Investor Relations -Press Release

<< Back
USA Mobility Reports Third Quarter Operating Results
                 Continued Improvement in Subscriber Trends;
                     Cost Reductions Outpace Expectations

ALEXANDRIA, Va., Nov. 8 /PRNewswire-FirstCall/ -- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the third quarter ended September 30, 2006. Reported revenue for the quarter was $119.6 million and EBITDA (earnings before interest, tax, depreciation, amortization and accretion) totaled $33.3 million. Third quarter operating income was $14.9 million, while net income was $8.7 million, or $0.31 per share.

    

    Key results in the third quarter included:

    * Net unit loss slowed to 172,000 from 203,000 in the second quarter and
      252,000 in the first quarter of 2006.  Total units in service at
      September 30, 2006 were 4,259,000, compared to 4,431,000 at June 30,
      2006.
    * The annual rate of subscriber loss improved to 16.7 percent from 17.2
      percent in the second quarter and 17.6 percent in the first quarter of
      2006.
    * The quarterly rate of subscriber erosion improved to 3.9 percent in the
      quarter, compared to 4.4 percent in the second quarter and 5.2 percent
      in the first quarter of 2006.
    * Average revenue per unit ("ARPU") was $8.60 in the quarter, compared to
      $8.74 in the second quarter and $8.80 in the first quarter of 2006,
      reflecting a continuing trend toward larger accounts that benefit from
      volume pricing.
    * Revenue declined $7.7 million or 6.0 percent during the third quarter,
      compared to $7.7 million or 5.7 percent in the second quarter, and $8.5
      million or 5.9 percent in the first quarter.
    * Operating expenses, excluding depreciation, amortization and accretion,
      were $86.3 million in the third quarter, a reduction of $3.3 million, or
      3.7 percent, from $89.6 million in second quarter.  Quarterly operating
      expenses have declined by $24.1 million, or 21.8 percent, compared to
      third quarter 2005.
    * As a percentage of revenue, EBITDA was 27.8 percent in the third
      quarter, compared to 27.4 percent in the third quarter of 2005, and 29.6
      percent in second quarter 2006.
    * Capital expenses were $5.2 million, compared to $4.6 million in the
      second quarter.
    * The Company's cash balance at September 30, 2006 was $58.7 million.

"Third quarter operating results compared favorably to our forecast and represent another solid quarter of progress for the Company," said Vincent D. Kelly, president and chief executive officer. "The annual rate of net subscriber losses continued to improve as we increased our sales and service focus on our core subscriber segments, including healthcare, government services and large business enterprises. Our net subscriber loss rate improved as gross placements rose for the second consecutive quarter. In addition, we launched a number of important marketing initiatives during the quarter to promote the Company as a single source for wireless solutions. Among them, we unveiled an enhanced user-friendly web site that provides existing and potential customers with a broad range of information and tools to help them identify and meet their wireless communications needs."

Kelly added, "As we approach the two-year anniversary of the Metrocall Arch merger, which created USA Mobility, we look back at both our accomplishments and our challenges. We have achieved all of our integration objectives ahead of time and we have re-focused our sales and marketing efforts around our core subscriber segments. We also have returned significant capital to our shareholders after having paid off all our bank debt incurred at the time of the merger."

"However, we continue to be challenged with a higher than anticipated rate of gross subscriber losses, particularly in our direct customer base. In fact the gross rate of direct subscriber erosion actually increased from 6.6 percent in third quarter 2005 to 7.0 percent in third quarter 2006. Our current outlook for the future is more optimistic on our ability to place gross additions to our subscriber base in our core segments than it was at the one-year anniversary of our merger a year ago. Our outlook in terms of our ability to lower our operating costs while increasing sales productivity has also improved. However, our outlook for the rate of gross subscriber churn forecasts a higher level of subscriber attrition than we assumed at the merger and even one year ago. The actual future rate of gross cancellations will be the single most critical determinant to long-term value of our paging business."

