EX-99.1 2 w68389exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1

(METROCALL LOGO)

For Immediate Release:
Thursday, November 4, 2004

Metrocall Contact:
Brett Mankey
(703) 660-6677, ext. 6231
investor.relations@metrocall.com

Metrocall Reports Third Quarter 2004 Operating Results

     Alexandria, VA, Thursday, November 4, 2004 — Metrocall Holdings, Inc. (NASDAQ: MTOH), a leading provider of paging and wireless messaging services, today announced total revenues of $82.1 million and net income of $5.8 million for the quarter ended September 30, 2004 compared to revenues of $87.1 million and net income of $7.2 million for the quarter ended June 30, 2004.

     Metrocall reported a net decline of 189,499 messaging units in service for the quarter ended September 30, 2004 comprised of 175,973 traditional one-way units and 13,526 advanced messaging two-way units. Units in service totaled 2,813,892 at September 30, 2004, including 2,501,336 one way and 312,556 two-way subscriber units. Average revenue per unit in service was $7.40 for traditional and $17.88 for advanced messaging, representing a decrease of $0.02 and $0.29 per unit, respectively from the three months ended June 30, 2004.

     Operating expenses including, cost of products sold, service, rent and maintenance, selling and marketing and general and administrative expenses (but excluding stock-based, depreciation and amortization expenses) for the third quarter of 2004 totaled approximately $60.8 million compared to $62.6 million reported for the second quarter. Operating expenses, however, included approximately $3.1 million in the third quarter and $3.0 million for the second quarter in general and administrative expenses related to legal and other expenses associated with the proposed merger between Metrocall and Arch Wireless, Inc.

     Overall these operating expenses, independent of costs incurred for the Metrocall/Arch merger preparation, were reduced by approximately $1.9 million to $57.7 million or 3.2%, and capital expenditures of $2.7 million were 30.8% lower than the $3.9 million spent in the three months ended June 30, 2004.

 


 

     On March 29, 2004, Metrocall announced the execution of a definitive merger agreement with Arch Wireless, Inc. A new holding company, USA Mobility, Inc., has been formed to own both Arch and Metrocall. Under terms of the agreement, Arch and Metrocall shareholders will own approximately 72.5% and 27.5% of USA Mobility, Inc., respectively and Metrocall shareholders will also receive $150 million in cash for 2 million shares of Metrocall common stock. A joint proxy statement/prospectus was mailed to Arch and Metrocall shareholders on October 8, 2004 and additional proxy materials were mailed on October 22, 2004. Shareholders of both companies are scheduled to vote on the merger on November 8, 2004. The merger is also subject to various regulatory approvals. Arch and Metrocall anticipate the merger will be completed during the fourth quarter of 2004.

About Metrocall Wireless, Inc.

     Metrocall Wireless, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to the business, government and healthcare communities. In addition to its reliable, nationwide one-way networks, Metrocall’s two-way network has the largest high-powered terrestrial ReFLEX footprint in the United States with roaming partners in Canada, Mexico and the Caribbean. Metrocall Wireless is the preferred ReFLEX wireless data network provider for many of the largest telecommunication companies in the United States that source network services and resell under their own brand names. In addition to traditional numeric, one-way text and two-way paging, Metrocall also offers wireless e-mail solutions, as well as mobile voice and data services through AT&T Wireless and Nextel. Also, Metrocall offers Integrated Resource Management Systems with wireless connectivity solutions for medical, business, government and other campus environments. Metrocall focuses on the business-to-business marketplace and supports organizations of all sizes. For more information on Metrocall please visit our Web site and online store at www.metrocall.com or call 800-800-2337.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release includes “forward-looking statements,” within the meaning of the federal securities laws that involve uncertainties and risks. These include statements regarding events or developments that Metrocall Holdings expects or anticipates will occur in the future. A number of risks and uncertainties could cause actual results, events, and developments to differ from expectations. Please refer to Metrocall’s most recent annual report on Form 10-K, and any subsequently filed reports on Form 10-Q and Form 8-K, as well as its other filings with the Securities and Exchange Commission, for a complete discussion of these and other important factors that could cause actual results to differ materially from those projected by these forward-looking statements.

