EX-99.1 2 w80296exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(USAMOBILITY LOGO)
News Release
         
For Immediate Release
  Contact:   Bob Lougee (800) 611-8488
Wednesday, October 27, 2010
      bob.lougee@usamobility.com
USA Mobility Reports Third Quarter Operating Results;
Board Declares Regular Quarterly and Special Cash Distribution
Subscriber and Revenue Trends Improve;
Operating Expenses Again Reduced;
Cash Flow Margins Remain High
Springfield, VA (October 27, 2010) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the third quarter ended September 30, 2010.
In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share and a special cash distribution of $1.00 per share. The cash distributions will be paid on December 10, 2010 to stockholders of record on November 18, 2010. Of the $0.25 cash distribution, the Company expects $0.24 will be a return of capital and $0.01 will be a dividend distribution. With respect to the special cash distribution, the Company expects $0.97 will be a return of capital and $0.03 will be a dividend distribution.
Total revenue for the third quarter was $56.7 million, compared to $59.1 million in the second quarter of 2010 and $69.5 million in the year-earlier quarter. Third quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $22.0 million, compared to $20.4 million in the second quarter and $25.7 million in the third quarter of 2009.
Net income for the third quarter was $15.4 million, or $0.69 per fully diluted share, compared to $13.9 million, or $0.58 per fully diluted share, in the second quarter, and $9.2 million, or $0.40 per fully diluted share, in the year-earlier quarter. Net income for the third quarter of 2010 included a one-time benefit of $0.8 million to operating expenses associated with the departure of the Company’s former chief operating officer and chief financial officer (COO/CFO) and the one-time receipt of $2.0 million for the completion of the sale of a narrowband personal communications service license. Excluding these one-time items, net income for the third quarter of 2010 would have been $13.2 million, or $0.59 per fully diluted share.

 

 

Third quarter results included:
  •   EBITDA margin (or EBITDA as a percentage of revenue) increased to 38.8 percent from 34.6 percent in the prior quarter and 37.0 percent in the third quarter of 2009. These results included a one-time benefit of $0.8 million to operating expenses associated with the departure of the Company’s former COO/CFO. Absent the one-time benefit, EBITDA margin would have been approximately 37.4 percent.
 
  •   The quarterly rate of revenue erosion improved to 4.1 percent in the third quarter, compared to 5.8 percent in the prior quarter, and 7.5 percent in the third quarter of 2009. The annual rate of revenue erosion was 18.4 percent, compared to 21.3 percent in both the second quarter and year-earlier quarter.
 
  •   Total paging ARPU (average revenue per unit) was $8.85 in the third quarter, compared to $8.87 in the second quarter and $8.89 in the year-earlier quarter.
 
  •   Net unit losses were 77,000 in the third quarter, compared to 72,000 in the prior quarter and 152,000 in the third quarter of 2009. Units in service totaled 1,950,000 at September 30, 2010, compared to 2,297,000 a year earlier.
 
  •   The quarterly rate of subscriber loss was 3.8 percent, compared to 3.5 percent in the second quarter and 6.2 percent in the third quarter of 2009. The annual rate of subscriber erosion improved to 15.1 percent in the quarter from 17.2 percent in the prior quarter and 23.5 percent in the year-earlier quarter.
 
  •   Operating expenses (excluding depreciation, amortization and accretion) totaled $34.7 million in the third quarter, a reduction of $9.1 million, or 20.8 percent, from $43.8 million in the third quarter of 2009. Operating expenses declined 10.3 percent from the prior quarter.
 
  •   Capital expenses were $1.7 million in the quarter, compared to $1.8 million in the year-earlier quarter.
 
  •   The Company repurchased 156,522 shares of common stock during the quarter under its buy back program, and approximately $16.1 million remains available for purchases under the currently approved plan which runs through December 31st of this year.
 
