EX-99.1 2 w75044exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(USA MOBILITY LOGO)
News Release
         
For Immediate Release
  Contact:   Bob Lougee (703) 721-3080
Wednesday, July 29, 2009
      bob.lougee@usamobility.com
USA Mobility Reports Second Quarter Operating Results;
Board Declares Quarterly Cash Distribution
Average Revenue Per Unit, Recurring Cash Flow Margins Reach New Highs;
Company Continues to Reduce Operating Expenses
Alexandria, VA (July 29, 2009) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the second quarter ended June 30, 2009.
In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share, payable on September 10, 2009 to stockholders of record on August 14, 2009. The Company expects the entire distribution to be paid as a return of capital.
Total revenue was $75.1 million for the second quarter, compared to $79.7 million in the first quarter and $92.1 million in the second quarter of 2008. Operating income was $12.8 million for the second quarter, while EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $24.0 million, compared to $28.6 million in the first quarter and $30.6 million in the year-earlier quarter. Second quarter results were negatively impacted by a one-time settlement expense of $4.0 million in connection with patent litigation. Absent the one-time litigation settlement expense, operating income would have been $16.8 million and EBITDA $28.0 million.
Net income for the second quarter was $44.7 million, or $1.93 per fully diluted share, compared to net income of $10.3 million, or $0.37 per fully diluted share, in the second quarter of 2008. The significant increase in net income in the second quarter was largely the result of a one-time income tax benefit of $37.0 million due to the effective settlement of uncertain tax positions, and tax refund claims. Excluding the one-time tax adjustment and $4.0 million litigation settlement expense, net income in the second quarter would have been $10.1 million, or $0.43 per fully diluted share.

 


 

Second quarter results included:
    Total paging ARPU (average revenue per unit) increased to $8.96 in the second quarter, its highest level since the third quarter of 2005, from $8.86 in the first quarter and $8.54 in the year-earlier quarter.
 
    The quarterly rate of revenue erosion was 5.7 percent, compared to 5.4 percent in the first quarter and 2.8 percent in the second quarter of 2008. The annual rate of revenue erosion was 18.4 percent, compared to 15.9 percent in the first quarter and 14.3 percent in the year-earlier quarter.
 
    Net unit loss in the second quarter was 158,000, compared to 208,000 in the first quarter and 157,000 in the second quarter of 2008. Total units in service were 2,449,000 at June 30, 2009, compared to 2,607,000 at March 31, 2009.
 
    The quarterly rate of subscriber loss was 6.0 percent in the second quarter, compared to 7.4 percent in the first quarter and 4.7 percent in the second quarter of 2008. The annual rate of subscriber erosion was 22.9 percent in the second quarter, compared to 21.8 percent in the first quarter and 15.5 percent in the year-earlier quarter.
 
    Operating expenses (excluding depreciation, amortization and accretion) totaled $51.2 million, compared to $51.1 million in the first quarter of 2009. Absent the one-time litigation settlement expense of $4.0 million, operating expenses in the second quarter would have been $47.2 million, a reduction of $14.3 million, or 23.3 percent, from $61.5 million in the second quarter of 2008.
 
    EBITDA margin (or EBITDA as a percentage of revenue) was 31.9 percent, compared to 35.9 percent in the first quarter and 33.2 percent in the year-earlier quarter. Excluding the one-time litigation settlement expense of $4.0 million, EBITDA margin in the second quarter would have been 37.2 percent, the highest level since the Company’s merger in 2004.
 
    Based on the completion of the IRS income tax audits for 2005 and 2006 and certain refund claims, the Company recorded a $37.0 million reduction to income tax expense in the quarter.
 
    Capital expenses were $4.4 million, compared to $6.1 million in the first quarter of 2009.
 
