TLL Proshares Ultrashort Telecommunications

Teletouch Communications, Inc. (AMEX:TLL) announced today that it has reported its audited financial information relating to results for the fiscal year ended May 31, 2005. The Company also reported that it filed an amended 2004 Annual Report on Form 10-K/A for the fiscal year ended May 31, 2004, that also included amended and restated Consolidated Statements of Operations for the fiscal years ended May 31, 2002 and 2003, and Consolidated Balance Sheet as of May 31, 2002. Total revenues for fiscal 2005 declined approximately 7.8% to $24.7 million compared with $26.8 million in fiscal 2004. Cash and Cash Equivalents significantly improved to approximately $1.3 million at year-end, from $0.07 million in the comparable 2004 period. In addition to increasing cash, the Company reduced its total debt in fiscal 2005 to $0.0 (zero) short-term debt at the end of fiscal 2005, compared with $0.1 million at the end of fiscal 2004, and long-term debt, including the current portion, to $0.2 million in fiscal 2005, from $0.5 million in fiscal 2004 (a decrease of nearly 65%). Total Paging revenues for the year declined approximately 17% to $18.6 million for fiscal 2005 compared to $22.5 million for fiscal 2004. Two-way radio service and product sales increased 58% to over $5.5 million in 2005, from approximately $3.5 million through 2004. Total Other service and product sales declined approximately 25% to $0.56 million in fiscal 2005, compared to $0.75 million through the same period in 2004. Teletouch recorded an operating loss of $3.7 million for fiscal 2005 compared with $166,000 in fiscal 2004. The decline in operating income was primarily due to the steady decline in service revenues from fewer pagers in service against the service provision costs and the continued write-down of related inventories and other assets. Pagers in service declined to 155,600 at 2005 year-end compared with 194,000 at fiscal year-end 2004. The Company recorded a net loss applicable to common stockholders of $3.5 million, or $0.75 per share in fiscal 2005 compared with a net loss applicable to common stockholders of $519,000, or $0.11 per share in fiscal 2004. Discussing the year-end financial results, Teletouch CEO, T. A. "Kip" Hyde, Jr. stated, "We have had a number of legacy business successes during the 2005 fiscal year, most notably increasing cash and substantial increasing our two-way radio business product sales and services. This was due in large part to the acquisition of Delta Communications last year and the continued availability of Department of Homeland Security funding for the various state and local governmental entities we serve. Plus, we have had some notable successes in commercial two-way radio sales arena, ending with a record year for Teletouch Two-Way." Hyde continued, "However, we remain disappointed in our ability to grow the Telemetry and GPS Location Based Services business. Although many of our large customer prospects appear promising, closing cycles continue to be unacceptably long. Also, while our outstanding relationship with Guidepoint for faster-closing small-fleet sales is just now beginning to bear fruit, frankly, it is not likely to have a meaningful impact on overall profitability for the foreseeable future, and our ability to grow internally is severely diminished." "As a result, the Company is today principally focused on completing a fundamental corporate reorganization designed to reduce operating overhead and rebuild the Company through more cost-effective internal growth and acquisitions. The first step towards this goal includes completing the previously announced sale of the paging business, and evaluating a potential sale of the two-way radio business. While these actions are and will be subject to shareholder approval, we are hopeful of a positive outcome, as the successful conclusion of these events will then allow Teletouch to better concentrate on new, higher growth opportunities." Hyde concluded, "Having recently filed our Annual Reports on Forms 10-K for fiscal 2005 and 10-K/A for fiscal 2004, we plan to file our Form 10-Q for the quarter ended August 31, 2005, in the near future. In accordance with our previously submitted and approved plan to regain compliance with the AMEX listing requirements (no later than November 28, 2005), these actions will likely result in the Company's regaining reporting compliance with both the American Stock Exchange ("AMEX") continued listing and SEC public reporting requirements. We will then be in a position to file our preliminary proxy with the SEC related to a special shareholders meeting to address and allow shareholders to vote on the sale of the paging business assets and other matters, all of which we expect to complete before year end." About Teletouch Teletouch offers telemetry and GPS-location based mobile asset monitoring, cellular, two-way radio communications and wireless messaging services throughout the United States. Teletouch's common stock is traded on the American Stock Exchange under stock symbol: TLL. Additional business and financial information on Teletouch is available at www.Teletouch.com. All statements in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption "Additional Factors That May Affect Our Business" in the Company's most recent Form 10-K and 10-Q filings, and amendments thereto. In addition, we operate in a highly