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USA Mobility Reports Third Quarter Operating Results; Board Declares Quarterly Cash Distribution

Operating Expenses Significantly Reduced;

Cash Flow Margins Remain Near All-Time Highs

ALEXANDRIA, Va.--(BUSINESS WIRE)--Oct. 28, 2009-- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging and communications services, today announced operating results for the third quarter ended September 30, 2009.

In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share. The cash distribution will be paid on December 10, 2009 to stockholders of record on November 17, 2009. The Company expects the entire distribution to be paid as a return of capital.

Total revenue for the third quarter was $69.5 million, compared to $75.1 million in the second quarter and $88.4 million in the third quarter of 2008. Operating income in the third quarter was $15.0 million, compared to $14.5 million in the year-earlier quarter. EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) increased to $25.7 million from $25.5 million in the third quarter of 2008.

Net income for the third quarter was $9.2 million, or $0.40 per fully diluted share, compared to net income of $2.4 million, or $0.09 per fully diluted share, in the year-earlier quarter.

Third quarter results included:

  • Operating expenses (excluding depreciation, amortization and accretion) totaled $43.8 million, compared to $51.2 million in the second quarter and $62.8 million in the third quarter of 2008.
  • EBITDA margin (or EBITDA as a percentage of revenue) was 37.0 percent, compared to 31.9 percent in the second quarter and 28.9 percent in the year-earlier quarter.
  • Total paging ARPU (average revenue per unit) was $8.89, compared to $8.96 in the second quarter and $8.69 in the third quarter of 2008.
  • The quarterly rate of revenue erosion increased to 7.5 percent from 5.7 percent in the second quarter and 4.0 percent in the third quarter of 2008. The annual rate of revenue erosion was 21.3 percent, compared to 18.4 percent in the second quarter and 16.2 percent in the year-earlier quarter.
  • Net unit loss in the third quarter was 152,000, compared to 158,000 in the second quarter and 174,000 in the third quarter of 2008. At September 30, 2009, total units in service were 2,297,000, compared to 2,449,000 at June 30, 2009.
  • The quarterly rate of net unit loss was 6.2 percent, compared to 6.0 percent in the second quarter and 5.5 percent in the third quarter of 2008. The annual rate of subscriber loss was 23.5 percent, compared to 22.9 percent in the second quarter and 17.1 percent in the year-earlier quarter.
  • Capital expenses were $1.8 million versus $4.4 million in the second quarter.
  • The Company’s cash balance at September 30, 2009 was $95.7 million.

“We reported another solid performance in the third quarter despite a continued high rate of unit loss,” said Vincent D. Kelly, president and chief executive officer. “Operating results met or exceeded the majority of our targeted objectives and were consistent with our previously stated financial guidance. Cash flow margins remained high, operating expenses were reduced to their lowest level in many years, and we continued to provide cost effective and reliable wireless communications services to customers on a profitable basis.” Kelly said the slow economy and continuing high unemployment nationwide contributed to higher than expected subscriber cancellations. “Still,” he added, “we saw encouraging signs in our Healthcare segment – which now comprises more than 50 percent of our customer base – with the addition of numerous hospital and medical-related accounts.”

Kelly said the Company again returned capital to stockholders in the third quarter in the form of cash distributions, consistent with its goal of producing sufficient free cash flow to return capital to stockholders. “Generating $23.6 million in cash from operations in the quarter allowed us to pay a regular quarterly cash distribution of $0.25 per share on September 10, 2009, representing a return of capital to stockholders of approximately $5.7 million. With the third quarter distribution, we have returned $316.7 million to stockholders since 2005.”

The Company continued to reduce operating expenses during the third quarter through ongoing cost control measures. Thomas L. Schilling, chief operating officer and chief financial officer, said: “We made excellent progress in the third quarter reducing expenses throughout the organization. Moreover, we continued to reduce operating expenses faster than the rate of revenue erosion as expenses (excluding depreciation, amortization and accretion) declined 30.3 percent from the year-earlier quarter while revenue declined 21.3 percent. In addition, third quarter operating expenses as a percentage of revenue improved to 63.0 percent, the lowest level in many years.” Schilling said lower operating expenses also helped keep the Company’s cash flow margins near all-time highs. However, he cautioned, “Our ability to sustain operating margins at these levels going forward will become increasingly difficult given current subscriber and revenue trends.”