    The Company’s cash balance at June 30, 2009 was $79.6 million.
“We continued to make excellent progress during the second quarter,” said Vincent D. Kelly, president and chief executive officer, “as operating results met or exceeded the majority of our performance objectives and were consistent with the financial guidance we provided earlier this year. ARPU and recurring cash flow margins rose to their highest levels in years, recurring operating expenses were further reduced, and we continued to provide cost effective and reliable wireless communications services to our customers on a profitable basis.” Kelly added: “While subscriber cancellations were higher than anticipated, due in large part to a weak economy nationwide, we continued to see lower net unit losses in our Healthcare market segment, which now represents approximately 50 percent of our customer base.”
Kelly said USA Mobility again returned capital to stockholders in the second quarter in the form of cash distributions, consistent with its goal of generating sufficient free cash flow to regularly return capital to stockholders. “We

 


 

produced $25.3 million in cash from operations in the quarter, allowing us to pay a regular quarterly cash distribution of $0.25 per share on June 18, 2009, representing a return of capital to our stockholders of approximately $5.7 million. Including the second quarter distribution, we have now returned $311.1 million to stockholders over the past four years.”
Thomas L. Schilling, chief operating officer and chief financial officer, said the Company continued to reduce operating expenses during the second quarter through a combination of internal consolidations and company-wide cost control initiatives. “Absent the one-time litigation settlement expense of $4.0 million, operating expenses (excluding depreciation, amortization and accretion) decreased 23.3 percent from the year-earlier quarter, once again outpacing the year-over-year decline in revenue of 18.4 percent. In addition,” Schilling noted, “excluding the one-time litigation settlement expense, second quarter operating expenses as a percentage of revenue were at their lowest level in more than four years.”
Commenting on the Company’s financial expectations for the balance of the year, Schilling said, “Based on our performance through the first half of the year, we are revising our financial guidance for 2009 to revenue between $286 million to $291 million, operating expenses (excluding depreciation, amortization and accretion) between $194 million to $197 million, and capital expenses between $16 million to $18 million.
* * * * * * * * *
USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Thursday, July 30, 2009. The dial-in number for the call is 888-801-6494 (toll-free) or 913-312-0970 (toll). The pass code for the call is 8045078. A replay of the call will be available from 3:00 p.m. ET on July 30 until 11:59 p.m. on Thursday, August 13. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 8045078.
* * * * * * * * *
About USA Mobility
USA Mobility, Inc., headquartered in Alexandria, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare, government, large enterprise and emergency response sectors. As a single-source provider, USA Mobilitys focus is on the business-to-business marketplace and supplying wireless connectivity solutions to a majority of the Fortune 1000 companies. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. In addition, USA Mobility offers mobile voice and data services through Sprint Nextel, including BlackBerry® smartphones and GPS location applications. The Company’s product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility also offers M2M (machine-to-machine) telemetry solutions for numerous applications that include asset tracking, utility meter reading and other remote device monitoring applications on a national scale. For further information visit www.usamobility.com.

 


 

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.
Tables to Follow

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

(unaudited and in thousands, except share and per share amounts)
                                                   
    For the three months ended  
    3/31/08     6/30/08     9/30/08     12/31/08     3/31/09       6/30/09  
Revenues:
                                                 
Paging service
  $ 86,773     $ 83,360     $ 80,533     $ 75,989     $ 72,021       $ 67,972  
Cellular
    1,859       1,547       1,494       993       991         775  
Product sales
    4,871       5,741       5,014       5,863       5,271         5,269  
Other
    1,255       1,427       1,316       1,413       1,408         1,129  
                     
Total revenues
    94,758       92,075       88,357       84,258       79,691         75,145  
                     
 
                                                 
Operating expenses:
                                                 
Cost of products sold
    1,081       1,408       1,291       1,812       1,669         1,421  
Service, rental and maintenance
    33,969       31,583       29,069       28,199       22,955         21,290  
Selling and marketing
    7,836       7,549       6,756       6,144       6,062         5,600  
General and administrative
    21,808       20,782       20,631       18,289       20,186         22,801  
Severance and restructuring
    145       153       5,063       (35 )     190         52  
Depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270         11,174  
Goodwill impairment
    188,170                                  
                     
Total operating expenses
    265,522       73,149       73,885       66,159       62,332         62,338  
                     
% of total revenues
    280.2 %     79.4 %     83.6 %     78.5 %     78.2 %       83.0 %
 
                                                 
                     
Operating (loss) income
    (170,764 )     18,926       14,472       18,099       17,359         12,807  
                     
% of total revenues
    -180.2 %     20.6 %     16.4 %     21.5 %     21.8 %       17.0 %
 
                                                 
Interest income, net
    578       672       471       79       26         28  
Other income (expense), net
    125       202       205       90       112         (42 )
                     
(Loss) income before income tax expense (benefit)
    (170,061 )     19,800       15,148       18,268       17,497         12,793  
Income tax expense (benefit)
    7,739       9,528       12,730       10,235       7,516         (31,953 )
                     
