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USA Mobility Reports Second Quarter Operating Results; Board Declares Quarterly Cash Distribution
Average Revenue Per Unit, Recurring Cash Flow Margins Reach New Highs; Company Continues to Reduce Operating Expenses

ALEXANDRIA, Va.--(BUSINESS WIRE)--Jul. 29, 2009-- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the second quarter ended June 30, 2009.

In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share, payable on September 10, 2009 to stockholders of record on August 14, 2009. The Company expects the entire distribution to be paid as a return of capital.

Total revenue was $75.1 million for the second quarter, compared to $79.7 million in the first quarter and $92.1 million in the second quarter of 2008. Operating income was $12.8 million for the second quarter, while EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $24.0 million, compared to $28.6 million in the first quarter and $30.6 million in the year-earlier quarter. Second quarter results were negatively impacted by a one-time settlement expense of $4.0 million in connection with patent litigation. Absent the one-time litigation settlement expense, operating income would have been $16.8 million and EBITDA $28.0 million.

Net income for the second quarter was $44.7 million, or $1.93 per fully diluted share, compared to net income of $10.3 million, or $0.37 per fully diluted share, in the second quarter of 2008. The significant increase in net income in the second quarter was largely the result of a one-time income tax benefit of $37.0 million due to the effective settlement of uncertain tax positions, and tax refund claims. Excluding the one-time tax adjustment and $4.0 million litigation settlement expense, net income in the second quarter would have been $10.1 million, or $0.43 per fully diluted share.

Second quarter results included:

  • Total paging ARPU (average revenue per unit) increased to $8.96 in the second quarter, its highest level since the third quarter of 2005, from $8.86 in the first quarter and $8.54 in the year-earlier quarter.
  • The quarterly rate of revenue erosion was 5.7 percent, compared to 5.4 percent in the first quarter and 2.8 percent in the second quarter of 2008. The annual rate of revenue erosion was 18.4 percent, compared to 15.9 percent in the first quarter and 14.3 percent in the year-earlier quarter.
  • Net unit loss in the second quarter was 158,000, compared to 208,000 in the first quarter and 157,000 in the second quarter of 2008. Total units in service were 2,449,000 at June 30, 2009, compared to 2,607,000 at March 31, 2009.
  • The quarterly rate of subscriber loss was 6.0 percent in the second quarter, compared to 7.4 percent in the first quarter and 4.7 percent in the second quarter of 2008. The annual rate of subscriber erosion was 22.9 percent in the second quarter, compared to 21.8 percent in the first quarter and 15.5 percent in the year-earlier quarter.
  • Operating expenses (excluding depreciation, amortization and accretion) totaled $51.2 million, compared to $51.1 million in the first quarter of 2009. Absent the one-time litigation settlement expense of $4.0 million, operating expenses in the second quarter would have been $47.2 million, a reduction of $14.3 million, or 23.3 percent, from $61.5 million in the second quarter of 2008.
  • EBITDA margin (or EBITDA as a percentage of revenue) was 31.9 percent, compared to 35.9 percent in the first quarter and 33.2 percent in the year-earlier quarter. Excluding the one-time litigation settlement expense of $4.0 million, EBITDA margin in the second quarter would have been 37.2 percent, the highest level since the Company’s merger in 2004.
  • Based on the completion of the IRS income tax audits for 2005 and 2006 and certain refund claims, the Company recorded a $37.0 million reduction to income tax expense in the quarter.
  • Capital expenses were $4.4 million, compared to $6.1 million in the first quarter of 2009.
  • The Company’s cash balance at June 30, 2009 was $79.6 million.

“We continued to make excellent progress during the second quarter,” said Vincent D. Kelly, president and chief executive officer, “as operating results met or exceeded the majority of our performance objectives and were consistent with the financial guidance we provided earlier this year. ARPU and recurring cash flow margins rose to their highest levels in years, recurring operating expenses were further reduced, and we continued to provide cost effective and reliable wireless communications services to our customers on a profitable basis.” Kelly added: “While subscriber cancellations were higher than anticipated, due in large part to a weak economy nationwide, we continued to see lower net unit losses in our Healthcare market segment, which now represents approximately 50 percent of our customer base.”