 


 

METROCALL HOLDINGS, INC. AND SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share information)

                 
    September 30,   December 31,
    2004
  2003
ASSETS
               
CURRENT ASSETS:
               
Cash and cash equivalents
  $ 39,434     $ 35,602  
Restricted cash
          547  
Accounts receivable, less allowance for doubtful accounts of $6,386 and $6,965 as of September 30, 2004 and December 31, 2003, respectively
    23,516       27,262  
Prepaid expenses and other current assets
    3,075       11,431  
Deferred tax assets, net of allowance
    2,782       2,592  
 
   
 
     
 
 
Total current assets
    68,807       77,434  
 
   
 
     
 
 
PROPERTY AND EQUIPMENT:
               
Land, buildings and leasehold improvements
    2,634       2,082  
Furniture, office equipment and vehicles
    24,619       23,033  
Paging and plant equipment
    72,897       72,589  
Less — Accumulated depreciation and amortization
    (50,785 )     (36,422 )
 
   
 
     
 
 
 
    49,365       61,282  
 
   
 
     
 
 
INTANGIBLE ASSETS, net of accumulated amortization of $645 and $107 as of September 30, 2004 and December 31, 2003, respectively
    2,129       1,746  
DEFERRED TAX ASSETS, net of allowance
    39,644       50,494  
OTHER ASSETS
    4,931       4,805  
 
   
 
     
 
 
TOTAL ASSETS
  $ 164,876     $ 195,761  
 
   
 
     
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Current maturities of long-term debt
  $ 70     $ 815  
Current maturities of series A redeemable preferred
          25,000  
Accounts payable
    8,290       9,900  
Accrued expenses and other current liabilities
    21,202       26,496  
Deferred revenue and subscriber deposits
    12,687       18,385  
 
   
 
     
 
 
Total current liabilities
    42,249       80,596  
CAPITAL LEASE AND OTHER LONG-TERM DEBT, less current maturities
    13       41  
OTHER LONG-TERM LIABILITIES
    3,943       3,492  
SERIES A REDEEMABLE PREFERRED STOCK
          18,351  
 
   
 
     
 
 
Total liabilities
    46,205       102,480  
COMMITMENTS AND CONTINGENCIES
               
STOCKHOLDERS’ EQUITY:
               
Common stock, par value $.01 per share; 7,500,000 shares authorized; 5,630,670 shares and 5,461,160 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively
    56       55  
Additional paid-in capital
    85,114       80,661  
Unearned compensation
          (458 )
Retained earnings
    33,501       13,023  
 
   
 
     
 
 
Total stockholders’ equity
    118,671       93,281  
 
   
 
     
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 164,876     $ 195,761  
 
   
 
     
 
 

 


 

METROCALL HOLDINGS, INC. AND SUBSIDIARIES
INCOME STATEMENTS
(Unaudited)
(In thousands, except share and per share information)

                                 
    Three Months Ended   Nine Months Ended
    September 30,
  September 30,
    2004   2003(1)   2004   2003(1)
 
 
 
 
 
 
 
 
 
REVENUES:
                               
Service, rent and maintenance revenues
  $ 77,667     $ 75,459     $ 247,219     $ 237,260  
Product sales
    4,395       4,155       12,673       12,528  
 
   
 
     
 
     
 
     
 
 
Total revenues
    82,062       79,614       259,892       249,788  
OPERATING EXPENSES:
                               
Cost of products sold (exclusive of depreciation and amortization shown separately below)
    1,433       1,212       3,716       3,143  
Service, rent and maintenance (exclusive of depreciation and amortization shown separately below)
    25,842       20,877       82,223       67,681  
Selling and marketing
    7,805       9,174       25,806       31,182  
General and administrative (exclusive of stock-based and other compensation shown separately below)
    25,756       21,825       76,117       71,110  
Stock-based and other compensation
    228       145       2,579       1,046  
Restructuring expenses
          521             6,247  
Depreciation and Amortization
    7,534       6,432       24,747       29,114  
 
   
 
     
 
     
 
     
 
 
Total operating expenses
    68,598       60,186       215,188       209,523  
 
   
 
     
 
     
 
     
 
 
Income from operations
    13,464       19,428       44,704       40,265  
INTEREST EXPENSE
    (134 )     (805 )     (407 )     (6,703 )
INTEREST EXPENSE – DIVIDENDS AND ACCRETION OF SERIES A PREFERRED
          (6,413 )     (4,479 )     (6,413 )
INTEREST AND OTHER INCOME (EXPENSE), NET
    (49 )     97       (83 )     329  
 
   
 
     
 
     
 
     
 
 
INCOME BEFORE INCOME TAXES
    13,281       12,307       39,735       27,478  
INCOME TAX PROVISION
    (7,527 )     (6,725 )     (19,257 )     (12,537 )
 
   
 
     
 
     
 
     
 
 
Net income
    5,754       5,582       20,478       14,941  
PREFERRED DIVIDENDS AND ACCRETION
                      (6,092 )
 
   
 
     
 
     
 
     
 
 
Income available to common stockholders
  $ 5,754     $ 5,582     $ 20,478     $ 8,849  
 
   
 
     
 
     
 
     
 
 
Basic earnings per share available to common stockholders
  $ 1.02     $ 1.13     $ 3.70     $ 1.78  
 
   
 
     
 
     
 
     
 
 
Diluted earnings per share available to common stockholders
  $ 0.99     $ 1.08     $ 3.53     $ 1.75  
 
   
 
     
 
     
 
     
 
 
Basic weighted-average common shares outstanding
    5,621,491       4,960,200       5,535,454       4,958,597  
 
   
 
     
 
     
 
     
 
 
Diluted weighted-average common shares outstanding
    5,840,178       5,161,502       5,795,659       5,054,987  
 
   
 
     
 
     
 
     
 
 

(1)   Amounts for 2003 do not include the results of operations of the assets acquired from WebLink Wireless, Inc. and Subsidiaries on November 18, 2003. Such amounts have been included in the Company’s consolidated operating results from the acquisition date forward including the three and nine month periods ended September 30, 2004, included here-in.

