Vince Kelly – President and CEO Tom Schilling – COO and CFO

Thank you for standing by, everyone and welcome to this USA Mobility's first quarter investor conference call. Just a quick reminder, today's call is being recorded. Online today, we have Vince Kelly, President and CEO and Tom Schilling, Chief Operating Officer and CFO. At this time, for opening comments, I would like to turn the call over to Mr. Kelly. Please go ahead, sir.

Good morning. Thank you for joining us for our first quarter investor update. Before we discuss our operating results, I wanted to remind everyone that today's conference call may include forward-looking statements that are subject to risks and uncertainties related to USA Mobility's future financial and business performance. Such statements may include estimates of revenue, expenses and income, as well as other predictive statements or plans, which are dependent upon future events or conditions. These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results. USA Mobility's actual results could differ materially from those anticipated in these forward-looking statements. Although these statements are based upon assumptions that the company believes to be reasonable, they are subject to risks and uncertainties. Please review the risk factor section relating to our operations and the business environment in which we compete contained in our 2009 Form 10-K, our first quarter Form 10-Q and related company documents filed with the Securities and Exchange Commission. Please note that USA Mobility assumes no obligation to update any forward-looking statements from past or present filings and conference calls. Let me begin by highlighting what we believe was an extraordinarily successful first quarter for USA Mobility. Despite a still sluggish economy, high jobless rates nationwide and continued migration of customers to alternative wireless services, we ended the quarter ahead of our key operating goals for subscribers, total revenue, average revenue per unit or ARPU, operating expenses and operating cash flow. At the same time, we were able to maintain cash flow margins, operate profitably with a low cost operating structure and once again return capital to our stockholders. Tom will discuss our financial results in more detail in a few minutes, but…

Thanks, Vince and good morning. As Vince mentioned, we're very pleased with the company's first quarter results, which are in line with our previously announced financial guidance. Continued reductions in operating expense combined with reduced customer churn and an increase in ARPU contributed to strong cash flows and a higher EBITDA margin for the quarter. We're especially pleased with the improvement in subscriber trends during the quarter, which had deteriorated significantly for most of 2009, as a result of the weak economy and sharp increase in unemployment. We ended the quarter with 2,099,000 subscribers, a net decrease of 83,000 units during the quarter, compared to a decline of 115,000 units in the prior quarter and 208,000 units in the year earlier quarter. The quarterly rate of subscriber loss improved to 3.8% from 5% in the fourth quarter and 7.4% in the year earlier quarter. Our annual rate of net unit loss improved to 19.5% compared to 22.5% in the fourth quarter and 21.8% in the year earlier quarter. Total growth placements increased to 76,000 in the first quarter from 68,000 in the fourth quarter, while disconnects declined to 159,000 from 183,000 in the prior quarter. Healthcare continues to be our most stable market segment with the highest gross placement rate and the lowest net unit loss rate. In the first quarter, the gross placement rate for healthcare was 3.5% and net unit loss was 1.4% compared to 3.4% and 2.1% respectively for the prior quarter. Overall, healthcare contributed nearly 70% of all gross placements in our direct channel during the quarter. And at March 31st, healthcare represented 54.5% of our total subscriber base, compared to 44.9% a year earlier. Total paging ARPU was $9 in the first quarter, compared to $8.88 in the fourth quarter and $8.86 in the first…

Thanks, Tom. Before we take your questions, I wanted to address a few other items that may be of interest to investors. First, I'll provide a few sales and marketing highlights from the first quarter. Second, I'll briefly review our current capital allocation strategy. And finally, I'll comment on our upcoming annual meeting with stockholders. Looking at our selling and marketing activities in the first quarter, we continue to focus on providing wireless messaging solutions to our target market segments of healthcare, government and large enterprise. These core segments represented approximately 87% of our direct subscriber base at the end of the quarter, up slightly from 86% at the end of 2009 and 82% in the same quarter a year ago. They also accounted for approximately 82% of our direct paging revenue in the first quarter, compared to 76% in the year earlier quarter. Our healthcare segment continued to be a major contributor during the first quarter, generating approximately 53% of total direct paging revenue. Our cellular business also made significant progress during the first quarter with total activations up from the prior quarter. It was the first full quarter since bringing on T-Mobile as a second provider, adding to our longstanding and valuable relationship with Sprint. As expected, T-Mobile has opened up many new opportunities for us to pursue where a lower-cost solution is required. We continued to progress toward full commercialization of our I-LAND messaging network during the first quarter. The I-LAND system, which we introduced last November, is a two way paging solution that offers the messaging speed of an in-house system with full wide area roaming capabilities. The system's two-way feature also allows for tracking and reporting of message status plus feedback to the customer when messages have been received and read by the recipient. To…

(Operator Instructions).

Well, if there're no questions, I think our results speak for themselves and the trends that we've just talked about. We're really looking forward to speaking to you again after we release our second quarter results. And those of you that want to join us at our shareholders' meeting, as I said are certainly welcome. Thanks very much for your support and everyone have a great day.

That does conclude our conference call. Thank you all for joining us.