USA Mobility Reports 2005 Operating Results25 May 2006
USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced final operating results for the fourth quarter and year ended December 31, 2005. The company had announced preliminary and unaudited 2005 operating results on April 3, 2006, pending filing of its 2005 Form 10-K and financial restatements for the years ended 2002, 2003 and 2004 and interim periods of 2004 and 2005. USA Mobility completed those filings today.
Reported revenue for 2005, the first full year of operations following the merger between Arch Wireless, Inc. and Metrocall Holdings, Inc. on November 16, 2004, totaled $618.6 million, compared to $788.7 million in 2004 on a pro forma basis. EBITDA (Earning before interest, tax, and depreciation, amortization and accretion) for 2005 was $158.5 million, or 25.6 percent of revenue, while operating income was $27.1 million. Net income for 2005 was $12.9 million, or $0.47 per fully diluted share.
The company announced earlier in the year that it would file an amended Form 10-K/A for the year ended December 31, 2004 and amended Form 10-Q/A's for the three interim quarterly periods of 2004 and 2005. The purpose of the amended filings was to amend and restate financial statements and other financial information for the years 2002, 2003 and 2004 and first three quarters of 2004 and 2005 to reflect certain corrections and adjustments, including restatement of income taxes and deferred tax assets for those periods. The errors, which occurred in certain earlier reporting periods, were identified by the company's internal accounting staff in the process of preparing its year-end 2005 operating results. The errors did not impact revenue, cash, or cash flow from operations.
The 2005 annual and fourth quarter results reported today vary from the preliminary results contained in USA Mobility's April 3, 2006 news release as follows:
* In the fourth quarter of 2005, the company recognized a reduction of
service, repair and maintenance (SRM) expense of $1.2 million. Of that
total, $0.9 million represents a gain due to the difference between the
company's estimated deconstruction obligations under the company's Asset
Retirement Obligation ("ARO") and the actual expenses incurred during
that period. The remaining $0.3 million corresponds to the
reclassification of accretion expense from SRM expense into
depreciation, amortization and accretion. In the past, the company had
included accretion expense as a component of SRM expense.
* The company's fourth quarter results also reflect a net reduction of
depreciation, amortization and accretion of $12.2 million, as compared
to the preliminary 2005 operating results announced on April 3. A total
of $12.5 million of the reduction represents an adjustment to the
depreciable life of the paging infrastructure assets, while accretion
increased by $0.3 million, reflecting the reclassification of accretion
from SRM expense as discussed above.
* For the year-ended 2005, the company recognized a reduction of SRM
expense of $2.6 million. Of that total, $1.5 million represents a gain
due to the difference between the company's estimated deconstruction
obligations under the ARO and the actual expenses incurred during that
period. The remaining $1.0 million corresponds to the reclassification
of accretion expense from SRM expense into depreciation, amortization
and accretion.
* The company's 2005 year-end results also reflect a reduction of
depreciation, amortization and accretion of $22.1 million, as compared
to preliminary 2005 operating results. A total of $23.1 million of the
reduction represents an adjustment to the depreciable life of the paging
infrastructure assets, with accretion increasing by $1.0 million,
reflecting the reclassification of accretion from SRM expense as
discussed above.
The cumulative effect of the restatements on the 40-month period affected (June 2002 - September 2005) is as follows:
* The income statement reflects an increase to depreciation, amortization
and accretion expense of $14.8 million, and a decrease to all other
operating expenses of $5.8 million resulting in a decrease in operating
income of $9.0 million, and a decrease to net income of $2.5 million.
* The assets on the balance sheet as of September 30, 2005 reflect a
decrease to property, plant and equipment of $10.4 million, and decrease
to the deferred tax asset of $4.4 million, a decrease to accounts
receivable of $0.7 million, and an increase to goodwill of $2.8 million,
for an overall reduction to assets of $12.7 million.
* Liabilities and equity on the balance sheet as of September 30, 2005
reflect an increase of $8.1 million in liabilities, primarily a result
of the asset retirement obligation, and a reduction to equity of $20.8
million.