  •   The Company’s cash balance at September 30, 2010 was $141.8 million.
“USA Mobility reported another quarter of outstanding operating results, continuing the positive trends we experienced in the first half of 2010,” said Vincent D. Kelly, president and chief executive officer. “During the quarter we met or exceeded the majority of our key performance targets, including continued improvement in subscriber and revenue trends. In addition, both cash flow margins and ARPU levels remained strong and cost management efforts continued on track, all consistent with the financial guidance we provided earlier this year. As a result, we again were able to generate sufficient cash flow to return significant capital to stockholders in the form of cash distributions and share repurchases.”
Shawn E. Endsley, chief financial officer, said the Company continued to make steady progress in reducing operating expenses during the quarter. “Excluding depreciation, amortization and accretion, operating expenses decreased 10.3 percent from the second quarter and 20.8 percent over the past 12 months,” he noted, “with

 

 

significant reductions in payroll and related expenses and site rent expenses.” Endsley added: “Operating expense as a percentage of revenue was 61.2 percent in the quarter, the lowest level in the Company’s history, compared to 63.0 percent in the year-earlier quarter, while lower expenses contributed to an EBITDA margin of 38.8 percent versus 37.0 percent in the same quarter of 2009. After excluding the one-time benefit associated with the departure of the Company’s former COO/CFO, operating expenses would have been 62.6 percent of revenue and the EBITDA margin would have been 37.4 percent.”
Based on current trends, the Company maintained its previous financial guidance for 2010, with revenues expected to be between $230 million and $235 million, operating expenses (excluding depreciation, amortization and accretion) between $156 million and $159 million, and capital expenses between $7 million and $9 million.
* * * * * * * * *
USA Mobility plans to host a conference call for investors on its third quarter results at 10:00 a.m. Eastern Time on Thursday, October 28, 2010. The dial-in number for the call is 888-204-4517 (toll-free) or 913-312-0979 (toll). The pass code for the call is 4774094. A replay of the call will be available from 2:00 p.m. ET on October 28 until 11:59 p.m. on Thursday, November 11. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4774094.
* * * * * * * * *
About USA Mobility
USA Mobility, Inc., headquartered in Springfield, 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 to organizations nationwide. 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 and T-Mobile, 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 RESULTS OF OPERATIONS (a)
(unaudited and in thousands, except share and per share amounts)
                                                         
    For the three months ended
    3/31/09     6/30/09     9/30/09     12/31/09     3/31/10     6/30/10     9/30/10
 
                                                        
Revenues:
                                                        
Paging service
   $ 72,021     $ 67,972     $ 63,308     $ 59,657     $ 57,832     $ 54,875     $ 52,778  
Cellular
     991       775       980       795       708       624       532  
Product sales
     5,271       5,269       4,354       3,927       3,358       2,732       2,805  
Other
     1,408       1,129       856       993       886       881       595  
     
Total revenues
     79,691       75,145       69,498       65,372       62,784       59,112       56,710  
     
 
                                                        
Operating expenses:
                                                        
Cost of products sold
     1,669       1,421       1,593       1,513       1,209       1,134       819  
Service, rental and maintenance
     22,955       21,290       20,950       20,115       18,941       17,175       16,821  
Selling and marketing
     6,062       5,600       5,198       4,955       4,557       4,394       4,060  
General and administrative
     20,186       22,801       16,050       15,289       15,812       15,924       12,907  
Severance and restructuring
     190       52       15       2,480       314       41       86  
Depreciation, amortization and accretion
     11,270       11,174       10,689       8,781       7,304       6,698       5,899  
     
Total operating expenses
     62,332       62,338       54,495       53,133       48,137       45,366       40,592  
     
% of total revenues
     78.2 %     83.0 %     78.4 %     81.3 %     76.7 %     76.7 %     71.6 %
 
                                                        
     
Operating income
     17,359       12,807       15,003       12,239       14,647       13,746       16,118  
     
% of total revenues
     21.8 %     17.0 %     21.6 %     18.7 %     23.3 %     23.3 %     28.4 %
 
                                                        
Interest income (expense), net
     26       28       16       (1 )     3       4       6  
Other income (expense), net
     112       (42 )     185       275       78       180       2,320  
     
Income before income tax expense (benefit)
     17,497       12,793       15,204       12,513       14,728       13,930       18,444  
Income tax expense (benefit)
     7,516       (31,953 )     6,003       8,883       5,843       841       3,060  
     
Net income
   $ 9,981     $ 44,746     $ 9,201     $ 3,630     $ 8,885     $ 13,089     $ 15,384  
     
 
                                                        
Basic net income per common share
   $ 0.43     $ 1.96     $ 0.40     $ 0.16     $ 0.39     $ 0.59     $ 0.70  
     
Diluted net income per common share
   $ 0.43     $ 1.93     $ 0.40     $ 0.16     $ 0.39     $ 0.58     $ 0.69  
     
 
                                                        
