EX-99.1 2 w37906exv99w1.htm EX-99.1 exv99w1
 

Exhibit 99.1
(USAMOBILITY LOGO)
News Release
             
For Immediate Release
      Contact:   Bob Lougee (703) 721-3080
Wednesday, August 1, 2007
          bob.lougee@usamobility.com
USA Mobility Reports Second Quarter Operating Results
Net Income Increases to $13.0 Million;
Subscriber and Revenue Trends Improve,
Board Declares $0.65 Per Share Cash Distribution
Alexandria, VA (August 1, 2007) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the second quarter ended June 30, 2007. Reported net income was $13.0 million, or $0.47 per fully diluted share, compared to $11.0 million, or $0.40 per fully diluted share, in the second quarter of 2006.
Key results in the second quarter included:
    Reported revenue was $107.5 million, compared to $111.5 million in the first quarter of 2007 and $127.2 million in the second quarter of 2006.
 
    The quarterly rate of revenue erosion improved to 3.7 percent from 3.9 percent in the first quarter, while the annual rate of revenue erosion in second quarter improved to 15.5 percent from 17.3 percent in the first quarter of 2007.
 
    Average revenue per unit (“ARPU”) was $8.54, compared to $8.65 in the first quarter and $8.74 in the year-earlier quarter.
 
    Operating expenses — excluding depreciation, amortization and accretion — totaled $74.1 million, a reduction of $2.3 million, or 3.0 percent, from the first quarter and a reduction of $15.4 million, or 17.2 percent, from the second quarter of 2006.
 
    EBITDA (earnings before interest, tax, depreciation, amortization and accretion) totaled $33.3 million, while EBITDA margin (or EBITDA as a percentage of revenue) was 31.0 percent.
 
    Operating income was $20.9 million, compared to $18.7 million in the second quarter of 2006.

 


 

    Net unit loss was 155,000, compared to 193,000 in the first quarter and 203,000 in the year-earlier quarter. Units in service at June 30, 2007 totaled 3,757,000, compared to 3,912,000 at March 31, 2007 and 4,431,000 at June 30, 2006.
 
    The quarterly rate of subscriber erosion was 4.0 percent, compared to 4.7 percent in the first quarter. The annual rate of unit loss improved to 15.2 percent at June 30, 2007 from 15.6 percent at March 31, 2007.
 
    Capital expenses were $3.5 million, compared to $5.1 million in the first quarter.
 
    The Company’s cash balance at June 30, 2007 was $57.6 million.
“USA Mobility continued to make steady progress during the quarter toward our 2007 goals and objectives,” said Vincent D. Kelly, president and chief executive officer. “Despite the challenges of an increasingly competitive wireless industry, the Company’s quarterly and annual rate of subscriber and revenue erosion again improved, albeit modestly. However, we are still challenged with a very high rate of gross subscriber cancellations, losing approximately two subscribers for every new subscriber we added last quarter. During the quarter, we partially offset the revenue impact of these losses through higher gross pager placements as well as increases in such non-pager revenue as cellular and product sales.
“In addition,” Kelly said, “our strategy to aggressively market and sell our services to our core subscriber segments generated some positive results, particularly in healthcare – now 40 percent of our direct subscriber base — where subscriber levels remained relatively flat with the prior quarter. We look for continued progress in these core segments, which include Government Services, Large Enterprises and First Responders, in the second half of 2007.” Toward that end, Kelly said the Company announced several product and service enhancements during the quarter aimed at its core customers. “In June, for example, we launched the nation’s first wide area coaster pager, called ReadyCall, to support healthcare providers. We also formed an alliance with WeatherBug Professional to provide severe weather alerts to first responder organizations.”
Kelly also noted that the Company returned approximately $45.0 million in capital to stockholders during the second quarter in the form of cash distributions, consistent with its strategy of returning cash to stockholders. The Company paid a regular quarterly cash distribution of $0.65 per share and a special cash distribution of $1.00 per share on June 7, 2007. Both distributions were paid as a return of capital.
“Based on these results and our current cash position,” Kelly added, “the Company’s Board of Directors earlier today declared a regular quarterly cash distribution of $0.65 per share, payable on September 6, 2007 to stockholders of record on August 16, 2007.” The Company expects the entire amount of the cash distribution to be paid as a return of capital.

