EX-99.1 2 w06929exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1

(USAMOBILITY LOGO)

Your Business Communications Partner

News Release

 
 
             
For Immediate Release
  Contact:   Bob Lougee   (508) 435-6117
Wednesday, March 16, 2005
           

USA Mobility Reports Fourth Quarter and 2004 Operating Results

Arch, Metrocall Merger Integration and Debt Reduction on Target

Alexandria, VA (March 16, 2005) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the fourth quarter and year ended December 31, 2004. The fourth quarter of 2004 represents the first quarter of combined operations for USA Mobility, formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. These results include 46 days of combined operations with Metrocall and a full year and full quarter of Arch’s operations. USA Mobility’s historical financials are those of Arch Wireless which was deemed the accounting acquirer in the merger.

Reported revenue for the fourth quarter of 2004 increased 4.7% to $141.3 million, compared to $135.0 million in the fourth quarter of 2003, with the increase due entirely to the inclusion of Metrocall revenue for 46 days. Reported net loss for the fourth quarter was $1.2 million, or $0.05 per share, compared to a net loss of $1.4 million, or $0.07 per share, for the fourth quarter of 2003. For 2004, reported revenue totaled $490.2 million, compared to $597.5 million in 2003. Reported net income in 2004 totaled $13.5 million, or $0.65 per share, compared to net income of $16.1 million, or $0.81 per share, in the prior year.

As shown below on a pro-forma basis, total revenues for the fourth quarter of 2004 decreased to $179.9 million, compared to $191.5 million in the third quarter of 2004 and $232.5 million in the fourth quarter of 2003.

 


 

                         
    Pro Forma Revenues  
($'s in millions)   4Q03     3Q04     4Q04  
Arch or USA Mobility(1)
  $ 135.0     $ 109.4     $ 141.3  
Metrocall(2)
    87.1       82.1       38.6  
WebLink Wireless(3)
    10.4              
 
                 
Pro Forma Total
  $ 232.5     $ 191.5     $ 179.9  


(1)   Reflects historical Arch revenues for the respective periods and Metrocall revenues from November 16, 2004 to December 31, 2004.
 
(2)   Reflects historical Metrocall revenues for the respective period through November 15, 2004.
 
(3)   Reflects historical revenues of WebLink Wireless through Metrocall’s acquisition on November 18, 2003.

USA Mobility’s messaging units in service decreased by 314,000 during the fourth quarter and 979,000 for the year, excluding the impact of 2,744,000 units acquired in the merger with Metrocall. Total units in service at December 31, 2004 were 6,202,000, including 5,003,000 direct units in service and 1,199,000 indirect units in service. Of the 6,202,000 total units in service at year end 2004, 5,673,000 were one-way messaging units and 529,000 were two-way messaging units. Pro forma for the merger, the company had 7,902,000 units in service at December 31, 2003. Consolidated average revenue per unit decreased to $9.17 in 2004 from $9.85 in 2003; however, a unit adjustment made by Arch in the fourth quarter of 2003 resulted in $0.45 of the year-to-year decline.

“While the merger closing occurred later than we originally planned, we made significant progress on our integration initiatives in our first 46 days of operations,” said Vincent D. Kelly, president and chief executive officer. “However, the wireless messaging industry remains very challenging, and those challenges continue to validate the importance of the merger of Arch and Metrocall. As we move forward with the integration process, we look to gain further benefit from cost reductions and operational synergies that will make us more efficient and enable us to better serve our customers for a longer period of time than either Arch or Metrocall would have been capable of on a stand-alone basis. We have continued to strengthen our financial position during the past four months through the repayment of debt incurred in the merger. USA Mobility repaid $45 million on our $140 million credit facility through December 31, 2004, and we have paid an additional $28.5 million through March 1, 2005, leaving a balance of $66.5 million. The company had $47 million cash on hand at December 31, 2004.”

Merger integration activities commenced in the fourth quarter and included consolidation of the sales and marketing function. In addition, numerous back-office and administrative functions have been, or are now being, consolidated into USA Mobility’s headquarters offices and operations center, both located in

 


 

Alexandria, VA, and its technical center based in Plano, TX. Other integration initiatives launched in the fourth quarter included planning for conversion to a single customer service and billing platform and the reconfiguration of both one-way and two-way networks.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its fourth quarter and year-end results at 9:30 a.m. Eastern time on Thursday, March 17, 2005. The call-in number is 877-502-9276 (toll-free) or 913-981-5591 (toll). The pass code for the call is 4476409 (followed by the # sign). A replay of the call will be available from 2:00 p.m. on March 17 until 8:00 p.m. on April 1. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4476409 (followed by the # sign).

