EX-99.1 2 w41763exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1
(USA MOBILITY LOGO)
         
For Immediate Release
  Contact:   Bob Lougee   (703) 721-3080
Wednesday, October 31, 2007
      bob.lougee@usamobility.com
USA Mobility Reports Third Quarter Operating Results;
Board Declares Quarterly Cash Distribution of $0.65 Per Share
Net Income Totals $20.3 Million as Subscriber and Revenue Trends Improve
Alexandria, VA (October 31, 2007) — 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, 2007. Reported net income was $20.3 million, or $0.74 per fully diluted share, compared to $8.7 million, or $0.31 per fully diluted share, in the third quarter of 2006.
In addition, on October 30, 2007 the Company’s Board of Directors declared a regular quarterly cash distribution of $0.65 per share. The cash distribution will be paid on November 29, 2007 to stockholders of record on November 8, 2007. The Company expects the entire amount of the cash distribution to be paid as a return of capital.
Third quarter results included:
    Reported revenue totaled $105.4 million, compared to $107.5 million in the second quarter of 2007 and $119.6 million in the third quarter of 2006.
 
    The quarterly rate of revenue erosion improved to 1.9 percent from 3.7 percent in the second quarter, while the annual rate of revenue erosion improved to 11.8 percent in the third quarter compared to 15.5 percent in the second quarter and 17.3 percent in the first quarter of 2007.
 
    Average revenue per unit (“ARPU”) improved to $8.62, compared to $8.54 in the second quarter and $8.60 in the year-earlier quarter.
 
    Operating expenses — excluding depreciation, amortization and accretion — totaled $73.9 million, a reduction of $12.4 million, or 14.4 percent, from the third quarter of 2006.
 
    EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) was $31.6 million for the third quarter, while EBITDA margin (or EBITDA as a percentage of revenue) was 29.9 percent.
 
    Operating income totaled $19.5 million, compared to $14.9 million in the third quarter of 2006.
 
    Net unit loss was 137,000, compared to 155,000 in the second quarter and 193,000 in the first quarter of 2007 and 172,000 in the year-earlier quarter. Units in service at September 30, 2007 totaled 3,620,000, compared to 3,757,000 at June 30, 2007 and 4,259,000 at September 30, 2006.
 
    The quarterly rate of subscriber erosion improved to 3.7 percent, compared to 4.0 percent in the second quarter and 4.7 percent in the first quarter. The annual rate of unit loss improved to 15.0 percent at September 30, 2007 from 15.2 percent at June 30, 2007.
 
    Capital expenses were $4.5 million, compared to $5.2 million in the year-earlier quarter.
 
    The Company’s cash balance at September 30, 2007 was $63.5 million.

 


 