 


 

“The payment of cash distributions reflects our commitment to return cash to stockholders” Kelly said. “However,” he cautioned, “because the Company faces increasing operating challenges as our revenue base erodes and our opportunity to extract costs diminishes, the Board and management will weigh our options for returning capital to stockholders very carefully going forward to ensure that we sufficiently meet our internal capital requirements while continuing to operate the Company efficiently and profitably. Our top two risk factors have to do with revenue erosion and our ability to cut costs. We have seen continued high levels of gross subscriber cancellations this quarter. We have also fallen behind on our site rent reduction savings forecast though we made up for that shortfall in other expense areas this quarter. However, the longer term impact of higher than anticipated gross subscriber cancellations as well as higher than forecast expenses would be to reduce the amount of cash we will generate in future periods. So while we are pleased with many aspects of our current operating performance, we are also cautious of these risks and we are working hard to mitigate them.”
Thomas L. Schilling, chief financial officer, said the Company continued to reduce operating expenses during the quarter. “Excluding depreciation, amortization and accretion, operating expenses decreased 3.0 percent from the first quarter and 17.2 percent from the second quarter of 2006,” he said. “Although the pace of expense reduction slowed from previous quarters, as expected, we continued to meet our expense reduction goals in most major expense categories. One exception,” Schilling noted, “was slightly higher than expected network costs in connection with tower site leases. While we will continue to reduce total operating expenses, we expect site lease expense to exceed earlier expectations for at least the next 18 months.” Schilling said the combination of lower revenue and ARPU in the quarter, along with a slowing rate of operating expense reduction, contributed to a decrease in EBITDA from the prior quarter. Even so, he added, the EBITDA margin of 31.0 percent in the second quarter increased from 29.6 percent in the year-earlier quarter.
“Overall, we are pleased and encouraged by our second quarter financial results, while recognizing the risks and challenges we face,” Schilling said. “However, due to our strong first half performance, we are adjusting our previous financial guidance for 2007 and now forecasting revenues between $420 million to $425 million versus our previous guidance of $400 million to $410 million, operating expenses – excluding depreciation, amortization and accretion – between $293 million to $298 million versus our previous guidance of $295 million to $300 million, and leaving our guidance on capital expenses unchanged at between $18 million to $20 million.”
* * * * * * * *
As previously announced, USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Thursday, August 2, 2007. The dial-in number for the call is 866-409-1563 (toll-free) or 913-312-6683 (toll). The pass code for the call is 1745515. A replay of the call will be available from 2:30 p.m. ET on August 2 until 11:59 p.m. on Thursday, August 16. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 1745515.
* * * * * * * * *

 


 

About USA Mobility
USA Mobility, Inc., headquartered in Alexandria, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare, government, large enterprise and emergency response sectors. As a single-source provider, USA Mobilitys focus is on the business-to-business marketplace and supplying wireless connectivity solutions to over 70 percent of the Fortune 1000 companies. The Company operates nationwide networks for both one-way paging and advanced two-way messaging services. In addition, USA Mobility offers mobile voice and data services through Sprint Nextel, including BlackBerry devices 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    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
Revenue:
                                                   
Paging service
  $ 125,673     $ 118,872     $ 112,129     $ 107,520     $ 104,003       $ 98,248    
Cellular
    2,026       2,096       1,728       1,877       2,087         2,497    
Product sales
    6,131       5,180       4,851       5,394       4,400         5,335    
Other
    1,062       1,057       845       1,253       1,052         1,390    
               
Total revenue
    134,892       127,205       119,553       116,044       111,542         107,470    
               
 
                                                   
Operating expenses:
                                                   
Cost of products sold
    786       1,169       1,184       698       687         1,508    
Service, rental and maintenance
    48,092       44,769       42,489       41,770       39,033         39,356    
Selling and marketing
    11,059       11,118       10,929       10,796       10,242         9,975    
General and administrative
    36,142       32,208       30,994       28,533       26,448         23,297    
Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318         12,450    
Severance and restructuring
    170       321       682       3,413       17            
               
Total operating expenses
    115,043       108,485       104,639       102,454       89,745         86,586    
               
% of total revenue
    85.3 %     85.3 %     87.5 %     88.3 %     80.5 %       80.6 %  
 