The Company paid a cash distribution to shareholders in July of $3.00 per share, or approximately $82 million. The Company also declared its first regular quarterly dividend of $0.65 on November 1, payable on December 7 to shareholders of record on November 16. "The Board's decision to implement recurring cash distributions reflects our confidence that we can continue to generate substantial cash flow going forward," Kelly said. "These actions are also consistent with our stated cash flow generation strategy and goal of returning cash to shareholders."

Thomas L. Schilling, chief financial officer, said the Company continued to aggressively reduce costs during the quarter. "We are extremely pleased with the continued cost reduction we've been able to achieve. Operating expenses (excluding depreciation, amortization and accretion) decreased 3.7 percent in the third quarter and were 21.8 percent lower than they were a year ago, outpacing the year-over-year decline in revenue of 21.3 percent. Our cost reductions in third quarter exceeded our expectation, and we now expect to out perform our operating expense guidance." Schilling added: "We are maintaining our revenue and capital expense guidance of $495 million to $500 million and $20 million to $22 million, respectively. However, we now expect operating expenses, excluding depreciation, amortization and accretion, for 2006 to be $354 million to $356 million, well below our previous guidance of $363 million to $368 million."

                               * * * * * * * *

USA Mobility plans to host a conference call for investors at 11:00 a.m. Eastern Time on Thursday, November 9, 2006. The dial-in number for the call is 877-704-5378 (toll-free) or 913-312-1292 (toll). The pass code for the call is 9657441. A replay of the call will be available from 3:00 p.m. ET on November 9 until 11:59 p.m. on Wednesday, November 22. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 9657441.


                              * * * * * * * * *

About USA Mobility

USA Mobility, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to the business, government, healthcare and emergency response sectors. USA Mobility offers traditional one-way and advanced two-way paging via its nationwide networks covering more than 90 percent of the U.S. population. In addition, the Company offers mobile voice and data services through Sprint Nextel and Cingular Wireless, including BlackBerry and GPS location applications. The Company's product offerings include wireless connectivity systems for medical, business, government and other campus environments. USA Mobility focuses on the business-to-business marketplace and supplies mobile connectivity solutions to more than 80 percent of the Fortune 1000 companies. For further information visit http://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 expectations for 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, our ability to continue to reduce operating expenses and to generate cash from operations, our future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, technological improvements in hand-held devices and transmission services offered by our competitors, 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.

                               Tables to Follow


                              USA MOBILITY, INC.
               CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a)
       (unaudited and in thousands, except share and per share amounts)


                                          For the three months ended
                                  3/31/05     6/30/05     9/30/05    12/31/05

    Revenue:
      Paging service             $156,588    $148,399    $141,832    $133,582
      Cellular                      1,507       2,122       1,877       2,336
      Product sales                 6,527       6,054       6,940       6,361
      Other                         1,055         962       1,305       1,125
    Total revenue                 165,677     157,537     151,954     143,404

    Operating expenses:
      Cost of products sold         1,279         929         945       1,330
      Service, rental and
       maintenance                 56,452      56,156      53,783      49,457
      Selling and marketing        10,462      11,181      11,328      10,400
      General and
       administrative              49,653      47,011      43,436      39,684
      Depreciation,
       amortization, and
       accretion                   40,594      35,224      28,875      26,635
      Severance and
       restructuring                5,137       9,904         855         713
    Total operating expenses      163,578     160,405     139,223     128,219
       % of total revenue            98.7%      101.8%       91.6%       89.4%

    Operating income (loss)         2,099      (2,868)     12,732      15,185
       % of total revenue             1.3%       -1.8%        8.4%       10.6%

      Interest income
       (expense), net              (1,214)       (499)        (18)        408
      Loss on extinguishment
       of long-term debt             (594)       (432)       (312)          0
      Other income (expense),
       net                            137         (73)         76      (1,144)
    Income (loss) before
     income tax expense               428      (3,872)     12,477      14,449
      Income tax benefit
       (expense)                     (291)         61      (3,752)     (6,594)
    Net income (loss)                $137     $(3,811)     $8,726      $7,855

