EX-99.1 2 w14785exv99w1.htm EX-99.1 exv99w1
 

Exhibit 99.1
(USA MOBILITY INC. LOGO)
“Your Business Communications Partner"
News Release
 
 
 
     
For Immediate Release   Contact:     Bob Lougee   (703) 721-3080
Wednesday, November 9, 2005    
USA Mobility Reports Third Quarter Operating Results;
Board Declares Special Dividend on Common Stock
Subscriber and Revenue Trends Continue to Improve
Merger Integration Substantially Complete
Bank Debt Repaid, Company Debt Free
Alexandria, VA (November 9, 2005) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the third quarter ended September 30, 2005 and a special dividend of $1.50 per share payable in December. USA Mobility was formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. USA Mobility’s historical financials are those of Arch Wireless, which was deemed the accounting acquirer in the merger.
Reported revenue for the third quarter of 2005 was $152.0 million, compared to $109.4 million in the third quarter of 2004, with the increase due entirely to the inclusion of Metrocall revenue for the quarter ended September 30, 2005. Third quarter revenue decreased 3.5% from $157.5 million reported for the second quarter of 2005.
Reported net income for the third quarter was $355,000, or $0.01 per fully diluted share, compared to net income of $6.7 million, or $0.34 per fully diluted share, in the third quarter of 2004.
USA Mobility reported a reduction of 232,000 units in service in the third quarter. Units in service totaled 5,116,000 at September 30, 2005, with 4,342,000 direct units in service and 774,000 indirect units in service. One-way units in service at the end of the third quarter totaled 4,662,000 while two-way units in service totaled 454,000. Average revenue per unit for the quarter was $9.04, with revenue per direct unit in service of $9.81 and revenue per indirect unit in service of $4.81.

 


 

“We continue to see positive trends in the rate of unit and revenue decline,” said Vincent D. Kelly, president and chief executive officer. “Unit losses of 232,000 during the third quarter compared to 272,000 during the second quarter, 347,000 in the first quarter and 388,000 in the fourth quarter of 2004 (reflecting the inclusion of Metrocall for the entire quarter). This is an improvement in the sequential rate of decline from 6.1% to 5.8% to 4.8% to 4.3% over the past four quarters. In addition,” Kelly noted, “third quarter revenue declined 3.5% compared to a decrease of 4.9% in the second quarter. Although current trends do not predict future results, we are very encouraged by these quarterly results.”
Kelly also noted that USA Mobility made significant progress during the quarter toward completing its merger integration goals. Key achievements included further consolidation of the company’s operating and management structure, repositioning of the company’s sales and marketing strategy, and making substantial progress in network rationalization, including the decommissioning of the Arch two-way network and most notably a long-term master site lease agreement with Global Signal, Inc. that is expected to greatly reduce USA Mobility’s network costs. “We have spent the first half of the year integrating the operations of the two companies in order to create a low cost operating platform with which to service our customers and generate cash flow. More recently we have focused on longer-term strategic initiatives on both the revenue and cost side of our business. While we cannot share every detail of our plans with you for competitive and other reasons, we look forward to providing more information at an investor meeting we plan to host in the first quarter of 2006 in New York City. We will provide the exact date and details of the meeting in the coming months.”
Thomas L. Schilling, chief financial officer, said the company continued to improve its financial position in the third quarter. “During the quarter we repaid the remaining $26.5 million balance on our bank credit facility, resulting in a debt free balance sheet and enhanced financial flexibility,” he said. “In addition, our cash balance at September 30th was $43.3 million.”
Kelly added: “As a result of our current and projected cash position at year end, our Board of Directors has declared a special one-time dividend of $1.50 per common share, to be paid on December 21, 2005 to shareholders of record on December 1, 2005.” Kelly said the Board has made no determination on future uses of cash beyond the one-time dividend, “but we will regularly evaluate our options for returning capital to shareholders based on the company’s operating performance and future capital investment requirements.”
Among other highlights of the third quarter, Kelly noted, was the company’s outstanding performance in the immediate aftermath of Hurricanes Katrina, Rita and Wilma. “Due to the reliability of our networks as compared to competing wireless services, plus the preparedness of our technical and customer support teams in the field, we were able to provide one-way and two-way paging and text-messaging services when most other wireless networks had not yet been restored,” Kelly said. “As a result, hundreds of emergency service responders — including hospitals, utilities, police, firefighters and government agencies — were able to maintain critical communications. We also supplied thousands of additional pagers to federal, state and local emergency response organizations to help respond to the crisis. While these disasters were devastating for those affected,” Kelly added, “we were pleased to do our part.”
* * * * * * * * *

 


 