Net (loss) income
  $ (177,800 )   $ 10,272     $ 2,418     $ 8,033     $ 9,981       $ 44,746  
                     
 
                                                 
Basic net (loss) income per common share
  $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43       $ 1.96  
                     
Diluted net (loss) income per common share
  $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43       $ 1.93  
                     
 
                                                 
Basic weighted average common shares outstanding
    27,459,068       27,474,156       27,474,156       25,348,440       23,134,072         22,858,573  
                     
Diluted weighted average common shares outstanding
    27,459,068       27,600,976       27,602,296       25,444,277       23,479,796         23,200,736  
                     
 
                                                 
Reconciliation of operating (loss) income to EBITDA (b):
                                                 
Operating (loss) income
  $ (170,764 )   $ 18,926     $ 14,472     $ 18,099     $ 17,359       $ 12,807  
Add back: depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270         11,174  
Add back: goodwill impairment
    188,170                                  
                     
EBITDA
  $ 29,919     $ 30,600     $ 25,547     $ 29,849     $ 28,629       $ 23,981  
                     
% of total revenues
    31.6 %     33.2 %     28.9 %     35.4 %     35.9 %       31.9 %
 
(a)   Slight variations in totals are due to rounding.
 
(b)   EBITDA or earnings before interest, taxes, depreciation, amortization, accretion and goodwill impairment is a non-GAAP measure and is presented for analytical purposes only.

 


 

USA MOBILITY, INC.
UNITS IN SERVICE ACTIVITY (a)

(unaudited and in thousands)
                                                   
    For the three months ended
    3/31/08   6/30/08   9/30/08   12/31/08   3/31/09     6/30/09
Units in service
                                                 
 
                                                 
Beginning units in service
                                                 
Direct one-way
    2,854       2,733       2,614       2,490       2,349         2,198  
Direct two-way
    221       206       196       184       171         157  
                       
Total direct
    3,075       2,939       2,810       2,674       2,520         2,355  
                       
Indirect one-way
    312       286       261       227       196         161  
Indirect two-way
    98       108       105       101       99         91  
                       
Total indirect
    410       394       366       328       295         252  
                       
Total beginning units in service
    3,485       3,333       3,176       3,002       2,815         2,607  
                       
 
                                                 
Gross placements
                                                 
Direct one-way
    77       90       76       61       67         74  
Direct two-way
    8       11       8       7       6         7  
                       
Total direct
    85       101       84       68       73         81  
                       
Indirect one-way
    17       22       12       8       8         9  
Indirect two-way
    16       7       7       6       4         2  
                       
Total indirect
    33       29       19       14       12         11  
                       
Total gross placements
    118       130       103       82       85         92  
                       
 
                                                 
Gross disconnects
                                                 
Direct one-way
    (199 )     (209 )     (199 )     (202 )     (218 )       (193 )
Direct two-way
    (22 )     (21 )     (20 )     (20 )     (20 )       (17 )
                       
Total direct
    (221 )     (230 )     (219 )     (222 )     (238 )       (210 )
                       
Indirect one-way
    (44 )     (47 )     (47 )     (39 )     (43 )       (31 )
Indirect two-way
    (5 )     (10 )     (11 )     (8 )     (12 )       (9 )
                       
Total indirect
    (49 )     (57 )     (58 )     (47 )     (55 )       (40 )
                       
Total gross disconnects
    (270 )     (287 )     (277 )     (269 )     (293 )       (250 )
                       
 
                                                 
Net gain (loss)
                                                 
Direct one-way
    (122 )     (119 )     (123 )     (142 )     (151 )       (119 )
Direct two-way
    (14 )     (10 )     (12 )     (12 )     (14 )       (10 )
                       
Total direct
    (136 )     (129 )     (135 )     (154 )     (165 )       (129 )
                       
Indirect one-way
    (27 )     (25 )     (35 )     (31 )     (35 )       (22 )
Indirect two-way
    11       (3 )     (4 )     (2 )     (8 )       (7 )
                       
Total indirect
    (16 )     (28 )     (39 )     (33 )     (43 )       (29 )
                       
Total net change
    (152 )     (157 )     (174 )     (187 )     (208 )       (158 )
                       
 
                                                 
Ending units in service
                                                 
Direct one-way
    2,732       2,614       2,491       2,349       2,198         2,079  
Direct two-way
    207       196       184       171       157         147  
                       
Total direct
    2,939       2,810       2,675       2,520       2,355         2,226  
                       
Indirect one-way
    285       261       226       196       161         139  
Indirect two-way
    109       105       101       99       91         84  
                       
Total indirect
    394       366       327       295       252         223  
                       
Total ending units in service
    3,333       3,176       3,002       2,815       2,607         2,449  
                       
 
(a)   Slight variations in totals are due to rounding.

