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USA Mobility Reports First Quarter Operating Results; Board Declares Quarterly Cash Distribution
Company Continues to Reduce Operating Expenses;

ALEXANDRIA, Va.--(BUSINESS WIRE)--Apr. 29, 2009-- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the first quarter ended March 31, 2009.

In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share, payable on June 18, 2009 to stockholders of record on May 20, 2009. The Company expects the entire distribution to be paid as a return of capital.

Total revenue for the first quarter was $79.7 million, compared to $84.3 million in the fourth quarter of 2008 and $94.8 million in the year-earlier quarter. EBITDA (earnings before interest, taxes, depreciation, amortization, accretion and goodwill impairment) in the first quarter totaled $28.6 million, compared to $29.8 million in the fourth quarter of 2008 and $29.9 million in the first quarter of 2008.

Net income for the first quarter was $10.0 million, or $0.43 per fully diluted share, compared to a net loss of $177.8 million, or $6.48 per fully diluted share, in the first quarter of 2008. The year-earlier loss resulted from a goodwill impairment for which the Company incurred a $188.2 million non-cash expense to write-off its entire goodwill balance. Absent the goodwill write-down, net income in the first quarter of 2008 would have been $10.4 million, or $0.38 per fully diluted share.

First quarter results included:

  • EBITDA margin (or EBITDA as a percentage of revenue) increased to 35.9 percent, compared to 35.4 percent in the fourth quarter of 2008 and 31.6 percent in the year-earlier quarter, reaching its highest level in more than four years.
  • The quarterly rate of revenue erosion was 5.4 percent, compared to 4.6 percent in the fourth quarter and 5.4 percent in the first quarter of 2008. The annual rate of revenue erosion for the first quarter was 15.9 percent, compared to the same rate for the fourth quarter and 15.0 percent in the year-earlier quarter.
  • Total paging ARPU (average revenue per unit) increased to $8.86 in the first quarter from $8.71 in the fourth quarter and $8.49 in the year-earlier quarter.
  • Net unit loss was 208,000 in the first quarter, compared to 187,000 in the fourth quarter of 2008 and 152,000 in the first quarter of 2008. Units in service totaled 2,607,000 at March 31, 2009, compared to 2,815,000 at December 31, 2008.
  • The quarterly rate of subscriber loss was 7.4 percent in the first quarter, historically the quarter with the highest net churn, compared to 6.2 percent in the fourth quarter and 4.4 percent in the first quarter of 2008. The annual rate of subscriber erosion was 21.8 percent in the first quarter, compared to 19.2 percent in the fourth quarter of 2008 and 14.8 percent in the year-earlier quarter.
  • Operating expenses (excluding depreciation, amortization, accretion and goodwill impairment) totaled $51.1 million in the first quarter, a reduction of $13.8 million, or 21.2 percent, from $64.8 million in the first quarter of 2008. Quarterly operating expenses declined 6.2 percent from the fourth quarter of 2008 and, as a percentage of revenue, are at their lowest level in more than four years.
  • Capital expenses were $6.1 million, compared to $4.2 million in the fourth quarter of 2008.
  • The Company’s cash balance at March 31, 2009 was $65.1 million.

“We reported excellent operating results for the first quarter,” said Vincent D. Kelly, president and chief executive officer. “Despite a very difficult economy and high unemployment nationwide, our results exceeded a majority of our performance objectives and were consistent with the financial guidance we provided earlier this year. Although the pace of subscriber losses accelerated during the quarter, as expected, we posted our highest ARPU in nearly three years. In addition, we continued to generate substantial free cash flow while successfully managing the business profitably with a low-cost operating structure. In fact, due to lower expenses, our EBITDA margin reached a record high 35.9 percent.”

Kelly said the Company continued to focus sales and marketing efforts around its core market segments of Healthcare, Government and Large Enterprise during the quarter. “These core segments represented approximately 82.1 percent of our direct subscriber base and 75.7 percent of our direct paging revenue at the end of the first quarter. Once again Healthcare was our best performing market segment with the highest rate of gross placements and lowest rate of net unit loss as healthcare providers continue to benefit from the reliability of paging for their most critical messaging needs. Indeed, our networks today carry the lion’s share of messaging to hospitals across the country, providing paging service to 40 percent of all U.S. hospitals and 63 percent of major hospitals (those with at least 200 beds).”