USA Mobility plans to host a conference call for investors on its third quarter results at 11:00 a.m. Eastern Time on Thursday, November 10, 2005. The call-in number is 866-802-6730 (toll-free) or 913-643-4200 (toll). The pass code for the call is 3544544 (followed by the # sign). A replay of the call will be available from 3:00 p.m. Eastern Time on November 10 until 11:59 p.m. Eastern Time on Wednesday, November 23. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 3544544 (followed by the # sign).
* * * * * * * * *
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% of the U.S. population. In addition, the company offers mobile voice and data services through Nextel, Sprint and Cingular/AT&T 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 over two-thirds of the Fortune 1000 companies. 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 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, 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, the timely and efficient integration of the operations and facilities of Metrocall and Arch 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 BALANCE SHEETS

(in thousands)
                 
    December 31, 2004     September 30, 2005  
            (Unaudited)  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 46,995     $ 43,323  
Accounts receivable, net
    37,750       43,424  
Prepaid rent, expenses and other
    15,460       13,823  
Deferred income tax assets
    26,906       26,309  
 
           
Total current assets
  $ 127,111     $ 126,879  
Property and equipment, net
    216,508       155,853  
Goodwill
    151,791       148,799  
Intangible assets, net
    67,129       45,631  
Deferred income tax assets
    225,253       216,109  
Other assets
    5,517       4,815  
 
           
TOTAL ASSETS
  $ 793,309     $ 698,086  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current maturities of long-term debt
  $ 47,558     $ 14  
Accounts payable and other accrued liabilities
    76,420       76,152  
Customer deposits
    4,316       3,427  
Deferred revenue
    23,623       19,929  
 
           
Total current liabilities
  $ 151,917     $ 99,522  
Long-term debt, less current maturities
    47,500        
Other long-term liabilities
    10,555       12,276  
 
           
TOTAL LIABILITIES
  $ 209,972     $ 111,798  
 
           
Stockholders’ equity:
               
Preferred stock
           
Common stock
    3       3  
Additional paid-in capital
    554,946       558,898  
Retained earnings
    28,388       27,387  
 
           
TOTAL STOCKHOLDERS’ EQUITY
    583,337       586,288  
 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 793,309     $ 698,086  
 
           

 


 

USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(unaudited and in thousands, except share and per share amounts)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2004     2005     2004     2005  
Revenue:
                               
Service, rental and maintenance, net of service credits
  $ 104,785     $ 145,014     $ 335,505     $ 455,647  
Product sales
    4,632       6,940       13,368       19,521  
 
                       
Total revenue
    109,417       151,954       348,873       475,168  
 
                       
Operating expenses:
                               
Cost of products sold
    691       945       2,485       3,153  
Service, rental and maintenance
    36,904       54,607       112,880       167,685  
Selling and marketing
    7,862       11,276       25,687       32,834  
General and administrative
    27,438       44,783       87,523       140,405  
Depreciation and amortization
    22,302       27,327       79,682       98,751  
Stock based compensation
    1,865       76       6,185       2,155  
Severance and related termination costs
    1,228       1,050       5,374       16,026  
 
                       
Total operating expenses
    98,290       140,064       319,816       461,009  
 
                       
Operating income
    11,127       11,890       29,057       14,159  
Interest expense, net
    71       (18 )     (4,958 )     (1,731 )
Loss on extinguishment of long-term debt
          (312 )           (1,338 )
Other income, net
    66       76       411       297  
 
                       
Income (loss) before income tax expense
    11,264       11,636       24,510       11,387  
Income tax expense
    (4,527 )     (11,281 )     (9,852 )     (12,388 )
 
                       
Net income (loss)
  $ 6,737     $ 355     $ 14,658       ($1,001 )
 
                       
Basic net income (loss) per common share
  $ 0.34     $ 0.01     $ 0.73       ($0.04 )
 
                       
Diluted net income (loss) per common share
  $ 0.34     $ 0.01     $ 0.73       ($0.04 )
 
                       
 
                               
Basic weighted average common shares outstanding
    19,914,099       27,365,701       19,967,708       27,234,214  
 
                       
Diluted weighted average common shares outstanding
    20,041,555       27,411,639       20,091,801       27,234,214  
 
                       

 


 

USA MOBILITY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)
                 
    Nine Months Ended September 30,  
    2004     2005  
Cash flows from operating activities:
               
Net income (loss)
  $ 14,658       ($1,001 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    79,682       98,751  
Amortization of deferred financing costs
          714  
Amortization of stock based compensation
    2,065       2,155  
Income tax expense
    9,852       12,388  
Loss on extinguishment of long-term debt
          1,338  
Gain on disposals of property and equipment
    (240 )     (30 )
Provisions for doubtful accounts, service credits and other
    7,349       17,221  
Changes in assets and liabilities:
               
