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USA Mobility Reports Second Quarter Operating Results; Board Declares Regular Quarterly Dividend

Wireless Subscriber and Revenue Trends Continue to Improve;

Wireless Healthcare Base Posts Growth;

Software Revenue and Bookings Increase as Backlog Remains Strong

SPRINGFIELD, Va.--(BUSINESS WIRE)--Aug. 1, 2013-- 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 second quarter ended June 30, 2013. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2013 to stockholders of record on August 19, 2013.

Consolidated revenue for the second quarter was $52.3 million, compared to $53.1 million in the first quarter and $56.0 million in the second quarter of 2012. Revenue from the Company’s Wireless business (USA Mobility Wireless) was $37.8 million in the second quarter, compared to $38.8 million in the first quarter and $42.8 million in the second quarter of 2012. Revenue from the Software business (Amcom Software) was $14.5 million in the second quarter versus $14.4 million in the first quarter and $13.2 million in the second quarter of 2012.

Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $15.7 million, or 30.1 percent of revenue, compared to $18.4 million, or 32.9 percent of revenue, in the second quarter of 2012. Second quarter EBITDA included $14.3 million from Wireless, compared with $14.3 million for the first quarter and $16.8 million for the second quarter of 2012 and $1.4 million from Software, compared with $1.2 million for the first quarter and $1.6 million for the second quarter of 2012.

Net income for the second quarter was $6.8 million, or $0.31 per fully diluted share, compared to $8.4 million, or $0.37 per fully diluted share, in the second quarter of 2012.

Highlights for the second quarter included:

Wireless

  • The annual rate of revenue erosion improved to an all-time low of 11.7 percent, compared to 12.4 percent in the first quarter and 17.9 percent in the second quarter of 2012, while the quarterly rate of revenue erosion improved to 2.6 percent from 2.9 percent in the first quarter and 3.3 percent in the year-earlier quarter.
  • The annual rate of subscriber erosion was 8.7 percent in the second quarter, compared to 11.0 percent in the second quarter of 2012, while the quarterly rate of unit erosion was 2.4 percent versus 2.1 percent in the second quarter of 2012. Net unit losses totaled 35,000 in the second quarter, compared to 34,000 in the second quarter of 2012. Units in service at June 30, 2013 totaled 1,445,000 compared to 1,583,000 a year earlier.
  • The Healthcare segment posted a net gain of 479 paging units during the quarter as gross additions exceeded gross disconnects.
  • Total ARPU (average revenue per unit) was $8.22 in the second quarter, compared to $8.25 in the first quarter and $8.45 in the second quarter of 2012.
  • Second quarter EBITDA margin for Wireless was 38.0 percent, compared to 36.9 percent in the first quarter and 39.2 percent in the year-earlier quarter.

Software

  • Bookings for the second quarter increased to $15.6 million from $14.3 million in the first quarter and $15.1 million in the second quarter of 2012.
  • The backlog totaled $39.6 million at June 30, 2013, compared to $34.4 million a year earlier.
  • Of the $14.5 million in Software revenue for the second quarter, $6.9 million was maintenance revenue and $7.6 million was operations revenue, compared to $6.5 million and $6.7 million, respectively, of the $13.2 million in Software revenue for second quarter of 2012.
  • The renewal rate for maintenance in the second quarter was 99.5 percent.

Total Company

  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $36.5 million in the second quarter, with $23.4 million for Wireless and $13.1 million for Software, compared to $37.5 million in the second quarter of 2012, with $26.0 million for Wireless and $11.5 million for Software.
  • Capital expenses were $2.9 million, the same as the second quarter of 2012.
  • Dividends paid to stockholders totaled $4.2 million in the second quarter.
  • The Company’s cash balance at June 30, 2013 was $72.0 million.
  • The number of full-time equivalent employees at June 30, 2013 totaled 659, including 361 for Wireless and 298 for Software, compared to a total of 686 at June 30, 2012, including 411 for Wireless and 275 for Software.

Vincent D. Kelly, president and chief executive officer, said: “USA Mobility continued to make excellent progress in the second quarter. Our Wireless and Software businesses continued making progress, integrating management, operations and sales functions designed to better serve our customer’s total communications and solutions needs, while increasing our long-term efficiency profile. Increasingly, we are seeing more demand from our customers to provide both software solutions and wireless capability as part of our overall solutions offerings. Both our wireless and software operations met or exceeded their performance goals in nearly all operating categories as consolidated EBITDA increased and expenses declined from the first quarter. At the same time, we maintained strong operating margins, and generated sufficient cash flow to again return capital to stockholders in the form of cash dividends.”

