Exhibit 99.1
“Your Business Communications Partner”
News Release
For Immediate Release | Contact: | Bob Lougee | (508) 435-6117 | |||
Wednesday, March 16, 2005 |
USA Mobility Reports Fourth Quarter and 2004 Operating Results
Arch, Metrocall Merger Integration and Debt Reduction on Target
Alexandria, VA (March 16, 2005) — USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the fourth quarter and year ended December 31, 2004. The fourth quarter of 2004 represents the first quarter of combined operations for USA Mobility, formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. These results include 46 days of combined operations with Metrocall and a full year and full quarter of Arch’s operations. USA Mobility’s historical financials are those of Arch Wireless which was deemed the accounting acquirer in the merger.
Reported revenue for the fourth quarter of 2004 increased 4.7% to $141.3 million, compared to $135.0 million in the fourth quarter of 2003, with the increase due entirely to the inclusion of Metrocall revenue for 46 days. Reported net loss for the fourth quarter was $1.2 million, or $0.05 per share, compared to a net loss of $1.4 million, or $0.07 per share, for the fourth quarter of 2003. For 2004, reported revenue totaled $490.2 million, compared to $597.5 million in 2003. Reported net income in 2004 totaled $13.5 million, or $0.65 per share, compared to net income of $16.1 million, or $0.81 per share, in the prior year.
As shown below on a pro-forma basis, total revenues for the fourth quarter of 2004 decreased to $179.9 million, compared to $191.5 million in the third quarter of 2004 and $232.5 million in the fourth quarter of 2003.
Pro Forma Revenues | ||||||||||||
($'s in millions) | 4Q03 | 3Q04 | 4Q04 | |||||||||
Arch or USA Mobility(1) | $ | 135.0 | $ | 109.4 | $ | 141.3 | ||||||
Metrocall(2) | 87.1 | 82.1 | 38.6 | |||||||||
WebLink Wireless(3) | 10.4 | — | — | |||||||||
Pro Forma Total | $ | 232.5 | $ | 191.5 | $ | 179.9 |
(1) | Reflects historical Arch revenues for the respective periods and Metrocall revenues from November 16, 2004 to December 31, 2004. | |
(2) | Reflects historical Metrocall revenues for the respective period through November 15, 2004. | |
(3) | Reflects historical revenues of WebLink Wireless through Metrocall’s acquisition on November 18, 2003. |
USA Mobility’s messaging units in service decreased by 314,000 during the fourth quarter and 979,000 for the year, excluding the impact of 2,744,000 units acquired in the merger with Metrocall. Total units in service at December 31, 2004 were 6,202,000, including 5,003,000 direct units in service and 1,199,000 indirect units in service. Of the 6,202,000 total units in service at year end 2004, 5,673,000 were one-way messaging units and 529,000 were two-way messaging units. Pro forma for the merger, the company had 7,902,000 units in service at December 31, 2003. Consolidated average revenue per unit decreased to $9.17 in 2004 from $9.85 in 2003; however, a unit adjustment made by Arch in the fourth quarter of 2003 resulted in $0.45 of the year-to-year decline.
“While the merger closing occurred later than we originally planned, we made significant progress on our integration initiatives in our first 46 days of operations,” said Vincent D. Kelly, president and chief executive officer. “However, the wireless messaging industry remains very challenging, and those challenges continue to validate the importance of the merger of Arch and Metrocall. As we move forward with the integration process, we look to gain further benefit from cost reductions and operational synergies that will make us more efficient and enable us to better serve our customers for a longer period of time than either Arch or Metrocall would have been capable of on a stand-alone basis. We have continued to strengthen our financial position during the past four months through the repayment of debt incurred in the merger. USA Mobility repaid $45 million on our $140 million credit facility through December 31, 2004, and we have paid an additional $28.5 million through March 1, 2005, leaving a balance of $66.5 million. The company had $47 million cash on hand at December 31, 2004.”
Merger integration activities commenced in the fourth quarter and included consolidation of the sales and marketing function. In addition, numerous back-office and administrative functions have been, or are now being, consolidated into USA Mobility’s headquarters offices and operations center, both located in
Alexandria, VA, and its technical center based in Plano, TX. Other integration initiatives launched in the fourth quarter included planning for conversion to a single customer service and billing platform and the reconfiguration of both one-way and two-way networks.
