EX-99.1 2 w77525exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(USAMOBILITY LOGO)
News Release
         
For Immediate Release
  Contact:   Bob Lougee (703) 721-3080
Wednesday, February 24, 2010
      bob.lougee@usamobility.com
USA Mobility Reports Fourth Quarter and 2009 Operating Results;
Announces Regular Quarterly Cash Distribution
Subscriber and Revenue Trends Improve; Operating Expenses Decline;
$45.5 Million in Capital Returned to Stockholders in 2009
Alexandria, VA (February 24, 2010) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the fourth quarter and year ended December 31, 2009.
In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share. The cash distribution will be paid on March 31, 2010 to stockholders of record on March 17, 2010. The Company expects the entire amount of the cash distribution to be paid as a return of capital.
For the fourth quarter, total revenues were $65.4 million, compared to $69.5 million in the third quarter of 2009 and $84.3 million in the fourth quarter of 2008. EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) was $21.0 million in the fourth quarter of 2009, compared to $29.8 million in the year-earlier quarter. Fourth quarter operating income was $12.2 million, compared to $18.1 million in the fourth quarter of 2008, while net income was $3.6 million, or $0.16 per fully diluted share, compared to $8.0 million, or $0.32 per fully diluted share, in the year-earlier quarter.
For the full-year 2009, revenues totaled $289.7 million, compared to $359.4 million in 2008, while EBITDA was $99.3 million, or 34.3 percent of revenue, compared to $115.9 million, or 32.2 percent of revenue, in the prior year. The Company reported net income for 2009 of $67.6 million, or $2.90 per fully diluted share, compared to a net loss of $157.1 million, or $5.83 per fully diluted share, for 2008. The prior year loss

 


 

resulted from the goodwill impairment in the first quarter of 2008 for which the Company incurred a $188.2 million non-cash expense to write-off its entire goodwill balance. Absent the goodwill write-down, net income for 2008 would have been $31.1 million, or $1.15 per fully diluted share.
Key results and highlights for the fourth quarter and 2009 included:
    Net unit losses were 115,000 in the fourth quarter, compared to 152,000 in the third quarter and 187,000 in the year-earlier quarter, while the quarterly rate of unit erosion decreased to 5.0 percent from 6.2 percent in the third quarter. The annual rate of unit erosion was 22.5 percent in 2009, compared to 19.2 percent in 2008. Net unit losses were 633,000 in 2009 versus 670,000 in 2008. Units in service at year-end 2009 totaled 2,182,000, compared to 2,815,000 a year earlier.
 
    The quarterly rate of revenue erosion improved to 5.9 percent in the fourth quarter from 7.5 percent in the third quarter. The year-over-year rate of revenue decline increased to 19.4 percent in 2009 from 15.3 percent in 2008.
 
    Operating expenses (excluding depreciation, amortization, accretion and goodwill impairment) were $44.4 million for the fourth quarter, a reduction of $10.1 million, or 18.5 percent, from $54.4 million in the year-earlier quarter. For the full year, operating expenses (excluding depreciation, amortization, accretion and goodwill impairment) declined by $53.1 million, or 21.8 percent, to $190.4 million from $243.5 million in 2008. Expense reduction during the year was largely the result of continued network rationalization, staff reductions and implementation of other company-wide cost efficiencies.
 
    Average revenue per unit (ARPU) was $8.88 for the fourth quarter, compared to $8.89 in the third quarter and $8.71 in the fourth quarter of 2008. For the year, ARPU totaled $8.77, compared to $8.64 in 2008.
 
    EBITDA as a percentage of revenue, or EBITDA margin, was 32.2 percent in the fourth quarter, compared to 35.4 percent the year-earlier quarter.
 
    Capital expenses were $5.0 million in the fourth quarter versus $4.2 million in the year-earlier quarter. For 2009, capital expenses totaled $17.2 million, compared to $18.3 million in 2008.
 
    The Company generated $84.8 million in cash during the year from operating and investing activities and had a cash balance of $109.6 million at December 31, 2009.
 
    During the year the Company distributed to stockholders total cash distributions of $2.00 per share of common stock, representing a return of capital to stockholders of $45.5 million.
 
    The number of full-time equivalent employees declined from 811 at the beginning of the year to 672 at year-end as a result of various consolidation and expense control initiatives.

