EX-99.1 2 w08989exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1

(USAMOBILITY LOGO)

Your Business Communications Partner

News Release

      

For Immediate Release   Contact: Bob Lougee (703) 721-3080
Tuesday, May 10, 2005    

USA Mobility Reports First Quarter Operating Results

Alexandria, VA (May 10, 2005) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the quarter ended March 31, 2005. The results represent the first full quarter of combined operations for USA Mobility, formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc.

Reported revenue for the first quarter of 2005 increased 34% to $166 million, compared to $124 million in the first quarter of 2004, with the increase due entirely to the inclusion of Metrocall revenue for three-month period. Reported net income for the first quarter of 2005 was $1.3 million, or $0.05 per fully diluted share, compared to net income of $4.9 million, or $0.24 per fully diluted share, in the year-earlier quarter. Included in the first quarter 2005 operating expense were severance and retention related costs of $5.0 million, including $4.3 million to settle the arbitration case with three former Arch executives. USA Mobility’s historical financials are those of Arch Wireless, the accounting acquirer in the merger.

USA Mobility reported a net decline of 344,000 messaging units in service during the first quarter of 2005, comprised of 316,000 one-way messaging units and 28,000 two-way messaging units. Messaging units in service totaled 5,858,000 at March 31, 2005, with 4,790,000 direct units in service and 1,068,000 indirect units in service. One-way units in service at March 31, 2005 totaled 5,357,000 while two-way units in service totaled 501,000. For the quarter, average revenue per unit was $9.72 for direct units in service and $4.06 per indirect unit in service.

 


 

“We continued to make substantial progress during the quarter toward our merger integration objectives,” said Vincent D. Kelly, president and chief executive officer. “Our unit in service reduction of 344,000 represents an improvement over our pro forma fourth quarter 2004 loss of 384,000 and our pro forma first quarter 2004 loss of 499,000. Although our industry remains challenging, we continue to believe the merger-related benefits of lower expenses and operational synergies will allow us to become more efficient over time.”

Kelly said merger integration activities during the first quarter included ongoing consolidation of numerous back-office and administrative functions, including the process of combining five customer service operations and three distribution centers and converting to a single customer service and billing platform. “In addition,” Kelly said, “we’ve begun the process to deconstruct one of our two-way networks and consolidate our one-way networks. Rationalization of our technical infrastructure and network operations will be an ongoing process as we look to match our network capacity to the requirements of our customers.”

Kelly said the company continued to strengthen its financial position during the first quarter through the repayment of debt incurred at the time of the merger. The company has repaid $98.5 million of its $140 million credit facility as of May 1, 2005, including $53.5 million since January 1, 2005, leaving a balance of $41.5 million as of May 1, 2005. He also noted that cash on hand at March 31, 2005 and May 1, 2005 totaled approximately $37 million and $38 million, respectively.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its first quarter results at 11:00 a.m. Eastern Time on Wednesday, May 11, 2005. The call-in number is 800-211-3767 (toll-free) or 312-461-9296 (toll). The pass code for the call is 8126403 (followed by the # sign). A replay of the call will be available from 2:30 p.m. ET on May 11 until 11:59 p.m. on Friday, May 27. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 8126403 (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
CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

                 
    December 31,     March 31,  
    2004     2005  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 46,995     $ 37,111  
Accounts receivable, net
    37,750       33,976  
Prepaid rent, expenses and other
    15,460       20,321  
Deferred income taxes
    26,906       26,626  
 
           
Total current assets
    127,111       118,034  
Property and equipment, net
    216,508       187,608  
Goodwill
    151,791       151,791  
Intangible assets, net
    67,129       59,037  
Deferred income tax
    225,253       224,662  
Other assets
    5,517       5,486  
 
           
 
  $ 793,309     $ 746,618  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Current maturities of long-term debt
  $ 47,558     $ 32,318  
Accounts payable and accrued expenses
    76,420       70,041  
Customer deposits
    4,316       3,971  
Deferred revenue
    23,623       22,475  
 
           
Total current liabilities
    151,917       128,805  
Long-term debt, less current maturities
    47,500       24,214  
Other long-term liabilities
    10,555       7,559  
 
           
Total liabilities
    209,972       160,578  
 
           
Stockholders’ equity:
               
Preferred stock
           
Common stock
    3       3  
Additional paid-in capital
    554,946       556,357  
Retained earnings
    28,388       29,680  
 
           
Total stockholders’ equity
    583,337       586,040  
 
           
 
  $ 793,309     $ 746,618  
 
           

 


 

USA MOBILITY, INC
CONDENSED CONSOLIDATED INCOME STATEMENTS

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

                 
    Three Months Ended  
    March 31,  
    2004     2005  
Revenues:
               
