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TCC Industries, Inc.
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(Name of Registrant as Specified In Its Charter)
Walter A. DeRoeck and Robert Thomajan
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Notes:
TCC INDUSTRIES
SHAREHOLDERS COMMITTEE
1301 CAPITAL OF TEXAS HIGHWAY SOUTH
SUITE B125
AUSTIN, TEXAS 78746
April 24, 1997
Dear Fellow Shareholder:
We have just received the Annual Report of TCC and its accompanying Letter to
Shareholders and were astonished at the lengths to which Mr. Schumann and his
Board have gone to disguise the condition of our Company (including the
Company's wholly-owned subsidiaries, the Meyer Group and Allen-Lewis) and were
disappointed, but not surprised, by their attempts to distort the achievements
and qualifications of Mr. DeRoeck and Mr. Thomajan. As we predicted, Mr.
Schumann has again attempted to focus your attention away from his failure to
operate the Company for a profit - with resulting shareholder value - and away
from its ever-mounting losses.
In an effort to bring some level of order and clarity to this election contest,
and to focus on the critical issue - how the Company is doing - we have set
forth below the self-serving statements of management and the facts as to what
has actually happened to TCC Industries under the direction of the current Board
of Directors and its management, with page references taken from the Company's
own reports to the SEC, its audited financial statements and other pertinent
sources, as listed on page 6 of this letter.
Management's Statements What's Actually Happened
----------------------- ------------------------
(a) "We are pleased that (a) "Revenue at the Meyer Group was $10 million
revenue at the Meyer in 1995, which is 18.7% below 1994 revenue of
Group increased 15.6% [to $12.3 million."/2/ [1996 revenue is below 1994
$11.5 million] over 1995"/1/ revenue, even though above 1995 revenue.]
(b) "We have confidence (b) "Many of Allen-Lewis' customers have
in the long term approached the upcoming tourist season cautiously
prospects for the market and prebookings were down 36% at
Allen-Lewis serves."/3/ December 31, 1996 when compared to
December 31, 1995."/4/
"Allen-Lewis continued to feel the impact of the
soft market conditions and increased competition
in 1996, a condition that began to develop
several
Management's Statements What's Actually Happened
----------------------- ------------------------
years ago in the markets it serves."5
(c) "While I have (c) "The last two years have been a keen
confidence the steps we disappointment to me and our whole management
have taken to build our team."/7/
Company through internal
measures will eventually "Despite a modest 3.8% increase in revenue in 1996
have the desired results to $20 million, we reported a disappointing loss
. . . we cannot predict of $1.5 million."/8/
when these measures would
result in improved stock
value . . . ."/6/
(d) "In their preliminary (d) "The Company reported an operating loss of
proxy statement the $1,150,000 for 1996 as compared to an operating
committee included a loss of $316,000 for 1995."/10/
chart incorrectly showing
that the Company had net Please consult the second chart on page 10 of the
losses of approximately Shareholders Committee's definitive Proxy
$3 million for the period Statement for Net Income since 1980.
1990-1996. In fact,
during this period, the
Company had net income of
approximately $3
million."/9/
(e) "We have a strong (e) "At December 31, 1995, we had . . . [a] book
cash position, little value per share of $4.69."/12/
debt and a book value of
$4.17 per share as of "Consolidated revenue increased $736,000 (3.8%) to
December 31, 1996. TCC $20.0 million for the year ended December 31, 1996
is a lean company and is as compared to revenue of $19.3 million in
implementing strategies 1995."/13/
to increase revenues."/11/
"For the year ended December 31, 1995 the Company
reported consolidated revenue of $19.3 million
which was 16.5% below consolidated revenue of
$23.1 million in 1994."/14/ [1996 revenue is 13.3%
below 1994 revenue.]
"Revenue at Allen-Lewis . . . decreased 8.0% to
$8.4 million in 1996, when compared to 1995."/15/
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Management's Statements What's Actually Happened
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"Revenue at Allen-Lewis was $9.2 million in 1995,
which is 14.0% below 1994 revenue of $10.6
million."/16/
"The Company reported . . . a $752,000 (11.4%)
increase in selling, general and administrative
expenses in 1996, when compared to 1995 . . ."/17/
"At December 31, 1996, the Company had working
capital of $7.9 million and a current ratio of 2.9
to 1, as compared to working capital of $9.5
million and a current ratio of 3.6 to 1 at
December 31, 1995."/18/
"During the last two years, gross profit margins
at the Meyer Group have been below historical
levels."/19/
As reported by the Company, total assets declined
from $19.3 million at December 31, 1995, to $17.7
million at December 31, 1996, while total
shareholders equity declined to $11.5 million at
December 31, 1996 from $12.95 million at December
31, 1995./20/
As of December 31, 1996 the Company had $28
million of net operating loss carry-forwards.
However, $18 million of those loss carry-forwards,
which were incurred by the Company in preceding
years and which can be used to shelter income in
subsequent years, will expire unused in 1999
unless the Company can be restored to
profitablility./21/
(f) "If we do sell the (f) We wholeheartedly agree.
entire company, the Board
is committed to
distribute the proceeds
to you."/22/
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WE BELIEVE THAT WHEN YOU DECIDE WHETHER TO SUPPORT THE INCUMBENT DIRECTORS OR
THE COMMITTEE'S NOMINEES, YOU SHOULD TAKE A LOOK AT THE ABILITY OF THE CURRENT
BOARD TO DELIVER ON PAST PROMISES. THE BOARD CLAIMS THAT IT CAN DELIVER VALUE -
- - BUT ITS TRACK RECORD SUGGESTS OTHERWISE.
