<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 30, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ___
Commission File Number 1-13436
TELETOUCH COMMUNICATIONS, INC.
(Name of registrant in its charter)
DELAWARE 75-2556090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
110 N. College, Suite 200, Tyler, Texas 75702 (903) 595-8800
(Address and telephone number of principal executive offices)
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value - 4,235,465 shares outstanding as of January 14,
1999
1
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
FORM 10-Q
QUARTER ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements - Teletouch Communications, Inc. (Unaudited)
Condensed Consolidated Balance Sheets at
November 30, 1999 and May 31, 1999 4
Condensed Consolidated Statements of Operations -
Three and Six Months Ended November 30, 1999 and
November 30, 1998 5
Condensed Consolidated Statements of Cash Flows -
Six Months Ended November 30, 1999 and
November 30, 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Part II. Other Information
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE>
Part 1. Financial Information
3
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except share data)
<TABLE>
<CAPTION>
November 30, 1999 May 31, 1999
------------------- -------------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................................ $ 3,762 $ 5,787
Accounts receivable, net of allowance.................................... 2,278 1,788
Inventory................................................................ 7,099 4,936
Deferred income tax assets............................................... 56 56
Note receivable.......................................................... 500 500
Certificates of deposit, restricted as to use............................ 1,475 725
Prepaid expenses and other current assets................................ 1,056 1,099
----------------- -------------
16,226 14,891
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $11,829 in 2000 and $10,671 in 1999...................... 18,895 18,733
GOODWILL, INTANGIBLES AND OTHER ASSETS:
Goodwill................................................................. 24,786 24,786
Subscriber bases......................................................... 28,255 28,225
FCC licenses............................................................. 21,744 21,741
Non-compete agreements................................................... 700 700
Debt issue costs......................................................... 4,100 4,100
Other.................................................................... 199 150
Accumulated amortization................................................. (36,127) (32,070)
----------------- -------------
43,657 47,632
----------------- -------------
$ 78,778 $ 81,256
================= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.................................... $ 4,503 $ 4,711
Current portion of unearned sale/leaseback profit........................ 405 405
Deferred revenue......................................................... 1,677 1,514
----------------- -------------
6,585 6,630
LONG-TERM LIABILITIES:
Long-term debt........................................................... 77,046 75,944
Unearned sale/leaseback profit........................................... 3,017 3,102
----------------- -------------
80,063 79,046
COMMITMENTS AND CONTINGENCIES -- --
DEFERRED INCOME TAXES 1,042 1,042
SHAREHOLDERS' EQUITY:
Series A cumulative convertible preferred stock, $.001 par
value, 15,000 shares authorized, issued, and outstanding................. -- --
Series B convertible preferred stock, $.001 par value, 411,457
shares authorized, 87,286 shares issued and outstanding.................. -- --
Common stock, $.001 par value, 25,000,000 shares authorized,
4,235,465 shares issued and outstanding in 2000 and 4,235,527 in
1999..................................................................... 4 4
Additional paid-in capital............................................... 24,816 24,816
Accumulated deficit...................................................... (33,732) (30,282)
----------------- -------------
(8,912) (5,462)
----------------- -------------
$ 78,778 $ 81,256
================= =============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except shares and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
----------------------------- ------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Service, rent, and maintenance revenue.................... $ 11,156 $ 10,447 $ 22,279 $ 20,677
Product sales revenue..................................... 2,579 1,847 4,886 3,823
---------- ---------- ---------- ----------
Total revenues......................................... 13,735 12,294 27,165 24,500
Net book value of products sold........................... (2,497) (1,826) (4,618) (3,698)
---------- ---------- ---------- ----------
11,238 10,468 22,547 20,802
Costs and expenses:
Operating............................................ 3,910 2,929 7,128 5,857