    Basic net income (loss)
     per common share               $0.01      $(0.14)      $0.32       $0.29
    Diluted net income (loss)
     per common share               $0.01      $(0.14)      $0.32       $0.29

    Basic weighted average
     common shares outstanding 27,108,034  27,226,076  27,365,701  27,396,187
    Diluted weighted average
     common shares outstanding 27,320,212  27,226,076  27,465,990  27,459,261


    Reconciliation of
     operating income to
     EBITDA (b):
    Operating income (loss)        $2,099     $(2,868)    $12,732     $15,185
    Add back: Depreciation,
     amortization and
     accretion                     40,594      35,224      28,875      26,635
    EBITDA                        $42,693     $32,356     $41,607     $41,820
       % of total revenue            25.8%       20.5%       27.4%       29.2%



                              USA MOBILITY, INC.
               CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a)
       (unaudited and in thousands, except share and per share amounts)


                                                For the three months ended
                                              3/31/06     6/30/06     9/30/06

    Revenue:
      Paging service                         $125,673    $118,872    $112,129
      Cellular                                  2,026       2,096       1,728
      Product sales                             6,131       5,180       4,851
      Other                                     1,063       1,057         846
    Total revenue                             134,892     127,205     119,553

    Operating expenses:
      Cost of products sold                       786       1,169       1,184
      Service, rental and maintenance          48,092      44,770      42,489
      Selling and marketing                    11,059      11,117      10,929
      General and administrative               36,141      32,208      30,994
      Depreciation, amortization, and
       accretion                               18,794      18,900      18,361
      Severance and restructuring                 170         321         682
    Total operating expenses                  115,043     108,486     104,639
       % of total revenue                        85.3%       85.3%       87.5%

    Operating income (loss)                    19,849      18,720      14,914
       % of total revenue                        14.7%       14.7%       12.5%

      Interest income (expense), net              549       1,023         717
      Loss on extinguishment of long-term
       debt                                         0           0           0
      Other income (expense), net                  62         989         104
    Income (loss) before income tax
     expense                                   20,460      20,731      15,734
      Income tax benefit (expense)             (8,195)     (9,779)     (7,075)
    Net income (loss)                         $12,265     $10,952      $8,659

    Basic net income (loss) per common
     share                                      $0.45       $0.40       $0.32
    Diluted net income (loss) per common
     share                                      $0.45       $0.40       $0.31

    Basic weighted average common shares
     outstanding                           27,397,307  27,399,533  27,400,853
    Diluted weighted average common shares
     outstanding                           27,503,230  27,587,958  27,575,039


    Reconciliation of operating income to
     EBITDA (b):
    Operating income (loss)                   $19,849     $18,720     $14,914
    Add back: Depreciation, amortization
     and accretion                             18,794      18,900      18,361
    EBITDA                                    $38,643     $37,620     $33,275
       % of total revenue                        28.6%       29.6%       27.8%

    (a) Slight variations in totals are due to rounding.
    (b) EBITDA or Earnings before interest, taxes, depreciation and
        amortization is a non-GAAP measure and is presented for analytical
        purposes only.



                              USA MOBILITY, INC.
                  PRO FORMA UNITS IN SERVICE ACTIVITY (a)(b)
                        units in thousands (unaudited)

                                 For the three months ended
                           3/31/05   6/30/05   9/30/05   12/31/05
    Units in service

    Beginning units in
     service
      Direct one-way         4,464     4,272     4,114      3,977
      Direct two-way           422       398       382        365
     Total direct            4,886     4,670     4,496      4,342
      Indirect one-way         987       859       762        685
      Indirect two-way          94        91        90         89
     Total indirect          1,081       951       852        774
    Total beginning units in
     service                 5,967     5,621     5,348      5,116