Basic weighted average common shares outstanding
     23,134,072       22,858,573       22,856,951       22,830,040       22,654,240       22,307,488       22,060,636  
     
Diluted weighted average common shares outstanding
     23,479,796       23,200,736       23,194,360       23,167,729       22,967,192       22,620,707       22,372,786  
     
 
                                                        
Reconciliation of operating income to EBITDA (b):
                                                        
Operating income
   $ 17,359     $ 12,807     $ 15,003     $ 12,239     $ 14,647     $ 13,746     $ 16,118  
Add back: depreciation, amortization and accretion
     11,270       11,174       10,689       8,781       7,304       6,698       5,899  
     
EBITDA
   $ 28,629     $ 23,981     $ 25,692     $ 21,020     $ 21,951     $ 20,444     $ 22,017  
     
% of total revenues
     35.9 %     31.9 %     37.0 %     32.2 %     35.0 %     34.6 %     38.8 %
 
(a)   Slight variations in totals are due to rounding.
 
(b)   EBITDA or earnings before interest, taxes, depreciation, amortization and accretion 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
    3/31/09   6/30/09   9/30/09   12/31/09   3/31/10   6/30/10   9/30/10
Units in service
                                                        
 
                                                        
Beginning units in service
                                                        
Direct one-way
     2,349       2,198       2,079       1,969       1,881       1,804       1,749  
Direct two-way
     171       157       147       141       133       126       121  
     
Total direct
     2,520       2,355       2,226       2,110       2,014       1,930       1,870  
     
Indirect one-way
     196       161       139       116       101       90       82  
Indirect two-way
     99       91       84       71       67       79       75  
     
Total indirect
     295       252       223       187       168       169       157  
     
Total beginning units in service
     2,815       2,607       2,449       2,297       2,182       2,099       2,027  
     
 
                                                        
Gross placements
                                                        
Direct one-way
     67       74       64       55       53       62       58  
Direct two-way
     6       7       9       5       5       6       4  
     
Total direct
     73       81       73       60       58       68       62  
     
Indirect one-way
     8       9       7       6       3       3       3  
Indirect two-way
     4       2       1       2       15       1       1  
     
Total indirect
     12       11       8       8       18       4       4  
     
Total gross placements
     85       92       81       68       76       72       66  
     
 
                                                        
Gross disconnects
                                                        
Direct one-way
     (218 )     (193 )     (174 )     (143 )     (130 )     (117 )     (115 )
Direct two-way
     (20 )     (17 )     (15 )     (13 )     (12 )     (11 )     (16 )
     
Total direct
     (238 )     (210 )     (189 )     (156 )     (142 )     (128 )     (131 )
     
Indirect one-way
     (43 )     (31 )     (30 )     (21 )     (14 )     (11 )     (10 )
Indirect two-way
     (12 )     (9 )     (14 )     (6 )     (3 )     (5 )     (2 )
     
Total indirect
     (55 )     (40 )     (44 )     (27 )     (17 )     (16 )     (12 )
     
Total gross disconnects
     (293 )     (250 )     (233 )     (183 )     (159 )     (144 )     (143 )
     
 
                                                        
Net gain (loss)
                                                        
Direct one-way
     (151 )     (119 )     (110 )     (88 )     (77 )     (55 )     (57 )
Direct two-way
     (14 )     (10 )     (6 )     (8 )     (7 )     (5 )     (12 )
     
Total direct
     (165 )     (129 )     (116 )     (96 )     (84 )     (60 )     (69 )
     
Indirect one-way
     (35 )     (22 )     (23 )     (15 )     (11 )     (8 )     (7 )
Indirect two-way
     (8 )     (7 )     (13 )     (4 )     12       (4 )     (1 )
     
Total indirect
     (43 )     (29 )     (36 )     (19 )     1       (12 )     (8 )
     
Total net change
     (208 )     (158 )     (152 )     (115 )     (83 )     (72 )     (77 )
     
 
                                                        
Ending units in service
                                                        
Direct one-way
     2,198       2,079       1,969       1,881       1,804       1,749       1,692  
Direct two-way
     157       147       141       133       126       121       109  
     
Total direct
     2,355       2,226       2,110       2,014       1,930       1,870       1,801  
     
Indirect one-way
     161       139       116       101       90       82       75  
Indirect two-way
     91       84       71       67       79       75       74  
     
Total indirect
     252       223       187       168       169       157       149  
     