The company said its integration of Arch and Metrocall was substantially completed in 2005, leading to significant improvements in overall operating results. Among them was a steady improvement in the year-over-year rate of subscriber and revenue decline. Other major accomplishments during the year included: successfully consolidating to a single customer service and billing platform; decommissioning Arch's two-way paging network; beginning the rationalization the one-way paging networks; reducing total operating expenses, excluding depreciation, amortization and accretion by 18.9% on a pro forma basis; repaying $140 million in bank debt incurred at the time of the merger; paying a special dividend representing a $41 million return of capital to investors; negotiating long-term contract with its largest site landlord representing substantial future cost savings; and strengthening the company's operational structure and management team.
"Our first year of operation was a very successful one," said Vincent D. Kelly, president and chief executive officer. "We achieved our principal goals of integrating the nation's two largest paging carriers and generating significant costs savings. In meeting those objectives, we also became debt free, returned capital to our shareholders, laid the foundation for continued operational efficiencies in the future and began to explore potential alternative sources of revenue. As we move through 2006," Kelly added, "we expect to make additional improvements to our operations and expand our selling and marketing initiatives as we continue to serve the needs of our nationwide customer base while remaining focused on our cash flow strategy."
Thomas L. Schilling, chief financial officer, said: "While the process of amending our financial statements was time-consuming, the adjustments and restatements were necessary under generally accepted accounting principles because they had a material impact on our income statement. However," Schilling added, "I would also note that restated items had no impact on the fundamentals of our business -- that is, the company's previously reported revenue, cash positions, or cash flow from operating activities."
The company announced that it will report first quarter 2006 operating results on Thursday, May 25, at approximately 4:00 p.m. Eastern Time and will hold a conference call for investors on its first quarter results at 11:00 a.m. Eastern Time on Friday, May 26, 2006. The call-in number for the investor call is 888-802-2275 (toll-free) or 913-312-1267 (toll). The pass code for the call is 1643835 (followed by the # sign). A replay of the call will be available from 3:00 p.m. ET on May 26 until 11:59 p.m. on Friday, June 9. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 1643835 (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 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 over two-thirds 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, 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 BALANCE SHEETS
(in thousands)
December 31, 2004 December 31, 2005
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $46,995 $37,547
Accounts receivable, net 40,078 38,177
Deposits 117 1,687
Prepaid rent, expenses and other 15,343 8,973
Deferred income tax assets 25,525 18,895
Total current assets $128,058 $105,279
Property and equipment, net 220,028 127,802
Goodwill 154,369 149,478
Intangible assets, net 67,129 40,654
Deferred income tax assets 207,046 207,150
Other assets 5,517 3,430
TOTAL ASSETS $782,147 $633,793
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $47,558 $13
Accounts payable and other accrued
liabilities 86,478 65,719
Customer deposits 4,316 3,104
Deferred revenue 23,623 17,924
Total current liabilities $161,975 $86,760
Long-term debt, less current maturities 47,500 -
Other long-term liabilities 16,632 14,040
TOTAL LIABILITIES $226,107 $100,800
Stockholders' equity:
Preferred stock - -
Common stock 3 3
Additional paid-in capital 536,252 521,298
Retained earnings 19,785 11,692
TOTAL STOCKHOLDERS' EQUITY 556,040 532,993
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $782,147 $633,793
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(in thousands, except share and per share amounts)
Year Ended December 31,
2004 2005
(Restated)
Revenue:
Service, rental and maintenance, net
of service credits $470,751 $592,690
Product sales 19,409 25,882
Total revenue 490,160 618,572
Operating expenses:
Cost of products sold 4,347 4,483
Service, rental and maintenance 160,144 215,588
Selling and marketing 36,085 43,145
General and administrative 130,046 177,438
Depreciation, amortization and accretion 107,629 131,328
Stock based compensation 4,863 2,832
Severance and related termination costs 11,938 16,609
Total operating expenses 455,052 591,423
Operating income 35,108 27,149
Interest expense (6,365) (2,412)
Interest income 451 1,089
Loss on extinguishment of long-term debt (1,031) (1,338)
Other income, net 814 (1,004)
Income before income tax expense 28,977 23,484
Income tax expense (16,810) (10,577)
Net income $12,167 $12,907
Basic net income per common share $0.58 $0.47
Diluted net income per common share $0.58 $0.47
Basic weighted average common shares
outstanding 20,839,959 27,275,040
Diluted weighted average common
shares outstanding 20,966,405 27,427,120
Reconciliation of operating income to
EBITDA:
Operating income $35,108 $27,149
Addback:
Depreciation, amortization and accretion 107,629 131,328
EBITDA(a) $142,737 $158,477
(a) EBITDA or Earnings before interest, taxes, depreciation and
amortization is a non-GAAP measure and is presented for analytical
purposes only.