 


 

USA MOBILITY, INC.
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)

(unaudited)
                                                   
    For the three months ended  
    3/31/08     6/30/08     9/30/08     12/31/08     3/31/09       6/30/09  
ARPU
                                                 
Direct one-way
  $ 7.83     $ 7.85     $ 8.08     $ 8.09     $ 8.11       $ 8.18  
Direct two-way
    23.68       23.90       23.78       23.77       23.68         23.62  
                     
Total direct
    8.95       8.97       9.16       9.16       9.15         9.21  
 
                                                 
Indirect one-way
    4.10       4.57       4.79       5.12       7.05         7.43  
Indirect two-way
    7.52       7.08       5.35       4.53       4.58         5.19  
                     
Total indirect
    4.97       5.28       4.96       4.93       6.19         6.60  
 
                                                 
Total one-way
    7.47       7.54       7.79       7.85       8.03         8.14  
Total two-way
    18.44       18.07       17.29       16.84       16.66         16.86  
                     
Total paging ARPU
  $ 8.49     $ 8.54     $ 8.69     $ 8.71     $ 8.86       $ 8.96  
                     
 
                                                 
Gross disconnect rate (b)
                                                 
Direct one-way
    -7.0 %     -7.6 %     -7.6 %     -8.1 %     -9.3 %       -8.8 %
Direct two-way
    -10.2 %     -10.4 %     -10.2 %     -10.6 %     -11.8 %       -11.0 %
                     
Total direct
    -7.2 %     -7.8 %     -7.8 %     -8.3 %     -9.5 %       -8.9 %
 
                                                 
Indirect one-way
    -13.9 %     -16.4 %     -17.9 %     -17.3 %     -22.0 %       -19.4 %
Indirect two-way
    -5.3 %     -8.8 %     -10.3 %     -7.7 %     -11.6 %       -9.1 %
                     
Total indirect
    -11.8 %     -14.3 %     -15.7 %     -14.3 %     -18.5 %       -15.6 %
 
                                                 
Total one-way
    -7.7 %     -8.5 %     -8.6 %     -8.9 %     -10.3 %       -9.5 %
Total two-way
    -8.7 %     -9.8 %     -10.2 %     -9.6 %     -11.7 %       -10.3 %
                     
Total paging gross disconnect rate
    -7.7 %     -8.6 %     -8.7 %     -9.0 %     -10.4 %       -9.6 %
                     
 
                                                 
Net gain (loss) rate (c)
                                                 
Direct one-way
    -4.3 %     -4.3 %     -4.7 %     -5.7 %     -6.4 %       -5.4 %
Direct two-way
    -6.4 %     -5.2 %     -6.1 %     -6.8 %     -8.5 %       -6.4 %
                     
Total direct
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %       -5.5 %
 
                                                 
Indirect one-way
    -8.5 %     -8.6 %     -13.2 %     -13.7 %     -17.8 %       -13.7 %
Indirect two-way
    11.0 %     -2.4 %     -4.1 %     -1.5 %     -8.2 %       -7.2 %
                     
Total indirect
    -3.9 %     -6.9 %     -10.6 %     -10.0 %     -14.6 %       -11.3 %
 
                                                 
Total one-way
    -4.7 %     -4.8 %     -5.5 %     -6.4 %     -7.3 %       -6.0 %
Total two-way
    -1.1 %     -4.2 %     -5.4 %     -4.9 %     -8.4 %       -6.7 %
                     
Total paging net gain (loss) rate
    -4.4 %     -4.7 %     -5.5 %     -6.2 %     -7.4 %       -6.0 %
                     
 
(a)   Slight variations in totals are due to rounding.
 
(b)   Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
 
(c)   Net gain (loss) rate is net current period placements and disconnected units in service divided by prior period ending units in service.