Kelly also said the Company introduced an exclusive two-way paging device to the market at the end of the first quarter. Called the ST902, the new device uses a disposable battery. “It’s the first new disposable battery two-way pager to come to market in many years, and was the culmination of more than two years of product development. In working with our customers, we found that many of them prefer a disposable battery rather than a rechargeable battery,” Kelly explained. “For example, hospitals often use their pagers around the clock, passing them from one shift to the next, and often don’t want to take a pager out of service to be recharged. In addition, many first responders require a wireless communications device they can take into the field where plug-in electrical outlets may not be available. As a result, we saw a need for a new two-way pager that was powered by a common, disposable AA battery. With permanent exclusivity on this new two-way pager, we will aggressively market the device to customers this year.”

USA Mobility again returned capital to stockholders in the first quarter, Kelly noted. “We continued to meet our goal of generating sufficient free cash flow to return capital to stockholders in the form of cash distributions. We produced $27.3 million in cash from operations in the quarter, allowing us to pay a regular quarterly cash distribution of $0.25 per share and a special cash distribution of $1.00 per share on March 31, 2009. Together, the distributions represented a return of capital to our stockholders of approximately $28.5 million. Including the first quarter distributions, we have now returned $305.4 million to stockholders over the past four years. In addition, the Board of Directors on April 29, 2009 declared a regular quarterly cash distribution of $0.25 per share, payable on June 18, 2009 to stockholders of record on May 20, 2009. The Company expects the June distribution, a total of approximately $5.7 million, to be paid as a return of capital.”

Kelly added: “We continued to buy back shares of the Company’s common stock during the first quarter under the stock repurchase program we commenced last August. As of March 31, we had purchased a total of approximately 4.6 million shares for $40.8 million, at an average price of $8.78 per share, and had approximately $22.3 million available for additional purchases under the currently approved plan, which extends through the end of 2009.”

Thomas L. Schilling, chief operating officer and chief financial officer, said the Company’s expenses declined significantly during the first quarter as a result of an internal reorganization and related cost control programs initiated late last year. “Operating expenses (excluding depreciation, amortization, accretion and goodwill impairment) decreased 21.2 percent from the year-earlier quarter,” he said, “outpacing the year-over-year decline in revenue of 15.9 percent. In addition,” Schilling noted, “operating expense as a percentage of revenue was 64.1 percent in the first quarter, the lowest level in more than four years.”

Schilling added, “The combination of lower expenses and higher ARPU contributed to an increase in first quarter EBITDA margin compared to the prior quarter. Although we are pleased and encouraged by financial results in the first quarter, we are maintaining our previous financial guidance for 2009 of revenues between $285 million to $295 million, operating expenses (excluding depreciation, amortization and accretion) between $198 million to $203 million, and capital expenses between $19 million to $21 million, however, economic conditions may result in later changes to our guidance.”

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its first quarter results at 10:00 a.m. Eastern Time on Thursday, April 30, 2009. The dial-in number for the call is 866-290-0916 (toll-free) or 913-312-1416 (toll). The pass code for the call is 4591325. A replay of the call will be available from 3:00 p.m. ET on April 30 until 11:59 p.m. on Thursday, May 14. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4591325.

* * * * * * * * *

USA Mobility’s Annual Meeting of Stockholders will be held at 9:00 a.m. Eastern Time on Wednesday, May 20, 2009 in Alexandria, VA.