Total ending units in service
     2,607       2,449       2,297       2,182       2,099       2,027       1,950  
     
 
(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
    3/31/09     6/30/09     9/30/09     12/31/09     3/31/10     6/30/10     9/30/10
 
                                                        
ARPU
                                                        
Direct one-way
   $ 8.11     $ 8.18     $ 8.08     $ 8.04     $ 8.16     $ 8.05     $ 8.07  
Direct two-way
     23.68       23.62       23.42       23.59       23.61       23.55       23.11  
     
Total direct
     9.15       9.21       9.10       9.06       9.17       9.06       9.01  
 
                                                        
Indirect one-way
     7.05       7.43       7.51       7.77       8.78       8.87       9.60  
Indirect two-way
     4.58       5.19       5.49       5.14       4.84       4.25       4.09  
     
Total indirect
     6.19       6.60       6.74       6.73       7.04       6.65       6.86  
 
                                                        
Total one-way
     8.03       8.14       8.05       8.02       8.19       8.09       8.14  
Total two-way
     16.66       16.86       17.09       17.32       16.76       16.06       15.54  
     
Total paging ARPU
   $ 8.86     $ 8.96     $ 8.89     $ 8.88     $ 9.00     $ 8.87     $ 8.85  
     
 
                                                        
Gross disconnect rate (b)
                                                        
Direct one-way
     -9.3 %     -8.8 %     -8.4 %     -7.2 %     -6.9 %     -6.5 %     -6.6 %
Direct two-way
     -11.8 %     -11.0 %     -10.2 %     -8.9 %     -9.1 %     -8.5 %     -13.0 %
     
Total direct
     -9.5 %     -8.9 %     -8.5 %     -7.3 %     -7.1 %     -6.6 %     -7.0 %
 
                                                        
Indirect one-way
     -22.0 %     -19.4 %     -21.9 %     -18.9 %     -13.7 %     -12.8 %     -12.5 %
Indirect two-way
     -11.6 %     -9.1 %     -16.4 %     -8.5 %     -4.9 %     -6.8 %     -2.6 %
     
Total indirect
     -18.5 %     -15.6 %     -19.8 %     -14.9 %     -10.1 %     -9.9 %     -7.7 %
 
                                                        
Total one-way
     -10.3 %     -9.5 %     -9.2 %     -7.9 %     -7.3 %     -6.8 %     -6.8 %
Total two-way
     -11.7 %     -10.3 %     -12.5 %     -8.8 %     -7.7 %     -7.9 %     -9.0 %
     
Total paging gross disconnect rate
     -10.4 %     -9.6 %     -9.5 %     -8.0 %     -7.3 %     -6.9 %     -7.0 %
     
 
                                                        
Net gain / loss rate (c)
                                                        
Direct one-way
     -6.4 %     -5.4 %     -5.3 %     -4.4 %     -4.1 %     -3.1 %     -3.2 %
Direct two-way
     -8.5 %     -6.4 %     -4.4 %     -5.5 %     -5.0 %     -4.2 %     -9.5 %
     
Total direct
     -6.6 %     -5.5 %     -5.2 %     -4.5 %     -4.2 %     -3.1 %     -3.6 %
 
                                                        
Indirect one-way
     -17.8 %     -13.7 %     -16.9 %     -13.6 %     -10.5 %     -9.8 %     -9.2 %
Indirect two-way
     -8.2 %     -7.2 %     -14.9 %     -5.2 %     17.1 %     -4.7 %     -0.9 %
     
Total indirect
     -14.6 %     -11.3 %     -16.1 %     -10.4 %     0.7 %     -7.4 %     -5.1 %
 
                                                        
Total one-way
     -7.3 %     -6.0 %     -6.0 %     -5.0 %     -4.4 %     -3.4 %     -3.5 %
Total two-way
     -8.4 %     -6.7 %     -8.2 %     -5.4 %     2.5 %     -4.4 %     -6.1 %
     
Total paging net gain / loss rate
     -7.4 %     -6.0 %     -6.2 %     -5.0 %     -3.8 %     -3.5 %     -3.8 %
     
 
(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
    3/31/09   6/30/09   9/30/09   12/31/09   3/31/10   6/30/10   9/30/10
 
                                                        
Gross placement rate (b)
                                                        
