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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
[Amendment No. ]
TLM Corporation
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(Name of Issuer)
TLM Corporation
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(Name of Person(s) Filing Statement)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
872558101
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(CUSIP Number of Class of Securities)
Robert Price, President
630 Fifth Avenue, Suite 3201
New York, New York 10020
Tel.: (212) 757-5600
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With Copies to:
Peter G. Samuels, Esq.
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036-8299
Tel.: (212) 969-3335
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation 14C [17
CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [Section 240.13e-3(c)] under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act
of 1933.
c. [ ] A tender offer.
d. [X] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Calculation of Filing Fee
<TABLE>
<CAPTION>
Transaction Amount of Filing fee
<S> <C>
valuation*
$67,379.06 $13.48
</TABLE>
*Set forth the amount on which the filing fee is calculated and state how it was
determined. [Fractional Share Payment ($1.31 per share) for 20% of the
outstanding shares of the Company's Common Stock (51,435 shares), which the
Company believes to be substantially in excess of the Fractional Share Payment
to be paid in connection with the Transaction described herein.]
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $
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Form or Registration No.:
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Filing Party: TLM Corporation
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Date Filed: November 14, 1996
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Schedule 13E-3
Item 1. Issuer and Class of Security Subject to Transaction
(a) TLM Corporation (the "Company"), a Nevada corporation
630 Fifth Avenue
Suite 3200
New York, New York 10020
(b) Common Stock, par value $.01 per share ("Common Stock"),
257,172 shares outstanding and 637 holders of record as of
October 28, 1996
(c) The Company's Common Stock is quoted on the NASD non-Nasdaq
over-the-counter Bulletin Board ("OTCBB"). The high and low
bid prices for the Company's Common Stock are as reported by
the OTCBB. Such quotations reflect inter-dealer prices,
without retail mark-up or mark-down commission and may not
necessarily represent actual transactions. Quotation in the
OTCBB does not necessarily reflect an active or established
public market. Quotations for the Company's Common Stock are
sporadic.
<TABLE>
<CAPTION>
1994 1995 1996
--------------- ------------------ ----------------
Quarter High Low High Low High Low
- ------- ------ --- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
First $ .25 .13 $ 1.00 1.00 $ 1.00 1.00
Second $ .56 .13 $ 1.50 .75 $ 1.125 .75
Third $ .75 .50 $ 1.00 1.00 $ 1.00 .75
Fourth $ 1.00 .75 $ 1.00 1.00 $ 1.00 1.00(1)
</TABLE>
- ----------
(1) Through November 1, 1996.
(d) The Company has not paid any dividends during the past two
fiscal years. There are no restrictions on the Company's
present or future ability to pay dividends.
(e) Not Applicable ("N.A.")
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(f) During 1994, 1995 and 1996, the Company, pursuant to
the authorization of its Board of Directors,
repurchased 98,714 shares of Common Stock at prices
ranging from $.50 to $1.39 per share for an aggregate
purchase price of $112,591. The average purchase
price paid by the Company per quarter in such
repurchases is as follows:
<TABLE>
<CAPTION>
Quarter Avg. price paid/share
<S> <C> <C>
1Q'94 $0.25
2Q'94 0.51
3Q'94 0.25
4Q'94 -
1Q'95 0.50
2Q'95 0.80
3Q'95 1.36
4Q'95 0.75
1Q'96 1.32
2Q'96 1.00
3Q'96 1.32
4Q'96 1.39
</TABLE>
Item 2. Identity and Background
This Statement is filed by the issuer of the Common Stock.
The response to Item 2 as to the Company is
incorporated by reference to "Appendix A" hereto.
The responses to Items 2(a), (b), (c), (d) and (g) as
to the officers and directors of the Company are
incorporated by reference to the information to
Appendix A.
(e) and (f) None of the natural persons identified in response
to Item 2(a) nor the Company has been convicted
in a criminal proceeding or been the subject of
any of the proceedings specified by Item 2(f)
during the past five years.
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Item 3. Past Contacts, Transactions or Negotiations
(a)(1) and (2) and (b) N.A.
Item 4. Terms of the Transaction
(a) The transaction involves a reduction in the number of
authorized shares of Common Stock, including the
_____ shares outstanding as of the Record Date, from
20,000,000 to 200,000 shares by means of a one for
100 reverse stock split and the payment of an amount
equal to $1.31 per share (the "Fractional Share
Payment") to those stockholders who hold less than
one whole share of Common Stock and other holders of
fractional shares after consummation of the
transaction (the "Transaction" or "Reverse Stock
Split").
(b) N.A.
Item 5. Plans or Proposals of the Issuer or Affiliate
(a) through (e) N.A.
(f) and (g) As a result of the Transaction, the Company's
reporting obligations under the Exchange Act,
the registration of the Common Stock under
Section 12(g) of the Exchange Act, and the
Company's obligation to comply with the
Commission's proxy rules will terminate.
Item 6. Source and Amount of Funds or Other Consideration
(a) and (b) The Company intends to use its cash and other
liquid assets to pay the estimated
approximately $_____ aggregate Fractional
Share Payment and the expenses of the
Transaction, estimated to be approximately
$20,500. The Company estimates that it will
incur the following expenses in connection
with the Transaction:
<TABLE>
<S> <C>
Printing and mailing $ 3,000
Transfer Agent Fees $ 5,000
Legal Fees $10,000
Miscellaneous Expenses $ 2,500
</TABLE>
(c) and (d) N.A.
Item 7. Purpose(s), Alternatives, Reasons and Effects
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(a) and (c) The purpose of the Transaction is to reduce the
number of the holders of record of the Common
Stock below 500. This will be accomplished by a
reduction in the number of authorized and
outstanding shares of Common Stock, in the form
of a one for 100 reverse stock split, with the
purchase by the Company of any resulting
fractional shares from the persons then holding
less than one whole share for the Fractional
Share Payment. That will reduce the number of
record holders of the common stock from ____,
as of the Record Date, to _____.
The reason for the Transaction is to permit the
Company to terminate the Company's reporting
obligations under the Exchange Act and the
requirement for the Company to comply with the
Commission's proxy rules and, thus, eliminate
the cost of compliance with those requirements,
which is significant to the Company.
The Company estimates that the annual pre-tax
cost of continuing as a public company,
including preparation and filing of reports and
proxy statements with the Commission,
preparation and mailing of reports, proxy
statements and other communication to
stockholders, annual audits of the Company's
financial statements and legal fees, is
approximately $21,500 or $.08 per share or
approximately $15 per beneficial owner, based
on the Company's estimate of the number of
beneficial owners of its Common Stock after
inquiries to securities brokers. That amount
constitutes approximately 213 percent and 17
percent of the Company's earnings before income
taxes for 1994 and 1995, respectively.
In addition to the out-of-pocket expense of
being a public company, the preparation of
reports and proxy statements requires the
attention of the officers of the Company who
devote only part of their time to the affairs
of the Company. The President and the Vice
President and Treasurer, who are the officers
responsible for the preparation of those
documents, receive no compensation as executive
officers, although the President receives an
annual Director's fee of $10,000 and the Vice
President and Treasurer receives an annual fee
of $12,000 for serving as a Chairman.
(b) The Board of Directors considered a number of
alternatives to the Transaction including a
self-tender, a continuation of the Company's share
repurchase program, seeking a merger or consolidation
with
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another company, selling its assets and seeking to
enter a new line of business, or continuing to
operate as it presently does.
The Board of Directors determined not to authorize a
self-tender by the Company for a sufficient number of
shares to reduce the number of record holders of the
Common Stock to below 500 (which would have provided
stockholders with a choice as to whether to remain as
stockholders of the Company or sell their shares), in
that there would be no assurance of its success, due
to the pro rata provision of the Commission's Rule
13e-4(f)(3) applicable to self tenders, the possible
inability to communicate the offer to a sufficient
number of stockholders (the "lost" stockholder
problem) and the lack of assurance that a sufficient
number of stockholders would tender their shares. The
Transaction, on the other hand, would operate
automatically to reduce the number of stockholders of
record below 500.
The Board also concluded, based on the Company's
experience, that continuation of the Company's share
repurchase program would be unlikely to reduce the
number of record holders below 500 and, thus, the
Company would continue to incur the expense of being
a public company without providing any value to
stockholders other than those whose shares are
repurchased from time to time by the Company.
Since disposing of substantially all of its post
production operating assets in 1989, the Company has
considered seeking acquisitions in businesses other
than post production operations or alternatively
seeking to liquidate or merge or consolidate with
another company. However, other than its acquisition
in 1994 of a corporation the principal asset of which
was an office building in Nashville, Tennessee (the
"Property"), the Company did not seriously consider
or receive any proposals for such transactions. Given
its past history of unsuccessful efforts, the Board
concluded that merger or consolidation or sale of
assets and seeking to enter a new line of business
were not viable alternatives.
The Board considered liquidation, but in light of the
estimated expenses of sale of the Company's assets
and liquidation of the Company (including brokerage
commissions, legal fees, real estate transfer taxes,
accounting fees, reserves to satisfy the Company's
obligations, and other miscellaneous costs and
expenses), the uncertainty as to the amount of
proceeds that would result from the sale of the
Property, and that a liquidation would result in the
failure of all stockholders to share in the future of
the Company, the Board determined that a liquidation
would not be in the best interests of stockholders.
In reaching this conclusion, the Board estimated that
the proceeds of sale of the Property would be
$815,000, or the purchase price paid by the
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Company in 1994 for the capital stock of the
corporation owning the Property, and that aggregate
expenses of the sale of such building and liquidation
of the Company would aggregate $97,800 (or 12% of
such proceeds of sale), with the result that after
liquidation for the Company's cash and other current
assets (estimated at $270,774) and repayment of the
Company's long-term indebtedness and other
liabilities and establishment of a reserve for the
Company's known or contingent obligations (estimated
at $615,327), the Board estimated the Company's
liquidation value net of expenses and liabilities as
aforesaid as $372,647 or $_____ per share as of the
Record Date.
Continuing to operate the Company as it presently is
operated was rejected by the Board, due to the
expense of continuing as a public company discussed
above.
(d) The Transaction will have various effects on the
Company, the stockholders who are executive officers
and directors of the Company and members of their
immediate families (the "Affiliated Stockholders"),
the unaffiliated stockholders (the "Unaffiliated
Stockholders") who remain stockholders after the
Transaction and the Unaffiliated Stockholders who
receive a Fractional Share Payment and cease to be
stockholders after the Transaction.
THE COMPANY. The expenses of the Transaction and the
payment of the Fractional Share Payment will reduce
the Company's cash and other liquid assets by
approximately $______ and its working capital and
total assets would be reduced by a corresponding
amount. However, the registration of the Common Stock
and the Company's reporting obligation under the
Exchange Act would be terminated and the Company
would cease to be a public company and the Company
believes that its remaining liquid assets and the
estimated annual pre-tax savings of the approximately
$21,500 costs of being a public company together with
the rental payments on the lease on the Property will
be sufficient to finance the operations of the
Company for at least the remainder of 1996 and for
1997.
AFFILIATED STOCKHOLDERS. The Affiliated Stockholders
will remain officers, directors and stockholders of
the Company.
The Affiliated Stockholders will experience many of
the same effects of the Transaction as the
Unaffiliated Stockholder who remain Stockholders.
However, as officers and directors they will not be
affected by the loss of information about the Company
available in filings with the Commission and annual
reports to stockholders, since
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<PAGE> 9
they would have access to such information as the
result of their positions.
The aggregate percentage beneficial ownership of the
Common Stock of the Affiliated Stockholders will
increase from 21.8 per cent, as of the Record Date,
to __ per cent.
At September 30, 1996 the book value per share of the
Common Stock held by the Affiliated Stockholders was
$1.31. Upon consummation of the Transaction the pro
forma book value per share of their Common Stock as
of September 30, 1996 will be $_______.
