Proshares Ultrashort Telecommunications (AMEX:TLL)
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Teletouch Communications, Inc. (AMEX: TLL) today
reported on its quarterly financial results filed on Form 10-Q for the
third quarter ended February 28, 2006. Total revenues for the third
quarter of fiscal 2006 declined approximately 14.4% to $5.02 million
compared with $5.87 million in the third quarter of fiscal 2005. Cash
and cash equivalents increased nearly 41% to approximately $1.80
million at the end of the third quarter compared with $1.28 million at
the 2005 fiscal year ended, May 31, 2005. The Company recorded Net
Income of approximately $0.02 million, or $0.00 earnings per share
versus a loss of $0.54 million, or $0.12 loss per share in the
comparable quarter of fiscal 2005.
Reporting on a segment basis, the decline in total Paging revenues
for the second quarter slowed slightly to approximately 18.4% or $3.70
million compared with $4.52 million in the prior-year period, in line
with the Company's estimates. However, the decline in net pager
subscribers slowed significantly in the third quarter 2006 compared to
the second quarter 2006. Total third quarter over second quarter 2006
pagers in service were essentially flat at 121,800 versus 125,500 in
service at the end of the second quarter. As indicated above, the
year-over-year comparative quarters analysis shows total pagers in
service declined approximately 25% through the period ended February
28, 2006, that is when compared with 162,300 pagers in service at
February 28, 2005. However, the relative increase in the decline rate
is due to the July, 2005 sale of approximately 15,000 subscribers to
Satellink Communications. When accounting for this sale, the overall
decline rate actually slowed to approximately 15.7%.
Total Two-way radio service and product sales were down 8.9% to
$1.18 million in the quarter, from $1.3 million in the comparable 2005
quarter. The decline was due primarily to a reduction in and the
timing of certain homeland security related hardware product sales;
recurring service revenues increased approximately 13.2% during the
current period over the comparative 2005 period. Total Other service
and product revenues, including the Company's Telemetry unit increased
approximately 215% to $0.15 million in the third quarter of 2006,
compared to $0.05 million during the same period in 2005. Although
there were increased subscriber activations in the period, the overall
increase is largely attributable to the Company's decision to exit the
telemetry hardware sales and its subsequent successful efforts to
liquidate much of the remaining telemetry-related hardware inventory
for cash.
The Company reported Net Income of $0.02 during the third quarter
2006, compared to a loss of $0.54 million during the prior year
quarter on significantly improved operating income to $0.13 million
for the third quarter of fiscal 2006, from a loss of $0.67 million in
the prior year comparable period. The reduction in operating loss was
primarily due to the Company's continued cost reductions across all
departments.
"It is notable that this is the first quarter since August 2003
that the Company has been able to report positive net income derived
solely from its operating businesses," stated Teletouch CEO, T. A.
"Kip" Hyde, Jr. "This is a testament to the team's success in slowing
pager attrition by generating new adds and renewals, reducing expenses
and corporate overhead everywhere possible to match our revenue base.
These were the primary factors in Teletouch reporting an increase in
its cash and cash equivalents, as well as operating income of $132,000
and net income of $19,000 for the third quarter of fiscal 2006."
Hyde continued, "While we do estimate a net loss through the
fourth quarter due to continued paging revenue declines and expected
additional one-time costs for the professional fees related to the
sale of the Company's paging business, we are confident that we will
continue to manage the business effectively through this process.
"We continue to work on the sale of our legacy paging business,
but have been delayed due to the SEC's review and comments to our
preliminary proxy. As we work to complete our response to the SEC, we
are also exploring alternative transactions for the Company that, if
completed prior to the paging sale, could eliminate the need for
shareholder approval. We still hope to complete the paging sale by
mid-2006. Once completed, we expect the sale of the paging assets to
generate sufficient cash to enable Teletouch to support the embedded
overhead costs of a public company, and allow the return of the
Company to a successful growth model."
About Teletouch Communications
Teletouch offers a comprehensive suite of telecommunications
services to enterprise users, including cellular, two-way radio
communications, GPS-telemetry and wireless messaging services
throughout the United States. TLL acquires, bills and supports a
large, primarily business and government base of subscribers, under
its own network of FCC licensed spectrum in Texas, Louisiana,
Arkansas, Oklahoma, Alabama, Missouri, Mississippi, Tennessee, and
Florida. Teletouch's common stock is traded on the American Stock
Exchange under stock symbol: TLL. Additional information about
Teletouch can be found 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-
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TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except shares and per share amounts)
Three Months Ended
February 28,
------------------------
2006 2005
------------ -----------
Operating revenues:
Service, rent, and maintenance revenue $ 4,054 $ 4,795
Product sales revenue 967 1,073
------------ -----------
Total operating revenues 5,021 5,868
------------ -----------
Operating expenses:
Cost of service, rent and maintenance
(exclusive of depreciation and
amortization included below) 2,319 2,690
Cost of products sold 529 917
Selling and general and administrative 1,588 2,125
Depreciation and amortization 443 784
Loss (gain) on disposal of assets 10 21
------------ -----------
Total operating expenses 4,889 6,537
------------ -----------
Operating income (loss) 132 (669)
Interest expense, net (113) (121)
------------ -----------
Income (loss) before income tax benefit 19 (790)
Income tax benefit - (253)
------------ -----------
Net income (loss) 19 (537)
Participation rights of common stock purchase
warrants in undistributed earnings (2) -
------------ -----------
Net income (loss) applicable to common
shareholders $ 17 $ (537)
============ ===========
Income (loss) per share applicable to common
shareholders:
Basic $ - $ (0.12)
============ ===========
Diluted $ - $ (0.12)
============ ===========
Denominator for income (loss) per share -
weighted average number of common shares
outstanding:
Basic 48,740,163 4,546,980
============ ===========
Diluted 55,027,689 4,546,980
============ ===========
Nine Months Ended
February 28,
------------------------
2006 2005
------------ -----------
Operating revenues:
Service, rent, and maintenance revenue $ 12,874 $ 15,231
Product sales revenue 3,072 3,455
------------ -----------
Total operating revenues 15,946 18,686
------------ -----------
Operating expenses:
Cost of service, rent and maintenance
(exclusive of depreciation and
amortization included below) 7,331 8,209
Cost of products sold 1,970 3,120
Selling and general and administrative 5,136 6,152
Depreciation and amortization 1,707 2,518
Loss (gain) on disposal of assets 8 (30)
------------ -----------
Total operating expenses 16,152 19,969
------------ -----------
Operating income (loss) (206) (1,283)
Interest expense, net (328) (332)
------------ -----------
Income (loss) before income tax benefit (534) (1,615)
Income tax benefit - (492)
------------ -----------
Net income (loss) (534) (1,123)
Participation rights of common stock purchase
warrants in undistributed earnings - -
------------ -----------
Net income (loss) applicable to common
shareholders $ (534) $ (1,123)
============ ===========
Income (loss) per share applicable to common
shareholders:
Basic $ (0.02) $ (0.25)
============ ===========
Diluted $ (0.02) $ (0.25)
============ ===========
Denominator for income (loss) per share -
weighted average number of common shares
outstanding:
Basic 23,994,432 4,546,980
============ ===========
Diluted 23,994,432 4,546,980
============ ===========
TELETOUCH COMMUNICATIONS, INC.
Selected Balance Sheet Highlights
(in thousands)
February 28, May 31,
2006 2005
-----------------------
Cash and cash equivalents $ 1,804 $ 1,283
Current portion of long-term debt 108 74
Long-term debt, net of current portion 55 102
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