Healthcare
     3.7 %     4.4 %     3.8 %     3.4 %     3.5 %     4.4 %     3.9 %
Government
     1.7 %     2.4 %     2.4 %     1.9 %     1.8 %     1.9 %     3.1 %
Large enterprise
     2.4 %     2.2 %     3.3 %     2.2 %     2.1 %     2.6 %     1.9 %
Other
     2.4 %     2.5 %     2.3 %     2.2 %     2.4 %     2.0 %     2.5 %
     
Total direct
     2.9 %     3.4 %     3.3 %     2.8 %     2.9 %     3.5 %     3.4 %
Total indirect
     3.9 %     4.3 %     3.7 %     4.5 %     10.9 %     2.5 %     2.6 %
     
Total
     3.0 %     3.5 %     3.3 %     3.0 %     3.5 %     3.4 %     3.3 %
     
 
                                                        
Gross disconnect rate (b)
                                                        
Healthcare
     -6.8 %     -6.2 %     -6.7 %     -5.5 %     -4.9 %     -5.2 %     -5.7 %
Government
     -9.9 %     -10.7 %     -10.7 %     -9.4 %     -9.1 %     -8.3 %     -8.3 %
Large enterprise
     -13.3 %     -13.0 %     -10.7 %     -9.4 %     -10.3 %     -8.3 %     -9.7 %
Other
     -13.0 %     -12.4 %     -10.6 %     -10.1 %     -11.0 %     -9.6 %     -9.3 %
     
Total direct
     -9.5 %     -8.9 %     -8.5 %     -7.3 %     -7.1 %     -6.6 %     -7.0 %
Total indirect
     -18.5 %     -15.6 %     -19.8 %     -14.9 %     -10.1 %     -9.9 %     -7.7 %
     
Total
     -10.4 %     -9.6 %     -9.5 %     -8.0 %     -7.3 %     -6.9 %     -7.0 %
     
 
                                                        
Net loss rate (b)
                                                        
Healthcare
     -3.1 %     -1.8 %     -2.9 %     -2.1 %     -1.4 %     -0.8 %     -1.8 %
Government
     -8.2 %     -8.4 %     -8.3 %     -7.5 %     -7.4 %     -6.4 %     -5.2 %
Large enterprise
     -10.9 %     -10.9 %     -7.4 %     -7.2 %     -8.1 %     -5.7 %     -7.8 %
Other
     -10.6 %     -10.0 %     -8.3 %     -7.9 %     -8.6 %     -7.6 %     -6.8 %
     
Total direct
     -6.6 %     -5.5 %     -5.2 %     -4.5 %     -4.2 %     -3.1 %     -3.6 %
Total indirect
     -14.6 %     -11.3 %     -16.1 %     -10.4 %     0.7 %     -7.4 %     -5.1 %
       
Total
     -7.4 %     -6.0 %     -6.2 %     -5.0 %     -3.8 %     -3.5 %     -3.8 %
     
 
                                                        
End of period units in service % of total (b)
                                                        
Healthcare
     44.9 %     49.8 %     51.5 %     53.2 %     54.5 %     56.1 %     57.1 %
Government
     17.2 %     15.6 %     15.3 %     14.9 %     14.4 %     14.1 %     13.9 %
Large enterprise
     12.0 %     11.8 %     11.8 %     11.4 %     10.9 %     10.7 %     10.2 %
Other
     16.2 %     13.7 %     13.2 %     12.8 %     12.1 %     11.4 %     11.2 %
     
Total direct
     90.3 %     90.9 %     91.8 %     92.3 %     91.9 %     92.3 %     92.4 %
Total indirect
     9.7 %     9.1 %     8.2 %     7.7 %     8.1 %     7.7 %     7.6 %
     
Total
     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
    3/31/09     6/30/09     9/30/09     12/31/09     3/31/10     6/30/10     9/30/10
 
                                                        
Account size ending units in service (000’s)
                                                        
1 to 3 units
     137       126       118       109       101       95       88  
4 to 10 units
     82       75       70       66       62       58       54  
11 to 50 units
     199       183       168       158       149       140       130  
51 to 100 units
     125       112       104       97       92       86       79  
101 to 1,000 units
     626       580       546       519       499       483       456  
>1,000 units
     1,186       1,150       1,104       1,065       1,027       1,008       994  
     
Total
     2,355       2,226       2,110       2,014       1,930       1,870       1,801  
     
 
                                                        