CONTINUING UNAFFILIATED STOCKHOLDERS. Those
Unaffiliated Stockholders who remain stockholders of
the Company after the Transaction will have a
residual interest in a company with approximately
$_____ less in liquid assets than before the
Transaction.
The aggregate percentage of the outstanding shares of
Common Stock held on the Record Date by the
Unaffiliated Stockholders who remain stockholders
after consummation of the Transaction was
approximately ___ per cent. As the result of the
Transaction, their aggregate holdings will be
increased to approximately ___ per cent of the
outstanding shares. The book value per share of their
shares of Common Stock on September 30, 1996 was
$1.31. As the result of the Transaction, the pro
forma book value per share of their shares as of
September 30, 1996 will be $__________.
The Company will no longer be subject to the periodic
reporting provisions of the Exchange Act.
Accordingly, these Unaffiliated Stockholders will no
longer have access to the information about the
Company theretofore provided in its filings with the
Commission and annual reports to stockholders, and
will no longer receive the benefit of proxy or
information statements prepared in accordance with
the rules of the Commission, disclosing material
information about management, its remuneration and
transactions with the Company and matters to be acted
upon at meetings of stockholders. Under Nevada law,
any person who is a stockholder of record of the
Company and owns not less than 15 percent of all of
the issued and outstanding shares of the Company or
has been authorized in writing by the holders of at
least 15 percent of all its issued and outstanding
shares, is entitled to inspect the books of account
and all financial records of the Company, to make
extracts therefrom, and to conduct an audit of such
records. Such provisions do not apply to any
corporation that furnishes to its stockholders a
detailed, annual financial statement, although the
Company will be under no legal obligation to furnish
any such annual financial statement.
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<PAGE> 10
As the result of the termination of the Company's
reporting obligations under the Exchange Act the
Common Stock will no longer be eligible to be quoted
on the O-T-C Bulletin Board. Even taking into account
the limited existing market for the Common Stock, the
loss of the availability of quotations for the Common
Stock on the OTCBB could significantly negatively
affect the liquidity and market value of the shares
of Common Stock held by these Unaffiliated
Stockholders. While the Common Stock might continue
to trade over-the-counter and quotations might be
reported in the "Pink Sheets" of the National
Quotation Bureau, Inc., there can be no assurances
that this will occur, particularly in view of the
limited number of shares available for trading. The
extent of the public market for the Common Stock and
the availability of such quotations would depend upon
such factors as the number of shares available for
trading, the number of remaining stockholders, the
interest of securities dealers in maintaining a
market in the Common Stock and the lack of publicly
available information about the Company.
Thus, these stockholders may have no practical means
of disposing of their Common Stock and may lose their
entire investment.
UNAFFILIATED STOCKHOLDERS WHO CEASE TO BE
STOCKHOLDERS. A stockholder holding fewer than 100
shares of Common Stock on the Record Date will have
that holding reduced to less than one whole share as
the result of the Transaction. The Company will make
a Fractional Share Payment to such a stockholder
rather than issue less than one whole share to the
stockholder and that stockholder will cease to be a
stockholder of the Company.
Stockholders who receive a Fractional Share Payment
and cease to be stockholders as the result of the
Transaction will no longer have an interest in the
Company and will lose the opportunity to share in the
Company's future. However, the Company has no plans,
negotiations, agreements, arrangements or
understandings for an extraordinary transaction and
does not expect to pay dividends for the foreseeable
future. Accordingly, absent the Transaction, such
stockholders would continue to share in the current
business of the Company without an established
trading market for their shares of Common Stock and
with their interests eroding as the result of the
costs of the Company continuing as a public company.
FEDERAL INCOME TAX CONSEQUENCES. The following
summary of the federal income tax consequences of the
Reverse Stock Split is based on the Internal Revenue
Code of 1986, as amended, the Treasury
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Regulations promulgated thereunder, judicial
authority and current administrative rulings and
practices as in effect on the date of this Schedule
13E-3. This discussion is for general information
only. The tax treatment of a stockholder may vary
depending upon the particular facts and circumstances
of such stockholder. Certain stockholders, including
insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, non-resident
aliens, foreign corporation and persons who do not
hold the Common Stock as a capital asset, may be
subject to special rules not discussed below.
ACCORDINGLY, STOCKHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR
FOREIGN INCOME TAX AND OTHER LAWS.
A stockholder receiving shares of Common Stock
pursuant to the Reverse Stock Split will not
recognize gain or loss for federal income tax
purposes (except in the case of cash received in lieu
of a fractional share, as described below). A
stockholder's aggregate tax basis of the shares of
Common Stock received pursuant to the Reverse Stock
Split (including any fractional shares to which a
stockholder is entitled) will equal the aggregate tax
basis of the stockholder's shares of Common Stock
exchanged in the Reverse Stock Split, reduced by the
amount of cash (if any) received in lieu of a
fractional share of Common Stock, increased by the
amount of such cash (if any) treated as a dividend
and increased by the amount of gain (if any)
recognized as a result of the receive of cash in lieu
of a fractional share of Common Stock. The aggregate
tax basis of each stockholder's shares of Common
Stock owned following the Reverse Stock Split will be
allocated ratably among the total number of shares of
Common Stock that the stockholder receives. For tax
purposes, the holding period of the Common Stock
received as a result of the Reverse Stock Split will
include the holding period of the shares of Common
Stock immediately prior to the effective date of the
Transaction, provided that the shares of Common Stock
were held as a capital asset on such effective date.
A stockholder's receipt of cash in lieu of a
fractional share of Common Stock pursuant to the
Reverse Stock Split, which results in a complete
termination of the stockholder's stock interest in
the Company, will cause the stockholder to recognize
gain or loss for federal income tax purposes in an
amount equal to the difference between the amount of
cash received by such stockholder and the aggregate
tax basis in his or her Common Stock owned prior to
the Transaction. If the stockholder holds the Common
Stock as a capital asset on the effective date of the
Transaction, then such stockholder's gain or loss
will be a capital gain
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or loss and will be long-term capital gain or loss if
on such effective date the shares of Common Stock
have been held for more than one year.
A stockholder's receipt of cash in lieu of a
fractional share of Common Stock, which does not
result in a complete termination of the stockholder's
stock interest in the Company, will cause the
stockholder to recognize gain, if any, in an amount
not in excess of the amount of cash the stockholder
receives. The gain will be capital gain if the
stockholder holds the Common Stock as a capital asset
on the effective date, provided that the distribution
of cash does not have the effect of a distribution of
a dividend, and will be long-term capital gain if on
the effective date the shares of Common Stock have
been held for more than one year.
In the event that a stockholder's receipt of cash in
lieu of a fractional share of Common Stock has the
effect of a distribution of a dividend and does not
constitute a complete termination of the
stockholder's stock interest in the Company, the
gain, if any, recognized by the stockholder will be
treated as ordinary income to the extent of the
stockholder's ratable share of the Company's
accumulated earnings and profits. The remainder, if
any, of the recognized gain will be treated as gain
from the exchange of property.
The information reporting and possibly the "backup"
withholding requirements of the Code may apply to the
stockholder's receipt of cash in lieu of fractional
share of Common Stock, depending on the stockholder's
particular facts and circumstances and depending on
whether the Company has accumulated earnings and
profits.
Item 8. Fairness of the Transaction
(a) The Company reasonably believes that under the
circumstances, the Transaction is, on balance, fair
to its Unaffiliated Stockholders both from a
financial point of view and in terms of the structure
of the Transaction.
The Company reasonably believes that the Transaction
is fair to its Unaffiliated Stockholders from a
financial point of view based on the recommendation
of its Board of Directors, the Fractional Share
Payment, the Company's net book value and estimated
liquidation value, the Company's past history and
future prospects, the lack of a reasonable
alternative to the Transaction, the lack of an
established trading market for the Common Stock, the
historical market prices for the Common Stock and
recent trading activity, the absence of the
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payment of dividends on the Common Stock and the lack
of prospects for payment of dividends for the
foreseeable future, the results of the Company's
stock repurchase program and the cost of remaining a
public company.
The Company reasonably believes that these factors
outweigh the disadvantages of the lack of appraisal
rights for dissenting stockholders, the loss by those
who remain stockholders of the benefits of the
information provided by reports and proxy statements
required by the rules of the Securities and Exchange
Commission and the ability to have their shares
quoted on the O-T-C Bulletin Board and the loss by
those who no longer will be stockholders of the
opportunity to participate as stockholders of the
Company in its future.
(b) NET BOOK VALUE. The Company's net book value per
share as of December 31, 1994 and 1995 and September
30, 1996 was $.95, $1.28 and $1.31, respectively, and
$____, on a pro forma basis, as of September 30,
1996, giving effect to the Fractional Share Payment
and the expenses of the Transaction.
LIQUIDATION VALUE. As discussed above, the Board of
Directors estimated that the Company's aggregate
liquidation value less costs of liquidation and
appropriate reserve necessary to satisfy the
Company's obligations was $372,647 or $1.43 per share
as of September 30, 1996. As discussed above, there
can be no assurance that the actual liquidation value
of the Company would not be a greater or lesser
amount. Other than estimating the liquidation value
of the Company, the Board did not consider or cause
to be prepared any projections or forecasts of the
future economic value of the Company.
GOING CONCERN VALUE. The Board determined that it
would not be in the best interest of the Company to
retain an outside expert to analyze or appraise the
value of the Company as a going concern, due to the
probable costs of such an analysis or appraisal and
the fact that the Board, based on the past history of
unsuccessful attempts to interest another company in
a merger with the Company or a purchase of its
assets, and the absence of unsolicited offers to
acquire the Company as a going concern or otherwise,
believed that it could be a waste of the Company's
assets to incur the expenses of such an appraisal or
analysis.
LACK OF AN ESTABLISHED TRADING MARKET. The Board of
Directors concluded there presently is no established
trading market for the Common Stock, quotations for
the Common Stock are sporadic and the Common Stock is
not a "margin security" and, therefore, cannot be
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used as collateral for loans from brokers. Therefore,
loss of the ability to have the Common Stock quoted
on the O-T-C Bulletin Board would not have a
significant impact on stockholders.
ABSENCE OF DIVIDENDS. The Company has never paid cash
dividends and currently intends to retain all
earnings for use in its business. Any payment of
future dividends will be at the discretion of the
Company's Board of Directors and will depend upon,
among other things, the Company's earnings, financial
condition, cash flow, capital requirements and other
relevant considerations.
The Transaction has been approved unanimously by the
Board of Directors, who, on balance, under the
circumstances, have concluded that the Transaction is
fair to the Company and the Unaffiliated
Stockholders. In view of the wide variety of factors
considered in connection with its evaluation of the
Transaction, the Board of Directors did not find it
practicable to, and did not, quantify or otherwise
attempt to assign relative weights to the specific
factors they considered in reaching their
determination, although the desire to eliminate the
expense of being a public company was the most
significant factor in the Board's judgment.
None of the members of the Board of Directors is a
recognized expert in financial analysis, although
each member individually has some relevant
experience. See Appendix A.
(c) The Transaction is not structured so that approval of
at least a majority of unaffiliated security holders
is required. Under Nevada law approval of
stockholders is not required in respect of a reverse
stock split pursuant to which only money will be paid
to stockholders who before the stock split became
effective held in the aggregate less than 10% of the
Company's outstanding common stock.
(d) A majority of the directors who are not employees of
the issuer has not retained an unaffiliated
representative to act solely on behalf of
unaffiliated security holders for the purpose of
negotiating the terms of the Transaction and/or
preparing a report concerning the fairness of the
Transaction.
(e) None of the members of the Board of Directors is a
paid employee of the Company.
