<PAGE> 1
[GRAPHIC OMITTED]
QUARTERLY REPORT UNDER SECTION 13 0R 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
______________ to _____________
Commission file number 33-72646
USA MOBILE COMMUNICATIONS, INC. II
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1236804
(State of incorporation) (I.R.S. Employer Identification No.)
1800 WEST PARK DRIVE, SUITE 250
WESTBOROUGH, MASSACHUSETTS 01581
(address of principal executive offices) (Zip Code)
(508) 870-6700
(Registrant's telephone number, including area code)
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or for such shorter period that the Registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 748.7501 shares of the Company's
Common Stock ($.01 par value) were outstanding as of August 8, 1997.
[GRAPHIC OMITTED]
<PAGE> 2
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statements:
Consolidated Condensed Balance Sheets as of June 30, 1997 and
December 31, 1996 3
Consolidated Condensed Statements of Operations for the
Three and Six Months Ended June 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION 11
Item 1 Legal Proceedings
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,133 $ 891
Accounts receivable, net 8,647 8,034
Inventories 10,133 8,807
Prepaid expenses and other 568 962
Due from Arch Communications Enterprises, Inc. 953 (27)
----------- -----------
Total current assets 23,434 18,667
----------- -----------
Property and equipment, at cost 156,915 144,448
Less accumulated depreciation and amortization (51,135) (33,127)
----------- -----------
Property and equipment, net 105,780 111,321
----------- -----------
Intangible and other assets, net 399,813 428,839
----------- -----------
$ 529,027 $ 558,827
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 10,656 $ 4,850
Accrued interest 7,507 7,736
Accrued expenses and other liabilities 13,215 14,695
Due to Arch Communications Group, Inc. 672 2,950
----------- -----------
Total current liabilities 32,050 30,231
----------- -----------
Long-term debt 288,000 278,000
----------- -----------
Deferred income taxes 30,131 40,731
----------- -----------
Stockholder's equity:
Common stock - $.01 par value -- --
Additional paid-in capital 283,353 283,353
Accumulated deficit (104,507) (73,488)
----------- -----------
Total stockholder's equity 178,846 209,865
----------- -----------
$ 529,027 $ 558,827
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
3
<PAGE> 4
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited and in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Service, rental, and maintenance
revenues $ 35,413 $ 31,143 $ 69,569 $ 60,131
Product sales 4,807 3,633 9,709 7,509
---------- ---------- ---------- ----------
Total revenues 40,220 34,776 79,278 67,640
Cost of products sold (3,247) (2,348) (6,749) (4,712)
---------- ---------- ---------- ----------
36,973 32,428 72,529 62,928
---------- ---------- ---------- ----------
Operating expenses:
Service, rental, and maintenance 7,877 6,731 15,116 13,051
Selling 5,187 4,975 10,710 9,585
General and administrative 8,654 8,279 16,351 15,603
Depreciation and amortization 28,385 23,307 56,319 45,135
---------- ---------- ---------- ----------
Total operating expenses 50,103 43,292 98,496 83,374
---------- ---------- ---------- ----------
Operating income (loss) (13,130) (10,864) (25,967) (20,446)
Interest expense, net (7,864) (7,491) (15,652) (15,056)
---------- ---------- ---------- ----------
Income (loss) before income tax benefit (20,994) (18,355) (41,619) (35,502)
Benefit from income taxes 5,300 4,590 10,600 8,905
---------- ---------- ---------- ----------
Net income (loss) $ (15,694) $ (13,765) $ (31,019) $ (26,597)
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
4
<PAGE> 5
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
<S> <C> <C>
Net cash provided by operating activities $ 13,994 $ 8,726
---------- ----------
Cash flows from investing activities:
Additions to property and equipment, net (20,090) (30,146)
Additions to intangible and other assets (1,662) (676)
Sale of paging assets to Arch Communications Enterprises, Inc. -- 10,400
---------- ----------
Net cash used for investing activities (21,752) (20,422)
---------- ----------
Cash flows from financing activities:
Issuance of long-term debt 66,000 51,500
Repayment of long-term debt (56,000) (47,500)
Proceeds from Arch Communications Enterprises, Inc. demand loan -- 32,500
Repayment of demand loan to Arch Communications Enterprises, Inc. -- (32,500)
Capital contribution from Arch Communications Group, Inc. -- 15,000
---------- ----------
Net cash provided by financing activities 10,000 19,000
---------- ----------
Net increase in cash and cash equivalents 2,242 7,304
Cash and cash equivalents, beginning of period 891 1,543
---------- ----------
Cash and cash equivalents, end of period $ 3,133 $ 8,847
========== ==========
Supplemental disclosure:
Interest paid $ 15,684 $ 14,313
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
5
<PAGE> 6
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC. )
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(a) Preparation of Interim Financial Statements - The consolidated
condensed financial statements of USA Mobile Communications, Inc. II ("USA
Mobile II") have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission. The financial information included
herein, other than the consolidated condensed balance sheet as of December 31,
1996, has been prepared by management without audit by independent accountants.