 


 

METROCALL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)

                 
    Nine Months Ended
    September 30,
    2004
  2003(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 20,478     $ 14,941  
Adjustments to reconcile net income to net cash provided by operating activities.
               
Depreciation and amortization
    24,747       29,114  
Amortization of unearned compensation
    458       908  
Stock-based compensation
    1,171       138  
Accretion on issuance of PIK Notes
          3,835  
Interest expense – accretion of series A preferred
    3,338       3,891  
Interest expense – accretion of long-term liabilities
    376        
Loss on sale of land held by partnership
          399  
Deferred income tax provision
    10,660       12,401  
Cash provided by changes in assets and liabilities:
               
Restricted cash
    547       5,857  
Accounts receivable
    3,615       6,946  
Prepaid expenses and other current assets
    8,356       2,227  
Accounts payable
    (1,610 )     (1,655 )
Tax benefit from exercise of stock options
    3,209        
Accrued expenses and other current liabilities
    (6,828 )     (2,239 )
Deferred revenues and subscriber deposits
    (5,699 )     (2,698 )
Other assets and long-term liabilities
    (234 )     436  
 
   
 
     
 
 
Net cash provided by operating activities
    62,584       74,501  
 
   
 
     
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (11,307 )     (5,914 )
 
   
 
     
 
 
Net cash used in investing activities
    (11,307 )     (5,914 )
 
   
 
     
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Repayment of long-term debt
    (773 )     (82,401 )
Redemption of series A preferred
    (46,746 )     (20,000 )
Proceeds from issuance of common stock
    74        
 
   
 
     
 
 
Net cash used in financing activities
    (47,445 )     (102,401 )
 
   
 
     
 
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    3,832       (33,814 )
CASH AND CASH EQUIVALENTS, beginning of period
    35,602       47,530  
 
   
 
     
 
 
CASH AND CASH EQUIVALENTS, end of period
  $ 39,434     $ 13,716  
 
   
 
     
 
 
Supplemental Disclosures of Cash Flow Information:
               
Cash payments for interest
  $     $ 798  
 
   
 
     
 
 
Cash payments for income taxes
  $ 4,943     $ 715  
 
   
 
     
 
 
Cash payments for series A preferred dividends (interest)
  $ 1,141     $ 2,522  
 
   
 
     
 
 
Supplemental disclosure of non-cash investing and financing items:
               
Preferred stock dividends and accretion
  $     $ 6,092  
 
   
 
     
 
 

(1)   Amounts for 2003 do not include the cash flows from operating, investing and financing activities related to the assets acquired from WebLink Wireless, Inc. and Subsidiaries on November 18, 2003. Such amounts have been included in the Company’s consolidated cash flow statement from the acquisition date forward including nine months ended September 30, 2004, included here-in.

 


 

METROCALL HOLDINGS, INC. AND SUBSIDIARIES
SELECTED UNAUDITED UNIT DATA

                                                         
    March 31,   June 30,   September 30,   December 31,   March 31,   June 30,   September 30,
    2003
  2003
  2003
  2003
  2004
  2004
  2004
Direct Units in Service
                                                       
Beginning units in service
    2,333,052       2,237,989       2,170,290       2,105,617       2,263,643       2,172,772       2,100,330  
Units in service growth (decline)
    (95,063 )     (67,699 )     (64,673 )     (53,211 )     (90,871 )     (72,442 )     (94,916 )
Units acquired from WebLink
                            211,237 (b)                        
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Ending units in Service
    2,237,989       2,170,290       2,105,617       2,263,643       2,172,772       2,100,330       2,005,414  
 
                                                       
Indirect Units in Service
                                                       
Beginning units in service
    1,386,332       1,159,276       961,574       907,809       1,201,301       1,052,650       903,061  
Units in service growth (decline)
    (227,056 )     (197,702 )     (53,765 )(a)     (128,953 )     (148,651 )     (149,589 )     (94,583 )
Units acquired from WebLink
                            422,445 (b)                        
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Ending units in Service
    1,159,276       961,574       907,809       1,201,301       1,052,650       903,061       808,478  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total units in service
    3,397,265       3,131,864       3,013,426       3,464,944       3,225,422       3,003,391       2,813,892  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 

(a)   Includes 73,000 units acquired from a reseller on September 30, 2003
 
(b)   Includes 633,682 units acquired from WebLink Wireless, Inc. and Subsidiaries on November 18, 2003.