    Gross placements
      Direct one-way           142       134       125        125
      Direct two-way            23        29        17         17
     Total direct              165       163       142        142
      Indirect one-way         108        92        26         24
      Indirect two-way           7         7         5         17
     Total indirect            115        99        31         41
    Total gross placements     280       262       173        183

    Gross disconnects
      Direct one-way          (334)     (292)     (262)      (267)
      Direct two-way           (48)      (44)      (34)       (34)
     Total direct             (381)     (337)     (296)      (301)
      Indirect one-way        (235)     (189)     (104)      (105)
      Indirect two-way         (10)       (9)       (6)        (6)
     Total indirect           (245)     (198)     (109)      (111)
    Total gross disconnects   (626)     (535)     (405)      (413)

    Net gain (loss)
      Direct one-way          (192)     (159)     (137)      (142)
      Direct two-way           (24)      (15)      (17)       (17)
     Total direct             (216)     (174)     (154)      (159)
      Indirect one-way        (128)      (97)      (77)       (82)
      Indirect two-way          (2)       (1)       (1)        11
     Total indirect           (130)      (99)      (78)       (71)
    Total net change          (346)     (273)     (233)      (230)

    Ending units in service
      Direct one-way         4,272     4,114     3,977      3,835
      Direct two-way           398       382       365        348
     Total direct            4,670     4,496     4,342      4,183
      Indirect one-way         859       762       685        603
      Indirect two-way          91        90        89        100
     Total indirect            951       852       774        703
    Total ending units in
     service                 5,621     5,348     5,116      4,886



                              USA MOBILITY, INC.
                  PRO FORMA UNITS IN SERVICE ACTIVITY (a)(b)
                        units in thousands (unaudited)

                                         For the three months ended
                                    3/31/06         6/30/06       9/30/06
    Units in service

    Beginning units in
     service
      Direct one-way                  3,835           3,678         3,547
      Direct two-way                    348             324           307
     Total direct                     4,183           4,002         3,854
      Indirect one-way                  603             535           483
      Indirect two-way                  100              96            94
     Total indirect                     703             631           577
    Total beginning units in
     service                          4,886           4,634         4,431

    Gross placements
      Direct one-way                    108             119           120
      Direct two-way                     15              15            15
     Total direct                       123             134           135
      Indirect one-way                   24              18            24
      Indirect two-way                    4               5             6
     Total indirect                      28              23            29
    Total gross placements              151             157           165

    Gross disconnects
      Direct one-way                   (265)           (250)         (239)
      Direct two-way                    (39)            (32)          (30)
     Total direct                      (304)           (282)         (269)
      Indirect one-way                  (92)            (70)          (58)
      Indirect two-way                   (7)             (8)          (10)
     Total indirect                    (100)            (78)          (68)
    Total gross disconnects            (404)           (360)         (337)

    Net gain (loss)
      Direct one-way                   (157)           (131)         (118)
      Direct two-way                    (24)            (17)          (15)
     Total direct                      (181)           (148)         (133)
      Indirect one-way                  (68)            (52)          (34)
      Indirect two-way                   (4)             (2)           (4)
     Total indirect                     (72)            (55)          (39)
    Total net change                   (252)           (203)         (172)

    Ending units in service
      Direct one-way                  3,678           3,547         3,429
      Direct two-way                    324             307           292
     Total direct                     4,002           3,854         3,721
      Indirect one-way                  535             483           449
      Indirect two-way                   96              94            89
     Total indirect                     631             577           538
    Total ending units in
     service                          4,634           4,431         4,259

    (a) The third quarter 2005 unit in service adjustment has been reflected
        in the first quarter 2005 beginning units in service balance.
    (b) Slight variations in totals are due to rounding.