End of period units in service % of total direct
                                                        
1 to 3 units
     5.8 %     5.7 %     5.6 %     5.4 %     5.2 %     5.1 %     4.9 %
4 to 10 units
     3.5 %     3.4 %     3.3 %     3.3 %     3.2 %     3.1 %     3.0 %
11 to 50 units
     8.4 %     8.2 %     8.0 %     7.8 %     7.7 %     7.5 %     7.2 %
51 to 100 units
     5.3 %     5.0 %     4.9 %     4.8 %     4.8 %     4.6 %     4.4 %
101 to 1,000 units
     26.6 %     26.0 %     25.9 %     25.8 %     25.9 %     25.8 %     25.3 %
>1,000 units
     50.4 %     51.7 %     52.3 %     52.9 %     53.2 %     53.9 %     55.2 %
     
Total
     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 %     -7.9 %     -6.9 %     -7.4 %     -7.6 %     -5.8 %     -7.0 %
4 to 10 units
     -8.8 %     -7.9 %     -6.7 %     -6.1 %     -5.3 %     -6.0 %     -7.5 %
11 to 50 units
     -8.9 %     -8.2 %     -7.7 %     -5.9 %     -5.8 %     -6.1 %     -7.3 %
51 to 100 units
     -6.2 %     -10.1 %     -7.6 %     -6.8 %     -4.4 %     -6.5 %     -7.9 %
101 to 1,000 units
     -8.0 %     -7.4 %     -5.9 %     -4.9 %     -3.7 %     -3.3 %     -5.6 %
>1,000 units
     -5.1 %     -3.1 %     -4.0 %     -3.5 %     -3.7 %     -1.9 %     -1.3 %
     
Total
     -6.6 %     -5.5 %     -5.2 %     -4.5 %     -4.2 %     -3.1 %     -3.6 %
     
 
                                                        
Account size ARPU
                                                        
1 to 3 units
   $ 14.73     $ 15.07     $ 14.98     $ 15.03     $ 15.28     $ 15.37     $ 15.48  
4 to 10 units
     14.00       14.30       14.24       14.21       14.37       14.35       14.51  
11 to 50 units
     11.41       11.65       11.54       11.45       11.86       12.01       12.18  
51 to 100 units
     10.30       10.13       10.06       10.06       10.67       10.76       10.69  
101 to 1,000 units
     8.94       9.04       8.89       8.82       9.00       8.93       8.82  
>1,000 units
     7.77       7.80       7.76       7.79       7.80       7.63       7.64  
     
Total
   $ 9.15     $ 9.21     $ 9.10     $ 9.06     $ 9.17     $ 9.06     $ 9.01  
     
 
                                                        
Cellular revenue
                                                        
Number of activations
     2,389       2,207       2,633       2,253       2,354       1,885       1,885  
     
Revenue from cellular services (000’s)
   $ 991     $ 775     $ 980     $ 795     $ 708     $ 624     $ 532  
     
 
(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  
    3/31/09     6/30/09     9/30/09     12/31/09     3/31/10     6/30/10     9/30/10  
 
                                                        
Cost of products sold
   $ 1,669     $ 1,421     $ 1,593     $ 1,513     $ 1,209     $ 1,134     $ 819  
       
 
                                                        
Service, rental and maintenance
                                                        
Site rent
     11,218       10,223       10,422       9,871       9,079       8,283       8,042  
Telecommunications
     4,485       4,284       3,945       3,885       3,831       3,467       3,341  
Payroll and related
     5,631       5,286       4,988       4,725       4,586       4,444       4,199  
Stock based compensation
     49       7       13       12       6       7       5  
Other
     1,572       1,490       1,582       1,622       1,439       974       1,234  
       
Total service, rental and maintenance
     22,955       21,290       20,950       20,115       18,941       17,175       16,821  
       
 
                                                        
Selling and marketing
                                                        
Payroll and related
     4,175       3,711       3,366       3,199       2,964       2,814       2,659  
Commissions
     1,201       1,422       1,328       1,131       1,164       1,367       1,163  
Stock based compensation
     109       26       26       26       17       22       17  
Other
     577       441       478       599       412       191       221  
       
Total selling and marketing
     6,062       5,600       5,198       4,955       4,557       4,394       4,060  
       
 
                                                        