The consolidated condensed balance sheet at December 31, 1996 has been derived
from, but does not include all the disclosures contained in, the audited
consolidated financial statements for the year ended December 31, 1996. In the
opinion of management, all of these unaudited statements include all adjustments
and accruals consisting only of normal recurring accrual adjustments which are
necessary for a fair presentation of the results of all interim periods reported
herein. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in
USA Mobile II's Annual Report on Form 10-K for the year ended December 31, 1996.
The results of operations for the periods presented are not necessarily
indicative of the results that may be expected for a full year.
(b) Intangible and Other Assets - Intangible and other assets, net of
accumulated amortization, are composed of the following (in thousands):
June 30, December 31,
1997 1996
(unaudited)
Goodwill $228,402 $242,769
Purchased FCC licenses 110,664 117,183
Purchased subscriber lists 56,682 65,256
Non-competition agreements 2,503 2,615
Deferred financing costs 881 248
Other 681 768
-------- --------
$399,813 $428,839
======== ========
(c) Reclassifications - Certain amounts of prior periods were reclassified
to conform with the 1997 presentation.
6
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause USA Mobile II's actual results to differ materially
from those indicated or suggested by such forwarding-looking statements. These
factors include, without limitation, those set forth below under the caption
"Factors Affecting Future Operating Results".
SHIFT IN OPERATING FOCUS
On April 30, 1997, Arch Communications Group, Inc. ("Arch") announced it
was shifting its operating focus to put a higher priority on leverage reduction
rather than subscriber unit growth. Arch's deleveraging efforts will focus on
but not be limited to slowing capital expenditures, across-the-board operating
efficiencies and the possible sale of non-strategic assets. The following
discussion does not reflect the future impact of this shift in operating focus.
RESULTS OF OPERATIONS
Total revenues increased to $40.2 million (a 15.7% increase), and $79.3
million (a 17.2% increase) in the three and six months ended June 30, 1997,
respectively, from $34.8 million and $67.6 million for the corresponding 1996
periods. Net revenues (total revenues less cost of products sold) increased to
$37.0 million (a 14.0% increase) and $72.5 million (a 15.3% increase) in the
three and six months ended June 30, 1997, respectively, from $32.4 million and
$62.9 million, respectively. Service, rental and maintenance revenues, which
consist primarily of recurring revenues associated with the sale or lease of
pagers, increased 13.7% to $35.4 million and 15.7% to $69.6 million,
respectively, for the three and six months ended June 30, 1997, from $31.1
million and $60.1 million for the three and six months ended June 30, 1996,
respectively. These increases in revenues were primarily due to the increase in
the number of pagers in service from June 30, 1997 to June 30, 1996. Maintenance
revenues represented less than 10% of total service, rental and maintenance
revenues in the three and six months ended June 30, 1997 and 1996. USA Mobile II
does not differentiate between service and rental revenues. Product sales, less
cost of products sold, increased to $1.6 million and $3.0 million in the three
and six months ended June 30, 1997, respectively, from $1.3 million and $2.8
million in the three and six months ended June 30, 1996, respectively, as a
result of a greater number of pager unit sales.
Service, rental and maintenance expenses, which consist primarily of
telephone line and site rental expenses, increased to $7.9 million and $15.1
million in the three and six months ended June 30, 1997, respectively, from $6.7
million and $13.1 million in the three and six months ended June 30, 1996,
respectively. The increases were due primarily to increased expenses associated
with system expansions and the provision of paging services to a greater number
of subscribers.
Selling expenses increased to $5.2 million and $10.7 million in the three
and six months ended June 30, 1997, respectively, from $5.0 million and $9.6
million in the three and six months ended June 30, 1996, respectively. Selling
expenses are directly related to the number of net new subscribers added, as
well as, promotional activities used to increase sales. Therefore, such expenses
may increase in the future if pagers in service are added at a more rapid rate
than in the past.
