8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 4, 2008

USA Mobility, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation) 000-51027
(Commission File Number) 16-1694797
(IRS Employer
Identification No.)

6677 Richmond Highway, Alexandria, Virginia
      (Address of principal executive offices)                                             22306
                                            (Zip Code)

(Registrant’s telephone number, including area code)
(866) 662-3049

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the obligation of the registrant under any of the following provisions:

o Written communication pursuant to Rule 425 under the Securities act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CRF 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     On March 5, 2008, the Company issued a press release announcing its fourth quarter results for the fiscal year ended December 31, 2007, and financial statements and other financial information for the fiscal year ended December 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.  

     As discussed in item 4.02 below, the press release discloses a preliminary restatement for the three and nine months ended September 30, 2007.

     The following tables provide a summary of the preliminary restatement disclosed in Item 4.02 below:

Summary of Adjustments to
Income Tax Expense, Net Income, and Earnings per Share
(In thousands except per share amounts)
(Unaudited) (a)

	For the three months ended
	September 30, 2007
	Previously
	Reported		Adjustments			As Adjusted
Income before income tax expense	$	21,415	$	—		$	21,415
Income tax expense		1,109		4,838			5,947
Net income	$	20,306	$	(4,838	)	$	15,468
Basic net income per common share	$	0.74	$	(0.18	)	$	0.56
Diluted net income per common share	$	0.74	$	(0.18	)	$	0.56

	For the nine months ended
	September 30, 2007
	Previously
	Reported		Adjustments			As Adjusted
Income before income tax expense	$	66,289	$	—		$	66,289
Income tax expense		19,991		4,838			24,829
Net income	$	46,298	$	(4,838	)	$	41,460
Basic net income per common share	$	1.68	$	(0.18	)	$	1.50
Diluted net income per common share	$	1.68	$	(0.18	)	$	1.50

(a) There are no adjustments to the balance sheet, or cash flows from operating, investing or financing activities.

     The adjustment as outlined above is preliminary and subject to revision based on finalization of the 2007 financial statements.

     The information in this Item 2.02 of this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

     The Audit Committee of the Board of Directors of USA Mobility, Inc. (the “Company”) concluded on March 4, 2008 to restate the Company’s financial statements and other financial information for the interim quarterly period ended September 30, 2007. Management has also identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2007. The Company intends to reflect the restated financial information for the interim period ended September 30, 2007 in its Annual Report on Form 10-K for the year ended December 31, 2007.

     In light of the pending restatement, the Company’s previously filed financial statements and other financial information for the interim quarterly period ended September 30, 2007 should no longer be relied upon.

     The adjustment as outlined below is preliminary and subject to revision.

     The determination to restate the consolidated financial statements and other financial information for the interim period ended September 30, 2007 was made as a result of management’s assessment of an accounting error recently discovered during the preparation of the Company’s 2007 financial statements. The Company’s assessment resulted in the following adjustment to the interim period ended September 30, 2007.

     Income tax expense was incorrectly reduced in the third quarter of 2007. Due to the expiration of assessment statutes during the third quarter of 2007, the Company reduced its income tax liability for uncertain tax positions by $20.7 million. Of this reduction, approximately $7.4 million was initially recorded as a reduction of income tax expense; $11.6 million as a reduction of goodwill; and $1.7 million as a reduction of long-term deferred income tax assets.

     During the fourth quarter of 2007, management determined that $4.8 million of the original $7.4 million reduction of income tax expense during the third quarter of 2007 was attributable to a deferred income tax asset existing prior to a predecessor company’s emergence from bankruptcy. In accordance with American Institute of Certified Public Accountants Statement of Positions 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code, and Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, third quarter income tax expense has been revised to reflect an increase of $4.8 million. The $4.8 million reduction in the income tax liability has been treated as an increase to additional paid-in capital.

     The adjustment discussed above does not impact our previously reported revenues, operating expenses, operating income, income before income taxes, balance sheet, or cash flow from operating, investing or financing activities.

     After reviewing these matters with the Audit Committee, management recommended to the Audit Committee that previously reported financial results for the interim period ended September 30, 2007 be restated to reflect this adjustment. The Audit Committee agreed with this recommendation, and determined at its meeting on March 4, 2008 that previously reported results for the Company for the interim period ended September 30, 2007 be restated to reflect this adjustment, and that previously filed financial statements and other financial information referred to above should no longer be relied upon.

3

     In connection with the evaluation described above, management has concluded that the pending restatement was a result of a material weakness in the Company’s internal control over financial reporting.

     A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected. The material weakness has now been identified and will be included in management’s assessment as of December 31, 2007.

     The Company did not maintain effective controls over the accuracy and valuation of the provision for income taxes in the third quarter of 2007. Specifically the Company did not maintain effective controls to review and monitor the accuracy of the components of the income tax provision calculation during the transition to a third party consultant. This control deficiency resulted in the restatement of the Company’s consolidated financial statements for the interim period ended September 30, 2007 to correct income tax expense. Accordingly, management determined that this control deficiency constitutes a material weakness.

