SecProbe.io

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McAfee & Taft                                                  W. Chris Coleman
A Professional Corporation                                      ATTORNEY AT LAW

10th Floor  Two Leadership Square                                 WRITER DIRECT
211 N. Robinson  Oklahoma City, OK  73102-7103                   (405) 552-2234
(405) 235-9621  FAX (405) 235-0439                           FAX (405) 228-7434
www.mcafeetaft.com                                 chris.coleman@mcafeetaft.com

                                October 11, 2004

Ms. Barbara C. Jacobs
Assistant Director
Securities Exchange Commission
Washington, DC  20549

                                      Re:      TMS, Inc.
                                               PREM14A filed on
                                               September 16, 2003
                                               File No. 33-22780

Dear Ms. Jacobs:

     This letter is in response to your comment letter of October 5, 2004 with
respect to the above Proxy Statement. We appreciate your comments and assistance
in enhancing and improving our disclosure and have modified our disclosure
accordingly. The following are our specific responses to each of your comments.

General
-------

1.   Please revise to disclose the information required by Item 14 of Schedule
     14A, as it applies to a liquidation. For example, your proxy statement
     should respond to Items 101, 102, 103, 301, 302, 303, 304 and 305 of
     Regulation S-K and include financial statements meeting the requirements of
     Regulation S-X. See Item 14.c.l. of Schedule 14A. Also, the financial
     information presented should be current pursuant to Article 3-12 of
     Regulation S-X. In the alternative, supplementally advise why you believe
     that some or all of this information is not required.

          Response: We believe that the information called for by the referenced
          items of Regulation S-K is not required. Those Items are incorporated
          by Item 14(c)(1) of Schedule 14A by reference to Part B of Form S-4.
          As noted in Instruction 2(a) to Item 14, that information is not
          required to be included where, as here, the consideration consists
          wholly of cash, "unless the information is material to an informed
          voting decision (e.g., the securityholders of the target company are
          voting and financing is not assured)." In the current transaction,
          financing is not a condition to closing. Although there will be a note
          from the purchaser for a portion of the consideration, the note
          essentially constitutes a holdback by the purchaser against which it
          may make certain offsets, primarily for failure to collect accounts
          receivable or failure of certain customers to accept custom software
          development. Hence, the company is receiving cash for the sale of its
          assets without a financing condition and the shareholders will receive
          cash as liquidation proceeds. The information called for by Item
          14(c)(1) is not material to an informed investment decision.

          Also, Instruction B to Item 14 provides that if only the security
          holders of the target company are voting, (i) the financial
          information in paragraphs (b)(8)-(11) of Item 14 for the acquiring
          company and the target need not be provided; and (ii) the information
          in paragraph (c)(2) of Item 14 for the target company need not be
          provided. Only the security holders of TMS are voting with respect to
          the proposed transaction.

          We do note, however, that "selected financial information" for TMS has
          been provided. The parties have also agreed to include selected
          balance sheet data for Pegasus and inserted additional discussion
          regarding the note. See pages 16-18 attached. We do not believe that
          any additional information is required to be included in the proxy
          materials.

2.   It appears that your plan of liquidation and the transaction with
     Measurement Incorporated may be the first step of a "Rule 13e-3
     transaction" as defined in paragraph (a)(3) of that regulation. Please note
     that this term encompasses any series of events involving one or more
     transactions described in paragraph (a)(3)(i) of the rule which has a
     reasonable likelihood of producing an effect described in paragraph
     (a)(3)(ii) of the rule. Also note that the rule applies to a transaction
     that independently may not constitute a Rule 13e-3 transaction, but is
     effected "as apart, or in furtherance, of" a series of transactions that,
     taken together, have a reasonable likelihood of producing the requisite
     effects. Refer to Q&A no. 4 of Exchange Act Release 34-17719. As a result,
     the issuer and affiliates engaging in the proposed transactions must file a
     Schedule 13E-3, the information required under the form, including all
     exhibits, and disseminate the information required by Rule 13e-3(e) to
     security holders. See Rule 13e-3(d). Alternatively, supplementally advise
     why you believe that the plan of liquidation and the transaction with
     Measurement Incorporated is not the first step in a "Rule l3e-3
     transaction."