 


 

“We again made excellent progress in the fourth quarter and throughout 2009,” said Vincent D. Kelly, president and chief executive officer. “Despite a struggling economy, high unemployment and ongoing industry challenges, we continued to operate the Company profitably while meeting our primary performance goals, including reducing expenses, increasing revenue per unit and operating margins, enhancing organizational efficiencies and concentrating selling and marketing around our core market segments, especially Healthcare. At the same time, we met our goal of generating a high enough level of cash flow to return significant capital to stockholders.”
Kelly said subscriber and revenue trends, which had deteriorated during the first three quarters of 2009, improved in the fourth quarter as general economic conditions began to stabilize. “We were pleased to see modest improvement in the pace of subscriber and revenue erosion during the quarter as our net loss rates reached their lowest level in more than 18 months. Whether these trends are sustainable, it’s too early to say,” he added; “however, we are encouraged by the positive results and hopeful that these early signs of an economic recovery will continue and favorably impact our future operating performance. Clearly, we are much more optimistic about subscriber trends today than we were a year ago.”
During 2009, Kelly noted, the Company continued to focus its sales and marketing efforts around its Healthcare market segment, which represented 57.6 percent of the Company’s direct subscriber base at year-end as well as 51.5 percent of direct paging revenue in the fourth quarter. “Healthcare continues to be our best performing market segment, contributing two-thirds of our direct gross placements in the fourth quarter, while net churn among Healthcare accounts remained significantly lower than for all other subscriber segments.”
Kelly said USA Mobility paid cash distributions to stockholders totaling $2.00 per share during 2009, including regular quarterly cash distributions of $0.25 per share and a special cash distribution of $1.00 per share in the first quarter, representing a return of capital totaling $45.5 million. “We were delighted to be able to return capital to stockholders during the year consistent with our stated capital allocation strategy. Over the past five years we have now returned $322.4 million to our stockholders. In addition,” he noted, “we repurchased $42.9 million of our common stock since the inception of our stock buy-back program.” Kelly said the Company expects to continue to operate the business consistent with its goal of producing sufficient cash flow to return capital to stockholders. “However,” he cautioned, “the rate at which the Company will continue to return capital to stockholders, either in the form of cash distributions or share repurchases, will depend largely on future operating results as well as economic factors and other business opportunities.”

 


 

Thomas L. Schilling, chief operating officer and chief financial officer, said: “Overall, our 2009 operating results were very strong. Although we continued to operate in a challenging environment, we expanded our EBITDA and net operating cash flow after investing activities to 34.3 percent and 29.3 percent, respectively, in the face of a 19.4 percent decline in revenue. At the same time, ARPU remained strong, operating and capital expenses declined, and we generated net operating cash flow after investing activities of $84.8 million.”
Schilling added: “For the year, operating expenses (excluding depreciation, amortization, accretion and goodwill impairment) declined 21.8 percent from 2008, outpacing the 19.4 percent year-over-year decline in revenues. In fact, costs in 2009 declined faster than revenues for the fourth straight year. Expense savings were largely the result of significant progress in our network rationalization program, including lower site rents, combined with staff reductions and various cost savings initiatives implemented throughout the Company.” Schilling noted positive results for the fourth quarter included “improvement in the rate of unit and revenue erosion to 5.0 percent and 5.9 percent, respectively, from 6.2 percent and 7.5 percent in the third quarter, while total paging ARPU increased to $8.88 in the fourth quarter from $8.71 in the fourth quarter of 2008.”
Commenting on the Company’s financial guidance, Schilling said: “We are pleased the financial guidance we provided for 2009 was either within or better than our target estimates. “Total revenue of $289.7 million was within our guidance range of $286 million to $291 million; operating expenses (excluding depreciation, amortization and accretion) of $190.4 million were better than the guidance range of $194 million to $197 million; and capital expenses of $17.2 million were within the guidance range of $16 million to $18 million. With respect to guidance for 2010, the Company expects revenue to be in a range from $228 million to $238 million, operating expenses (excluding depreciation, amortization and accretion) to be in a range from $158 million to $163 million, and capital expenses in a range from $10 million to $12 million.”
* * * * * * * * *
USA Mobility plans to host a conference call for investors on its fourth quarter and 2009 results at 10:00 a.m. Eastern Time on Thursday, February 25, 2010. The dial-in number for the call is 877-419-6600 (toll-free) or 719-325-4839 (toll). The pass code for the call is 1151304. A replay of the call will be available from 3:00 p.m. ET on February 25 until 11:59 p.m. on Thursday, March 11. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 1151304.
* * * * * * * * *

 


 

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 Mobility’s focus is on the business-to-business marketplace and supplying wireless connectivity solutions. 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   9/30/09     12/31/09
Revenues:
                                                                 
Paging service
  $ 86,773     $ 83,360     $ 80,533     $ 75,989     $ 72,021     $ 67,972     $ 63,308       $ 59,657  
Cellular
    1,859       1,547       1,494       993       991       775       980         795  
Product sales
    4,871       5,741       5,014       5,863       5,271       5,269       4,354         3,927  
Other
    1,255       1,427       1,316       1,413       1,408       1,129       856         993  
           
