Stockholders' Equity

3 Months Ended

Mar. 31, 2012

Stockholder's Equity [Abstract]

Stockholders' Equity

(15) Stockholders’ Equity — Our authorized capital stock consists of 75 million shares of common stock, par value $0.0001 per share, and 25 million shares of preferred stock, par value $0.0001 per share.

Changes in Stockholders’ Equity. Changes in stockholders’ equity for the three months ended March 31, 2012 consisted of:

	(Dollars in thousands)
Balance at January 1, 2012	$	252,440
Net income for the three months ended March 31, 2012		8,462
Cash dividends declared		(5,653)
Amortization of stock based compensation		437
Issued, purchased, retired common stock, and other		422
Balance at March 31, 2012	$	256,108

General. At March 31, 2012 and December 31, 2011, there were 22,141,680 and 22,108,233 shares of common stock outstanding, respectively, and no shares of preferred stock outstanding.

At March 31, 2012, we had no stock options outstanding.

We established the USA Mobility, Inc. Equity Incentive Plan (the “2004 Equity Plan”) in connection with and prior to the November 2004 merger of Arch Wireless, Inc. (“Arch”) and Metrocall Holdings, Inc. (“Metrocall”) and subsidiaries. Under the 2004 Equity Plan, we have the ability to issue up to 1,878,976 shares of our common stock to eligible employees and non-executive members of the Board of Directors in the form of shares of common stock, stock options, shares of restricted common stock (“restricted stock”), restricted stock units (“RSUs”) or stock grants. Restricted stock awarded under the 2004 Equity Plan entitles the stockholder to all rights of common stock ownership except that the restricted stock may not be sold, transferred, exchanged, or otherwise disposed of during the restriction period, which will be determined by the Compensation Committee of the Board of Directors. RSUs are generally convertible into shares of common stock pursuant to the Restricted Stock Unit Agreement when the appropriate vesting conditions have been satisfied.

The following table summarizes the activities under the 2004 Equity Plan from inception through March 31, 2012:

	Activity
Equity securities approved		1,878,976
Less: Equity securities issued to eligible employees
2005 LTIP		(103,937)
2006 LTIP (1)		(183,212)
2009 LTIP		(338,834)
2011 LTIP		(211,587)
Short-Term Incentive Plan (“STIP”) (2)		(159,573)
Less: Equity securities issued to non-executive members of the Board of Directors
Restricted stock		(82,317)
Common stock (3)		(28,696)
Add: Equity securities forfeited by eligible employees
2005 LTIP		22,488
2006 LTIP		21,358
2009 LTIP		80,104
Add: Restricted stock forfeited by the non-executive members of the Board of Directors		3,985
Total available at March 31, 2012		898,755

⁽¹⁾  On November 14, 2008, our Board of Directors approved an additional grant of 7,129 shares of restricted stock under the 2006 LTIP Initial Target Award to eligible employees. In March 2009, our Board of Directors approved an additional grant of 43,511 shares of common stock as an Additional Target Award under the 2006 LTIP to eligible employees.

⁽²⁾  Pursuant to his employment agreement, Mr. Vincent D. Kelly, our CEO received 50 percent of his STIP award in our common stock. In relation to his 2009 STIP award, on March 4, 2010 Mr. Kelly received 60,799 shares of common stock bases on the closing stock price on February 26, 2010 of $11.26 per share. In relation to his 2010 STIP award, on March 4, 2011 Mr. Kelly received 47,455 shares of common stock based on the closing stock price on February 25, 2011 of $15.21 per share. In relation to his 2011 STIP award, on March 2, 2012 Mr. Kelly received 51,319 shares of common stock based on the closing stock price on February 24, 2012 of $14.10 per share.

⁽³⁾  19,605 existing RSUs were converted into shares of our common stock and issued to the non-executive members of our Board of Directors on March 17, 2008. In addition, 9,091 shares of common stock have been issued in lieu of cash payments to the non-executive members of our Board of Directors for services performed.