          Response: First, you seem to believe that there is some relationship
          by or among the parties that simply does not exist. There is no
          controlling relationship within the meaning of Rule 13e-3(1) by or
          among TMS, Pegasus or Measurement Incorporated. Further, although the
          company's obligation to close on the sale to Pegasus is conditioned
          upon the disposition of the company's interest in VSC Technologies,
          the disposition of the interest in VSC Technologies to Measurement
          Incorporated is not a condition to Pegasus' obligation to close. See
          "Conditions to Closing and Termination" and "Summary - What will
          happen to the Company's interest in VSC Technologies, L.L.C.?" The
          company in fact recently reached an agreement in principal with
          Measurement Incorporated, but it is not a foregone conclusion that the
          sale will in fact be made to it. In any event, as noted above,
          Measurement Incorporated is not an affiliate of the company within the
          meaning of Rule 13e-3(a)(1). The mere fact that the company has a
          joint venture with Measurement Incorporated with respect to what
          constitutes a minor portion of the company's assets does not make
          Measurement Incorporated an affiliate.

          The sale of the interest in VSC is merely a clean up detail in the
          course of selling the company's assets and liquidating it. The
          transaction has neither the purpose nor the effect of taking TMS
          private. Bear in mind that Measurement Incorporated is no more an
          affiliate of Pegasus than it is of TMS. There is nothing remotely
          close to the concerns here that were expressed in the illustration to
          Question No. 4 of Exchange Act Release 34-17719, wherein two
          affiliated corporations entered into a merger agreement and thereafter
          but prior to the solicitation of proxies one affiliate purchased stock
          of the other in the open market.

          Further, there is no going private transaction to facilitate.
          Certainly there is not a "sale of substantially all of the assets of
          an issuer to its affiliate or a group of affiliates..." as set forth
          in Rule 13e-3(i)(C). Pegasus is certainly not an affiliate of the
          company. The transaction here is nothing more than it appears on its
          face, i.e., a sale of all or substantially all of the assets of TMS to
          unrelated third parties in a negotiated transaction. Therefore, there
          is no "lack of arms-length bargaining" which was one of the principal
          concerns expressed by the commission in Exchange Act Release 34-17719.

          We assume that you are not taking the position that subsections
          (3)(i)(A) (there is no sale to an affiliate) or (B) (there is no
          tender offer) of Rule 13e-3(a) apply.

3.   Please disclose whether you received a solvency opinion regarding your plan
     of liquidation. If so, revise your proxy to provide the appropriate
     disclosure. If not, disclose the risks to shareholders as a result of your
     decision not to obtain a solvency opinion. For example, discuss the
     potential for creditors of the company to pursue the assets distributed to
     stockholders under state law.

          Response: The Company has not received or requested a solvency opinion
          at this time. The Company has not done this because they are currently
          selling substantially all of their assets for cash based on a
          negotiated price, but does not have any current plans to make a
          distribution to the shareholders until the existing contingencies have
          been defined. This is disclosed in the Proxy Statement under
          "Contingencies; Creditors; Litigations", at Pages 32 - 33, attached.
          Also, the risk to shareholders and the potential for creditors to
          pursue assets distributed to the stockholders is described therein.

4.   We note that the sale of your CPT business to Pegasus is subject to
     shareholder approval, as part of the plan of liquidation or otherwise.
     Supplementally tell us why you have not presented the transaction with
     Measurement Incorporated as a separate matter for stockholder approval.

          Response: The governing documents of TMS and the corporate law of
          Oklahoma do not require shareholder approval unless the sale is of all
          or substantially all of the assets of TMS. The CPT Business is
          substantially all of the assets of the Company. We consider the sale
          of the interest in VSC Technologies, LLC to be part of the liquidation
          process, which the shareholders would have approved by approving the
          liquidation.

5.   It does not appear that you have filed the agreement regarding the sale of
     your CPT business to Pegasus. Please include this agreement as an appendix
     to this proxy or supplementally advise why you believe that the inclusion
     of this agreement as an appendix is not required.