Total revenues
    94,758       92,075       88,357       84,258       79,691       75,145       69,498         65,372  
           
 
                                                                 
Operating expenses:
                                                                 
Cost of products sold
    1,081       1,408       1,291       1,812       1,669       1,421       1,593         1,513  
Service, rental and maintenance
    33,969       31,583       29,069       28,199       22,955       21,290       20,950         20,115  
Selling and marketing
    7,836       7,549       6,756       6,144       6,062       5,600       5,198         4,955  
General and administrative
    21,808       20,782       20,631       18,289       20,186       22,801       16,050         15,289  
Severance and restructuring
    145       153       5,063       (35 )     190       52       15         2,480  
Depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270       11,174       10,689         8,781  
Goodwill impairment
    188,170                                              
           
Total operating expenses
    265,522       73,149       73,885       66,159       62,332       62,338       54,495         53,133  
           
% of total revenues
    280.2 %     79.4 %     83.6 %     78.5 %     78.2 %     83.0 %     78.4 %       81.3 %
 
                                                                 
           
Operating (loss) income
    (170,764 )     18,926       14,472       18,099       17,359       12,807       15,003         12,239  
           
% of total revenues
    -180.2 %     20.6 %     16.4 %     21.5 %     21.8 %     17.0 %     21.6 %       18.7 %
 
                                                                 
Interest income (expense), net
    578       672       471       79       26       28       16         (1 )
Other income (expense), net
    125       202       205       90       112       (42 )     185         275  
           
(Loss) income before income tax expense (benefit)
    (170,061 )     19,800       15,148       18,268       17,497       12,793       15,204         12,513  
Income tax expense (benefit)
    7,739       9,528       12,730       10,235       7,516       (31,953 )     6,003         8,883  
           
Net (loss) income
  $ (177,800 )   $ 10,272     $ 2,418     $ 8,033     $ 9,981       44,746     $ 9,201       $ 3,630  
           
 
                                                                 
Basic net (loss) income per common share (b)
  $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43     $ 1.96     $ 0.40       $ 0.16  
           
Diluted net (loss) income per common share (b)
  $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43     $ 1.93     $ 0.40       $ 0.16  
           
 
                                                                 
Basic weighted average common shares outstanding
    27,459,068       27,474,156       27,474,156       25,348,440       23,134,072       22,858,573       22,856,951         22,830,040  
           
Diluted weighted average common shares outstanding
    27,459,068       27,600,976       27,602,296       25,444,277       23,479,796       23,200,736       23,194,360         23,167,729  
           
 
                                                                 
Reconciliation of operating (loss) income to EBITDA (c):
                                                                 
Operating (loss) income
  $ (170,764 )   $ 18,926     $ 14,472     $ 18,099     $ 17,359     $ 12,807     $ 15,003       $ 12,239  
Add back: depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270       11,174       10,689         8,781  
Add back: goodwill impairment
    188,170                                              
           
EBITDA
  $ 29,919     $ 30,600     $ 25,547     $ 29,849     $ 28,629     $ 23,981     $ 25,692       $ 21,020  
           
% of total revenues
    31.6 %     33.2 %     28.9 %     35.4 %     35.9 %     31.9 %     37.0 %       32.2 %
 
                                                                 
 
(a)   Slight variations in totals are due to rounding.
 
(b)   Basic and diluted net (loss) income per common share is computed independently for each period presented. As a result, the sum of the quarterly basic and diluted net (loss) income per common share for the years ended December 31, 2008 and 2009 may not equal the total computed for the year.
 
(c)   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   9/30/09     12/31/09
Units in service
                                                                 
 
                                                                 
Beginning units in service
                                                                 
Direct one-way
    2,854       2,732       2,614       2,491       2,349       2,198       2,079         1,969  
Direct two-way
    221       207       196       184       171       157       147         141  
           
Total direct
    3,075       2,939       2,810       2,675       2,520       2,355       2,226         2,110  
           
Indirect one-way
    312       285       261       226       196       161       139         116  
Indirect two-way
    98       109       105       101       99       91       84         71  
           
Total indirect
    410       394       366       327       295       252       223         187  
           
Total beginning units in service
    3,485       3,333       3,176       3,002       2,815       2,607       2,449         2,297  
           
 
                                                                 
Gross placements
                                                                 
Direct one-way
    77       90       76       60       67       74       64         55  
Direct two-way
    8       11       8       7       6       7       9         5  
           
Total direct
    85       101       84       67       73       81       73         60  
           