Selling.............................................. 2,164 1,246 3,885 2,476
General and administrative........................... 1,515 2,401 3,881 4,695
Depreciation and amortization........................ 3,647 3,688 7,293 7,017
---------- ---------- ---------- ----------
Total costs and expenses.................................. 11,236 10,264 22,187 20,045
---------- ---------- ---------- ----------
Operating income.......................................... 2 204 360 757
Gain/(loss) on sale of assets............................. (116) 1 117 --
Interest expense, net..................................... (2,003) (1,949) (3,927) (3,983)
---------- ---------- ---------- ----------
Loss before income taxes.................................. (2,117) (1,744) (3,450) (3,226)
Income tax expense/(benefit).............................. -- -- -- --
---------- ---------- ---------- ----------
Net loss.................................................. (2,117) (1,744) (3,450) (3,226)
Preferred stock dividends................................. (937) (793) (1,851) (1,568)
---------- ---------- ---------- ----------
Loss applicable to common stock........................... (3,054) (2,537) (5,301) (4,794)
========== ========== ========== ==========
Loss per share............................................ $ (0.72) $ (0.60) $ (1.25) $ (1.13)
========== ========== ========== ==========
Weighted average shares outstanding....................... 4,235,465 4,235,611 4,235,465 4,235,611
========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
Operating Activities:
Net loss.................................................................... $ (3,450) $ (3,226)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization............................................... 7,293 7,017
Non cash consulting expense................................................. -- 55
Non cash interest expense................................................... 1,597 1,486
Provision for losses on accounts receivable................................. 702 297
Gain on sale of assets...................................................... (117) --
Amortization of unearned sale/leaseback profit.............................. (202) (202)
Changes in operating assets and liabilities:
Accounts receivable, net................................................... (1,192) (454)
Inventories................................................................ (1,532) (300)
Prepaid expenses and other assets.......................................... (24) 487
Accounts payable and accrued expenses...................................... (208) (773)
Deferred revenue.......................................................... 163 316
----------- -----------
Net cash provided by operating activities........................................ 3,030 4,703
Investing Activities:
Capital expenditures, including pagers...................................... (4,286) (3,149)
Purchase of certificates of deposit......................................... (750) --
Deferred costs associated with acquisitions................................. (15) --
Net proceeds from sale of assets............................................ 246 4
----------- -----------
Net cash used for investing activities........................................... (4,805) (3,145)
Financing Activities:
Payments on long-term debt.................................................. (250) (1,000)
----------- -----------
Net increase/(decrease) in cash and cash equivalents............................. (2,025) 558
Cash and cash equivalents at beginning of period................................. 5,787 4,567
----------- -----------
Cash and cash equivalents at end of period....................................... $ 3,762 $ 5,125
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
6
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated financial statements of Teletouch
Communications, Inc., and its subsidiaries (the "Company") for the periods ended
November 30, 1999 and 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial reporting applied on a
consistent basis. Significant accounting policies followed by the Company were
disclosed in the notes to the financial statements included in the Company's
Annual Report on Form 10-K for the year ended May 31, 1999. The balance sheet at
May 31, 1999 has been derived from the audited financial statements at that date
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Company's management, the accompanying condensed consolidated
financial statements contain the material adjustments necessary to present
fairly the financial position of the Company at November 30, 1999 and May 31,
1999 and the results of its operations and cash flows for the periods ended
November 30, 1999 and 1998. All such adjustments are of a normal recurring
nature. Interim period results are not necessarily indicative of the results to
be achieved for the full year.
Reclassification: Certain reclassifications have been made in the prior years'
financial statements to conform to the fiscal year 2000 presentation.