Services, rental and maintenance, net
  $ 119,546     $ 159,150  
Product sales
    4,113       6,527  
 
           
Total revenues
    123,659       165,677  
 
           
 
               
Operating expenses:
               
Cost of products sold
    938       1,279  
Service, rental, and maintenance
    39,362       56,973  
Selling and marketing
    9,120       10,470  
General and administrative
    32,941       53,140  
Depreciation and amortization
    26,309       38,535  
Stock based compensation
    688       1,411  
Restructuring charges
    3,018        
 
           
Total operating expenses
    112,376       161,808  
 
           
 
               
Operating income
    11,283       3,869  
Interest expense
    (3,400 )     (1,411 )
Interest income
    71       197  
Loss on extinguishment of debt
          (594 )
Other income
    168       293  
 
           
Income before income tax expense
    8,122       2,354  
Income tax expense
    (3,265 )     (1,062 )
 
           
Net income
  $ 4,857     $ 1,292  
 
           
 
               
Basic net income per common share
  $ 0.24     $ 0.05  
 
           
Diluted net income per common share
  $ 0.24     $ 0.05  
 
           
Basic weighted average common shares outstanding
    20,000,000       27,108,034  
 
           
Diluted weighted average common shares outstanding
    20,078,213       27,317,407  
 
           

 


 

USA MOBILITY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

                 
    Three Months Ended  
    March 31,  
    2004     2005  
Cash flows from operating activities:
               
Net income
  $ 4,857     $ 1,292  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    26,309       38,535  
Amortization of deferred financing costs
          505  
Amortization of stock compensation
    688       1,411  
Deferred income tax provision
    3,265       871  
Loss on extinguishment of debt
          594  
Gain on disposals of property and equipment
    (109 )     (26 )
Provisions for doubtful accounts, service adjustments and other
    2,280       7,005  
Changes in assets and liabilities:
               
Accounts receivable
    3,353       (3,333 )
Prepaid expenses and other
    (2,017 )     (4,861 )
Intangibles and other long-term assets
          (46 )
Accounts payable and accrued expenses
    (13,860 )     (6,379 )
Customer deposits and deferred revenue
    (1,866 )     (1,493 )
Other long-term liabilities
    1,620       (2,996 )
 
           
Net cash provided by operating activities
    24,520       31,079  
 
           
 
               
Cash flows from investing activities:
               
Purchases of property and equipment
    (5,701 )     (2,564 )
Proceeds from disposals of property and equipment
    750       25  
Receipts from note receivable
    56       102  
 
           
Net cash used for investing activities
    (4,895 )     (2,437 )
 
           
 
               
Cash flows from financing activities:
               
Repayment of long-term debt
    (20,000 )     (38,526 )
 
           
Net cash provided by/ (used for) financing activities
    (20,000 )     (38,526 )
 
           
 
               
Net (decrease) in cash and cash equivalents
    (375 )     (9,884 )
Cash and cash equivalents, beginning of period
    34,582       46,995  
 
           
Cash and cash equivalents, end of period
  $ 34,207     $ 37,111  
 
           
 
               
Supplemental disclosures:
               
Interest paid
  $ 1,903     $ 1,367  
 
           
Income taxes paid
  $     $  
 
           

 


 

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

                                         
    Three Months Ended  
    March 2004     June 2004     September 2004     December 2004     March 2005  
Direct One-Way:
                                       
Beginning units in service
    3,393,000       3,247,000       3,122,000       2,997,000       4,557,000  
Unit in service acquired
                            1,757,000          
Unit in service growth (decline)
    (146,000 )     (125,000 )     (125,000 )     (197,000 )     (188,000 )
 
   
Ending units in service
    3,247,000       3,122,000       2,997,000       4,557,000       4,369,000  
 
   
 
                                       
 
Service, rental and maintenance revenues (000s)
  $ 89,705     $ 83,584     $ 79,079     $ 97,465     $ 113,300  
Average revenue per unit
  $ 9.00     $ 8.77     $ 8.62     $ 8.60     $ 8.46  
 
 
                                       
Two-Way:
                                       
Beginning units in service
    281,000       269,000       258,000       250,000       446,000  
Unit in service acquired
                            211,000          
Unit in service growth (decline)
    (12,000 )     (11,000 )     (8,000 )     (15,000 )     (25,000 )
 
   
Ending units in service
    269,000       258,000       250,000       446,000       421,000  
 
   
 
                                       
 
Service, rental and maintenance revenues (000s)
  $ 21,950     $ 20,739     $ 19,561     $ 24,961     $ 29,481  
Average revenue per unit
  $ 26.66     $ 26.28     $ 25.74     $ 23.76     $ 22.67  
 
