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TMS signs agreement to acquire Sequoia Data; merger agreement combines imaging and scanning industry leaders.

STILLWATER, Okla.--(BUSINESS WIRE)--November 9, 1995--TMS, Inc. (NASDAQ Bulletin Board:TMSS) and Sequoia Data Corporation, a privately held firm, announced today the signing of a Merger Agreement whereby TMS will acquire Sequoia Data Corporation. In a stock-swap transaction in the form of a pooling of interests, TMS will issue a total of 5.3 million shares of TMS stock to Sequoia Data shareholders. The acquisition combines TMS, a pioneer in document imaging, CD-ROM retrieval software and related services, with Sequoia Data, a pioneer and leader in image enhancement and forms processing software for document imaging and optical character recognition (OCR).

The deal, a pooling of interest, combines the financials of the companies, resulting in combined revenues of over $5,000,000 for 1995 (TMS and Sequoia have the same fiscal year, which concludes on Aug. 31) and combined 1995 income of $984,000. TMS net income per common and common equivalent share will remain unchanged at $.08 for the year. After the acquisition, the combined weighted average common and common equivalent shares will be 13,105,194. As the transaction will not formally close until after the conclusion of the companies' first quarters, each company will report Q1 1996, which ends Nov. 30, 1995, separately.

"With the merger agreement in place, the transaction will go through more procedural steps including SEC review," commented TMS president Maxwell Steinhardt. "The agreement marks the successful conclusion of the due diligence process and we expect no difficulties with the remaining steps in the transaction, which we expect to conclude by the end of January," stated Steinhardt.

Steinhardt continued, "TMS and Sequoia Data are tightly aligned in both products and vision for the future. We expect this transaction will strengthen and advance our position in the marketplace. The combined company will offer better solutions to our customers and market into new areas. Importantly, our new synergies should accelerate sales and profit growth to enhance shareholder value. This transaction process has been very smooth partly because the management teams have known each other for years and share similar outlooks on key issues."

Dana Allen, president of Sequoia, noted, "The TMS Sequoia combination will field the largest suite of core technologies in the imaging industry, offering customers a great deal of complementary technologies from a single source. Our combined technology expertise will give us a strong advantage, especially for new vertical markets we intend to pursue."

Combined product lines will include scanner drivers, deskewing and imaging enhancement (with gray scale dynamic thresholding), forms identification, forms removal and processing, image viewing and annotation, and CD-ROM publishing/text retrieval. Additionally, the companies offer document conversion services and contract programming as needed.

Sequoia has unaudited revenues for fiscal year 1994 of $562,023, with earnings of $99,395, or a 17 percent net income margin, and unaudited revenues for fiscal year 1995 of $988,000 with earnings of $270,000, or a 27 percent net income margin. Sequoia sales grew over 75 percent during the company's fiscal year 1995, while profits during the same period grew over 193 percent compared to fiscal 1994 results.

TMS 1995 annual revenue was $4,221,120, a 23 percent increase over $3,438,761 reported for fiscal year 1994, representing the third consecutive year with revenue growth over 20 percent. Net income for fiscal year 1995 was $771,481, an increase of 120 percent compared to $350,621 reported for fiscal year 1994. Earnings per share were $0.08 compared to $0.04 for fiscal year 1994. Fiscal year 1995 ended with an 18.3 percent net income margin. The combined company, upon conclusion of the transaction, will combine certain administrative and technology functions, but Sequoia Data will continue to operate from its current California facility.

Founded in 1981 and based in Stillwater, Okla., TMS designs, develops and markets text and image software toolkits and provides engineering and document conversion services to major companies and government organizations in the U.S. and many other countries to assist them in migrating from paper to electronic information systems. TMS maintains field sales offices in Mountain View, CA and Groton, CT. TMS has shipped over 100,000 units worldwide to clients including DiscoverCard, EDS, Arthur Andersen, General Dynamics, Fidelity Investments, the U.S. Navy and Army, Price Waterhouse, TRW, Rockwell and many others.

Sequoia Data Corporation, based in Burlingame, Calif. specializes in the area of image enhancement technology tailored for the rapidly growing OCR marketplace, and is noted for the Imaging Magazine Product of the Year product, ScanFix. During the 1994-95 timeframe Sequoia has added other offerings that have been very well received, including GrayFix, for gray scale images, and FormFix, winner of the Document Management Magazine Product Choice award.

CONTACT: TMS Dir., Corp. Comm.

Ellen Beeby

Phone: 405/377-0880

Fax: 405/377-0452


Investor Access Corp.

Kevin Theiss

Phone: 212/692-9060

Fax: 212/661-2399
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Publication:Business Wire
Date:Nov 9, 1995
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