               
Operating income
    19,849       18,720       14,914       13,590       21,797         20,884    
               
% of total revenue
    14.7 %     14.7 %     12.5 %     11.7 %     19.5 %       19.4 %  
 
                                                   
Interest income, net
    549       1,023       717       1,579       951         932    
Other income (expense), net
    62       988       103       (353 )     (516 )       826    
               
Income before income tax expense
    20,460       20,731       15,734       14,816       22,232         22,642    
Income tax expense
    (8,195 )     (9,779 )     (7,075 )     (6,511 )     (9,206 )       (9,676 )  
               
Net income
  $ 12,265     $ 10,952     $ 8,659     $ 8,305     $ 13,026       $ 12,966    
               
 
                                                   
Basic net income per common share
  $ 0.45     $ 0.40     $ 0.32     $ 0.30     $ 0.47       $ 0.47    
                 
Diluted net income per common share
  $ 0.45     $ 0.40     $ 0.31     $ 0.30     $ 0.47       $ 0.47    
                 
 
                                                   
Basic weighted average common shares outstanding
    27,397,307       27,399,533       27,400,853       27,401,492       27,434,418         27,440,094    
                 
Diluted weighted average common shares outstanding
    27,503,230       27,587,958       27,575,039       27,597,919       27,578,066         27,570,346    
                 
 
                                                   
Reconciliation of operating income to EBITDA (b):
                                                   
Operating income
  $ 19,849     $ 18,720     $ 14,914     $ 13,590     $ 21,797       $ 20,884    
Add back: Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318         12,450    
               
EBITDA
  $ 38,643     $ 37,620     $ 33,275     $ 30,834     $ 35,115       $ 33,334    
                 
% of total revenue
    28.6 %     29.6 %     27.8 %     26.6 %     31.5 %       31.0 %  
 
                                                 
 
(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    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
Units in service
                                                   
 
                                                   
Beginning units in service
                                                   
Direct one-way
    3,835       3,678       3,547       3,429       3,318         3,179    
Direct two-way
    348       324       307       292       280         263    
               
Total direct
    4,183       4,002       3,854       3,721       3,598         3,442    
               
Indirect one-way
    603       535       483       449       417         378    
Indirect two-way
    100       97       94       89       90         92    
               
Total indirect
    703       632       577       538       507         470    
               
Total beginning units in service
    4,886       4,634       4,431       4,259       4,105         3,912    
               
 
                                                   
Gross placements
                                                   
Direct one-way
    108       119       120       112       91         112    
Direct two-way
    15       15       15       15       12         14    
               
Total direct
    123       134       135       127       103         126    
               
Indirect one-way
    24       18       24       36       19         25    
Indirect two-way
    4       5       5       6       8         8    
               
Total indirect
    28       23       29       42       27         33    
               
Total gross placements
    151       157       164       169       130         159    
               
 
                                                   
Gross disconnects
                                                   
Direct one-way
    (265 )     (250 )     (238 )     (222 )     (230 )       (220 )  
Direct two-way
    (39 )     (32 )     (30 )     (28 )     (29 )       (32 )  
               
Total direct
    (304 )     (282 )     (268 )     (250 )     (259 )       (252 )  
               
Indirect one-way
    (92 )     (70 )     (58 )     (68 )     (58 )       (57 )  
Indirect two-way
    (8 )     (8 )     (10 )     (5 )     (6 )       (5 )  
               
Total indirect
    (100 )     (78 )     (68 )     (73 )     (64 )       (62 )  
               
Total gross disconnects
    (404 )     (360 )     (336 )     (323 )     (323 )       (314 )  
               
 
                                                   
Net gain (loss)
                                                   
Direct one-way
    (157 )     (131 )     (118 )     (111 )     (139 )       (108 )  
Direct two-way
    (24 )     (17 )     (15 )     (12 )     (17 )       (18 )  
               
Total direct
    (181 )     (148 )     (133 )     (123 )     (156 )       (126 )  
               
Indirect one-way
    (68 )     (52 )     (34 )     (32 )     (39 )       (32 )  
Indirect two-way
    (4 )     (3 )     (5 )     1       2         3    
               
Total indirect
    (72 )     (55 )     (39 )     (31 )     (37 )       (29 )  
               
