Investor Relations -Press Release

<< Back
USA Mobility Reports First Quarter Operating Results; Board Declares Regular Quarterly Dividend
Wireless Subscriber and Revenue Trends Improve; Software Business Performance on Track; Operating Expenses Again Reduced

SPRINGFIELD, Va., May 04, 2011 (BUSINESS WIRE) -- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging,mobile voice and data and unified communications solutions, today announced operating results for the first quarter ended March 31, 2011. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.25 per share, payable on June 24, 2011 to stockholders of record on May 20, 2011.

Total revenue for the first quarter was $57.3 million, including $52.5 million from the Company's wireless business (USA Mobility Wireless) and $4.8 million from its software business (Amcom Software), which the Company acquired on March 3, 2011. Software maintenance revenue was reduced by $0.9 million for purchase accounting adjustments. First quarter revenue from the wireless business was $52.5 million, compared to $54.6 million in the fourth quarter and $62.8 million in the first quarter of 2010. Reported results for the software business include only the 29-day period from March 3, 2011 to March 31, 2011. On a pro forma basis, reflecting Amcom results for the full quarter and excluding purchase accounting adjustments, total revenue was $65.6 million.

First quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $17.9 million, including $17.0 million from wireless and $0.9 million from software. First quarter EBITDA from wireless was $17.0 million, compared to $16.9 million in the prior quarter and $22.0 million in the year-earlier quarter. On a pro forma basis, excluding purchase accounting adjustments and one-time acquisition related expenses, first quarter EBITDA was $21.7 million or 33.0 percent of revenue.

Net income for the first quarter reflected 29 days of the software business as well as the maintenance revenue purchase accounting adjustment. Also, operating expenses (excluding depreciation, amortization and accretion) reflected $2.9 million in one-time acquisition related expenses, and depreciation, amortization and accretion increased $0.5 million due primarily to acquired intangible assets. Additionally, the acquisition resulted in a $32.4 million reduction in the deferred income tax asset valuation allowance and a corresponding reduction in income tax expense. The result was net income for the first quarter of $40.7 million, or $1.82 per fully diluted share, compared to $8.9 million, or $0.39 per fully diluted share, in the year-earlier quarter. Excluding the purchase accounting adjustment to software maintenance revenue, the one-time acquisition related expenses and the reduction in the deferred income tax asset valuation allowance, net income for the first quarter would have been $10.9 million, or $0.49 per fully diluted share.

First quarter results included:

Wireless

  • Net unit losses improved to 61,000 in the first quarter, compared to 83,000 in the first quarter of 2010, and the quarterly rate of unit erosion improved to 3.2 percent from 3.8 percent in the year-earlier quarter. The annual rate of subscriber erosion was 12.9 percent in the first quarter, compared to 19.5 percent in the year-ago quarter, and was the lowest annual unit loss rate in more than six years. Units in service at March 31, 2011 totaled 1,828,000, compared to 2,099,000 a year earlier.
  • The quarterly rate of revenue erosion improved to 3.9 percent from 4.0 percent in the first quarter of 2010, while the annual rate of revenue erosion was 16.3 percent in the first quarter, compared to 21.2 percent in the year-earlier quarter, reaching its lowest level in two years.
  • Total ARPU (average revenue per unit) was $8.72 in the first quarter, compared to $8.74 in the fourth quarter and $9.00 in the first quarter of 2010.

Software

  • Pro forma bookings for the quarter ended March 31, 2011 were $13.7 million and the backlog was $19.3 million at March 31, 2011.
  • Revenue from the software business totaled $4.8 million in the period from March 3, 2011 to March 31, 2011, of which $0.9 million was maintenance revenue and $3.9 million was operations revenue (which includes software, professional services and equipment sales). Pro forma revenue, excluding purchase accounting adjustments of $0.9 million, was $5.7 million for the 29-day period.
  • The pro forma renewal rate for maintenance in the first quarter was 99.5 percent.