          Response: Pursuant to Items 14(b)(1) and (b)(4) of Schedule 14A and
          Items 1001 and 1004(a)(2) of Regulation M-A, the Company has provided
          a summary of the material terms of the proposed sale of its CPT
          Business. The Company is not aware of a requirement that it file the
          entire purchase agreement. However, if necessary, the Company would
          propose making a Form 8-K filing and incorporating that filing in the
          proxy materials by reference. This would provide the shareholders
          access to the agreement without substantially increasing the Company's
          costs of distributing the proxy materials.

Questions and Answers about the Pro used Plan of Liquidation
------------------------------------------------------------

6.   Please relocate the question "[w]hat will I receive in the liquidation" to
     a more prominent position in this section.

          Response: We have moved this question so that it appears after the
          question "[h]as the board made a recommendation with respect to the
          proposed liquidation?". See page 2 attached.

7.   You estimate that shareholders will receive total liquidation proceeds
     between $0.145 and $0.16. TMS's stockholders may find it useful if you
     describe the liquidation range in terms of 100 TMS shares. Also, revise
     your proxy statement to provide a reasonably detailed explanation of why it
     is estimated that liquidation could result in cash distributions to
     stockholders ranging from $0.145 to $0.16 per share. This should include
     the details and factors considered in concluding the range of liquidation
     values. See Item 14.b.7 of Schedule 14A. Further, in tabular form,
     reconcile historical financial statement carrying amounts with the range of
     estimated recovery on asset dispositions for each significant balance sheet
     category.

          Response: We have made revisions in the "Summary" section to the
          question "[w]hat will I receive in the liquidation?" and added a
          question "[w]hat is the expected timing for distribution of the
          liquidation proceeds?" to address this comment. See page 2 attached.
          We provided information about the estimated liquidation proceeds in
          amounts relative to 1000 shares because few of our shareholders hold
          stock in amounts less than 1000 shares. We have not provided a tabular
          reconciliation of historical financial statement carrying amounts
          because we do not believe this information is meaningful. There are
          only three relevant categories, accounts receivable, computer
          equipment and furniture and fixtures, all of which are being sold to
          Pegasus.

8.   Expand your disclosure to explain the conditions and events that may impact
     the amount of liquidation proceeds that will be received by your
     shareholders. Also, explain the time frame in which you plan to distribute
     all or some of your liquidation proceeds. Do you plan on distributing all
     of the liquidation proceeds at one time? Will you distribute portions of
     the liquidation proceeds at varying intervals? For example, will you
     distribute the portion of the liquidation proceeds attributable to the
     Pegasus transaction before the remainder of your assets are liquidated?

          Response: See response to comment number 7.

9.   We note your reference to the litigation with NCS Pearson: Please disclose
     the required information under Item 103 of Regulation S-K. You should also
     explain contingent or future events that may impact the amount and/or
     timing of your distribution.

          Response: The information required by Item 103 of S-K was contained in
          "Description of Purchase and Sale Agreement with Measurement
          Incorporated-Indemnification" we have, however, to provide better
          disclosure included this same information under "Contingencies;
          Creditors; Litigation" and enhanced this disclosure. See Page 33
          attached. For information regarding events that may impact the amount
          and/or timing of the liquidating distribution, see pages 1, 18 and 24
          attached.

Background of the Company's Decision to Liquidate
-------------------------------------------------

10.  You provide a discussion of other potential options of TMS, including other
     potential acquiring companies. Please revise to compare the sale of
     substantially all of the assets and plan of liquidation to the other offers
     that you received and describe in concise terms the basis of the special
     committee and the board for concluding that liquidation was a superior
     option from a shareholder perspective. On what basis did the board conclude
     that the sale of substantially all of the assets to Pegasus and the
     implementation of the plan of liquidation was the course most likely to
     obtain the highest value reasonably available to stockholders? In this
     regard, discuss the transaction valuation of the proposed transactions made
     in good faith, including the range of consideration offered by each, and
     disclose the basis of the special committee and the board in determining
     that the sale of sub