     Management has not finalized its assessment of internal control over financial reporting related to the preparation of the 2007 financial statements; accordingly the Company may identify additional control deficiencies as material weaknesses.

     The Audit Committee has discussed the matters mentioned herein with Grant Thornton LLP, our independent registered public accounting firm.

4

Item 9.01  Financial Statements and Exhibits.

(d)     Exhibit:

Exhibit No.	Description of Exhibit
99.1	Press release, dated March 5, 2008, of USA Mobility, Inc. (furnished pursuant to Item 2.02; not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934)

5

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

USA MOBILITY, INC.
By:	/s/ Thomas L. Schilling
	Name:	Thomas L. Schilling
	Title:	Chief Operating Officer and Chief Financial Officer

Date: March 5, 2008

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press release dated March 5, 2008, of USA Mobility, Inc.

EX-99.1

Exhibit 99.1

News Release

For Immediate Release	Contact: Bob Lougee (703) 721-3080
Wednesday, March 5, 2008

USA Mobility Reports Fourth Quarter and 2007 Operating Results

Subscriber and Revenue Trends Improve, Expenses Decline;
Core Market Segments Show Continued Progress;
$98.3 Million in Capital Returned to Stockholders

Alexandria, VA (March 5, 2008) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the fourth quarter and year ended December 31, 2007.

Total revenue for the fourth quarter was $100.2 million, compared to $105.4 million in the third quarter of 2007 and $116.0 million in the fourth quarter of 2006. EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) for the fourth quarter of 2007 was $24.5 million, or 24.5 percent of revenue, and operating income was $13.6 million. Total revenue for 2007 was $424.6 million, compared to $497.7 million in 2006. EBITDA for 2007 was $124.5 million, or 29.3 percent of revenue, while operating income was $75.8 million.

The Company reported a net loss of $46.7 million, or $1.70 per fully diluted share, for the fourth quarter, compared to net income of $8.3 million, or $0.30 per fully diluted share, in the fourth quarter of 2006. The loss primarily resulted from a $54.3 million income tax expense in the fourth quarter due to a reduction in the carrying value of deferred income tax assets. Absent the incremental income tax expense, net income for the fourth quarter would have been $7.6 million, or $0.28 per fully diluted share. The higher income tax expense resulted in a net loss for the year of $5.2 million, or $0.19 per fully diluted share, from $40.2 million, or $1.46 per fully diluted share, in 2006. Third quarter net income has been adjusted to reflect a change in income tax expense due to the lapse of the statute of limitations on the 2003 income tax liabilities.

Key results for the fourth quarter and 2007 included:

• Quarterly net unit losses slowed to 135,000 in the fourth quarter from 193,000 in the first quarter, while the quarterly rate of unit erosion improved to 3.7 percent in the fourth quarter from 4.7 percent in the first quarter. The annual rate of unit erosion declined to 15.1 percent in 2007 from 16.0 percent in 2006. Net unit losses were 620,000 in 2007 versus 781,000 in 2006. Total units in service at year-end 2007 were 3,485,000, compared to 4,105,000 a year earlier.

• The quarterly rate of revenue erosion increased to 5.0 percent in the fourth quarter from 3.9 percent in the first quarter. However, the year-over-year rate of revenue decline improved from 19.5 percent in 2006 to 14.7 percent in 2007, the Company’s slowest rate of revenue decline in years.

• Operating expenses, excluding depreciation, amortization and accretion, were $75.7 million for the fourth quarter, a reduction of $9.5 million, or 11.2 percent, from $85.2 million in the year-earlier quarter. For the full year, operating expenses declined by $57.2 million, or 16.0 percent, to $300.1 million from $357.3 million in 2006. Expense reduction during the year was largely due to network rationalization, staff reductions and company-wide cost efficiencies.

• Average revenue per unit (ARPU) was $8.62 for the fourth quarter, an increase from $8.57 in the fourth quarter of 2006. For the year, ARPU totaled $8.55, compared to $8.60 in 2006. ARPU levels remained stable during 2007 due principally to structural pricing changes and a reduction in the rate of billing and service credits.

• EBITDA as a percentage of revenue, or EBITDA margin, was 24.5 percent in the fourth quarter, compared to 26.6 percent the year-earlier quarter.

• Capital expenses totaled $18.3 million in 2007, compared to $21.0 million in 2006.

• The Company generated $96.3 million in cash during the year from operating and investing activities and had a cash balance of $64.5 million at December 31, 2007.

• During the year the Company distributed to stockholders quarterly cash distributions of $0.65 per share of common stock plus a special distribution of $1.00 per share in the second quarter. Combined, the cash distributions represented a return of capital to stockholders of $98.3 million.

• The number of full-time equivalent employees declined from 1,235 at the beginning of the year to 1,003 at year end as a result of ongoing consolidation and expense control initiatives.

“We made excellent progress in the fourth quarter and during 2007,” said Vincent D. Kelly, president and chief executive officer. “We continued to operate the Company profitably while meeting our primary operating goals, reducing costs, increasing organizational efficiencies and expanding product offerings to our core market subscribers throughout the country. Despite ongoing competitive challenges, subscriber and revenue trends continued to improve, prices remained stable and we generated a sufficient level of cash flow to return capital to stockholders in the form of cash distributions.”