Indirect one-way
    17       22       12       9       8       9       7         6  
Indirect two-way
    16       7       7       6       4       2       1         2  
           
Total indirect
    33       29       19       15       12       11       8         8  
           
Total gross placements
    118       130       103       82       85       92       81         68  
           
 
                                                                 
Gross disconnects
                                                                 
Direct one-way
    (199 )     (209 )     (199 )     (202 )     (218 )     (193 )     (174 )       (143 )
Direct two-way
    (22 )     (21 )     (20 )     (20 )     (20 )     (17 )     (15 )       (13 )
           
Total direct
    (221 )     (230 )     (219 )     (222 )     (238 )     (210 )     (189 )       (156 )
           
Indirect one-way
    (44 )     (47 )     (47 )     (39 )     (43 )     (31 )     (30 )       (21 )
Indirect two-way
    (5 )     (10 )     (11 )     (8 )     (12 )     (9 )     (14 )       (6 )
           
Total indirect
    (49 )     (57 )     (58 )     (47 )     (55 )     (40 )     (44 )       (27 )
           
Total gross disconnects
    (270 )     (287 )     (277 )     (269 )     (293 )     (250 )     (233 )       (183 )
           
 
                                                                 
Net gain (loss)
                                                                 
Direct one-way
    (122 )     (119 )     (123 )     (142 )     (151 )     (119 )     (110 )       (88 )
Direct two-way
    (14 )     (10 )     (12 )     (13 )     (14 )     (10 )     (6 )       (8 )
           
Total direct
    (136 )     (129 )     (135 )     (155 )     (165 )     (129 )     (116 )       (96 )
           
Indirect one-way
    (27 )     (25 )     (35 )     (30 )     (35 )     (22 )     (23 )       (15 )
Indirect two-way
    11       (3 )     (4 )     (2 )     (8 )     (7 )     (13 )       (4 )
           
Total indirect
    (16 )     (28 )     (39 )     (32 )     (43 )     (29 )     (36 )       (19 )
           
Total net change
    (152 )     (157 )     (174 )     (187 )     (208 )     (158 )     (152 )       (115 )
           
 
                                                                 
Ending units in service
                                                                 
Direct one-way
    2,732       2,614       2,491       2,349       2,198       2,079       1,969         1,881  
Direct two-way
    207       196       184       171       157       147       141         133  
           
Total direct
    2,939       2,810       2,675       2,520       2,355       2,226       2,110         2,014  
           
Indirect one-way
    285       261       226       196       161       139       116         101  
Indirect two-way
    109       105       101       99       91       84       71         67  
           
Total indirect
    394       366       327       295       252       223       187         168  
           
Total ending units in service
    3,333       3,176       3,002       2,815       2,607       2,449       2,297         2,182  
           
 
(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   9/30/09     12/31/09
ARPU
                                                                 
Direct one-way
  $ 7.83     $ 7.85     $ 8.08     $ 8.09     $ 8.11     $ 8.18     $ 8.08       $ 8.04  
Direct two-way
    23.68       23.90       23.78       23.77       23.68       23.62       23.42         23.59  
           
Total direct
    8.95       8.97       9.16       9.16       9.15       9.21       9.10         9.06  
 
                                                                 
Indirect one-way
    4.10       4.57       4.79       5.12       7.05       7.43       7.51         7.77  
Indirect two-way
    7.52       7.08       5.35       4.53       4.58       5.19       5.49         5.14  
           
Total indirect
    4.97       5.28       4.96       4.93       6.19       6.60       6.74         6.73  
 
                                                                 
Total one-way
    7.47       7.54       7.79       7.85       8.03       8.14       8.05         8.02  
Total two-way
    18.44       18.07       17.29       16.84       16.66       16.86       17.09         17.32  
           
Total paging ARPU
  $ 8.49     $ 8.54     $ 8.69     $ 8.71     $ 8.86     $ 8.96     $ 8.89       $ 8.88  
           
 
                                                                 
Gross disconnect rate (b)
                                                                 
Direct one-way
    -7.0 %     -7.6 %     -7.6 %     -8.1 %     -9.3 %     -8.8 %     -8.4 %       -7.2 %
Direct two-way
    -10.2 %     -10.4 %     -10.2 %     -10.6 %     -11.8 %     -11.0 %     -10.2 %       -8.9 %
           
Total direct
    -7.2 %     -7.8 %     -7.8 %     -8.3 %     -9.5 %     -8.9 %     -8.5 %       -7.3 %
 