Kelly added: “On the Wireless side, we once again exceeded expectations for gross additions, revenue, ARPU, and expenses. In addition, the annual rate of revenue erosion reached a record low, the annual rate of subscriber erosion improved from a year ago, and our quarterly direct net unit churn improved to 1.3 percent from 2.0 percent in the second quarter of 2012.”

Kelly said second quarter sales efforts in the Wireless business continued to focus on the core market segments of Healthcare, Government and Large Enterprise. “These core segments represented 92.3 percent of our direct subscriber base and 88.6 percent of our direct paging revenue at the end of the quarter. Healthcare comprised 74.3 percent of our direct subscriber base at June 30th and continued to be our best performing market segment with the highest percentage of direct gross additions (84.9 percent). Moreover,” he noted, “our Healthcare segment posted a small net gain of 479 paging units during the quarter as gross additions exceeded gross disconnects. We are pleased healthcare providers continue to recognize the cost and reliability benefits of paging for their most critical messaging needs.”

Commenting on the Software business, Kelly said: “Second quarter revenue and bookings increased from both the prior and year-earlier quarters while our backlog totaled $39.6 million and remained near a record high. In addition, our Amcom sales team recorded a number of major contracts in such key industries as healthcare, public safety, and government and continued to build a solid pipeline of prospective business. Customer demand remained strong for such software solutions as call center management, clinical alerting middleware, critical smartphone communications and emergency notification. While sales activity remained strongest in North America, we also continued to add new accounts in the Asia-Pacific region as we continued to aggressively pursue software accounts in key international markets.”

Kelly noted that Amcom’s successful pursuit of international sales resulted in the Company’s inclusion among companies receiving the President’s “E” Award for Exports in May 2013. Presented by the Department of Commerce at a ceremony in Washington, D.C., the “E” Award is the highest recognition a company can receive for contributing to U.S. exports. “We were delighted that Amcom received this well-deserved recognition for its international sales performance,” Kelly said. “While our Software business already enjoys a leading position in the mission-critical communications space in domestic markets, we expect to continue expanding its international reach as part of our ongoing strategy for long-term growth.”

Shawn E. Endsley, chief financial officer, said USA Mobility’s balance sheet continued to benefit from strong quarterly performances by both Wireless and Software businesses. “Improved rates of revenue erosion and subscriber churn, combined with solid operating expense management, helped drive strong EBITDA in our Wireless business,” he noted, “while revenue and bookings in the Software business continued to increase. The net result is a consolidated cash balance of $72 million at June 30th. In addition, we continue to operate as a debt-free company while maintaining approximately $40 million in borrowing capacity through our credit facility.”

Endsley said the Company is maintaining its previously announced financial guidance for 2013, which projects total revenue to range from $195 million to $213 million, operating expenses (excluding depreciation, amortization and accretion) to range from $150 million to $152 million, and capital expenses to range from $8.1 million to $9.7 million.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Friday, August 2, 2013. Dial-in numbers for the call are 719-457-2661 or 888-438-5524. The pass code for the call is 3839277. A replay of the call will be available from 1:00 p.m. ET on August 2 until 1:00 p.m. on Friday, August 16. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 3839277.

* * * * * * * * *

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 through its wireless subsidiary, USA Mobility Wireless. In addition, through its software subsidiary, Amcom Software, it provides mission critical unified communications solutions nationally and internationally to leading organizations in such industries as healthcare, hospitality, education, business and government. Amcom connects people to each other and the data they need. Its software solutions include critical smartphone communications, contact center optimization, emergency management and clinical workflow improvement. As a single-source provider, USA Mobility Wireless focuses on the business-to-business marketplace and supplies wireless connectivity solutions to organizations nationwide. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. USA Mobility Wireless also offers mobile voice and data services through SprintNextel and T-Mobile, including BlackBerry® smartphones and GPS location applications. Its product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. For further information visit www.usamobility.com and 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, continued growth of our Software business and demand for our Software products and services, our ability to develop additional software solutions for our customers, 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, competition from other software providers, 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 INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
           
For the three months ended June 30,
2013   2012  
Wireless   Software   Total Wireless   Software   Total
 