USA MOBILITY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2004 2005
(Restated)
Cash flows from operating activities:
Net income $12,167 $12,907
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and
accretion 107,629 131,328
Deferred income tax expense 17,766 7,461
Loss on extinguishment of long-term debt 1,036 1,338
Accretion of long-term debt and other
non-cash interest expense 372 714
Deferred stock compensation 4,863 2,832
Provisions for doubtful accounts,
service credits and other 13,565 25,055
Gain on disposals of property and
equipment (93) 1,287
Changes in assets and liabilities:
Accounts receivable (2,158) (23,439)
Prepaid expenses and other 4,745 5,109
Intangibles and other long-term assets (4,962) 7,978
Accounts payable and accrued expenses (28,451) (21,276)
Customer deposits and deferred revenue (8,790) (6,911)
Other long-term liabilities (3,424) (5,129)
Net cash provided by operating activities $114,265 $139,254
Cash flows from investing activities:
Purchases of property and equipment (19,232) (13,499)
Proceeds from disposals of property
and equipment 2,998 168
Receipts from note receivable 271 285
Merger of companies, net of cash acquired (117,759) -
Net cash used for investing activities $(133,722) $(13,046)
Cash flows from financing activities:
Issuance of long-term debt 140,000 -
Repayment of long-term debt (105,017) (95,045)
Dividends paid - (40,691)
Purchase of common stock (3,113) -
Proceeds from exercise of options - 80
Net cash used for financing activities $31,870 $(135,656)
Net decrease in cash and cash equivalents $12,413 $(9,448)
Cash and cash equivalents, beginning
of period 34,582 46,995
Cash and cash equivalents, end of period $46,995 $37,547
Supplemental disclosure:
Interest paid $6,966 $2,245
State income taxes paid $1,729 $562
USA MOBILITY, INC.
PRO FORMA UNITS IN SERVICE ACTIVITY(a)(b)
units in thousands (unaudited)
Three Months Ended
March June September December
2004 2004 2004 2004
Direct One-Way:
Beginning units in service 5,329 5,100 4,909 4,690
Gross placements 226 181 182 166
Disconnects (455) (372) (401) (392)
Ending units in service 5,100 4,909 4,690 4,464
Two-Way:
Beginning units in service 506 483 462 449
Gross placements 40 32 35 29
Disconnects (63) (53) (48) (56)
Ending units in service 483 462 449 422
Indirect One-Way:
Beginning units in service 1,716 1,474 1,253 1,101
Gross placements 157 145 160 143
Disconnects (399) (366) (312) (257)
Ending units in service 1,474 1,253 1,101 987
Two-Way:
Beginning units in service 131 123 121 115
Gross placements 20 16 20 7
Disconnects (28) (18) (26) (28)
Ending units in service 123 121 115 94
Total
Beginning units in service 7,682 7,180 6,745 6,355
Gross placements 443 374 397 345
Disconnects (945) (809) (787) (733)
Ending units in service 7,180 6,745 6,355 5,967
Adjusted Proforma ARPU
Direct One-Way $9.10 $8.96 $8.89 $8.75
Direct Two-Way $25.15 $24.68 $24.22 $23.93
Indirect One-Way $4.06 $4.26 $4.12 $4.26
Indirect Two-Way $12.89 $12.07 $11.30 $10.41
Total $9.15 $9.16 $9.14 $9.09
Three Months Ended
March June September December
2005 2005 2005 2005
Direct One-Way:
Beginning units in service 4,464 4,273 4,114 3,977
Gross placements 141 134 125 126
Disconnects (332) (293) (262) (268)
Ending units in service 4,273 4,114 3,977 3,835
Two-Way:
Beginning units in service 422 397 382 365
Gross placements 22 29 17 18
Disconnects (47) (44) (34) (36)
Ending units in service 397 382 365 347
Indirect One-Way:
Beginning units in service 987 859 762 685
Gross placements 107 92 26 26
Disconnects (235) (189) (103) (107)
Ending units in service 859 762 685 604
Two-Way:
Beginning units in service 94 91 90 89
Gross placements 7 7 3 18
Disconnects (10) (8) (4) (7)
Ending units in service 91 90 89 100
Total
Beginning units in service 5,967 5,620 5,348 5,116
Gross placements 277 262 171 188
Disconnects (624) (534) (403) (418)
Ending units in service 5,620 5,348 5,116 4,886
Adjusted Proforma ARPU
Direct One-Way $8.65 $8.61 $8.48 $8.27
Direct Two-Way $23.98 $23.65 $24.28 $23.76
Indirect One-Way $4.07 $4.11 $4.36 $4.66
Indirect Two-Way $9.16 $8.71 $8.42 $7.80
Total $9.01 $9.02 $9.04 $8.90
(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.