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 a majority of the Fortune 1000 companies. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. 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
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09  
 
Revenues:
Paging service $ 86,773 $ 83,360 $ 80,533 $ 75,989 $ 72,021
Cellular 1,859 1,547 1,494 993 991
Product sales 4,871 5,741 5,014 5,863 5,271
Other

 

  1,255     1,427     1,316     1,413     1,408  
Total revenues   94,758     92,075     88,357     84,258     79,691  
 
Operating expenses:
Cost of products sold 1,081 1,408 1,291 1,812 1,669
Service, rental and maintenance 33,969 31,583 29,069 28,199 22,955
Selling and marketing 7,836 7,549 6,756 6,144 6,062
General and administrative 21,808 20,782 20,631 18,289 20,186
Severance and restructuring 145 153 5,063 (35 ) 190
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270
Goodwill impairment   188,170     -     -     -     -  
Total operating expenses   265,522     73,149     73,885     66,159     62,332  
% of total revenues 280.2 % 79.4 % 83.6 % 78.5 % 78.2 %
         
Operating (loss) income   (170,764 )   18,926     14,472     18,099     17,359  
% of total revenues -180.2 % 20.6 % 16.4 % 21.5 % 21.8 %
 
Interest income, net 578 672 471 79 26
Other income, net   125     202     205     90     112  
(Loss) income before income tax expense (170,061 ) 19,800 15,148 18,268 17,497
Income tax expense   7,739     9,528     12,730     10,235     7,516  
Net (loss) income $ (177,800 ) $ 10,272   $ 2,418   $ 8,033   $ 9,981  
 
Basic net (loss) income per common share $ (6.48 ) $ 0.37   $ 0.09   $ 0.32   $ 0.43  
Diluted net (loss) income per common share $ (6.48 ) $ 0.37   $ 0.09   $ 0.32   $ 0.43  
 
Basic weighted average common shares outstanding   27,459,068     27,474,156     27,474,156     25,348,440     23,134,072  
Diluted weighted average common shares outstanding   27,459,068     27,600,976     27,602,296     25,444,277     23,479,796  
 
 
Reconciliation of operating (loss) income to EBITDA (b):
Operating (loss) income $ (170,764 ) $ 18,926 $ 14,472 $ 18,099 $ 17,359
Add back: depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270
Add back: goodwill impairment   188,170     -     -     -     -  
EBITDA $ 29,919   $ 30,600   $ 25,547   $ 29,849   $ 28,629  
% of total revenues 31.6 % 33.2 % 28.9 % 35.4 %   35.9 %
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization, accretion and goodwill impairment 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
3/31/08   6/30/08   9/30/08   12/31/08   3/31/09  
Units in service
 
Beginning units in service
Direct one-way 2,854 2,733 2,614 2,490 2,349
Direct two-way 221     206     196     184     171  
Total direct 3,075     2,939     2,810     2,674     2,520  
Indirect one-way 312 286 261 227 196
Indirect two-way 98     108     105     101     99  
Total indirect 410     394     366     328     295  
Total beginning units in service 3,485     3,333     3,176     3,002     2,815  
 
Gross placements
Direct one-way 77 90 76 61 67
Direct two-way 8     11     8     7     6  
Total direct 85     101     84     68     73  
Indirect one-way 17 22 12 8 8
Indirect two-way 16     7     7     6     4  
Total indirect 33     29     19     14     12  
Total gross placements 118     130     103     82     85  
 
Gross disconnects
Direct one-way (199 ) (209 ) (199 ) (202 ) (218 )
Direct two-way (22 )   (21 )   (20 )   (20 )   (20 )
Total direct (221 )   (230 )   (219 )   (222 )   (238 )
Indirect one-way (44 ) (47 ) (47 ) (39 ) (43 )
Indirect two-way (5 )   (10 )   (11 )   (8 )   (12 )
Total indirect (49 )   (57 )   (58 )   (47 )   (55 )
Total gross disconnects (270 )   (287 )   (277 )   (269 )   (293 )
 
Net gain (loss)
Direct one-way (122 ) (119 ) (123 ) (142 ) (151 )
Direct two-way (14 )   (10 )   (12 )   (12 )   (14 )
Total direct (136 )   (129 )   (135 )   (154 )   (165 )
Indirect one-way (27 ) (25 ) (35 ) (31 ) (35 )
Indirect two-way 11     (3 )   (4 )   (2 )   (8 )
Total indirect (16 )   (28 )   (39 )   (33 )   (43 )
Total net change (152 )   (157 )   (174 )   (187 )   (208 )
 