                              USA MOBILITY, INC.
           PRO FORMA AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
                                 (unaudited)


                                               For the three months ended
                                          3/31/05  6/30/05  9/30/05 12/31/05

    ARPU
      Direct one-way                        $8.65    $8.61    $8.48    $8.27
      Direct two-way                        23.98    23.65    24.28    23.76
    Total direct                             9.96     9.89     9.81     9.57

      Indirect one-way                       4.07     4.11     4.36     4.66
      Indirect two-way                       9.16     8.71     8.42     7.80
    Total indirect                           4.53     4.57     4.81     5.06

      Total one-way                          7.85     7.88     7.85     7.76
      Total two-way                         21.25    20.83    21.22    20.42
    Total paging ARPU                       $9.01    $9.02    $9.04    $8.90



    Gross churn (b) %
      Direct one-way                        -7.5%    -6.8%    -6.4%    -6.7%
      Direct two-way                       -11.4%   -11.1%    -8.9%    -9.4%
    Total direct                            -7.8%    -7.2%    -6.6%    -6.9%

      Indirect one-way                     -23.8%   -22.0%   -13.6%   -15.3%
      Indirect two-way                     -10.2%    -9.7%    -6.4%    -7.2%
    Total indirect                         -22.6%   -20.8%   -12.8%   -14.4%

      Total one-way                        -10.4%    -9.4%    -7.5%    -8.0%
      Total two-way                        -11.1%   -10.8%    -8.4%    -9.0%
    Total paging gross churn %             -10.5%    -9.5%    -7.6%    -8.1%



    Net churn (c) %
      Direct one-way                        -4.3%    -3.7%    -3.3%    -3.6%
      Direct two-way                        -5.8%    -3.8%    -4.5%    -4.8%
    Total direct                            -4.4%    -3.7%    -3.4%    -3.7%

      Indirect one-way                     -12.9%   -11.3%   -10.2%   -11.9%
      Indirect two-way                      -2.6%    -1.5%    -1.2%    12.2%
    Total indirect                         -12.0%   -10.4%    -9.2%    -9.1%

      Total one-way                         -5.9%    -5.0%    -4.4%    -4.8%
      Total two-way                         -5.2%    -3.4%    -3.9%    -1.4%
    Total paging net churn %                -5.8%    -4.9%    -4.3%    -4.5%



                              USA MOBILITY, INC.
           PRO FORMA AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
                                 (unaudited)


                                                For the three months ended
                                             3/31/06     6/30/06     9/30/06

    ARPU
      Direct one-way                           $8.17       $8.06       $7.95
      Direct two-way                           23.61       23.75       23.27
    Total direct                                9.44        9.32        9.16

      Indirect one-way                          4.53        4.59        4.49
      Indirect two-way                          6.93        6.99        6.53
    Total indirect                              4.89        4.97        4.82

      Total one-way                             7.69        7.63        7.54
      Total two-way                            19.85       19.87       19.35
    Total paging ARPU                          $8.80       $8.74       $8.60



    Gross churn (b) %
      Direct one-way                           -6.9%       -6.8%       -6.7%
      Direct two-way                          -11.1%       -9.8%       -9.8%
    Total direct                               -7.3%       -7.0%       -7.0%

      Indirect one-way                        -15.3%      -13.1%      -12.0%
      Indirect two-way                         -7.1%       -8.2%      -10.6%
    Total indirect                            -14.2%      -12.4%      -11.8%

      Total one-way                            -8.1%       -7.6%       -7.4%
      Total two-way                           -10.2%       -9.5%      -10.0%
    Total paging gross churn %                 -8.3%       -7.8%       -7.6%



    Net churn (c) %
      Direct one-way                           -4.1%       -3.6%       -3.3%
      Direct two-way                           -6.8%       -5.2%       -4.9%
    Total direct                               -4.3%       -3.7%       -3.5%

      Indirect one-way                        -11.3%       -9.8%       -7.1%
      Indirect two-way                         -3.5%       -2.6%       -4.5%
    Total indirect                            -10.2%       -8.7%       -6.7%

      Total one-way                            -5.1%       -4.3%       -3.8%
      Total two-way                            -6.1%       -4.6%       -4.8%
    Total paging net churn %                   -5.2%       -4.4%       -3.9%