Kelly said USA Mobility again returned capital to stockholders in the second quarter in the form of cash distributions, consistent with its goal of generating sufficient free cash flow to regularly return capital to stockholders. “We produced $25.3 million in cash from operations in the quarter, allowing us to pay a regular quarterly cash distribution of $0.25 per share on June 18, 2009, representing a return of capital to our stockholders of approximately $5.7 million. Including the second quarter distribution, we have now returned $311.1 million to stockholders over the past four years.”

Thomas L. Schilling, chief operating officer and chief financial officer, said the Company continued to reduce operating expenses during the second quarter through a combination of internal consolidations and company-wide cost control initiatives. “Absent the one-time litigation settlement expense of $4.0 million, operating expenses (excluding depreciation, amortization and accretion) decreased 23.3 percent from the year-earlier quarter, once again outpacing the year-over-year decline in revenue of 18.4 percent. In addition,” Schilling noted, “excluding the one-time litigation settlement expense, second quarter operating expenses as a percentage of revenue were at their lowest level in more than four years.”

Commenting on the Company’s financial expectations for the balance of the year, Schilling said, “Based on our performance through the first half of the year, we are revising our financial guidance for 2009 to revenue between $286 million to $291 million, operating expenses (excluding depreciation, amortization and accretion) between $194 million to $197 million, and capital expenses between $16 million to $18 million.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Thursday, July 30, 2009. The dial-in number for the call is 888-801-6494 (toll-free) or 913-312-0970 (toll). The pass code for the call is 8045078. A replay of the call will be available from 3:00 p.m. ET on July 30 until 11:59 p.m. on Thursday, August 13. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 8045078.

* * * * * * * * *

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   6/30/09
 
Revenues:      
Paging service $ 86,773 $ 83,360 $ 80,533 $ 75,989 $ 72,021 $ 67,972
Cellular 1,859 1,547 1,494 993 991 775
Product sales 4,871 5,741 5,014 5,863 5,271 5,269
Other   1,255     1,427     1,316     1,413     1,408     1,129  
Total revenues   94,758     92,075     88,357     84,258     79,691     75,145  
 
Operating expenses:
Cost of products sold 1,081 1,408 1,291 1,812 1,669 1,421
Service, rental and maintenance 33,969 31,583 29,069 28,199 22,955 21,290
Selling and marketing 7,836 7,549 6,756 6,144 6,062 5,600
General and administrative 21,808 20,782 20,631 18,289 20,186 22,801
Severance and restructuring 145 153 5,063 (35 ) 190 52
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174
Goodwill impairment   188,170     -     -     -     -     -  
Total operating expenses   265,522     73,149     73,885     66,159     62,332     62,338  
% of total revenues 280.2 % 79.4 % 83.6 % 78.5 % 78.2 % 83.0 %
                                   
Operating (loss) income   (170,764 )   18,926     14,472     18,099     17,359     12,807  
% of total revenues -180.2 % 20.6 % 16.4 % 21.5 % 21.8 % 17.0 %
 
Interest income, net 578 672 471 79 26 28
Other income (expense), net   125     202     205     90     112     (42 )
(Loss) income before income tax expense (benefit) (170,061 ) 19,800 15,148 18,268 17,497 12,793
Income tax expense (benefit)   7,739     9,528     12,730     10,235     7,516     (31,953 )
Net (loss) income $ (177,800 ) $ 10,272   $ 2,418   $ 8,033   $ 9,981   $ 44,746  
 
Basic net (loss) income per common share $ (6.48 ) $ 0.37   $ 0.09   $ 0.32   $ 0.43   $ 1.96  
Diluted net (loss) income per common share $ (6.48 ) $ 0.37   $ 0.09   $ 0.32   $ 0.43   $ 1.93  
 
Basic weighted average common shares outstanding   27,459,068     27,474,156     27,474,156     25,348,440     23,134,072     22,858,573  
Diluted weighted average common shares outstanding   27,459,068     27,600,976     27,602,296     25,444,277     23,479,796     23,200,736  
 