* * * * * * * * *
USA Mobility plans to host a conference call for investors on its fourth quarter and year-end results at 9:30 a.m. Eastern time on Thursday, March 17, 2005. The call-in number is 877-502-9276 (toll-free) or 913-981-5591 (toll). The pass code for the call is 4476409 (followed by the # sign). A replay of the call will be available from 2:00 p.m. on March 17 until 8:00 p.m. on April 1. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4476409 (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 and healthcare 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 and with roaming partners in Canada and Mexico. In addition, the company offers mobile voice and data services through Nextel 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
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited and in thousands)
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 46,995 | $ | 34,582 | ||||
Accounts receivable, net | 37,750 | 26,052 | ||||||
Deposits | 3,369 | 6,776 | ||||||
Prepaid rent | 864 | 514 | ||||||
Prepaid expenses and other | 14,479 | 7,381 | ||||||
Deferred income tax | 18,445 | 30,206 | ||||||
Total current assets | 121,902 | 105,511 | ||||||
Property and equipment | 483,895 | 394,436 | ||||||
Less accumulated depreciation and amortization | (267,387 | ) | (180,563 | ) | ||||
Property and equipment, net | 216,508 | 213,873 | ||||||
Goodwill | 151,791 | — | ||||||
Assets held for sale | — | 1,139 | ||||||
Intangible and other assets, net | 67,129 | — | ||||||
Deferred income tax | 233,714 | 189,346 | ||||||
Other assets | 2,267 | 3 | ||||||
$ | 793,311 | $ | 509,872 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 47,558 | $ | 20,000 | ||||
Accounts payable | 6,011 | 8,836 | ||||||
Accrued compensation and benefits | 17,792 | 17,820 | ||||||
Accrued network costs | 8,956 | 7,893 | ||||||
Accrued property and sales taxes | 27,862 | 10,076 | ||||||
Accrued interest | 547 | 1,520 | ||||||
Accrued restructuring charges | 4,974 | 11,481 | ||||||
Accrued other | 10,280 | 8,104 | ||||||
Customer deposits and deferred revenue | 27,939 | 25,477 | ||||||
Total current liabilities | 151,919 | 111,207 | ||||||
Long-term debt, less current maturities | 47,500 | 40,000 | ||||||
Other long-term liabilities | 10,555 | 4,042 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 3 | 2 | ||||||
Additional paid-in capital | 555,083 | 339,928 | ||||||
Deferred stock compensation | (137 | ) | (2,682 | ) | ||||
Retained earnings | 28,388 | 17,375 | ||||||
Total stockholders’ equity | 583,337 | 354,623 | ||||||
$ | 793,311 | $ | 509,872 | |||||
USA MOBILITY, INC
CONSOLIDATED INCOME STATEMENTS
(unaudited and in thousands, except share and per share amounts)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues: | ||||||||||||||||
Services, rental and maintenance | $ | 135,246 | $ | 129,533 | $ | 470,751 | $ | 571,989 | ||||||||
Product sales | 6,041 | 5,493 | 19,409 | 25,489 | ||||||||||||
Total revenues | 141,287 | 135,026 | 490,160 | 597,478 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of products sold | 1,862 | 1,229 | 4,347 | 5,580 | ||||||||||||
Service, rental, and maintenance | 48,192 | 46,777 | 161,071 | 192,159 | ||||||||||||
Selling and marketing | 10,398 | 9,936 | 36,085 | 45,639 | ||||||||||||
General and administrative | 41,775 | 33,662 | 129,299 | 166,167 | ||||||||||||
Depreciation and amortization | 34,685 | 27,058 | 114,367 | 118,917 | ||||||||||||
Stock based and other compensation | 4,387 | 2,188 | 12,927 | 11,420 | ||||||||||||
Restructuring charges | — | 11,481 | 3,018 | 11,481 | ||||||||||||
Total operating expenses | 141,299 | 132,331 | 461,114 | 551,363 | ||||||||||||
Operating income | (12 | ) | 2,695 | 29,046 | 46,115 | |||||||||||
Interest expense, net | (955 | ) | (5,253 | ) | (5,914 | ) | (19,237 | ) | ||||||||
Loss on extinguishment of debt | (1,031 | ) | — | (1,031 | ) | — | ||||||||||
Other income, net | 247 | 201 | 658 | 516 | ||||||||||||
Income (loss) before reorganization items | (1,751 | ) | (2,357 | ) | 22,759 | 27,394 | ||||||||||