(f) N.A.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations
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(a) The Board concluded, based on its assets, historical
earnings and future prospects that it would not be in
the interest of the Company to incur the expense of
retaining an investment banker or other expert to
explore alternatives for enhancing shareholder value.
(b) and (c) N.A.
Item 10. Interest in Securities of this Issuer
(a) The information in Appendix A is incorporated by
reference in response to this Item.
(b) On October 23, 1996, the Company purchased 3,300
shares of Common Stock from an Unaffiliated
Stockholder for a purchase price of $1.39 per share
in the open market.
Item 11. Contracts, Arrangements or Understandings with Respect to
the Issuer's Securities
N.A.
Item 12. Present Intentions and Recommendation of Certain Persons
with Regard to the Transaction
(a) No Affiliated Stockholders will cease to be
stockholders as a result of the Transaction; certain
Affiliated Stockholders will receive Fractional Share
Payments on the same basis as Unaffiliated
Stockholders who continue as stockholders after
consummation of the Transaction. See Item 7(d) above.
(b) Other than the unanimous approval of the Transaction
by the Board of Directors, no Affiliated Stockholder
has made a recommendation in respect of the
Transaction.
Item 13. Other Provisions of the Transaction
(a) No appraisal or similar rights are provided in
respect of the Transaction under Nevada law or the
Certificate of Incorporation of the Company nor does
the Transaction otherwise provide for such rights.
Under Nevada law, stockholders of the Company will
have no remedy in respect to the Transaction absent
breach of fiduciary relating to the Transaction by
the Board of Directors of the Company.
(b) and (c) N.A.
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Item 14. Financial Information
(a)(1) The TLM Corporation and Subsidiary Consolidated
Financial Statements included in Exhibit (g)(1) are
incorporated by reference to this Item.
(2) The unaudited TLM Corporation and Subsidiary
Consolidated Financial Statements included in Exhibit
(g)(2) are incorporated by reference to this Item.
(3) Unaudited Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Pro Forma
-----------------
Nine Months Ended Pro Forma Nine Months Ended
-------------------- ---------- ----------------
1994 1995 Sept. 30, 1996 1995** Sept. 30, 1996**
---- ---- -------------------- ---------- ----------------
<S> <C> <C>
1.37 3.84 1.33
</TABLE>
(4) Unaudited Book Value Per Share
<TABLE>
<CAPTION>
Pro Forma Pro Forma
------------- --------------
Dec. 31, 1995 Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C>
$1.28 $1.31 $ $
</TABLE>
- -------------
** All pro forma information in this Item 14 gives effect to the
Transaction as if it had occurred on January 1, 1995, including
estimated expenses of $20,500 and estimated annual savings of costs of
compliance with Exchange Act reporting requirements and other expenses
of being a public company of $21,500.
14
<PAGE> 17
(b)(1) Selected Balance Sheet Data
<TABLE>
<CAPTION>
Pro Forma Pro Forma
------------- --------------
Dec. 31, 1995 Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1996
------------- -------------- ------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Working Capital $ 235,062 $ 246,970 $ $
Total Assets $1,038,625 $ 899,784 $ $
Long Term
Obligation $ 489,795 $ 504,792 $ $
Stockholders'
equity $ 368,794 $ 340,395 $ $
</TABLE>
Selected Income Statement Data
<TABLE>
<CAPTION>
Pro Forma
Nine Months Ended Pro Forma Nine Months Ended
1995 Sept. 30, 1996 1995 Sept. 30, 1996
--------- ----------------- --------- -----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Operating
Revenue $ 129,000 $ 96,750 $ 129,000 $ 96,750
Income from
Operations $ (21,994) $ 11,499
Other income, net $ 149,882 --
Net income $ 110,623 $ 7,299
Net income per
share $ 0.36 $ 0.03
</TABLE>
Item 15. Persons and Assets Employed, Retained or Utilized
(a) and (b) See Item 6(a) and (b) above.
(b) N.A.
Item 16. Additional Information
N.A.
Item 17. Material to Be Filed as Exhibits
(a) through (c) and (e) and (f) N.A.
15
<PAGE> 18
(d) Disclosure Statement under Rule 13e-3(d)
(g) TLM Corporation and Subsidiary Consolidated Financial
Statements
16
<PAGE> 19
SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
November 14, 1996 (Date)
--------------------------------
/s/ Robert Price (Signature)
--------------------------------
Robert Price, President (Name and Title)
--------------------------------
<PAGE> 20
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
99(d) Disclosure Statement under Rule 13e-3(d)
99(g) TLM Corporation and Subsidiary Consolidated Financial
Statements
<PAGE> 1
Exhibit (d)
TLM CORPORATION
630 FIFTH AVENUE
SUITE 3200
NEW YORK, NEW YORK 10020
DISCLOSURE STATEMENT
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The Board of Directors of TLM Corporation, a Nevada
corporation (the "Company"), has approved a one for 100 reverse stock split (the
"Transaction" or "Reverse Stock Split") of the Company's Common Stock, par value
$.01 per share ("Common Stock"). The purposes of the Transaction is to reduce
the number of holders of record of the Common Stock below 500. This will be
accomplished by a reduction in the number of authorized and outstanding shares
of Common Stock, as a result of the Reverse Stock Split, with the purchase by
the Company of any resulting fractional shares from the persons then holding
less than one whole share (as well as other holders of fractional shares) for a
fractional share payment equal to $1.31 per share (the "Fractional Share
Payment"), the book value of the Common Stock as at September 30, 1996.
The reason for the Transaction is to permit the Company to
terminate its reporting obligations under the Securities Exchange Act of 1934
(the "Exchange Act") and the requirement that the Company comply with the proxy
rules of the Securities and Exchange Commission (the "Commission") and, thus,
eliminate the cost of compliance with those requirements, which is significant
to the Company.
Your vote is not being solicited in connection with the
Transaction, in that under Nevada law approval of the Company's Board of
Directors is sufficient to authorize the Transaction. No appraisal or similar
rights are provided to stockholders in respect of the Transaction under Nevada
law or the Certificate of Incorporation of the Company nor does the Transaction
otherwise provide for such rights.
<PAGE> 2
SPECIAL FACTORS
PURPOSE, ALTERNATIVES, REASONS AND EFFECTS OF THE TRANSACTION
PURPOSE. The purpose of the Transaction is to reduce the
number of the holders of record of the Common Stock
below 500. This will be accomplished by a reduction
in the number of authorized and outstanding shares of
Common Stock, in the form of a one for 100 reverse
stock split, with the purchase by the Company of any
resulting fractional shares from the persons then
holding less than one whole share for the Fractional
Share Payment. That will reduce the number of record
holders of the common stock from ____, as of the
Record Date, to _____.
The reason for the Transaction is to permit the
Company to terminate the Company's reporting
obligations under the Exchange Act and the
requirement for the Company to comply with the
Commission's proxy rules and, thus, eliminate the
cost of compliance with those requirements, which is
significant to the Company.
The Company estimates that the annual pre-tax cost of
continuing as a public company, including preparation
and filing of reports and proxy statements with the
Commission, preparation and mailing of reports, proxy
statements and other communication to stockholders,
annual audits of the Company's financial statements
and legal fees, is approximately $21,500 or $.08 per
share or approximately $15 per beneficial owner,
based on the Company's estimate of the number of
beneficial owners of its Common Stock after inquiries
to securities brokers. That amount constitutes
approximately 213 percent and 17 percent of the
Company's earnings before income taxes for 1994 and
1995, respectively.
In addition to the out-of-pocket expense of being a
public company, the preparation of reports and proxy
statements requires the attention of the officers of
the Company who devote only part of their time to the
affairs of the Company. The President and the Vice
President and Treasurer, who are the officers
responsible for the preparation of those documents,
receive no compensation as executive officers,
although the President receives an annual Director's
fee of $10,000 and the Vice President and Treasurer
receives an annual fee of $12,000 for serving as a
Chairman.
2
<PAGE> 3
ALTERNATIVES. The Board of Directors considered a number of
alternatives to the Transaction including a
self-tender, a continuation of the Company's share
repurchase program, seeking a merger or consolidation
with another company, selling its assets and seeking
to enter a new line of business, or continuing to
operate as it presently does.
The Board of Directors determined not to authorize a
self-tender by the Company for a sufficient number of
shares to reduce the number of record holders of the
Common Stock to below 500 (which would have provided
stockholders with a choice as to whether to remain as
stockholders of the Company or sell their shares), in
that there would be no assurance of its success, due
to the pro rata provision of the Commission's Rule
13e-4(f)(3) applicable to self tenders, the possible
inability to communicate the offer to a sufficient
number of stockholders (the "lost" stockholder
problem) and the lack of assurance that a sufficient
number of stockholders would tender their shares. The
Transaction, on the other hand, would operate
automatically to reduce the number of stockholders of
record below 500.
The Board also concluded, based on the Company's
experience, that continuation of the Company's share
repurchase program would be unlikely to reduce the
number of record holders below 500 and, thus, the
Company would continue to incur the expense of being
a public company without providing any value to
stockholders other than those whose shares are
repurchased from time to time by the Company.
Since disposing of substantially all of its post
production operating assets in 1989, the Company has
considered seeking acquisitions in businesses other
than post production operations or alternatively
seeking to liquidate or merge or consolidate with
another company. However, other than its acquisition
in 1994 of a corporation the principal asset of which
was an office building in Nashville, Tennessee (the
"Property"), the Company did not seriously consider
or receive any proposals for such transactions. Given
its past history of unsuccessful efforts, the Board
concluded that merger or consolidation or sale of
assets and seeking to enter a new line of business
were not viable alternatives.
The Board considered liquidation, but in light of the
estimated expenses of sale of the Company's assets
and liquidation of the Company (including brokerage
commissions, legal fees, real
3
<PAGE> 4
estate transfer taxes, accounting fees, reserves to
satisfy the Company's obligations, and other
miscellaneous costs and expenses), the uncertainty as
to the amount of proceeds that would result from the
sale of the Property, and that a liquidation would
result in the failure of all stockholders to share in
the future of the Company, the Board determined that
a liquidation would not be in the best interests of
stockholders. In reaching this conclusion, the Board
estimated that the proceeds of sale of the Property
would be $815,000, or the purchase price paid by the
Company in 1994 for the capital stock of the
corporation owning the Property, and that aggregate
expenses of the sale of such building and liquidation
of the Company would aggregate $97,800 (or 12% of
such proceeds of sale), with the result that after
liquidation for the Company's cash and other current
assets (estimated at $270,774) and repayment of the
Company's long-term indebtedness and other
liabilities and establishment of a reserve for the
Company's known or contingent obligations (estimated
at $615,327), the Board estimated the Company's
liquidation value net of expenses and liabilities as
aforesaid as $372,647 or $_____ per share as of the
Record Date.
Continuing to operate the Company as it presently is
operated was rejected by the Board, due to the
expense of continuing as a public company discussed
above.
EFFECTS OF
TRANSACTION. The Transaction will have various effects on the
Company, the stockholders who are executive officers
and directors of the Company and members of their
immediate families (the "Affiliated Stockholders"),
the unaffiliated stockholders (the "Unaffiliated
Stockholders") who remain stockholders after the
Transaction and the Unaffiliated Stockholders who
receive a Fractional Share Payment and cease to be
stockholders after the Transaction.
THE COMPANY. The expenses of the Transaction and the
payment of the Fractional Share Payment will reduce
the Company's cash and other liquid assets by
approximately $______ and its working capital and
total assets would be reduced by a corresponding
amount. However, the registration of the Common Stock
and the Company's reporting obligation under the
Exchange Act would be terminated and the Company
would cease to be a public company and the Company
believes that its remaining liquid assets and the
estimated annual pre-tax
4
<PAGE> 5
savings of the approximately $21,500 costs of being a
public company together with the rental payments on
the lease on the Property will be sufficient to
finance the operations of the Company for at least
the remainder of 1996 and for 1997.