USA MOBILITY, INC.
SUMMARY OF CONSOLIDATED OPERATING RESULTS(a)
(unaudited and in thousands)
For the year ended December 31,
2004 2005
Proforma
Revenues:
Service, rental and maintenance, net
of service credits $754,696 $592,690
Product sales 34,009 25,882
Total revenue 788,705 618,572
Operating expenses:
Cost of products sold 8,475 4,483
Service, rental and maintenance 256,382 215,588
Selling and marketing 65,847 43,145
General and administrative 216,317 177,438
Depreciation, amortization and accretion 145,328 131,328
Stock based compensation 6,401 2,832
Severance and restructuring 13,622 16,609
Total operating expenses 712,372 591,423
Operating income 76,333 27,149
Interest expense (7,360) (2,412)
Interest income 451 1,089
Loss on extinguishment of long-term debt - (1,338)
Other income, net 163 (1,004)
Income before income tax expense 69,587 23,484
Income tax expense (33,006) (10,577)
Net income $36,581 $12,907
Basic net income per common share $1.36 $0.47
Diluted net income per common share $1.34 $0.47
Basic weighted average common shares
outstanding 26,938,871 27,275,040
Diluted weighted average common
shares outstanding 27,313,706 27,427,120
Reconciliation of operating income to
EBITDA:
Operating income $76,333 $27,149
Addback:
Depreciation, amortization and accretion 145,328 131,328
EBITDA(b) $221,661 $158,477
(a) Pro forma amounts assume the merger of Arch Wireless, Inc. and
Metrocall Holdings, Inc. as of January 1, 2004.
(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.
SUMMARY OF CONSOLIDATED OPERATING RESULTS
(unaudited and in thousands)
For the three months ended
March June September December
31, 30, 30, 31,
2004 2004 2004 2004
Revenues:
Service, rental and
maintenance, net of
service credits $119,546 $111,174 $104,785 $135,246
Product sales 4,113 4,623 4,632 6,041
Total revenue 123,659 115,797 109,417 141,287
Operating expenses:
Cost of products sold 938 856 691 1,862
Service, rental and
maintenance 38,790 36,739 36,653 47,962
Selling and marketing 9,068 8,757 7,862 10,398
General and administrative 31,304 29,150 27,615 41,977
Depreciation, amortization
and accretion 26,353 28,327 21,867 31,082
Stock based compensation 2,267 1,908 1,865 (1,177)
Severance and restructuring 3,689 602 1,228 6,419
Total operating expenses 112,409 106,339 97,781 138,523
Operating income (loss) 11,250 9,458 11,636 2,764
Interest expense (3,400) (1,770) (18) (1,177)
Interest income 71 70 89 221
Loss on extinguishment of
long-term debt - - - (1,031)
Other income, net 168 177 66 403
Income (loss) before
income tax expense 8,089 7,935 11,773 1,180
Income tax expense (3,256) (1,690) (9,369) (2,495)
Net income (loss) $4,833 $6,245 $2,404 $(1,315)
Basic net income (loss)
per common share $0.24 $0.31 $0.12 $(0.06)
Diluted net income (loss)
per common share $0.24 $0.31 $0.12 $(0.06)
Basic weighted average
common shares outstanding 20,000,000 19,965,076 19,914,099 23,461,642
Diluted weighted average
common shares outstanding 20,078,213 20,109,191 20,041,555 23,461,642
Reconciliation of
operating income to
EBITDA:
Operating income (loss) $11,250 $9,458 $11,636 $2,764
Addback:
Depreciation,
amortization and
accretion 26,353 28,327 21,867 31,082
EBITDA(a) $37,603 $37,785 $33,503 $33,846
For the three months ended
March June September December
31, 30, 30, 31,
2005 2005 2005 2005
Revenues:
Service, rental and
maintenance, net of
service credits $159,150 $151,483 $145,014 $137,043
Product sales 6,527 6,054 6,940 6,361
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 56,353 56,104 53,739 49,392
Selling and marketing 10,402 11,156 11,276 10,311
General and administrative 48,427 46,491 43,261 39,259
Depreciation, amortization
and accretion 40,595 35,224 28,876 26,633
Stock based compensation 1,385 597 271 579
Severance and restructuring 5,137 9,904 855 713
Total operating expenses 163,578 160,405 139,223 128,217