Kelly said the Company continued to concentrate its sales and marketing efforts during the year around its core market segments of Healthcare, Government and Large Enterprise. “At year end, our core market segments represented 77.6 percent of our direct subscriber base, compared with 67.7 percent at December 31, 2006, with Healthcare alone representing 42.1 percent. In addition, these core market segments made up approximately 68.1 percent of our direct paging revenue in 2007, compared to 57.2 percent in 2006. During the year,” he added, “we announced several new products and services designed to support our core customers. They included the nation’s first wide area coaster pager, called ReadyCall, to help hospital administrators ease congestion in patient waiting areas, an alliance with WeatherBug Professional to provide severe weather alerts to first responder organizations, and a customized paging solution, called PageSync, which gives customers using BlackBerry® smartphones paging reliability and multiple features in a single device. Going forward,” Kelly said, “we look to broaden our presence and create new sales and service opportunities in these core market segments.”

Consistent with its stated strategy, Kelly said USA Mobility generated sufficient cash flow in 2007 to again return capital to stockholders. The Company paid quarterly cash distributions of $0.65 per share and a special distribution of $1.00 per share in the second quarter, returning a total of $98.3 million in capital to stockholders during the year. “In addition,” Kelly noted, “our Board of Directors on February 13, 2008, declared a $0.65 per share quarterly cash distribution for stockholders of record as of February 25th, payable on March 13th. Similar to previous distributions, we expect the entire amount of the March 13th cash distribution to be paid as a return of capital.”

Kelly cautioned investors, however, that the rate at which the Company will continue to return capital to stockholders would depend largely on future operating results as well as various other business factors. “Additionally, in light of the deterioration in our stock price over the last nine months, as well as increased flexibility we have under Section 382, the Board of Directors is evaluating our strategy for returning capital to stockholders which may include periodic recurring cash distributions, special cash distributions, a stock repurchase program, or a combination of these alternatives.”

He also pointed out that a regulatory decision made during 2007 eventually could have a significant impact on the Company’s network cost structure and capital allocation strategy. “Last October the Federal Communications Commission (FCC) issued an Order on Reconsideration (Back-Up Power Order) requiring large commercial mobile radio service (CMRS) providers, including USA Mobility, to have at least eight hours of back-up power at each transmission site to minimize communications outages during emergencies. We do not believe the Back-Up Power Order should apply to paging carriers for a variety of reasons, including the unique simulcast and high-power network architecture of paging. Accordingly, along with numerous other wireless providers and trade associations, we appealed the Back-Up Power Order in January to the DC Circuit Court of Appeals. We expect the appeal to be heard around mid-year.”

Thomas L. Schilling, chief operating officer and chief financial officer, said: “We continued to strengthen our financial position in 2007, principally through ongoing cost reduction initiatives including our network rationalization program and efforts to ‘right size’ our organization as demand for paging products remained slow. While subscriber disconnect rates were higher than forecast, however, we continued to generate strong cash flow during the year and are pleased with our overall financial results.”

Schilling said the improvement in the rate of annual revenue erosion to 14.7 percent from 19.5 percent resulted in part from structural price increases in 2007 in selected distribution channels and improvements in the rate of service credits. “Total paging ARPU increased to $8.62 in the fourth quarter from $8.57 in the fourth quarter of 2006,” he noted, “while indirect ARPU increased to $5.06 from $4.92 in the year-earlier quarter and was our highest level of indirect ARPU in several years.” Schilling cautioned, however, that ARPU would likely trend downward going forward since further price increases were unlikely in the near term.

Commenting on the reduction of deferred income tax assets (DTAs) in the fourth quarter, Schilling explained: “Accounting rules require us to evaluate whether or not the Company will use all of its DTAs to offset future taxable income. As a result, based on current trends for subscribers, revenue, operating expenses and capital expenses — which, of course, are subject to change — we projected future levels of taxable income that mandated a reduction in the carrying value of our DTAs based on our effective tax rate of approximately 38 percent. Going forward, we will continue to evaluate our operating trends and will adjust the carrying value of our DTAs, either up or down, as circumstances warrant.”

Schilling also commented on the Company’s financial guidance. “We are pleased the financial guidance we provided for 2007 was largely on target,” he noted. “Total revenue of $424.6 million was within our guidance range of $420 million to $425 million; operating expenses (excluding depreciation, amortization

and accretion) of $300.1 million were slightly above the revised guidance range of $293 million to $298 million; and capital expenses of $18.3 million were within the guidance range of $18 million to $20 million. With respect to guidance for 2008, the Company expects revenue to be in a range from $345 million to $355 million, operating expenses (excluding depreciation, amortization and accretion) to be in a range from $250 million to $255 million, and capital expenses in a range from $18 million to $20 million.”

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its fourth quarter and 2007 results at 11:00 a.m. Eastern Time on Thursday, March 6, 2008. The dial-in number for the call is 888-708-5691 (toll-free) or 913-981-5560 (toll). The pass code for the call is 9699744. A replay of the call will be available from 4:00 p.m. ET on March 6 until 11:59 p.m. on Thursday, March 20. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 9699744.