Commenting on the Company’s financial expectations for the balance of the year, Schilling said, “Based on our performance through September 30th, we are maintaining our financial guidance for 2009 of revenue between $286 million to $291 million, operating expenses (excluding depreciation, amortization and accretion) between $194 million to $197 million, and capital expenses between $16 million to $18 million.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its third quarter results at 10:00 a.m. Eastern Time on Thursday, October 29, 2009. The dial-in number for the call is 877-208-2391 (toll-free) or 913-312-9321 (toll). The pass code for the call is 5046918. A replay of the call will be available from 3:00 p.m. ET on October 29 until 11:59 p.m. on Thursday, November 12. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 5046918.

* * * * * * * * *

About USA Mobility

USA Mobility, Inc., headquartered in Alexandria, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare, government, large enterprise and emergency response sectors. As a single-source provider, USA Mobility's focus is on the business-to-business marketplace and supplying wireless connectivity solutions to a majority of the Fortune 1000 companies. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. In addition, USA Mobility offers mobile voice and data services through Sprint Nextel, including BlackBerry® smartphones and GPS location applications. The Company's product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility also offers M2M (machine-to-machine) telemetry solutions for numerous applications that include asset tracking, utility meter reading and other remote device monitoring applications on a national scale. For further information visit www.usamobility.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.

 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(unaudited and in thousands, except share and per share amounts)
               
 
For the three months ended
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09     6/30/09     9/30/09  
Revenues:  
Paging service $ 86,773 $ 83,360 $ 80,533 $ 75,989 $ 72,021 $ 67,972 $ 63,308
Cellular 1,859 1,547 1,494 993 991 775 980
Product sales 4,871 5,741 5,014 5,863 5,271 5,269 4,354
Other   1,255       1,427       1,316       1,413       1,408       1,129     856  
Total revenues   94,758       92,075       88,357       84,258       79,691       75,145     69,498  
 
Operating expenses:
Cost of products sold 1,081 1,408 1,291 1,812 1,669 1,421 1,593
Service, rental and maintenance 33,969 31,583 29,069 28,199 22,955 21,290 20,950
Selling and marketing 7,836 7,549 6,756 6,144 6,062 5,600 5,198
General and administrative 21,808 20,782 20,631 18,289 20,186 22,801 16,050
Severance and restructuring 145 153 5,063 (35 ) 190 52 15
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174 10,689
Goodwill impairment   188,170       -       -       -       -       -     -  
Total operating expenses   265,522       73,149       73,885       66,159       62,332       62,338     54,495  
% of total revenues 280.2 % 79.4 % 83.6 % 78.5 % 78.2 % 83.0 % 78.4 %
                       
Operating (loss) income   (170,764 )     18,926       14,472       18,099       17,359       12,807     15,003  
% of total revenues -180.2 % 20.6 % 16.4 % 21.5 % 21.8 % 17.0 % 21.6 %
 
Interest income, net 578 672 471 79 26 28 16
Other income (expense), net   125       202       205       90       112       (42 )   185  
(Loss) income before income tax expense (benefit) (170,061 ) 19,800 15,148 18,268 17,497 12,793 15,204
Income tax expense (benefit)   7,739       9,528       12,730       10,235       7,516       (31,953 )   6,003  
Net (loss) income $ (177,800 )   $ 10,272     $ 2,418     $ 8,033     $ 9,981     $ 44,746   $ 9,201  
 
Basic net (loss) income per common share $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43     $ 1.96   $ 0.40  
Diluted net (loss) income per common share $ (6.48 )   $ 0.37     $ 0.09     $ 0.32     $ 0.43     $ 1.93   $ 0.40  
 
