TOTAL-TEL USA COMMUNICATIONS, INC.
1997
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints WARREN FELDMAN and THOMAS P.
GUNNING, or either of them, attorneys and proxies with full power of
substitution and with all the powers the undersigned would possess if
personally present, to vote all stock of the undersigned in TOTAL-TEL
USA COMMUNICATIONS, INC. at the 1997 Annual Meeting of Shareholders, to
be held on Tuesday, September 23, 1997 at 10:00 A.M, EDT at 150 Clove
Road, Little Falls, New Jersey, 07424 or at any adjourned session
thereof. Said proxies are directed to vote the shares the undersigned
would be entitled to vote upon the following matters, more fully
described in the accompanying Proxy Statement:
(1) Election of Directors
( ) FOR all nominees (except ( ) WITHHOLD AUTHORITY
as authority is withheld to vote for all
by striking a line through nominees
the nominee's name)
Kevin Alward Warren Feldman
Sol Feldman Leon Genet
Jay J. Miller
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS SET FORTH ABOVE. IF NO INSTRUCTIONS ARE GIVEN, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR
DIRECTORS, AND, IN THEIR DISCRETION, AS TO ANY OTHER MATTER PROPERLY
BROUGHT BEFORE THE MEETING.
Dated: , 1997
- --------------------------
-----------------------------
-----------------------------
Signature(s) of Shareholder(s)
Please sign exactly as name or names appear hereon. Kindly sign and
return this proxy immediately. No postage required if mailed in the
United States in the accompanying envelope.
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
TOTAL-TEL USA COMMUNICATIONS, INC.
150 Clove Road
Little Falls, New Jersey 07424
NOTICE OF 1997
ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
TOTAL-TEL USA COMMUNICATIONS, INC.:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Total-Tel USA Communications, Inc. which will be held at
150 Clove Road, 8th Floor, Little Falls, New Jersey, 07424 at 10:00 AM,
EDT on Tuesday, September 23, 1997, for the following purposes:
(1) To elect directors; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on August
15, 1997, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting. The share transfer
books will not be closed.
YOU ARE EARNESTLY REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT
AT THE MEETING, TO MARK, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING
PROXY, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW THE PROXY
AND VOTE YOUR OWN SHARES.
By order of the Board of Directors.
Thomas P. Gunning
Secretary
August 18, 1997
Little Falls, New Jersey
TOTAL-TEL USA COMMUNICATIONS, INC.
----------------------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF SHAREHOLDERS
September 23, 1997
The proxy accompanying this Proxy Statement is solicited by the
Board of Directors of TOTAL-TEL USA COMMUNICATIONS, INC. (the
"Company"). All proxies in the accompanying form which are properly
executed and duly returned will be voted in accordance with the
shareholders' instructions thereon at the 1997 Annual Meeting of
Shareholders (the "Meeting"), to be held on Tuesday, September 23, 1997
at 10:00 A.M., EDT, at 150 Clove Road, 8th Floor, Little Falls, New
Jersey, 07424 for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
A proxy may be revoked at any time before it is voted at the
meeting by filing with the Secretary of the Company notice to such
effect or a duly executed proxy bearing a later date. If no instructions
are indicated, the proxies will be voted in accordance with management's
recommendations set forth herein. The persons named as proxies intend to
vote in accordance with their discretion on any matter which may
properly come before the Meeting or any adjournment thereof.
Shareholders who are present at the Meeting may revoke their proxies and
vote in person if they so desire.
This Proxy Statement is first being mailed to shareholders on or
about August 18, 1997.
MATTERS TO BE ACTED UPON
-------------------------
The following matters are to be considered and acted upon at the
Meeting:
1. Five directors are to be elected to hold office until the
next Annual Meeting of Shareholders and until their respective
successors are duly elected and qualified; and
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND
------------------------------------------
CERTAIN BENEFICIAL OWNERS
-------------------------
Only holders of record of the Company's Common Stock at the close
of business on August 15, 1997 will be entitled to vote at the Meeting.
On that date, there were issued and outstanding 3,113,102 Common shares
of the Company. Each outstanding Common share is entitled to one vote at
the Meeting.
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
Set forth below is certain information concerning persons who were
known by the Company to own beneficially or of record more than 5% of
the issued and outstanding shares of Common Stock of the Company as of
August 15, 1997.