* * * * * * * * *

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 Mobility‘s 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^® smartphones and GPS location applications. The Company’s product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility also offers M2M (machine-to-machine) telemetry solutions for numerous applications that include asset tracking, utility meter reading and other remote device monitoring applications on a national scale. For further information visit www.usamobility.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS 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			9/30/07 (b)			12/31/07
Revenues:
Paging service	$	125,673		$	118,872		$	112,129		$	107,520		$	104,003		$	98,248		$	95,393		$	91,825
Cellular		2,026			2,096			1,728			1,877			2,087			2,497			2,035			1,705
Product sales		6,131			5,180			4,851			5,394			4,400			5,335			6,851			5,618
Other		1,062			1,057			845			1,253			1,052			1,390			1,145			1,040
Total revenues		134,892			127,205			119,553			116,044			111,542			107,470			105,424			100,188
Operating expenses:
Cost of products sold		786			1,169			1,184			698			687			1,508			2,435			1,603
Service, rental and maintenance		48,092			44,769			42,489			41,770			39,033			39,356			36,746			36,795
Selling and marketing		11,059			11,118			10,929			10,796			10,242			9,975			9,891			8,720
General and administrative		36,142			32,208			30,994			28,533			26,448			23,297			23,606			23,316
Severance and restructuring		170			321			682			3,413			17			—			1,177			5,235
Depreciation, amortization and accretion		18,794			18,900			18,361			17,244			13,318			12,450			12,048			10,872
Total operating expenses		115,043			108,485			104,639			102,454			89,745			86,586			85,903			86,541
% of total revenues		85.3	%		85.3	%		87.5	%		88.3	%		80.5	%		80.6	%		81.5	%		86.4	%
Operating income		19,849			18,720			14,914			13,590			21,797			20,884			19,521			13,647
% of total revenues		14.7	%		14.7	%		12.5	%		11.7	%		19.5	%		19.4	%		18.5	%		13.6	%
Interest income, net		549			1,023			717			1,579			951			932			856			709
Other income (expense), net		62			988			103			(353	)		(516	)		826			1,038			802
Income before income tax expense		20,460			20,731			15,734			14,816			22,232			22,642			21,415			15,158
Income tax expense		8,195			9,779			7,075			6,511			9,206			9,676			5,947			61,816
Net income (loss)	$	12,265		$	10,952		$	8,659		$	8,305		$	13,026		$	12,966		$	15,468		$	(46,658	)
Basic net income (loss) per common share	$	0.45		$	0.40		$	0.32		$	0.30		$	0.47		$	0.47		$	0.56		$	(1.70	)
Diluted net income (loss) per common share	$	0.45		$	0.40		$	0.31		$	0.30		$	0.47		$	0.47		$	0.56		$	(1.70	)
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			27,450,035
Diluted weighted average common shares		27,503,230			27,587,958			27,575,039			27,596,451			27,578,066			27,570,346			27,594,513			27,450,035
outstanding
Reconciliation of operating income to EBITDA (c):
Operating income	$	19,849		$	18,720		$	14,914		$	13,590		$	21,797		$	20,884		$	19,521		$	13,647
Add back: depreciation, amortization and accretion		18,794			18,900			18,361			17,244			13,318			12,450			12,048			10,872
EBITDA	$	38,643		$	37,620		$	33,275		$	30,834		$	35,115		$	33,334		$	31,569		$	24,519
% of total revenues		28.6	%		29.6	%		27.8	%		26.6	%		31.5	%		31.0	%		29.9	%		24.5	%