Basic weighted average common shares outstanding   27,459,068       27,474,156       27,474,156       25,348,440       23,134,072       22,858,573     22,856,951  
Diluted weighted average common shares outstanding   27,459,068       27,600,976       27,602,296       25,444,277       23,479,796       23,200,736     23,194,360  
 
 
Reconciliation of operating (loss) income to EBITDA (b):
Operating (loss) income $ (170,764 ) $ 18,926 $ 14,472 $ 18,099 $ 17,359 $ 12,807 $ 15,003
Add back: depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174 10,689
Add back: goodwill impairment   188,170       -       -       -       -       -     -  
EBITDA $ 29,919     $ 30,600     $ 25,547     $ 29,849     $ 28,629     $ 23,981   $ 25,692  
% of total revenues 31.6 % 33.2 % 28.9 % 35.4 % 35.9 % 31.9 %   37.0 %
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization, accretion and goodwill impairment is a non-GAAP measure and is presented for analytical purposes only.
             
USA MOBILITY, INC.
UNITS IN SERVICE ACTIVITY (a)
(unaudited and in thousands)
 
 
For the three months ended
3/31/08   6/30/08   9/30/08   12/31/08   3/31/09   6/30/09   9/30/09  

Units in service

 
Beginning units in service  
Direct one-way 2,854 2,732 2,614 2,491 2,349 2,198 2,079
Direct two-way 221     207     196     184     171     157   147  
Total direct 3,075     2,939     2,810     2,675     2,520     2,355   2,226  
Indirect one-way 312 285 261 226 196 161 139
Indirect two-way 98     109     105     101     99     91   84  
Total indirect 410     394     366     327     295     252   223  
Total beginning units in service 3,485     3,333     3,176     3,002     2,815     2,607   2,449  
 
Gross placements
Direct one-way 77 90 76 61 67 74 64
Direct two-way 8     11     8     7     6     7   9  
Total direct 85     101     84     68     73     81   73  
Indirect one-way 17 22 12 8 8 9 7
Indirect two-way 16     7     7     6     4     2   1  
Total indirect 33     29     19     14     12     11   8  
Total gross placements 118     130     103     82     85     92   81  
 
Gross disconnects
Direct one-way (199 ) (209 ) (199 ) (202 ) (218 ) (193 ) (174 )
Direct two-way (22 )   (21 )   (20 )   (20 )   (20 )   (17 ) (15 )
Total direct (221 )   (230 )   (219 )   (222 )   (238 )   (210 ) (189 )
Indirect one-way (44 ) (47 ) (47 ) (39 ) (43 ) (31 ) (30 )
Indirect two-way (5 )   (10 )   (11 )   (8 )   (12 )   (9 ) (14 )
Total indirect (49 )   (57 )   (58 )   (47 )   (55 )   (40 ) (44 )
Total gross disconnects (270 )   (287 )   (277 )   (269 )   (293 )   (250 ) (233 )
 
Net gain (loss)
Direct one-way (122 ) (119 ) (123 ) (142 ) (151 ) (119 ) (110 )
Direct two-way (14 )   (10 )   (12 )   (12 )   (14 )   (10 ) (6 )
Total direct (136 )   (129 )   (135 )   (154 )   (165 )   (129 ) (116 )
Indirect one-way (27 ) (25 ) (35 ) (31 ) (35 ) (22 ) (23 )
Indirect two-way 11     (3 )   (4 )   (2 )   (8 )   (7 ) (13 )
Total indirect (16 )   (28 )   (39 )   (33 )   (43 )   (29 ) (36 )
Total net change (152 )   (157 )   (174 )   (187 )   (208 )   (158 ) (152 )
 
Ending units in service
Direct one-way 2,732 2,614 2,491 2,349 2,198 2,079 1,969
Direct two-way 207     196     184     171     157     147   141  
Total direct 2,939     2,810     2,675     2,520     2,355     2,226   2,110  
Indirect one-way 285 261 226 196 161 139 116
Indirect two-way 109     105     101     99     91     84   71  
Total indirect 394     366     327     295     252     223   187  
Total ending units in service 3,333     3,176     3,002     2,815     2,607     2,449   2,297  
 
(a) Slight variations in totals are due to rounding.
 