Name and Address Number of Shares Percentage
of Beneficial Owner Owned (1) of Class
- ------------------- ----------------- ----------
Warren H. Feldman, Esq. 577,262 shares (2) 16.9%
150 Clove Road
Little Falls, NJ 07424
Heartland Advisors, Inc. 578,700 shares 16.9%
790 North Milwaukee Street
Milwaukee, WI 53202
Solomon Feldman 476,190 shares 13.9%
1890 South Ocean Drive
Hallandale, FL 33009
Kevin Alward 281,950 shares (3) 8.2%
150 Clove Road
Little Falls, NJ 07424
Michael A. Karp 219,340 shares 6.4%
3416 Sansom Street
Philadelphia, PA 19104
(1) All shares are beneficially owned and sole investment and voting
power is held by the persons named.
(2) Includes options to purchase 129,000 shares of the Company's
Common Stock which are exercisable currently or within 60 days of the
date hereof.
(3) Includes options to purchase 181,000 shares of the Company's
Common Stock which are exercisable currently or within 60 days of the
date hereof.
Security Ownership of Management
- --------------------------------
The following table sets forth as of August 15, 1997 information
concerning the beneficial ownership of outstanding shares of Common
Stock of the Company by each director of the Company, each nominee for
election as a director and all directors and officers of the Company as
a group:
Name of Beneficial Number of Shares Percentage
Owner Owned (1) of Class
- ------------------- ---------------- ----------
Kevin Alward 281,950 shares(3) 8.2%
Solomon Feldman 476,190 shares 13.8%
Warren H. Feldman 577,262 shares(2) 16.8%
Leon Genet 49,310 shares 1.4%
Jay J. Miller -- --%
All directors and officers
as a group (6 in number) 1,407,212 shares(2)(3) 40.9%
(1) All shares are beneficially owned and sole investment and voting
power is held by the persons named.
(2) Includes options to purchase 129,000 shares of the Company's
Common Stock which are exercisable currently or within 60 days of the
date hereof.
(3) Includes options to purchase 181,000 shares of th Company's
Common Stock which are exercisable currently or within 60 days of the
date hereof.
Changes in Control
- ------------------
The Company knows of no contractual arrangement which may, at a
subsequent date, result in a change of control of the Company.
ELECTION OF DIRECTORS
---------------------
The Board of Directors has fixed the number of directors to be
elected at the Annual Meeting of Shareholders at five. The shares
represented by the proxies will be voted in favor of the election as
directors of the persons named below unless authority to do so is
withheld. The directors elected will hold office until the next Annual
Meeting of Shareholders and their respective successors are duly elected
and qualify. If any nominee is not a candidate for election at the
meeting, an event which the Board of Directors does not anticipate, the
proxies will be voted for a substitute nominee and the others named
below.
Director
Name Company Office Since Age
- ---- --------------- -------- ---
Kevin Alward Director, President and 1996 31
Chief Operating Officer
Solomon Feldman Director 1959 76
Warren H. Feldman Chairman of the Board, 1987 41
President and Chief
Executive Officer
Leon Genet Director 1996 66
Jay J. Miller Director 1983 64
Mr. Kevin Alward, President and Chief Operating Officer of
TotalTel, Inc., the principal operating subsidiary of the Company,
joined TotalTel in October, 1988, as a sales account executive, became
Manager of Sales in November, 1990 and Vice President of Marketing in
1991. In February, 1992, Mr. Alward was promoted to Senior Vice
President of TotalTel, Inc. and assumed the additional responsibilities
of Chief Operating Officer in April, l993. In 1994, Mr. Alward assumed
the position of President of TotalTel, Inc. and in 1996, he was
appointed President and Chief Operating Officer of the Company.
Mr. Solomon Feldman served as the Treasurer from 1959 until April
1997 and as a director of the Company continuously since 1959.
Mr. Warren H. Feldman was elected Chairman of the Board in
September 1993 and President and Chief Executive Officer of the Company
in September, 1992. Prior to such time, he served as Vice President -
Regulatory Affairs of the Company since January, 1986 and was the
General Manager of its Total-Tel USA division and in-house General
Counsel of the Company since 1984. He was elected a director on April 1,
1987 and President of Total-Tel USA Division on October 27, 1988. Warren
H. Feldman is the son of Mr. Solomon Feldman.
Mr. Leon Genet is a partner in Genet Realty, a commercial and
industrial real estate brokerage firm. Following graduation from
Syracuse University, he was an officer in the United States Air Force.