 


 

USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)

(unaudited)
                                                   
    For the three months ended
    3/31/08   6/30/08   9/30/08   12/31/08   3/31/09     6/30/09
Gross placement rate (b)
                                                 
Healthcare
    3.3 %     4.8 %     3.8 %     3.0 %     3.7 %       4.4 %
Government
    2.2 %     2.1 %     2.2 %     2.1 %     1.7 %       2.4 %
Large enterprise
    2.4 %     2.3 %     2.2 %     2.1 %     2.4 %       2.2 %
Other
    2.5 %     2.6 %     2.4 %     2.2 %     2.4 %       2.5 %
                       
Total direct
    2.8 %     3.4 %     3.0 %     2.5 %     2.9 %       3.4 %
Total indirect
    8.0 %     7.4 %     5.1 %     4.4 %     3.9 %       4.3 %
                       
Total
    3.4 %     3.9 %     3.2 %     2.7 %     3.0 %       3.5 %
                       
 
                                                 
Gross disconnect rate (b)
                                                 
Healthcare
    -5.1 %     -5.8 %     -6.0 %     -6.4 %     -6.8 %       -6.2 %
Government
    -6.7 %     -8.5 %     -8.5 %     -9.3 %     -9.9 %       -10.7 %
Large enterprise
    -8.6 %     -9.2 %     -9.2 %     -8.9 %     -13.3 %       -13.0 %
Other
    -10.7 %     -10.5 %     -10.1 %     -11.4 %     -13.0 %       -12.4 %
                       
Total direct
    -7.2 %     -7.8 %     -7.8 %     -8.3 %     -9.5 %       -8.9 %
Total indirect
    -11.8 %     -14.3 %     -15.7 %     -14.3 %     -18.5 %       -15.6 %
                       
Total
    -7.7 %     -8.6 %     -8.7 %     -9.0 %     -10.4 %       -9.6 %
                       
 
                                                 
Net loss rate (b)
                                                 
Healthcare
    -1.7 %     -0.9 %     -2.1 %     -3.4 %     -3.1 %       -1.8 %
Government
    -4.5 %     -6.4 %     -6.3 %     -7.1 %     -8.2 %       -8.4 %
Large enterprise
    -6.2 %     -6.9 %     -7.0 %     -6.8 %     -10.9 %       -10.9 %
Other
    -8.2 %     -7.9 %     -7.8 %     -9.2 %     -10.6 %       -10.0 %
                       
Total direct
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %       -5.5 %
Total indirect
    -3.9 %     -6.9 %     -10.6 %     -10.0 %     -14.6 %       -11.3 %
                       
Total
    -4.4 %     -4.7 %     -5.5 %     -6.2 %     -7.4 %       -6.0 %
                       
 
                                                 
End of period units in service % of total (b)
                                                 
Healthcare
    38.3 %     40.0 %     41.5 %     42.8 %     44.9 %       49.8 %
Government
    17.9 %     17.7 %     17.6 %     17.4 %     17.2 %       15.6 %
Large enterprise
    13.1 %     12.8 %     12.6 %     12.5 %     12.0 %       11.8 %
Other
    18.9 %     18.0 %     17.4 %     16.8 %     16.2 %       13.7 %
                       
Total direct
    88.2 %     88.5 %     89.1 %     89.5 %     90.3 %       90.9 %
Total indirect
    11.8 %     11.5 %     10.9 %     10.5 %     9.7 %       9.1 %
                       
Total
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %       100.0 %
                       
 
(a)   Slight variations in totals are due to rounding.
 
(b)   Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.

 


 

USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION — DIRECT UNITS IN SERVICE AND CELLULAR ACTIVATIONS (a)

(unaudited)
                                                   
    For the three months ended  
    3/31/08     6/30/08     9/30/08     12/31/08     3/31/09       6/30/09  
Account size ending units in service (000’s)
                                                 
1 to 3 units
    184       172       159       149       137         126  
4 to 10 units
    112       104       97       89       82         75  
11 to 50 units
    276       255       236       218       199         183  
51 to 100 units
    164       155       144       133       125         112  
101 to 1,000 units
    784       750       716       681       626         580  
>1,000 units
    1,419       1,374       1,323       1,250       1,186         1,150  
                   
Total
    2,939       2,810       2,675       2,520       2,355         2,226  
                   
 
                                                 