“We once again reported an extremely positive quarter, meeting or exceeding the majority of our business goals and objectives,” said Vincent D. Kelly, president and chief executive officer. “Revenue declined at its lowest level in years, cash flow generation remained strong, and we made additional improvements to our cost structure — including solid progress on our site rent rationalization plan. In addition, the rate of subscriber churn and average revenue per unit showed modest improvement from the prior quarter. Overall, we were pleased and encouraged by the Company’s operating results for the quarter.”
Kelly said the Company’s strategy to focus its selling and marketing efforts around three core subscriber segments, including Healthcare Providers, Government Services and Large Enterprises, all of which include First Responders, continued to generate positive results in the third quarter. “Among other new business opportunities in the government and healthcare sectors, we were pleased to expand our relationship with the U.S. Department of Health and Human Services (DHHS) by providing additional paging units for the National Disaster Medical System, the agency’s nationwide emergency response system. Given the effectiveness of our networks in disaster scenarios, we look to establish similar relationships with other federal, state and local government agencies to help them meet their emergency response communications needs.”
Kelly also noted that the Company returned approximately $17.7 million in capital to stockholders during the third quarter in the form of a cash distribution, consistent with its strategy of returning cash to stockholders. The cash distribution of $0.65 per share was paid on September 6, 2007. Including quarterly and special cash distributions paid earlier in the year, the Company has returned approximately $80.5 million in capital to stockholders thus far in 2007.
Kelly cautioned, however, that the Company’s ability to continue to return capital to stockholders will depend largely on future operating results as well as internal capital requirements. “Despite a very successful third quarter,” he said, “we face ongoing operating challenges as the rate of gross subscriber cancellations remains high.
The continuation of this trend, coupled with the related loss of revenue, presents a significant risk with respect to future operating margins and cash flows since a lower revenue base limits our opportunities to reduce costs. If this trend were to continue, the impact would be to reduce the amount of cash generated in future periods.” In short, while we are pleased with our current operating performance, we are mindful of these longer term risks and are working diligently to address them.”
Thomas L. Schilling, chief operating officer and chief financial officer, said the Company further reduced its operating expenses during the third quarter, including reductions in site rent and telecommunications expense. “Operating expenses — excluding depreciation, amortization and accretion — decreased 0.4 percent from the second quarter and 14.4 percent from the third quarter of 2006; however, the decrease from the second to the third quarter would have been 2.0 percent absent a one-time severance and restructuring charge of approximately $1.2 million in part connected with the executive management realignment announced in mid-October.” Schilling added: “We also benefited from a slight increase in ARPU in the quarter — the result of price increases in selected distribution channels and improvements in the rate of service credits – which helped offset our rate of revenue erosion. We believe we have now taken the ‘low hanging fruit’ this year in terms of our ability to effect meaningful ARPU enhancement through selective price increases and, as a result, we expect ARPU going forward to trend downward, albeit at a slower pace than in recent years.
“While subscriber disconnect rates remain higher than forecast and a major challenge, we continued to generate strong cash flow during the third quarter and, overall, are pleased with our financial results. Accordingly,” Schilling said, “we are maintaining our previous financial guidance for 2007, projecting full-year revenues between $420 million to $425 million, operating expenses – excluding depreciation, amortization and accretion – between $293 million to $298 million, and capital expenses between $18 million to $20 million.”
* * * * * * * * *
As previously announced, USA Mobility plans to host a conference call for investors on its third quarter results at 10:00 a.m. Eastern Time on Thursday, November 1, 2007. The dial-in number for the call is 888-600-4885 (toll-free) or 913-312-1485 (toll). The pass code for the call is 7577647. A replay of the call will be available from 3:00 p.m. ET on November 1 until 11:59 p.m. on Thursday, November 15. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 7577647.
* * * * * * * * *

 


 

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.    

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS (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       9/30/07    
Revenue:
                                                           
Paging service
  $ 125,673     $ 118,872     $ 112,129     $ 107,520     $ 104,003     $ 98,248       $ 95,393    
Cellular
    2,026       2,096       1,728       1,877       2,087       2,497         2,035    
Product sales
    6,131       5,180       4,851       5,394       4,400       5,335         6,851    
Other
    1,062       1,057       845       1,253       1,052       1,390         1,145    
               
Total revenue
    134,892       127,205       119,553       116,044       111,542       107,470         105,424    
               
 
                                                           
Operating expenses:
                                                           
Cost of products sold
    786       1,169       1,184       698       687       1,508         2,435    
Service, rental and maintenance
    48,092       44,769       42,489       41,770       39,033       39,356         36,746    
Selling and marketing
    11,059       11,118       10,929       10,796       10,242       9,975         9,891    
General and administrative
    36,142       32,208       30,994       28,533       26,448       23,297         23,606    
Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318       12,450         12,048    
Severance and restructuring
    170       321       682       3,413       17               1,177    
               
Total operating expenses
    115,043       108,485       104,639       102,454       89,745       86,586         85,903    
               
% of total revenue
    85.3 %     85.3 %     87.5 %     88.3 %     80.5 %     80.6 %       81.5 %  
 
                                                           
               
Operating income
    19,849       18,720       14,914       13,590       21,797       20,884         19,521    
               
% of total revenue
    14.7 %     14.7 %     12.5 %     11.7 %     19.5 %     19.4 %       18.5 %  
 
                                                           
Interest income, net
    549       1,023       717       1,579       951       932         856    
Other income (expense), net
    62       988       103       (353 )     (516 )     826         1,038    
               
Income before income tax expense
    20,460       20,731       15,734       14,816       22,232       22,642         21,415    
Income tax expense
    8,195       9,779       7,075       6,511       9,206       9,676         1,109    
               
Net income
  $ 12,265     $ 10,952     $ 8,659     $ 8,305     $ 13,026     $ 12,966       $ 20,306    
               
 
                                                           
Basic net income per common share
  $ 0.45     $ 0.40     $ 0.32     $ 0.30     $ 0.47     $ 0.47       $ 0.74    
               