AFFILIATED STOCKHOLDERS. The Affiliated Stockholders
will remain officers, directors and stockholders of
the Company.
The Affiliated Stockholders will experience many of
the same effects of the Transaction as the
Unaffiliated Stockholder who remain Stockholders.
However, as officers and directors they will not be
affected by the loss of information about the Company
available in filings with the Commission and annual
reports to stockholders, since they would have access
to such information as the result of their positions.
The aggregate percentage beneficial ownership of the
Common Stock of the Affiliated Stockholders will
increase from 21.8 per cent, as of the Record Date,
to __ per cent.
At September 30, 1996 the book value per share of the
Common Stock held by the Affiliated Stockholders was
$1.31. Upon consummation of the Transaction the pro
forma book value per share of their Common Stock as
of September 30, 1996 will be $_______.
No Affiliated Stockholders will cease to be
stockholders as a result of the Transaction; certain
Affiliated Stockholders will receive Fractional Share
Payments on the same basis as Unaffiliated
Stockholders who continue as stockholders after
consummation of the Transaction.
CONTINUING UNAFFILIATED STOCKHOLDERS. Those
Unaffiliated Stockholders who remain stockholders of
the Company after the Transaction will have a
residual interest in a company with approximately
$_____ less in liquid assets than before the
Transaction.
The aggregate percentage of the outstanding shares of
Common Stock held on the Record Date by the
Unaffiliated Stockholders who remain stockholders
after consummation of the Transaction was
approximately ___ per cent. As the result of the
Transaction, their aggregate holdings will be
increased to approximately ___ per cent of the
outstanding shares. The book value per share of their
shares of Common Stock on
5
<PAGE> 6
September 30, 1996 was $1.31. As the result of the
Transaction, the pro forma book value per share of
their shares as of September 30, 1996 will be
$__________.
The Company will no longer be subject to the periodic
reporting provisions of the Exchange Act.
Accordingly, these Unaffiliated Stockholders will no
longer have access to the information about the
Company theretofore provided in its filings with the
Commission and annual reports to stockholders, and
will no longer receive the benefit of proxy or
information statements prepared in accordance with
the rules of the Commission, disclosing material
information about management, its remuneration and
transactions with the Company and matters to be acted
upon at meetings of stockholders. Under Nevada law,
any person who is a stockholder of record of the
Company and owns not less than 15 percent of all of
the issued and outstanding shares of the Company or
has been authorized in writing by the holders of at
least 15 percent of all its issued and outstanding
shares, is entitled to inspect the books of account
and all financial records of the Company, to make
extracts therefrom, and to conduct an audit of such
records. Such provisions do not apply to any
corporation that furnishes to its stockholders a
detailed, annual financial statement, although the
Company will be under no legal obligation to furnish
any such annual financial statement.
As the result of the termination of the Company's
reporting obligations under the Exchange Act the
Common Stock will no longer be eligible to be quoted
on the O-T-C Bulletin Board. Even taking into account
the limited existing market for the Common Stock, the
loss of the availability of quotations for the Common
Stock on the OTCBB could significantly negatively
affect the liquidity and market value of the shares
of Common Stock held by these Unaffiliated
Stockholders. While the Common Stock might continue
to trade over-the-counter and quotations might be
reported in the "Pink Sheets" of the National
Quotation Bureau, Inc., there can be no assurances
that this will occur, particularly in view of the
limited number of shares available for trading. The
extent of the public market for the Common Stock and
the availability of such quotations would depend upon
such factors as the number of shares available for
trading, the number of remaining stockholders, the
interest of securities dealers in maintaining a
market in the Common Stock and the lack of publicly
available information about the Company.
6
<PAGE> 7
Thus, these stockholders may have no practical means
of disposing of their Common Stock and may lose their
entire investment.
UNAFFILIATED STOCKHOLDERS WHO CEASE TO BE
STOCKHOLDERS. A stockholder holding fewer than 100
shares of Common Stock on the Record Date will have
that holding reduced to less than one whole share as
the result of the Transaction. The Company will make
a Fractional Share Payment to such a stockholder
rather than issue less than one whole share to the
stockholder and that stockholder will cease to be a
stockholder of the Company.
Stockholders who receive a Fractional Share Payment
and cease to be stockholders as the result of the
Transaction will no longer have an interest in the
Company and will lose the opportunity to share in the
Company's future. However, the Company has no plans,
negotiations, agreements, arrangements or
understandings for an extraordinary transaction and
does not expect to pay dividends for the foreseeable
future. Accordingly, absent the Transaction, such
stockholders would continue to share in the current
business of the Company without an established
trading market for their shares of Common Stock and
with their interests eroding as the result of the
costs of the Company continuing as a public company.
FEDERAL INCOME TAX CONSEQUENCES. The following
summary of the federal income tax consequences of the
Reverse Stock Split is based on the Internal Revenue
Code of 1986, as amended, the Treasury Regulations
promulgated thereunder, judicial authority and
current administrative rulings and practices as in
effect on the date of this Schedule 13E-3. This
discussion is for general information only. The tax
treatment of a stockholder may vary depending upon
the particular facts and circumstances of such
stockholder. Certain stockholders, including
insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, non-resident
aliens, foreign corporation and persons who do not
hold the Common Stock as a capital asset, may be
subject to special rules not discussed below.
ACCORDINGLY, STOCKHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR
FOREIGN INCOME TAX AND OTHER LAWS.
7
<PAGE> 8
A stockholder receiving shares of Common Stock
pursuant to the Reverse Stock Split will not
recognize gain or loss for federal income tax
purposes (except in the case of cash received in lieu
of a fractional share, as described below). A
stockholder's aggregate tax basis of the shares of
Common Stock received pursuant to the Reverse Stock
Split (including any fractional shares to which a
stockholder is entitled) will equal the aggregate tax
basis of the stockholder's shares of Common Stock
exchanged in the Reverse Stock Split, reduced by the
amount of cash (if any) received in lieu of a
fractional share of Common Stock, increased by the
amount of such cash (if any) treated as a dividend
and increased by the amount of gain (if any)
recognized as a result of the receive of cash in lieu
of a fractional share of Common Stock. The aggregate
tax basis of each stockholder's shares of Common
Stock owned following the Reverse Stock Split will be
allocated ratably among the total number of shares of
Common Stock that the stockholder receives. For tax
purposes, the holding period of the Common Stock
received as a result of the Reverse Stock Split will
include the holding period of the shares of Common
Stock immediately prior to the effective date of the
Transaction, provided that the shares of Common Stock
were held as a capital asset on such effective date.
A stockholder's receipt of cash in lieu of a
fractional share of Common Stock pursuant to the
Reverse Stock Split, which results in a complete
termination of the stockholder's stock interest in
the Company, will cause the stockholder to recognize
gain or loss for federal income tax purposes in an
amount equal to the difference between the amount of
cash received by such stockholder and the aggregate
tax basis in his or her Common Stock owned prior to
the Transaction. If the stockholder holds the Common
Stock as a capital asset on the effective date of the
Transaction, then such stockholder's gain or loss
will be a capital gain or loss and will be long-term
capital gain or loss if on such effective date the
shares of Common Stock have been held for more than
one year.
A stockholder's receipt of cash in lieu of a
fractional share of Common Stock, which does not
result in a complete termination of the stockholder's
stock interest in the Company, will cause the
stockholder to recognize gain, if any, in an amount
not in excess of the amount of cash the stockholder
receives. The gain will be capital gain if the
stockholder holds the Common Stock as a capital asset
on the effective date, provided that the
8
<PAGE> 9
distribution of cash does not have the effect of a
distribution of a dividend, and will be long-term
capital gain if on the effective date the shares of
Common Stock have been held for more than one year.
In the event that a stockholder's receipt of cash in
lieu of a fractional share of Common Stock has the
effect of a distribution of a dividend and does not
constitute a complete termination of the
stockholder's stock interest in the Company, the
gain, if any, recognized by the stockholder will be
treated as ordinary income to the extent of the
stockholder's ratable share of the Company's
accumulated earnings and profits. The remainder, if
any, of the recognized gain will be treated as gain
from the exchange of property.
The information reporting and possibly the "backup"
withholding requirements of the Code may apply to the
stockholder's receipt of cash in lieu of fractional
share of Common Stock, depending on the stockholder's
particular facts and circumstances and depending on
whether the Company has accumulated earnings and
profits.
FAIRNESS OF THE TRANSACTION
The Company reasonably believes that under the
circumstances, the Transaction is, on balance, fair
to its Unaffiliated Stockholders both from a
financial point of view and in terms of the structure
of the Transaction.
The Company reasonably believes that the Transaction
is fair to its Unaffiliated Stockholders from a
financial point of view based on the recommendation
of its Board of Directors, the Fractional Share
Payment, the Company's net book value and estimated
liquidation value, the Company's past history and
future prospects, the lack of a reasonable
alternative to the Transaction, the lack of an
established trading market for the Common Stock, the
historical market prices for the Common Stock and
recent trading activity, the absence of the payment
of dividends on the Common Stock and the lack of
prospects for payment of dividends for the
foreseeable future, the results of the Company's
stock repurchase program and the cost of remaining a
public company.
The Company reasonably believes that these factors
outweigh the disadvantages of the lack of appraisal
rights for dissenting
9
<PAGE> 10
stockholders, the loss by those who remain
stockholders of the benefits of the information
provided by reports and proxy statements required by
the rules of the Securities and Exchange Commission
and the ability to have their shares quoted on the
O-T-C Bulletin Board and the loss by those who no
longer will be stockholders of the opportunity to
participate as stockholders of the Company in its
future.
NET BOOK VALUE. The Company's net book value per
share as of December 31, 1994 and 1995 and September
30, 1996 was $.95, $1.28 and $1.31, respectively, and
$____, on a pro forma basis, as of September 30,
1996, giving effect to the Fractional Share Payment
and the expenses of the Transaction.
LIQUIDATION VALUE. As discussed above, the Board of
Directors estimated that the Company's aggregate
liquidation value less costs of liquidation and
appropriate reserve necessary to satisfy the
Company's obligations was $372,647 or $1.43 per share
as of September 30, 1996. As discussed above, there
can be no assurance that the actual liquidation value
of the Company would not be a greater or lesser
amount. Other than estimating the liquidation value
of the Company, the Board did not consider or cause
to be prepared any projections or forecasts of the
future economic value of the Company.
GOING CONCERN VALUE. The Board determined that it
would not be in the best interest of the Company to
retain an outside expert to analyze or appraise the
value of the Company as a going concern, due to the
probable costs of such an analysis or appraisal and
the fact that the Board, based on the past history of
unsuccessful attempts to interest another company in
a merger with the Company or a purchase of its
assets, and the absence of unsolicited offers to
acquire the Company as a going concern or otherwise,
believed that it could be a waste of the Company's
assets to incur the expenses of such an appraisal or
analysis.
LACK OF AN ESTABLISHED TRADING MARKET. The Board of
Directors concluded there presently is no established
trading market for the Common Stock, quotations for
the Common Stock are sporadic and the Common Stock is
not a "margin security" and, therefore, cannot be
used as collateral for loans from brokers. Therefore,
loss of the ability to have the Common Stock quoted
on the O-T-C Bulletin Board would not have a
significant impact on stockholders.
10
<PAGE> 11
ABSENCE OF DIVIDENDS. The Company has never paid cash
dividends and currently intends to retain all
earnings for use in its business. Any payment of
future dividends will be at the discretion of the
Company's Board of Directors and will depend upon,
among other things, the Company's earnings, financial
condition, cash flow, capital requirements and other
relevant considerations.