NOTE B - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
November 30, May 31,
1999 1999
------------ -------
<S> <C> <C>
(Unaudited)
Notes payable........................................... $59,750 $60,000
Junior subordinated notes, including accrued interest... 17,296 15,944
------- -------
$77,046 $75,944
======= =======
</TABLE>
Notes Payable: In January 1998, Teletouch amended its original agreement (the
"Credit Facility") with a group of lenders led by Chase Manhattan Bank. The new
agreement (the "Credit Agreement") provides for loans in an amount not to exceed
$70 million, as opposed to the $95 million provided for in the original Credit
Facility. As of November 30, 1999, $59,750,000 of the Credit Agreement was
funded, and $10,000,000 is available for future funding. To complete the Credit
Agreement, the Company paid approximately $0.5 million in amendment fees. These
fees have been deferred and are being amortized, using the effective interest
method, over the term of the existing loans.
7
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Credit Agreement bears interest, at the Company's designation, at a
floating rate of the prime rate plus 1% to 2% or LIBOR plus 2% to 3%. These
rates vary depending on the leverage ratio of the Company. The Credit Agreement
is secured by substantially all of the assets of Teletouch and its subsidiaries.
Borrowings under the Credit Agreement require the principal be repaid in
escalating quarterly installments beginning with payments of $1,625,000 in
August 2000 and ending in November 2005. These principal installments are
expected to be paid with funds generated from operations. The Credit Agreement
also requires the maintenance of specified financial and operating covenants,
with which the Company is in compliance, and prohibits any payments on the
Junior Subordinated Notes and the payment of dividends.
NOTE C - SEGMENT INFORMATION
Teletouch operates in the wireless telecommunications industry, providing
paging and messaging, cellular, and two-way radio services to a diversified
customer base. As of and for the six months ending November 30, 1999 and 1998,
the Company had no foreign operations.
Teletouch's cellular and two-way radio operations represent less than 10%
individually and in the aggregate of revenue, operating income, and assets of
the Company.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Certain statements contained herein are not based on historical facts, but are
forward-looking statements that are based upon numerous assumptions about future
conditions that could prove not to be accurate. Actual events, transactions and
results may materially differ from the anticipated events, transactions or
results described in such statements. The Company's ability to consummate such
transactions and achieve such events or results is subject to certain risks and
uncertainties. Such risks and uncertainties include, but are not limited to, the
existence of demand for and acceptance of the Company's products and services,
regulatory approvals and developments, economic conditions, the impact of
competition and pricing, results of financing efforts and other factors
affecting the Company's business that are beyond the Company's control. The
Company undertakes no obligation and does not intend to update, revise, or
otherwise publicly release the results of any revisions to these forward-looking
statements that may be made to reflect future events or circumstances.
OVERVIEW
The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
condensed consolidated financial statements and notes thereto included elsewhere
in this report.
Teletouch is a leading provider of wireless telecommunications services,
primarily paging services, in non-major metropolitan areas and communities in
the southeast United States. As of November 30, 1999 the Company had
approximately 400,800 pagers in service. The Company derives the majority of its
revenues from fixed periodic fees, not dependent on usage, charged to
subscribers for paging services. As long as a subscriber remains on service,
operating results benefit from the recurring payments of the fixed periodic fees
without incurring additional selling expenses or other fixed costs. While there
can be no assurance, Teletouch expects that net subscriber additions will
continue to grow as the Company continues to open new retail stores and to focus
on its other sales channels.
The Company is also expanding its existing product lines. In December 1998,
Teletouch began offering prepaid cellular service and Sprint PCS cellular
service. To enhance its primary wireless services, the Company is also expanding
its offering of other value-added services such as voice mail and Smartpager(R),
a service whereby individuals can send an alphanumeric page to a subscriber
without any special software or equipment. The Company is closely monitoring new
product offerings and the expansion of existing products and services to ensure
those products and services are meeting its customers' needs.