Total net change
    (253 )     (203 )     (172 )     (154 )     (193 )       (155 )  
               
 
                                                   
Ending units in service
                                                   
Direct one-way
    3,678       3,547       3,429       3,318       3,179         3,071    
Direct two-way
    324       307       292       280       263         245    
               
Total direct
    4,002       3,854       3,721       3,598       3,442         3,316    
               
Indirect one-way
    535       483       449       417       378         346    
Indirect two-way
    97       94       89       90       92         95    
               
Total indirect
    632       577       538       507       470         441    
               
Total ending units in service
    4,634       4,431       4,259       4,105       3,912         3,757    
               
 
(a)   Slight variations in totals are due to rounding.

 


 

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

(unaudited)
                                                     
    For the three months ended    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
ARPU
                                                   
 
Direct one-way
  $ 8.17     $ 8.06     $ 7.95     $ 7.86     $ 7.96       $ 7.87    
Direct two-way
    23.61       23.75       23.27       23.61       23.91         24.02    
               
Total direct
    9.44       9.32       9.16       9.09       9.18         9.08    
 
                                                   
Indirect one-way
    4.53       4.59       4.49       4.56       4.45         4.12    
Indirect two-way
    6.93       6.99       6.53       6.63       6.30         6.10    
               
Total indirect
    4.89       4.97       4.82       4.92       4.79         4.53    
 
                                                   
Total one-way
    7.69       7.63       7.54       7.49       7.57         7.48    
Total two-way
    19.85       19.87       19.35       19.55       19.46         19.18    
               
Total paging ARPU
  $ 8.80     $ 8.74     $ 8.60     $ 8.57     $ 8.65       $ 8.54    
               
 
                                                   
Gross disconnect rate (a)
                                                   
               
Direct one-way
    -6.9 %     -6.8 %     -6.7 %     -6.5 %     -6.9 %       -6.9 %  
Direct two-way
    -11.1 %     -9.8 %     -9.8 %     -9.5 %     -10.5 %       -12.2 %  
               
Total direct
    -7.3 %     -7.0 %     -7.0 %     -6.7 %     -7.2 %       -7.3 %  
 
                                                   
Indirect one-way
    -15.3 %     -13.1 %     -12.0 %     -15.1 %     -14.0 %       -15.1 %  
Indirect two-way
    -7.1 %     -8.2 %     -10.6 %     -5.8 %     -6.2 %       -5.4 %  
               
Total indirect
    -14.2 %     -12.4 %     -11.8 %     -13.5 %     -12.6 %       -13.2 %  
 
                                                   
Total one-way
    -8.1 %     -7.6 %     -7.4 %     -7.5 %     -7.7 %       -7.8 %  
Total two-way
    -10.2 %     -9.5 %     -10.0 %     -8.6 %     -9.4 %       -10.4 %  
               
Total paging gross disconnect rate
    -8.3 %     -7.8 %     -7.6 %     -7.6 %     -7.9 %       -8.0 %  
               
 
                                                   
Net gain / loss rate (b)
                                                   
               
Direct one-way
    -4.1 %     -3.6 %     -3.3 %     -3.2 %     -4.2 %       -3.4 %  
Direct two-way
    -6.8 %     -5.2 %     -4.9 %     -4.4 %     -6.0 %       -6.8 %  
               
Total direct
    -4.3 %     -3.7 %     -3.5 %     -3.3 %     -4.3 %       -3.7 %  
 
                                                   
Indirect one-way
    -11.3 %     -9.8 %     -7.1 %     -7.1 %     -9.5 %       -8.5 %  
Indirect two-way
    -3.5 %     -2.6 %     -4.5 %     1.0 %     2.5 %       3.3 %  
               
Total indirect
    -10.2 %     -8.7 %     -6.7 %     -5.7 %     -7.3 %       -6.2 %  
 
                                                   
Total one-way
    -5.1 %     -4.3 %     -3.8 %     -3.7 %     -4.8 %       -3.9 %  
Total two-way
    -6.1 %     -4.6 %     -4.8 %     -3.1 %     -3.9 %       -4.2 %  
               
Total paging net gain / loss rate
    -5.2 %     -4.4 %     -3.9 %     -3.6 %     -4.7 %       -4.0 %  
               
 
(a)   Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
 
(b)   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 CUSTOMER SEGMENT (a)