Operating income (loss) 2,099 (2,868) 12,731 15,187
Interest expense (1,411) (734) (232) (35)
Interest income 197 235 214 443
Loss on extinguishment of
long-term debt (594) (432) (312) -
Other income, net 137 (73) 76 (1,144)
Income (loss) before
income tax expense 428 (3,872) 12,477 14,451
Income tax expense (291) 61 (3,750) (6,597)
Net income (loss) $137 $(3,811) $8,727 $7,854
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:
Operating income (loss) $2,099 $(2,868) $12,731 $15,187
Addback:
Depreciation,
amortization and
accretion 40,595 35,224 28,876 26,633
EBITDA(a) $42,694 $32,356 $41,607 $41,820
(a) EBITDA or Earnings before interest, taxes, depreciation and
amortization is a non-GAAP measure and is presented for analytical
purposes only.
USA MOBILITY, INC.
SUMMARY OF CONSOLIDATED OPERATING RESULTS(a)
(unaudited and in thousands)
For the three months ended
March June September December
31, 30, 30, 31,
2004 2004 2004 2004
Pro forma Pro forma Pro forma Pro forma
Revenues:
Service, rental and
maintenance, net of
service credits $206,356 $193,917 $182,452 $171,971
Product sales 8,016 8,997 9,027 7,969
Total revenue 214,372 202,914 191,479 179,940
Operating expenses:
Cost of products sold 1,878 2,199 2,124 2,274
Service, rental and
maintenance 67,121 64,167 62,365 62,729
Selling and marketing 18,299 17,475 15,667 14,406
General and administrative 53,707 51,181 50,289 61,140
Depreciation, amortization
and accretion 38,238 39,550 32,496 35,045
Stock based compensation 5,966 2,810 2,093 (2,784)
Severance and restructuring 3,689 602 1,228 6,419
Total operating expenses 188,898 177,984 166,262 179,229
Operating income (loss) 25,474 24,930 25,217 711
Interest expense (2,188) (1,971) (1,753) (1,448)
Interest income - - - 451
Loss on extinguishment of
long-term debt - - - -
Other income, net 110 201 17 (165)
Income (loss) before
income tax expense 23,396 23,160 23,481 (451)
Income tax expense (9,410) (7,810) (14,077) (1,709)
Net income (loss) $13,986 $15,350 $9,404 $(2,160)
Basic net income (loss)
per common share $0.52 $0.57 $0.35 $(0.08)
Diluted net income (loss)
per common share $0.51 $0.56 $0.34 $(0.08)
Basic weighted average
common shares outstanding 26,961,046 26,926,122 26,875,145 26,992,900
Diluted weighted average
common shares outstanding 27,324,881 27,355,859 27,288,223 26,992,900
Reconciliation of
operating income to
EBITDA:
Operating income (loss) $25,474 $24,930 $25,217 $711
Addback:
Depreciation,
amortization and
accretion 38,238 39,550 32,496 35,045
EBITDA(b) $63,712 $64,480 $57,713 $35,756
For the three months ended
March June September December
31, 30, 30, 31,
2005 2005 2005 2005
Revenues:
Service, rental and
maintenance, net of
service credits $159,150 $151,483 $145,014 $137,043
Product sales 6,527 6,054 6,940 6,361
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 56,353 56,104 53,739 49,392
Selling and marketing 10,402 11,156 11,276 10,311
General and administrative 48,427 46,491 43,261 39,259
Depreciation, amortization
and accretion 40,595 35,224 28,876 26,633
Stock based compensation 1,385 597 271 579
Severance and restructuring 5,137 9,904 855 713
Total operating expenses 163,578 160,405 139,223 128,217
Operating income (loss) 2,099 (2,868) 12,731 15,187
Interest expense (1,411) (734) (232) (35)
Interest income 197 235 214 443
Loss on extinguishment of
long-term debt (594) (432) (312) -
Other income, net 137 (73) 76 (1,144)
Income (loss) before income
tax expense 428 (3,872) 12,477 14,451
Income tax expense (291) 61 (3,750) (6,597)
Net income (loss) $137 $(3,811) $8,727 $7,854
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:
Operating income (loss) $2,099 $ (2,868) $12,731 $15,187
Addback:
Depreciation, amortization
and accretion 40,595 35,224 28,876 26,633
EBITDA(b) $42,694 $32,356 $41,607 $41,820
(a) Pro forma amounts assume the merger of Arch Wireless, Inc. and
Metrocall Holdings, Inc. as of January 1, 2004.