    (a) The third quarter 2005 unit in service adjustment has been reflected
        in the first quarter 2005 beginning units in service balance.
    (b) Gross churn is current period disconnected units divided by prior
        period ending units in service.
    (c) Net churn is net current period placements and disconnected units in
        service divided by prior period ending units in service




                              USA MOBILITY, INC.
               SUPPLEMENTAL INFORMATION BY CUSTOMER SEGMENT (a)
                                 (unaudited)


                                                For the three months ended
                                             3/31/06     6/30/06     9/30/06

    Gross placements %
      Healthcare                                3.8%        4.5%        4.1%
      Government                                2.2%        2.3%        2.6%
      Large enterprise                          2.6%        3.0%        3.8%
      Other                                     2.7%        3.0%        3.3%
    Total direct                                2.9%        3.3%        3.5%
    Total indirect                              4.0%        3.7%        5.1%
    Total                                       3.1%        3.4%        3.7%

    Gross churn %
      Healthcare                               -4.6%       -4.7%       -5.3%
      Government                               -5.7%       -6.3%       -5.9%
      Large enterprise                         -7.7%       -7.4%       -6.9%
      Other                                   -10.3%       -9.5%       -9.3%
    Total direct                               -7.3%       -7.0%       -7.0%
    Total indirect                            -14.2%      -12.4%      -11.8%
    Total                                      -8.3%       -7.8%       -7.6%

    Net churn %
      Healthcare                               -0.7%       -0.2%       -1.1%
      Government                               -3.5%       -4.1%       -3.3%
      Large enterprise                         -5.1%       -4.3%       -3.0%
      Other                                    -7.5%       -6.6%       -6.1%
    Total direct                               -4.3%       -3.7%       -3.5%
    Total indirect                            -10.2%       -8.7%       -6.7%
    Total                                      -5.2%       -4.4%       -3.9%

    End of period units in service % of
     total
      Healthcare                               29.0%       30.5%       31.5%
      Government                               16.4%       16.4%       16.6%
      Large enterprise                         10.2%       10.2%       10.1%
      Other                                    30.8%       29.9%       29.2%
    Total direct                               86.4%       87.0%       87.4%
    Total indirect                             13.6%       13.0%       12.6%
    Total                                     100.0%      100.0%      100.0%

    (a) Slight variations in totals are due to rounding.



                              USA MOBILITY, INC.
       SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR
                               ACTIVATIONS (a)
                                 (unaudited)


                                             For the three months ended
                                        12/31/05  3/31/06  6/30/06  9/30/06

    Account size ending units in service
     (000's)
      1 to 3 units                           388      358      327      300
      4 to 10 units                          221      203      188      175
      11 to 50 units                         527      489      456      426
      51 to 100 units                        285      265      249      238
      101 to 1,000 units                   1,134    1,068    1,027      999
      >1,000 units                         1,628    1,619    1,608    1,582
    Total                                  4,183    4,002    3,854    3,721

    End of period units in service % of
     total direct
      1 to 3 units                          9.3%     8.9%     8.5%     8.1%
      4 to 10 units                         5.3%     5.1%     4.9%     4.7%
      11 to 50 units                       12.6%    12.2%    11.8%    11.4%
      51 to 100 units                       6.8%     6.6%     6.5%     6.4%
      101 to 1,000 units                   27.1%    26.7%    26.7%    26.9%
      >1,000 units                         38.9%    40.4%    41.7%    42.5%
    Total                                 100.0%   100.0%   100.0%   100.0%

    Account size net unit loss %
      1 to 3 units                                  -7.8%    -8.7%    -8.0%
      4 to 10 units                                 -8.2%    -7.5%    -6.9%
      11 to 50 units                                -7.2%    -6.8%    -6.5%
      51 to 100 units                               -7.0%    -6.2%    -4.2%
      101 to 1,000 units                            -5.8%    -3.8%    -2.7%
      >1,000 units                                  -0.5%    -0.7%    -1.6%
    Total                                           -4.3%    -3.7%    -3.5%

