TLL Proshares Ultrashort Telecommunications

Teletouch Communications, Inc. (AMEX:TLL) today reported on financial information relating to its results filed on Form 10-Q for the second quarter ended November 30, 2005. Total revenues for the second quarter of fiscal 2006 declined approximately 14.8% to $5.43 million compared with $6.37 million in the second quarter of fiscal 2005. Cash and Cash Equivalents declined to approximately $0.94 million at the end of the second quarter compared with $1.28 million at the 2005 fiscal year ended, May 31, 2005, although Net Cash from Operating Activities was positive and slightly improved at $0.20 million in the second quarter, over the $0.18 reported for the first quarter of fiscal 2006. The Company recorded a net loss of approximately $0.12 million, or $0.01 loss per share in the second quarter fiscal 2006, versus a higher net loss of $0.36 million, or $0.08 loss per share in the comparable quarter of fiscal 2005. Reporting on a segment basis, total Paging revenues for the second quarter declined approximately 19.4% to $3.84 million compared with $4.76 million in the prior-year period, in line with the Company's estimates. Pagers in service declined to approximately 125,500 for the six months ended November 30, 2005, compared with 169,400 at November 30, 2004. Two-way radio service and product sales were down 2.7% to $1.44 million in the quarter, from $1.48 million in the comparable 2005 quarter. The decline was due primarily to a reduction in and the timing of hardware product sales; service revenues increased during the current period. Total Other service and product revenues increased approximately 14.4% to $0.15 million in the second quarter of 2006, compared to $0.13 million through the same period in 2005. The Company significantly reduced its operating loss 95% to $0.02 million for the second quarter of fiscal 2006, from a loss of $0.46 million in the prior year period. The reduction in operating loss was primarily due to continued cost reductions across all departments in the Company and lower depreciation expense related to certain paging assets that fully depreciated in the quarter. Discussing the second quarter results, Teletouch CEO, T. A. "Kip" Hyde, Jr. stated, "Teletouch is now showing significant operating and financial improvement from both the Company's direct actions to control expenses, and the restructuring activities related to the transition and preparation for sale of the paging business. As previously announced, the Company filed its preliminary Proxy for a Special Shareholders Meeting with the SEC, which in its current form asks Teletouch shareholders to approve the sale of the core paging business assets. The special shareholders' meeting is tentatively scheduled for March 1, 2006. If the sale is approved, we are prepared and would expect to close the transaction shortly following the special meeting." Hyde concluded, "We plan to use the proceeds from the sale of the paging business to acquire one or more currently identified companies that each offer significant revenue, EBITDA and/or net income growth opportunities. We are currently in discussions with a number of acquisition targets and are actively looking to identify others. Once the final disposition of the paging business sale is made clear by the shareholders' vote, we will be better prepared to move forward on this front, as well." 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 CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except shares and per share amounts) Three Months Ended Six Months Ended November 30, November 30, ---------------------- --------------------- 2005 2004 2005 2004 ----------- ---------- ----------- --------- Operating revenues: Service, rent, and maintenance revenue $4,241 $5,094 $8,820 $10,436 Product sales revenue 1,186 1,279 2,105 2,382 ----------- ---------- ----------- --------- Total operating revenues 5,427 6,373 10,925 12,818 ----------- ---------- ----------- --------- Operating expenses: Cost of service, rent and maintenance (exclusive of depreciation and amortization included below) 2,361 2,737 5,012 5,519 Cost of products sold 768 1,205 1,441 2,203 Selling and general and administrative 1,818 2,056 3,548 4,027 Depreciation and amortization 503 829 1,264 1,734 Loss (gain) on disposal of assets (1) 3 (2) (51) ----------- ---------- ----------- --------- Total operating expenses 5,449 6,830 11,263 13,432 ----------- ---------- ----------- --------- Operating loss (22) (457) (338) (614) Interest expense, net (100) (108) (215) (211) ----------- ---------- ----------- --------- Loss before income tax benefit (122) (565) (553) (825) Income tax benefit - (201) - (239) ----------- ---------- ----------- --------- Net loss $(122) $(364) $(553) $(586) =========== ========== =========== ========= Basic and diluted loss per share $(0.01) $(0.08) $(0.05) $(0.13) =========== ========== =========== ========= Weighted average number of common shares outstanding(1) 18,844,548 4,546,980 11,824,400 4,546,980 =========== ========== =========== ========= (1) 48,735,495 Total common shares outstanding as of the January 9, 2006 filing date. *T -0- *T TELETOUCH COMMUNICATIONS, INC. Selected Balance Sheet Highlights (In thousands) November 30, May 31, 2005 2005 ------------- ---------- Cash and cash equivalents $942 $1,283 Current portion of long-term debt and redeemable common stock obligations 335 426 Long-term debt and redeemable common stock obligations, net of current portion 2,388 2,290 *T