 
Reconciliation of operating (loss) income to EBITDA (b):
Operating (loss) income $ (170,764 ) $ 18,926 $ 14,472 $ 18,099 $ 17,359 $ 12,807
Add back: depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174
Add back: goodwill impairment   188,170     -     -     -     -     -  
EBITDA $ 29,919   $ 30,600   $ 25,547   $ 29,849   $ 28,629   $ 23,981  
% of total revenues 31.6 % 33.2 % 28.9 % 35.4 % 35.9 %   31.9 %
 
(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 6/30/09  

Units in service

 
Beginning units in service    
Direct one-way 2,854 2,733 2,614 2,490 2,349 2,198
Direct two-way 221   206   196   184   171   157  
Total direct 3,075   2,939   2,810   2,674   2,520   2,355  
Indirect one-way 312 286 261 227 196 161
Indirect two-way 98   108   105   101   99   91  
Total indirect 410   394   366   328   295   252  
Total beginning units in service 3,485   3,333   3,176   3,002   2,815   2,607  
 
Gross placements
Direct one-way 77 90 76 61 67 74
Direct two-way 8   11   8   7   6   7  
Total direct 85   101   84   68   73   81  
Indirect one-way 17 22 12 8 8 9
Indirect two-way 16   7   7   6   4   2  
Total indirect 33   29   19   14   12   11  
Total gross placements 118   130   103   82   85   92  
 
Gross disconnects
Direct one-way (199 ) (209 ) (199 ) (202 ) (218 ) (193 )
Direct two-way (22 ) (21 ) (20 ) (20 ) (20 ) (17 )
Total direct (221 ) (230 ) (219 ) (222 ) (238 ) (210 )
Indirect one-way (44 ) (47 ) (47 ) (39 ) (43 ) (31 )
Indirect two-way (5 ) (10 ) (11 ) (8 ) (12 ) (9 )
Total indirect (49 ) (57 ) (58 ) (47 ) (55 ) (40 )
Total gross disconnects (270 ) (287 ) (277 ) (269 ) (293 ) (250 )
 
Net gain (loss)
Direct one-way (122 ) (119 ) (123 ) (142 ) (151 ) (119 )
Direct two-way (14 ) (10 ) (12 ) (12 ) (14 ) (10 )
Total direct (136 ) (129 ) (135 ) (154 ) (165 ) (129 )
Indirect one-way (27 ) (25 ) (35 ) (31 ) (35 ) (22 )
Indirect two-way 11   (3 ) (4 ) (2 ) (8 ) (7 )
Total indirect (16 ) (28 ) (39 ) (33 ) (43 ) (29 )
Total net change (152 ) (157 ) (174 ) (187 ) (208 ) (158 )
 
Ending units in service
Direct one-way 2,732 2,614 2,491 2,349 2,198 2,079
Direct two-way 207   196   184   171   157   147  
Total direct 2,939   2,810   2,675   2,520   2,355   2,226  
Indirect one-way 285 261 226 196 161 139
Indirect two-way 109   105   101   99   91   84  
Total indirect 394   366   327   295   252   223  
Total ending units in service 3,333   3,176   3,002   2,815   2,607   2,449  
 
(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   6/30/09
 

ARPU

     
Direct one-way $ 7.83 $ 7.85 $ 8.08 $ 8.09 $ 8.11 $ 8.18
Direct two-way   23.68     23.90     23.78     23.77     23.68     23.62  
Total direct 8.95 8.97 9.16 9.16 9.15 9.21
 
Indirect one-way 4.10 4.57 4.79 5.12 7.05 7.43
Indirect two-way   7.52     7.08     5.35     4.53     4.58     5.19  
Total indirect 4.97 5.28 4.96 4.93 6.19 6.60
 
Total one-way 7.47 7.54 7.79 7.85 8.03 8.14
Total two-way   18.44     18.07     17.29     16.84     16.66     16.86  
Total paging ARPU $ 8.49   $ 8.54   $ 8.69   $ 8.71   $ 8.86   $ 8.96  
 
 
 

Gross disconnect rate (b)