Ending units in service
Direct one-way 2,732 2,614 2,491 2,349 2,198
Direct two-way 207     196     184     171     157  
Total direct 2,939     2,810     2,675     2,520     2,355  
Indirect one-way 285 261 226 196 161
Indirect two-way 109     105     101     99     91  
Total indirect 394     366     327     295     252  
Total ending units in service 3,333     3,176     3,002     2,815     2,607  
 
(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
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09  
 
ARPU
Direct one-way $ 7.83 $ 7.85 $ 8.08 $ 8.09 $ 8.11
Direct two-way   23.68     23.90     23.78     23.77     23.68  
Total direct 8.95 8.97 9.16 9.16 9.15
 
Indirect one-way 4.10 4.57 4.79 5.12 7.05
Indirect two-way   7.52     7.08     5.35     4.53     4.58  
Total indirect 4.97 5.28 4.96 4.93 6.19
 
Total one-way 7.47 7.54 7.79 7.85 8.03
Total two-way   18.44     18.07     17.29     16.84     16.66  
Total paging ARPU $ 8.49   $ 8.54   $ 8.69   $ 8.71   $ 8.86  
 
 
 
Gross disconnect rate (b)
Direct one-way -7.0 % -7.6 % -7.6 % -8.1 % -9.3 %
Direct two-way   -10.2 %   -10.4 %   -10.2 %   -10.6 %   -11.8 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 %
 
Indirect one-way -13.9 % -16.4 % -17.9 % -17.3 % -22.0 %
Indirect two-way   -5.3 %   -8.8 %   -10.3 %   -7.7 %   -11.6 %
Total indirect -11.8 % -14.3 % -15.7 % -14.3 % -18.5 %
 
Total one-way -7.7 % -8.5 % -8.6 % -8.9 % -10.3 %
Total two-way   -8.7 %   -9.8 %   -10.2 %   -9.6 %   -11.7 %
Total paging gross disconnect rate   -7.7 %   -8.6 %   -8.7 %   -9.0 %   -10.4 %
 
 
 
Net gain (loss) rate (c)
Direct one-way -4.3 % -4.3 % -4.7 % -5.7 % -6.4 %
Direct two-way   -6.4 %   -5.2 %   -6.1 %   -6.8 %   -8.5 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 %
 
Indirect one-way -8.5 % -8.6 % -13.2 % -13.7 % -17.8 %
Indirect two-way   11.0 %   -2.4 %   -4.1 %   -1.5 %   -8.2 %
Total indirect -3.9 % -6.9 % -10.6 % -10.0 % -14.6 %
 
Total one-way -4.7 % -4.8 % -5.5 % -6.4 % -7.3 %
Total two-way   -1.1 %   -4.2 %   -5.4 %   -4.9 %   -8.4 %
Total paging net (loss) gain rate   -4.4 %   -4.7 %   -5.5 %   -6.2 %   -7.4 %
 
(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 MARKET SEGMENT (a)
(unaudited)
 
 
For the three months ended
3/31/08   6/30/08   9/30/08   12/31/08   3/31/09  
 
Gross placement rate (b)
Healthcare 3.3 % 4.8 % 3.8 % 3.0 % 3.7 %
Government 2.2 % 2.1 % 2.2 % 2.1 % 1.7 %
Large enterprise 2.4 % 2.3 % 2.2 % 2.1 % 2.4 %
Other 2.5 % 2.6 % 2.4 % 2.2 % 2.4 %
Total direct 2.8 % 3.4 % 3.0 % 2.5 % 2.9 %
Total indirect 8.0 % 7.4 % 5.1 % 4.4 % 3.9 %
Total 3.4 % 3.9 % 3.2 % 2.7 % 3.0 %
 
Gross disconnect rate (b)
Healthcare -5.1 % -5.8 % -6.0 % -6.4 % -6.8 %
Government -6.7 % -8.5 % -8.5 % -9.3 % -9.9 %
Large enterprise -8.6 % -9.2 % -9.2 % -8.9 % -13.3 %
Other -10.7 % -10.5 % -10.1 % -11.4 % -13.0 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 %
Total indirect -11.8 % -14.3 % -15.7 % -14.3 % -18.5 %
Total -7.7 % -8.6 % -8.7 % -9.0 % -10.4 %
 