    Account size ARPU
      1 to 3 units                        $14.30   $14.02   $14.14   $14.07
      4 to 10 units                        13.11    13.02    13.08    12.99
      11 to 50 units                       10.89    10.88    10.81    10.72
      51 to 100 units                       9.71     9.59     9.53     9.39
      101 to 1,000 units                    8.44     8.34     8.29     8.21
      >1,000 units                          8.19     8.18     8.05     7.89
    Total                                  $9.57    $9.44    $9.32    $9.16


    Cellular revenue
    Number of activations                  8,682    6,829    6,969    6,374
    Revenue from cellular services
     (000's)                              $2,336   $2,026   $2,096   $1,728

    (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
                                        3/31/05   6/30/05   9/30/05  12/31/05

    Cost of products sold                $1,279      $929      $945    $1,330

    Service, rental and maintenance
      Lease payments for transmitter
       locations                         33,041    32,067    30,347    29,118
      Telecommunications related
       expenses                          10,286    11,821    10,585     9,614
      Payroll and related expenses        8,917     7,600     7,488     7,127
      Stock based compensation               97        52        43        68
      Other                               4,111     4,617     5,320     3,530
    Total service, rental and
     maintenance                         56,452    56,156    53,783    49,457

    Selling and marketing
      Payroll and related expenses        7,736     7,363     7,626     6,704
      Commissions                         2,261     3,058     2,731     2,266
      Stock based compensation               60        25        52        89
      Other                                 405       735       919     1,341
    Total selling and marketing          10,462    11,181    11,328    10,400

    General and administrative
      Payroll and related expenses       18,676    17,926    14,796    12,046
      Stock based compensation            1,228       520       175       423
      Bad debt                            1,527       963     2,440     3,899
      Facility expenses                   6,112     5,289     5,160     4,601
      Telecommunications                  2,898     2,416     2,495     2,292
      Outside services                    6,768     7,988     5,391     7,962
      Taxes and permits                   5,308     4,855     6,170     2,871
      Other                               7,137     7,055     6,809     5,590
    Total general and administrative     49,653    47,011    43,436    39,684

    Depreciation, amortization and
     accretion                           40,594    35,224    28,875    26,635
    Severance and restructuring           5,137     9,904       855       713

    Operating expenses                 $163,578  $160,405  $139,223  $128,219

    Capital expenditures                  2,565     2,818     3,944     4,172



                              USA MOBILITY, INC.
         CONSOLIDATED OPERATING EXPENSES SUPPLEMENTAL INFORMATION (a)
                         (unaudited and in thousands)

                                                For the three months ended
                                             3/31/06     6/30/06     9/30/06

    Cost of products sold                       $786      $1,169      $1,184

    Service, rental and maintenance
      Lease payments for transmitter
       locations                              26,099      25,021      24,314
      Telecommunications related expenses      9,099       8,481       7,343
      Payroll and related expenses             7,046       6,578       6,517
      Stock based compensation                    81          83          78
      Other                                    5,767       4,606       4,237
    Total service, rental and maintenance     48,092      44,770      42,489

    Selling and marketing
      Payroll and related expenses             7,709       7,317       6,996
      Commissions                              2,226       2,373       2,407
      Stock based compensation                   171         166         178
      Other                                      953       1,262       1,348
    Total selling and marketing               11,059      11,117      10,929

    General and administrative
      Payroll and related expenses            12,330      11,412       9,517
      Stock based compensation                   430         462         484
      Bad debt                                 1,790       1,705       2,035
      Facility expenses                        4,104       3,973       3,467
      Telecommunications                       2,248       1,982       1,857
      Outside services                         6,419       5,631       6,162
      Taxes and permits                        4,149       2,708       3,035
      Other                                    4,670       4,335       4,436
    Total general and administrative          36,141      32,208      30,994

    Depreciation, amortization and
     accretion                                18,794      18,900      18,361
    Severance and restructuring                  170         321         682

    Operating expenses                      $115,043    $108,486    $104,639

    Capital expenditures                       4,424       4,595       5,153

    (a) Slight variations in totals are due to rounding.