Mr. Genet continues his significant involvement with Syracuse University
as a benefactor and as a charter member of the Board of the College for
Human Development, home of the highly popular Genet lecture series,
which brings CEO's of leading worldwide corporations to the Syracuse
campus. He serves as a member of the National Commerce and Industry
Board for the State of Israel Bonds Organization and is a shareholder,
director and officer of LPJ Communications, Inc., which has earned
commissions from TotalTel USA Communications, Inc. on the same basis as
other independent representatives.
Jay J. Miller, Esq. has been a practicing attorney for more than
thirty years in the City of New York. Mr. Miller is a director of
Westbrae Natural, Inc., a specialty food firm, and Edison Control
Corporation, a manufacturer of pipe, fittings and accessories for
concrete pumping equipment. He is Chairman of the Board of AmTrust
Pacific Ltd., a New Zealand real estate company.
Board of Directors
- ------------------
The Company's Board of Directors currently consists of five
persons, of whom two are members of management and three are non-
management directors. During the fiscal year ended January 31, 1997,
the Board held four meetings attended by all of the directors.
The Company's Board of Directors has Audit and Compensation
Committees but does not have a Nominating Committee or a committee
performing a similar function. The Audit Committee consists of a
management director, Warren Feldman, and two non-management directors,
namely, Jay J. Miller and Leon Genet. The Committee reviews, analyzes
and may make recommendations to the Board of Directors with respect to
the Company's financial statements and controls. The Committee has met
and intends to meet from time to time with the Company's independent
public accountants to monitor their activities. The Compensation
Committee consists of Messrs. Genet, Miller and Warren Feldman and is
charged with reviewing and recommending the compensation and benefits
payable to the Company's senior executives.
Required Shareholders' Vote
- ---------------------------
Assuming the presence of a quorum (a majority of the total
issued and outstanding shares of Common Stock of the Company), the
favorable vote of the holders of a plurality of the shares present
and voting at the Meeting for the election of each nominee is
required for his election.
EXECUTIVE COMPENSATION
----------------------
The following table sets forth the compensation which the Company
paid during the fiscal years ended January 31, 1997, 1996 and 1995 to
the Chief Executive Officer and to each executive officer of the Company
whose aggregate remuneration exceeded $100,000:
Summary Compensation Table
--------------------------
Name and Fiscal Year Annual Compensation Other Compensation
Principal Ended Annual Awards All Other
Position January 31 Salary ($) Bonus(s) Compensation($) Options(#) Compensations(s)
- -------- ---------- ---------- -------- --------------- ---------- ----------------
Warren H. 1997 $315,000(1) $295,000 $7,025(4)
Feldman 1996 $195,000(1) $274,241 $4,667(5)
Chairman and 1995 $195,103(1) $ 74,153 30,000(3) $4,583(6)
Chief Executive
Officer
Kevin Alward 1997 $315,000(2) $280,000 $9,769(9)
President and 1996 $195,000 $274,241 $6,010(10)
Chief Operating 1995 $195,000 $ 63,700 63,000(7)(8) $5,256(11)
Officer
Thomas P. 1997 $ 95,231 $ 6,000 $6,560(12)
Gunning
Vice President,
Treasurer and
Secretary
(1) Does not include annual Director's fee of $15,000
(2) Does not include director's fees of $2,500.
(3) Represents an incentive stock option to purchase 30,000 shares
of Common Stock exercisable at a price of $9.625 per share (110% of the
market price at the date of issue), adjusted for a 2 for 1 stock split
on July 1, l996. This option vests over a period of forty-eight (48)
months, with 25% of the option exercisable at the 12th, 24th, 36th and
48th months of its term, subject to earlier vesting in certain
circumstances as provided in the option agreement.
(4) The amounts shown represent the Company's contribution under
its 401(K) Deferred Compensation and Retirement Savings Plan of $4,668
and $2,357 for the use of a Company vehicle for non-business purposes.
(5) The amounts shown represent the Company's contribution under its
401(K) Deferred Compensation and Retirement Savings Plan of $2,310 and
$2,357 for the use of a Company vehicle for non-business purposes.
(6) The amounts shown represents the Company's contribution
under its 401 (K) Deferred Compensation and Retirement Savings Plan
of $2,226 and $2,357 for the use of a Company vehicle for non business
purposes.
(7) Represents an incentive stock option to purchase 33,000 shares
of Common Stock exercisable at a price of $7.28 per share, adjusted
for the 10% stock dividend distributed in July 1994 and a 2 for 1 stock
split on July 1, l996. This option vests over a period of thirty-six
(36) months with 25% of the option exercisable at the 8th, 12th, 24th
and 36th month of its term, subject to earlier vesting in certain
circumstances as provided in the option agreement.