Accounts receivable
    (2,452 )     (23,154 )
Prepaid expenses and other
    (5,182 )     2,039  
Intangibles and other long-term assets
          2,911  
Accounts payable and accrued expenses
    (16,427 )     (2,692 )
Customer deposits and deferred revenue
    (6,081 )     (4,583 )
Other long-term liabilities
    4,083       (5,768 )
 
           
Net cash provided by operating activities
  $ 87,307     $ 100,289  
 
           
Cash flows from investing activities:
               
Purchases of property and equipment
    (15,328 )     (9,515 )
Proceeds from disposals of property and equipment
    1,675       259  
Receipts from note receivable
    168       259  
 
           
Net cash used for investing activities
    ($13,485 )     ($8,997 )
 
           
Cash flows from financing activities:
               
Repayment of long-term debt
    (60,000 )     (95,044 )
Proceeds from exercise of options
          80  
Purchase of treasury shares
    (3,112 )      
 
           
Net cash used for financing activities
    ($63,112 )     ($94,964 )
 
           
Net decrease in cash and cash equivalents
  $ 10,710       ($3,672 )
Cash and cash equivalents, beginning of period
    34,582       46,995  
 
           
Cash and cash equivalents, end of period
  $ 45,292     $ 43,323  
 
           
Supplemental disclosure:
               
Interest paid
  $ 6,709     $ 2,210  
 
           
State income taxes paid
  $ 0     $ 465  
 
           

 


 

USA MOBILITY, INC.
PRO FORMA AND ADJUSTED UNITS IN SERVICE ACTIVITY (a) (b)

units in thousands (unaudited)
                                                         
    Three Months Ended  
    March 2004     June 2004     September 2004     December 2004     March 2005     June 2005     September 2005  
Direct            One-Way:
                                                       
Beginning units in service
    5,329       5,100       4,909       4,690       4,464       4,273       4,114  
Gross placements
    226       181       182       166       141       134       125  
Disconnects
    (455 )     (372 )     (401 )     (392 )     (332 )     (293 )     (262 )
 
                                         
Ending units in service
    5,100       4,909       4,690       4,464       4,273       4,114       3,977  
 
                                         
Two-Way:
                                                       
Beginning units in service
    506       483       462       449       422       397       382  
Gross placements
    40       32       35       29       22       29       17  
Disconnects
    (63 )     (53 )     (48 )     (56 )     (47 )     (44 )     (34 )
 
                                         
Ending units in service
    483       462       449       422       397       382       365  
 
                                         
Indirect            One-Way:
                                                       
Beginning units in service
    1,716       1,474       1,253       1,101       987       859       762  
Gross placements
    157       145       160       143       107       92       26  
Disconnects
    (399 )     (366 )     (312 )     (257 )     (235 )     (189 )     (103 )
 
                                         
Ending units in service
    1,474       1,253       1,101       987       859       762       685  
 
                                         
Two-Way:
                                                       
Beginning units in service
    131       123       121       115       94       91       90  
Gross placements
    20       16       20       7       7       7       3  
Disconnects
    (28 )     (18 )     (26 )     (28 )     (10 )     (8 )     (4 )
 
                                         
Ending units in service
    123       121       115       94       91       90       89  
 
                                         
Total
                                                       
Beginning units in service
    7,682       7,180       6,745       6,355       5,967       5,620       5,348  
Gross placements
    443       374       397       345       277       262       171  
Disconnects
    (945 )     (809 )     (787 )     (733 )     (624 )     (534 )     (403 )
 
                                         
Ending units in service
    7,180       6,745       6,355       5,967       5,620       5,348       5,116  
 
                                         
 
Adjusted Proforma ARPU
                                                       
Direct One-Way
  $ 9.10     $ 8.96     $ 8.89     $ 8.75     $ 8.65     $ 8.61     $ 8.48  
Direct Two-Way
  $ 25.15     $ 24.68     $ 24.22     $ 23.93     $ 23.98     $ 23.65     $ 24.28  
Indirect One-Way
  $ 4.06     $ 4.26     $ 4.12     $ 4.26     $ 4.07     $ 4.11     $ 4.36  
Indirect Two-Way
  $ 12.89     $ 12.07     $ 11.30     $ 10.41     $ 9.16     $ 8.71     $ 8.42  
 
                                         
Total
  $ 9.15     $ 9.16     $ 9.14     $ 9.09     $ 9.01     $ 9.02     $ 9.04  
 
                                         
(a)   Assumes Arch and Metrocall combined as of January 1, 2004 and the unit in service adjustment reflected in March 2004.
 
(b)   Amounts have been adjusted for rounding.