USA MOBILITY, INC.
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(unaudited)
               
 
For the three months ended
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09     6/30/09     9/30/09  
 

ARPU

 
Direct one-way $ 7.83 $ 7.85 $ 8.08 $ 8.09 $ 8.11 $ 8.18 $ 8.08
Direct two-way   23.68       23.90       23.78       23.77       23.68       23.62     23.42  
Total direct 8.95 8.97 9.16 9.16 9.15 9.21 9.10
 
Indirect one-way 4.10 4.57 4.79 5.12 7.05 7.43 7.51
Indirect two-way   7.52       7.08       5.35       4.53       4.58       5.19     5.49  
Total indirect 4.97 5.28 4.96 4.93 6.19 6.60 6.74
 
Total one-way 7.47 7.54 7.79 7.85 8.03 8.14 8.05
Total two-way   18.44       18.07       17.29       16.84       16.66       16.86     17.09  
Total paging ARPU $ 8.49     $ 8.54     $ 8.69     $ 8.71     $ 8.86     $ 8.96   $ 8.89  
 
 
 
Gross disconnect rate (b)
Direct one-way -7.0 % -7.6 % -7.6 % -8.1 % -9.3 % -8.8 % -8.4 %
Direct two-way   -10.2 %     -10.4 %     -10.2 %     -10.6 %     -11.8 %     -11.0 %   -10.2 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 % -8.9 % -8.5 %
 
Indirect one-way -13.9 % -16.4 % -17.9 % -17.3 % -22.0 % -19.4 % -21.9 %
Indirect two-way   -5.3 %     -8.8 %     -10.3 %     -7.7 %     -11.6 %     -9.1 %   -16.4 %
Total indirect -11.8 % -14.3 % -15.7 % -14.3 % -18.5 % -15.6 % -19.8 %
 
Total one-way -7.7 % -8.5 % -8.6 % -8.9 % -10.3 % -9.5 % -9.2 %
Total two-way   -8.7 %     -9.8 %     -10.2 %     -9.6 %     -11.7 %     -10.3 %   -12.5 %
Total paging gross disconnect rate   -7.7 %     -8.6 %     -8.7 %     -9.0 %     -10.4 %     -9.6 %   -9.5 %
 
 
 
Net gain / loss rate (c)
Direct one-way -4.3 % -4.3 % -4.7 % -5.7 % -6.4 % -5.4 % -5.3 %
Direct two-way   -6.4 %     -5.2 %     -6.1 %     -6.8 %     -8.5 %     -6.4 %   -4.4 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 % -5.5 % -5.2 %
 
Indirect one-way -8.5 % -8.6 % -13.2 % -13.7 % -17.8 % -13.7 % -16.9 %
Indirect two-way   11.0 %     -2.4 %     -4.1 %     -1.5 %     -8.2 %     -7.2 %   -14.9 %
Total indirect -3.9 % -6.9 % -10.6 % -10.0 % -14.6 % -11.3 % -16.1 %
 
Total one-way -4.7 % -4.8 % -5.5 % -6.4 % -7.3 % -6.0 % -6.0 %
Total two-way   -1.1 %     -4.2 %     -5.4 %     -4.9 %     -8.4 %     -6.7 %   -8.2 %
Total paging net gain / loss rate   -4.4 %     -4.7 %     -5.5 %     -6.2 %     -7.4 %     -6.0 %   -6.2 %
 
(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(c) Net gain / loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.
 
USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(unaudited)
               
 
For the three months ended
3/31/08   6/30/08   9/30/08   12/31/08   3/31/09   6/30/09   9/30/09  
 
Gross placement rate (b)  
Healthcare 3.3 % 4.8 % 3.8 % 3.0 % 3.7 % 4.4 % 3.8 %
Government 2.2 % 2.1 % 2.2 % 2.1 % 1.7 % 2.4 % 2.4 %
Large enterprise 2.4 % 2.3 % 2.2 % 2.1 % 2.4 % 2.2 % 3.3 %
Other 2.5 %   2.6 %   2.4 %   2.2 %   2.4 %   2.5 % 2.3 %
Total direct 2.8 % 3.4 % 3.0 % 2.5 % 2.9 % 3.4 % 3.3 %
Total indirect 8.0 %   7.4 %   5.1 %   4.4 %   3.9 %   4.3 % 3.7 %
Total 3.4 %   3.9 %   3.2 %   2.7 %   3.0 %   3.5 % 3.3 %
 