(a)	Slight variations in totals are due to rounding.
(b)	Income tax expense increased by $4,838,000. This increase reflects a change in recognizing the lapse of the statute of limitations on the 2003 income tax liabilities.
(c)	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			12/31/07
Units in service
Beginning units in service
Direct one-way		3,835			3,678			3,547			3,429			3,318			3,179			3,071			2,961
Direct two-way		348			324			307			292			280			263			245			232
Total direct		4,183			4,002			3,854			3,721			3,598			3,442			3,316			3,193
Indirect one-way		603			535			483			449			417			378			346			330
Indirect two-way		100			97			94			89			90			92			95			97
Total indirect		703			632			577			538			507			470			441			427
Total beginning units in service		4,886			4,634			4,431			4,259			4,105			3,912			3,757			3,620
Gross placements
Direct one-way		108			119			120			112			91			112			107			81
Direct two-way		15			15			15			15			12			14			13			10
Total direct		123			134			135			127			103			126			120			91
Indirect one-way		24			18			24			36			19			25			35			29
Indirect two-way		4			5			5			7			8			8			7			7
Total indirect		28			23			29			43			27			33			42			36
Total gross placements		151			157			164			170			130			159			162			127
Gross disconnects
Direct one-way		(265	)		(250	)		(238	)		(222	)		(230	)		(220	)		(217	)		(188	)
Direct two-way		(39	)		(32	)		(30	)		(29	)		(29	)		(32	)		(26	)		(21	)
Total direct		(304	)		(282	)		(268	)		(251	)		(259	)		(252	)		(243	)		(209	)
Indirect one-way		(92	)		(70	)		(58	)		(68	)		(58	)		(57	)		(51	)		(47	)
Indirect two-way		(8	)		(8	)		(10	)		(4	)		(6	)		(5	)		(5	)		(6	)
Total indirect		(100	)		(78	)		(68	)		(72	)		(64	)		(62	)		(56	)		(53	)
Total gross disconnects		(404	)		(360	)		(336	)		(323	)		(323	)		(314	)		(299	)		(262	)
Net gain (loss)
Direct one-way		(157	)		(131	)		(118	)		(111	)		(139	)		(108	)		(110	)		(107	)
Direct two-way		(24	)		(17	)		(15	)		(12	)		(17	)		(18	)		(13	)		(11	)
Total direct		(181	)		(148	)		(133	)		(123	)		(156	)		(126	)		(123	)		(118	)
Indirect one-way		(68	)		(52	)		(34	)		(32	)		(39	)		(32	)		(16	)		(18	)
Indirect two-way		(4	)		(3	)		(5	)		1			2			3			2			1
Total indirect		(72	)		(55	)		(39	)		(31	)		(37	)		(29	)		(14	)		(17	)
Total net change		(253	)		(203	)		(172	)		(154	)		(193	)		(155	)		(137	)		(135	)
Ending units in service
Direct one-way		3,678			3,547			3,429			3,318			3,179			3,071			2,961			2,854
Direct two-way		324			307			292			280			263			245			232			221
Total direct		4,002			3,854			3,721			3,598			3,442			3,316			3,193			3,075
Indirect one-way		535			483			449			417			378			346			330			312
Indirect two-way		97			94			89			90			92			95			97			98
Total indirect		632			577			538			507			470			441			427			410
Total ending units in service		4,634			4,431			4,259			4,105			3,912			3,757			3,620			3,485