 
                                       
 
Total Direct Average revenue per unit
  $ 10.35     $ 10.09     $ 9.92     $ 9.89     $ 9.72  
 
 
                                       
Indirect One-Way:
                                       
Beginning units in service
    754,000       654,000       577,000       511,000       1,116,000  
Unit in service acquired
                            690,000          
Unit in service growth (decline)
    (100,000 )     (77,000 )     (66,000 )     (85,000 )     (128,000 )
 
   
Ending units in service
    654,000       577,000       511,000       1,116,000       988,000  
 
   
 
                                       
 
Service, rental and maintenance revenues (000s)
  $ 7,359     $ 6,369     $ 5,713     $ 8,942     $ 11,261  
Average revenue per unit
  $ 3.49     $ 3.47     $ 3.53     $ 3.67     $ 3.57  
 
 
                                       
Two-Way:
                                       
Beginning units in service
    9,000       8,000       12,000       14,000       83,000  
Unit in service acquired
                            86,000          
Unit in service growth (decline)
    (1,000 )     4,000       2,000       (17,000 )     (3,000 )
 
   
Ending units in service
    8,000       12,000       14,000       83,000       80,000  
 
   
 
                                       
 
Service, rental and maintenance revenues (000s)
  $ 532     $ 482     $ 432     $ 1,783     $ 2,545  
Average revenue per unit
  $ 21.06     $ 14.92     $ 10.37     $ 10.92     $ 10.40  
 
 
                                       
 
Total Indirect Average revenue per unit
  $ 3.69     $ 3.65     $ 3.68     $ 4.15     $ 4.06  
 
 
                                       
Totals
                                       
Beginning units in service
    4,437,000       4,178,000       3,969,000       3,772,000       6,202,000  
Unit in service acquired
                      2,744,000        
Unit in service growth (decline)
    (259,000 )     (209,000 )     (197,000 )     (314,000 )     (344,000 )
 
   
Ending units in service
    4,178,000       3,969,000       3,772,000       6,202,000       5,858,000  
 
   
 
                                       
 
Service, rental and maintenance revenues (000s)
  $ 119,546     $ 111,174     $ 104,785     $ 133,151     $ 156,588  
Average revenue per unit
  $ 9.25     $ 9.12     $ 9.04     $ 8.90     $ 8.66  
 

Note: Amounts have been been adjusted for rounding.

 


 

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

                                         
    Three Months Ended  
    March 2004     June 2004     September 2004     December 2004     March 2005  
Direct One-Way:
                                       
Beginning units in service
    5,407,000       5,181,000       4,994,000       4,779,000       4,557,000  
Gross placements
    229,000       185,000       186,000       170,000       144,000  
Disconnects
    (455,000 )     (372,000 )     (401,000 )     (392,000 )     (332,000 )
 
                             
Ending units in service
    5,181,000       4,994,000       4,779,000       4,557,000       4,369,000  
 
                             
 
                                       
Two-Way:
                                       
Beginning units in service
    530,000       507,000       486,000       473,000       446,000  
Gross placements
    40,000       32,000       35,000       29,000       22,000  
Disconnects
    (63,000 )     (53,000 )     (48,000 )     (56,000 )     (47,000 )
 
                             
Ending units in service
    507,000       486,000       473,000       446,000       421,000  
 
                             
 
                                       
Indirect One-Way:
                                       
Beginning units in service
    1,845,000       1,603,000       1,382,000       1,230,000       1,116,000  
Gross placements
    157,000       145,000       160,000       143,000       107,000  
Disconnects
    (399,000 )     (366,000 )     (312,000 )     (257,000 )     (235,000 )
 
                             
Ending units in service
    1,603,000       1,382,000       1,230,000       1,116,000       988,000  
 
                             
 
                                       
Two-Way:
                                       
Beginning units in service
    120,000       112,000       110,000       104,000       83,000  
Gross placements
    20,000       16,000       20,000       7,000       7,000  
Disconnects
    (28,000 )     (18,000 )     (26,000 )     (28,000 )     (10,000 )
 
                             
Ending units in service
    112,000       110,000       104,000       83,000       80,000  
 
                             
 
                                       
Total
                                       
Beginning units in service
    7,902,000       7,403,000       6,972,000       6,586,000       6,202,000  
Gross placements
    446,000       378,000       401,000       350,000       281,000  
Disconnects
    (945,000 )     (809,000 )     (787,000 )     (734,000 )     (625,000 )
 
                             
Ending units in service
    7,403,000       6,972,000       6,586,000       6,202,000       5,858,000  
 
                             

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