Gross disconnect rate (b)
Healthcare -5.1 % -5.8 % -6.0 % -6.4 % -6.8 % -6.2 % -6.7 %
Government -6.7 % -8.5 % -8.5 % -9.3 % -9.9 % -10.7 % -10.7 %
Large enterprise -8.6 % -9.2 % -9.2 % -8.9 % -13.3 % -13.0 % -10.7 %
Other -10.7 %   -10.5 %   -10.1 %   -11.4 %   -13.0 %   -12.4 % -10.6 %
Total direct -7.2 % -7.8 % -7.8 % -8.3 % -9.5 % -8.9 % -8.5 %
Total indirect -11.8 %   -14.3 %   -15.7 %   -14.3 %   -18.5 %   -15.6 % -19.8 %
Total -7.7 %   -8.6 %   -8.7 %   -9.0 %   -10.4 %   -9.6 % -9.5 %
 
Net loss rate (b)
Healthcare -1.7 % -0.9 % -2.1 % -3.4 % -3.1 % -1.8 % -2.9 %
Government -4.5 % -6.4 % -6.3 % -7.1 % -8.2 % -8.4 % -8.3 %
Large enterprise -6.2 % -6.9 % -7.0 % -6.8 % -10.9 % -10.9 % -7.4 %
Other -8.2 %   -7.9 %   -7.8 %   -9.2 %   -10.6 %   -10.0 % -8.3 %
Total direct -4.4 % -4.4 % -4.8 % -5.8 % -6.6 % -5.5 % -5.2 %
Total indirect -3.9 %   -6.9 %   -10.6 %   -10.0 %   -14.6 %   -11.3 % -16.1 %
Total -4.4 %   -4.7 %   -5.5 %   -6.2 %   -7.4 %   -6.0 % -6.2 %
 
End of period units in service % of total (b)
Healthcare 38.3 % 40.0 % 41.5 % 42.8 % 44.9 % 49.8 % 51.5 %
Government 17.9 % 17.7 % 17.6 % 17.4 % 17.2 % 15.6 % 15.3 %
Large enterprise 13.1 % 12.8 % 12.6 % 12.5 % 12.0 % 11.8 % 11.8 %
Other 18.9 %   18.0 %   17.4 %   16.8 %   16.2 %   13.7 % 13.2 %
Total direct 88.2 % 88.5 % 89.1 % 89.5 % 90.3 % 90.9 % 91.8 %
Total indirect 11.8 %   11.5 %   10.9 %   10.5 %   9.7 %   9.1 % 8.2 %
Total 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 % 100.0 %
 
(a) Slight variations in totals are due to rounding.
(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.
 
USA MOBILITY, INC.
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR ACTIVATIONS (a)
(unaudited)
             
 
For the three months ended
  3/31/08     6/30/08     9/30/08     12/31/08     3/31/09     6/30/09     9/30/09  
 
Account size ending units in service (000's)  
1 to 3 units 184 172 159 149 137 126 118
4 to 10 units 112 104 97 89 82 75 70
11 to 50 units 276 255 236 218 199 183 168
51 to 100 units 164 155 144 133 125 112 104
101 to 1,000 units 784 750 716 681 626 580 546
>1,000 units   1,419       1,374       1,323       1,250       1,186       1,150     1,104  
Total   2,939       2,810       2,675       2,520       2,355       2,226     2,110  
 
