AWIN AERWINS Technologies Inc

Arch Wireless Reports Second Quarter Operating Results WESTBOROUGH, Mass., Aug. 3 /PRNewswire-FirstCall/ -- Arch Wireless, Inc. (NASDAQ:AWIN)(BSE:AWL), a leading wireless messaging and mobile information company, today announced consolidated net income of $3.1 million, or $0.15 per share, for the quarter ended June 30, 2004. Consolidated revenues for the second quarter of 2004 were $116 million. "Despite ongoing competition in the wireless messaging industry, we continued to improve our operations and business processes and are pleased with the company's second quarter operating results," said C. Edward Baker, Jr., chairman and chief executive officer. "During 2003 and the first half of 2004 we made several important changes to our operating processes, allowing for continued expense savings and the creation of necessary processes to eliminate excess network capacity and maintain or improve many of our operating metrics," he added. Arch reported a net decline of 209,000 messaging units in service for the quarter ended June 30, 2004 comprised of 202,000 one-way messaging units and 7,000 two-way messaging units. Messaging units in service totaled 3,969,000 at June 30, 2004 including 3,380,000 direct units in service and 589,000 indirect units in service. Average revenue per direct unit in service was $10.10 during the second quarter compared to $3.66 per indirect unit in service. J. Roy Pottle, executive vice president and chief financial officer, said Arch continued to strengthen its financial position during the quarter. "Arch became debt-free on May 28, 2004 when our wholly owned subsidiary, Arch Wireless Holdings, Inc. (AWHI), completed the final redemption of its 12% Subordinated Secured Compounding Notes due 2009," he said. "In addition to repaying $300 million of debt over the past twenty-four months," Pottle noted, "the company has successfully restructured its operations to reduce fixed costs in order to maintain operating margins despite declines in revenue. This provides Arch with increased operating and financial flexibility in advance of our pending merger with Metrocall." Baker noted that progress toward Arch's proposed merger with Metrocall is on schedule. "We expect to file a definitive joint proxy statement/prospectus relating to the merger with the Securities and Exchange Commission in the near future," he said, "which will clear the way for shareholders of both companies to vote on the merger after distribution and review of the definitive joint proxy/prospectus." Arch and Metrocall currently plan to schedule special meetings of their respective shareholders for mid-September. Baker said the proposed merger also requires the approval and consent of the Federal Communications Commission and clearance from the U.S. Department of Justice. "We expect those agency reviews to be completed within the next few months," he added, "and that, as anticipated, the merger will be completed at the end of the third quarter or early in the fourth quarter." Arch and Metrocall announced a definitive merger agreement on March 29, 2004 in which both companies would combine into a new holding company. In connection with the proposed business combination transaction, on July 23, 2004 USA Mobility, Inc. (formerly known as Wizards-Patriots Holdings, Inc.), the holding company in the proposed transaction ("Parent"), filed with the Securities and Exchange Commission (the "SEC") an amended registration statement on Form S-4, which includes a preliminary joint proxy statement/prospectus of Arch and Metrocall and other relevant documents in connection with the proposed transaction. In addition, Parent will prepare and file a definitive joint proxy statement/prospectus and other documents regarding the proposed transaction with the SEC. Investors of Arch and Metrocall are urged to read the definitive joint proxy statement/prospectus and other relevant materials because they will contain important information about Parent, Arch and Metrocall and the proposed transaction. The definitive joint proxy statement/prospectus will be sent to stockholders of Arch and Metrocall seeking their approval of the proposed transaction. Investors may obtain a free copy of these materials and other documents filed by Parent, Arch and Metrocall with the Securities and Exchange Commission at the SEC's website at http://www.sec.gov/. A free copy of the definitive joint proxy statement/prospectus, once it is