                                                                 
Indirect one-way
    -13.9 %     -16.4 %     -17.9 %     -17.3 %     -22.0 %     -19.4 %     -21.9 %       -18.9 %
Indirect two-way
    -5.3 %     -8.8 %     -10.3 %     -7.7 %     -11.6 %     -9.1 %     -16.4 %       -8.5 %
           
Total indirect
    -11.8 %     -14.3 %     -15.7 %     -14.3 %     -18.5 %     -15.6 %     -19.8 %       -14.9 %
 
                                                                 
Total one-way
    -7.7 %     -8.5 %     -8.6 %     -8.9 %     -10.3 %     -9.5 %     -9.2 %       -7.9 %
Total two-way
    -8.7 %     -9.8 %     -10.2 %     -9.6 %     -11.7 %     -10.3 %     -12.5 %       -8.8 %
           
Total paging gross disconnect rate
    -7.7 %     -8.6 %     -8.7 %     -9.0 %     -10.4 %     -9.6 %     -9.5 %       -8.0 %
           
 
                                                                 
Net gain / loss rate (c)
                                                                 
Direct one-way
    -4.3 %     -4.3 %     -4.7 %     -5.7 %     -6.4 %     -5.4 %     -5.3 %       -4.4 %
Direct two-way
    -6.4 %     -5.2 %     -6.1 %     -6.8 %     -8.5 %     -6.4 %     -4.4 %       -5.5 %
           
Total direct
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %     -5.5 %     -5.2 %       -4.5 %
 
                                                                 
Indirect one-way
    -8.5 %     -8.6 %     -13.2 %     -13.7 %     -17.8 %     -13.7 %     -16.9 %       -13.6 %
Indirect two-way
    11.0 %     -2.4 %     -4.1 %     -1.5 %     -8.2 %     -7.2 %     -14.9 %       -5.2 %
           
Total indirect
    -3.9 %     -6.9 %     -10.6 %     -10.0 %     -14.6 %     -11.3 %     -16.1 %       -10.4 %
 
                                                                 
Total one-way
    -4.7 %     -4.8 %     -5.5 %     -6.4 %     -7.3 %     -6.0 %     -6.0 %       -5.0 %
Total two-way
    -1.1 %     -4.2 %     -5.4 %     -4.9 %     -8.4 %     -6.7 %     -8.2 %       -5.4 %
           
Total paging net gain / loss rate
    -4.4 %     -4.7 %     -5.5 %     -6.2 %     -7.4 %     -6.0 %     -6.2 %       -5.0 %
           
 
(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   9/30/09     12/31/09
 
                                                                 
Gross placement rate (b)
                                                                 
Healthcare
    3.3 %     4.8 %     3.8 %     3.0 %     3.7 %     4.4 %     3.8 %       3.4 %
Government
    2.2 %     2.1 %     2.2 %     2.1 %     1.7 %     2.4 %     2.4 %       1.9 %
Large enterprise
    2.4 %     2.3 %     2.2 %     2.1 %     2.4 %     2.2 %     3.3 %       2.2 %
Other
    2.5 %     2.6 %     2.4 %     2.2 %     2.4 %     2.5 %     2.3 %       2.2 %
           
Total direct
    2.8 %     3.4 %     3.0 %     2.5 %     2.9 %     3.4 %     3.3 %       2.8 %
Total indirect
    8.0 %     7.4 %     5.1 %     4.4 %     3.9 %     4.3 %     3.7 %       4.5 %
           
Total
    3.4 %     3.9 %     3.2 %     2.7 %     3.0 %     3.5 %     3.3 %       3.0 %
           
 
                                                                 
Gross disconnect rate (b)
                                                                 
Healthcare
    -5.1 %     -5.8 %     -6.0 %     -6.4 %     -6.8 %     -6.2 %     -6.7 %       -5.5 %
Government
    -6.7 %     -8.5 %     -8.5 %     -9.3 %     -9.9 %     -10.7 %     -10.7 %       -9.4 %
Large enterprise
    -8.6 %     -9.2 %     -9.2 %     -8.9 %     -13.3 %     -13.0 %     -10.7 %       -9.4 %
Other
    -10.7 %     -10.5 %     -10.1 %     -11.4 %     -13.0 %     -12.4 %     -10.6 %       -10.1 %
           
Total direct
    -7.2 %     -7.8 %     -7.8 %     -8.3 %     -9.5 %     -8.9 %     -8.5 %       -7.3 %
Total indirect
    -11.8 %     -14.3 %     -15.7 %     -14.3 %     -18.5 %     -15.6 %     -19.8 %       -14.9 %
           
Total
    -7.7 %     -8.6 %     -8.7 %     -9.0 %     -10.4 %     -9.6 %     -9.5 %       -8.0 %
           
 
                                                                 
Net loss rate (b)
                                                                 