Total Company

  • Operating expenses (excluding depreciation, amortization and accretion) totaled $39.5 million in the first quarter, with $35.6 million for wireless (which included $2.9 million of acquisition related expenses) and $3.9 million for software.
  • EBITDA margin (or EBITDA as a percentage of revenue) was 31.2 percent. EBITDA margin for wireless was 32.3 percent, compared to 30.9 percent in the fourth quarter and 35.0 percent in the year-earlier quarter.
  • Capital expenses were $1.5 million, compared to $1.7 million in the first quarter of 2010.
  • The Company's cash balance at March 31, 2011 was $23.4 million.
  • The outstanding debt balance was $51.9 million at an interest rate of 5.25 percent.

Vincent D. Kelly, president and chief executive officer, said: "Consistent with financial guidance we provided earlier this year, USA Mobility continued to make excellent progress during the first quarter, meeting or exceeding key performance goals for both our wireless and software businesses. We were particularly pleased to see solid results from our recently acquired Amcom Software subsidiary, as well as continued improvement in the pace of subscriber and revenue erosion in our wireless business. At the same time, we continued to reduce expenses, maintain strong operating margins, and generate sufficient cash flow to again return capital to stockholders in the form of dividend distributions."

Kelly said the Company continued to focus sales and marketing efforts in its wireless business during the quarter around its core market segments of Healthcare, Government and Large Enterprise. "These core segments represented approximately 88.9 percent of our direct subscriber base and 83.8 percent of our direct paging revenue at the end of the first quarter, compared to 86.8 percent and 81.5 percent, respectively, a year earlier. Healthcare continued to be 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."

Commenting on the software business, Kelly said: "Our integration of Amcom is on track and going exceptionally well. To date we have initiated training programs for both sales teams to share leads and cross sell products and services into our key market segments, especially Healthcare. Additionally, we have received very positive feedback from our healthcare customer base with respect to the merger and its impact on our future. Moving forward we expect to leverage additional operational capabilities from each business, including customer relationships, technical know-how, and back-office support. Despite the distraction of the acquisition in the first quarter," Kelly noted, "our software business generated strong bookings and has a $19.3 million backlog going into the second quarter."

Shawn E. Endsley, chief financial officer, said the Company continued to reduce operating expenses in the first quarter. "Recurring operating expenses (excluding depreciation, amortization and accretion) for wireless decreased 20.0 percent from the year-earlier quarter," Endsley noted, "exceeding the rate of wireless revenue decline. At the same time, ARPU remained strong and capital expenses declined. With respect to Amcom," Endsley added, "the addition of software operations required a review of the recovery of our deferred income tax assets. The expected additional taxable income from Amcom allowed for a reduction in the deferred income tax asset valuation allowance and income tax expense of $32.4 million. Including software operations from March 3, 2011, the combined businesses generated operating cash flow of $12.7 million in the quarter."

Regarding financial guidance for 2011, Endsley said the Company is reiterating its prior guidance for the full year for the wireless company as well as its full year pro-forma guidance for the software company. Additionally, the software company guidance for financial reporting purposes has been broken out separately in the schedules attached to this press release and has been adjusted to reflect: (1) results for the partial year (March 3 to December 31); and (2) purchase accounting adjustments for deferred revenue. As such, Endsley said the Company expects total revenues for 2011 to range from $224 million to $240 million, with wireless between $182 million and $192 million and software between $42 million and $48 million; operating expenses (excluding depreciation, amortization and accretion) to range from $167 million to $176 million, with wireless between $132 million and $136 million and software between $35 million and $40 million; and capital expenses to range from $6 million to $9 million, with wireless between $5 million and $7 million and software between $1 million and $2 million.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its first quarter results at 10:00 a.m. Eastern Time on Thursday, May 5, 2011. Dial-in numbers for the call are 719-325-2488 or 888-857-6929. The pass code for the call is 2032739. A replay of the call will be available from 2:00 p.m. ET on May 5 until 11:59 p.m. on Thursday, May 19. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 2032739.