(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			12/31/07
ARPU
Direct one-way	$	8.17		$	8.06		$	7.95		$	7.86		$	7.96		$	7.87		$	7.98		$	7.93
Direct two-way		23.61			23.75			23.27			23.61			23.91			24.02			24.17			24.06
Total direct		9.44			9.32			9.16			9.09			9.18			9.08			9.16			9.09
Indirect one-way		4.53			4.59			4.49			4.56			4.45			4.12			4.35			4.11
Indirect two-way		6.93			6.99			6.53			6.63			6.30			6.10			5.30			8.20
Total indirect		4.89			4.97			4.82			4.92			4.79			4.53			4.56			5.06
Total one-way		7.69			7.63			7.54			7.49			7.57			7.48			7.61			7.55
Total two-way		19.85			19.87			19.35			19.55			19.46			19.18			18.74			19.30
Total paging ARPU	$	8.80		$	8.74		$	8.60		$	8.57		$	8.65		$	8.54		$	8.62		$	8.62
Gross disconnect rate (b)
Direct one-way		-6.9	%		-6.8	%		-6.7	%		-6.5	%		-6.9	%		-6.9	%		-7.1	%		-6.4	%
Direct two-way		-11.1	%		-9.8	%		-9.8	%		-9.8	%		-10.4	%		-12.2	%		-10.5	%		-9.1	%
Total direct		-7.3	%		-7.0	%		-7.0	%		-6.7	%		-7.2	%		-7.3	%		-7.3	%		-6.6	%
Indirect one-way		-15.3	%		-13.1	%		-12.0	%		-15.1	%		-14.0	%		-15.0	%		-14.7	%		-14.1	%
Indirect two-way		-7.6	%		-8.2	%		-10.6	%		-4.7	%		-6.2	%		-5.9	%		-5.7	%		-6.7	%
Total indirect		-14.2	%		-12.4	%		-11.8	%		-13.3	%		-12.6	%		-13.2	%		-12.8	%		-12.5	%
Total one-way		-8.1	%		-7.6	%		-7.3	%		-7.5	%		-7.7	%		-7.8	%		-7.8	%		-7.1	%
Total two-way		-10.2	%		-9.5	%		-10.0	%		-8.6	%		-9.4	%		-10.4	%		-9.2	%		-8.4	%
Total paging gross disconnect rate		-8.3	%		-7.8	%		-7.6	%		-7.6	%		-7.9	%		-8.0	%		-8.0	%		-7.2	%
Net gain / loss rate (c)
Direct one-way		-4.1	%		-3.6	%		-3.3	%		-3.2	%		-4.2	%		-3.4	%		-3.6	%		-3.6	%
Direct two-way		-6.8	%		-5.2	%		-4.9	%		-4.1	%		-5.9	%		-6.9	%		-5.3	%		-4.6	%
Total direct		-4.3	%		-3.7	%		-3.5	%		-3.3	%		-4.3	%		-3.6	%		-3.7	%		-3.7	%
Indirect one-way		-11.3	%		-9.8	%		-7.1	%		-7.1	%		-9.5	%		-8.5	%		-4.6	%		-5.4	%
Indirect two-way		-3.6	%		-2.9	%		-4.9	%		1.0	%		2.5	%		3.2	%		2.1	%		0.8	%
Total indirect		-10.2	%		-8.7	%		-6.8	%		-5.7	%		-7.3	%		-6.2	%		-3.2	%		-4.0	%
Total one-way		-5.1	%		-4.3	%		-3.8	%		-3.7	%		-4.8	%		-3.9	%		-3.7	%		-3.8	%
Total two-way		-6.1	%		-4.7	%		-4.9	%		-2.9	%		-3.9	%		-4.2	%		-3.3	%		-3.0	%
Total paging net gain / loss rate		-5.2	%		-4.4	%		-3.9	%		-3.6	%		-4.7	%		-4.0	%		-3.7	%		-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			12/31/07
Gross placement rate (b)
Healthcare		3.8	%		4.5	%		4.1	%		4.2	%		3.6	%		4.8	%		4.5	%		3.6	%
Government		2.2	%		2.3	%		2.6	%		2.1	%		2.2	%		2.5	%		2.5	%		2.0	%
Large enterprise		2.6	%		3.0	%		3.8	%		3.9	%		2.7	%		3.0	%		2.9	%		2.7	%
Other		2.7	%		3.0	%		3.3	%		3.1	%		2.6	%		3.2	%		3.4	%		2.4	%
Total direct		2.9	%		3.3	%		3.5	%		3.4	%		2.9	%		3.7	%		3.6	%		2.8	%
Total indirect		4.0	%		3.7	%		5.1	%		7.8	%		5.3	%		6.9	%		9.6	%		8.5	%
Total		3.1	%		3.4	%		3.7	%		4.0	%		3.2	%		4.1	%		4.3	%		3.5	%
Gross disconnect rate (b)
Healthcare		-4.6	%		-4.7	%		-5.3	%		-4.6	%		-4.6	%		-5.0	%		-5.6	%		-5.0	%
Government		-5.7	%		-6.3	%		-5.9	%		-5.8	%		-5.8	%		-6.4	%		-6.8	%		-6.0	%
Large enterprise		-7.7	%		-7.4	%		-6.9	%		-6.8	%		-8.4	%		-9.3	%		-7.6	%		-6.9	%
Other		-10.3	%		-9.5	%		-9.3	%		-9.5	%		-10.9	%		-10.5	%		-10.5	%		-9.5	%
Total direct		-7.3	%		-7.0	%		-7.0	%		-6.7	%		-7.2	%		-7.3	%		-7.3	%		-6.6	%
Total indirect		-14.2	%		-12.4	%		-11.8	%		-13.3	%		-12.6	%		-13.2	%		-12.8	%		-12.5	%
Total		-8.3	%		-7.8	%		-7.6	%		-7.6	%		-7.9	%		-8.0	%		-8.0	%		-7.2	%
Net loss rate (b)
Healthcare		-0.7	%		-0.2	%		-1.1	%		-0.4	%		-1.1	%		-0.2	%		-1.0	%		-1.3	%
Government		-3.5	%		-4.1	%		-3.3	%		-3.6	%		-3.6	%		-3.8	%		-4.3	%		-4.0	%
Large enterprise		-5.1	%		-4.3	%		-3.0	%		-2.9	%		-5.7	%		-6.2	%		-4.6	%		-4.3	%
Other		-7.5	%		-6.6	%		-6.1	%		-6.4	%		-8.3	%		-7.2	%		-7.2	%		-7.1	%
Total direct		-4.3	%		-3.7	%		-3.5	%		-3.3	%		-4.3	%		-3.6	%		-3.7	%		-3.7	%
Total indirect		-10.2	%		-8.7	%		-6.8	%		-5.7	%		-7.3	%		-6.2	%		-3.2	%		-4.0	%
Total		-5.2	%		-4.4	%		-3.9	%		-3.6	%		-4.7	%		-4.0	%		-3.7	%		-3.7	%
End of period units in service % of total (b)
Healthcare		29.0	%		30.5	%		31.5	%		32.5	%		33.6	%		35.0	%		36.2	%		37.1	%
Government		16.4	%		16.4	%		16.6	%		16.5	%		17.9	%		18.0	%		17.8	%		17.8	%
Large enterprise		10.2	%		10.2	%		10.1	%		10.3	%		13.8	%		13.6	%		13.5	%		13.5	%
Other		30.8	%		29.9	%		29.2	%		28.3	%		22.6	%		21.7	%		20.7	%		19.8	%
Total direct		86.4	%		87.0	%		87.4	%		87.6	%		88.0	%		88.3	%		88.2	%		88.2	%
Total indirect		13.6	%		13.0	%		12.6	%		12.4	%		12.0	%		11.7	%		11.8	%		11.8	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

(a)	Slight variations in totals are due to rounding.
(b)	Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnet and net loss rates.