While we believe that the information contained in our public filings with the
SEC and in our previous letters to you sets forth the facts concerning Mr.
DeRoeck and Mr. Thomajan, we feel obliged once again to speak to the innuendoes
(indirect suggestions) of and unsupported hearsay from Mr. Schumann.
As to Mr. DeRoeck, Mr. Schumann and the Board apparently believe Mr. DeRoeck
should be faulted for his willingness to spend his own money to bring a message
to his fellow shareholders that this Board and this management have repeatedly
failed to perform, year after year, about which Mr. Schumann has repeatedly
expressed his own disappointment - a disappointment at least shared by Mr.
DeRoeck and you, his fellow shareholder. We make no apology.
As regards Mr. Thomajan, Mr. Schumann ignores a distinguished 30-year career and
instead relies upon unsubstantiated speculation contained in a 1993 article from
Forbes magazine. In addition, Mr. Schumann ignores the Shareholders Committee
letters and its filings with the SEC which contain fact, not speculation.
ALSO, SHAREHOLDERS SHOULD NOTE THAT IN ITS DEFINITIVE PROXY STATEMENT EVEN
MANAGEMENT OF TCC ADMITTED THAT:
"THE BOARD HAS NO EVIDENCE OF ANY ILLEGAL ACTIVITY ON THE PART OF MR.
THOMAJAN OR THAT HIS ASSOCIATION WITH RICHCO HOLDINGS, LTD. HAS HAD ANY
ADVERSE EFFECT ON THE COMPANIES HE HAS WORKED WITH SINCE 1993."
At the risk of repetition, here are the facts. Bob Thomajan is an experienced,
highly regarded international corporate lawyer. His client list has been a
"Who's Who" of large American and foreign corporations. As required by the code
of professional responsibility governing the conduct of all lawyers, Mr.
Thomajan cannot and does not comment or provide information regarding his
clients or former clients, and that was his misquoted response in 1993 to a
question from a gossip columnist of the Austin American-Statesman. It is no
secret, and there need be none, that Mr. Thomajan spent two years at Richco's
headquarters in Switzerland as legal counsel to a $50 billion company (that
settled all its differences with the United States in 1984) and left when the
company was sold to its shareholders and other public companies. (Since that
time, Mr. Thomajan has had no direct or indirect involvement of any kind with
Mr. Rich or Richco Holdings, and neither are in any way involved in the
investment fund managed by Mr. Thomajan.) We make no apology.
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We trust that management will not again, in its desperation to prevent minority
representation on the Board, resort to mudslinging innuendoes and downright
inaccuracies. Given its conduct until now, we remain concerned but ready and
open to respond.
ENCLOSED IS ANOTHER GOLD PROXY CARD, WHICH WE URGE YOU TO SIGN, DATE AND RETURN
IN THE ENCLOSED ENVELOPE TODAY. IF YOU HAVE ANY QUESTIONS, PLEASE CALL
MACKENZIE PARTNERS, INC., WHO IS ASSISTING US WITH THE SOLICITATION OF PROXIES,
AT (800) 322-2885.
ELECT OUR WELL QUALIFIED NOMINEES WHO WILL SERVE YOUR INTERESTS
VOTE YOUR GOLD PROXY TODAY!
Yours very truly,
Walter A. DeRoeck
Robert Thomajan
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___________________
Sources for references to Management's Statements and What's Actually Happened.
1. Letter to shareholders included in the TCC Industries, Inc. 1996 Annual
Report to Shareholders ("1996 Letter"), page 2.
2. Annual Report on Form 10-K for the year ended December 31, 1996 for TCC
Industries, Inc. ("1996 Form 10-K"), as filed with the Securities and
Exchange Commission.
3. 1996 Letter, page 4.
4. 1996 Form 10-K, page 9.
5. 1996 Letter, page 3.
6. 1996 Letter, page 1.
7. Interview with Mr. Schumann contained in The Bowser Report, February 1996,
page 7.
8. 1996 Letter, page 2.
9. Mr. Schumann's undated letter to shareholders ("Mr. Schumann's Undated
Letter to Shareholders"), page 2.
10. 1996 Form 10-K, page 7.
11. Mr. Schumann's Undated Letter to Shareholders, page 2.
12. Letter to shareholders included in the TCC Industries, Inc. 1995 Annual
Report to Shareholders, page 4.
13. 1996 Form 10-K, page 6.
14. 1996 Form 10-K, page 7.
15. 1996 Form 10-K, page 6.
16. 1996 Form 10-K, page 7.
17. 1996 Form 10-K, page 7.
18. 1996 Form 10-K, page 10.
19. 1996 Form 10-K, page 9.
20. 1996 Form 10-K, pages F4 and F5.
21. 1996 Form 10-K, page F17.
22. Mr. Schumann's Undated Letter to Shareholders, page 3.
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MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (Collect)
or
CALL TOLL FREE (800) 322-2885
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