* * * * * * * * *

About USA Mobility

USA Mobility, Inc., headquartered in Springfield, 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 organizations nationwide. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. In addition, through its Amcom Software subsidiary, it provides mission critical unified communications solutions for contact centers, emergency management, mobile event notification and messaging. USA Mobility also offers mobile voice and data services through Sprint Nextel and T-Mobile, including BlackBerry(R) 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 http://www.usamobility.comand http://www.amcomsoftware.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.
FINANCIAL GUIDANCE
(In millions)
Full Year Adjusted
Guidance Range (a) Guidance Range (b)
From To From To
Revenues
Wireless $ 182.0 $ 192.0 $ 182.0 $ 192.0
Software 57.0 63.0 (c) 42.0 48.0
Combined $ 239.0 $ 255.0 $ 224.0 $ 240.0
Operating Expenses (d)
Wireless $ 136.0 $ 132.0 $ 136.0 $ 132.0
Software 47.0 43.0 40.0 35.0
Combined $ 183.0 $ 175.0 $ 176.0 $ 167.0
Capital Expenses
Wireless $ 7.0 $ 5.0 $ 7.0 $ 5.0
Software 2.0 1.0 2.0 1.0
Combined $ 9.0 $ 6.0 $ 9.0 $ 6.0
(a) The full year guidance assumes that the Amcom Software, Inc. ("Software") acquisition had occurred as of January 1, 2011.

(b) The adjusted guidance for 2011 reflects Software's results from March 3, 2011, the date of acquisition, and reflects the
fair value adjustment to maintenance revenues as required by generally accepted accounting principles.

(c) Software revenues do NOT reflect any fair value adjustment to maintenance revenue as a result of purchase accounting.
(d) Operating expenses exclude depreciation, amortization and accretion.
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(In thousands, except share and per share amounts)
Wireless Software Total

For three months
ended March 31, 2011

For the period
March 3, 2011 to
March 31, 2011

Revenue:
Paging service $ 48,628 $ - $ 48,628
Cellular 684 - 684
Product sales 2,344 4,799 7,143
Other 880 - 880
Total revenue 52,536 4,799 57,335
Operating expenses:
Cost of products sold 663 1,762 2,425
Service, rental and maintenance 15,816 646 16,462
Selling and marketing 3,833 1,088 4,921
General and administrative 15,240 387 15,627
Severance and restructuring 33 - 33
Depreciation, amortization and accretion 4,032 508 4,540
Total operating expenses 39,617 4,391 44,008
% of total revenue 75.4 % 91.5 % 76.8 %
Operating income 12,919 408 13,327
% of total revenue 24.6 % 8.5 % 23.2 %
Interest expense, net (247 ) (9 ) (256 )
Other income (expense), net 205 (2 ) 203
Income before income tax (benefit) 12,877 397 13,274
Income tax (benefit) expense (27,583 ) 206 (27,377 )
Net income $ 40,460 $ 191 $ 40,651
Basic net income per common share $ 1.84
Diluted net income per common share $ 1.82
Basic weighted average common shares outstanding 22,063,393
Diluted weighted average common shares outstanding 22,333,399
Reconciliation of operating income to EBITDA (c):
Operating income $ 12,919 $ 408 $ 13,327
Add back: depreciation, amortization and accretion 4,032 508 4,540
EBITDA 16,951 916 17,867
% of total revenue 32.3 % 19.1 % 31.2 %
(a) Includes consolidated results of operations of USA Mobility Wireless, Inc. ("Wireless") and Software.
(b) Slight variations in totals are due to rounding.

(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.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)

3/31/11

12/31/10

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 23,383 $ 129,220
Accounts receivable, net 21,134 13,419
Prepaid expenses and other 4,412 2,638
Inventory, net 2,432 160
Tax receivables 8,050 5,004
Escrow receivables 7,500 -
Deferred income tax assets, net 7,907 3,915
Total current assets 74,818 154,356
Tax receivables 191 191
Property and equipment, net 26,248 27,135
Goodwill 131,172 -
Other intangible assets, net 43,477 511
Deferred income tax assets, net 55,046 47,390
Escrow receivables 7,500 -
Deferred financing costs, net 1,294 -
Other assets 1,150 1,075
Total assets $ 340,896 $ 230,658
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 12,500 $ -
Consideration payable 7,500 -
Accounts payable and accrued liabilities 18,321 17,527
Accrued compensation and benefits 8,600 9,968
Customer deposits 3,266 718
Deferred revenue 10,493 6,268
Total current liabilities 60,680 34,481
Long-term debt, net of current portion 39,447 -
Consideration payable 7,500 -
Deferred revenue 487 -
Other long-term liabilities 12,657 11,787
Total liabilities 120,771 46,268
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 130,355 129,696
Retained earnings 89,768 54,692
Total stockholders' equity 220,125 184,390
Total liabilities and stockholders' equity $ 340,896 $ 230,658
(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