Diluted net income per common share
  $ 0.45     $ 0.40     $ 0.31     $ 0.30     $ 0.47     $ 0.47       $ 0.74    
               
 
                                                           
Basic weighted average common shares outstanding
    27,397,307       27,399,533       27,400,853       27,401,492       27,434,418       27,440,094         27,445,028    
               
Diluted weighted average common shares outstanding
    27,503,230       27,587,958       27,575,039       27,597,919       27,578,066       27,570,346         27,595,905    
               
 
                                                           
Reconciliation of operating income to EBITDA (b):
                                                           
Operating income
  $ 19,849     $ 18,720     $ 14,914     $ 13,590     $ 21,797     $ 20,884       $ 19,521    
Add back: Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318       12,450         12,048    
               
EBITDA
  $ 38,643     $ 37,620     $ 33,275     $ 30,834     $ 35,115     $ 33,334       $ 31,569    
               
% of total revenue
    28.6 %     29.6 %     27.8 %     26.6 %     31.5 %     31.0 %       29.9 %  
 
(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       9/30/07    
Units in service
                                                           
 
                                                           
Beginning units in service
                                                           
Direct one-way
    3,835       3,678       3,547       3,429       3,318       3,179         3,071    
Direct two-way
    348       324       307       292       280       263         245    
               
Total direct
    4,183       4,002       3,854       3,721       3,598       3,442         3,316    
               
Indirect one-way
    603       535       483       449       417       378         346    
Indirect two-way
    100       97       94       89       90       92         95    
               
Total indirect
    703       632       577       538       507       470         441    
               
Total beginning units in service
    4,886       4,634       4,431       4,259       4,105       3,912         3,757    
               
 
                                                           
Gross placements
                                                           
Direct one-way
    108       119       120       112       91       112         107    
Direct two-way
    15       15       15       15       12       14         13    
               
Total direct
    123       134       135       127       103       126         120    
               
Indirect one-way
    24       18       24       36       19       25         35    
Indirect two-way
    4       5       5       6       8       8         7    
               
Total indirect
    28       23       29       42       27       33         42    
               
Total gross placements
    151       157       164       169       130       159         162    
               
 
                                                           
Gross disconnects
                                                           
Direct one-way
    (265 )     (250 )     (238 )     (222 )     (230 )     (220 )       (217 )  
Direct two-way
    (39 )     (32 )     (30 )     (28 )     (29 )     (32 )       (26 )  
               
Total direct
    (304 )     (282 )     (268 )     (250 )     (259 )     (252 )       (243 )  
               
Indirect one-way
    (92 )     (70 )     (58 )     (68 )     (58 )     (57 )       (51 )  
Indirect two-way
    (8 )     (8 )     (10 )     (5 )     (6 )     (5 )       (5 )  
               
Total indirect
    (100 )     (78 )     (68 )     (73 )     (64 )     (62 )       (56 )  
               
Total gross disconnects
    (404 )     (360 )     (336 )     (323 )     (323 )     (314 )       (299 )  
               
 
                                                           
Net gain (loss)
                                                           
Direct one-way
    (157 )     (131 )     (118 )     (111 )     (139 )     (108 )       (110 )  
Direct two-way
    (24 )     (17 )     (15 )     (12 )     (17 )     (18 )       (13 )  
               
Total direct
    (181 )     (148 )     (133 )     (123 )     (156 )     (126 )       (123 )  
               
Indirect one-way
    (68 )     (52 )     (34 )     (32 )     (39 )     (32 )       (16 )  
Indirect two-way
    (4 )     (3 )     (5 )     1       2       3         2    
               
Total indirect
    (72 )     (55 )     (39 )     (31 )     (37 )     (29 )       (14 )  
               
Total net change
    (253 )     (203 )     (172 )     (154 )     (193 )     (155 )       (137 )  
               
 
                                                           
Ending units in service
                                                           
Direct one-way
    3,678       3,547       3,429       3,318       3,179       3,071         2,961    
Direct two-way
    324       307       292       280       263       245         232    
               
Total direct
    4,002       3,854       3,721       3,598       3,442       3,316         3,193    
               
Indirect one-way
    535       483       449       417       378       346         330    
Indirect two-way
    97       94       89       90       92       95         97    
               
Total indirect
    632       577       538       507       470       441         427    
               
Total ending units in service
    4,634       4,431       4,259       4,105       3,912       3,757         3,620    
               