Net loss rate (b)
Healthcare -1.7 % -0.9 % -2.1 % -3.4 % -3.1 %
Government -4.5 % -6.4 % -6.3 % -7.1 % -8.2 %
Large enterprise -6.2 % -6.9 % -7.0 % -6.8 % -10.9 %
Other -8.2 % -7.9 % -7.8 % -9.2 % -10.6 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 %
Total indirect -3.9 % -6.9 % -10.6 % -10.0 % -14.6 %
Total -4.4 % -4.7 % -5.5 % -6.2 % -7.4 %
 
End of period units in service % of total (b)
Healthcare 38.3 % 40.0 % 41.5 % 42.8 % 44.9 %
Government 17.9 % 17.7 % 17.6 % 17.4 % 17.2 %
Large enterprise 13.1 % 12.8 % 12.6 % 12.5 % 12.0 %
Other 18.9 % 18.0 % 17.4 % 16.8 % 16.2 %
Total direct 88.2 % 88.5 % 89.1 % 89.5 % 90.3 %
Total indirect 11.8 % 11.5 % 10.9 % 10.5 % 9.7 %
Total 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 disconnect and net loss rates.

 
 
USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR ACTIVATIONS (a)
(unaudited)
 
 
For the three months ended
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09  
 
Account size ending units in service (000's)

 

1 to 3 units 184 172 159 149 137
4 to 10 units 112 104 97 89 82
11 to 50 units 276 255 236 218 199
51 to 100 units 164 155 144 133 125
101 to 1,000 units 784 750 716 681 626
>1,000 units   1,419     1,374     1,323     1,250     1,186  
Total   2,939     2,810     2,675     2,520     2,355  
 
End of period units in service % of total direct
1 to 3 units 6.2 % 6.1 % 5.9 % 5.9 % 5.8 %
4 to 10 units 3.8 % 3.7 % 3.6 % 3.5 % 3.5 %
11 to 50 units 9.4 % 9.1 % 8.8 % 8.7 % 8.4 %
51 to 100 units 5.6 % 5.5 % 5.4 % 5.3 % 5.3 %
101 to 1,000 units 26.7 % 26.7 % 26.8 % 27.0 % 26.6 %
>1,000 units   48.3 %   48.9 %   49.5 %   49.6 %   50.4 %
Total   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
 
Account size net loss rate
1 to 3 units -7.8 % -6.9 % -7.0 % -6.9 % -7.8 %
4 to 10 units -6.5 % -7.2 % -6.7 % -7.8 % -8.8 %
11 to 50 units -7.6 % -7.4 % -7.4 % -7.6 % -8.9 %
51 to 100 units -6.9 % -5.5 % -7.5 % -7.2 % -6.2 %
101 to 1,000 units -5.2 % -4.3 % -4.6 % -4.9 % -8.0 %
>1,000 units   -2.4 %   -3.2 %   -3.7 %   -5.5 %   -5.1 %
Total   -4.4 %   -4.4 %   -4.8 %   -5.8 %   -6.6 %
 
Account size ARPU
1 to 3 units $ 14.66 $ 14.62 $ 14.72 $ 14.68 $ 14.73
4 to 10 units 13.56 13.56 13.92 13.89 14.00
11 to 50 units 10.99 11.03 11.40 11.35 11.41
51 to 100 units 9.57 9.76 10.36 10.25 10.30
101 to 1,000 units 8.23 8.45 8.91 8.98 8.94
>1,000 units   7.75     7.70     7.72     7.75     7.77  
Total $ 8.95   $ 8.97   $ 9.16   $ 9.16   $ 9.15  
 
 
Cellular revenue
Number of activations   4,509     3,970     3,779     2,287     2,389  
Revenue from cellular services (000's) $ 1,859   $ 1,547   $ 1,494   $ 993   $ 991  
 
(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
  3/31/08   6/30/08   9/30/08   12/31/08     3/31/09
 
Cost of products sold $ 1,081 $ 1,408 $ 1,291 $ 1,812   $ 1,669
 
Service, rental and maintenance
Site rent 17,792 16,756 15,463 14,785 11,218
Telecommunications 6,204 5,503 5,072 5,307 4,485
Payroll and related 6,683 6,504 5,827 5,490 5,631
Stock based compensation 17 19 19 18 49
Other   3,273   2,801   2,688   2,599     1,572
Total service, rental and maintenance   33,969   31,583   29,069   28,199     22,955
 