* * * * * * * * *

About USA Mobility

USA Mobility, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to the business, government and healthcare sectors. USA Mobility offers traditional one-way and advanced two-way paging via its nationwide networks covering more than 90% of the U.S. population and with roaming partners in Canada and Mexico. In addition, the company offers mobile voice and data services through Nextel and Cingular/AT&T Wireless, including BlackBerry and GPS location applications. The company’s product offerings include wireless connectivity systems for medical, business, government and other campus environments. USA Mobility focuses on the business-to-business marketplace and supplies mobile connectivity solutions to over two-thirds of the Fortune 1000 companies. 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 expectations for 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, the timely and efficient integration of the operations and facilities of Metrocall and Arch 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
CONSOLIDATED CONDENSED BALANCE SHEETS

(unaudited and in thousands)

                 
    December 31,     December 31,  
    2004     2003  
ASSETS
 
               
Current assets:
               
Cash and cash equivalents
  $ 46,995     $ 34,582  
Accounts receivable, net
    37,750       26,052  
Deposits
    3,369       6,776  
Prepaid rent
    864       514  
Prepaid expenses and other
    14,479       7,381  
Deferred income tax
    18,445       30,206  
 
           
Total current assets
    121,902       105,511  
 
           
Property and equipment
    483,895       394,436  
Less accumulated depreciation and amortization
    (267,387 )     (180,563 )
 
           
Property and equipment, net
    216,508       213,873  
 
           
Goodwill
    151,791        
Assets held for sale
          1,139  
Intangible and other assets, net
    67,129        
Deferred income tax
    233,714       189,346  
Other assets
    2,267       3  
 
           
 
  $ 793,311     $ 509,872  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
               
Current liabilities:
               
Current maturities of long-term debt
  $ 47,558     $ 20,000  
Accounts payable
    6,011       8,836  
Accrued compensation and benefits
    17,792       17,820  
Accrued network costs
    8,956       7,893  
Accrued property and sales taxes
    27,862       10,076  
Accrued interest
    547       1,520  
Accrued restructuring charges
    4,974       11,481  
Accrued other
    10,280       8,104  
Customer deposits and deferred revenue
    27,939       25,477  
 
           
Total current liabilities
    151,919       111,207  
 
           
Long-term debt, less current maturities
    47,500       40,000  
 
           
Other long-term liabilities
    10,555       4,042  
 
           
Commitments and contingencies
               
Stockholders’ equity:
               
Preferred stock
           
Common stock
    3       2  
Additional paid-in capital
    555,083       339,928  
Deferred stock compensation
    (137 )     (2,682 )
Retained earnings
    28,388       17,375  
 
           
Total stockholders’ equity
    583,337       354,623  
 
           
 
  $ 793,311     $ 509,872  
 
           

 


 

USA MOBILITY, INC
CONSOLIDATED INCOME STATEMENTS

(unaudited and in thousands, except share and per share amounts)

                                 
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2004     2003     2004     2003  
Revenues:
                               
Services, rental and maintenance
  $ 135,246     $ 129,533     $ 470,751     $ 571,989  
Product sales
    6,041       5,493       19,409       25,489  
 
                       
Total revenues
    141,287       135,026       490,160       597,478  
 
                               
Operating expenses:
                               
Cost of products sold
    1,862       1,229       4,347       5,580  
Service, rental, and maintenance
    48,192       46,777       161,071       192,159  
Selling and marketing
    10,398       9,936       36,085       45,639  
General and administrative
    41,775       33,662       129,299       166,167  
Depreciation and amortization
    34,685       27,058       114,367       118,917  
Stock based and other compensation
    4,387       2,188       12,927       11,420  
Restructuring charges
          11,481       3,018       11,481  
 
                       
Total operating expenses
    141,299       132,331       461,114       551,363  
 
                               
Operating income
    (12 )     2,695       29,046       46,115  
Interest expense, net
    (955 )     (5,253 )     (5,914 )     (19,237 )
Loss on extinguishment of debt
    (1,031 )           (1,031 )      
Other income, net
    247       201       658       516  
 