2009 LTIP. On January 6, 2009, our Board of Directors approved a long-term incentive program that included a cash component and a stock component in the form of RSUs based upon achievement of expense reduction and earnings before interest, taxes, depreciation, amortization and accretion goals during our 2012 calendar year and continued employment with the Company. RSUs were granted under the 2004 Equity Plan pursuant to a Restricted Stock Unit Agreement based upon the closing price per share of our common stock on January 15, 2009 of $12.01. Our Board of Directors awarded 329,416 RSUs to certain eligible employees and also approved that future cash dividends related to the existing RSUs will be set aside and paid in cash to each eligible employee when the RSUs are converted into shares of common stock. Existing RSUs would be converted into shares of common stock on the earlier of a change in control of the Company (as defined in the 2004 Equity Plan) or on or after the third business day following the day that we file our 2012 Annual Report on Form 10-K (“2012 Annual Report”) with the SEC but in no event later than December 31, 2013.

Any unvested RSUs granted under the 2004 Equity Plan and the related cash dividends are forfeited if the participant terminates employment with USA Mobility. As of December 31, 2011 a total of 80,104 have been forfeited offset by new grants of 9,418 RSUs resulting in an outstanding balance of 258,730 RSUs as of March 31, 2012. There were no forfeitures or additional grants in the first quarter of 2012.

We used the fair-value based method of accounting for the 2009 LTIP and are amortizing $3.0 million (after the effect of estimated forfeitures) to expense over the 48-month vesting period. A total of $0.2 million was included in stock based compensation expense for each of the three months ended March 31, 2011 and 2010, respectively, in relation to the 2009 LTIP.

Also on January 6, 2009, we provided for long-term cash performance awards to the same certain eligible employees under the 2009 LTIP. Similar to the RSUs, the vesting period for these long-term cash performance awards is 48 months upon attainment of the established performance goals and would be paid on the earlier of a change in control of the Company (as defined in the 2004 Equity Plan); or on or after the third business day following the day that we file our 2012 Annual Report with the SEC but in no event later than December 31, 2013.

We are ratably recognizing $2.8 million (after the effect of estimated forfeitures) to expense over the 48-month vesting period. A total of $0.2 million was included in payroll and related expense for each of the three months ended March 31, 2012 and 2011, respectively, for these long-term cash performance awards. Any unvested long-term cash performance awards are forfeited if the participant terminates employment with USA Mobility.

2011 LTIP. On March 15, 2011, our Board of Directors adopted a long-term incentive program that included a stock component in the form of RSUs. The 2011 LTIP provides eligible employees the opportunity to earn RSUs based upon achievement of performance goals, established by our Board of Directors for our revenue and operating cash flows (including software operations) during the period from January 1, 2011 through December 31, 2014 (the “performance period”), and continued employment with the Company. For the purpose of the 2011 LTIP as it relates to software operations, the performance period is considered as April 1, 2011 through December 31, 2014. On April 7, 2011, our Board of Directors granted eligible employees from Amcom RSUs under the 2004 Equity Plan pursuant to a Restricted Stock Unit Agreement based upon the closing price per share of our common stock on April 6, 2011 of $15.41. Our Board of Directors awarded 211,587 RSUs to certain eligible employees at Amcom and also approved that future cash dividends related to the existing RSUs will be set aside and paid in cash to each eligible employee when the RSUs are converted into shares of common stock. Existing RSUs would be converted into shares of common stock on the earlier of a change in control of the Company (as defined in the 2004 Equity Plan) or on or after the third business day following the day that we file our 2014 Annual Report on Form 10-K (“2014 Annual Report”) with the SEC but in no event later than December 31, 2015. Any unvested RSUs granted under the 2004 Equity Plan and the related cash dividends are forfeited if the participant terminates employment with USA Mobility. We used the fair-value based method of accounting for the 2011 LTIP and are amortizing $2.9 million (after the effect of estimated forfeitures) to expense over the 45-month vesting period beginning on April 1, 2011. A total of $0.2 million was included in stock based compensation expense for the three months ended March 31, 2012 in relation to the 2011 LTIP.