                              USA MOBILITY, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS (a)
                                (in thousands)

                                                 12/31/05            9/30/06
                                                                   (unaudited)
    Assets
      Current assets:
        Cash and cash equivalents                 $37,547            $58,701
        Accounts receivable, net                   38,177             28,520
        Prepaid rent, expenses and
         other                                     10,660              8,820
        Deferred income tax assets                 18,895             14,801
      Total current assets                       $105,279           $110,842
      Property and equipment, net                 127,802             99,024
      Goodwill                                    149,478            149,478
      Intangible assets, net                       40,654             29,418
      Deferred income tax assets                  207,150            194,905
      Other assets                                  3,430              6,312
    Total assets                                 $633,793           $589,979

    Liabilities and stockholders'
     equity
      Current liabilities:
        Current maturities of long-term
         debt                                         $13               $-
        Accounts payable and accrued
         liabilities                               65,719             62,210
        Dividends payable                             -                  390
        Customer deposits                           3,104              2,438
        Deferred revenue                           17,924             16,424
      Total current liabilities                   $86,760            $81,462
      Other long-term liabilities                  14,040             23,733
    Total liabilities                            $100,800           $105,195
    Stockholders' equity:
      Preferred stock                                $-                 $-
      Common stock                                      3                  3
      Additional paid-in capital                  521,298            476,122
      Retained earnings                            11,692              8,659
    Total stockholders' equity                    532,993            484,784
    Total liabilities and stockholders'
     equity                                      $633,793           $589,979

    (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 nine months ended
                                                  9/30/05            9/30/06

    Cash flows from operating
     activities:
      Net income                                   $5,054            $31,876
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation, amortization and
         accretion                                104,695             56,056
        Deferred income tax expense
         (benefit)                                 (4,685)            12,836
        Loss on extinguishment of long-
         term debt                                  1,338                -
        Amortization of deferred
         financing costs                              714                -
        Amortization of stock based
         compensation                               2,253              2,133
        Provisions for doubtful
         accounts and service credits              17,221             12,640
        (Gain) loss on disposals of
         property and equipment                       (30)               389
      Changes in assets and
       liabilities:
        Accounts receivable                       (23,558)            (4,690)
        Prepaid rent, expenses and
         other                                      2,194              2,247
        Intangibles and other long-term
         assets                                     5,004                360
        Accounts payable and accrued
         expenses                                  (9,082)            (4,077)
        Customer deposits and deferred
         revenue                                   (4,583)            (2,166)
        Other long-term liabilities                 3,566              7,308
    Net cash provided by operating
     activities                                  $100,101           $114,912

    Cash flows from investing
     activities:
      Purchases of property and
       equipment                                   (9,327)           (14,171)
      Proceeds from disposals of
       property and equipment                         259                115
      Receipts from long-term notes
       receivable                                     259              1,707
    Net cash used in investing
     activities                                   $(8,809)          $(12,349)

    Cash flows from financing
     activities:
      Repayment of long-term debt                 (95,044)               (13)
      Dividends paid                                  -              (81,396)
      Exercise of options                              80                -
    Net cash used in financing
     activities                                  $(94,964)          $(81,409)


    Net increase (decrease) in cash and
     cash equivalents                              (3,672)            21,154
    Cash and cash equivalents,
     beginning of period                           46,995             37,547
    Cash and cash equivalents, end of
     period                                       $43,323            $58,701

    Supplemental disclosure:
      Interest paid                                $2,210                $34

    (a) Slight variations in totals are due to rounding.

CONTACT: Bob Lougee (703) 721-3080

SOURCE USA Mobility, Inc.

CONTACT: Bob Lougee of USA Mobility, Inc., 1-703-721-3080
Web site: http://www.usamobility.com
(USMO)