(unaudited)
                                                     
    For the three months ended    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
Gross placement rate
                                                   
Healthcare
    3.8 %     4.5 %     4.1 %     4.2 %     3.6 %       4.8 %  
Government
    2.2 %     2.3 %     2.6 %     2.1 %     2.2 %       2.5 %  
Large enterprise
    2.6 %     3.0 %     3.8 %     3.9 %     2.7 %       3.0 %  
Other
    2.7 %     3.0 %     3.3 %     3.1 %     2.6 %       3.2 %  
               
Total direct
    2.9 %     3.3 %     3.5 %     3.4 %     2.9 %       3.7 %  
Total indirect
    4.0 %     3.7 %     5.1 %     7.8 %     5.3 %       6.9 %  
               
Total
    3.1 %     3.4 %     3.7 %     4.0 %     3.2 %       4.1 %  
               
 
                                                   
Gross disconnect rate
                                                   
Healthcare
    -4.6 %     -4.7 %     -5.3 %     -4.6 %     -4.6 %       -5.0 %  
Government
    -5.7 %     -6.3 %     -5.9 %     -5.8 %     -5.8 %       -6.4 %  
Large enterprise
    -7.7 %     -7.4 %     -6.9 %     -6.8 %     -8.4 %       -9.3 %  
Other
    -10.3 %     -9.5 %     -9.3 %     -9.5 %     -10.9 %       -10.5 %  
               
Total direct
    -7.3 %     -7.0 %     -7.0 %     -6.7 %     -7.2 %       -7.3 %  
Total indirect
    -14.2 %     -12.4 %     -11.8 %     -13.5 %     -12.6 %       -13.2 %  
               
Total
    -8.3 %     -7.8 %     -7.6 %     -7.6 %     -7.8 %       -8.0 %  
               
 
                                                   
Net loss rate
                                                   
Healthcare
    -0.7 %     -0.2 %     -1.1 %     -0.4 %     -1.1 %       -0.2 %  
Government
    -3.5 %     -4.1 %     -3.3 %     -3.6 %     -3.6 %       -3.8 %  
Large enterprise
    -5.1 %     -4.3 %     -3.0 %     -2.9 %     -5.7 %       -6.2 %  
Other
    -7.5 %     -6.6 %     -6.1 %     -6.4 %     -8.3 %       -7.2 %  
               
Total direct
    -4.3 %     -3.7 %     -3.5 %     -3.3 %     -4.3 %       3.7 %  
Total indirect
    -10.2 %     -8.7 %     -6.7 %     -5.7 %     -7.3 %       -6.2 %  
               
Total
    -5.2 %     -4.4 %     -3.9 %     -3.6 %     -4.7 %       -4.0 %  
               
 
                                                   
End of period units in service % of total
                                                   
Healthcare
    29.0 %     30.5 %     31.5 %     32.5 %     33.6 %       35.0 %  
Government
    16.4 %     16.4 %     16.6 %     16.5 %     17.9 %       18.0 %  
Large enterprise
    10.2 %     10.2 %     10.1 %     10.3 %     13.8 %       13.6 %  
Other
    30.8 %     29.9 %     29.2 %     28.3 %     22.7 %       21.7 %  
               
Total direct
    86.4 %     87.0 %     87.4 %     87.6 %     88.0 %       88.3 %  
Total indirect
    13.6 %     13.0 %     12.6 %     12.4 %     12.0 %       11.7 %  
               
Total
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %       100.0 %  
               
 
(a)   Slight variations in totals are due to rounding.

 


 

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

(unaudited)
                                                     
    For the three months ended    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
Account size ending units in service (000’s)
                                                   
1 to 3 units
    358       327       300       275       251         232    
4 to 10 units
    203       188       175       163       150         139    
11 to 50 units
    489       456       426       398       368         344    
51 to 100 units
    265       249       238       226       215         200    
101 to 1,000 units
    1,068       1,027       999       967       924         898    
>1,000 units
    1,619       1,607       1,583       1,569       1,534         1,503    
               
Total
    4,002       3,854       3,721       3,598       3,442         3,316    
               
 
                                                   