(8) Represents an incentive stock option to purchase 30,000 shares
of Common Stock exercisable at a price of $8.75 per share, adjusted for
a 2 to 1 stock split on July 1, l996. This option vests over a period of
forty-eight (48) months with 25% of the option exercisable at the 12th,
24th, 36th and 48th month of its term, subject to earlier vesting in
certain circumstances as provided in the option agreement.
(9) The amount shown represents the Company's contribution under its
401 (K) Deferred Compensation and Retirement Savings Plan of $5,620 and
$3,071 for the use of a Company vehicle for non business purposes and
$1,078 term life insurance premiums.
(10) The amounts shown represent the Company's contribution under
its 401 (K) Deferred Compesation and Retirement Savings Plan of $2,310
and $2,643 for the use of a Company vehicle for non business purposes
and $1,057 term life insurance.
(11) The amount shown represents the Company's contribution under
its 401 (K) Deferred Compensation and Retirement Savings Plan of $1,556
and $2,643 for the use of a Company vehicle for non business purposes
and $1,057 term life insurance premiums.
(12) The amounts shown represent the Company's contribution under
its 401-K Deferred Compensation and Retirement Savings Plan of $3,110
and $1,179 for the use of a Company vehicle for non business purposes
and $2,271 term life insurance premiums.
Adoption of 401 (K) Savings and Investment Plan
- -----------------------------------------------
On February 3, 1992, the Company adopted a 401 (K) plan for
eligible hourly and salaried employees, including officers, who may
elect to contribute, subject to Internal Revenue Code limitations, from
1% to 15% of their wages and salaries. The contributions are currently
invested in any one of six investments funds, each of which has a
different investment objective.
An employee may contribute up to $9,500 per year, and the Company
will match a certain percentage of each employee's contribution.
Other Compensation
- ------------------
See Summary Compensation Table.
Compensation of Directors
- -------------------------
Each director of the Company receives $15,000 per year for service
in such capacity.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
Total-Tel USA Communications, Inc. has grown substantially over the
past five years. The Board of Directors has retained the Company's
executive officers based on not only upon the size and needs of the
Company at the present time, but with due consideration of their ability
to lead a substantially larger organization in the future.
The Compensation Committee believes that the Company provides
compensation to the Company's executive officers in amounts comparable
to companies in the industry and geographical area in which the Company
operates having similar operating and growth characteristics. A
substantial portion of the compensation is tied to achievement of
budgets and other predetermined management goals.
The salary and other compensation paid to the Chief Executive, and
Chief Operating Officer of the Company in the fiscal year ended January
31, 1997 was determined primarily based upon the following factors:
1. Increased revenue and earnings of the Company.
2. Compensation level of executive officers of companies engaged in
businesses like the Company's with similar growth and earning
characteristics.
3. Responsibilities and tasks to be achieved within the Company.
Respectfully submitted,
Leon Genet
Jay J. Miller
Stock Performance Chart
- -----------------------
The following chart graphs the performance of the cumulative
total return to shareholders (stock price appreciation) during the
previous five years in comparison to returns of the NASDAQ Stock
Market (U.S.) Index and a peer group index. The peer group index used
is the NASDAQ Telecommunications Stock Index.
[GRAPHIC WORM CHART: COMPARATIVE FIVE-YEAR TOTAL RETURNS
TOTAL TEL USA STOCK]
Comparative Five-Year Total Returns*
TOTAL TEL USA STOCK
[PLOT POINTS]
NASDAQ
COMPOSITES -- US FACTOR
.504551
1/31/92 198.196 100.000
1/31/93 224.087 113.063
1/31/94 257.711 130.028
1/31/95 245.865 124.051
1/31/96 347.453 175.308
1/31/97 455.417 229.781
PEER GROUP FACTOR
(TELECOMMUNICATIONS STOCKS)
.354599
1/31/92 282.009 100.000
1/31/93 348.333 123.185
1/31/94 518.169 183.742
1/31/95 432.491 153.361
1/31/96 581.195 206.091
1/31/97 592.918 210.248
TOTAL TEL STOCK
- ---------------
FACTOR
59.259259
1/31/92 * 1.6875 100.000
1/31/93 * 1.9125 113.333
1/31/94 * 7.4250 440.000
1/31/95 * 8.6250 511.111
1/31/96 * 8.9375 529.630
1/31/97 17.5000 1,037.037
* Adjusted for 2-1 split 7/1/96
Assumes $100 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in Total-
Tel Common Stock, NASDAQ Stock Market (U.S.) Index, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Certain Relationships and Related Transactions
- ----------------------------------------------
On December 1, 1993, the Company leased approximately 21,300 square
feet of warehouse space in Belleville, New Jersey from a partnership in
which two of the partners are directors and major shareholders of the
Company. During the fiscal year ended January 31, 1996, the Company paid
rent of $59,760 to the partnership. The annual rent for this facility is
$58,560 for the first three years and $63,885 for years four and five
plus a proportionate share of real estate taxes.