9
<PAGE>
RESULTS OF OPERATIONS
The following table presents certain items from the Company's condensed
consolidated statements of operations and certain other information for the
periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
-------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ --------------
(in thousands, except pagers, ARPU and per share amounts)
<S> <C> <C> <C> <C>
Service, rent and maintenance revenue $ 11,156 $ 10,447 $ 22,279 $ 20,677
Product sales revenue 2,579 1,847 4,886 3,823
-------- -------- -------- --------
Total revenues 13,735 12,294 27,165 24,500
Net book value of products sold (2,497) (1,826) (4,618) (3,698)
-------- -------- -------- --------
$ 11,238 $ 10,468 $ 22,547 $ 20,802
Operating expenses $ 11,236 $ 10,264 $ 22,187 $ 20,045
Operating income $ 2 $ 204 $ 360 $ 757
Net loss before preferred stock dividends $ (2,117) $ (1,744) $ (3,450) $ (3,226)
Net loss after preferred stock dividends $ (3,054) $ (2,537) $ (5,301) $ (4,794)
Loss per share after preferred stock dividends $ (0.72) $ (0.60) $ (1.25) $ (1.13)
EBITDA (1) $ 3,649 $ 3,892 $ 7,653 $ 7,774
Pagers in service at end of period 400,800 366,900 400,800 366,900
Average revenue per unit ("ARPU") $ 8.98 $ 9.28 $ 9.03 $ 9.28
</TABLE>
___________________________
(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization (and certain non-recurring income and expenses). EBITDA is a
standard measure of financial performance in the paging industry. However,
EBITDA is not a measure defined in generally accepted accounting principles
("GAAP") and should not be construed as an alternative to operating income
or cash flows from operating activities as determined in accordance with
GAAP. EBITDA is, however, one of the primary financial measures by which
the Company's covenants are calculated under its debt agreements. The
EBITDA shown above does not include gain/(loss) on the sale of assets.
Results of Operations for the six months and three months ended
- ---------------------------------------------------------------
November 30, 1999 and 1998
- --------------------------
Total revenue: Teletouch's total revenue increased to $27.2 and $13.7 million
-------------
for the six months and three months ended November 30, 1999 from $24.5 and $12.3
million for the six months and three months ended November 30, 1998. This
increase is due primarily to the additional revenues of $1.1 million from new
cellular products and from an increase in pagers in service resulting from
internal growth. Pagers in service increased to approximately 400,800 at
November 30, 1999 as compared to 366,900 at November 30, 1998.
10
<PAGE>
The positive impact on total revenue of the increase in pagers in service is
partially offset by the decline in average revenue per unit ("ARPU"). ARPU for
the six months ended November 30, 1999 was $9.03 as compared to $9.19 for the
six months ended May 31, 1999 and $9.28 for the six months ended
November 30, 1998. The decrease in ARPU is primarily due to an increase in the
percentage of the Company's subscriber base represented by resellers as well as
increased competition in the Company's markets. Resellers are businesses that
buy airtime at wholesale prices from Teletouch and sell the service to end
users. While the wholesale price to a reseller is lower than the price the
Company charges to its other customers, a reseller bears the cost of acquiring,
billing, collecting and servicing its subscribers. At November 30, 1999
approximately 38% of the Company's subscriber base was represented by resellers
as opposed to 36% at November 30, 1998. In fiscal 1999, Teletouch implemented a
minor price increase for its basic paging service. The price increase will have
a positive impact on the Company's future ARPU, but as competitors continue to
pursue its customers in the marketplace and as the percentage of its subscriber
base represented by resellers increases, ARPU will continue to decline.
Nevertheless, Teletouch expects that the growth of paging units in service and
the introduction of new products and services will increase sufficiently to
offset any decline in ARPU and not result in a decrease in total revenue.