available, also may be obtained from Arch Wireless, Inc., 1800 West Park Drive, Suite 250, Westborough, MA 01581, Attention: Jerry Cimmino (tel.: 508-870-6700), or Metrocall Holdings, Inc., 6677 Richmond Highway, Alexandria, Virginia 22306, Attention: Shirley White (tel.: 703-660-6677). Investors also may access free copies of the documents filed with the SEC by Arch on Arch's website at http://www.arch.com/ or upon written request to Arch at its address listed above, and investors may access free copies of the documents filed with the SEC by Metrocall on Metrocall's website at http://www.metrocall.com/ or upon written request to Metrocall at its address indicated above. Arch and Metrocall and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Arch stockholders. The directors and executive officers of Arch include: William E. Redmond, Jr., Richard A. Rubin, Samme L. Thompson, James V. Continenza, Eric Gold, Carroll D. McHenry, Matthew Oristano, J. Roy Pottle and C. Edward Baker, Jr. The directors and executive officers of Metrocall include: Vincent D. Kelly, Royce Yudkoff, Eugene I. Davis, Nicholas A. Gallopo, David J. Leonard, Brian O'Reilly, Steven D. Scheiwe, George Z. Moratis and Stan Sech. Stockholders may obtain additional information regarding the interests of such participants by reading the preliminary joint proxy statement/prospectus and, when it becomes available, the definitive joint proxy statement/prospectus. Arch Wireless, Inc., headquartered in Westborough, Mass., is a leading wireless messaging and mobile information company with operations throughout the United States. It offers a full range of wireless messaging and wireless e-mail services, including mobile data solutions for the enterprise, to business and retail customers nationwide. Arch provides services to customers in all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico and in the Caribbean principally through a nationwide direct sales force, as well as through indirect resellers, retailers and other strategic partners. Additional information on Arch is available on the Internet at http://www.arch.com/. 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 Arch's expectations for future operating and financial performance and completion of its pending merger with Metrocall, 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 Arch'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 its paging products and services, Arch's ability to continue to reduce operating expenses, possible delays in or failure to obtain shareholder or regulatory approvals of the merger with Metrocall, Arch's 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 Arch's periodic reports and registration statements filed with the Securities and Exchange Commission. Although Arch 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. Arch disclaims any intent or obligation to update any forward- looking statements. ARCH WIRELESS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited and in thousands) June 30, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $22,367 $34,582 Accounts receivable, net 20,279 26,052 Deposits 3,224 6,776 Prepaid rent 384 514 Prepaid expenses and other 8,331 7,381 Deferred income tax 25,893 30,206 Total current assets 80,478 105,511 Property and equipment 391,936 394,436 Less accumulated depreciation and amortization (224,615) (180,563) Property and equipment, net 167,321 213,873 Assets held for sale - 1,139 Intangible and other assets, net 3 3 Deferred income tax 191,955 189,346 $439,757 $509,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $- $20,000 Accounts payable 8,403 8,836 Accrued compensation and benefits 7,131 17,820 Accrued network costs 7,100 7,893 Accrued property and sales taxes 8,887 10,076 Accrued interest - 1,520 Accrued restructuring charges 8,470 11,481 Accrued other 7,028 8,104 Customer deposits and deferred revenue 21,316 25,477 Total current liabilities 68,335 111,207 Long-term debt, less current maturities - 40,000 Other long-term liabilities 6,921 4,042 Stockholders' equity: Common stock 2 2 Treasury stock (3,112) - Additional paid-in capital 344,576 339,928 Deferred stock compensation (2,261) (2,682) Retained earnings 25,296 17,375 Total stockholders' equity 364,501 354,623 $439,757 $509,872 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Revenues: One-way messaging $93,680 $126,761 $194,042 $263,632 Two-way messaging 22,117 27,315 45,414 55,197 Total revenues 115,797 154,076 