(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.
Cumulative Summary of Adjustments to Assets and Liabilities
(In thousands)
December 31,
2002 2003 2004
Assets
Increase (decrease) in:
Accounts receivable, net $- $- $(740)
Other receivables - - -
Property and equipment, net 4,710 (5,367) 3,520
Goodwill - - 2,578
Deferred income tax assets - (11,883) (19,588)
Total impact on Assets $4,710 $(17,250) $(14,230)
Total Assets, as restated $442,634 $495,495 $782,147
Liabilities
Increase (decrease) in:
Accrued taxes $536 $1,317 $2,235
Accrued restructuring - - 856
Accrued other 2,939 780 951
Other long-term liabilities 5,404 9,012 9,025
Total impact on Liabilities $8,879 $11,109 $13,067
Total Liabilities, as restated $328,410 $169,231 $226,107
Equity
Increase (decrease) in:
Additional paid-in capital $- $(21,070) $(18,694)
Retained earnings (4,169) (7,289) (8,603)
Total impact on Equity $(4,169) $(28,359) $(27,297)
Total Equity, as restated $114,224 $326,264 $556,040
Total impact on Liabilities
and Equity $4,710 $(17,250) $(14,230)
Total Liabilities and Equity, as
restated $442,634 $495,495 $782,147
Quarter ended
3/31/05 6/30/05 9/30/05
Assets
Increase (decrease) in:
Accounts receivable, net $(740) $(740) $(740)
Other receivables - - (2)
Property and equipment, net 2,172 551 (10,358)
Goodwill 2,578 2,561 2,847
Deferred income tax assets (17,326) (19,415) (4,412)
Total impact on Assets $(13,316) $(17,043) $(12,665)
Total Assets, as restated $736,121 $702,661 $688,893
Liabilities
Increase (decrease) in:
Accrued taxes $2,405 $1,498 $(24)
Accrued restructuring 856 856 856
Accrued other 762 874 (2,964)
Other long-term liabilities 10,889 8,920 10,242
Total impact on Liabilities $14,912 $12,148 $8,110
Total Liabilities, as restated $178,309 $146,401 $123,380
Equity
Increase (decrease) in:
Additional paid-in capital $(18,470) $(18,271) $(18,227)
Retained earnings (9,758) (10,920) (2,548)
Total impact on Equity $(28,228) $(29,191) $(20,775)
Total Equity, as restated $557,812 $556,260 $565,513
Total impact on Liabilities
and Equity $(13,316) $(17,043) $(12,665)
Total Liabilities and Equity, as
restated $736,121 $702,661 $688,893
USA Mobility, Inc.