End of period units in service % of total direct
                                                 
1 to 3 units
    6.2 %     6.1 %     5.9 %     5.9 %     5.8 %       5.7 %
4 to 10 units
    3.8 %     3.7 %     3.6 %     3.5 %     3.5 %       3.4 %
11 to 50 units
    9.4 %     9.1 %     8.8 %     8.7 %     8.4 %       8.2 %
51 to 100 units
    5.6 %     5.5 %     5.4 %     5.3 %     5.3 %       5.0 %
101 to 1,000 units
    26.7 %     26.7 %     26.8 %     27.0 %     26.6 %       26.0 %
>1,000 units
    48.3 %     48.9 %     49.5 %     49.6 %     50.4 %       51.7 %
                   
Total
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %       100.0 %
                   
 
                                                 
Account size net loss rate
                                                 
1 to 3 units
    -7.8 %     -6.9 %     -7.0 %     -6.9 %     -7.8 %       -7.9 %
4 to 10 units
    -6.5 %     -7.2 %     -6.7 %     -7.8 %     -8.8 %       -7.9 %
11 to 50 units
    -7.6 %     -7.4 %     -7.4 %     -7.6 %     -8.9 %       -8.2 %
51 to 100 units
    -6.9 %     -5.5 %     -7.5 %     -7.2 %     -6.2 %       -10.1 %
101 to 1,000 units
    -5.2 %     -4.3 %     -4.6 %     -4.9 %     -8.0 %       -7.4 %
>1,000 units
    -2.4 %     -3.2 %     -3.7 %     -5.5 %     -5.1 %       -3.1 %
                   
Total
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %       -5.5 %
                   
 
                                                 
Account size ARPU
                                                 
1 to 3 units
  $ 14.66     $ 14.62     $ 14.72     $ 14.68     $ 14.73       $ 15.07  
4 to 10 units
    13.56       13.56       13.92       13.89       14.00         14.30  
11 to 50 units
    10.99       11.03       11.40       11.35       11.41         11.65  
51 to 100 units
    9.57       9.76       10.36       10.25       10.30         10.13  
101 to 1,000 units
    8.23       8.45       8.91       8.98       8.94         9.04  
>1,000 units
    7.75       7.70       7.72       7.75       7.77         7.80  
                   
Total
  $ 8.95     $ 8.97     $ 9.16     $ 9.16     $ 9.15       $ 9.21  
                   
 
                                                 
Cellular revenue
                                                 
Number of activations
    4,509       3,970       3,779       2,287       2,389         2,207  
                   
Revenue from cellular services (000’s)
  $ 1,859     $ 1,547     $ 1,494     $ 993     $ 991       $ 775  
                   
 
(a)   Slight variations in totals are due to rounding.

 


 

USA MOBILITY, INC.
CONSOLIDATED OPERATING EXPENSES SUPPLEMENTAL INFORMATION (a)

(unaudited and in thousands)
                                                   
    For the three months ended  
    3/31/08     6/30/08     9/30/08     12/31/08     3/31/09       6/30/09  
                                       
Cost of products sold
  $ 1,081     $ 1,408     $ 1,291     $ 1,812     $ 1,669       $ 1,421  
                   
 
                                                 
Service, rental and maintenance
                                                 
Site rent
    17,792       16,756       15,463       14,785       11,218         10,223  
Telecommunications
    6,204       5,503       5,072       5,307       4,485         4,284  
Payroll and related
    6,683       6,504       5,827       5,490       5,631         5,286  
Stock based compensation
    17       19       19       18       49         7  
Other
    3,273       2,801       2,688       2,599       1,572         1,490  
                   
Total service, rental and maintenance
    33,969       31,583       29,069       28,199       22,955         21,290  
                   
 
                                                 
Selling and marketing
                                                 
Payroll and related
    5,164       4,797       4,317       4,145       4,175         3,711  
Commissions
    1,724       2,037       1,742       1,213       1,201         1,422  
Stock based compensation
    39       50       49       60       109         26  
Other
    909       665       648       726       577         441  
                   
Total selling and marketing
    7,836       7,549       6,756       6,144       6,062         5,600  
                   
 
                                                 
General and administrative
                                                 
Payroll and related
    8,682       8,129       7,847       7,992       9,075         7,754  
Stock based compensation
    190       247       253       298       569         241  
Bad debt
    711       691       680       618       850         750  
Facility rent
    2,073       2,199       1,937       1,689       1,628         1,446  
Telecommunications
    1,048       983       936       834       771         721  
Outside services
    5,359       4,584       4,632       4,519       4,514         4,063  
Taxes, licenses and permits
    1,958       2,055       2,216       372       1,101         1,695  
Other
    1,787       1,894       2,130       1,967       1,678         6,131  
                   