End of period units in service % of total direct
1 to 3 units 6.2 % 6.1 % 5.9 % 5.9 % 5.8 % 5.7 % 5.6 %
4 to 10 units 3.8 % 3.7 % 3.6 % 3.5 % 3.5 % 3.4 % 3.3 %
11 to 50 units 9.4 % 9.1 % 8.8 % 8.7 % 8.4 % 8.2 % 8.0 %
51 to 100 units 5.6 % 5.5 % 5.4 % 5.3 % 5.3 % 5.0 % 4.9 %
101 to 1,000 units 26.7 % 26.7 % 26.8 % 27.0 % 26.6 % 26.0 % 25.9 %
>1,000 units   48.3 %     48.9 %     49.5 %     49.6 %     50.4 %     51.7 %   52.3 %
Total   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %   100.0 %
 
Account size net loss rate
1 to 3 units -7.8 % -6.9 % -7.0 % -6.9 % -7.8 % -7.9 % -6.9 %
4 to 10 units -6.5 % -7.2 % -6.7 % -7.8 % -8.8 % -7.9 % -6.7 %
11 to 50 units -7.6 % -7.4 % -7.4 % -7.6 % -8.9 % -8.2 % -7.7 %
51 to 100 units -6.9 % -5.5 % -7.5 % -7.2 % -6.2 % -10.1 % -7.6 %
101 to 1,000 units -5.2 % -4.3 % -4.6 % -4.9 % -8.0 % -7.4 % -5.9 %
>1,000 units   -2.4 %     -3.2 %     -3.7 %     -5.5 %     -5.1 %     -3.1 %   -4.0 %
Total   -4.4 %     -4.4 %     -4.8 %     -5.8 %     -6.6 %     -5.5 %   -5.2 %
 
Account size ARPU
1 to 3 units $ 14.66 $ 14.62 $ 14.72 $ 14.68 $ 14.73 $ 15.07 $ 14.98
4 to 10 units 13.56 13.56 13.92 13.89 14.00 14.30 14.24
11 to 50 units 10.99 11.03 11.40 11.35 11.41 11.65 11.54
51 to 100 units 9.57 9.76 10.36 10.25 10.30 10.13 10.06
101 to 1,000 units 8.23 8.45 8.91 8.98 8.94 9.04 8.89
>1,000 units   7.75       7.70       7.72       7.75       7.77       7.80     7.76  
Total $ 8.95     $ 8.97     $ 9.16     $ 9.16     $ 9.15     $ 9.21   $ 9.10  
 
 
Cellular revenue
Number of activations   4,509       3,970       3,779       2,287       2,389       2,207     2,633  
Revenue from cellular services (000's) $ 1,859     $ 1,547     $ 1,494     $ 993     $ 991     $ 775   $ 980  
 
(a) Slight variations in totals are due to rounding.
 
USA MOBILITY, INC.
CONSOLIDATED OPERATING EXPENSES SUPPLEMENTAL INFORMATION (a)
(unaudited and in thousands)
             
 
For the three months ended
  3/31/08   6/30/08   9/30/08   12/31/08     3/31/09   6/30/09   9/30/09  
 
Cost of products sold $ 1,081   $ 1,408   $ 1,291   $ 1,812     $ 1,669   $ 1,421 $ 1,593  
 
Service, rental and maintenance
Site rent 17,792 16,756 15,463 14,785 11,218 10,223 10,422
Telecommunications 6,204 5,503 5,072 5,307 4,485 4,284 3,945
Payroll and related 6,683 6,504 5,827 5,490 5,631 5,286 4,988
Stock based compensation 17 19 19 18 49 7 13
Other   3,273     2,801     2,688     2,599       1,572     1,490   1,582  
Total service, rental and maintenance   33,969     31,583     29,069     28,199       22,955     21,290   20,950  
 
Selling and marketing
Payroll and related 5,164 4,797 4,317 4,145 4,175 3,711 3,366
Commissions 1,724 2,037 1,742 1,213 1,201 1,422 1,328
Stock based compensation 39 50 49 60 109 26 26
Other   909     665     648     726       577     441   478  
Total selling and marketing   7,836     7,549     6,756     6,144       6,062     5,600   5,198  
 