 
(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    
    3/31/06     6/30/06     9/30/06     12/31/06     3/31/07     6/30/07       9/30/07    
ARPU
                                                           
Direct one-way
  $ 8.17     $ 8.06     $ 7.95     $ 7.86     $ 7.96     $ 7.87       $ 7.98    
Direct two-way
    23.61       23.75       23.27       23.61       23.91       24.02         24.17    
               
Total direct
    9.44       9.32       9.16       9.09       9.18       9.08         9.16    
 
                                                           
Indirect one-way
    4.53       4.59       4.49       4.56       4.45       4.12         4.35    
Indirect two-way
    6.93       6.99       6.53       6.63       6.30       6.10         5.30    
               
Total indirect
    4.89       4.97       4.82       4.92       4.79       4.53         4.56    
 
                                                           
Total one-way
    7.69       7.63       7.54       7.49       7.57       7.48         7.61    
Total two-way
    19.85       19.87       19.35       19.55       19.46       19.18         18.74    
               
Total paging ARPU
  $ 8.80     $ 8.74     $ 8.60     $ 8.57     $ 8.65     $ 8.54       $ 8.62    
               
 
                                                           
Gross disconnect rate (b)
                                                           
Direct one-way
    -6.9 %     -6.8 %     -6.7 %     -6.5 %     -6.9 %     -6.9 %       -7.1 %  
Direct two-way
    -11.1 %     -9.8 %     -9.8 %     -9.5 %     -10.5 %     -12.2 %       -10.5 %  
               
Total direct
    -7.3 %     -7.0 %     -7.0 %     -6.7 %     -7.2 %     -7.3 %       -7.3 %  
 
                                                           
Indirect one-way
    -15.3 %     -13.1 %     -12.0 %     -15.1 %     -14.0 %     -15.1 %       -14.7 %  
Indirect two-way
    -7.1 %     -8.2 %     -10.6 %     -5.8 %     -6.2 %     -5.4 %       -5.7 %  
               
Total indirect
    -14.2 %     -12.4 %     -11.8 %     -13.5 %     -12.6 %     -13.2 %       -12.8 %  
 
                                                           
Total one-way
    -8.1 %     -7.6 %     -7.4 %     -7.5 %     -7.7 %     -7.8 %       -7.8 %  
Total two-way
    -10.2 %     -9.5 %     -10.0 %     -8.6 %     -9.4 %     -10.4 %       -9.2 %  
               
Total paging gross disconnect rate
    -8.3 %     -7.8 %     -7.6 %     -7.6 %     -7.9 %     -8.0 %       -8.0 %  
               
 
                                                           
Net gain / loss rate (c)
                                                           
Direct one-way
    -4.1 %     -3.6 %     -3.3 %     -3.2 %     -4.2 %     -3.4 %       -3.6 %  
Direct two-way
    -6.8 %     -5.2 %     -4.9 %     -4.4 %     -6.0 %     -6.8 %       -5.3 %  
               
Total direct
    -4.3 %     -3.7 %     -3.5 %     -3.3 %     -4.3 %     -3.7 %       -3.7 %  
 
                                                           
Indirect one-way
    -11.3 %     -9.8 %     -7.1 %     -7.1 %     -9.5 %     -8.5 %       -4.6 %  
Indirect two-way
    -3.5 %     -2.6 %     -4.5 %     1.0 %     2.5 %     3.3 %       2.1 %  
               
Total indirect
    -10.2 %     -8.7 %     -6.7 %     -5.7 %     -7.3 %     -6.2 %       -3.2 %  
 
                                                           
Total one-way
    -5.1 %     -4.3 %     -3.8 %     -3.7 %     -4.8 %     -3.9 %       -3.7 %  
Total two-way
    -6.1 %     -4.6 %     -4.8 %     -3.1 %     -3.9 %     -4.2 %       -3.3 %  
               
Total paging net gain / loss rate
    -5.2 %     -4.4 %     -3.9 %     -3.6 %     -4.7 %     -4.0 %       -3.7 %  
               
 
(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 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       9/30/07    
Gross placement rate
                                                           
 
                                                         
Healthcare
    3.8 %     4.5 %     4.1 %     4.2 %     3.6 %     4.8 %       4.5 %  
Government
    2.2 %     2.3 %     2.6 %     2.1 %     2.2 %     2.5 %       2.5 %  
Large enterprise
    2.6 %     3.0 %     3.8 %     3.9 %     2.7 %     3.0 %       2.9 %  
Other
    2.7 %     3.0 %     3.3 %     3.1 %     2.6 %     3.2 %       3.4 %  
               