Board of Directors Equity Compensation. On August 1, 2007, for periods of service beginning on July 1, 2007, our Board of Directors approved that, in lieu of RSUs, each non-executive director will be granted in arrears on the first business day following the quarter of service, restricted stock under the 2004 Equity Plan for their service on the Board of Directors and committees thereof. The restricted stock would be granted quarterly based upon the closing price per share of our common stock at the end of each quarter, such that each non-executive director would receive $40,000 per year of restricted stock ($50,000 for the Chair of the Audit Committee). The restricted stock will vest on the earlier of a change in control of the Company (as defined in the 2004 Equity Plan) or one year from the date of grant, provided, in each case, that the non-executive director maintains continuous service on the Board of Directors. Future cash dividends related to the restricted stock will be set aside and paid in cash to each non-executive director on the date the restricted stock vests. In addition to the quarterly restricted stock grants, the non-executive directors would be entitled to cash compensation of $40,000 per year ($50,000 for the Chair of the Audit Committee), also payable quarterly. These sums are payable, at the election of the non-executive director, in the form of cash, shares of common stock, or any combination thereof.

The following table details information on the restricted stock vested by or awarded to our non-executive directors in 2012 and 2011:

Service for the         three months ended	Grant Date	Price  Per Share(1)		Restricted Stock Awarded		Restricted Stock Vested		Vesting Date	Restricted Stock Awarded and Outstanding		Cash Dividends Paid(2)
December 31, 2010	January 3, 2011	$	17.77		2,955		(2,955)	January 3, 2012		—	$	2,955
March 31, 2011	April 1, 2011		14.48		3,627		(3,627)	April 2, 2012		—		3,627
June 30, 2011	July 1, 2011		15.26		3,439		—	July 2, 2012		3,439		—
September 30, 2011	October 3, 2011		13.20		3,979		—	October 1, 2012		3,979		—
December 31, 2011	January 3, 2012		13.87		3,785		—	January 2, 2013		3,785		—
March 31, 2012	April 2, 2012		13.93		3,769		—	April 1, 2013		3,769		—
Total					21,554		(6,582)			14,972	$	6,582

⁽¹⁾ The quarterly restricted stock awarded is based on the price per share of our common stock on the last trading day prior to the quarterly award date.

⁽²⁾ Amount excludes interest earned and paid upon vesting of shares of restricted stock.

The shares of restricted stock will vest one year from the date of grant and the related cash dividends on the vested restricted stock will be paid to our non-executive directors. These grants of shares of restricted stock will reduce the number of shares eligible for future issuance under the 2004 Equity Plan.

We used the fair-value based method of accounting for the equity awards. A total of $52,500 was included in stock based compensation expense for each of the three months ended March 31, 2012 and 2011, respectively, in relation to the restricted stock issued to our non-executive directors.

The following table details information on the cash dividends declared in 2012 relating to the restricted stock issued to our non-executive directors:

Declaration Date	Record Date		Payment Date		Per Share Amount		Total Amount
February 22		March 16		March 30	$	0.25	$	3,708

Board of Directors Common Stock. As of March 31, 2012, a cumulative total of 9,091 shares of common stock have been issued in lieu of cash payments to the non-executive directors for services performed. These shares of common stock reduced the number of shares eligible for future issuance under the 2004 Equity Plan.

Cash Dividends to Stockholders. The following table details our cash dividend payments made in 2012. Cash dividends paid as disclosed in the statements of cash flows for the three months ended March 31, 2012 and 2011 include previously declared cash dividends on shares of vested restricted stock issued to our non-executive directors. Cash dividends on RSUs and restricted stock have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited RSUs and restricted stock are also forfeited.