Healthcare
    -1.7 %     -0.9 %     -2.1 %     -3.4 %     -3.1 %     -1.8 %     -2.9 %       -2.1 %
Government
    -4.5 %     -6.4 %     -6.3 %     -7.1 %     -8.2 %     -8.4 %     -8.3 %       -7.5 %
Large enterprise
    -6.2 %     -6.9 %     -7.0 %     -6.8 %     -10.9 %     -10.9 %     -7.4 %       -7.2 %
Other
    -8.2 %     -7.9 %     -7.8 %     -9.2 %     -10.6 %     -10.0 %     -8.3 %       -7.9 %
           
Total direct
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %     -5.5 %     -5.2 %       -4.5 %
Total indirect
    -3.9 %     -6.9 %     -10.6 %     -10.0 %     -14.6 %     -11.3 %     -16.1 %       -10.4 %
           
Total
    -4.4 %     -4.7 %     -5.5 %     -6.2 %     -7.4 %     -6.0 %     -6.2 %       -5.0 %
           
 
                                                                 
End of period units in service % of total (b)
                                                                 
Healthcare
    38.3 %     40.0 %     41.5 %     42.8 %     44.9 %     49.8 %     51.5 %       53.2 %
Government
    17.9 %     17.7 %     17.6 %     17.4 %     17.2 %     15.6 %     15.3 %       14.9 %
Large enterprise
    13.1 %     12.8 %     12.6 %     12.5 %     12.0 %     11.8 %     11.8 %       11.4 %
Other
    18.9 %     18.0 %     17.4 %     16.8 %     16.2 %     13.7 %     13.2 %       12.8 %
           
Total direct
    88.2 %     88.5 %     89.1 %     89.5 %     90.3 %     90.9 %     91.8 %       92.3 %
Total indirect
    11.8 %     11.5 %     10.9 %     10.5 %     9.7 %     9.1 %     8.2 %       7.7 %
           
Total
    100.0 %     100.0 %     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   9/30/09     12/31/09
 
                                                                 
Account size ending units in service (000’s)
                                                                 
1 to 3 units
    184       172       159       149       137       126       118         109  
4 to 10 units
    112       104       97       89       82       75       70         66  
11 to 50 units
    276       255       236       218       199       183       168         158  
51 to 100 units
    164       155       144       133       125       112       104         97  
101 to 1,000 units
    784       750       716       681       626       580       546         519  
>1,000 units
    1,419       1,374       1,323       1,250       1,186       1,150       1,104         1,065  
           
Total
    2,939       2,810       2,675       2,520       2,355       2,226       2,110         2,014  
           
 
                                                                 
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 %     5.6 %       5.4 %
4 to 10 units
    3.8 %     3.7 %     3.6 %     3.5 %     3.5 %     3.4 %     3.3 %       3.3 %
11 to 50 units
    9.4 %     9.1 %     8.8 %     8.7 %     8.4 %     8.2 %     8.0 %       7.8 %
51 to 100 units
    5.6 %     5.5 %     5.4 %     5.3 %     5.3 %     5.0 %     4.9 %       4.8 %
101 to 1,000 units
    26.7 %     26.7 %     26.8 %     27.0 %     26.6 %     26.0 %     25.9 %       25.8 %
>1,000 units
    48.3 %     48.9 %     49.5 %     49.6 %     50.4 %     51.7 %     52.3 %       52.9 %
           
Total
    100.0 %     100.0 %     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 %     -6.9 %       -7.4 %
4 to 10 units
    -6.5 %     -7.2 %     -6.7 %     -7.8 %     -8.8 %     -7.9 %     -6.7 %       -6.1 %
11 to 50 units
    -7.6 %     -7.4 %     -7.4 %     -7.6 %     -8.9 %     -8.2 %     -7.7 %       -5.9 %
51 to 100 units
    -6.9 %     -5.5 %     -7.5 %     -7.2 %     -6.2 %     -10.1 %     -7.6 %       -6.8 %
101 to 1,000 units
    -5.2 %     -4.3 %     -4.6 %     -4.9 %     -8.0 %     -7.4 %     -5.9 %       -4.9 %
>1,000 units
    -2.4 %     -3.2 %     -3.7 %     -5.5 %     -5.1 %     -3.1 %     -4.0 %       -3.5 %
           
Total
    -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %     -5.5 %     -5.2 %       -4.5 %
           
 
                                                                 