BOARD APPROVAL. The Transaction has been approved
unanimously by the Board of Directors, who, on
balance, under the circumstances, have concluded that
the Transaction is fair to the Company and the
Unaffiliated Stockholders. In view of the wide
variety of factors considered in connection with its
evaluation of the Transaction, the Board of Directors
did not find it practicable to, and did not, quantify
or otherwise attempt to assign relative weights to
the specific factors they considered in reaching
their determination, although the desire to eliminate
the expense of being a public company was the most
significant factor in the Board's judgment.
None of the members of the Board of Directors is a
recognized expert in financial analysis, although
each member individually has some relevant
experience. See "Directors and Executive Officers"
below.
The Transaction is not structured so that approval of
at least a majority of unaffiliated security holders
is required. Under Nevada law approval of
stockholders is not required in respect of a reverse
stock split pursuant to which only money will be paid
to stockholders who before the stock split became
effective held in the aggregate less than 10% of the
Company's outstanding common stock.
A majority of the directors who are not employees of
the issuer has not retained an unaffiliated
representative to act solely on behalf of
unaffiliated security holders for the purpose of
negotiating the terms of the Transaction and/or
preparing a report concerning the fairness of the
Transaction.
None of the members of the Board of Directors is a
paid employee of the Company.
11
<PAGE> 12
ABSENCE OF INVESTMENT BANKING ADVICE
The Board concluded, based on its assets, historical
earnings and future prospects that it would not be in
the interest of the Company to incur the expense of
retaining an investment banker or other expert to
explore alternatives for enhancing shareholder value.
THE COMPANY'S COMMON STOCK
The Company's Common Stock is quoted on the NASD non-
Nasdaq over-the-counter Bulletin Board ("OTCBB"). The
high and low bid prices for the Company's Common
Stock are as reported by the OTCBB. Such quotations
reflect inter-dealer prices, without retail mark-up
or mark-down commission and may not necessarily
represent actual transactions. Quotation in the OTCBB
does not necessarily reflect an active or established
public market. Quotations for the Company's Common
Stock are sporadic.
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ------------------ ------------------
Quarter High Low High Low High Low
------- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
First $ .25 .13 $1.00 1.00 $1.00 1.00
Second $ .56 .13 $1.50 .75 $1.125 .75
Third $ .75 .50 $1.00 1.00 $1.00 .75
Fourth $1.00 .75 $1.00 1.00 $1.00 1.00(1)
</TABLE>
----------
(1) Through November 1, 1996.
The Company has not paid any dividends during the
past two fiscal years. There are no restrictions on
the Company's present or future ability to pay
dividends.
There were 257,172 shares of Common Stock outstanding
and 637 holders of record as of October 28, 1996.
During 1994, 1995 and 1996, the Company, pursuant to
the authorization of its Board of Directors,
repurchased 98,714 shares of Common Stock at prices
ranging from $.50 to $1.39
12
<PAGE> 13
per share for an aggregate purchase price of
$112,591. The average purchase price paid by the
Company per quarter in such repurchases is as
follows:
<TABLE>
<CAPTION>
Quarter Avg. price paid/share
------- ---------------------
<S> <C>
1Q'94 $0.25
2Q'94 0.51
3Q'94 0.25
4Q'94 --
1Q'95 0.50
2Q'95 0.80
3Q'95 1.36
4Q'95 0.75
1Q'96 1.32
2Q'96 1.00
3Q'96 1.32
4Q'96 1.39
</TABLE>
On October 23, 1996, the Company purchased 3,300
shares of Common Stock from an Unaffiliated
Stockholder for a purchase price of $1.39 per share
in the open market.
EXPENSES OF THE TRANSACTION
The Company intends to use its cash and other liquid
assets to pay the estimated approximately $_____
aggregate Fractional Share Payment and the expenses
of the Transaction, estimated to be approximately
$20,500. The Company estimates that it will incur the
following expenses in connection with the
Transaction:
<TABLE>
<S> <C>
Printing and mailing $ 3,000
Transfer Agent Fees $ 5,000
Legal Fees $10,000
Miscellaneous Expenses $ 2,500
</TABLE>
13
<PAGE> 14
FINANCIAL INFORMATION
More complete financial information respecting the
Company is included in the Company's annual reports
on Form 10-K for the years ended December 31, 1994
and 1995 and the Company's quarterly reports on Form
10-Q for the quarterly periods ended September 30,
1995 and September 30, 1996. The Company hereby
undertakes to provide without charge to stockholders
of the Company, upon written or oral request of any
such person, a copy of any such reports. Requests for
such copies should be directed to Kim I. Pressman,
Treasurer, TLM Corporation, 630 Fifth Avenue, New
York, New York 10020, telephone (212) 757-5600.
Unaudited Ratio of Earnings
to Fixed Charges
<TABLE>
<CAPTION>
Pro Forma
---------
Nine Months Ended Pro Forma Nine Months Ended
----------------- ---------- -----------------
1994 1995 Sept. 30, 1996 1995** Sept. 30, 1996**
---- ---- ----------------- ---------- ----------------
<S> <C> <C> <C> <C>
1.37 3.84 1.33
</TABLE>
(4) Unaudited Book Value Per Share
<TABLE>
<CAPTION>
Pro Forma Pro Forma
------------- --------------
Dec. 31, 1995 Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C>
$1.28 $1.31 $ $
</TABLE>
- -------------
** All pro forma information in this Disclosure Statement gives effect to
the Transaction as if it had occurred on January 1, 1995, including
estimated expenses of $20,500 and estimated annual savings of costs of
compliance with Exchange Act reporting requirements and other expenses
of being a public company of $21,500.
14
<PAGE> 15
Selected Balance Sheet Data
<TABLE>
<CAPTION>
Pro Forma Pro Forma
------------- --------------
Dec. 31, 1995 Sept. 30, 1996 Dec. 31, 1995 Sept. 30, 1996
------------- -------------- ------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Working Capital $ 235,062 $ 246,970 $ $
Total Assets $1,038,625 $ 899,784 $ $
Long Term
Obligation $ 489,795 $ 504,792 $ $
Stockholders'
equity $ 368,794 $ 340,395 $ $
</TABLE>
Selected Income Statement Data
<TABLE>
<CAPTION>
Pro Forma
Nine Months Ended Pro Forma Nine Months Ended
1995 Sept. 30, 1996 1995 Sept. 30, 1996
---- ------------------ ---------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Operating
Revenue $ 129,000 $ 96,750 $ 129,000 $ 96,750
Income from
Operations $ (21,994) $ 11,499
Other income, net $ 149,882 --
Net income $ 110,623 $ 7,299
Net income per
share $ 0.36 $ 0.03
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY; BENEFICIAL OWNERSHIP OF COMMON
STOCK
DIRECTORS AND EXECUTIVE OFFICERS
Robert Price, age 63, Director and President of the Company,
an attorney, is a former General Partner of Lazard Freres & Co. He has served as
an Assistant United States Attorney, practiced law in New York and served as
Deputy Mayor of New York City. In the early sixties, Mr. Price served as
President and Director of Atlantic States Industries, a corporation owning
weekly newspapers and four radio stations. After leaving public office, Mr.
Price became Executive Vice President of the Dreyfus Corporation and an
Investment Officer of the Dreyfus Fund. In 1972 he joined Lazard Freres & Co.
Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation,
15
<PAGE> 16
Graphic Scanning Corp. and Lane Bryant, Inc., and is currently a member of the
Council on Foreign Relations. Mr. Price serves as the Representative of The
Majority Leader and President Pro Tem of the New York State Senate on the Board
of Directors of the Municipal Assistance Corporation for the City of New York,
and is a Member of the Board of Trustees of the City of New York. Mr. Price is
also a Director, President, Chief Executive Officer and Treasurer of Price
Communications Corporation and a Director and President of PriCellular
Corporation.
Kim I. Pressman, age 39, Director and Chairman, Vice President
and Treasurer of the Company, a certified public accountant, is a graduate of
Indiana University and holds an M.B.A. from New York University. Prior to
joining Price Communications Corporation in 1984, Ms. Pressman was employed for
three years by Peat, Marwick, Mitchell & Co., a national certified public
accounting firm, and for more than three years thereafter was Supervisor,
Accounting Policies for International Paper Company and then Manager, Accounting
Operations for Corinthian Broadcasting Division of Dun & Bradstreet Company, a
large group owner of broadcasting stations. Ms. Pressman is a Director,
Executive Vice President and Secretary of Price Communications Corporation and a
Director, Vice President and Secretary of PriCellular Corporation.
Steven A. Farbman, age 35, Director of the Company, is Senior
Vice President and Secretary of The New York Law Publishing Company. Mr. Farbman
holds a B.A. in journalism from The George Washington University. He assumed his
current positions at The New York Law Publishing Company in March 1988. Prior to
that he was Publisher of Professional Office Design Magazine from September 1987
to November 1989 and Associate Publisher of the magazine since 1986. Mr. Farbman
is the son-in-law of Robert Price.
Steven Price, age 33, is Vice President and Secretary of the
Company. From 1990 to 1993 he was an attorney with Davis Polk & Wardwell. Prior
thereto, Mr. Price was appointed by President Bush to serve in the U.S. State
Department as Special Assistant to the Chief U.S. Nuclear Arms Negotiator, and
worked in the mergers and acquisitions department of Goldman, Sachs & Co. He is
a graduate of Brown University and Columbia Law School and is the son of Robert
Price, the President of the Company. He is also a Director of Price
Communications Corporation, and is Vice President-Director of Corporate
Development of PriCellular Corporation.
SECURITY OWNERSHIP
The address of the persons named below is 630 Fifth Avenue,
Suite 3200, New York, New York 10020. They are all citizens of the United
States.
The following table sets forth as of the close of business on
September 30, 1996, certain information with regard to the beneficial ownership
of
16
<PAGE> 17
outstanding Common Stock by each director and executive officer of the Company
and by the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature Percent of
Name Beneficial Ownership Class (2)
- ---- -------------------- ----------
<S> <C> <C>
Robert Price 46,100 17.7%(3)
Kim I. Pressman 910 *
Steven A. Farbman 0 *
Steven Price 10,000 3.8%
Directors and Executive
Officers as a Group 57,010 21.8%
</TABLE>
*Less than 1%
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security).
(2) The percentages are based on a total of 260,472 shares of Common Stock
outstanding as of September 30, 1996.
(3) Includes 15,000 shares for which Mr. Price is Custodian for the benefit
of his grandchild Alexandra Lyn Farbman and 18,600 shares for which Mr.
Price is Custodian for the benefit of another grandchild, Leo Jake
Farbman, both children of Director Steven Farbman.
During the 60 days prior to September 30, 1996, none of the persons identified
in the above table engaged in any transaction in the Common Stock.