Summary of Adjustments to
Operating Income, Net Income, and Earnings per Share
(In thousands except per share amounts)
Seven Months Ended Year Ended
December 31, December 31,
2002 2003 2004
Operating income (loss) - as
previously reported $25,326 $46,115 $29,046
Increase (decrease) due to:
Service, rental and maintenance
expense 2,684 2,549 504
General and administrative
expense (536) (781) (747)
Depreciation and amortization (6,317) (10,421) 7,161
Severance and related
termination costs - - (856)
Operating income (loss) - as restated $21,157 $37,462 $35,108
Net income (loss) - as previously
reported $827 $16,128 $13,481
Adjustments to operating income
(loss), net (4,169) (8,653) 6,062
Other income, net - increase
(decrease) - - 156
Income tax expense - (increase)
decrease - 5,533 (7,532)
Net income (loss) - as restated $(3,342) $13,008 $12,167
Quarter ended
3/31/05 6/30/05 9/30/05
Operating income (loss) - as
previously reported $3,869 $(1,601) $11,890
Increase (decrease) due to:
Service, rental and maintenance
expense 44 73 605
General and administrative
expense (5) 742 1,522
Depreciation and amortization (1,809) (2,082) (1,286)
Severance and related
termination costs - - -
Operating income (loss) - as restated $2,099 $(2,868) $12,731
Net income (loss) - as previously
reported $1,292 $(2,649) $355
Adjustments to operating income
(loss), net (1,770) (1,267) 841
Other income, net - increase
(decrease) (156) - -
Income tax expense - (increase)
decrease 771 105 7,531
Net income (loss) - as restated $137 $(3,811) $8,727
Seven Months
Ended Year
December Ended
31, December 31, Quarter ended
2002 2003 2004 3/31/05 6/30/05 9/30/05
Diluted net income per
common share
- as previously
reported $0.04 $0.81 $0.64 $0.05 $(0.10) $0.01
Effect of adjustments
to income (0.21) (0.16) (0.06) (0.04) (0.04) 0.31
Diluted net income per
common share
- as restated $(0.17) $0.65 $0.58 $0.01 $(0.14) $0.32
USA MOBILITY, INC.
SUMMARY OF RESTATEMENT ADJUSTMENT IMPACTS
(in thousands)
For the quarter ended December 31, 2005
Previously Restatement
reported adjustments Final
April 3, 2006
(unaudited) (unaudited) (unaudited)
Revenues:
Service, rental and maintenance,
net of service credits $137,043 $- $137,043
Product sales 6,361 - 6,361
Total revenue 143,404 - 143,404
Operating expenses:
Cost of products sold 1,330 - 1,330
Service, rental and maintenance(a) 50,593 (1,201) 49,392
Selling and marketing 10,311 - 10,311
General and administrative 39,260 (1) 39,259
Depreciation, amortization and
accretion(a) 38,809 (12,176) 26,633
Stock based compensation 579 - 579
Severance and restructuring 714 (1) 713
Total operating expenses 141,596 (13,379) 128,217
Operating income 1,808 13,379 15,187
Interest expense (35) - (35)
Interest income 443 - 443
Loss on extinguishment of long-term debt - - -
Other income, net (1,144) - (1,144)
Income before income tax expense $1,072 $13,379 $14,451
Income tax expense (6,597)
Net income $7,854
Reconciliation of operating income to
EBITDA:
Operating income $1,808 $13,379 $15,187
Addback:
Depreciation, amortization and
accretion 38,809 (12,176) 26,633
EBITDA(b) $40,617 $1,203 $41,820
USA MOBILITY, INC.
SUMMARY OF RESTATEMENT ADJUSTMENT IMPACTS
(in thousands)
For the year ended December 31, 2005
Previously Restatement Final
reported adjustments
April 3, 2006
(unaudited) (unaudited) (audited)
Revenues:
Service, rental and maintenance, net
of service credits $592,690 $- $592,690
Product sales 25,882 - 25,882
Total revenue 618,572 - 618,572
Operating expenses:
Cost of products sold 4,483 - 4,483
Service, rental and maintenance(a) 218,160 (2,572) 215,588
Selling and marketing 43,145 - 43,145
General and administrative 177,438 - 177,438
Depreciation, amortization and
accretion(a) 153,403 (22,075) 131,328
Stock based compensation 2,832 - 2,832
Severance and restructuring 16,609 - 16,609
Total operating expenses 616,070 (24,647) 591,423
Operating income 2,502 24,647 27,149
Interest expense (2,412) - (2,412)
Interest income 1,089 - 1,089
Loss on extinguishment of long-term debt (1,338) - (1,338)
Other income, net (1,004) - (1,004)
Income before income tax expense $(1,163) $24,647 $23,484
Income tax expense (10,577)
Net income $12,907
Reconciliation of operating income to
EBITDA:
Operating income $2,502 $24,647 $27,149
Addback:
Depreciation, amortization and
accretion 153,403 (22,075) 131,328
EBITDA(b) $155,905 $2,572 $158,477
(a) Previously (as reported April 3, 2006), USA Mobility included
accretion expense in service, rental and maintenance expense;
final figures reflect accretion expense as part of depreciation,
amortization and accretion.
(b) EBITDA or Earnings before interest, taxes, depreciation and
amortization is a non-GAAP measure and is presented for analytical
purposes only.
Source: prnewswire
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