Reorganization items | — | (425 | ) | — | (425 | ) | ||||||||||
Income before income tax benefit (expense) | (1,751 | ) | (2,782 | ) | 22,759 | 26,969 | ||||||||||
Income tax benefit (expense) | 574 | 1,409 | (9,278 | ) | (10,841 | ) | ||||||||||
Net income (loss) | $ | (1,177 | ) | $ | (1,373 | ) | $ | 13,481 | $ | 16,128 | ||||||
Basic net income (loss) per common share | $ | (0.05 | ) | $ | (0.07 | ) | $ | 0.65 | $ | 0.81 | ||||||
Diluted net income (loss) per common share | $ | (0.05 | ) | $ | (0.07 | ) | $ | 0.64 | $ | 0.81 | ||||||
Basic weighted average common shares outstanding | 23,461,642 | 20,000,000 | 20,839,959 | 20,000,000 | ||||||||||||
Diluted weighted average common shares outstanding | 23,612,842 | 20,034,806 | 20,965,205 | 20,034,476 | ||||||||||||
USA MOBILITY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31, 2004 and 2003
(unaudited and in thousands)
2004 | 2003 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 13,481 | $ | 16,128 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 114,367 | 118,917 | ||||||
Accretion of long-term debt and other non-cash interest expense | 372 | 4,681 | ||||||
Deferred stock compensation | 2,078 | 3,149 | ||||||
Deferred income tax provision | 9,278 | 10,841 | ||||||
(Loss) on disposals of property and equipment | (93 | ) | (16 | ) | ||||
Other income | (271 | ) | (286 | ) | ||||
Loss on extinguishment of debt | 1,036 | — | ||||||
Provisions for doubtful accounts and service adjustments | 13,836 | 23,244 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (1,963 | ) | (3,988 | ) | ||||
Prepaid expenses and other | 3,601 | 18,065 | ||||||
Other long-term assets | (1,712 | ) | — | |||||
Accounts payable and accrued expenses | (32,875 | ) | (1,840 | ) | ||||
Customer deposits and deferred revenue | (8,790 | ) | (10,227 | ) | ||||
Other long-term liabilities | 1,920 | 2,577 | ||||||
Net cash provided by operating activities | 114,265 | 181,245 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property and equipment | (19,232 | ) | (25,446 | ) | ||||
Proceeds from disposals of property and equipment | 2,998 | 3,176 | ||||||
Receipts from note receivable | 271 | 286 | ||||||
Merger of companies, net of cash acquired | (117,759 | ) | — | |||||
Net cash used for investing activities | (133,722 | ) | (21,984 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of long-term debt | 140,000 | — | ||||||
Repayment of long-term debt | (105,017 | ) | (161,866 | ) | ||||
Purchase of common stock | (3,113 | ) | — | |||||
Net cash provided by/ (used for) financing activities | 31,870 | (161,866 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 12,413 | (2,605 | ) | |||||
Cash and cash equivalents, beginning of period | 34,582 | 37,187 | ||||||
Cash and cash equivalents, end of period | $ | 46,995 | $ | 34,582 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 6,966 | $ | 15,033 | ||||
Asset retirement obligations | $ | 2,197 | $ | 2,236 | ||||
Income taxes paid | $ | 1,729 | $ | — | ||||
Common stock and options issued in Metrocall merger | $ | 214,236 | $ | — | ||||
Liabilities assumed in merger | $ | 57,214 | $ | — |
USA MOBILITY, INC.
UNITS IN SERVICE ACTIVITY
(unaudited)
Three Months Ended | ||||||||||||||||||
March 2004 | June 2004 | September 2004 | December 2004 | |||||||||||||||
Direct One-Way: | ||||||||||||||||||
Beginning units in service | 3,393,000 | 3,247,000 | 3,122,000 | 2,997,000 | ||||||||||||||
Unit in service acquired | 1,757,000 | |||||||||||||||||
Unit in service growth (decline) | (146,000 | ) | (125,000 | ) | (125,000 | ) | (197,000 | ) | ||||||||||
Ending units in service | 3,247,000 | 3,122,000 | 2,997,000 | 4,557,000 | ||||||||||||||
Service, rental and maintenance revenues (000s) | $ | 89,705 | $ | 83,584 | $ | 79,079 | $ | 99,560 | ||||||||||
Average revenue per unit | $ | 9.00 | $ | 8.77 | $ | 8.62 | $ | 8.63 | ||||||||||
Two-Way: | ||||||||||||||||||
Beginning units in service | 281,000 | 269,000 | 258,000 | 250,000 | ||||||||||||||
Unit in service acquired | 211,000 | |||||||||||||||||
