Teletouch Announces It Will Restate Financial Results for the Years Ended May 31, 2002 and 2003; No Impact on 2004; Financial St
03 September 2005 - 6:07AM
Business Wire
Teletouch Communications, Inc. (AMEX:TLL) announced today that the
Company will restate its financial statements for the fiscal years
ended May 31, 2002 and 2003. The restatement is the result of
previously reported ongoing conversations with SEC staff concerning
the accounting for the Company's financial restructuring which took
place in May 2002 and November 2002. The financial restructuring
had two components: a May 2002 extinguishment of certain junior
debt (the "May 2002 Exchange Transaction"); followed by a November
2002 exchange of Series C Preferred Stock and redeemable common
stock purchase warrants for its Series A and Series B Preferred
Stock, warrants for the purchase of shares of Series B Preferred
Stock, common stock warrants and shares of its common stock (the
"November 2002 Exchange Transaction"). As a result of the required
restatements, the Company has not been able to file its Annual
Report on Form 10-K for the year ended May 31, 2005 (the "10-K")
with the SEC in a timely fashion and that filing is delinquent at
this time. It appears at this time that there will be no impact on
the Company's results of operations, financial position or cash
flows for the years ended May 31, 2004 and 2005, respectively. As
soon as possible, the Company intends to issue preliminary,
unaudited summary results of operations for the period covered by
the 10-K. All readers of this press release are urged to review
such unaudited results of operations upon their issuance. Then,
following completion of its discussions with the SEC staff the
Company intends to (i) as discussed in greater detail below, file
the amended financial statements with the SEC and (ii) file the
10-K for the year ended May 31, 2005. The Exchange Transactions As
previously disclosed, in the May 2002 Exchange Transaction the
Company retired certain junior debt, and later, after receiving
stockholder approval in November 2002 and in conjunction with the
November 2002 Exchange Transaction, issued to the holders of that
debt shares of its Series C Preferred Stock and redeemable stock
purchase warrants in exchange for outstanding shares of its Series
A and Series B Preferred Stock, warrants for the purchase of shares
of Series B Preferred Stock, common stock warrants and shares of
its common stock (the Exchanged Securities). The holders of the
Exchanged Securities included an entity affiliated with the
Company's Chairman of the Board, Robert M. McMurrey. In its
accounting for the two transactions, the Company retained an
independent third party, which used a present value methodology to
value the Company's Common Stock (into which the Series C Preferred
Stock was convertible) at $0.04 per share. The Company used this
valuation and apportioned the value of the securities which it
issued between the May 2002 Exchange Transaction and the November
2002 Exchange Transaction. During its normal review of the
Company's filings, the SEC staff initiated discussions with the
Company about the Company's accounting for the two Exchange
Transactions including discussions regarding the method used to
value the shares of the Series C Preferred Stock issued and whether
or not the Series C Preferred Stock contained a "beneficial
conversion feature" which should be accounted for under EITF 98-5
and EITF 00-27. The accounting under EITF 98-5 and EITF 00-27 would
have required an amount to be recorded as period dividends on the
Series C Preferred Stock. As a result of these discussions with the
SEC staff and the Company's ongoing analysis of the May 2002 and
November 2002 Exchange Transactions, the Company has preliminarily
determined that the shares of the Series C Preferred Stock issued
in the May 2002 and November 2002 Exchange Transactions should have
been valued at the market price of the Company's common stock
($0.33 per share when the Series C Preferred Stock was issued in
November, 2002) rather than the present value methodology
originally used. This change in the valuation of the shares of the
Series C Preferred Stock would: -- reduce by $5.06 million, to
$64.5 million from $69.6 million, the gain on the May 2002 Exchange
Transaction recorded in the year ended May 31, 2002; and -- reduce,
by $7.59 million to $28.8 million from $36.3 million, the gain from
the November 2002 Exchange Transaction that was included in the
computation of earnings per share for the year ended May 31, 2003.
Earnings per share for the relevant quarters and the years ended
May 31, 2002 and 2003 will be impacted. Total stockholders' equity
would not be affected, although there would be some changes in the
components of stockholders' equity. These specific changes are: --
The reduction in the gain from the May 2002 Exchange Transaction
would increase the Company's accumulated deficit with an offsetting
increase of the amount recorded for the outstanding Series C
preferred Stock. -- The reduction in the gain from the November
2002 Exchange Transaction would decrease the Company's additional
paid-in capital with an offsetting increase of the amount recorded
for the outstanding Series C preferred Stock. In addition, the
change in the value assigned to the Series C Preferred Stock would
mean that it does not contain a beneficial conversion feature as
defined in EITF 98-5 and EITF 00-27. It appears at this time that
there will be no impact on the Company's results of operations,
financial position or cash flows for the years ended May 31, 2004
and 2005, respectively. The Company cautioned that its discussions
with the SEC staff are ongoing, as a result of which there can be
no assurance that the adjustments described above will in fact be
the final adjustments that the Company determines are required.
Until the Company has restated and reissued its results for the
applicable periods, investors and other users of the Company's SEC
filings are cautioned not to rely on the Company's financial
statements for the years ended May 31, 2002 and 2003, to the extent
they are affected by the accounting issues described above. At the
same time as the Company was discussing these issues with the SEC
staff, the Company, under the supervision of its Audit Committee
and with the assistance of an independent accounting expert, began
its inquiry into the circumstances relating to the above-referenced
accounting treatments to assure that there are no other financial
reporting or disclosure control items that may be of concern. The
preliminary results of this inquiry indicate that, apart from the
adjustments discussed in this Current Report, no other adjustments
to the Company's financial statements appear necessary. The Company
intends to file the amended financial statements with the SEC as
soon as possible after the completion of its discussions with the
SEC staff. About Teletouch Teletouch Communications, Inc., a proven
U.S. leader in wireless messaging and related network management,
provides a complete suite of mobile asset tracking solutions using
sophisticated, yet cost-effective GPS-based hardware and software
products for fleets, hazardous materials and "worker-down"
emergency notification applications. In addition to its telemetry
business, Teletouch offers two-way radio communications, cellular
and wireless messaging services throughout the United States.
Teletouch's common stock is traded on the American Stock Exchange
under stock symbol: TLL. Additional product, business and financial
information for Teletouch is available at www.Teletouch.com. This
release contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act, as amended, that are based on
management's exercise of business judgment as well as assumptions
made by and information currently available to management. When
used in this document, the words "may", "will", "anticipate",
"believe", "estimate", "expect", "intend", and words of similar
import, are intended to identify any forward-looking statements.
You should not place undue reliance on these forward-looking
statements. Negotiations with respect to the transaction that are
the subject of this release are ongoing and may result in
significant modifications to the transaction. There can be no
assurance that the transaction that is the focus of this release
will be concluded, or if concluded that it will be concluded on
terms currently contemplated. These statements reflect our current
view of future events and are subject to certain risks and
uncertainties as noted in our securities and other regulatory
filings. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, our
actual results could differ materially from those anticipated in
these forward-looking statements. We undertake no obligation and do
not intend to update, revise or otherwise publicly release any
revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
any unanticipated events. Although we believe that our expectations
are based on reasonable assumptions, we can give no assurance that
our expectations will materialize. Many factors could cause actual
results to differ materially from our forward-looking statements.
Proshares Ultrashort Telecommunications (AMEX:TLL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Proshares Ultrashort Telecommunications (AMEX:TLL)
Historical Stock Chart
From Jul 2023 to Jul 2024