3/31/11

3/31/10

Cash flows from operating activities:
Net income $ 40,651 $ 8,885
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, amortization and accretion 4,540 7,304
Amortization of deferred financing costs 45 -
Deferred income tax expense (27,929 ) 5,777
Amortization of stock based compensation 225 263
Provisions for doubtful accounts, service credits and other 700 1,225
Settlement of non-cash transaction taxes (119 ) (350 )
(Loss)/Gain on disposals of property and equipment (13 ) 59
Changes in assets and liabilities:
Accounts receivable (49 ) 472
Prepaid expenses, intangibles and other assets (154 ) (31 )
Accounts payable and accrued liabilities (5,047 ) (5,273 )
Customer deposits (797 ) (51 )
Deferred revenue 636 (387 )
Net cash provided by operating activities 12,689 17,893
Cash flows from investing activities:
Purchases of property and equipment (1,494 ) (1,725 )
Proceeds from disposals of property and equipment 11 38
Acquisitions, net of cash acquired (134,217 ) -
Net cash used in investing activities (135,700 ) (1,687 )
Cash flows from financing activities:
Issuance of debt 24,044 -
Deferred financing costs (1,339 ) -
Cash dividends to stockholders (5,531 ) (5,619 )
Purchase of common stock - (4,623 )
Net cash provided (used) in financing activities 17,174 (10,242 )
Net (decrease) increase in cash and cash equivalents (105,837 ) 5,964
Cash and cash equivalents, beginning of period 129,220 109,591
Cash and cash equivalents, end of period $ 23,383 $ 115,555
Supplemental disclosure:
Interest paid $ 263 $ 1
Income taxes paid (state and local) $ - $ -
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC. (WIRELESS)
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a)
(Unaudited and in thousands, except share and per share amounts)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

Revenues:
Paging service $ 48,628 $ 50,319 $ 52,778 $ 54,875 $ 57,832
Cellular 684 499 532 624 708
Product sales 2,344 2,784 2,805 2,732 3,358
Other 880 1,046 595 881 886
Total revenues 52,536 54,648 56,710 59,112 62,784
Operating expenses:
Cost of products sold 663 1,051 819 1,134 1,209
Service, rental and maintenance 15,816 16,221 16,821 17,175 18,941
Selling and marketing 3,833 3,915 4,060 4,394 4,557
General and administrative 15,240 14,829 12,907 15,924 15,812
Severance and restructuring 33 1,738 86 41 314
Depreciation, amortization and accretion 4,032 4,226 5,899 6,698 7,304
Total operating expenses 39,617 41,980 40,592 45,366 48,137
% of total revenues 75.4 % 76.8 % 71.6 % 76.7 % 76.7 %
Operating income 12,919 12,668 16,118 13,746 14,647
% of total revenues 24.6 % 23.2 % 28.4 % 23.3 % 23.3 %
Interest (expense) income, net (247 ) 3 6 4 3
Other income, net 205 227 2,320 180 78
Income before income tax (benefit) expense 12,877 12,898 18,444 13,930 14,728
Income tax (benefit) expense (27,583 ) (27,642 ) 3,060 841 5,843
Net income $ 40,460 $ 40,540 $ 15,384 $ 13,089 $ 8,885
Basic net income per common share $ 1.84 $ 1.84 $ 0.70 $ 0.59 $ 0.39
Diluted net income per common share $ 1.82 $ 1.82 $ 0.69 $ 0.58 $ 0.39
Basic weighted average common shares outstanding 22,063,393 22,050,512 22,060,636 22,307,488 22,654,240
Diluted weighted average common shares outstanding 22,333,399 22,323,551 22,372,786 22,620,707 22,967,192
Reconciliation of operating income to EBITDA (b):
Operating income $ 12,919 $ 12,668 $ 16,118 $ 13,746 $ 14,647
Add back: depreciation, amortization and accretion 4,032 4,226 5,899 6,698 7,304
EBITDA $ 16,951 $ 16,894 $ 22,017 $ 20,444 $ 21,951
% of total revenues 32.3 % 30.9 % 38.8 % 34.6 % 35.0 %
(a) Slight variations in totals are due to rounding.