Selling and marketing
Payroll and related 5,164 4,797 4,317 4,145 4,175
Commissions 1,724 2,037 1,742 1,213 1,201
Stock based compensation 39 50 49 60 109
Other   909   665   648   726     577
Total selling and marketing   7,836   7,549   6,756   6,144     6,062
 
General and administrative
Payroll and related 8,682 8,129 7,847 7,992 9,075
Stock based compensation 190 247 253 298 569
Bad debt 711 691 680 618 850
Facility rent 2,073 2,199 1,937 1,689 1,628
Telecommunications 1,048 983 936 834 771
Outside services 5,359 4,584 4,632 4,519 4,514
Taxes, licenses and permits 1,958 2,055 2,216 372 1,101
Other   1,787   1,894   2,130   1,967     1,678
Total general and administrative   21,808   20,782   20,631   18,289     20,186
 
Severance and restructuring 145 153 5,063 (35 ) 190
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270
Goodwill impairment 188,170 - - - -
         
Operating expenses $ 265,522 $ 73,149 $ 73,885 $ 66,159   $ 62,332
 
Capital expenditures $ 3,988 $ 3,892 $ 6,214 $ 4,242 $ 6,054
 
(a) Slight variations in totals are due to rounding.
   
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(in thousands)
 
 
 
  12/31/08   3/31/09
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 75,032 $ 65,075
Accounts receivable, net 25,118 22,601
Prepaid expenses and other 6,226 5,195
Deferred income tax assets, net   6,025   4,577
Total current assets 112,401 97,448
Property and equipment, net 57,867 55,017
Intangible assets, net 6,520 5,711
Deferred income tax assets, net 59,599 54,088
Other assets   4,973   4,393
Total assets $ 241,360 $ 216,657
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 40,983 $ 37,621
Customer deposits 1,203 1,103
Deferred revenue   9,958   9,336
Total current liabilities 52,144 48,060
Other long-term liabilities   48,478   48,974
Total liabilities   100,622   97,034
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 140,736 119,621
Retained earnings   -   -
Total stockholders' equity   140,738   119,623
Total liabilities and stockholders' equity $ 241,360 $ 216,657
 
(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 three months ended
  3/31/08     3/31/09  
 
Cash flows from operating activities:
Net (loss) income $ (177,800 ) $ 9,981
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion 12,513 11,270
Goodwill impairment 188,170 -
Deferred income tax expense 7,735 6,954
Amortization of stock based compensation 246 727
Provisions for doubtful accounts, service credits and other 1,567 1,517
Non-cash transaction tax accrual adjustments (946 ) (1,394 )
Loss on disposals of property and equipment 12 -
Changes in assets and liabilities:
Accounts receivable 76 1,000
Prepaid expenses and other 363 1,057
Intangibles and other long-term assets 477 (712 )
Accounts payable and accrued liabilities (5,766 ) (2,373 )
Customer deposits and deferred revenue   (613 )   (722 )
Net cash provided by operating activities   26,034     27,305  
 
Cash flows from investing activities:
Purchases of property and equipment (3,988 ) (6,054 )
Proceeds from disposals of property and equipment   153     7  
Net cash used in investing activities   (3,835 )   (6,047 )
 
Cash flows from financing activities:
Cash distributions to stockholders (17,763 ) (28,517 )
Purchase of common stock   -     (2,698 )
Net cash used in financing activities   (17,763 )   (31,215 )
 
 
Net increase (decrease) in cash and cash equivalents 4,436 (9,957 )
Cash and cash equivalents, beginning of period   64,542     75,032  
Cash and cash equivalents, end of period $ 68,978   $ 65,075  
 
Supplemental disclosure:
Interest paid $ 2   $ -  
Income taxes paid (state and local) $ 6   $ 15  
 
(a) Slight variations in totals are due to rounding.

Source: USA Mobility, Inc.

USA Mobility, Inc.
Bob Lougee, 703-721-3080
bob.lougee@usamobility.com