Total direct
    2.9 %     3.3 %     3.5 %     3.4 %     2.9 %     3.7 %       3.6 %  
Total indirect
    4.0 %     3.7 %     5.1 %     7.8 %     5.3 %     6.9 %       9.6 %  
               
Total
    3.1 %     3.4 %     3.7 %     4.0 %     3.2 %     4.1 %       4.3 %  
               
 
                                                           
Gross disconnect rate
                                                           
Healthcare
    -4.6 %     -4.7 %     -5.3 %     -4.6 %     -4.6 %     -5.0 %       -5.6 %  
Government
    -5.7 %     -6.3 %     -5.9 %     -5.8 %     -5.8 %     -6.4 %       -6.8 %  
Large enterprise
    -7.7 %     -7.4 %     -6.9 %     -6.8 %     -8.4 %     -9.3 %       -7.6 %  
Other
    -10.3 %     -9.5 %     -9.3 %     -9.5 %     -10.9 %     -10.5 %       -10.5 %  
               
Total direct
    -7.3 %     -7.0 %     -7.0 %     -6.7 %     -7.2 %     -7.3 %       -7.3 %  
Total indirect
    -14.2 %     -12.4 %     -11.8 %     -13.5 %     -12.6 %     -13.2 %       -12.8 %  
               
Total
    -8.3 %     -7.8 %     -7.6 %     -7.6 %     -7.8 %     -8.0 %       -8.0 %  
               
 
                                                           
Net loss rate
                                                           
Healthcare
    -0.7 %     -0.2 %     -1.1 %     -0.4 %     -1.1 %     -0.2 %       -1.0 %  
Government
    -3.5 %     -4.1 %     -3.3 %     -3.6 %     -3.6 %     -3.8 %       -4.3 %  
Large enterprise
    -5.1 %     -4.3 %     -3.0 %     -2.9 %     -5.7 %     -6.2 %       -4.6 %  
Other
    -7.5 %     -6.6 %     -6.1 %     -6.4 %     -8.3 %     -7.2 %       -7.2 %  
               
Total direct
    -4.3 %     -3.7 %     -3.5 %     -3.3 %     -4.3 %     -3.7 %       -3.7 %  
Total indirect
    -10.2 %     -8.7 %     -6.7 %     -5.7 %     -7.3 %     -6.2 %       -3.2 %  
               
Total
    -5.2 %     -4.4 %     -3.9 %     -3.6 %     -4.7 %     -4.0 %       -3.7 %  
               
 
                                                           
End of period units in service % of total
                                                           
Healthcare
    29.0 %     30.5 %     31.5 %     32.5 %     33.6 %     35.0 %       36.2 %  
Government
    16.4 %     16.4 %     16.6 %     16.5 %     17.9 %     18.0 %       17.8 %  
Large enterprise
    10.2 %     10.2 %     10.1 %     10.3 %     13.8 %     13.6 %       13.5 %  
Other
    30.8 %     29.9 %     29.2 %     28.3 %     22.7 %     21.7 %       20.7 %  
               
Total direct
    86.4 %     87.0 %     87.4 %     87.6 %     88.0 %     88.3 %       88.2 %  
Total indirect
    13.6 %     13.0 %     12.6 %     12.4 %     12.0 %     11.7 %       11.8 %  
               
Total
    100.0 %     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       9/30/07  
Account size ending units in service (000’s)
                                                         
1 to 3 units
    358       327       300       275       251       232         216  
4 to 10 units
    203       188       175       163       150       139         129  
11 to 50 units
    489       456       426       398       368       344         319  
51 to 100 units
    265       249       238       226       215       200         189  
101 to 1,000 units
    1,068       1,027       999       967       924       898         856  
>1,000 units
    1,619       1,607       1,583       1,569       1,534       1,503         1,484  
             
Total
    4,002       3,854       3,721       3,598       3,442       3,316         3,193  
             
 
                                                         