The foregoing transaction was made upon terms considered by the
Management to be not less favorable to the Company than a like
transaction negotiated at arm's length.
On May 27, 1993, the Company made a $25,000 non-interest bearing,
unsecured loan to Kevin Alward, then President of its principal
operating subsidiary, TotalTel, Inc. The note, originally due October 1,
l993, was extended to December 31, 1995. On November 1, 1993, the
Company made a $100,000 unsecured loan to Mr. Alward to provide funds
for the purchase of the Company's Common Stock. This note bears interest
at the prime rate published in the Wall Street Journal. Interest
payments are due monthly and the principal balance which was originally
due April 1, l995 was extended to December 31, 1996. On March 1, l995,
the Company made a $55,000 unsecured loan to Mr. Alward. This note is
payable on demand, and bears interest at the prime rate published in the
Wall Street Journal. Interest payments are due monthly, beginning on
April 1, l995. At January 31, l996, $32,500 of this note has been
repaid. On September 1, 1995, the Company made a $60,000 unsecured loan
to Mr. Alward. The note is payable on demand with interest at 9% per
annum. On January 31, l996, the notes dated May 27, 1993, March 1, l995
and September 1, l995, together with any unpaid interest were combined
into one note with a principal balance of $117,281. This note bears
interest at 8% per annum and is payable in semi-monthly installments
commencing February 7, l996 for seven and one-half years. The current
unpaid principal balance at August 23, l996 is $111,946.77. Mr. Alward
was elected President, Chief Operating Officer and a director of the
Company on October 10, 1996.
PROPOSALS OF
------------
SHAREHOLDERS FOR 1997 ANNUAL MEETING
------------------------------------
Proposals of shareholders intended to be presented for action at
the 1998 Annual Meeting of Shareholders must be received at the
Company's offices not later than May 15, 1998 to be considered for
inclusion in the Company's proxy statement and form of proxy relating to
that meeting. The terms and conditions of Rule 14a-8 under the
Securities Exchange Act of 1934 shall apply to any such submission.
ANNUAL REPORT
-------------
The Annual Report of the Company for the fiscal year ended January
31, 1997, including financial statements, is being mailed to shareholders
together with this Proxy Statement. No part of such Annual Report shall
be regarded as proxy soliciting material or as a communication by means
of which any solicitation is being or is to be made.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------
Deloitte & Touche LLP or a predecessor, has served as the
independent certified public accountants of the Company since 1962. The
Company intends to appoint Deloitte & Touche LLP as its independent
certified public accountants for the fiscal year ending January 31,
1998. Deloitte & Touche has indicated that it expects to have a
representative at the Meeting. The representative will be afforded an
opportunity to make a statement, if he desires, and will be available to
respond to appropriate shareholder questions.
VOTING AND SOLICITATION OF PROXIES
----------------------------------
The solicitation of proxies in the accompanying form is made by the
Company's Board of Directors , and the cost thereof will be borne by the
Company. The Company may solicit proxies by mail, telephone, or
telegraph. Brokerage firms, custodians, banks, trustees, nominees or
other persons holding shares in their names, will be reimbursed for
their reasonable expenses in forwarding proxy materials to their
principals.
As of the date of this Proxy Statement, the Board of Directors is
not aware of any other matter to be presented before the Meeting. In the
event any other matter is properly brought before the Meeting, it is
intended that the persons voting the accompanying proxy will vote the
shares represented thereby in accordance with their best judgment.
It is important that proxies be returned promptly. Therefore,
whether or not you plan to attend in person, you are asked to execute
and return your proxy in the enclosed, postage prepaid, envelope.
By Order of the Board of Directors.
Thomas P. Gunning
August 18, 1997 Secretary
PROXY97a.edg Page 9 To Total Tel