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USA Mobility Reports Second Quarter
Operating Results; Board Declares Quarterly Cash Distribution
Subscriber Trends Continue to Improve;
Operating Expenses Again Reduced;
Cash Flow Margins Remain Strong

SPRINGFIELD, Va., Jul 28, 2010 (BUSINESS WIRE) --

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, 2010.

In addition, the Company's Board of Directors declared a regular quarterly cash distribution of $0.25 per share, payable on September 10, 2010 to stockholders of record on August 19, 2010. Of the $0.25 cash distribution, the Company expects $0.23 will be a return of capital and $0.02 will be a dividend distribution.

Total revenue for the second quarter was $59.1 million, compared to $62.8 million in the first quarter of 2010 and $75.1 million in the year-earlier quarter. Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $20.4 million, compared to $22.0 million in the first quarter and $24.0 million in the second quarter of 2009.

Net income for the second quarter was $13.1 million, or $0.58 per fully diluted share, compared to $8.9 million, or $0.39 per fully diluted share, in the first quarter, and $44.7 million, or $1.93 per fully diluted share, in the year-earlier quarter. The second quarter of 2009 net income included a one-time income tax benefit of $37.0 million due to the settlement of uncertain tax positions and tax refund claims and a litigation settlement expense of $4.0 million. Excluding those two items, net income in the year-earlier quarter would have been $10.1 million, or $0.43 per fully diluted share. In the second quarter of 2010, the Company reassessed the expected level of the Company's 2010 taxable income, which allowed the Company to reduce the deferred tax asset valuation allowance by $4.7 million with a corresponding reduction in income tax expense. Absent the reduction in income tax expense, net income would have been $8.4 million or $0.37 per fully diluted share.

Second quarter results included:

  • Net unit loss was 72,000 in the second quarter, compared to 83,000 in the prior quarter and 158,000 in the second quarter of 2009. Units in service totaled 2,027,000 at June 30, 2010, compared to 2,449,000 a year earlier.
  • The quarterly rate of subscriber loss improved to 3.5 percent, compared to 3.8 percent in the first quarter and 6.0 percent in the second quarter of 2009. The annual rate of subscriber erosion also improved to 17.2 percent in the second quarter from 19.5 percent in the first quarter and 22.9 percent in the year-earlier quarter.
  • Total paging ARPU (average revenue per unit) was $8.87 in the second quarter, compared to $9.00 in the first quarter and $8.96 in the year-earlier quarter.
  • The quarterly rate of revenue erosion was 5.8 percent, compared to 4.0 percent in the prior quarter and 5.7 percent in the second quarter of 2009. The annual rate of revenue erosion was 21.3 percent, compared to 21.2 percent in the first quarter and 18.4 percent in the year-earlier quarter.
  • Operating expenses (excluding depreciation, amortization and accretion) totaled $38.7 million in the second quarter, a reduction of $12.5 million, or 24.4 percent, from $51.2 million in the second quarter of 2009. Operating expenses declined 5.3 percent from the prior quarter.
  • EBITDA margin (or EBITDA as a percentage of revenue) was 34.6 percent, compared to 31.9 percent in the second quarter of 2009.
  • Capital expenses were $0.6 million in the quarter, compared to $4.4 million in the year-earlier quarter, due to fewer paging device purchases.
  • The Company repurchased 176,839 shares of common stock during the quarter under its buy back program, and approximately $18.1 million remains available for purchases under the currently approved plan.
  • The Company's cash balance at June 30, 2010 was $129.1 million.

Vincent D. Kelly, president and chief executive officer, said: "USA Mobility reported another quarter of solid operating results, meeting or exceeding the majority of our key performance objectives. We were particularly pleased to see continued improvement in the pace of subscriber erosion, which slowed for the third consecutive quarter. At the same time, revenue, ARPU, and operating margins remained at high levels while our expense reduction efforts continued on track, all consistent with the financial guidance we provided earlier this year. In addition, we again generated sufficient cash flow during the quarter to return significant capital to stockholders in the form of cash distributions and share repurchases."