General and administrative expenses increased to $8.7 million and $16.4
million in the three and six months ended June 30, 1997, respectively, from $8.3
million and $15.6 million in the three and six months ended June 30, 1996,
respectively. These increases were due primarily to increased expenses
associated with supporting more pagers in service.
Depreciation and amortization expenses increased to $28.4 million and $56.3
million in the three and six months ended June 30, 1997, respectively, from
$23.3 million and $45.1 million in the three and six months ended June 30, 1996,
respectively. These expenses reflect USA Mobile II's continued investment in
pagers and other system expansion capital to support continued growth.
Operating loss increased to $13.1 million and $26.0 million in the three
and six months ended June 30, 1997, respectively, from $10.9 million and $20.4
million in the three and six months ended June 30, 1996, respectively, as a
result of the factors outlined above.
7
<PAGE> 8
Net interest expense increased to $7.9 million and $15.7 million in the
three and six months ended June 30, 1997 from $7.5 million and $15.1 million in
the corresponding 1996 periods. The increase is principally attributable to an
increase in USA Mobile II's outstanding debt.
During the three and six months ended June 30, 1997, USA Mobile II
recognized an income tax benefit of $5.3 million and $10.6 million,
respectively, as compared to $4.6 million and $8.9 million recognized in the
three and six months ended June 30, 1996, respectively. These benefits represent
the tax benefit of operating losses which were available to offset previously
established deferred tax liabilities arising from Arch's acquisition of USA
Mobile.
USA Mobile II's net loss was $15.7 million and $31.0 million for the three
and six months ended June 30, 1997, respectively, as compared to $13.8 million
and $26.6 million for the three and six months ended June 30, 1996,
respectively, as a result of factors outlined above.
Earnings before interest, taxes, depreciation and amortization, ("EBITDA"),
increased 22.6% to $15.3 million and increased 22.9% to $30.4 million in the
three and six months ended June 30, 1997, respectively, from $12.4 million and
$24.7 million in the three and six months ended June 30, 1996, respectively, as
a result of the factors outlined above. EBITDA is a standard measure of
financial performance in the paging industry and is also one of the financial
measures used to calculate whether USA Mobile II is in compliance with the
covenants under its debt agreements, but should not be construed as an
alternative to operating income or cash flows from operating activities as
determined in accordance with generally accepted accounting principles. EBITDA
does not reflect income tax benefit and interest expense.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The following important factors, among others, could cause USA Mobile II's
actual operating results to differ materially from those indicated or suggested
by forward-looking statements made in this Form 10-Q or presented elsewhere by
USA Mobile II's management from time to time.
INDEBTEDNESS AND HIGH DEGREE OF LEVERAGE
USA Mobile II is highly leveraged. At June 30, 1997, USA Mobile II had
outstanding $288.0 million of total debt. Many factors, some of which will be
beyond USA Mobile II's control, such as prevailing economic conditions, will
affect the performance of USA Mobile II. In addition, covenants imposed by the
credit facility and other indebtedness of USA Mobile II restrict the ability of
USA Mobile II to incur additional indebtedness and prohibit certain activities
and may limit other aspects of USA Mobile II's operations. There can be no
assurance that USA Mobile II will be able to generate sufficient cash flow to
cover required interest and principal payments on its indebtedness. If USA
Mobile II is unable to meet interest and principal payments in the future, it
may, depending upon the circumstances which then exist, seek additional equity
or debt financing, attempt to refinance its existing indebtedness or sell all or
part of its business or assets to raise funds to repay its indebtedness. There
can be no assurance that sufficient equity or debt financing will be available
or, if available, that it will be on terms acceptable to USA Mobile II, that USA
Mobile II will be able to refinance its existing indebtedness or that sufficient
funds could be raised through asset sales. USA Mobile II's high degree of
leverage may have important consequences for USA Mobile II, including: (i) the
ability of USA Mobile to obtain additional financing for acquisitions, working
capital, capital expenditures or other purposes, if necessary, may be impaired
or such financing may not be on favorable terms; (ii) a substantial portion of
the cash flow of USA Mobile II will be used to pay interest expense, which will
reduce the funds which would otherwise be available for operations and future
business opportunities; (iii) USA Mobile II may be more highly leveraged than
its competitors which may place it at a competitive disadvantage; and (iv) USA
Mobile II's high degree of leverage will make it more vulnerable to a downturn
in its business or the economy generally.
