sales which resulted in lower margins.
HEALTHCARE COMMUNICATIONS
Income from operations for the three months ended September 30, 1995 was
$42,987 as compared to a loss from operations of $143,944 for the three months
ended September 30, 1994. The increase in the income from operations for the
three month period ended September 30, 1995 as compared to 1994 reflects lower
overhead and expense levels as compared to September 30, 1994. The loss from
operations for the three months ended September 30, 1994 reflects the costs
attributable to staff severances and other costs associated with Xenejenex's
restructuring of its healthcare communications business. Xenejenex expects to
report continued profitability as a result of its restructuring.
LIQUIDITY, CAPITAL RESOURCES
At September 30, 1995, the Company's total cash and cash equivalents were
$513,590. Cash used in operations was $184,249 for the three months ended
September 30, 1995. Although the Company believes that its cash and cash
equivalents are sufficient for the near future, there can be no assurance that
the Company will provide additional funding to its operating subsidiaries. The
operating subsidiaries have implemented restructuring plans to curtail cash
utilized in operations and preserve available cash reserves. There can be no
assurance, however, that Diet Workshop will return to profitability given the
difficult industry trends it faces. The Company is pursuing strategic alliances
for the sale of both of its two operating subsidiaries. There can be no
assurance, however, that strategic partners can be found. As a result of the
limited sources of external financing and capital available to the Company,
there exists substantial doubt as to the Company's ability to continue as a
going concern.
10
<PAGE>
Part II. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
11.1 Statement regarding the computation of earnings per share.
b) Reports on Form 8-K - None
11
<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.
TDX Corporation
Date: November 10, 1995 By: /s/ Donald T. Pascal
----------------------------------
Donald T. Pascal
President
(Principal Executive Officer)
Date: November 10, 1995 By: /s/ Steven F. Smith
----------------------------------
Steven F. Smith
Chief Financial Officer and Treasurer,
(Principal Financial and Accounting Officer)
12
<PAGE>
EXHIBIT INDEX
Page number
Exhibit sequentially
Number Exhibit numbered
- ------ ------- --------
11.1 Statement regarding the computation of earnings
per share. 14
13
<PAGE>
TDX CORPORATION AND SUBSIDIARIES
Statement regarding the computation of earnings per share
Exhibit 11.1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
For the three months ended
September 30,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Weighted average shares outstanding 7,334,524 7,334,524
Loss from continuing operations $(231,417) $(268,071)
Income from discontinued operations --- 8,085
----------- ----------
Net loss $ (231,417) $(259,986)
----------- ----------
----------- ----------
Net income (loss) per share:
- Continuing $ (.03) $ (.04)
- Discontinuing --- ---
---------- ---------
Net loss per share $ (.03) $ (.04)
---------- ---------
---------- ---------
</TABLE>