Revenue:
Paging service $ 36,064 $ - $ 36,064 $ 40,548 $ - $ 40,548
Cellular 163 - 163 286 - 286
Software revenue and other (b) 1,401 14,497 15,898 1,669 13,178 14,847
Other   143       -       143     280       -       280  
Total revenue   37,771       14,497       52,268     42,783       13,178       55,961  
 
Operating expenses:
Cost of revenue (b) 112 5,373 5,485 156 5,060 5,216
Service, rental and maintenance (b) 10,538 2,284 12,822 11,464 2,428 13,892
Selling and marketing 2,563 3,784 6,347 2,972 2,947 5,919
General and administrative 10,201 1,684 11,885 11,426 1,068 12,494
Severance and restructuring 2 - 2 0 24 24
Depreciation, amortization and accretion   2,380       1,442       3,822     2,854       1,752       4,606  
Total operating expenses   25,796       14,567       40,363     28,872       13,279       42,151  
% of total revenue 68.3 % 100.5 % 77.2 % 67.5 % 100.8 % 75.3 %
 
Operating income (loss) 11,975 (70 ) 11,905 13,911 (101 ) 13,810
% of total revenue 31.7 % -0.5 % 22.8 % 32.5 % -0.8 % 24.7 %
 
Interest expense, net (63 ) (1 ) (64 ) (66 ) - (66 )
Other (expense) income, net   (82 )     7       (75 )   439       (3 )     436  
Income (loss) before income tax (expense) benefit 11,830 (64 ) 11,766 14,284 (104 ) 14,180
Income tax (expense) benefit   (4,967 )     29       (4,938 )   (5,772 )     39       (5,733 )
Net income (loss) $ 6,863     $ (35 )   $ 6,828   $ 8,512     $ (65 )   $ 8,447  
 
Basic net income per common share $ 0.32   $ 0.38  
Diluted net income per common share $ 0.31   $ 0.37  
 
Basic weighted average common shares outstanding   21,644,281     22,130,397  
Diluted weighted average common shares outstanding   21,827,149     22,613,517  
 
 
Reconciliation of operating income (loss) to EBITDA (c):
Operating income (loss) $ 11,975 $ (70 ) $ 11,905 $ 13,911 $ (101 ) $ 13,810
Add back: depreciation, amortization and accretion   2,380       1,442       3,822     2,854       1,752       4,606  
EBITDA $ 14,355     $ 1,372     $ 15,727   $ 16,765     $ 1,651     $ 18,416  
% of total revenue 38.0 % 9.5 % 30.1 % 39.2 % 12.5 % 32.9 %
 
Key statistics:
Units in service 1,445 - 1,445 1,583 - 1,583
Average revenue per unit (ARPU) $ 8.22 $ - $ 8.22 $ 8.45 $ - $ 8.45
Bookings $ - $ 15,626 $ 15,626 $ - $ 15,085 $ 15,085
Backlog $ - $ 39,576 $ 39,576 $ - $ 34,391 $ 34,391
 
(a) Slight variations in totals are due to rounding.
(b) Wireless results reflect eliminations for intercompany revenue and expenses.

(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 STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
           
For the six months ended June 30,
2013 2012
Wireless   Software   Total Wireless   Software   Total
 
Revenue:
Paging service $ 73,115 $ - $ 73,115 $ 82,423 $ - $ 82,423
Cellular 358 - 358 563 - 563
Software revenue and other (b) 2,773 28,848 31,621 3,456 25,648 29,104
Other   304       -       304     606       -       606  
Total revenue   76,550       28,848       105,398     87,048       25,648       112,696  
 
Operating expenses:
Cost of revenue (b) 107 10,561 10,668 329 9,703 10,032
Service, rental and maintenance (b) 21,367 4,487 25,854 23,498 4,697 28,195
Selling and marketing 5,039 7,524 12,563 6,020 5,552 11,572
General and administrative 21,382 3,655 25,037 22,934 2,729 25,663
Severance and restructuring 2 - 2 9 37 46
Depreciation, amortization and accretion   4,776       2,853       7,629     5,669       3,452       9,121  
Total operating expenses   52,673       29,080       81,753     58,459       26,170       84,629  
% of total revenue 68.8 % 100.8 % 77.6 % 67.2 % 102.0 % 75.1 %
                   
Operating income (loss)   23,877       (232 )     23,645     28,589       (522 )     28,067  
% of total revenue 31.2 % -0.8 % 22.4 % 32.8 % -2.0 % 24.9 %
 