competitive and rapidly changing environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise any forward-looking statement. -0- *T TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES Financial Highlights (in thousands, except shares and per share amounts) Three Months Ended May 31, May 31, 2005 2004 ---------- ---------- Operating revenues: Service, rent, and maintenance revenue $4,691 $5,376 Product sales revenue 1,292 1,322 ---------- ---------- Total operating revenues 5,983 6,698 ---------- ---------- Operating expenses: Cost of service, rent and maintenance (exclusive of depreciation and amortization included below) 2,643 2,741 Cost of products sold 1,153 1,300 Selling and general and administrative 2,296 1,764 Depreciation and amortization 700 868 Impairment of goodwill 551 -- Loss on disposal of assets 1,050 6 ---------- ---------- Total operating expenses 8,393 6,679 ---------- ---------- Operating income (loss) (2,410) 19 Interest expense, net (100) (81) ---------- ---------- Loss before income tax expense (benefit) and extraordinary item (2,510) (62) Income tax expense (benefit) (181) 137 ---------- ---------- Loss before extraordinary item (2,329) (199) Extraordinary item-Gain derived from negative goodwill on sale of certain PNI assets, net of income tax -- 64 ---------- ---------- Net loss (2,329) (135) Net loss applicable to common shareholders $(2,329) $(135) ========== ========== Earnings (loss) per share -- basic: Earnings (loss) applicable to common shareholders before extraordinary item $(0.48) $(0.03) Extraordinary item $-- $-- ---------- ---------- Earnings (loss) applicable to common shareholders $(0.48) $(0.03) ========== ========== Earnings (loss) per share -- diluted: Earnings (loss) applicable to common shareholders before extraordinary item $(0.48) $(0.03) Extraordinary item $-- $-- ---------- ---------- Earnings (loss) applicable to common shareholders $(0.48) $(0.03) ========== ========== Weighted average shares outstanding-basic 4,849,499 4,546,980 ========== ========== Weighted average shares outstanding-diluted 4,849,499 4,546,980 ========== ========== TELETOUCH COMMUNICATIONS, INC. Selected Balance Sheet Highlights (In thousands) May 31, 2005 May 31, 2004 ------------ ------------ Cash and cash equivalents $1,283 $72 Current portion of long-term debt 74 45 Long-term debt, net of current portion 102 448 TELETOUCH COMMUNICATIONS, INC. Consolidated Statements of Operations (In thousands, except shares and per share amounts) Years Ended May 31, May 31, May 31, May 31, 2005 2004 2003 2002 ---------- ---------- ----------- ----------- (Restated) (Restated) Operating revenues: Service, rent and maintenance revenue $19,922 $23,192 $27,929 $34,335 Product sales 4,747 3,562 6,893 12,234 ---------- ---------- ----------- ----------- Total operating revenues 24,669 26,754 34,822 46,569 ---------- ---------- ----------- ----------- Operating expenses: Cost of service, rent and maintenance (exclusive of depreciation and amortization included below) 10,852 11,025 14,460 15,086 Cost of products sold 4,273 3,184 5,315 8,539 Selling and general and administrative 8,449 8,613 11,007 15,177 Depreciation and amortization 3,218 3,726 4,665 6,338 Impairment of goodwill 551 -- -- -- Loss on disposal of assets 1,019 372 253 109 Write-off of equipment -- -- 810 -- ---------- ---------- ----------- ----------- Total operating expenses 28,362 26,920 36,510 45,249 ---------- ---------- ----------- ----------- Operating income (loss) (3,693) (166) (1,688) 1,320 Gain on extinguishment of debt -- -- 510 64,505 Gain on litigation setttlement -- -- 429 -- Interest expense, net (432) (357) (384) (7,412) ---------- ---------- ----------- ----------- Income (loss) before income taxes (benefit) and extraordinary item (4,125) (523) (1,133) 58,413 Income tax expense (benefit) (673) 60 (372) -- ---------- ---------- ----------- ----------- Income (loss) before extraordinary item (3,452) (583) (761) 58,413 Extraordinary item -- Gain derived from negative goodwill on purchase of certain assets, net of income tax -- 64 -- -- ---------- ---------- ----------- ----------- Net income (loss) (3,452) (519) (761) 58,413 Gain on preferred stock transaction -- -- 28,778 -- Participation rights of Series C Preferred Stock in undistributed earnings -- -- (23,580) -- Preferred stock dividends -- -- -- (4,789) Net income (loss) applicable to common stockholders $(3,452) $(519) $4,437 $53,624 ========== ========== =========== =========== Earnings (loss) per common share -- basic: Earnings (loss) applicable to common shareholders before extraordinary item $(0.75) $(0.12) $.96 $11.09 Extraordinary item -- 0.01 -- -- ---------- ---------- ----------- ----------- Earnings (loss) applicable to common shareholders $(0.75) $(0.11) $.96 $11.09 ========== ========== =========== =========== Earnings (loss) per common share -- diluted: Earnings (loss) applicable to common shareholders before extraordinary item $(0.75) $(0.12) $.30 $.59 Extraordinary item -- 0.01 -- -- ---------- ---------- ----------- ----------- Earnings (loss) applicable to common shareholders $(0.75) $(0.11) $.30 $.59 ========== ========== =========== =========== Weighted average number of common shares outstanding: Basic 4,623,164 4,546,980 4,644,978 4,834,255 ========== ========== =========== =========== Diluted 4,623,164 4,546,980 92,053,503 98,893,353 ========== ========== =========== =========== *T