General and administrative
                                                        
Payroll and related
     9,075       7,754       7,213       7,089       6,912       6,621       5,719  
Stock based compensation
     569       241       241       241       240       242       15  
Bad debt
     850       750       699       654       713       594       571  
Facility rent
     1,628       1,446       1,457       1,411       1,354       1,326       992  
Telecommunications
     771       721       720       702       657       603       518  
Outside services
     4,514       4,063       3,269       3,051       3,267       3,185       2,463  
Taxes, licenses and permits
     1,101       1,695       (680 )     660       1,591       1,836       1,276  
Other
     1,678       6,131       3,131       1,481       1,078       1,517       1,353  
       
Total general and administrative
     20,186       22,801       16,050       15,289       15,812       15,924       12,907  
       
 
                                                        
Severance and restructuring
     190       52       15       2,480       314       41       86  
Depreciation, amortization and accretion
     11,270       11,174       10,689       8,781       7,304       6,698       5,899  
       
 
                                                        
Operating expenses
   $ 62,332     $ 62,338     $ 54,495     $ 53,133     $ 48,137     $ 45,366     $ 40,592  
       
 
                                                        
Capital expenditures
   $ 6,054     $ 4,355     $ 1,806     $ 5,014     $ 1,725     $ 563     $ 1,730  
 
(a)   Slight variations in totals are due to rounding.

 

 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(in thousands)
                 
    12/31/09     9/30/10  
            (unaudited)  
 
                
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 109,591     $ 141,813  
Accounts receivable, net
     19,051       14,282  
Prepaid expenses and other
     3,016       2,890  
Tax receivables
     5,117       —  
Deferred income tax assets, net
     1,068       831  
       
Total current assets
     137,843       159,816  
Property and equipment, net
     41,295       26,550  
Intangible assets, net
     226       443  
Tax receivables
     —       5,175  
Deferred income tax assets, net
     32,123       22,738  
Other assets
     2,061       402  
       
Total assets
   $ 213,548     $ 215,124  
       
 
                
Liabilities and stockholders’ equity
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 35,214     $ 23,131  
Customer deposits
     888       753  
Deferred revenue
     7,422       7,095  
       
Total current liabilities
     43,524       30,979  
Other long-term liabilities
     11,228       12,631  
       
Total liabilities
     54,752       43,610  
       
Commitments and contingencies
                
Stockholders’ equity:
                
Preferred stock
     —       —  
Common stock
     2       2  
Additional paid-in capital
     137,378       129,451  
Retained earnings
     21,416       42,061  
       
Total stockholders’ equity
     158,796       171,514  
       
Total liabilities and stockholders’ equity
   $ 213,548     $ 215,124  
       
 
(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 nine months ended
    9/30/09     9/30/10
 
                
Cash flows from operating activities:
                
Net income
   $ 63,928     $ 37,358  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, amortization and accretion
     33,133       19,901  
Deferred income tax expense
     22,889       9,622  
Amortization of stock based compensation
     1,281       571  
Provisions for doubtful accounts, service credits and other
     3,559       3,504  
Non-cash transaction tax accrual adjustments
     (4,879 )     (927 )
Loss (gain) on disposals of property and equipment
     138       (3 )
Changes in assets and liabilities:
                
Accounts receivable
     1,203       1,265  
Prepaid expenses, intangible assets and other assets
     (913 )     643  
Accounts payable and accrued liabilities
     (4,403 )     (9,744 )
Customer deposits and deferred revenue
     (2,057 )     (462 )
Other long-term liabilities
     (37,654 )     —  
     
Net cash provided by operating activities
   $ 76,225     $ 61,728  
     
 
                
Cash flows from investing activities:
                
Purchases of property and equipment
     (12,215 )     (4,018 )
Proceeds from disposals of property and equipment
     30       72  
     
Net cash used in investing activities
   $ (12,185 )   $ (3,946 )
     
 
                
Cash flows from financing activities:
                
Cash distributions to stockholders
     (39,843 )     (16,667 )
Purchase of common stock
     (3,537 )     (8,893 )
     
Net cash used in financing activities
   $ (43,380 )   $ (25,560 )
     
 
                
Net increase in cash and cash equivalents
     20,660       32,222  
Cash and cash equivalents, beginning of period
     75,032       109,591  
     
Cash and cash equivalents, end of period
   $ 95,692     $ 141,813  
     
Supplemental disclosure:
                
Interest paid
   $ 1     $ —  
     
Income taxes paid (state and local)
   $ 437     $ 340  
     
 
(a)   Slight variations in totals are due to rounding.