Interest expense, net (127 ) (1 ) (128 ) (254 ) - (254 )
Other income (expense), net   7       (1 )     6     393       (19 )     374  
Income (loss) before income tax (expense) benefit 23,757 (234 ) 23,523 28,728 (541 ) 28,187
Income tax (expense) benefit   (9,864 )     94       (9,770 )   (11,491 )     212       (11,279 )
Net income (loss) $ 13,893     $ (140 )   $ 13,753   $ 17,237     $ (329 )   $ 16,908  
 
Basic net income per common share $ 0.63   $ 0.76  
Diluted net income per common share $ 0.63   $ 0.75  
 
Basic weighted average common shares outstanding   21,666,096     22,118,470  
Diluted weighted average common shares outstanding   21,921,742     22,601,603  
 
 
Reconciliation of operating income (loss) to EBITDA (c):
Operating income (loss) $ 23,877 $ (232 ) $ 23,645 $ 28,589 $ (522 ) $ 28,067
Add back: depreciation, amortization and accretion   4,776       2,853       7,629     5,669       3,452       9,121  
EBITDA $ 28,653     $ 2,621     $ 31,274   $ 34,258     $ 2,930     $ 37,188  
% of total revenue 37.4 % 9.1 % 29.7 % 39.4 % 11.4 % 33.0 %
 
Key statistics:
Units in service 1,445 - 1,445 1,583 - 1,583
Average revenue per unit (ARPU) $ 8.24 $ - $ 8.24 $ 8.45 $ - $ 8.45
Bookings $ - $ 29,879 $ 29,879 $ - $ 27,502 $ 27,502
Backlog $ - $ 39,576 $ 39,576 $ - $ 34,391 $ 34,391
 
(a) Slight variations in totals are due to rounding.
(b) Wireless results reflect eliminations for intercompany revenue and expenses.

(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)
   
 
 

6/30/13

12/31/12

(Unaudited)
 
Assets
Current assets:
Cash and cash equivalents $ 72,029 $ 61,046
Accounts receivable, net 17,935 21,580
Prepaid expenses and other 6,714 5,836
Inventory 2,641 3,257
Escrow receivables - 275
Deferred income tax assets, net   4,581     3,915
Total current assets 103,900 95,909
Property and equipment, net 21,150 20,809
Goodwill 133,031 133,031
Other intangible assets, net 27,836 30,333
Deferred income tax assets, net 31,838 41,239
Other assets   1,169     1,306
Total assets $ 318,924   $ 322,627
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 10,530 $ 12,659
Accrued compensation and benefits 12,368 17,806
Consideration payable - 275
Deferred revenue   26,047     29,986
Total current liabilities 48,945 60,726
Deferred revenue 544 693
Other long-term liabilities   9,515     9,789
Total liabilities   59,004     71,208
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 125,500 125,212
Retained earnings   134,418     126,205
Total stockholders' equity   259,920     251,419
Total liabilities and stockholders' equity $ 318,924   $ 322,627
 
(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

6/30/13

6/30/12

 
Cash flows from operating activities:
Net income $ 13,753 $ 16,908

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and accretion 7,629 9,121
Amortization of deferred financing costs 129 129
Deferred income tax expense 8,849 10,728
Amortization of stock based compensation 1,254 442
Provisions for doubtful accounts, service credits and other 833 780
Adjustments of non-cash transaction taxes (251 ) (243 )
Loss/(Gain) on disposals of property and equipment 167 (146 )
Changes in assets and liabilities:
Accounts receivable 2,812 (876 )
Prepaid expenses and other assets (367 ) 161
Accounts payable and accrued liabilities (7,578 ) (3,160 )
Deferred revenue   (4,088 )     (85 )
Net cash provided by operating activities   23,142       33,759  
 
Cash flows from investing activities:
Purchases of property and equipment (5,268 ) (4,439 )
Proceeds from disposals of property and equipment 9 318
Acquisitions, net of cash acquired   -       (3,000 )
Net cash used in investing activities   (5,259 )     (7,121 )
 
Cash flows from financing activities:
Repayment of debt - (28,250 )
Cash dividends to stockholders   (6,900 )     (11,075 )
Net cash used in financing activities   (6,900 )     (39,325 )
 
 
Net increase / (decrease) in cash and cash equivalents 10,983 (12,687 )
Cash and cash equivalents, beginning of period   61,046       53,655  
Cash and cash equivalents, end of period $ 72,029     $ 40,968  
 