Thomas L. Schilling, chief operating officer and chief financial officer, said the Company continued to pursue various cost reduction initiatives during the quarter. "Operating expenses (excluding depreciation, amortization and accretion) decreased 5.3 percent from the first quarter and 24.4 percent over the past 12 months," Schilling noted, "including significant reductions in payroll expense and site rent expense. Operating expense as a percentage of revenue was 65.4 percent in the quarter, compared to 68.1 percent in the year-earlier quarter, with the lower expenses contributing to an EBITDA margin of 34.6 percent versus 31.9 percent in the same quarter of 2009."

Based on current trends, the Company is revising its financial guidance for 2010. Revenues are now expected to be between $230 million to $235 million, operating expenses (excluding depreciation, amortization and accretion) between $156 million to $159 million, and capital expenses between $7 million to $9 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 29, 2010. The dial-in number for the call is 888-551-9020 (toll-free) or 719-325-2348 (toll). The pass code for the call is 4546380. A replay of the call will be available from 2:30 p.m. ET on July 29 until 11:59 p.m. on Thursday, August 12. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4546380.

* * * * * * * * *

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, USA Mobility 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 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 RESULTS OF OPERATIONS (a)
(unaudited and in thousands, except share and per share amounts)
For the three months ended
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10
Revenues:
Paging service $ 72,021 $ 67,972 $ 63,308 $ 59,657 $ 57,832 $ 54,875
Cellular 991 775 980 795 708 624
Product sales 5,271 5,269 4,354 3,927 3,358 2,732
Other 1,408 1,129 856 993 886 881
Total revenues 79,691 75,145 69,498 65,372 62,784 59,112
Operating expenses:
Cost of products sold 1,669 1,421 1,593 1,513 1,209 1,134
Service, rental and maintenance 22,955 21,290 20,950 20,115 18,941 17,175
Selling and marketing 6,062 5,600 5,198 4,955 4,557 4,394
General and administrative 20,186 22,801 16,050 15,289 15,812 15,924
Severance and restructuring 190 52 15 2,480 314 41
Depreciation, amortization and accretion 11,270 11,174 10,689 8,781 7,304 6,698
Total operating expenses 62,332 62,338 54,495 53,133 48,137 45,366
% of total revenues 78.2 % 83.0 % 78.4 % 81.3 % 76.7 % 76.7 %
Operating income 17,359 12,807 15,003 12,239 14,647 13,746
% of total revenues 21.8 % 17.0 % 21.6 % 18.7 % 23.3 % 23.3 %
Interest income (expense), net 26 28 16 (1 ) 3 4
Other income (expense), net 112 (42 ) 185 275 78 180
Income before income tax expense (benefit) 17,497 12,793 15,204 12,513 14,728 13,930
Income tax expense (benefit) 7,516 (31,953 ) 6,003 8,883 5,843 841
Net income $ 9,981 $ 44,746 $ 9,201 $ 3,630 $ 8,885 $ 13,089
Basic net income per common share $ 0.43 $ 1.96 $ 0.40 $ 0.16 $ 0.39 $ 0.59
Diluted net income per common share $ 0.43 $ 1.93 $ 0.40 $ 0.16 $ 0.39 $ 0.58
Basic weighted average common shares outstanding 23,134,072 22,858,573 22,856,951 22,830,040 22,654,240 22,307,488
Diluted weighted average common shares outstanding 23,479,796 23,200,736 23,194,360 23,167,729 22,967,192 22,620,707
Reconciliation of operating income to EBITDA (b):
Operating income $ 17,359 $ 12,807 $ 15,003 $ 12,239 $ 14,647 $ 13,746
Add back: depreciation, amortization and accretion 11,270 11,174 10,689 8,781 7,304 6,698
EBITDA $ 28,629 $ 23,981 $ 25,692 $ 21,020 $ 21,951 $ 20,444
% of total revenues 35.9 % 31.9 % 37.0 % 32.2 % 35.0 % 34.6 %
(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.
UNITS IN SERVICE ACTIVITY (a)
(unaudited and in thousands)
For the three months ended
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10