17
<PAGE> 1
Exhibit (g)
TLM Corporation and
Subsidiary Consolidated Financial Statements
Index to Financial Statements
Independent Accountants Report
(1) Consolidated Balance Sheet at December 31, 1995
Consolidated Statement of Operations
for the years ended December 31, 1995 and 1994
Consolidated Statements of Stockholders'
Equity for the Years ended December 31, 1995 and 1994
Consolidated Statements of Cash
Flows for the Years ended December 31, 1995 and 1994
(2) Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995
Consolidated Statement of Operations for the Nine Months
ended September 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1996 and 1995
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
TLM Corporation:
We have audited the accompanying consolidated balance sheet of TLM Corporation
(a Nevada corporation) and subsidiary as of December 31, 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TLM Corporation and
subsidiary as of December 31, 1995, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
New York, New York
April 8, 1996
7
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
TLM Corporation:
We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of TLM Corporation and subsidiary for the
year ended December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations, the changes in
shareholders' equity and the cash flows of TLM Corporation and subsidiary for
the year ended December 31, 1994, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
March 13, 1995
8
<PAGE> 4
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
December 31, 1995
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 256,028
Short-term investments (Notes 2 and 5) 127,725
Other current assets 5,018
-----------
Total current assets 388,771
Building at cost, net of accumulated depreciation of $43,977 (Note 2) 635,029
Goodwill, net of accumulated amortization of $1,022 (Note 2) 14,825
-----------
Total assets $ 1,038,625
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses (Note 3) $ 15,188
Income taxes payable 3,991
Accrued interest payable (Note 5) 6,805
Due to broker 127,725
-----------
Total current liabilities 153,709
Long-term note payable, net
of unamortized discount of $50,205 (Note 5) 489,795
Net deferred tax liability (Note 4) 26,327
Shareholders' equity:
Preferred stock, $.01 par value; authorized
20,000,000 shares; no shares issued --
Common stock, $.01 par value; authorized
20,000,000 shares; outstanding 287,921 shares 2,879
Additional paid-in capital 1,525,495
Retained deficit (1,159,580)
-----------
Total shareholders' equity 368,794
-----------
Total liabilities and shareholders' equity $ 1,038,625
===========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 5
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Income:
Rental income (Note 6) $ 129,000 $64,500
Interest and dividends 8,983 3,993
Gain on sale of short-term investments 5,597 7,104
----------------------
143,580 75,597
----------------------
Expenses:
General and administrative expenses 92,686 25,190
Depreciation and amortization 27,792 17,207
Interest expense 45,096 27,212
----------------------
165,574 69,609
----------------------
Income (loss) from operations (21,994) 5,988
Other income, net 149,882 4,095
----------------------
Income before taxes 127,888 10,083
Income tax expense (Note 4) 17,265 5,958
----------------------
Net income $ 110,623 $ 4,125
======================
Net income per share (Note 2) $ 0.36 $ 0.01
======================
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 6
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock Additional-
------------------ Paid-In Accumulated
Shares Amount Capital Deficit Total
------- ------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 355,886 $ 3,559 $ 1,597,148 ($1,274,328) $ 326,379
Purchase and retirement of
common stock (19,236) (193) (10,506) -- (10,699)
Net Income -- -- -- 4,125 4,125
-------------------------------------------------------------
Balance at December 31, 1994 336,650 3,366 1,586,642 (1,270,203) 319,805
Purchase and retirement of
common stock (48,729) (487) (61,147) -- (61,634)
Net Income -- -- -- 110,623 110,623
-------------------------------------------------------------
Balance at December 31, 1995 287,921 $ 2,879 $ 1,525,495 ($1,159,580) $ 368,794
=============================================================
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 7
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 110,623 $ 4,125
Adjustments to reconcile net income
to net cash provided by operating activities:
Items not affecting cash:
Depreciation and amortization 27,792 17,207
Amortization of debt discount 16,926 10,949
Changes in assets and liabilities, net of effects of acquisition:
Decrease (increase) in other assets 7,355 (2,511)
(Decrease) increase in interest payable (9,913) 16,718
Increase in accounts payable and accrued expenses 3,180 14,545
Increase in other payables 129,179 --
Increase in noncurrent liabilities 7,067 3,421
Reclassification of transactions from investing activities:
Purchase of marketable securities (1,582,273) (788,190)
Proceeds from sale of marketable securities 1,460,145 795,294
(Gain) on sale of marketable securities (5,597) (7,104)
----------- ---------
Total adjustments 53,861 60,329
----------- ---------
Net cash provided by operating activities 164,484 64,454
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in business, net of cash acquired -- (217,094)
----------- ---------
Net cash (used in) investing activities -- (217,094)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock (61,634) (10,699)
----------- ---------
Net cash (used in) financing activities (61,634) (10,699)
----------- ---------
Net increase (decrease) in cash and cash equivalents 102,850 (163,339)
Cash and cash equivalents, beginning of year 153,178 316,517
----------- ---------
Cash and cash equivalents, end of year $ 256,028 $ 153,178
=========== =========
Supplemental disclosures of cash flow information:
Income taxes paid, net $ 1,002 $ 1,515
=========== =========
Interest paid $ 36,913 $ 497
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 8
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. ORGANIZATION
In May 1994, TLM Corporation ("TLM") purchased all the capital stock of Eimar
Realty Corporation ("Eimar") from Price Communications Corporation ("Price"),
the sole assets of which were a Nashville, Tennessee office building and cash,
for $815,000, consisting of $275,000 in cash and the balance in a four year note
bearing interest of five percent per annum, payable quarterly. The Company
entered into a new five year net lease agreement with the building's current
occupants, radio stations WLAC-AM & FM, effective July 1994 (see Note 6).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of TLM Corporation
and its wholly owned subsidiary (the "Company"). All significant intercompany
balances and transactions have been eliminated in the consolidated financial
statements.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from these estimates.
SHORT-TERM INVESTMENTS
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities,"
effective January 1, 1994. The Company's short-term investments in marketable
equity securities are classified as trading securities under the provisions of
SFAS No. 115. Accordingly, net unrealized holding gains and losses for trading
securities are included in earnings for the reporting period.
13
<PAGE> 9
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SHORT-TERM INVESTMENTS (CONTINUED)
Short-term investments at December 31, 1995 are carried at fair value, which is
based on quoted market prices for these investments. The adoption of SFAS No.
115 did not have a material impact on the Company's results of operations or
financial condition.
DEPRECIATION AND AMORTIZATION
Depreciation is being computed on the straight-line method over twenty five
years, the estimated useful life of the building. Amortization of goodwill is
computed on the straight-line method over twenty-five years. Debt discount is
amortized under the effective interest method over the life of the note.
PER SHARE AMOUNTS
Income per common share is based on the weighted average number of common shares
outstanding during the year. The number of shares used in determining per share
amounts was 310,779 and 347,194 for the years ended December 31, 1995 and 1994,
respectively.
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." The cumulative effect of this change had no significant impact on
the Company's financial statements, including income tax expense. Under SFAS No.
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized as income in the period that includes the enactment date.
OTHER INCOME, NET
Other income consists primarily of fees paid to TLM for consulting services, net
of other expenses.
14
<PAGE> 10
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of December 31, 1995 consist of the
following:
<TABLE>
<S> <C>
Accrued professional fees $10,000
Accrued other 5,188
-------
$15,188
=======
</TABLE>
4. INCOME TAXES
The components of the provision for income taxes for the year ended December 31,
1995 and 1994 are approximately:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1995 1994
---- ----
<S> <C> <C>
Current:
Federal $ 4,386 $ --
State & Local 5,811 2,537
--------------------------
10,197 2,537
--------------------------
Deferred:
Federal 5,739 2,395
State & Local 1,329 1,026
--------------------------
7,068 3,421
--------------------------
$17,265 $5,958
==========================
</TABLE>
15
<PAGE> 11
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. INCOME TAXES (CONTINUED)
Income tax expense in the accompanying statements of operations differs from the
expense computed at the Federal statutory tax rates due to the following:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Tax expense at the Federal income
tax rate (25.9% and 15.0% for 1995
and 1994, respectively) $ 33,123 $ 1,512
Increase (decrease) resulting
from:
State and local tax, net of
federal income tax benefit 4,555 3,156
Benefit of net operating loss
carryforward (24,366) (343)
Amortization of goodwill and
debt discount 4,305 1,633
Other (352) --
-----------------------
$ 17,265 $ 5,958
=======================
</TABLE>
"Net deferred tax liability" on the Consolidated Balance Sheet as of December
31, 1995 includes a deferred tax asset of approximately $56,000 related to the
Company's net operating loss carryforward, which was subject to a valuation
allowance of approximately $24,000, and a deferred tax liability of
approximately $58,000 related to the difference in the depreciation of its
building. This represents a decrease in the allowance of approximately $11,000
from the beginning of the year. The allowance has been recognized to offset the
related tax asset due to the uncertainty of the realization of benefit of such
amount.
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $140,000 for income tax purposes that expire beginning in the year
2002. These carryforwards arose prior to the 1992 sale of 90.7% of TLM's assets
to Price and the purchase of Eimar common stock from Price in 1994, and are
subject to the limitations of Internal Revenue Code Sections 382 and 383.
16
<PAGE> 12
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY TRANSACTIONS
In connection with the acquisition of Eimar, TLM issued a note to Price in the
amount of $540,000. The note bears interest at the rate of 5% per annum, payable
quarterly, with the principal payable on May 20, 1998. As of December 31, 1995,
accrued interest was approximately $6,805. This note payable has been discounted
based upon an imputed interest rate of 9.5%.
As of December 31, 1995, the Company's short-term investments were in marketable
equity securities of PriCellular Corporation (an affiliate) Class A Common
Stock.
6. LEASE
In July 1994, the Company, as lessor, entered into a five year operating lease
related to its Nashville, Tennessee, office building. During the lease period,
the lessee is responsible for all expenses related to the building including
operating and maintenance expenses, insurance and property taxes. Rental income
received from the lessee was $129,000 and $64,500 for 1995 and 1994,
respectively. The following is a schedule of future minimum lease payments
receivable under the noncancellable operating lease as of December 31, 1995:
Year ending December 31:
<TABLE>
<S> <C>
1996 $ 129,000
1997 129,000
1998 129,000
1999 64,500
2000 --
---------
Net minimum lease payments receivable $ 451,500
=========
</TABLE>
17
<PAGE> 13
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
[The remainder of this page is intentionally left blank]
18
<PAGE> 14
[KPMG PEAT MARWICK LETTERHEAD]
Independent Auditors' Report
The Board of Directors and Shareholders
TLM Corporation:
We have audited the accompanying consolidated balance sheet of TLM Corporation
and subsidiary as of December 31, 1994, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TLM Corporation and
subsidiary as of December 31, 1994, and the results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
New York, New York
March 13, 1995
<PAGE> 15
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
To the Board of Directors and Shareholders
TLM Corporation
We have audited the accompanying statements of operations, shareholders' equity,
and cash flows of TLM Corporation for the year ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations, changes in shareholders'
equity and cash flows of TLM Corporation for the year ended December 31,
1993 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
March 8, 1994
<PAGE> 16
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
December 31, 1994
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 153,178
Other current assets 12,373
-----------
Total current assets 165,551
Building at cost, net of accumulated depreciation of $16,817 (Note 3) 662,189
Goodwill, net of accumulated amortization of $390 (Note 3) 15,457
-----------
Total assets $ 843,197
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses (Note 4) $ 12,008
State income taxes payable 2,537
Accrued interest payable - related party (Note 6) 16,718
-----------
Total current liabilities 31,263
-----------
Long-term note payable - related party, net
of unamortized discount of $67,131 (Note 6) 472,869
Deferred tax effect of basis difference arising on acquisition* (Note 5) 19,260
Shareholders' equity:
Preferred stock, $.01 par value; authorized
20,000,000 shares; no shares issued
Common stock $.01 par value; authorized
20,000,000 shares; outstanding 336,650 shares 3,366
Additional paid-in capital 1,586,642
Retained deficit (1,270,203)
-----------
Total shareholders' equity 319,805
-----------
Total liabilities and shareholders' equity
$ 843,197
===========
</TABLE>
*The Company also has net operating loss carryforwards which may mitigate
federal income taxes, if any, resulting from disposition of the acquired assets
during the carryforward period (see Note 5).
See accompanying notes to consolidated financial statements.