Operating expenses, excluding depreciation and amortization: Operating
-----------------------------------------------------------
expenses, excluding depreciation and amortization, were $14.9 million, 55% of
total revenue, for the first six months of fiscal year 2000 as compared to $13.0
million, 53% of total revenue, for the first six months of fiscal year 1999; and
$7.6 million, 55% of total revenue, for the three months ended November 30, 1999
as compared to $6.6 million, 53% of total revenue, for the three months ended
November 30, 1998. Costs have increased primarily because of the opening of 14
new retail outlets, particularly in the areas of payroll, rent, and advertising
expenses. Additionally, due to the restructuring of certain administrative
collection functions in May 1999, bad debt losses have increased significantly
for the six and three months ended November 30, 1999 as compared to the six and
three months ended November 30, 1998. As a result, the Company has implemented
new procedures that should result in lower bad debt losses over the next few
months.
Depreciation and amortization: Depreciation and amortization expense was
------------------------------
$7.3 and $3.6 million for the six months and three months ended November 30,
1999 as compared to $7.0 and $3.7 million for the six and three months ended
November 30, 1998. The increase is primarily due to the additional depreciation
recorded on returned leased pagers and the addition of new retail outlets.
Teletouch's emphasis on selling rather than leasing pagers has begun to
stabilize the depreciation expense associated with returned leased pagers.
Interest expense: Net interest expense decreased to $3.9 million for the six
----------------
months ended November 30, 1999 from $4.0 million for the six months ended
November 30, 1998. However, interest expense increased to $2.0 million for the
three months ended November 30, 1999 from $1.9 million for the three months
ended November 30, 1998. The decrease in long-term debt under the Credit
Agreement at November 30, 1999 versus the long-term debt owed at November 30,
1998 combined with lower interest rates are the primary factors contributing to
the year-to-date lower interest costs. These factors, however, were partially
offset by the increased amortization of financing costs associated with the
Credit Agreement and the increased interest expenses associated with the Junior
Subordinated Notes.
11
<PAGE>
Income tax benefit: For fiscal year 2000, the Company estimates the effective
------------------
tax benefit rate will be 0%. A valuation allowance has been recorded against
deferred tax assets which are not likely to be realized. Specifically,
Teletouch's carryforwards expire at specific future dates and utilization of
certain carryforwards is limited to specific amounts each year. However, due to
the uncertain nature of their ultimate realization, the Company has established
a valuation allowance against these carryforward benefits and will recognize
benefits only as reassessment demonstrates they are realizable. Realization is
entirely dependent upon future earnings in specific tax jurisdictions. While the
need for this valuation allowance is subject to periodic review, if the
allowance is reduced, the tax benefits of the carryforwards will be recorded in
future operations as a reduction of the Company's income tax expense.
EBITDA: EBITDA decreased to $7.7 million, 28% of total revenue, for the six
------
months ended November 30, 1999 from $7.8 million, 32% of total revenue, for the
six months ended November 30, 1998; and $3.6 million, 27% of total revenue, for
the three months ended November 30, 1999 from $3.9 million, 32% of total
revenue, for the three months ended November 30, 1998. The decrease in EBITDA as
a percentage of total revenue is primarily due to the 14 new retail outlets
opened during the first six months of fiscal 2000 and increased bad debt losses,
as previously discussed.
FINANCIAL CONDITION
In January 1998, Teletouch amended its original agreement (the "Credit
Facility") with a group of lenders led by Chase Manhattan Bank. The new
agreement (the "Credit Agreement") provides for loans in an amount not to exceed
$70 million, as opposed to the $95 million provided for in the original Credit
Facility. As of November 30, 1999, $59,750,000 of the Credit Agreement was
funded, and $10,000,000 is available for future funding. To complete the Credit
Agreement, the Company paid approximately $0.5 million in amendment fees. These
fees have been deferred and are being amortized, using the effective interest
method, over the term of the existing loans.
The Credit Agreement bears interest, at the Company's designation, at a
floating rate of the prime rate plus 1% to 2% or LIBOR plus 2% to 3%. These
rates vary depending on the leverage ratio of the Company. The Credit Agreement
is secured by substantially all of the assets of Teletouch and its subsidiaries.