Units in service

Beginning units in service
Direct one-way 2,349 2,198 2,079 1,969 1,881 1,804
Direct two-way 171 157 147 141 133 126
Total direct 2,520 2,355 2,226 2,110 2,014 1,930
Indirect one-way 196 161 139 116 101 90
Indirect two-way 99 91 84 71 67 79
Total indirect 295 252 223 187 168 169
Total beginning units in service 2,815 2,607 2,449 2,297 2,182 2,099
Gross placements
Direct one-way 67 74 64 55 53 62
Direct two-way 6 7 9 5 5 6
Total direct 73 81 73 60 58 68
Indirect one-way 8 9 7 6 3 3
Indirect two-way 4 2 1 2 15 1
Total indirect 12 11 8 8 18 4
Total gross placements 85 92 81 68 76 72
Gross disconnects
Direct one-way (218 ) (193 ) (174 ) (143 ) (130 ) (117 )
Direct two-way (20 ) (17 ) (15 ) (13 ) (12 ) (11 )
Total direct (238 ) (210 ) (189 ) (156 ) (142 ) (128 )
Indirect one-way (43 ) (31 ) (30 ) (21 ) (14 ) (11 )
Indirect two-way (12 ) (9 ) (14 ) (6 ) (3 ) (5 )
Total indirect (55 ) (40 ) (44 ) (27 ) (17 ) (16 )
Total gross disconnects (293 ) (250 ) (233 ) (183 ) (159 ) (144 )
Net (loss) gain
Direct one-way (151 ) (119 ) (110 ) (88 ) (77 ) (55 )
Direct two-way (14 ) (10 ) (6 ) (8 ) (7 ) (5 )
Total direct (165 ) (129 ) (116 ) (96 ) (84 ) (60 )
Indirect one-way (35 ) (22 ) (23 ) (15 ) (11 ) (8 )
Indirect two-way (8 ) (7 ) (13 ) (4 ) 12 (4 )
Total indirect (43 ) (29 ) (36 ) (19 ) 1 (12 )
Total net change (208 ) (158 ) (152 ) (115 ) (83 ) (72 )
Ending units in service
Direct one-way 2,198 2,079 1,969 1,881 1,804 1,749
Direct two-way 157 147 141 133 126 121
Total direct 2,355 2,226 2,110 2,014 1,930 1,870
Indirect one-way 161 139 116 101 90 82
Indirect two-way 91 84 71 67 79 75
Total indirect 252 223 187 168 169 157
Total ending units in service 2,607 2,449 2,297 2,182 2,099 2,027
(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
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10

ARPU

Direct one-way $ 8.11 $ 8.18 $ 8.08 $ 8.04 $ 8.16 $ 8.05
Direct two-way 23.68 23.62 23.42 23.59 23.61 23.55
Total direct 9.15 9.21 9.10 9.06 9.17 9.06
Indirect one-way 7.05 7.43 7.51 7.77 8.78 8.87
Indirect two-way 4.58 5.19 5.49 5.14 4.84 4.25
Total indirect 6.19 6.60 6.74 6.73 7.04 6.65
Total one-way 8.03 8.14 8.05 8.02 8.19 8.09
Total two-way 16.66 16.86 17.09 17.32 16.76 16.06
Total paging ARPU $ 8.86 $ 8.96 $ 8.89 $ 8.88 $ 9.00 $ 8.87

Gross disconnect rate (b)