Supplemental disclosure:
Interest paid $ 6     $ 283  
Income taxes paid $ 831     $ 936  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
           
 
For the three months ended

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

 
Revenues:
Paging service $ 36,064 $ 37,051 $ 38,081 $ 39,235 $ 40,548 $ 41,875
Cellular 163 195 275 314 286 277
Software revenue 15,898 15,723 13,381 15,321 14,847 14,257
Other   143       161       147       246       280       326  
Total revenues   52,268       53,130       51,884       55,116       55,961       56,735  
 
Operating expenses:
Cost of revenue 5,485 5,183 5,709 5,105 5,216 4,816
Service, rental and maintenance 12,822 13,032 13,499 13,731 13,892 14,303
Selling and marketing 6,347 6,216 6,030 6,043 5,919 5,653
General and administrative 11,885 13,152 12,551 12,466 12,494 13,169
Severance and restructuring 2 - 1,712 - 24 22
Depreciation, amortization and accretion 3,822 3,807 4,387 4,724 4,606 4,515
Impairment   -       -       3,382       -       -       -  
Total operating expenses   40,363       41,390       47,270       42,069       42,151       42,478  
% of total revenues 77.2 % 77.9 % 91.1 % 76.3 % 75.3 % 74.9 %
 
Operating income 11,905 11,740 4,614 13,047 13,810 14,257
% of total revenues 22.8 % 22.1 % 8.9 % 23.7 % 24.7 % 25.1 %
 
Interest expense, net (64 ) (64 ) (62 ) (64 ) (66 ) (188 )
Other income (expense), net   (75 )     81       289       52       436       (62 )
Income before income tax expense 11,766 11,757 4,841 13,035 14,180 14,007
Income tax expense   (4,938 )     (4,832 )     (2,814 )     (4,987 )     (5,733 )     (5,545 )
Net income $ 6,828     $ 6,925     $ 2,027     $ 8,048     $ 8,447     $ 8,462  
 
Basic net income per common share $ 0.32     $ 0.32     $ 0.09     $ 0.37     $ 0.38     $ 0.38  
Diluted net income per common share $ 0.31     $ 0.32     $ 0.09     $ 0.36     $ 0.37     $ 0.37  
 
Basic weighted average common shares outstanding   21,644,281       21,688,153       21,492,792       21,973,473       22,130,397       22,106,543  
Diluted weighted average common shares outstanding   21,827,149       21,904,862       21,991,673       22,399,934       22,613,517       22,589,483  
 
Reconciliation of operating income to EBITDA (b):
Operating income $ 11,905 $ 11,740 $ 4,614 $ 13,047 $ 13,810 $ 14,257
Add back: depreciation, amortization, accretion and impairment   3,822       3,807       7,769       4,724       4,606       4,515  
EBITDA $ 15,727     $ 15,547     $ 12,383     $ 17,771     $ 18,416     $ 18,772  
% of total revenues 30.1 % 29.3 % 23.9 % 32.2 % 32.9 % 33.1 %
 
Key statistics:
Units in service 1,445 1,480 1,515 1,546 1,583 1,617
Average revenue per unit (ARPU) $ 8.22 $ 8.25 $ 8.29 $ 8.36 $ 8.45 $ 8.50
Bookings $ 15,626 $ 14,253 $ 18,129 $ 15,670 $ 15,085 $ 12,417
Backlog $ 39,576 $ 40,183 $ 40,626 $ 36,155 $ 34,391 $ 32,688
 
(a) Slight variations in totals are due to rounding.

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

 
 
USA MOBILITY, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
           
 
For the three months ended

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

 
Cost of revenue
Payroll and related $ 2,917 $ 2,838 $ 2,634 $ 2,427 $ 2,324 $ 2,368
Cost of sales 2,133 1,890 2,500 2,195 2,434 2,037
Other   435     455     575     483     458       411
Total cost of revenue   5,485     5,183     5,709     5,105     5,216       4,816
 
Service, rental and maintenance
Site rent 4,237 4,235 4,326 4,326 4,421 4,791
Telecommunications 1,885 1,889 2,053 2,257 2,346 2,312
Payroll and related 5,074 5,203 5,432 5,309 5,360 5,529
Stock based compensation 10 10 7 6 6 6
Other   1,616     1,695     1,681     1,833     1,759       1,665
Total service, rental and maintenance   12,822     13,032     13,499     13,731     13,892       14,303
 