General and administrative
Payroll and related 8,682 8,129 7,847 7,992 9,075 7,754 7,213
Stock based compensation 190 247 253 298 569 241 241
Bad debt 711 691 680 618 850 750 699
Facility rent 2,073 2,199 1,937 1,689 1,628 1,446 1,457
Telecommunications 1,048 983 936 834 771 721 720
Outside services 5,359 4,584 4,632 4,519 4,514 4,063 3,269
Taxes, licenses and permits 1,958 2,055 2,216 372 1,101 1,695 (680 )
Other   1,787     1,894     2,130     1,967       1,678     6,131   3,131  
Total general and administrative   21,808     20,782     20,631     18,289       20,186     22,801   16,050  
 
Severance and restructuring 145 153 5,063 (35 ) 190 52 15
Depreciation, amortization and accretion 12,513 11,674 11,075 11,750 11,270 11,174 10,689
Goodwill impairment   188,170     -     -     -       -     -   -  
Operating expenses $ 265,522   $ 73,149   $ 73,885   $ 66,159     $ 62,332   $ 62,338 $ 54,495  
 
Capital expenditures $ 3,988 $ 3,892 $ 6,214 $ 4,242 $ 6,054 $ 4,355 $ 1,806  
 
(a) Slight variations in totals are due to rounding.
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(in thousands)
               
 
 
  12/31/08   9/30/09
(unaudited)
Assets
Current assets:  
Cash and cash equivalents $ 75,032 $ 95,692
Accounts receivable, net 25,118 20,356
Tax receivables - 4,411
Prepaid expenses and other 6,226 3,033

Deferred income tax assets, net

  6,025   1,171
Total current assets 112,401 124,663
Property and equipment, net 57,867 44,123
Intangible assets, net 6,520 1,442
Deferred income tax assets, net 59,599 41,564
Other assets   4,973   3,228
Total assets $ 241,360 $ 215,020
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 40,983 $ 32,586
Customer deposits 1,203 951
Deferred revenue   9,958   8,153
Total current liabilities 52,144 41,690
Other long-term liabilities   48,478   11,509
Total liabilities   100,622   53,199
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 140,736 138,299
Retained earnings   -   23,520
Total stockholders' equity   140,738   161,821
Total liabilities and stockholders' equity $ 241,360 $ 215,020
 
(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
  9/30/08     9/30/09  
 
Cash flows from operating activities:  
Net (loss) income $ (165,110 ) $ 63,928
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion 35,262 33,133
Goodwill impairment 188,170 -
Deferred income tax expense 27,871 22,889
Amortization of stock based compensation 884 1,281
Provisions for doubtful accounts, service credits and other 4,566 3,559
Non-cash transaction tax accrual adjustments (1,717 ) (4,879 )
(Gain) Loss on disposals of property and equipment (18 ) 138
Changes in assets and liabilities:
Accounts receivable (2,388 ) 1,203
Prepaid expenses and other 2,501 (1,374 )
Intangibles and other long-term assets 2,498 461
Accounts payable and accrued liabilities (6,769 ) (4,403 )
Customer deposits and deferred revenue (1,279 ) (2,057 )
Other long-term liabilities   -     (37,654 )
Net cash provided by operating activities $ 84,471   $ 76,225  
 
Cash flows from investing activities:
Purchases of property and equipment (14,094 ) (12,215 )
Proceeds from disposals of property and equipment   176     30  
Net cash used in investing activities $ (13,918 ) $ (12,185 )
 
Cash flows from financing activities:
Cash distributions to stockholders (31,367 ) (39,843 )
Purchase of common stock   -     (3,537 )
Net cash used in financing activities $ (31,367 ) $ (43,380 )
 
 
Net increase (decrease) in cash and cash equivalents 39,186 20,660
Cash and cash equivalents, beginning of period   64,542     75,032  
Cash and cash equivalents, end of period $ 103,728   $ 95,692  
 
Supplemental disclosure:
Interest paid $ 3   $ 1  
Income taxes paid (state and local) $ 413   $ 437  
 
(a) Slight variations in totals are due to rounding.

Source: USA Mobility, Inc.

USA Mobility, Inc.
Bob Lougee, 703-721-3080
bob.lougee@usamobility.com