Direct one-way -9.3 % -8.8 % -8.4 % -7.2 % -6.9 % -6.5 %
Direct two-way -11.8 % -11.0 % -10.2 % -8.9 % -9.1 % -8.5 %
Total direct -9.5 % -8.9 % -8.5 % -7.3 % -7.1 % -6.6 %
Indirect one-way -22.0 % -19.4 % -21.9 % -18.9 % -13.7 % -12.8 %
Indirect two-way -11.6 % -9.1 % -16.4 % -8.5 % -4.9 % -6.8 %
Total indirect -18.5 % -15.6 % -19.8 % -14.9 % -10.1 % -9.9 %
Total one-way -10.3 % -9.5 % -9.2 % -7.9 % -7.3 % -6.8 %
Total two-way -11.7 % -10.3 % -12.5 % -8.8 % -7.7 % -7.9 %
Total paging gross disconnect rate -10.4 % -9.6 % -9.5 % -8.0 % -7.3 % -6.9 %

Net (loss) gain rate (c)

Direct one-way -6.4 % -5.4 % -5.3 % -4.4 % -4.1 % -3.1 %
Direct two-way -8.5 % -6.4 % -4.4 % -5.5 % -5.0 % -4.2 %
Total direct -6.6 % -5.5 % -5.2 % -4.5 % -4.2 % -3.1 %
Indirect one-way -17.8 % -13.7 % -16.9 % -13.6 % -10.5 % -9.8 %
Indirect two-way -8.2 % -7.2 % -14.9 % -5.2 % 17.1 % -4.7 %
Total indirect -14.6 % -11.3 % -16.1 % -10.4 % 0.7 % -7.4 %
Total one-way -7.3 % -6.0 % -6.0 % -5.0 % -4.4 % -3.4 %
Total two-way -8.4 % -6.7 % -8.2 % -5.4 % 2.5 % -4.4 %
Total paging net (loss) gain rate -7.4 % -6.0 % -6.2 % -5.0 % -3.8 % -3.5 %
(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 (loss) gain 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
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10
Gross placement rate (b)
Healthcare 3.7 % 4.4 % 3.8 % 3.4 % 3.5 % 4.4 %
Government 1.7 % 2.4 % 2.4 % 1.9 % 1.8 % 1.9 %
Large enterprise 2.4 % 2.2 % 3.3 % 2.2 % 2.1 % 2.6 %
Other 2.4 % 2.5 % 2.3 % 2.2 % 2.4 % 2.0 %
Total direct 2.9 % 3.4 % 3.3 % 2.8 % 2.9 % 3.5 %
Total indirect 3.9 % 4.3 % 3.7 % 4.5 % 10.9 % 2.5 %
Total 3.0 % 3.5 % 3.3 % 3.0 % 3.5 % 3.4 %
Gross disconnect rate (b)
Healthcare -6.8 % -6.2 % -6.7 % -5.5 % -4.9 % -5.2 %
Government -9.9 % -10.7 % -10.7 % -9.4 % -9.1 % -8.3 %
Large enterprise -13.3 % -13.0 % -10.7 % -9.4 % -10.3 % -8.3 %
Other -13.0 % -12.4 % -10.6 % -10.1 % -11.0 % -9.6 %
Total direct -9.5 % -8.9 % -8.5 % -7.3 % -7.1 % -6.6 %
Total indirect -18.5 % -15.6 % -19.8 % -14.9 % -10.1 % -9.9 %
Total -10.4 % -9.6 % -9.5 % -8.0 % -7.3 % -6.9 %
Net (loss) gain rate (b)
Healthcare -3.1 % -1.8 % -2.9 % -2.1 % -1.4 % -0.8 %
Government -8.2 % -8.4 % -8.3 % -7.5 % -7.4 % -6.4 %
Large enterprise -10.9 % -10.9 % -7.4 % -7.2 % -8.1 % -5.7 %
Other -10.6 % -10.0 % -8.3 % -7.9 % -8.6 % -7.6 %
Total direct -6.6 % -5.5 % -5.2 % -4.5 % -4.2 % -3.1 %
Total indirect -14.6 % -11.3 % -16.1 % -10.4 % 0.7 % -7.4 %
Total -7.4 % -6.0 % -6.2 % -5.0 % -3.8 % -3.5 %
End of period units in service % of total (b)
Healthcare 44.9 % 49.8 % 51.5 % 53.2 % 54.5 % 56.1 %
Government 17.2 % 15.6 % 15.3 % 14.9 % 14.4 % 14.1 %
Large enterprise 12.0 % 11.8 % 11.8 % 11.4 % 10.9 % 10.7 %
Other 16.2 % 13.7 % 13.2 % 12.8 % 12.1 % 11.4 %
Total direct 90.3 % 90.9 % 91.8 % 92.3 % 91.9 % 92.3 %
Total indirect 9.7 % 9.1 % 8.2 % 7.7 % 8.1 % 7.7 %
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) gain rates.
USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR ACTIVATIONS (a)