End of period units in service % of total direct
                                                   
1 to 3 units
    8.9 %     8.5 %     8.1 %     7.6 %     7.3 %       7.0 %  
4 to 10 units
    5.1 %     4.9 %     4.7 %     4.5 %     4.4 %       4.2 %  
11 to 50 units
    12.2 %     11.8 %     11.4 %     11.1 %     10.7 %       10.4 %  
51 to 100 units
    6.6 %     6.5 %     6.4 %     6.3 %     6.2 %       6.0 %  
101 to 1,000 units
    26.7 %     26.6 %     26.9 %     26.9 %     26.8 %       27.1 %  
>1,000 units
    40.5 %     41.7 %     42.5 %     43.6 %     44.6 %       45.3 %  
               
Total
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %       100.0 %  
               
 
                                                   
Account size net loss rate
                                                   
1 to 3 units
            -8.7 %     -8.0 %     -8.3 %     -9.0 %       -7.6 %  
4 to 10 units
            -7.5 %     -6.9 %     -6.6 %     -7.9 %       -7.6 %  
11 to 50 units
            -6.8 %     -6.5 %     -6.6 %     -7.6 %       -6.4 %  
51 to 100 units
            -6.2 %     -4.2 %     -5.2 %     -4.9 %       -6.9 %  
101 to 1,000 units
            -3.8 %     -2.7 %     -3.2 %     -4.4 %       -2.8 %  
>1,000 units
            -0.7 %     -1.6 %     -0.9 %     -2.2 %       -2.0 %  
                       
Total
            -3.7 %     -3.5 %     -3.3 %     -4.3 %       -3.7 %  
                       
 
                                                   
Account size ARPU
                                                   
1 to 3 units
  $ 14.02     $ 14.14     $ 14.07     $ 14.16     $ 14.71       $ 14.67    
4 to 10 units
    13.02       13.08       12.99       13.03       13.42         13.40    
11 to 50 units
    10.88       10.81       10.72       10.73       10.95         10.93    
51 to 100 units
    9.59       9.53       9.39       9.27       9.44         9.48    
101 to 1,000 units
    8.34       8.29       8.21       8.15       8.24         8.24    
>1,000 units
    8.18       8.05       7.89       7.88       7.92         7.80    
               
Total
  $ 9.44     $ 9.32     $ 9.16     $ 9.09     $ 9.18       $ 9.08    
               
 
                                                   
Cellular revenue
                                                   
Number of activations
    6,829       6,969       6,374       5,818       5,450         8,046    
               
Revenue from cellular services (000’s)
  $ 2,026     $ 2,096     $ 1,728     $ 1,877     $ 2,087       $ 2,497    
               
 
(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    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07       6/30/07    
Cost of products sold
  $ 786     $ 1,169     $ 1,184     $ 698     $ 687       $ 1,508    
               
 
                                                   
Service, rental and maintenance
                                                   
Site rent
    26,099       25,021       24,314       24,204       22,284         22,115    
Telecommunications and related
    9,099       8,480       7,343       7,185       7,058         6,622    
Payroll and related
    7,046       6,578       6,517       6,136       6,488         6,657    
Stock based compensation
    81       83       78       78       31         30    
Other
    5,767       4,607       4,237       4,167       3,172         3,932    
               
Total service, rental and maintenance
    48,092       44,769       42,489       41,770       39,033         39,356    
               
 
                                                   
Selling and marketing
                                                   
Payroll and related
    7,709       7,317       6,996       6,902       6,740         6,259    
Commissions
    2,226       2,373       2,407       2,577       2,170         2,386    
Stock based compensation
    171       166       178       55       93         91    
Other
    953       1,262       1,348       1,262       1,239         1,239    
               
Total selling and marketing
    11,059       11,118       10,929       10,796       10,242         9,975    
               
 
                                                   
General and administrative
                                                   
Payroll and related
    12,330       11,412       9,517       9,287       9,560         9,343    
Stock based compensation
    431       461       484       462       304         299    
Bad debt
    1,790       1,705       2,035       1,975       1,402         1,075    
Facility rent
    4,104       3,973       3,468       3,408       2,947         3,066    
Telecommunications
    2,248       1,982       1,858       1,714       1,764         1,526    
Outside services
    6,419       5,631       6,162       7,122       5,504         5,222    
Taxes, licenses and permits
    4,149       2,708       3,036       (501 )     2,316         (20 )  
Other
    4,671       4,336       4,434       5,066       2,651         2,786    
               
Total general and administrative
    36,142       32,208       30,994       28,533       26,448         23,297    
               
 
                                                   
Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318         12,450    
Severance and restructuring
    170       321       682       3,413       17            
               
 
                                                   
Operating expenses
  $ 115,043     $ 108,485     $ 104,639     $ 102,454     $ 89,745       $ 86,586    
               
 
                                                   
Capital expenditures
    4,424       4,595       5,152       6,819       5,086         3,525    
 
                                                 
 
(a)   Slight variations in totals are due to rounding.