3
<PAGE> 17
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993
------- -------
<S> <C> <C>
Income:
Rental income (Note 7) $64,500 $ --
Interest and dividends 3,993 11,429
Gain on sale of marketable securities 7,104 14,295
------- -------
75,597 25,724
------- -------
Expenses:
General and administrative expenses 25,190 8,525
Depreciation and amortization 17,207 --
Interest expense (Note 6) 27,212 --
------- -------
69,609 8,525
------- -------
Income from operations 5,988 17,199
Other income, net 4,095 --
------- -------
Income before taxes 10,083 17,199
Income tax expense (Note 5) 5,958 --
------- -------
Net Income $ 4,125 $17,199
======= =======
Net income per share $ 0.01 $ 0.04
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 18
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 393,048 $ 3,930 $ 1,608,955 ($1,291,527) $ 321,358
Purchase and retirement of
common stock (37,162) (371) (11,807) -- (12,178)
Net Income -- -- -- 17,199 17,199
----------------------------------------------------------------------------------
Balance at December 31, 1993 355,886 3,559 1,597,148 (1,274,328) 326,379
Purchase and retirement of
common stock (19,236) (193) (10,506) -- (10,699)
Net Income -- -- -- 4,125 4,125
----------------------------------------------------------------------------------
Balance at December 31, 1994 336,650 $ 3,366 $ 1,586,642 ($1,270,203) $ 319,805
==================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 19
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,125 $ 17,199
--------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Items not affecting cash:
Depreciation and amortization 17,207 --
Amortization of debt discount 10,949 --
Changes in assets and liabilities, net of effects of acquisition:
Increase in other current assets (2,511) (140)
Increase in interest payable 16,718 --
Increase in accounts payable and accrued expenses 14,545 --
Increase in non-current liabilities 3,421 --
Reclassification of transactions to investing activities:
Gain on sale of marketable securities (7,104) (14,295)
--------- -----------
Total adjustments 53,225 (14,435)
--------- -----------
Net cash provided by operating activities 57,350 2,764
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in business, net of cash acquired (217,094) --
Purchase of marketable securities (788,190) (2,476,791)
Proceeds from sale of marketable securities 795,294 2,606,726
--------- -----------
Net cash (used) provided by investing activities (209,990) 129,935
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock (10,699) (12,178)
--------- -----------
Net cash used by financing activities (10,699) (12,178)
--------- -----------
Net (decrease) increase in cash and cash equivalents (163,339) 120,521
Cash and cash equivalents, beginning of year 316,517 195,996
--------- -----------
Cash and cash equivalents, end of year $ 153,178 $ 316,517
========= ===========
Supplemental disclosures of cash flow information:
Income taxes paid, net $ 1,515 --
========= ===========
Interest paid $ 497 $ 1,580
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 20
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. ORGANIZATION
On August 5, 1992, TLM Corporation ("TLM") sold 90.7% of its assets ("Sale of
Assets") to Price Communications Corporation ("Price") in exchange for the
3,834,802 shares of TLM's common stock owned by Price. Pursuant to a related
agreement, Price agreed to forgive any liability to Price as the result of TLM
being included in the consolidated group with Price for tax purposes
(approximately $379,000). Price paid the costs TLM incurred in connection with
the Sale of Assets and agreed to provide TLM with office space rent-free, and
absorbed certain of TLM's corporate expenses until it acquired an operating
business or merged with another company.
On May 20, 1994, TLM purchased all the capital stock of Eimar Realty
Corporation ("Eimar") from Price (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of TLM Corporation
and its subsidiary (the "Company"). All significant intercompany entries and
transactions have been eliminated.
MARKETABLE EQUITY SECURITIES
Unrealized gains and losses on marketable securities are charged to operations.
Cost is determined on the weighted average cost method. Dividends and interest
are accrued as earned. Marketable debt securities are carried at amortized
cost, unless there is an impairment in value considered to be other than
temporary, in which case the securities are recorded at their estimated
realizable value.
DEPRECIATION AND AMORTIZATION
Depreciation is being computed on the straight-line method over twenty five
years, the estimated useful life of the building. Amortization of goodwill is
computed on the straight-line method over twenty-five years. Debt discount is
amortized under the effective interest method.
(continued)
7
<PAGE> 21
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PER SHARE AMOUNTS
Income per common share is based on the weighted average number of common
shares outstanding during the year. The number of shares used in determining
per share amounts was 347,194 and 384,751 for the years ended December 31, 1994
and 1993, respectively.
INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," ("Statement 109")
issued by the Financial Accounting Standards Board. The cumulative effect of
this change had no significant impact on the Company's financial statements,
including income tax expense. Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized as income in the period that includes the enactment date.
3. ACQUISITION OF EIMAR REALTY CORPORATION
On May 20, 1994, TLM purchased all the capital stock of Eimar from Price, the
sole assets of which were a Nashville, Tennessee, office building and cash, for
$815,000, consisting of $275,000 in cash and the balance in a four year note
bearing interest at five percent per annum, payable quarterly (see Note 6). The
Company entered into a five year net lease agreement with the owners of the
building's current occupants, radio stations WLAC-AM & FM, effective July 1,
1994 (see Note 7).
The acquisition has been accounted for under the purchase method, and
accordingly, the operating results of Eimar have been included in the
consolidated operating results since the date of acquisition. The acquisition
resulted in an intangible asset, goodwill, of approximately $16,000, which is
being amortized over twenty-five years.
8
<PAGE> 22
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITION OF EIMAR REALTY CORPORATION (CONTINUED)
The following unaudited proforma financial information has been prepared based
on the assumption that the aforementioned acquisition had occurred on January
1, 1994 and 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------
1994 1993
---- ----
<S> <C> <C>
Income $140,097 $154,724
Net income 25,519 20,355
Net income per share $ 0.07 $ 0.05
</TABLE>
The proforma information reflects adjustments for changes in administrative
expense, depreciation, amortization, interest expense and income taxes
resulting from this acquisition.
The proforma financial information is not necessarily indicative either of the
results of operations that would have occurred had the acquisition been made at
the beginning of the periods, or of future results of operations of the
Company.
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of December 31, 1994 consist of the
following:
<TABLE>
<S> <C>
Accrued professional fees $ 9,000
Accrued other 3,008
-------
$12,008
=======
</TABLE>
9
<PAGE> 23
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES
As discussed in Note 2, the Company adopted Statement 109 as of January 1,
1993. The cumulative effect had no significant impact on the Company's
financial statements, including tax expense, for the year then ended.
For the period subsequent to the Sale of Assets and prior to the Company's
acquisition of Eimar, Price assumed the related income tax expense of the
Company. The Company has reduced its provision for income taxes accordingly,
resulting in no income tax provision for the year ended December 31, 1993. The
components of the provision for income taxes for the year ended December 31,
1994 are approximately:
<TABLE>
<S> <C>
Current:
Federal $ --
State & Local 2,537
------
2,537
------
Deferred:
Federal 2,395
State & Local 1,026
------
3,421
------
$5,958
======
</TABLE>
Income tax expense in the accompanying statements of operations differs from
the expense computed at the Federal statutory tax rates due to the following:
<TABLE>
<CAPTION>
1994 1993
-----------------------
<S> <C> <C>
Tax expense at the Federal income
tax rate (15%) $1,512 $ 2,580
Increase (decrease) resulting
from:
State and local tax, net of
federal income tax benefit 3,156 1,275
Contributions -- 1,050
Benefit of net operating loss
carry forward (343) (1,755)
Amortization of goodwill and
debt discount 1,633 --
Assumption of taxes by former
parent -- (3,150)
-----------------------
$5,958 $ --
=======================
</TABLE>
10
<PAGE> 24
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
As of December 31, 1994, the Company had a deferred tax asset of approximately
$35,000 related to its net operating loss carryforward, which was subject to a
valuation allowance of approximately $35,000, and a deferred tax liability of
approximately $19,000 related to the difference in the depreciation of its
building. This represents a decrease in the allowance of approximately $4,800
from the beginning of the year. The allowance has been recognized to offset the
related tax asset due to the uncertainty of the realization of benefit of such
amount.
At December 31, 1994, the Company had net operating loss carryforwards of
approximately $233,000 for income tax purposes that expire beginning in the year
2002. These carryforwards arose prior to the Sale of Assets (see Note 1) and
the purchase of Eimar common stock (see Note 3) and are subject to the
limitations of Internal Revenue Code Section 382 and 383.
6. LONG-TERM NOTE PAYABLE - RELATED PARTY
In connection with the acquisition of Eimar, TLM issued a note to Price in the
amount of $540,000. The note bears interest at the rate of 5% per annum,
payable quarterly, with the principal payable on May 20, 1998. As of December
31, 1994, accrued interest was approximately $16,700. This note payable has
been discounted based upon an imputed interest rate of 9.5%.
7. LEASE
In July 1994, the Company, as lessor, entered into a five year operating lease
related to its Nashville, Tennessee, office building. During the lease period,
the lessee is responsible for all expenses related to the building including
operating and maintenance expenses, insurance and property taxes. The following
is a schedule of future minimum lease payments receivable under the
noncancellable operating lease as of December 31, 1994:
<TABLE>
<CAPTION>
Amounts Receivable
Year ending December 31: as Lessor
------------------------ ------------------
<S> <C>
1995 $129,000
1996 129,000
1997 129,000
1998 129,000
1999 64,500
--------
Net minimum lease payments receivable $580,500
========
</TABLE>
11
<PAGE> 25
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
September 30, 1995
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 241,206
Other current assets 11,225
-----------
Total current assets 252,431
Building at cost, net of accumulated
depreciation of $37,187 641,819
Goodwill, net of accumulated
amortization of $864 14,983
-----------
Total assets $ 909,233
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 29,320
-----------
Total current liabilities 29,320
-----------
Long-term note payable - related party,
net of unamortized discount of $54,303 485,697
Deferred tax effect of basis difference
arising on acquisition 23,454
Shareholders' Equity:
Preferred stock, $.01 par value; authorized
20,000,000 shares; no shares issued --
Common stock, $.01 par value; authorized
20,000,000 shares; outstanding 287,979 shares 2,880
Additional paid-in capital 1,525,495
Retained deficit (1,157,613)
-----------
Total shareholders' equity 370,762
-----------
Total liabilities and shareholders' equity $ 909,233
===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 26
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1995 1994
-------- --------
<S> <C> <C>
Income:
Rental income $ 96,750 $ 41,187
Interest and dividends 6,640 2,978
Gain (loss) on sale of marketable securities 5,598 7,913
Other income 150,000 --
-------------------
258,988 52,078
-------------------
Expenses:
General and administrative expenses 70,883 19,143
Depreciation and amortization 20,844 10,826
Interest expense 34,175 9,782
-------------------
125,902 39,751
-------------------
Income before taxes 133,086 12,327
Income tax expense 20,496 1,710
-------------------
Net income $112,590 $ 10,617
===================
Income per share $ 0.36 $ 0.03
===================
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 27
TLM CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 144,036 $ 99,036
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchase of marketable securities (1,552,050) (445,737)
Proceeds from sale of marketable securities 1,557,648 289,484
Investment in business, net -- (275,000)
----------- -----------
Net cash provided by (used in) investing activities 5,598 (431,253)
----------- -----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repurchase of common stock (61,606) (10,732)
----------- -----------
Net cash used in financing activities (61,606) (10,732)
----------- -----------
Net increase (decrease) in cash and cash equivalents 88,028 (342,949)
Cash and cash equivalents, beginning of period 153,178 377,263
----------- -----------
Cash and cash equivalents, end of period $ 241,206 $ 34,314
=========== ===========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 1,000 1,710
=========== ===========
Interest paid $ 36,912 $ --
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 28
TLM Corporation and Subsidiary
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of TLM Corporation
(the "Company") and its subsidiary. All significant intercompany items and
transactions have been eliminated.
The consolidated financial statements have been prepared by the Company without
audit, in accordance with rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the statements reflect all adjustments
consisting only of normal recurring adjustments necessary for a fair
presentation of the results for the interim periods. The results of operations
for any interim period are not necessarily indicative of the results for a full
year.
2. PER SHARE DATA
Income per common share is based on income for the period divided by the
weighted average number of common shares outstanding during the year, which was
approximately 317,000 for the nine months ended September 30, 1995 and 348,000
for the nine months ended September 30, 1994.
3. MARKETABLE EQUITY SECURITIES
Unrealized gains and losses on marketable securities are charged to operations.