(unaudited)
For the three months ended
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10
Account size ending units in service (000's)
1 to 3 units 137 126 118 109 101 95
4 to 10 units 82 75 70 66 62 58
11 to 50 units 199 183 168 158 149 140
51 to 100 units 125 112 104 97 92 86
101 to 1,000 units 626 580 546 519 499 483
>1,000 units 1,186 1,150 1,104 1,065 1,027 1,008
Total 2,355 2,226 2,110 2,014 1,930 1,870
End of period units in service % of total direct
1 to 3 units 5.8 % 5.7 % 5.6 % 5.4 % 5.2 % 5.1 %
4 to 10 units 3.5 % 3.4 % 3.3 % 3.3 % 3.2 % 3.1 %
11 to 50 units 8.4 % 8.2 % 8.0 % 7.8 % 7.7 % 7.5 %
51 to 100 units 5.3 % 5.0 % 4.9 % 4.8 % 4.8 % 4.6 %
101 to 1,000 units 26.6 % 26.0 % 25.9 % 25.8 % 25.9 % 25.8 %
>1,000 units 50.4 % 51.7 % 52.3 % 52.9 % 53.2 % 53.9 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Account size net loss rate
1 to 3 units -7.8 % -7.9 % -6.9 % -7.4 % -7.6 % -5.8 %
4 to 10 units -8.8 % -7.9 % -6.7 % -6.1 % -5.3 % -6.0 %
11 to 50 units -8.9 % -8.2 % -7.7 % -5.9 % -5.8 % -6.1 %
51 to 100 units -6.2 % -10.1 % -7.6 % -6.8 % -4.4 % -6.5 %
101 to 1,000 units -8.0 % -7.4 % -5.9 % -4.9 % -3.7 % -3.3 %
>1,000 units -5.1 % -3.1 % -4.0 % -3.5 % -3.7 % -1.9 %
Total -6.6 % -5.5 % -5.2 % -4.5 % -4.2 % -3.1 %
Account size ARPU
1 to 3 units $ 14.73 $ 15.07 $ 14.98 $ 15.03 $ 15.28 $ 15.37
4 to 10 units 14.00 14.30 14.24 14.21 14.37 14.35
11 to 50 units 11.41 11.65 11.54 11.45 11.86 12.01
51 to 100 units 10.30 10.13 10.06 10.06 10.67 10.76
101 to 1,000 units 8.94 9.04 8.89 8.82 9.00 8.93
>1,000 units 7.77 7.80 7.76 7.79 7.80 7.63
Total $ 9.15 $ 9.21 $ 9.10 $ 9.06 $ 9.17 $ 9.06
Cellular revenue
Number of activations 2,389 2,207 2,633 2,253 2,354 1,885
Revenue from cellular services (000's) $ 991 $ 775 $ 980 $ 795 $ 708 $ 624
(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
3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10
Cost of products sold $ 1,669 $ 1,421 $ 1,593 $ 1,513 $ 1,209 $ 1,134
Service, rental and maintenance
Site rent 11,218 10,223 10,422 9,871 9,079 8,283
Telecommunications 4,485 4,284 3,945 3,885 3,831 3,467
Payroll and related 5,631 5,286 4,988 4,725 4,586 4,444
Stock based compensation 49 7 13 12 6 7
Other 1,572 1,490 1,582 1,622 1,439 974
Total service, rental and maintenance 22,955 21,290 20,950 20,115 18,941 17,175
Selling and marketing
Payroll and related 4,175 3,711 3,366 3,199 2,964 2,814
Commissions 1,201 1,422 1,328 1,131 1,164 1,367
Stock based compensation 109 26 26 26 17 22
Other 577 441 478 599 412 191
Total selling and marketing 6,062 5,600 5,198 4,955 4,557 4,394
General and administrative
Payroll and related 9,075 7,754 7,213 7,089 6,912 6,621
Stock based compensation 569 241 241 241 240 242
Bad debt 850 750 699 654 713 594
Facility rent 1,628 1,446 1,457 1,411 1,354 1,326
Telecommunications 771 721 720 702 657 603
Outside services 4,514 4,063 3,269 3,051 3,267 3,185
Taxes, licenses and permits 1,101 1,695 (680 ) 660 1,591 1,836