Unit in service growth (decline) | (12,000 | ) | (11,000 | ) | (8,000 | ) | (15,000 | ) | ||||||||||
Ending units in service | 269,000 | 258,000 | 250,000 | 446,000 | ||||||||||||||
Service, rental and maintenance revenues (000s) | $ | 21,950 | $ | 20,739 | $ | 19,561 | $ | 24,961 | ||||||||||
Average revenue per unit | $ | 26.66 | $ | 26.28 | $ | 25.74 | $ | 23.76 | ||||||||||
Indirect One-Way: | ||||||||||||||||||
Beginning units in service | 754,000 | 654,000 | 577,000 | 511,000 | ||||||||||||||
Unit in service acquired | 690,000 | |||||||||||||||||
Unit in service growth (decline) | (100,000 | ) | (77,000 | ) | (66,000 | ) | (85,000 | ) | ||||||||||
Ending units in service | 654,000 | 577,000 | 511,000 | 1,116,000 | ||||||||||||||
Service, rental and maintenance revenues (000s) | $ | 7,359 | $ | 6,369 | $ | 5,713 | $ | 8,942 | ||||||||||
Average revenue per unit | $ | 3.49 | $ | 3.47 | $ | 3.53 | $ | 3.67 | ||||||||||
Two-Way: | ||||||||||||||||||
Beginning units in service | 9,000 | 8,000 | 12,000 | 14,000 | ||||||||||||||
Unit in service acquired | 86,000 | |||||||||||||||||
Unit in service growth (decline) | (1,000 | ) | 4,000 | 2,000 | (17,000 | ) | ||||||||||||
Ending units in service | 8,000 | 12,000 | 14,000 | 83,000 | ||||||||||||||
Service, rental and maintenance revenues (000s) | $ | 532 | $ | 482 | $ | 432 | $ | 1,783 | ||||||||||
Average revenue per unit | $ | 21.24 | $ | 21.09 | $ | 14.92 | $ | 10.92 | ||||||||||
Totals | ||||||||||||||||||
Beginning units in service | 4,437,000 | 4,178,000 | 3,969,000 | 3,772,000 | ||||||||||||||
Unit in service acquired | — | — | — | 2,744,000 | ||||||||||||||
Unit in service growth (decline) | (259,000 | ) | (209,000 | ) | (197,000 | ) | (314,000 | ) | ||||||||||
Ending units in service | 4,178,000 | 3,969,000 | 3,772,000 | 6,202,000 | ||||||||||||||
Service, rental and maintenance revenues (000s) | $ | 119,546 | $ | 111,174 | $ | 104,785 | $ | 135,246 | ||||||||||
Average revenue per unit | $ | 9.25 | $ | 9.12 | $ | 9.04 | $ | 8.91 | ||||||||||
USA MOBILITY, INC.
PRO FORMA UNITS IN SERVICE ACTIVITY (a)
(unaudited)
Three Months Ended | ||||||||||||||||
March 2004 | June 2004 | September 2004 | December 2004 | |||||||||||||
Direct One-Way: | ||||||||||||||||
Beginning units in service | 5,440,000 | 5,214,000 | 5,027,000 | 4,812,000 | ||||||||||||
Unit in service acquired | — | — | — | — | ||||||||||||
Unit in service growth (decline) | (226,000 | ) | (187,000 | ) | (215,000 | ) | (222,000 | ) | ||||||||
Ending units in service | 5,214,000 | 5,027,000 | 4,812,000 | 4,590,000 | ||||||||||||
Two-Way: | ||||||||||||||||
Beginning units in service | 497,000 | 474,000 | 453,000 | 440,000 | ||||||||||||
Unit in service acquired | — | — | — | — | ||||||||||||
Unit in service growth (decline) | (23,000 | ) | (21,000 | ) | (13,000 | ) | (27,000 | ) | ||||||||
Ending units in service | 474,000 | 453,000 | 440,000 | 413,000 | ||||||||||||
Indirect One-Way: | ||||||||||||||||
Beginning units in service | 1,813,000 | 1,571,000 | 1,350,000 | 1,198,000 | ||||||||||||
Unit in service acquired | — | — | — | — | ||||||||||||
Unit in service growth (decline) | (242,000 | ) | (221,000 | ) | (152,000 | ) | (114,000 | ) | ||||||||
Ending units in service | 1,571,000 | 1,350,000 | 1,198,000 | 1,084,000 | ||||||||||||
Two-Way: | ||||||||||||||||
Beginning units in service | 152,000 | 144,000 | 142,000 | 136,000 | ||||||||||||
Unit in service acquired | — | — | — | — | ||||||||||||
Unit in service growth (decline) | (8,000 | ) | (2,000 | ) | (6,000 | ) | (21,000 | ) | ||||||||
Ending units in service | 144,000 | 142,000 | 136,000 | 115,000 | ||||||||||||
Total | ||||||||||||||||
Beginning units in service | 7,902,000 | 7,403,000 | 6,972,000 | 6,586,000 | ||||||||||||
Unit in service acquired | — | — | — | — | ||||||||||||
Unit in service growth (decline) | (499,000 | ) | (431,000 | ) | (386,000 | ) | (384,000 | ) | ||||||||
Ending units in service | 7,403,000 | 6,972,000 | 6,586,000 | 6,202,000 | ||||||||||||
(a) | Assumes Arch and Metrocall combined as of January 1, 2004. |