239,456 318,829 Operating expenses: Cost of products sold 856 1,374 1,794 3,032 Service, rental, and maintenance 36,988 48,511 75,976 98,646 Selling 8,757 11,721 17,825 24,215 General and administrative 28,968 43,887 60,085 92,979 Depreciation and amortization 31,071 30,638 57,380 63,861 Stock based and other compensation 2,510 4,276 5,448 6,471 Restructuring charges - - 3,018 - Total operating expenses 109,150 140,407 221,526 289,204 Operating income 6,647 13,669 17,930 29,625 Interest expense, net (1,700) (4,827) (5,029) (10,473) Other income (expense) 177 73 345 83 Income before income tax expense 5,124 8,915 13,246 19,235 Income tax expense (2,060) (3,671) (5,325) (7,920) Net income $3,064 $5,244 $7,921 $11,315 Basic net income per common share $0.15 $0.26 $0.40 $0.57 Diluted net income per common share $0.15 $0.26 $0.39 $0.57 Basic weighted average common shares outstanding 19,965,076 20,000,000 19,982,635 20,000,000 Diluted weighted average common shares outstanding 20,109,191 20,025,555 20,093,617 20,012,848 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Six Months Ended June 30, 2004 2003 Cash flows from operating activities: Net income $7,921 $11,315 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 57,380 63,861 Accretion of long-term debt - 4,750 Amortization of stock and other compensation 1,448 1,773 Deferred income tax provision 5,325 7,920 (Gains) losses on disposals of property and equipment (230) 61 Other income (110) (119) Provisions for doubtful accounts and service adjustments 4,378 15,294 Changes in assets and liabilities: Accounts receivable 1,395 (2,298) Prepaid expenses and other (129) 13,071 Accounts payable and accrued expenses (18,711) (16,708) Customer deposits and deferred revenue (4,161) (4,340) Other long-term liabilities 2,801 1,733 Net cash provided by operating activities 57,307 96,313 Cash flows from investing activities: Additions to property and equipment (8,138) (9,695) Proceeds from disposals of property and equipment 1,618 2,232 Receipts from note receivable 110 119 Net cash used for investing activities (6,410) (7,344) Cash flows from financing activities: Repayment of long-term debt (60,000) (80,000) Capital contribution (distribution) (3,112) - Net cash used for financing activities (63,112) (80,000) Net increase (decrease) in cash and cash equivalents (12,215) 8,969 Cash and cash equivalents, beginning of period 34,582 37,187 Cash and cash equivalents, end of period $22,367 $46,156 Supplemental disclosures: Interest paid $6,690 $5,456 Asset retirement obligations $- $1,244 ARCH WIRELESS, INC. UNIT IN SERVICE ACTIVITY Three Months Ended September 2003 December 2003 March 2004 June 2004 Direct One-Way: Beginning units in service 3,476,000 3,300,000 3,393,000 3,247,000 Unit in service growth (decline) (176,000) 93,000 (146,000) (125,000) Ending units in service 3,300,000 3,393,000 3,247,000 3,122,000 Revenues (000s) $107,455 $101,497 $92,940 $87,226 Average revenue per unit $9.43 $9.35 $9.00 $8.77 Two-Way: Beginning units in service 310,000 300,000 281,000 269,000 Unit in service growth (decline) (10,000) (19,000) (12,000) (11,000) Ending units in service 300,000 281,000 269,000 258,000 Revenues (000s) $25,940 $24,630 $22,756 $21,593 Average revenue per unit $27.67 $27.27 $26.66 $26.28 Indirect One-Way: Beginning units in service 978,000 860,000 754,000 654,000 Unit in service growth (decline) (118,000) (106,000) (100,000) (77,000) Ending units in service 860,000 754,000 654,000 577,000 Revenues (000s) $9,491 $8,256 $7,422 $6,454 Average revenue per unit $3.44 $3.39 $3.49 $3.47 Two-Way: Beginning units in service 9,000 8,000 9,000 8,000 Unit in service growth (decline) (1,000) 1,000 (1,000) 4,000 Ending units in service 8,000 9,000 8,000 12,000 Revenues (000s) $737 $643 $541 $524 Average revenue per unit $21.96 $21.24 $21.09 $14.92 (1) Total Beginning units in service 4,773,000 4,468,000 4,437,000 4,178,000 Unit in service growth (decline) (305,000) (280,000) (259,000) (209,000) Adjustment - 249,000 - - Ending units in service 4,468,000 4,437,000 4,178,000 3,969,000 (1) Average revenue per unit includes the effect of approximately 4,900 telemetry unit additions during the quarter. These units have lower monthly charges than typical indirect units. Contact: Bob Lougee, (508) 435-6117 DATASOURCE: Arch Wireless, Inc. CONTACT: Bob Lougee, Arch Wireless, Inc., +1-508-435-6117 Web site: http://www.arch.com/

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