Direct one-way -7.0 % -7.6 % -7.6 % -8.1 % -9.3 % -8.8 %
Direct two-way   -10.2 %   -10.4 %   -10.2 %   -10.6 %   -11.8 %   -11.0 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 % -8.9 %
 
Indirect one-way -13.9 % -16.4 % -17.9 % -17.3 % -22.0 % -19.4 %
Indirect two-way   -5.3 %   -8.8 %   -10.3 %   -7.7 %   -11.6 %   -9.1 %
Total indirect -11.8 % -14.3 % -15.7 % -14.3 % -18.5 % -15.6 %
 
Total one-way -7.7 % -8.5 % -8.6 % -8.9 % -10.3 % -9.5 %
Total two-way   -8.7 %   -9.8 %   -10.2 %   -9.6 %   -11.7 %   -10.3 %
Total paging gross disconnect rate   -7.7 %   -8.6 %   -8.7 %   -9.0 %   -10.4 %   -9.6 %
 
 
 

Net gain (loss) rate (c)

Direct one-way -4.3 % -4.3 % -4.7 % -5.7 % -6.4 % -5.4 %
Direct two-way   -6.4 %   -5.2 %   -6.1 %   -6.8 %   -8.5 %   -6.4 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 % -5.5 %
 
Indirect one-way -8.5 % -8.6 % -13.2 % -13.7 % -17.8 % -13.7 %
Indirect two-way   11.0 %   -2.4 %   -4.1 %   -1.5 %   -8.2 %   -7.2 %
Total indirect -3.9 % -6.9 % -10.6 % -10.0 % -14.6 % -11.3 %
 
Total one-way -4.7 % -4.8 % -5.5 % -6.4 % -7.3 % -6.0 %
Total two-way   -1.1 %   -4.2 %   -5.4 %   -4.9 %   -8.4 %   -6.7 %
Total paging net gain (loss) rate   -4.4 %   -4.7 %   -5.5 %   -6.2 %   -7.4 %   -6.0 %
 
(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 6/30/09
 
Gross placement rate (b)    
Healthcare 3.3 % 4.8 % 3.8 % 3.0 % 3.7 % 4.4 %
Government 2.2 % 2.1 % 2.2 % 2.1 % 1.7 % 2.4 %
Large enterprise 2.4 % 2.3 % 2.2 % 2.1 % 2.4 % 2.2 %
Other 2.5 %   2.6 %   2.4 %   2.2 %   2.4 % 2.5 %
Total direct 2.8 % 3.4 % 3.0 % 2.5 % 2.9 % 3.4 %
Total indirect 8.0 %   7.4 %   5.1 %   4.4 %   3.9 % 4.3 %
Total 3.4 %   3.9 %   3.2 %   2.7 %   3.0 % 3.5 %
 
Gross disconnect rate (b)
Healthcare -5.1 % -5.8 % -6.0 % -6.4 % -6.8 % -6.2 %
Government -6.7 % -8.5 % -8.5 % -9.3 % -9.9 % -10.7 %
Large enterprise -8.6 % -9.2 % -9.2 % -8.9 % -13.3 % -13.0 %
Other -10.7 %   -10.5 %   -10.1 %   -11.4 %   -13.0 % -12.4 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 % -8.9 %
Total indirect -11.8 %   -14.3 %   -15.7 %   -14.3 %   -18.5 % -15.6 %
Total -7.7 %   -8.6 %   -8.7 %   -9.0 %   -10.4 % -9.6 %
 
Net loss rate (b)
Healthcare -1.7 % -0.9 % -2.1 % -3.4 % -3.1 % -1.8 %
Government -4.5 % -6.4 % -6.3 % -7.1 % -8.2 % -8.4 %
Large enterprise -6.2 % -6.9 % -7.0 % -6.8 % -10.9 % -10.9 %
Other -8.2 %   -7.9 %   -7.8 %   -9.2 %   -10.6 % -10.0 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 % -5.5 %
Total indirect -3.9 %   -6.9 %   -10.6 %   -10.0 %   -14.6 % -11.3 %
Total -4.4 %   -4.7 %   -5.5 %   -6.2 %   -7.4 % -6.0 %
 