FUTURE CAPITAL NEEDS
USA Mobile II's business strategy requires the availability of substantial
funds to finance the continued development and future growth and expansion of
its operations. The amount of capital required by USA Mobile II will depend upon
a number of factors, including subscriber growth, technological developments,
marketing and sales expenses, competitive conditions, acquisition strategy and
acquisition opportunities. No assurance can be given that additional equity or
debt financing will be available to USA Mobile II on acceptable terms, if at
all. The unavailability of sufficient financing when needed would have a
material adverse effect on USA Mobile II.
8
<PAGE> 9
HISTORY OF LOSSES
USA Mobile II has not reported any net income since its inception, except
that USA Mobile II reported net income of $17.6 million in the year ended
December 31, 1991 resulting from an extraordinary gain of $42.2 million
attributable to the restructuring of its debt. USA Mobile II's historical net
losses have resulted principally from (i) substantial depreciation and
amortization expenses, primarily related to intangible assets and pager
depreciation, and (ii) interest expense on debt incurred primarily to finance
acquisitions of paging operations and other costs of growth. Substantial and
increased amounts of debt are expected to be outstanding for the foreseeable
future, which will result in significant additional interest expense which could
have a substantial negative impact on USA Mobile II. USA Mobile II expects to
continue to report net losses for the foreseeable future.
GROWTH AND ACQUISITION STRATEGY
USA Mobile II has pursued and intends to continue to pursue acquisitions of
paging businesses as well as the continued internal growth of USA Mobile II's
paging business. The process of integrating acquired paging businesses may
involve unforeseen difficulties and may require a disproportionate amount of the
time and attention of USA Mobile II's management and the financial and other
resources of USA Mobile II. No assurance can be given that suitable additional
acquisitions can be identified, financed and completed on acceptable terms, or
that USA Mobile II's future acquisitions will be successful. Implementation of
USA Mobile II's growth strategies will be subject to numerous other
contingencies beyond the control of USA Mobile II, including general and
regional economic conditions, interest rates, competition, changes in regulation
or technology and the ability to attract and retain skilled employees.
Accordingly, no assurance can be given that USA Mobile II's growth strategies
will prove effective or that the goals of USA Mobile II will be achieved.
DEPENDENCE ON KEY PERSONNEL
The success of USA Mobile II will be dependent, to a significant extent,
upon the continued services of a relatively small group of executive personnel.
USA Mobile II does not have employment agreements with any of its current
executive officers, although all current executive officers have entered into
non-competition agreements with USA Mobile II. The loss or unavailability of one
or more of its executive officers or the inability to attract or retain key
employees in the future could have an adverse effect upon USA Mobile II's
operations.
COMPETITION AND TECHNOLOGICAL CHANGE
USA Mobile II faces competition from other paging service providers in all
markets in which it operates as well as from certain competitors who hold
nationwide licenses. USA Mobile II believes that competition for paging
subscribers is based on quality of service, geographic coverage and price and
that USA Mobile II generally competes effectively based on these factors.
Monthly fees for basic paging services have, in general, declined since USA
Mobile II commenced operations, due in part to competitive conditions, and USA
Mobile II may face significant price-based competition in the future which could
adversely affect USA Mobile II. Some of USA Mobile II's competitors possess
greater financial, technical and other resources than USA Mobile II. A trend
towards increasing consolidation in the paging industry in particular and the
wireless communications industry in general in recent years has led to
competition from increasingly larger and better capitalized competitors. If any
of such competitors were to devote additional resources to the paging business
or focus its strategy on USA Mobile II's markets, USA Mobile II's results of
operations could be adversely affected. A variety of wireless two-way
communication technologies currently are in use or under development. Although
such technologies generally are higher priced than paging services or not widely
available, technological improvements could result in increased capacity and
efficiency for wireless two-way communication and, accordingly, could result in
increased competition for USA Mobile II. Two-way service providers also could
elect to provide paging service as an adjunct to their primary services. Future
technological advances in the telecommunications industry could increase new
services or products competitive with the paging services provided by USA Mobile
II or could require USA Mobile II to reduce the price of its paging services or
incur additional capital expenditures to meet competitive requirements. Recent
and proposed regulatory changes by the FCC are aimed at encouraging such
technological advances and new services. For example, the FCC has created
potential sources of competition by opening up new spectrum for such services as
the General Wireless Communications Service ("GWCS") and the Wireless
Communications Service ("WCS") as well as speeding up licensing of other
services through auctions, including the Local Multipoint Distribution Service
("LMDS"), 220-222 MHz and broadband PCS services. Entities offering service on
wireless two-way communications technology, including cellular telephones and
specialized mobile radio services, also compete with the paging services that
the Company provides. There can be no assurance that the Company will be able to
9
<PAGE> 10
compete successfully with its current and future competitors in the paging
business or with competitors offering alternative communication technologies.