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 %       6.8 %
4 to 10 units
    5.1 %     4.9 %     4.7 %     4.5 %     4.4 %     4.2 %       4.0 %
11 to 50 units
    12.2 %     11.8 %     11.4 %     11.1 %     10.7 %     10.4 %       10.0 %
51 to 100 units
    6.6 %     6.5 %     6.4 %     6.3 %     6.2 %     6.0 %       5.9 %
101 to 1,000 units
    26.7 %     26.6 %     26.9 %     26.9 %     26.8 %     27.1 %       26.8 %
>1,000 units
    40.5 %     41.7 %     42.5 %     43.6 %     44.6 %     45.3 %       46.5 %
             
Total
    100.0 %     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 %       -6.6 %
4 to 10 units
            -7.5 %     -6.9 %     -6.6 %     -7.9 %     -7.6 %       -7.0 %
11 to 50 units
            -6.8 %     -6.5 %     -6.6 %     -7.6 %     -6.4 %       -7.3 %
51 to 100 units
            -6.2 %     -4.2 %     -5.2 %     -4.9 %     -6.9 %       -5.7 %
101 to 1,000 units
            -3.8 %     -2.7 %     -3.2 %     -4.4 %     -2.8 %       -4.7 %
>1,000 units
            -0.7 %     -1.6 %     -0.9 %     -2.2 %     -2.0 %       -1.3 %
                     
Total
            -3.7 %     -3.5 %     -3.3 %     -4.3 %     -3.7 %       -3.7 %
                     
 
                                                         
Account size ARPU
                                                         
1 to 3 units
  $ 14.02     $ 14.14     $ 14.07     $ 14.16     $ 14.71     $ 14.67       $ 13.27  
4 to 10 units
    13.02       13.08       12.99       13.03       13.42       13.40         12.21  
11 to 50 units
    10.88       10.81       10.72       10.73       10.95       10.93         9.90  
51 to 100 units
    9.59       9.53       9.39       9.27       9.44       9.48         8.64  
101 to 1,000 units
    8.34       8.29       8.21       8.15       8.24       8.24         7.38  
>1,000 units
    8.18       8.05       7.89       7.88       7.92       7.80         6.90  
             
Total
  $ 9.44     $ 9.32     $ 9.16     $ 9.09     $ 9.18     $ 9.08       $ 9.16  
             
 
                                                         
Cellular revenue
                                                         
Number of activations
    6,829       6,969       6,374       5,818       5,450       8,046         5,579  
             
Revenue from cellular services (000’s)
  $ 2,026     $ 2,096     $ 1,728     $ 1,877     $ 2,087     $ 2,497       $ 2,035  
             
 
(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       9/30/07    
Cost of products sold
  $ 786     $ 1,169     $ 1,184     $ 698     $ 687     $ 1,508       $ 2,435    
                         
 
                                                           
Service, rental and maintenance
                                                           
Site rent
    26,099       25,021       24,314       24,204       22,284       22,115         20,705    
Telecommunications and related
    9,099       8,480       7,343       7,185       7,058       6,622         5,289    
Payroll and related
    7,046       6,578       6,517       6,136       6,488       6,657         6,871    
Stock based compensation
    81       83       78       78       31       30         26    
Other
    5,767       4,607       4,237       4,167       3,172       3,932         3,855    
                         
Total service, rental and maintenance
    48,092       44,769       42,489       41,770       39,033       39,356         36,746    
                         
 
                                                           
Selling and marketing
                                                           
Payroll and related
    7,709       7,317       6,996       6,902       6,740       6,259         5,984    
Commissions
    2,226       2,373       2,407       2,577       2,170       2,386         2,140    
Stock based compensation
    171       166       178       55       93       91         67    
Other
    953       1,262       1,348       1,262       1,239       1,239         1,700    
                         
Total selling and marketing
    11,059       11,118       10,929       10,796       10,242       9,975         9,891    
                         
 
                                                           
General and administrative
                                                           
Payroll and related
    12,330       11,412       9,517       9,287       9,560       9,343         9,487    
Stock based compensation
    431       461       484       462       304       299         214    
Bad debt
    1,790       1,705       2,035       1,975       1,402       1,075         854    
Facility rent
    4,104       3,973       3,468       3,408       2,947       3,066         2,614    
Telecommunications
    2,248       1,982       1,858       1,714       1,764       1,526         1,402    
Outside services
    6,419       5,631       6,162       7,122       5,504       5,222         5,136    
Taxes, licenses and permits
    4,149       2,708       3,036       (501 )     2,316       (20 )       1,815    
Other
    4,671       4,336       4,434       5,066       2,651       2,786         2,084    
                         