Selling and marketing
Payroll and related 3,672 3,594 3,519 3,504 3,544 3,559
Commissions 1,519 1,387 1,197 1,335 1,343 1,253
Stock based compensation 17 17 19 19 18 16
Other   1,139     1,218     1,295     1,185     1,014       825
Total selling and marketing   6,347     6,216     6,030     6,043     5,919       5,653
 
General and administrative
Payroll and related 5,662 6,026 6,423 5,851 5,972 6,490
Stock based compensation 601 599 296 435 (19 ) 415
Bad debt 265 275 300 275 270 234
Facility rent 839 844 889 903 868 806
Telecommunications 343 375 379 390 443 412
Outside services 2,111 3,077 2,377 2,353 2,458 2,447
Taxes, licenses and permits 1,166 1,233 1,312 1,249 1,426 1,501
Other   898     723     575     1,010     1,076       864
Total general and administrative   11,885     13,152     12,551     12,466     12,494       13,169
 
Severance and restructuring 2 - 1,712 - 24 22
Depreciation, amortization and accretion 3,822 3,807 4,387 4,724 4,606 4,515
Impairment   -     -     3,382     -     -       -
Operating expenses $ 40,363   $ 41,390   $ 47,270   $ 42,069   $ 42,151     $ 42,478
 
Capital expenditures $ 2,927 $ 2,341 $ 2,854 $ 2,696 $ 2,888 $ 1,551
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC. (WIRELESS)
UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
           
 
For the three months ended

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

Units in service

 
Beginning units in service
Direct one-way 1,324 1,346 1,366 1,395 1,423 1,465
Direct two-way 73     75     79     82     85     90  
Total direct 1,397     1,421     1,445     1,477     1,508     1,555  
Indirect one-way 38 48 55 58 60 63
Indirect two-way 45     46     46     48     49     50  
Total indirect 83     94     101     106     109     113  
Total beginning units in service 1,480     1,515     1,546     1,583     1,617     1,668  
 
Gross placements
Direct one-way 49 39 46 45 49 41
Direct two-way 5     3     2     3     4     3  
Total direct 54     42     48     48     53     44  
Indirect one-way 1 1 2 1 2 1
Indirect two-way -     -     -     -     -     -  
Total indirect 1     1     2     1     2     1  
Total gross placements 55     43     50     49     55     45  
 
Gross disconnects
Direct one-way (66 ) (61 ) (66 ) (74 ) (77 ) (83 )
Direct two-way (5 )   (5 )   (6 )   (6 )   (7 )   (8 )
Total direct (71 )   (66 )   (72 )   (80 )   (84 )   (91 )
Indirect one-way (3 ) (11 ) (9 ) (4 ) (4 ) (4 )
Indirect two-way (16 )   (1 )   -     (2 )   (1 )   (1 )
Total indirect (19 )   (12 )   (9 )   (6 )   (5 )   (5 )
Total gross disconnects (90 )   (78 )   (81 )   (86 )   (89 )   (96 )
 
Net loss
Direct one-way (17 ) (22 ) (20 ) (29 ) (28 ) (42 )
Direct two-way -     (2 )   (4 )   (3 )   (3 )   (5 )
Total direct (17 )   (24 )   (24 )   (32 )   (31 )   (47 )
Indirect one-way (2 ) (10 ) (7 ) (3 ) (2 ) (3 )
Indirect two-way (16 )   (1 )   -     (2 )   (1 )   (1 )
Total indirect (18 )   (11 )   (7 )   (5 )   (3 )   (4 )
Total net change (35 )   (35 )   (31 )   (37 )   (34 )   (51 )
 
Ending units in service
Direct one-way 1,307 1,324 1,346 1,366 1,395 1,423
Direct two-way 73     73     75     79     82     85  
Total direct 1,380     1,397     1,421     1,445     1,477     1,508  
Indirect one-way 36 38 48 55 58 60
Indirect two-way 29     45     46     46     48     49  
Total indirect 65     83     94     101     106     109  
Total ending units in service 1,445     1,480     1,515     1,546     1,583     1,617  
 
(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

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

 

ARPU

Direct one-way $ 7.67 $ 7.73 $ 7.78 $ 7.84 $ 7.89 $ 7.91
Direct two-way   19.95       20.41       20.52       20.55       20.88       21.08  
Total direct 8.33 8.40 8.47 8.54 8.62 8.67
 