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

	For the three months ended
	3/31/06			6/30/06			9/30/06			12/31/06			3/31/07			6/30/07			9/30/07			12/31/07
Account size ending units in service (000’s)
1 to 3 units		358			327			300			275			251			232			216			200
4 to 10 units		203			188			175			163			150			139			129			120
11 to 50 units		489			456			426			398			368			344			319			298
51 to 100 units		265			249			238			226			215			200			189			176
101 to 1,000 units		1,068			1,027			999			967			924			898			856			827
>1,000 units		1,619			1,607			1,583			1,568			1,534			1,503			1,483			1,454
Total		4,002			3,854			3,721			3,598			3,442			3,316			3,193			3,075
End of period units in service % of total direct
1 to 3 units		8.9	%		8.5	%		8.1	%		7.7	%		7.3	%		7.0	%		6.8	%		6.5	%
4 to 10 units		5.1	%		4.9	%		4.7	%		4.5	%		4.4	%		4.2	%		4.1	%		3.9	%
11 to 50 units		12.2	%		11.8	%		11.4	%		11.1	%		10.7	%		10.4	%		10.0	%		9.7	%
51 to 100 units		6.6	%		6.5	%		6.4	%		6.3	%		6.2	%		6.0	%		5.9	%		5.7	%
101 to 1,000 units		26.7	%		26.6	%		26.9	%		26.9	%		26.9	%		27.1	%		26.8	%		26.9	%
>1,000 units		40.5	%		41.7	%		42.5	%		43.6	%		44.6	%		45.3	%		46.5	%		47.3	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Account size net loss rate
1 to 3 units		-7.8	%		-8.7	%		-8.0	%		-8.3	%		-9.0	%		-7.6	%		-6.6	%		-7.6	%
4 to 10 units		-8.2	%		-7.5	%		-6.9	%		-6.6	%		-7.9	%		-7.6	%		-7.0	%		-7.5	%
11 to 50 units		-7.2	%		-6.8	%		-6.5	%		-6.6	%		-7.5	%		-6.4	%		-7.3	%		-6.6	%
51 to 100 units		-7.0	%		-6.2	%		-4.2	%		-5.2	%		-4.9	%		-6.9	%		-5.7	%		-6.4	%
101 to 1,000 units		-5.8	%		-3.8	%		-2.7	%		-3.2	%		-4.4	%		-2.8	%		-4.7	%		-3.3	%
>1,000 units		-5.0	%		-0.7	%		-1.6	%		-0.9	%		-2.2	%		-2.0	%		-1.3	%		-2.0	%
Total		-4.3	%		-3.7	%		-3.5	%		-3.3	%		-4.3	%		-3.6	%		-3.7	%		-3.7	%
Account size ARPU
1 to 3 units	$	14.02		$	14.14		$	14.07		$	14.18		$	14.68		$	14.67		$	14.90		$	14.83
4 to 10 units		13.02			13.08			12.99			13.07			13.41			13.40			13.68			13.62
11 to 50 units		10.88			10.81			10.72			10.76			10.95			10.93			11.15			11.07
51 to 100 units		9.59			9.53			9.39			9.30			9.44			9.48			9.74			9.74
101 to 1,000 units		8.34			8.29			8.21			8.18			8.24			8.24			8.35			8.38
>1,000 units		8.18			8.05			7.89			7.91			7.93			7.80			7.86			7.81
Total	$	9.44		$	9.32		$	9.16		$	9.09		$	9.18		$	9.08		$	9.16		$	9.09
Cellular revenue
Number of activations		6,829			6,969			6,374			5,818			5,450			8,046			5,579			5,070
Revenue from cellular services (000’s)	$	2,026		$	2,096		$	1,728		$	1,877		$	2,087		$	2,497		$	2,035		$	1,705

(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		12/31/07
Cost of products sold	$	786	$	1,169	$	1,184	$	698		$	687	$	1,508		$	2,435	$	1,603
Service, rental and maintenance
Site rent		26,099		25,021		24,314		24,204			22,284		22,115			20,705		19,602
Telecommunications		9,099		8,480		7,343		7,185			7,058		6,622			5,289		6,356
Payroll and related		7,046		6,578		6,517		6,136			6,488		6,657			6,871		6,878
Stock based compensation		81		83		78		78			31		30			26		25
Other		5,767		4,607		4,237		4,167			3,172		3,932			3,855		3,934
Total service, rental and maintenance		48,092		44,769		42,489		41,770			39,033		39,356			36,746		36,795
Selling and marketing
Payroll and related		7,709		7,317		6,996		6,902			6,740		6,259			5,984		5,517
Commissions		2,226		2,373		2,407		2,577			2,170		2,386			2,140		2,056
Stock based compensation		171		166		178		55			93		91			67		52
Other		953		1,262		1,348		1,262			1,239		1,239			1,700		1,095
Total selling and marketing		11,059		11,118		10,929		10,796			10,242		9,975			9,891		8,720
General and administrative
Payroll and related		12,330		11,412		9,517		9,287			9,560		9,343			9,487		8,744
Stock based compensation		431		461		484		462			304		299			214		180
Bad debt		1,790		1,705		2,035		1,975			1,402		1,075			854		1,015
Facility rent		4,104		3,973		3,468		3,408			2,947		3,066			2,614		2,177
Telecommunications		2,248		1,982		1,858		1,714			1,764		1,526			1,402		1,366
Outside services		6,419		5,631		6,162		7,122			5,504		5,222			5,136		4,854
Taxes, licenses and permits		4,149		2,708		3,036		(501	)		2,316		(20	)		1,815		2,218
Other		4,671		4,336		4,434		5,066			2,651		2,786			2,084		2,762
Total general and administrative		36,142		32,208		30,994		28,533			26,448		23,297			23,606		23,316
Severance and restructuring		170		321		682		3,413			17		—			1,177		5,235
Depreciation, amortization and accretion		18,794		18,900		18,361		17,244			13,318		12,450			12,048		10,872
Operating expenses	$	115,043	$	108,485	$	104,639	$	102,454		$	89,745	$	86,586		$	85,903	$	86,541
Capital expenses	$	4,424	$	4,595	$	5,152	$	6,819		$	5,086	$	3,525		$	4,528	$	5,184