SUBSCRIBER TURNOVER
The results of operations of wireless messaging service providers, such as
USA Mobile II, can be significantly affected by subscriber cancellations. The
sales and marketing costs associated with attracting new subscribers are
substantial relative to the costs of providing service to existing customers.
Because the paging business is characterized by high fixed costs, disconnections
directly and adversely affect operating cash flow. An increase in its subscriber
cancellation rate may adversely affect USA Mobile II's results of operations.
DEPENDENCE ON SUPPLIERS
USA Mobile II does not manufacture any of the pagers used in its paging
operations. USA Mobile II buys pagers primarily from Motorola, Inc. ("Motorola")
and NEC America, Inc. ("NEC") and therefore is dependent on such manufacturers
to obtain sufficient pager inventory for new subscriber and replacement needs.
In addition, USA Mobile II purchases terminals and transmitters primarily from
Glenayre Technologies, Inc. ("Glenayre") and Motorola and thus is dependent on
such manufacturers for sufficient terminals and transmitters to meet its
expansion and replacement requirements. To date, USA Mobile II has not
experienced significant delays in obtaining pagers, terminals or transmitters,
but there can be no assurance that USA Mobile II will not experience such delays
in the future. USA Mobile II has never had a purchase agreement with Glenayre or
NEC. USA Mobile II's purchase agreement with Motorola expires in December 1997,
with a provision for automatic renewal for a one-year term. Although USA Mobile
II believes that sufficient alternative sources of pagers, terminals and
transmitters exist, there can be no assurance that USA Mobile II would not be
adversely affected if it were unable to obtain these items from current supply
sources or on terms comparable to existing terms.
GOVERNMENT REGULATION, FOREIGN OWNERSHIP AND POSSIBLE REDEMPTION
The paging operations of USA Mobile II are subject to regulation by the FCC
and various state regulatory agencies. There can be no assurance that those
agencies will not propose or adopt regulations or take actions that would have a
material adverse effect on USA Mobile II's business. Changes in regulation of
USA Mobile II's paging business or the allocation of radio spectrum for services
that compete with USA Mobile II's business could adversely USA Mobile II's
results of operations. Indeed, the FCC has created potential sources of
competition by opening up new spectrum for such services as the GWCS and the WCS
as well as, speeding up licensing of other services through auctions, including
the LMDS, 220-222 MHz and broadband PCS services. Further, the FCC has recently
adopted rules implementing a market area licensing scheme. In addition, some
aspects of the recently enacted Telecommunications Act of 1996 could have a
beneficial effect on USA Mobile II's business, but other provisions may place
additional burdens upon USA Mobile II or subject USA Mobile II to increased
competition.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
USA Mobile II is involved in various lawsuits and claims arising
in the normal course of business. USA Mobile II believes that none
of such matters will have a material adverse effect on the USA
Mobile II's business or financial condition.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed on the accompanying index to exhibits are
filed as part of this Quarterly Report on Form 10-Q.
(b) None.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q for the quarter ended June
30, 1997, to be signed on its behalf by the undersigned thereunto duly
authorized.
USA MOBILE COMMUNICATIONS, INC. II
Dated: August 11, 1997 By: /S/ BRIAN D. BOYCE
-------------------
Brian D. Boyce
Vice President, Finance and Controller
12
<PAGE> 13
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
27.1* - Financial Data Schedule.
* Filed herewith
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000916122
<NAME> USA MOBILE COMMUNICATIONS, INC. II
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 3,133
<SECURITIES> 0
<RECEIVABLES> 9,527
<ALLOWANCES> 880
<INVENTORY> 10,133
<CURRENT-ASSETS> 23,434
<PP&E> 156,915
<DEPRECIATION> 51,135
<TOTAL-ASSETS> 529,027
<CURRENT-LIABILITIES> 32,050
<BONDS> 288,000
0
0
<COMMON> 283,353
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 529,027
<SALES> 4,807
<TOTAL-REVENUES> 40,220
<CGS> 3,247
<TOTAL-COSTS> 13,064
<OTHER-EXPENSES> 37,039
<LOSS-PROVISION> 1,581
<INTEREST-EXPENSE> 7,864
<INCOME-PRETAX> (20,994)
<INCOME-TAX> (5,300)
<INCOME-CONTINUING> (15,694)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,694)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