                       
Income (loss) before reorganization items
    (1,751 )     (2,357 )     22,759       27,394  
Reorganization items
          (425 )           (425 )
 
                       
Income before income tax benefit (expense)
    (1,751 )     (2,782 )     22,759       26,969  
Income tax benefit (expense)
    574       1,409       (9,278 )     (10,841 )
 
                       
Net income (loss)
  $ (1,177 )   $ (1,373 )   $ 13,481     $ 16,128  
 
                       
 
                               
Basic net income (loss) per common share
  $ (0.05 )   $ (0.07 )   $ 0.65     $ 0.81  
 
                       
Diluted net income (loss) per common share
  $ (0.05 )   $ (0.07 )   $ 0.64     $ 0.81  
 
                       
Basic weighted average common shares outstanding
    23,461,642       20,000,000       20,839,959       20,000,000  
 
                       
Diluted weighted average common shares outstanding
    23,612,842       20,034,806       20,965,205       20,034,476  
 
                       

 


 

USA MOBILITY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31, 2004 and 2003

(unaudited and in thousands)

                 
    2004     2003  
Cash flows from operating activities:
               
Net income
  $ 13,481     $ 16,128  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    114,367       118,917  
Accretion of long-term debt and other non-cash interest expense
    372       4,681  
Deferred stock compensation
    2,078       3,149  
Deferred income tax provision
    9,278       10,841  
(Loss) on disposals of property and equipment
    (93 )     (16 )
Other income
    (271 )     (286 )
Loss on extinguishment of debt
    1,036        
Provisions for doubtful accounts and service adjustments
    13,836       23,244  
Changes in assets and liabilities:
               
Accounts receivable
    (1,963 )     (3,988 )
Prepaid expenses and other
    3,601       18,065  
Other long-term assets
    (1,712 )      
Accounts payable and accrued expenses
    (32,875 )     (1,840 )
Customer deposits and deferred revenue
    (8,790 )     (10,227 )
Other long-term liabilities
    1,920       2,577  
 
           
Net cash provided by operating activities
    114,265       181,245  
 
           
 
               
Cash flows from investing activities:
               
Additions to property and equipment
    (19,232 )     (25,446 )
Proceeds from disposals of property and equipment
    2,998       3,176  
Receipts from note receivable
    271       286  
Merger of companies, net of cash acquired
    (117,759 )      
 
           
Net cash used for investing activities
    (133,722 )     (21,984 )
 
           
 
               
Cash flows from financing activities:
               
Issuance of long-term debt
    140,000        
Repayment of long-term debt
    (105,017 )     (161,866 )
Purchase of common stock
    (3,113 )      
 
           
Net cash provided by/ (used for) financing activities
    31,870       (161,866 )
 
           
 
               
Net increase (decrease) in cash and cash equivalents
    12,413       (2,605 )
Cash and cash equivalents, beginning of period
    34,582       37,187  
 
           
Cash and cash equivalents, end of period
  $ 46,995     $ 34,582  
 
           
 
               
Supplemental disclosures:
               
Interest paid
  $ 6,966     $ 15,033  
Asset retirement obligations
  $ 2,197     $ 2,236  
Income taxes paid
  $ 1,729     $  
Common stock and options issued in Metrocall merger
  $ 214,236     $  
Liabilities assumed in merger
  $ 57,214     $  

 


 

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

                                     
      Three Months Ended    
      March 2004     June 2004     September 2004     December 2004    
 
Direct One-Way:
                                 
 
Beginning units in service
    3,393,000       3,247,000       3,122,000       2,997,000    
 
Unit in service acquired
                            1,757,000    
 
Unit in service growth (decline)
    (146,000 )     (125,000 )     (125,000 )     (197,000 )  
 
 
                         
 
Ending units in service
    3,247,000       3,122,000       2,997,000       4,557,000    
 
 
                         
 
 
                                 
     
 
Service, rental and maintenance revenues (000s)
  $ 89,705     $ 83,584     $ 79,079     $ 99,560    
 
Average revenue per unit
  $ 9.00     $ 8.77     $ 8.62     $ 8.63    
     
 
 
                                 
 
Two-Way:
                                 