(a) Slight variations in totals are due to rounding.

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

	12/31/06		12/31/07
Assets
Current assets:
Cash and cash equivalents	$	66,507	$	64,542
Accounts receivable, net		26,364		28,044
Prepaid expenses and other		12,294		8,608
Deferred income tax assets, net		18,399		8,267
Total current assets		123,564		109,461
Property and equipment, net		91,562		75,669
Goodwill		159,438		188,170
Intangible assets, net		26,339		16,929
Deferred income tax assets, net		180,244		86,219
Other assets		7,067		7,634
Total assets	$	588,214	$	484,082
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	63,979	$	53,418
Distributions payable		435		93
Customer deposits		2,250		1,592
Deferred revenue		16,194		12,059
Total current liabilities		82,858		67,162
Other long-term liabilities		29,384		43,352
Total liabilities		112,242		110,514
Stockholders’ equity:
Preferred stock		—		—
Common stock		3		3
Additional paid-in capital		475,969		373,565
Retained earnings		—		—
Total stockholders’ equity		475,972		373,568
Total liabilities and stockholders’ equity	$	588,214	$	484,082

(a) Slight variations in totals are due to rounding.

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

	For the twelve months ended
	12/31/06			12/31/07
Cash flows from operating activities:
Net income (loss)	$	40,181		$	(5,198	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		73,299			48,688
Deferred income tax expense		16,197			91,995
Amortization of stock based compensation		2,728			1,412
Provisions for doubtful accounts, service credits and other		17,204			8,561
Non-cash tax accrual adjustments		(3,467	)		(6,789	)
Loss/(gain) on disposals of property and equipment		601			(169	)
Changes in assets and liabilities:
Accounts receivable		(6,816	)		(10,240	)
Prepaid expenses and other		(395	)		2,706
Intangibles and other long-term assets		(2,746	)		(582	)
Accounts payable and accrued liabilities		816			(6,538	)
Customer deposits and deferred revenue		(2,584	)		(4,793	)
Other long-term liabilities		12,224			(4,768	)
Net cash provided by operating activities		147,242			114,285
Cash flows from investing activities:
Purchases of property and equipment		(20,990	)		(18,323	)
Proceeds from disposals of property and equipment		200			323
Receipts from long-term notes receivable		1,425			—
Net cash used in investing activities		(19,365	)		(18,000	)
Cash flows from financing activities:
Repayment of long-term debt		(13	)		—
Cash distributions to stockholders		(98,904	)		(98,250	)
Net cash used in financing activities		(98,917	)		(98,250	)
Net increase (decrease) in cash and cash equivalents		28,960			(1,965	)
Cash and cash equivalents, beginning of period		37,547			66,507
Cash and cash equivalents, end of period	$	66,507		$	64,542
Supplemental disclosure:
Interest paid	$	34		$	13
Income taxes paid (state and local)	$	49		$	70

(a) Slight variations in totals are due to rounding.

USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(in thousands, except share and per share amounts)

	For the year ended
	December 31,
	2006			2007
Revenue:
Paging service	$	464,194		$	389,469
Cellular		7,727			8,324
Product sales		21,556			22,204
Other		4,217			4,627
Total revenue		497,694			424,624
Operating expenses:
Cost of products sold		3,837			6,233
Service, rental and maintenance		177,120			151,930
Selling and marketing		43,902			38,828
General and administrative		127,877			96,667
Severance and restructuring		4,586			6,429
Depreciation, amortization and accretion		73,299			48,688
Total operating expenses		430,621			348,775
% of total revenue		86.5	%		82.1	%
Operating income		67,073			75,849
% of total revenue		13.5	%		17.9	%
Interest income, net		3,868			3,448
Other income, net		800			2,150
Income before income tax expense		71,741			81,447
Income tax expense		31,560			86,645
Net income (loss)	$	40,181		$	(5,198	)
Basic net income (loss) per common share	$	1.47		$	(0.19	)
Diluted net income (loss) per common share	$	1.46		$	(0.19	)
Basic weighted average common shares outstanding		27,399,811			27,442,444
Diluted weighted average common shares outstanding		27,580,866			27,442,444
Reconciliation of operating income to EBITDA (b):
Operating income	$	67,073		$	75,849
Add back: Depreciation, amortization and accretion		73,299			48,688
EBITDA	$	140,372		$	124,537
% of total revenue		28.2	%		29.3	%

(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.