Total general and administrative
    21,808       20,782       20,631       18,289       20,186         22,801  
                   
 
                                                 
Severance and restructuring
    145       153       5,063       (35 )     190         52  
Depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270         11,174  
Goodwill impairment
    188,170                                  
                   
Operating expenses
  $ 265,522     $ 73,149     $ 73,885     $ 66,159     $ 62,332       $ 62,338  
                   
 
                                                 
Capital expenditures
  $ 3,988     $ 3,892     $ 6,214     $ 4,242     $ 6,054       $ 4,355  
                                       
 
(a)   Slight variations in totals are due to rounding.

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(in thousands)
                   
    12/31/08       6/30/09  
              (unaudited)  
Assets
                 
Current assets:
                 
Cash and cash equivalents
  $ 75,032       $ 79,570  
Accounts receivable, net
    25,118         20,919  
Tax receivable
            4,424  
Prepaid expenses and other
    6,226         4,656  
Deferred income tax assets, net
    6,025         1,805  
 
           
Total current assets
    112,401         111,374  
Property and equipment, net
    57,867         50,482  
Intangible assets, net
    6,520         3,577  
Deferred income tax assets, net
    59,599         46,802  
Other assets
    4,973         3,823  
 
           
Total assets
  $ 241,360       $ 216,058  
 
           
 
                 
Liabilities and stockholders’ equity
                 
Current liabilities:
                 
Accounts payable and accrued liabilities
  $ 40,983       $ 37,659  
Customer deposits
    1,203         1,028  
Deferred revenue
    9,958         8,169  
 
           
Total current liabilities
    52,144         46,856  
Other long-term liabilities
    48,478         11,128  
 
           
Total liabilities
    100,622         57,984  
 
           
Stockholders’ equity:
                 
Preferred stock
             
Common stock
    2         2  
Additional paid-in capital
    140,736         138,020  
Retained earnings
            20,052  
 
           
Total stockholders’ equity
    140,738         158,074  
 
           
Total liabilities and stockholders’ equity
  $ 241,360       $ 216,058  
 
           
 
(a)   Slight variations in totals are due to rounding.

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(unaudited and in thousands)
                   
    For the six months ended  
    6/30/08       6/30/09  
Cash flows from operating activities:
                 
Net (loss) income
  $ (167,528 )     $ 54,727  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
                 
Depreciation, amortization and accretion
    24,187         22,444  
Goodwill impairment
    188,170          
Deferred income tax expense
    15,759         17,012  
Amortization of stock based compensation
    562         1,001  
Provisions for doubtful accounts, service credits and other
    3,022         2,507  
Non-cash transaction tax accrual adjustments
    (1,228 )       (1,949 )
Loss on disposals of property and equipment
    24         153  
Changes in assets and liabilities:
                 
Accounts receivable
    (1,633 )       1,692  
Prepaid expenses and other
    1,617         (2,922 )
Intangibles and other long-term assets
    1,490         (143 )
Accounts payable and accrued liabilities
    (9,798 )       (2,261 )
Customer deposits and deferred revenue
    (1,154 )       (1,964 )
Other long-term liabilities
            (37,654 )
 
           
Net cash provided by operating activities
  $ 53,490       $ 52,643  
 
           
 
                 
Cash flows from investing activities:
                 
Purchases of property and equipment
    (7,880 )       (10,409 )
Proceeds from disposals of property and equipment
    169         23  
 
           
Net cash used in investing activities
  $ (7,711 )     $ (10,386 )
 
           
 
                 
Cash flows from financing activities:
                 
Cash distributions to stockholders
    (24,565 )       (34,182 )
Purchase of common stock
            (3,537 )
 
           
Net cash used in financing activities
  $ (24,565 )     $ (37,719 )
 
           
 
                 
Net increase in cash and cash equivalents
    21,214         4,538  
Cash and cash equivalents, beginning of period
    64,542         75,032  
 
           
Cash and cash equivalents, end of period
  $ 85,756       $ 79,570  
 
           
 
                 
Supplemental disclosure:
                 
Interest paid
  $ 3       $  
 
           
Income taxes paid (state and local)
  $ 420       $ 385  
 
           
 
(a)   Slight variations in totals are due to rounding.