 


 

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

(in thousands)
                     
    12/31/06       6/30/07    
              (unaudited)    
Assets
                   
Current assets:
                   
Cash and cash equivalents
  $ 66,507       $ 57,636    
Accounts receivable, net
    26,364         27,672    
Prepaid expenses and other
    12,294         10,788    
Deferred income tax assets
    18,399         16,864    
 
               
Total current assets
  $ 123,564       $ 112,960    
Property and equipment, net
    91,562         79,838    
Goodwill
    159,438         199,771    
Intangible assets, net
    26,339         21,091    
Deferred income tax assets
    180,244         156,074    
Other assets
    7,067         7,113    
 
               
Total assets
  $ 588,214       $ 576,847    
 
               
 
                   
Liabilities and stockholders’ equity
                   
Current liabilities:
                   
Current maturities of long-term debt
  $ 0       $ 0    
Accounts payable and accrued liabilities
    63,979         55,442    
Distributions payable
    435         157    
Customer deposits
    2,250         1,858    
Deferred revenue
    16,194         15,667    
 
               
Total current liabilities
  $ 82,858       $ 73,124    
Other long-term liabilities
    29,384         68,793    
 
               
Total liabilities
  $ 112,242       $ 141,917    
 
               
Stockholders’ equity:
                   
Preferred stock
  $       $    
Common stock
    3         3    
Additional paid-in capital
    475,969         434,927    
Retained earnings
            0    
 
               
Total stockholders’ equity
    475,972         434,930    
 
               
Total liabilities and stockholders’ equity
  $ 588,214       $ 576,847    
 
               
 
(a)   Slight variations in totals are due to rounding.

 


 

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

(unaudited and in thousands)
                     
    For the six months ended    
    6/30/06       6/30/07    
Cash flows from operating activities:
                   
Net income
  $ 23,217       $ 25,992    
Adjustments to reconcile net income to net cash provided by operating activities:
                   
Depreciation, amortization and accretion
    37,695         25,768    
Deferred income tax expense
    6,446         15,230    
Amortization of stock based compensation
    1,393         849    
Provisions for doubtful accounts and service credits
    7,897         6,069    
Loss on disposals of property and equipment
    404         634    
Changes in assets and liabilities:
                   
Accounts receivable
    (723 )       (7,376 )  
Prepaid expenses and other
    (872 )       1,667    
Intangibles and other long-term assets
    321         345    
Accounts payable and accrued liabilities
    (7,253 )       (8,948 )  
Customer deposits and deferred revenue
    (961 )       (919 )  
Other long-term liabilities
    12,839         3,116    
 
               
Net cash provided by operating activities
  $ 80,403       $ 62,427    
 
               
 
                   
Cash flows from investing activities:
                   
Purchases of property and equipment
    (9,019 )       (8,611 )  
Proceeds from disposals of property and equipment
    56         129    
Receipts from long-term notes receivable
    190            
 
               
Net cash used in investing activities
  $ (8,773 )     $ (8,482 )  
 
               
 
                   
Cash flows from financing activities:
                   
Repayment of long-term debt
    (13 )          
Cash distributions to stockholders
            (62,816 )  
 
               
Net cash used in financing activities
  $ (13 )     $ (62,816 )  
 
               
 
                   
Net increase (decrease) in cash and cash equivalents
    71,617         (8,871 )  
Cash and cash equivalents, beginning of period
    37,547         66,507    
 
               
Cash and cash equivalents, end of period
  $ 109,164       $ 57,636    
 
               
 
                   
Supplemental disclosure:
                   
Interest paid
  $ 17       $ 7    
 
               
 
(a)   Slight variations in totals are due to rounding.