 
Beginning units in service
    281,000       269,000       258,000       250,000    
 
Unit in service acquired
                            211,000    
 
Unit in service growth (decline)
    (12,000 )     (11,000 )     (8,000 )     (15,000 )  
 
 
                         
 
Ending units in service
    269,000       258,000       250,000       446,000    
 
 
                         
 
 
                                 
     
 
Service, rental and maintenance revenues (000s)
  $ 21,950     $ 20,739     $ 19,561     $ 24,961    
 
Average revenue per unit
  $ 26.66     $ 26.28     $ 25.74     $ 23.76    
     
 
 
                                 
 
Indirect One-Way:
                                 
 
Beginning units in service
    754,000       654,000       577,000       511,000    
 
Unit in service acquired
                            690,000    
 
Unit in service growth (decline)
    (100,000 )     (77,000 )     (66,000 )     (85,000 )  
 
 
                         
 
Ending units in service
    654,000       577,000       511,000       1,116,000    
 
 
                         
 
 
                                 
     
 
Service, rental and maintenance revenues (000s)
  $ 7,359     $ 6,369     $ 5,713     $ 8,942    
 
Average revenue per unit
  $ 3.49     $ 3.47     $ 3.53     $ 3.67    
     
 
 
                                 
 
Two-Way:
                                 
 
Beginning units in service
    9,000       8,000       12,000       14,000    
 
Unit in service acquired
                            86,000    
 
Unit in service growth (decline)
    (1,000 )     4,000       2,000       (17,000 )  
 
 
                         
 
Ending units in service
    8,000       12,000       14,000       83,000    
 
 
                         
 
 
                                 
     
 
Service, rental and maintenance revenues (000s)
  $ 532     $ 482     $ 432     $ 1,783    
 
Average revenue per unit
  $ 21.24     $ 21.09     $ 14.92     $ 10.92    
     
 
 
                                 
 
Totals
                                 
 
Beginning units in service
    4,437,000       4,178,000       3,969,000       3,772,000    
 
Unit in service acquired
                      2,744,000    
 
Unit in service growth (decline)
    (259,000 )     (209,000 )     (197,000 )     (314,000 )  
 
 
                         
 
Ending units in service
    4,178,000       3,969,000       3,772,000       6,202,000    
 
 
                                 
     
 
Service, rental and maintenance revenues (000s)
  $ 119,546     $ 111,174     $ 104,785     $ 135,246    
 
Average revenue per unit
  $ 9.25     $ 9.12     $ 9.04     $ 8.91    
     

 


 

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

                                 
    Three Months Ended  
    March 2004     June 2004     September 2004     December 2004  
Direct One-Way:
                               
Beginning units in service
    5,440,000       5,214,000       5,027,000       4,812,000  
Unit in service acquired
                       
Unit in service growth (decline)
    (226,000 )     (187,000 )     (215,000 )     (222,000 )
 
                       
Ending units in service
    5,214,000       5,027,000       4,812,000       4,590,000  
 
                       
 
                               
Two-Way:
                               
Beginning units in service
    497,000       474,000       453,000       440,000  
Unit in service acquired
                       
Unit in service growth (decline)
    (23,000 )     (21,000 )     (13,000 )     (27,000 )
 
                       
Ending units in service
    474,000       453,000       440,000       413,000  
 
                       
 
                               
Indirect One-Way:
                               
Beginning units in service
    1,813,000       1,571,000       1,350,000       1,198,000  
Unit in service acquired
                       
Unit in service growth (decline)
    (242,000 )     (221,000 )     (152,000 )     (114,000 )
 
                       
Ending units in service
    1,571,000       1,350,000       1,198,000       1,084,000  
 
                       
 
                               
Two-Way:
                               
Beginning units in service
    152,000       144,000       142,000       136,000  
Unit in service acquired
                       
Unit in service growth (decline)
    (8,000 )     (2,000 )     (6,000 )     (21,000 )
 
                       
Ending units in service
    144,000       142,000       136,000       115,000  
 
                       
 
                               
Total
                               
Beginning units in service
    7,902,000       7,403,000       6,972,000       6,586,000  
Unit in service acquired
                       
Unit in service growth (decline)
    (499,000 )     (431,000 )     (386,000 )     (384,000 )
 
                       
Ending units in service
    7,403,000       6,972,000       6,586,000       6,202,000  
 
                       


(a)   Assumes Arch and Metrocall combined as of January 1, 2004.