Total general and administrative
    36,142       32,208       30,994       28,533       26,448       23,297         23,606    
                         
 
                                                           
Depreciation, amortization and accretion
    18,794       18,900       18,361       17,244       13,318       12,450         12,048    
Severance and restructuring
    170       321       682       3,413       17               1,177    
                         
Operating expenses
  $ 115,043     $ 108,485     $ 104,639     $ 102,454     $ 89,745     $ 86,586       $ 85,903    
                         
 
                                                           
Capital expenditures
  $ 4,424     $ 4,595     $ 5,152     $ 6,819     $ 5,086     $ 3,525       $ 4,528    
 
                                                         
 
(a)   Slight variations in totals are due to rounding.


 

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

(in thousands)
                     
    12/31/06       9/30/07    
              (unaudited)    
Assets
                   
Current assets:
                   
Cash and cash equivalents
  $ 66,507       $ 63,532    
Accounts receivable, net
    26,364         27,683    
Prepaid expenses and other
    12,294         8,147    
Deferred income tax assets
    18,399         13,799    
 
               
Total current assets
    123,564         113,161    
Property and equipment, net
    91,562         76,030    
Goodwill
    159,438         188,170    
Intangible assets, net
    26,339         19,281    
Deferred income tax assets
    180,244         148,396    
Other assets
    7,067         7,280    
 
               
Total assets
  $ 588,214       $ 552,318    
 
               
 
                   
Liabilities and stockholders’ equity
                   
Current liabilities:
                   
Accounts payable and accrued liabilities
  $ 63,979       $ 51,980    
Distributions payable
    435         127    
Customer deposits
    2,250         1,750    
Deferred revenue
    16,194         13,392    
 
               
Total current liabilities
    82,858         67,249    
Other long-term liabilities
    29,384         47,287    
 
               
Total liabilities
    112,242         114,536    
 
               
Stockholders’ equity:
                   
Preferred stock
               
Common stock
    3         3    
Additional paid-in capital
    475,969         432,837    
Retained earnings
            4,942    
 
               
Total stockholders’ equity
    475,972         437,782    
 
               
Total liabilities and stockholders’ equity
  $ 588,214       $ 552,318    
 
               
 
(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    
    9/30/06       9/30/07    
Cash flows from operating activities:
                   
Net income
  $ 31,876       $ 46,298    
Adjustments to reconcile net income to net cash provided by operating activities:
                   
Depreciation, amortization and accretion
    56,055         37,816    
Deferred income tax expense
    12,836         24,231    
Amortization of stock based compensation
    2,133         1,155    
Provisions for doubtful accounts and service credits
    12,640         7,238    
Non-cash tax accrual adjustments
    (2,385 )       (6,130 )  
Loss/(Gain) on disposals of property and equipment
    389         (92 )  
Changes in assets and liabilities:
                   
Accounts receivable
    (4,690 )       (8,557 )  
Prepaid expenses and other
    2,247         3,341    
Intangibles and other long-term assets
    360         (212 )  
Accounts payable and accrued liabilities
    (1,692 )       (9,320 )  
Customer deposits and deferred revenue
    (2,166 )       (3,302 )  
Other long-term liabilities
    7,309         (1,927 )  
 
               
Net cash provided by operating activities
  $ 114,912       $ 90,539    
 
               
 
                   
Cash flows from investing activities:
                   
Purchases of property and equipment
    (14,171 )       (13,139 )  
Proceeds from disposals of property and equipment
    115         155    
Receipts from long-term notes receivable
    1,707            
 
               
Net cash used in investing activities
  $ (12,349 )     $ (12,984 )  
 
               
 
                   
Cash flows from financing activities:
                   
Repayment of long-term debt
    (13 )          
Cash distributions to stockholders
    (81,396 )       (80,530 )  
 
               
Net cash used in financing activities
  $ (81,409 )     $ (80,530 )  
 
               
 
                   
Net increase (decrease) in cash and cash equivalents
    21,154         (2,975 )  
Cash and cash equivalents, beginning of period
    37,547         66,507    
 
               
Cash and cash equivalents, end of period
  $ 58,701       $ 63,532    
 
               
 
                   
Supplemental disclosure:
                   
Interest paid
  $ 34       $ 11    
 
               
Income taxes paid (state and local)
  $ 380       $ 404    
 
               
 
(a)   Slight variations in totals are due to rounding.