Declaration Date	Record Date		Payment Date		Per Share Amount		Total  Payment(1)
							(Dollars in thousands)
February 22		March 16		March 30	$	0.25	$	5,535

⁽¹⁾ The total payment reflects the cash dividends paid in relation to common stock and vested restricted stock.

Future Cash Dividends to Stockholders. On May 3, 2012, our Board of Directors declared a regular quarterly dividend distribution of $0.25 per share of common stock, with a record date of May 18, 2012, and a payment date of June 22, 2012. This dividend distribution of approximately $5.5 million will be paid from available cash on hand.

Common Stock Repurchase Program. On July 31, 2008, our Board of Directors approved a program for us to repurchase up to $50.0 million of our common stock in the open market during the twelve-month period commencing on or about August 5, 2008. Credit Suisse Securities (USA) LLC will administer such purchases. We used available cash on hand and net cash provided by operating activities to fund the common stock repurchase program.

Our Board of Directors approved a supplement to the common stock repurchase program effective on March 3, 2009. The supplement reset the repurchase authority to $25.0 million as of January 1, 2009 and extended the purchase period through December 31, 2009.

On November 30, 2009, our Board of Directors approved a further extension of the purchase period from December 31, 2009 to March 31, 2010. On March 3, 2010, our Board of Directors approved an additional supplement effective March 3, 2010 which reset the repurchase authority to $25.0 million as of January 1, 2010 and extended the purchase period through December 31, 2010.

For the year ended December 31, 2010, we purchased 697,768 shares of our common stock for approximately $8.9 million (excluding commissions). From the inception of the common stock repurchase program through December 31, 2010, we have repurchased a total of 5,556,331 shares of our common stock under this program for approximately $51.7 million (excluding commissions). There was approximately $16.1 million of common stock repurchase authority remaining under the program as of December 31, 2010. This repurchase authority allows, at management’s discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors. All repurchased shares of common stock are returned to the status of authorized but unissued shares of the Company.

Repurchased shares of our common stock were accounted for as a reduction to common stock and additional paid-in-capital in the period in which the repurchase occurred.

On December 6, 2010, our Board of Directors approved another supplement to the common stock repurchase program effective on January 3, 2011. The supplement reset the repurchase authority to $25.0 million as of January 3, 2011 and extended the purchase period through December 31, 2011.

During 2011 our common stock repurchase program was suspended due to the acquisition of our software operations. Our Board of Directors continues to evaluate whether to extend the common stock repurchase program in 2012.

Additional Paid-in Capital. For the three months ended March 31, 2012, additional paid-in capital increased by $0.9 million. The increase in the first quarter of 2012 was due primarily to amortization of stock based compensation and a net issuance of common stock under the 2011 STIP to our CEO after purchase of common stock from the CEO for his tax withholdings.

Net Income per Common Share. Basic net income per common share is computed on the basis of the weighted average common shares outstanding. Diluted net income per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares including outstanding restricted stock using the “treasury stock” method plus the effect of outstanding RSUs, which are treated as contingently issuable shares. During the first quarter of 2012, we acquired a total of 21,657 shares of our common stock from our CEO in payment of required tax withholdings for the common stock awarded on March 2, 2012 related to the 2011 STIP. These shares of common stock acquired were retired and excluded from our reported outstanding share balance as of March 31, 2012. For the three months ended March 31, 2012, no shares of common stock were repurchased under our common stock repurchase program. For the three months ended March 31, 2012, the effect of 56 potential dilutive common shares was not included in the calculation for diluted net income per share as the impact is anti-dilutive. The components of basic and diluted net income per common share were as follows for the periods stated:

	For the Three Months Ended March 31,
	2012		2011
	(Dollars in thousands, except share and per share amounts)
Net income	$	8,462	$	40,651
Weighted average shares of common stock outstanding		22,106,543		22,063,393
Dilutive effect of restricted stock and RSUs		482,940		270,006
Weighted average shares of common stock and common stock equivalents		22,589,483		22,333,399
Net income per common share
Basic	$	0.38	$	1.84
Diluted	$	0.37	$	1.82