(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for
analytical purposes only.

USA MOBILITY, INC. (WIRELESS)
UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

Units in service

Beginning units in service
Direct one-way 1,645 1,692 1,749 1,804 1,881
Direct two-way 106 109 121 126 133
Total direct 1,751 1,801 1,870 1,930 2,014
Indirect one-way 68 75 82 90 101
Indirect two-way 70 74 75 79 67
Total indirect 138 149 157 169 168
Total beginning units in service 1,889 1,950 2,027 2,099 2,182
Gross placements
Direct one-way 46 45 58 62 53
Direct two-way 4 6 4 6 5
Total direct 50 51 62 68 58
Indirect one-way 2 2 3 3 3
Indirect two-way 0 1 1 1 15
Total indirect 2 3 4 4 18
Total gross placements 52 54 66 72 76
Gross disconnects
Direct one-way (94 ) (92 ) (115 ) (117 ) (130 )
Direct two-way (8 ) (9 ) (16 ) (11 ) (12 )
Total direct (102 ) (101 ) (131 ) (128 ) (142 )
Indirect one-way 8 (9 ) (10 ) (11 ) (14 )
Indirect two-way (19 ) (5 ) (2 ) (5 ) (3 )
Total indirect (11 ) (14 ) (12 ) (16 ) (17 )
Total gross disconnects (113 ) (115 ) (143 ) (144 ) (159 )
Net gain / (loss)
Direct one-way (48 ) (47 ) (57 ) (55 ) (77 )
Direct two-way (4 ) (3 ) (12 ) (5 ) (7 )
Total direct (52 ) (50 ) (69 ) (60 ) (84 )
Indirect one-way 10 (7 ) (7 ) (8 ) (11 )
Indirect two-way (19 ) (4 ) (1 ) (4 ) 12
Total indirect (9 ) (11 ) (8 ) (12 ) 1
Total net change (61 ) (61 ) (77 ) (72 ) (83 )
Ending units in service
Direct one-way 1,597 1,645 1,692 1,749 1,804
Direct two-way 102 106 109 121 126
Total direct 1,699 1,751 1,801 1,870 1,930
Indirect one-way 78 68 75 82 90
Indirect two-way 51 70 74 75 79
Total indirect 129 138 149 157 169
Total ending units in service 1,828 1,889 1,950 2,027 2,099
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC. (WIRELESS)
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(Unaudited)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

ARPU

Direct one-way $ 8.05 $ 8.05 $ 8.07 $ 8.05 $ 8.16
Direct two-way 22.23 22.57 23.11 23.55 23.61
Total direct 8.89 8.92 9.01 9.06 9.17
Indirect one-way 8.44 9.13 9.60 8.87 8.78
Indirect two-way 4.31 3.98 4.09 4.25 4.84
Total indirect 6.49 6.48 6.86 6.65 7.04
Total one-way 8.07 8.09 8.14 8.09 8.19
Total two-way 15.41 14.96 15.54 16.06 16.76
Total paging ARPU $ 8.72 $ 8.74 $ 8.85 $ 8.87 $ 9.00

Gross disconnect rate (b)

Direct one-way -5.7 % -5.5 % -6.6 % -6.5 % -6.9 %
Direct two-way -7.5 % -8.5 % -13.0 % -8.5 % -9.1 %
Total direct -5.8 % -5.7 % -7.0 % -6.6 % -7.1 %
Indirect one-way 11.9 % -12.1 % -12.5 % -12.8 % -13.7 %
Indirect two-way -26.4 % -5.8 % -2.6 % -6.8 % -4.9 %
Total indirect -8.1 % -8.9 % -7.7 % -9.9 % -10.1 %
Total one-way -5.0 % -5.7 % -6.8 % -6.8 % -7.3 %
Total two-way -15.2 % -7.4 % -9.0 % -7.9 % -7.7 %
Total paging gross disconnect rate -6.0 % -5.9 % -7.0 % -6.9 % -7.3 %