Indirect one-way 8.97 8.22 7.51 7.25 7.48 7.61
Indirect two-way   3.89       3.76       3.87       4.08       4.19       4.33  
Total indirect 6.31 5.85 5.74 5.77 5.97 6.14
 
Total one-way 7.71 7.74 7.77 7.82 7.88 7.90
Total two-way   14.40       13.96       14.16       14.36       14.69       15.00  
Total paging ARPU $ 8.22     $ 8.25     $ 8.29     $ 8.36     $ 8.45     $ 8.50  
 
 
 

Gross disconnect rate (b)

Direct one-way -5.0 % -4.6 % -4.8 % -5.3 % -5.4 % -5.7 %
Direct two-way   -6.7 %     -6.6 %     -7.8 %     -7.7 %     -8.5 %     -8.3 %
Total direct -5.1 % -4.7 % -5.0 % -5.5 % -5.6 % -5.8 %
 
Indirect one-way -7.4 % -23.6 % -16.1 % -7.6 % -6.6 % -7.0 %
Indirect two-way   -34.0 %     -1.6 %     -1.6 %     -3.1 %     -1.8 %     -1.7 %
Total indirect -22.3 % -12.5 % -9.3 % -5.5 % -4.4 % -4.7 %
 
Total one-way -5.1 % -5.2 % -5.3 % -5.4 % -5.4 % -5.8 %
Total two-way   -17.3 %     -4.7 %     -5.4 %     -6.0 %     -6.0 %     -5.9 %
Total paging gross disconnect rate   -6.1 %     -5.2 %     -5.3 %     -5.5 %     -5.5 %     -5.8 %
 
 
 

Net loss rate (c)

Direct one-way -1.3 % -1.7 % -1.5 % -2.1 % -1.9 % -2.9 %
Direct two-way   -0.4 %     -1.9 %     -4.9 %     -4.0 %     -3.9 %     -4.9 %
Total direct -1.3 % -1.7 % -1.7 % -2.2 % -2.0 % -3.0 %
 
Indirect one-way -4.7 % -21.8 % -13.2 % -5.6 % -4.9 % -5.4 %
Indirect two-way   -33.7 %     -1.3 %     -1.3 %     -2.5 %     -1.2 %     -0.9 %
Total indirect -21.0 % -11.5 % -7.6 % -4.2 % -3.2 % -3.4 %
 
Total one-way -1.4 % -2.4 % -1.9 % -2.2 % -2.0 % -3.0 %
Total two-way   -13.3 %     -1.6 %     -3.5 %     -3.5 %     -2.9 %     -3.5 %
Total paging net loss rate   -2.4 %     -2.3 %     -2.0 %     -2.3 %     -2.1 %     -3.0 %
 
(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 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

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

 
Gross placement rate (b)
Healthcare 4.5 % 3.4 % 3.9 % 3.7 % 4.3 % 3.3 %
Government 2.3 % 1.6 % 1.5 % 2.5 % 1.8 % 1.3 %
Large enterprise 2.4 % 2.1 % 2.3 % 2.0 % 1.9 % 2.4 %
Other 1.5 %   1.8 %   1.9 %   2.1 %   2.0 %   2.2 %
Total direct 3.8 % 3.0 % 3.3 % 3.2 % 3.5 % 2.8 %
Total indirect 1.4 %   1.0 %   1.7 %   1.3 %   1.2 %   1.3 %
Total 3.7 %   2.9 %   3.2 %   3.1 %   3.4 %   2.7 %
 
Gross disconnect rate (b)
Healthcare -4.4 % -3.9 % -4.4 % -4.5 % -4.5 % -4.7 %
Government -7.1 % -5.9 % -6.7 % -6.8 % -7.0 % -7.7 %
Large enterprise -6.7 % -7.0 % -5.7 % -7.3 % -8.0 % -7.7 %
Other -7.4 %   -7.3 %   -7.0 %   -8.1 %   -8.7 %   -9.2 %
Total direct -5.1 % -4.7 % -5.0 % -5.5 % -5.6 % -5.8 %
Total indirect -22.3 %   -12.5 %   -9.3 %   -5.5 %   -4.4 %   -4.7 %
Total -6.1 %   -5.2 %   -5.3 %   -5.5 %   -5.5 %   -5.8 %
 