Other 1,678 6,131 3,131 1,481 1,078 1,517
Total general and administrative 20,186 22,801 16,050 15,289 15,812 15,924
Severance and restructuring 190 52 15 2,480 314 41
Depreciation, amortization and accretion 11,270 11,174 10,689 8,781 7,304 6,698
Operating expenses $ 62,332 $ 62,338 $ 54,495 $ 53,133 $ 48,137 $ 45,366
Capital expenditures $ 6,054 $ 4,355 $ 1,806 $ 5,014 $ 1,725 $ 563
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(in thousands)
12/31/09 6/30/10
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 109,591 $ 129,123
Accounts receivable, net 19,051 14,655
Prepaid expenses and other 3,016 3,878
Tax receivables 5,117 -
Deferred income tax assets, net 1,068 760
Total current assets 137,843 148,416
Property and equipment, net 41,295 30,984
Intangible assets, net 226 278
Tax receivables - 5,155
Deferred income tax assets, net 32,123 25,854
Other assets 2,061 407
Total assets $ 213,548 $ 211,094
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 35,214 $ 27,946
Customer deposits 888 797
Deferred revenue 7,422 6,681
Total current liabilities 43,524 $ 35,424
Other long-term liabilities 11,228 12,104
Total liabilities 54,752 47,528
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 137,378 131,420
Retained earnings 21,416 32,144
Total stockholders' equity 158,796 163,566
Total liabilities and stockholders' equity $ 213,548 $ 211,094
(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
6/30/09 6/30/10
Cash flows from operating activities:
Net income $ 54,727 $ 21,974
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 22,444 14,002
Deferred income tax expense 17,012 6,577
Amortization of stock based compensation 1,001 534
Provisions for doubtful accounts, service credits and other 2,507 2,400
Non-cash transaction tax accrual adjustments (1,949 ) (667 )
Loss on disposals of property and equipment 153 22
Changes in assets and liabilities:
Accounts receivable 1,692 1,996
Prepaid expenses, intangibles and other assets (3,065 ) (17 )
Accounts payable and accrued liabilities (2,261 ) (6,188 )
Customer deposits and deferred revenue (1,964 ) (833 )
Other long-term liabilities (37,654 ) -
Net cash provided by operating activities 52,643 39,800
Cash flows from investing activities:
Purchases of property and equipment (10,409 ) (2,288 )
Proceeds from disposals of property and equipment 23 58
Net cash used in investing activities (10,386 ) (2,230 )
Cash flows from financing activities:
Cash distributions to stockholders (34,182 ) (11,151 )
Purchase of common stock (3,537 ) (6,887 )
Net cash used in financing activities (37,719 ) (18,038 )
Net increase in cash and cash equivalents 4,538 19,532
Cash and cash equivalents, beginning of period 75,032 109,591
Cash and cash equivalents, end of period $ 79,570 $ 129,123
Supplemental disclosure:
Interest paid $ - $ -
Income taxes paid (state and local) $ 385 $ 362
(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