Cost is determined on the weighted average cost method. Dividends and interest
are accrued as earned. Marketable debt securities are carried at amortized cost,
unless there is an impairment in value considered to be other than temporary, in
which case the securities are recorded at their estimated realizable value.
4. DEPRECIATION AND AMORTIZATION
Depreciation is being computed on the straight-line method over twenty-five
years, the estimated useful life of the Company's building. Amortization of
goodwill is computed on the straight line method over twenty-five years. Debt
discount is amortized under the effective interest method.
5. RECENT DEVELOPMENTS - OTHER INCOME
The Company received a payment of $150,000 for consulting services performed by
the Company that is included in the statement of operations in other income.
6
<PAGE> 29
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's main sources of revenue are income from the rental of the
Nashville, Tennessee office building and the investment of its liquid assets in
money market, government, equity, debt or other securities.
The Company's income, general and administrative expenses, depreciation
and amortization, and interest expense for the nine and three months ended
September 30, 1995 are not comparable to the nine and three months ended
September 30, 1994 due to the acquisition of Eimar Realty Corporation ("Eimar")
and the issuance of the promissory note to effect such acquisition.
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1994
During the nine months ended September 30, 1995 income increased to
approximately $259,000 due to the acquisition of Eimar in May of 1994, which
resulted in nine months of rental income from the Eimar's office building
compared to approximately five months of rental income for the same period in
1994 and a payment of $150,000 for consulting fees included in other income.
General and administrative expenses increased by approximately $52,000 primarily
attributable to directors' fees and other operating expenses. The increase in
depreciation and amortization is due to the inclusion of nine months of
depreciation and amortization of intangibles associated with the acquisition of
Eimar during May of 1994. Additionally, interest expense increased by
approximately $24,000 since the Company had little or no debt outstanding during
much of the nine months ended September 30, 1994.
Net income for the nine months ended September 30, 1995 was approximately
$113,000 as compared to $11,000 for the nine months ended September 30, 1994.
CASH FLOW
For the nine months ended September 30, 1995, the Company's principal
sources of cash flow were the receipt of rental and consulting revenue and TLM's
investing activities. The principal use of cash flow during this period was the
Company's investing activities including the purchase of marketable equity
securities. For the comparable periods during 1994, the Company's principal
source and use of cash flow was its investing activities.
7
<PAGE> 30
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $241,000 of cash and cash equivalents at
September 30, 1995. The Company had net working capital of approximately
$223,000 at September 30, 1995.
On April 21, 1994, the Company's Board of Directors authorized the
repurchase by the Company of up to 50,000 shares of its Common Stock out of
funds legally available therefor in addition to previous authorizations. The
Company is authorized to make such purchases from time to time in the market or
in privately negotiated transactions when it is legally permissible to do so and
believed to be in the best interests of its shareholders. The Company
repurchased approximately 49,000 shares of its Common Stock during the nine
months ended September 30, 1995.
[The remainder of this page was left blank intentionally.]
8
<PAGE> 31
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 264,324
Other current assets 6,450
-----------
Total current assets 270,774
Building at cost, net of accumulated
depreciation of $64,347 614,659
Goodwill, net of accumulated
amortization of $1,496 14,351
-----------
Total assets $ 899,784
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 24,065
-----------
Total current liabilities 24,065
Long-term note payable - related party,
net of unamortized discount of $35,208 504,792
Net deferred tax liability 30,532
Shareholders' Equity:
Preferred stock, $.01 par value; authorized
20,000,000 shares; no shares issued --
Common stock, $.01 par value; authorized
20,000,000 shares; issued and outstanding
260,472 shares 2,605
Additional paid-in capital 1,490,071
Retained deficit (1,152,281)
-----------
Total shareholders' equity 340,395
-----------
Total liabilities and shareholders' equity $ 899,784
===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 32
TLM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 32,250 $ 32,250 $ 96,750 $ 96,750
Interest and dividends 3,377 2,211 9,094 6,640
Gain (loss) on sale of marketable securities 0 (2,603) 7,887 5,598
-------- --------- -------- ---------
35,627 31,858 113,731 108,988
-------- --------- -------- ---------
Expenses:
General and administrative expenses 20,399 42,060 46,139 70,883
Depreciation and amortization 6,948 6,948 20,844 20,844
Interest expense 11,867 11,322 35,249 34,175
-------- --------- -------- ---------
39,214 60,330 102,232 125,902
-------- --------- -------- ---------
(Loss) income from operations (3,587) (28,472) 11,499 (16,914)
Other income 0 150,000 0 150,000
-------- --------- -------- ---------
(Loss) income before taxes (3,587) 121,528 11,499 133,086
Income tax expense 1,400 17,634 4,200 20,496
-------- --------- -------- ---------
Net (loss) income $ (4,987) $ 103,894 $ 7,299 $ 112,590
======== ========= ======== =========
(Loss) income per share $ (0.02) $ 0.35 $ 0.03 $ 0.36
======== ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 33
TLM CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1996 1995
--------- ---------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 43,994 $ 149,634
--------- ---------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repurchase of common stock (35,698) (61,606)
--------- ---------
Net cash used in financing activities (35,698) (61,606)
--------- ---------
Net increase in cash and cash equivalents 8,296 88,028
Cash and cash equivalents, beginning of period 256,028 153,178
--------- ---------
Cash and cash equivalents, end of period $ 264,324 $ 241,206
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ -- $ 1,000
========= =========
Interest paid $ 20,250 $ 36,912
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 34
TLM CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of TLM
Corporation (the "Company") and its subsidiary. All significant intercompany
items and transactions have been eliminated.
The consolidated financial statements have been prepared by the Company
without audit, in accordance with rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments consisting only of normal recurring adjustments necessary for a fair
presentation of the results for the interim periods. The results of operations
for any interim period are not necessarily indicative of the results for a full
year.
2. PER SHARE DATA
Income per common share is based on income for the period divided by
the weighted average number of common shares outstanding during the period,
which was approximately 267,000 and 274,000 for the three and nine months ended
September 30, 1996, and 296,000 and 317,000 for the three and nine months ended
September 30, 1995.
6
<PAGE> 35
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's main sources of revenues are income from the rental of
the Nashville, Tennessee office building and the investment of its liquid assets
in money market, government, equity, debt or other securities.
The Company had a net loss for the three months ended September 30,
1996 of $4,987, or $.02 per share, as compared with the net income of $103,894,
representing $.35 per share for the three months ended September 30, 1995. Net
income was $7,299 and $112,590 for the nine months ended September 30, 1996 and
1995, respectively, and net income per share was $.03 and $.36, respectively.
Net income for the three and nine months ended September 30, 1996
decreased approximately $105,000 from the corresponding periods in 1995. This is
due to a one-time consulting project during the third quarter of 1995 which
resulted in $150,000 of other income for the Company. This $150,000 decrease in
other income was partially offset by a decrease in overall general &
administrative expenses.
CASH FLOW
For both the nine months ended September 30, 1996 and 1995, the
Company's principal source and use of cash flow was from operating activities,
primarily for the purchase and sale of marketable equity securities and rental
income.
7
<PAGE> 36
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $264,000 of cash and cash equivalents at
September 30, 1996. The Company had net working capital of approximately
$247,000 at September 30, 1996.
During July 1993, the Company's Board of Directors authorized the
repurchase by the Company of odd lot shares of its Common Stock out of funds
legally available therefore in addition to shares purchased under previous
authorizations. The Company is authorized to make such purchases from time to
time in the market or in privately negotiated transactions when it is legally
permissible to do so and believed to be in the best interests of its
shareholders. The Company repurchased approximately 27,000 shares of its Common
Stock during the nine months ended September 30, 1996.
(The remainder of this page was left blank intentionally)
8
<PAGE> 37
APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY; BENEFICIAL
OWNERSHIP OF COMMON STOCK
DIRECTORS AND EXECUTIVE OFFICERS
Robert Price, age 63, Director and President of the Company,
an attorney, is a former General Partner of Lazard Freres & Co. He has served as
an Assistant United States Attorney, practiced law in New York and served as
Deputy Mayor of New York City. In the early sixties, Mr. Price served as
President and Director of Atlantic States Industries, a corporation owning
weekly newspapers and four radio stations. After leaving public office, Mr.
Price became Executive Vice President of the Dreyfus Corporation and an
Investment Officer of the Dreyfus Fund. In 1972 he joined Lazard Freres & Co.
Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant,
Inc., and is currently a member of the Council on Foreign Relations. Mr. Price
serves as the Representative of The Majority Leader and President Pro Tem of the
New York State Senate on the Board of Directors of the Municipal Assistance
Corporation for the City of New York, and is a Member of the Board of Trustees
of the City of New York. Mr. Price is also a Director, President, Chief
Executive Officer and Treasurer of Price Communications Corporation and a
Director and President of PriCellular Corporation.
Kim I. Pressman, age 39, Director and Chairman, Vice President
and Treasurer of the Company, a certified public accountant, is a graduate of
Indiana University and holds an M.B.A. from New York University. Prior to
joining Price Communications Corporation in 1984, Ms. Pressman was employed for
three years by Peat, Marwick, Mitchell & Co., a national certified public
accounting firm, and for more than three years thereafter was Supervisor,
Accounting Policies for International Paper Company and then Manager, Accounting
Operations for Corinthian Broadcasting Division of Dun & Bradstreet Company, a
large group owner of broadcasting stations. Ms. Pressman is a Director,
Executive Vice President and Secretary of Price Communications Corporation and a
Director, Vice President and Secretary of PriCellular Corporation.
Steven A. Farbman, age 35, Director of the Company, is Senior
Vice President and Secretary of The New York Law Publishing Company. Mr. Farbman
holds a B.A. in journalism from The George Washington University. He assumed his
current positions at The New York Law Publishing Company in March 1988. Prior to
that he was Publisher of Professional Office Design Magazine from September 1987
to November 1989 and Associate Publisher of the magazine since 1986. Mr. Farbman
is the son-in-law of Robert Price.
<PAGE> 38
Steven Price, age 33, is Vice President and Secretary of the
Company. From 1990 to 1993 he was an attorney with Davis Polk & Wardwell. Prior
thereto, Mr. Price was appointed by President Bush to serve in the U.S. State
Department as Special Assistant to the Chief U.S. Nuclear Arms Negotiator, and
worked in the mergers and acquisitions department of Goldman, Sachs & Co. He is
a graduate of Brown University and Columbia Law School and is the son of Robert
Price, the President of the Company. He is also a Director of Price
Communications Corporation, and is Vice President-Director of Corporate
Development of PriCellular Corporation.
<PAGE> 39
SECURITY OWNERSHIP
The address of the persons named below is 630 Fifth Avenue,
Suite 3200, New York, New York 10020. They are all citizens of the United
States.
The following table sets forth as of the close of business on
September 30, 1996, certain information with regard to the beneficial ownership
of outstanding Common Stock by each director and executive officer of the
Company and by the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature Percent of
Name Beneficial Ownership Class (2)
- ---- -------------------- -----------
<S> <C> <C>
Robert Price 46,100 17.7%(3)
Kim I. Pressman 910 *
Steven A. Farbman 0 *
Steven Price 10,000 3.8%
Directors and Executive
Officers as a Group 57,010 21.8%
</TABLE>
*Less than 1%
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security).
(2) The percentages are based on a total of 260,472 shares of Common Stock
outstanding as of September 30, 1996.
(3) Includes 15,000 shares for which Mr. Price is Custodian for the benefit
of his grandchild Alexandra Lyn Farbman and 18,600 shares for which Mr.
Price is Custodian for the benefit of another grandchild, Leo Jake
Farbman, both children of Director Steven Farbman.
During the 60 days prior to September 30, 1996, none of the persons identified
in the above table engaged in any transaction in the Common Stock.