Net gain / loss rate (c)

Direct one-way -2.9 % -2.7 % -3.2 % -3.1 % -4.1 %
Direct two-way -3.6 % -4.6 % -9.5 % -4.2 % -5.0 %
Total direct -3.0 % -2.8 % -3.6 % -3.1 % -4.2 %
Indirect one-way 14.6 % -9.8 % -9.2 % -9.8 % -10.5 %
Indirect two-way -25.8 % -4.6 % -0.9 % -4.7 % 17.1 %
Total indirect -6.6 % -7.2 % -5.1 % -7.4 % 0.7 %
Total one-way -2.2 % -3.0 % -3.5 % -3.4 % -4.4 %
Total two-way -12.7 % -4.6 % -6.1 % -4.4 % 2.5 %
Total paging net (loss) gain rate -3.2 % -3.2 % -3.8 % -3.5 % -3.8 %
(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. (WIRELESS)
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(Unaudited)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

Gross placement rate (b)
Healthcare 3.3 % 3.4 % 3.9 % 4.4 % 3.5 %
Government 1.9 % 1.5 % 3.1 % 1.9 % 1.8 %
Large enterprise 2.3 % 2.2 % 1.9 % 2.6 % 2.1 %
Other 2.5 % 2.3 % 2.5 % 2.0 % 2.4 %
Total direct 2.9 % 2.8 % 3.4 % 3.5 % 2.9 %
Total indirect 1.6 % 1.7 % 2.6 % 2.5 % 10.9 %
Total 2.8 % 2.7 % 3.3 % 3.4 % 3.5 %
Gross disconnect rate (b)
Healthcare -4.7 % -4.4 % -5.7 % -5.2 % -4.9 %
Government -7.6 % -7.3 % -8.3 % -8.3 % -9.1 %
Large enterprise -6.2 % -7.0 % -9.7 % -8.3 % -10.3 %
Other -9.2 % -8.6 % -9.3 % -9.6 % -11.0 %
Total direct -5.8 % -5.7 % -7.0 % -6.6 % -7.1 %
Total indirect -8.1 % -8.9 % -7.7 % -9.9 % -10.1 %
Total -6.0 % -5.9 % -7.0 % -6.9 % -7.3 %
Net loss rate (b)
Healthcare -1.4 % -1.1 % -1.8 % -0.8 % -1.4 %
Government -5.7 % -5.9 % -5.2 % -6.4 % -7.4 %
Large enterprise -3.9 % -4.8 % -7.8 % -5.7 % -8.1 %
Other -6.8 % -6.3 % -6.8 % -7.6 % -8.6 %
Total direct -3.0 % -2.8 % -3.6 % -3.1 % -4.2 %
Total indirect -6.6 % -7.2 % -5.1 % -7.4 % 0.7 %
Total -3.2 % -3.2 % -3.8 % -3.5 % -3.8 %
End of period units in service % of total (b)
Healthcare 59.5 % 58.3 % 57.1 % 56.1 % 54.5 %
Government 13.1 % 13.5 % 13.9 % 14.1 % 14.4 %
Large enterprise 10.0 % 10.1 % 10.2 % 10.7 % 10.9 %
Other 10.3 % 10.8 % 11.2 % 11.4 % 12.1 %
Total direct 92.9 % 92.7 % 92.4 % 92.3 % 91.9 %
Total indirect 7.1 % 7.3 % 7.6 % 7.7 % 8.1 %
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) gain rates.

USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR ACTIVATIONS (a)
(Unaudited)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

Account size ending units in service (000's)
1 to 3 units 79 84 88 95 101
4 to 10 units 48 52 54 58 62
11 to 50 units 114 123 130 140 149
51 to 100 units 72 76 79 86 92
101 to 1,000 units 424 436 456 483 499
>1,000 units 962 980 994 1,008 1,027
Total 1,699 1,751 1,801 1,870 1,930
End of period units in service % of total direct
1 to 3 units 4.7 % 4.8 % 4.9 % 5.1 % 5.2 %
4 to 10 units 2.8 % 2.9 % 3.0 % 3.1 % 3.2 %
11 to 50 units 6.7 % 7.0 % 7.2 % 7.5 % 7.7 %
51 to 100 units 4.2 % 4.4 % 4.4 % 4.6 % 4.8 %
101 to 1,000 units 25.0 % 24.9 % 25.3 % 25.8 % 25.9 %
>1,000 units 56.6 % 56.0 % 55.2 % 53.9 % 53.2 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Account size net loss rate
1 to 3 units -6.2 % -4.8 % -7.0 % -5.8 % -7.6 %
4 to 10 units -6.2 % -5.0 % -7.5 % -6.0 % -5.3 %
11 to 50 units -7.7 % -5.1 % -7.3 % -6.1 % -5.8 %
51 to 100 units -5.7 % -4.2 % -7.9 % -6.5 % -4.4 %
101 to 1,000 units -2.7 % -4.2 % -5.6 % -3.3 % -3.7 %
>1,000 units -1.8 % -1.5 % -1.3 % -1.9 % -3.7 %
Total -3.0 % -2.8 % -3.6 % -3.1 % -4.2 %
Account size ARPU
1 to 3 units $ 15.57 $ 15.57 $ 15.48 $ 15.37 $ 15.28
4 to 10 units 14.53 14.56 14.51 14.35 14.37
11 to 50 units 12.19 12.26 12.18 12.01 11.86
51 to 100 units 10.59 10.72 10.69 10.76 10.67
101 to 1,000 units 9.00 9.00 8.82 8.93 9.00
>1,000 units 7.47 7.43 7.64 7.63 7.80
Total $ 8.89 $ 8.92 $ 9.01 $ 9.06 $ 9.17
Cellular revenue
Number of activations 2,191 1,990 1,885 1,885 2,354
Revenue from cellular services (000's) $ 684 $ 499 $ 532 $ 624 $ 708
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC. (WIRELESS)
CONSOLIDATED OPERATING EXPENSES SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended

3/31/11

12/31/10

9/30/10

6/30/10

3/31/10

Cost of products sold $ 663 $ 1,051 $ 819 $ 1,134 $ 1,209
Service, rental and maintenance
Site rent 6,881 7,629 8,042 8,283 9,079
Telecommunications 3,099 3,066 3,341 3,467 3,831
Payroll and related 4,293 4,319 4,199 4,444 4,586
Stock based compensation 5 6 5 7 6
Other 1,538 1,201 1,234 974 1,439
Total service, rental and maintenance 15,816 16,221 16,821 17,175 18,941
Selling and marketing
Payroll and related 2,494 2,627 2,659 2,814 2,964
Commissions 1,002 1,007 1,163 1,367 1,164
Stock based compensation 17 17 17 22 17
Other 320 264 221 191 412
Total selling and marketing 3,833 3,915 4,060 4,394 4,557
General and administrative
Payroll and related 5,677 6,118 5,719 6,621 6,912
Stock based compensation 203 223 15 242 240
Bad debt 393 547 571 594 713
Facility rent 726 856 992 1,326 1,354
Telecommunications 443 480 518 603 657
Outside services 5,186 2,385 2,463 3,185 3,267
Taxes, licenses and permits 1,332 1,097 1,276 1,836 1,591
Other 1,280 3,123 1,353 1,517 1,078
Total general and administrative 15,240 14,829 12,907 15,924 15,812
Severance and restructuring 33 1,738 86 41 314
Depreciation, amortization and accretion 4,032 4,226 5,899 6,698 7,304
Operating expenses $ 39,617 $ 41,980 $ 40,592 $ 45,366 $ 48,137
Capital expenditures $ 1,494 $ 4,720 $ 1,730 $ 563 $ 1,725
(a) Slight variations in totals are due to rounding.

SOURCE: USA Mobility, Inc.

USA Mobility, Inc.
Bob Lougee, 800-611-8488
bob.lougee@usamobility.com