Net loss rate (b)
Healthcare 0.0 % -0.5 % -0.4 % -0.9 % -0.2 % -1.4 %
Government -4.6 % -4.3 % -5.2 % -4.3 % -5.2 % -6.4 %
Large enterprise -4.2 % -4.9 % -3.4 % -5.3 % -6.1 % -5.3 %
Other -5.9 %   -5.5 %   -5.1 %   -5.9 %   -6.8 %   -7.1 %
Total direct -1.3 % -1.7 % -1.7 % -2.2 % -2.0 % -3.0 %
Total indirect -21.0 %   -11.5 %   -7.6 %   -4.2 %   -3.2 %   -3.4 %
Total -2.4 %   -2.3 %   -2.0 %   -2.3 %   -2.1 %   -3.0 %
 
End of period units in service % of total (b)
Healthcare 70.9 % 68.4 % 67.1 % 65.9 % 64.9 % 63.6 %
Government 9.1 % 10.1 % 10.3 % 10.8 % 11.1 % 11.5 %
Large enterprise 8.1 % 8.3 % 8.5 % 8.6 % 8.9 % 9.3 %
Other 7.3 %   7.6 %   7.9 %   8.1 %   8.4 %   8.8 %
Total direct 95.4 % 94.4 % 93.8 % 93.4 % 93.3 % 93.2 %
Total indirect 4.6 %   5.6 %   6.2 %   6.6 %   6.7 %   6.8 %
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. (WIRELESS)
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)

(Unaudited)

           
 
For the three months ended

6/30/13

3/31/13

12/31/12

9/30/12

6/30/12

3/31/12

 
Account size ending units in service (000's)
1 to 3 units 47 49 52 55 58 61
4 to 10 units 28 29 31 33 35 37
11 to 50 units 67 71 75 78 82 86
51 to 100 units 45 47 49 50 52 54
101 to 1,000 units 305 321 334 343 356 373
>1,000 units   888       880       880       886       894       897  
Total   1,380       1,397       1,421       1,445       1,477       1,508  
 
End of period units in service % of total direct
1 to 3 units 3.4 % 3.5 % 3.6 % 3.8 % 3.9 % 4.1 %
4 to 10 units 2.0 % 2.1 % 2.2 % 2.3 % 2.3 % 2.3 %
11 to 50 units 4.8 % 5.1 % 5.3 % 5.4 % 5.6 % 5.7 %
51 to 100 units 3.2 % 3.4 % 3.5 % 3.5 % 3.5 % 3.6 %
101 to 1,000 units 22.1 % 23.0 % 23.5 % 23.7 % 24.1 % 24.8 %
>1,000 units   64.5 %     62.9 %     61.9 %     61.3 %     60.6 %     59.5 %
Total   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
 
Account size net loss rate
1 to 3 units -5.1 % -4.8 % -5.5 % -5.3 % -5.7 % -6.2 %
4 to 10 units -5.3 % -6.0 % -5.5 % -4.8 % -6.2 % -6.2 %
11 to 50 units -6.4 % -4.8 % -4.6 % -4.8 % -4.1 % -7.1 %
51 to 100 units -5.3 % -4.0 % -2.6 % -3.9 % -2.4 % -3.9 %
101 to 1,000 units -5.0 % -3.9 % -2.6 % -3.8 % -4.7 % -1.7 %
>1,000 units   1.1 %     -0.2 %     -0.6 %     -1.0 %     -0.3 %     -2.7 %
Total   -1.3 %     -1.7 %     -1.7 %     -2.2 %     -2.0 %     -3.0 %
 
Account size ARPU
1 to 3 units $ 15.12 $ 15.22 $ 15.29 $ 15.43 $ 15.49 $ 15.49
4 to 10 units 14.29 14.33 14.39 14.42 14.40 14.45
11 to 50 units 11.96 12.06 12.04 12.11 12.24 12.15
51 to 100 units 10.42 10.47 10.47 10.48 10.35 10.52
101 to 1,000 units 8.84 8.84 8.94 8.97 9.01 9.04
>1,000 units   7.19       7.23       7.24       7.28       7.34       7.35  
Total $ 8.33     $ 8.40     $ 8.47     $ 8.54     $ 8.62     $ 8.67  
 
 
Cellular:
Number of activations   799       925       1,041       948       1,052       1,070  
Revenue from cellular services (000's) $ 163     $ 195     $ 275     $ 314     $ 286     $ 277  
 
(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