Account size ARPU
                                                                 
1 to 3 units
  $ 14.66     $ 14.62     $ 14.72     $ 14.68     $ 14.73     $ 15.07     $ 14.98       $ 15.03  
4 to 10 units
    13.56       13.56       13.92       13.89       14.00       14.30       14.24         14.21  
11 to 50 units
    10.99       11.03       11.40       11.35       11.41       11.65       11.54         11.45  
51 to 100 units
    9.57       9.76       10.36       10.25       10.30       10.13       10.06         10.06  
101 to 1,000 units
    8.23       8.45       8.91       8.98       8.94       9.04       8.89         8.82  
>1,000 units
    7.75       7.70       7.72       7.75       7.77       7.80       7.76         7.79  
           
Total
  $ 8.95     $ 8.97     $ 9.16     $ 9.16     $ 9.15     $ 9.21     $ 9.10       $ 9.06  
           
 
                                                                 
Cellular revenue
                                                                 
Number of activations
    4,509       3,970       3,779       2,287       2,389       2,207       2,633         2,253  
           
Revenue from cellular services (000’s)
  $ 1,859     $ 1,547     $ 1,494     $ 993     $ 991     $ 775     $ 980       $ 795  
           
 
(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     9/30/09       12/31/09  
 
                                                                 
Cost of products sold
  $ 1,081     $ 1,408     $ 1,291     $ 1,812     $ 1,669     $ 1,421     $ 1,593       $ 1,513  
           
 
                                                                 
Service, rental and maintenance
                                                                 
Site rent
    17,792       16,756       15,463       14,785       11,218       10,223       10,422         9,871  
Telecommunications
    6,204       5,503       5,072       5,307       4,485       4,284       3,945         3,885  
Payroll and related
    6,683       6,504       5,827       5,490       5,631       5,286       4,988         4,725  
Stock based compensation
    17       19       19       18       49       7       13         12  
Other
    3,273       2,801       2,688       2,599       1,572       1,490       1,582         1,622  
           
Total service, rental and maintenance
    33,969       31,583       29,069       28,199       22,955       21,290       20,950         20,115  
           
 
                                                                 
Selling and marketing
                                                                 
Payroll and related
    5,164       4,797       4,317       4,145       4,175       3,711       3,366         3,199  
Commissions
    1,724       2,037       1,742       1,213       1,201       1,422       1,328         1,131  
Stock based compensation
    39       50       49       60       109       26       26         26  
Other
    909       665       648       726       577       441       478         599  
           
Total selling and marketing
    7,836       7,549       6,756       6,144       6,062       5,600       5,198         4,955  
           
 
                                                                 
General and administrative
                                                                 
Payroll and related
    8,682       8,129       7,847       7,992       9,075       7,754       7,213         7,089  
Stock based compensation
    190       247       253       298       569       241       241         241  
Bad debt
    711       691       680       618       850       750       699         654  
Facility rent
    2,073       2,199       1,937       1,689       1,628       1,446       1,457         1,411  
Telecommunications
    1,048       983       936       834       771       721       720         702  
Outside services
    5,359       4,584       4,632       4,519       4,514       4,063       3,269         3,051  
Taxes, licenses and permits
    1,958       2,055       2,216       372       1,101       1,695       (680 )       660  
Other
    1,787       1,894       2,130       1,967       1,678       6,131       3,131         1,481  
           
Total general and administrative
    21,808       20,782       20,631       18,289       20,186       22,801       16,050         15,289  
           
 
                                                                 
Severance and restructuring
    145       153       5,063       (35 )     190       52       15         2,480  
Depreciation, amortization and accretion
    12,513       11,674       11,075       11,750       11,270       11,174       10,689         8,781  
Goodwill impairment
    188,170                                              
           
Operating expenses
  $ 265,522     $ 73,149     $ 73,885     $ 66,159     $ 62,332     $ 62,338     $ 54,495       $ 53,133  
           
 
                                                                 
Capital expenses
  $ 3,988     $ 3,892     $ 6,214     $ 4,242     $ 6,054     $ 4,355     $ 1,806       $ 5,014  
 
                                                                 
 
(a)   Slight variations in totals are due to rounding.

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)
                   
    12/31/08     12/31/09
Assets
                 
Current assets:
                 
Cash and cash equivalents
  $ 75,032       $ 109,591  
Accounts receivable, net
    25,118         19,051  
Tax receivables
            5,117  
Prepaid expenses and other
    6,226         3,016  
Deferred income tax assets, net
    6,025         1,068  
           
Total current assets
    112,401         137,843  
Property and equipment, net
    57,867         41,295  
Intangible assets, net
    6,520         226  
Deferred income tax assets, net
    59,599         32,123  
Other assets
    4,973         2,061  
           
Total assets
  $ 241,360       $ 213,548  
           
 
                 
Liabilities and stockholders’ equity
                 
Current liabilities:
                 