Borrowings under the Credit Agreement require the principal be repaid in
escalating quarterly installments beginning with payments of $1,625,000 in
August 2000 and ending in November 2005. These principal installments are
expected to be paid with funds generated from operations. The Credit Agreement
also requires the maintenance of specified financial and operating covenants,
with which the Company is in compliance, and prohibits any payments on the
Junior Subordinated Notes and the payment of dividends.
Teletouch's operations require capital investment to purchase inventory for
lease to customers, to open new retail facilities, and to acquire paging
infrastructure equipment to support the Company's growth. Net capital
expenditures, including pagers, amounted to $4.3 million and $3.1 million for
the first six months of fiscal years 2000 and 1999, respectively. Teletouch
anticipates capital expenditures to be higher in fiscal 2000 as compared to
fiscal 1999 as the Company continues its retail store expansion in the last half
of fiscal 2000, improves its infrastructure, and meets its subscribers' pager
needs. Teletouch will pay for these expenditures with cash generated from
operations and, if necessary, borrowings under the unused portion of the Credit
Agreement (discussed above).
12
<PAGE>
The Company's inventory balance increased approximately $2.2 million between
May 31, 1999 and November 30, 1999. This increase was funded with cash generated
from operations. The increase occurred primarily to smooth the transitioning of
Teletouch's central inventory from Arkansas to Texas, to stock the Company's new
retail stores, and to meet the needs of various marketing programs. Inventory
levels are expected to decrease to historical levels in the last half of Fiscal
2000.
NEW ACCOUNTING ANNOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting guidelines for derivatives and requires an
establishment to record all derivatives as assets or liabilities on the balance
sheet at fair value. Additionally, this statement establishes accounting
treatment for three types of hedges: hedges of changes in the fair value of
assets, liabilities or firm commitments; hedges of the variable cash flows of
forecasted transactions; and hedges of foreign currency exposures of net
investments in foreign operations. Any derivative that qualifies as a hedge,
depending upon the nature of that hedge, will either be offset against the
change in fair value of the hedged assets, liabilities or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. SFAS No. 133 is effective for years beginning
after June 15, 2000. Teletouch is currently analyzing the implementation
requirements and does not anticipate that the adoption of this statement will
have a material impact on its consolidated balance sheets, statements of
operations, or cash flows.
IMPACT OF YEAR 2000
Teletouch has experienced no significant issues with respect to Year 2000.
However, the Company is continuing to monitor its systems to insure that any
issues that might arise are addressed immediately.
13
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
Teletouch is party to various legal proceedings arising in the ordinary course
of business. The Company believes there is no proceeding, either threatened or
pending, against it that could result in a material adverse effect on its
results of operations or financial condition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
---------
Exhibit Page
Number Title of Exhibit Number
- ------ ---------------- ------
27 Financial Data Schedule 16
(b) Reports on Form 8-K.
--------------------
None.
14
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELETOUCH COMMUNICATIONS, INC.
---------------------------------
(Registrant)
Date: January 14, 2000
/s/ J. Richard Carlson
---------------------
J. Richard Carlson
President
Chief Operating Officer
Date: January 14, 2000
/s/ J. Kernan Crotty
--------------------
J. Kernan Crotty
Executive Vice President
Chief Financial Officer
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 3,762
<SECURITIES> 0
<RECEIVABLES> 2,441
<ALLOWANCES> 163
<INVENTORY> 7,099
<CURRENT-ASSETS> 16,226
<PP&E> 30,724
<DEPRECIATION> 11,829
<TOTAL-ASSETS> 78,778
<CURRENT-LIABILITIES> 6,585
<BONDS> 77,046
0
0
<COMMON> 4
<OTHER-SE> (8,916)
<TOTAL-LIABILITY-AND-EQUITY> 78,778
<SALES> 27,165
<TOTAL-REVENUES> 27,165
<CGS> 4,618
<TOTAL-COSTS> 22,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,927
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</TABLE>