End of period units in service % of total (b)
Healthcare 38.3 % 40.0 % 41.5 % 42.8 % 44.9 % 49.8 %
Government 17.9 % 17.7 % 17.6 % 17.4 % 17.2 % 15.6 %
Large enterprise 13.1 % 12.8 % 12.6 % 12.5 % 12.0 % 11.8 %
Other 18.9 %   18.0 %   17.4 %   16.8 %   16.2 % 13.7 %
Total direct 88.2 % 88.5 % 89.1 % 89.5 % 90.3 % 90.9 %
Total indirect 11.8 %   11.5 %   10.9 %   10.5 %   9.7 % 9.1 %
Total 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 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 6/30/09
 
Account size ending units in service (000's)      
1 to 3 units 184 172 159 149 137 126
4 to 10 units 112 104 97 89 82 75
11 to 50 units 276 255 236 218 199 183
51 to 100 units 164 155 144 133 125 112
101 to 1,000 units 784 750 716 681 626 580
>1,000 units   1,419       1,374       1,323       1,250       1,186     1,150  
Total   2,939       2,810       2,675       2,520       2,355     2,226  
 
End of period units in service % of total direct
1 to 3 units 6.2 % 6.1 % 5.9 % 5.9 % 5.8 % 5.7 %
4 to 10 units 3.8 % 3.7 % 3.6 % 3.5 % 3.5 % 3.4 %
11 to 50 units 9.4 % 9.1 % 8.8 % 8.7 % 8.4 % 8.2 %
51 to 100 units 5.6 % 5.5 % 5.4 % 5.3 % 5.3 % 5.0 %
101 to 1,000 units 26.7 % 26.7 % 26.8 % 27.0 % 26.6 % 26.0 %
>1,000 units   48.3 %     48.9 %     49.5 %     49.6 %     50.4 %   51.7 %
Total   100.0 %     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 % -7.9 %
4 to 10 units -6.5 % -7.2 % -6.7 % -7.8 % -8.8 % -7.9 %
11 to 50 units -7.6 % -7.4 % -7.4 % -7.6 % -8.9 % -8.2 %
51 to 100 units -6.9 % -5.5 % -7.5 % -7.2 % -6.2 % -10.1 %
101 to 1,000 units -5.2 % -4.3 % -4.6 % -4.9 % -8.0 % -7.4 %
>1,000 units   -2.4 %     -3.2 %     -3.7 %     -5.5 %     -5.1 %   -3.1 %
Total   -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %   -5.5 %
 
Account size ARPU
1 to 3 units $ 14.66 $ 14.62 $ 14.72 $ 14.68 $ 14.73 $ 15.07
4 to 10 units 13.56 13.56 13.92 13.89 14.00 14.30
11 to 50 units 10.99 11.03 11.40 11.35 11.41 11.65
51 to 100 units 9.57 9.76 10.36 10.25 10.30 10.13
101 to 1,000 units 8.23 8.45 8.91 8.98 8.94 9.04
>1,000 units   7.75       7.70       7.72       7.75       7.77     7.80  
Total $ 8.95     $ 8.97     $ 9.16     $ 9.16     $ 9.15   $ 9.21  
 
 
Cellular revenue
Number of activations   4,509       3,970       3,779       2,287       2,389     2,207  
Revenue from cellular services (000's) $ 1,859     $ 1,547     $ 1,494     $ 993     $ 991   $ 775  
 
(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 6/30/09
   
Cost of products sold $ 1,081   $ 1,408   $ 1,291   $ 1,812     $ 1,669 $ 1,421
 
Service, rental and maintenance
Site rent 17,792 16,756 15,463 14,785 11,218 10,223
Telecommunications 6,204 5,503 5,072 5,307 4,485 4,284
Payroll and related 6,683 6,504 5,827 5,490 5,631 5,286
Stock based compensation 17 19 19 18 49 7
Other   3,273     2,801     2,688     2,599       1,572   1,490
Total service, rental and maintenance   33,969     31,583     29,069     28,199       22,955   21,290
 