Accounts payable and accrued liabilities
  $ 40,983       $ 35,214  
Customer deposits
    1,203         888  
Deferred revenue
    9,958         7,422  
           
Total current liabilities
    52,144         43,524  
Other long-term liabilities
    48,478         11,228  
           
Total liabilities
    100,622         54,752  
           
Stockholders’ equity:
                 
Preferred stock
             
Common stock
    2         2  
Additional paid-in capital
    140,736         137,378  
Retained earnings
            21,416  
           
Total stockholders’ equity
    140,738         158,796  
           
Total liabilities and stockholders’ equity
  $ 241,360       $ 213,548  
           

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
                   
    For the twelve months ended
    12/31/08     12/31/09
Cash flows from operating activities:
                 
Net (loss) income
  $ (157,077 )     $ 67,558  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
                 
Depreciation, amortization and accretion
    47,012         41,914  
Goodwill impairment
    188,170          
Deferred income tax expense
    36,831         32,433  
Amortization of stock based compensation
    1,259         1,560  
Provisions for doubtful accounts, service credits and other
    5,851         4,515  
Non-cash transaction tax accrual adjustments
    (5,499 )       (7,218 )
Loss on disposals of property and equipment
    48         2  
Changes in assets and liabilities:
                 
Accounts receivable
    (2,925 )       1,553  
Prepaid expenses and other
    3,167         (2,062 )
Intangibles and other long-term assets
    4,279         1,628  
Accounts payable and accrued liabilities
    (12,586 )       482  
Customer deposits and deferred revenue
    (2,490 )       (2,851 )
Other long-term liabilities
            (37,654 )
           
Net cash provided by operating activities
    106,040         101,860  
           
 
                 
Cash flows from investing activities:
                 
Purchases of property and equipment
    (18,336 )       (17,229 )
Proceeds from disposals of property and equipment
    179         168  
           
Net cash used in investing activities
    (18,157 )       (17,061 )
           
 
                 
Cash flows from financing activities:
                 
Cash distributions to stockholders
    (39,061 )       (45,502 )
Purchase of common stock
    (38,332 )       (4,738 )
           
Net cash used in financing activities
    (77,393 )       (50,240 )
           
 
                 
Net increase in cash and cash equivalents
    10,490         34,559  
Cash and cash equivalents, beginning of period
    64,542         75,032  
           
Cash and cash equivalents, end of period
  $ 75,032       $ 109,591  
           
 
                 
Supplemental disclosure:
                 
Interest paid
  $ 11       $ 2  
           
Income taxes paid (state and local)
  $ 462       $ 447  
           

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)
                   
    For the year ended December 31,
    2008     2009
Revenue:
                 
Paging service
  $ 326,655       $ 262,958  
Cellular
    5,893         3,541  
Product sales
    21,489         18,821  
Other
    5,411         4,386  
           
Total revenue
    359,448         289,706  
           
 
                 
Operating expenses:
                 
Cost of products sold
    5,592         6,196  
Service, rental and maintenance
    122,820         85,310  
Selling and marketing
    28,285         21,815  
General and administrative
    81,510         74,326  
Severance and restructuring
    5,326         2,737  
Depreciation, amortization and accretion
    47,012         41,914  
Goodwill impairment
    188,170          
           
Total operating expenses
    478,715         232,298  
           
% of total revenue
    133.2 %       80.2 %
 
                 
           
Operating (loss) income
    (119,267 )       57,408  
           
% of total revenue
    -33.2 %       19.8 %
 
                 
Interest income, net
    1,800         69  
Other income, net
    622         530  
           
(Loss) income before income tax expense (benefit)
    (116,845 )       58,007  
Income tax expense (benefit)
    40,232         (9,551 )
           
Net (loss) income
  $ (157,077 )     $ 67,558  
           
 
                 
Basic net (loss) income per common share
  $ (5.83 )     $ 2.95  
           
Diluted net (loss) income per common share
  $ (5.83 )     $ 2.90  
           
 
                 
Basic weighted average common shares outstanding
    26,936,072         22,918,904  
           
Diluted weighted average common shares outstanding
    26,936,072         23,260,431  
           
 
                 
Reconciliation of operating (loss) income to EBITDA (a):
                 
Operating (loss) income
  $ (119,267 )     $ 57,408  
Add back: depreciation, amortization and accretion
    47,012         41,914  
Add back: goodwill impairment
    188,170          
           
EBITDA
  $ 115,915       $ 99,322  
           
% of total revenue
    32.2 %       34.3 %
 
                 
 
(a)   EBITDA or earnings before interest, taxes, depreciation, amortization, accretion and goodwill impairment is a non-GAAP measure and is presented for analytical purposes only.