Selling and marketing
Payroll and related 5,164 4,797 4,317 4,145 4,175 3,711
Commissions 1,724 2,037 1,742 1,213 1,201 1,422
Stock based compensation 39 50 49 60 109 26
Other   909     665     648     726       577   441
Total selling and marketing   7,836     7,549     6,756     6,144       6,062   5,600
 
General and administrative
Payroll and related 8,682 8,129 7,847 7,992 9,075 7,754
Stock based compensation 190 247 253 298 569 241
Bad debt 711 691 680 618 850 750
Facility rent 2,073 2,199 1,937 1,689 1,628 1,446
Telecommunications 1,048 983 936 834 771 721
Outside services 5,359 4,584 4,632 4,519 4,514 4,063
Taxes, licenses and permits 1,958 2,055 2,216 372 1,101 1,695
Other   1,787     1,894     2,130     1,967       1,678   6,131
Total general and administrative   21,808     20,782     20,631     18,289       20,186   22,801
 
Severance and restructuring 145 153 5,063 (35

)

 

190 52
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174
Goodwill impairment   188,170     -     -     -       -   -
Operating expenses $ 265,522   $ 73,149   $ 73,885   $ 66,159     $ 62,332 $ 62,338
 
Capital expenditures $ 3,988 $ 3,892 $ 6,214 $ 4,242 $ 6,054 $ 4,355
 
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(in thousands)
             
 
 
12/31/08 6/30/09
(unaudited)
Assets
Current assets:    
Cash and cash equivalents $ 75,032 $ 79,570
Accounts receivable, net 25,118 20,919
Tax receivable - 4,424
Prepaid expenses and other 6,226 4,656
Deferred income tax assets, net   6,025   1,805
Total current assets 112,401 111,374
Property and equipment, net 57,867 50,482
Intangible assets, net 6,520 3,577
Deferred income tax assets, net 59,599 46,802
Other assets   4,973   3,823
Total assets $ 241,360 $ 216,058
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 40,983 $ 37,659
Customer deposits 1,203 1,028
Deferred revenue   9,958   8,169
Total current liabilities 52,144 46,856
Other long-term liabilities   48,478   11,128
Total liabilities   100,622   57,984
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 140,736 138,020
Retained earnings   -   20,052
Total stockholders' equity   140,738   158,074
Total liabilities and stockholders' equity $ 241,360 $ 216,058
 
(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 six months ended
6/30/08 6/30/09
 
Cash flows from operating activities:      
Net (loss) income $ (167,528 ) $ 54,727
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion 24,187 22,444
Goodwill impairment 188,170 -
Deferred income tax expense 15,759 17,012
Amortization of stock based compensation 562 1,001
Provisions for doubtful accounts, service credits and other 3,022 2,507
Non-cash transaction tax accrual adjustments (1,228 ) (1,949 )
Loss on disposals of property and equipment 24 153
Changes in assets and liabilities:
Accounts receivable (1,633 ) 1,692
Prepaid expenses and other 1,617 (2,922 )
Intangibles and other long-term assets 1,490 (143 )
Accounts payable and accrued liabilities (9,798 ) (2,261 )
Customer deposits and deferred revenue (1,154 ) (1,964 )
Other long-term liabilities   -     (37,654 )
Net cash provided by operating activities $ 53,490   $ 52,643  
 
Cash flows from investing activities:
Purchases of property and equipment (7,880 ) (10,409 )
Proceeds from disposals of property and equipment   169     23  
Net cash used in investing activities $ (7,711 ) $ (10,386 )
 
Cash flows from financing activities:
Cash distributions to stockholders (24,565 ) (34,182 )
Purchase of common stock   -     (3,537 )
Net cash used in financing activities $ (24,565 ) $ (37,719 )
 
 
Net increase in cash and cash equivalents 21,214 4,538
Cash and cash equivalents, beginning of period   64,542     75,032  
Cash and cash equivalents, end of period $ 85,756   $ 79,570  
 
Supplemental disclosure:
Interest paid $ 3   $ -  
Income taxes paid (state and local) $ 420   $ 385  
 
(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