AWIN AERWINS Technologies Inc

Arch Wireless Reports Third Quarter Operating Results WESTBOROUGH, Mass., Oct. 28 /PRNewswire-FirstCall/ -- Arch Wireless, Inc. (NASDAQ:AWIN)(BSE:AWL), a leading wireless messaging and mobile information company, today announced consolidated net income of $6.7 million, or $0.34 per share, for the quarter ended September 30, 2004. Consolidated revenues for the third quarter of 2004 were $109 million. "Operating results continued to meet our expectations despite ongoing competition among all wireless messaging service providers," said C. Edward Baker, Jr., chairman and chief executive officer. "We are pleased that various cost saving initiatives and changes to our business processes that we undertook over the past year have positioned the company to meet our expectations pending and subsequent to our merger with Metrocall Holdings, Inc." Arch reported a net decline of 197,000 messaging units in service for the quarter ended September 30, 2004 comprised of 191,000 one-way messaging units and 6,000 two-way messaging units. Messaging units in service totaled 3,772,000 at September 30, including 3,247,000 direct units in service and 525,000 indirect units in service. Baker said Arch's proposed merger with Metrocall is expected to close in November. "A definitive joint proxy statement/prospectus relating to the merger was filed with the Securities and Exchange Commission on October 6, 2004," he said, "and stockholders of each company are scheduled to vote on the merger on November 8, 2004 at special stockholder meetings." The record date for both meetings is October 7, 2004. "Upon receipt of all approvals," Baker added, "we will set a closing date, clearing the way for the two companies to combine into a new holding company to be called USA Mobility, Inc." USA Mobility filed with the Securities and Exchange Commission an amended registration statement on Form S-4, which includes a form of joint proxy statement/prospectus of Arch and Metrocall and other relevant documents in connection with the proposed transaction. Investors of Arch and Metrocall are urged to read the definitive joint proxy statement/prospectus and other relevant materials because they contain important information about USA Mobility, Arch and Metrocall and the proposed transaction. The definitive joint proxy statement/prospectus was sent to stockholders of record 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 USA Mobility, 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 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 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. Tables to Follow Contact: Bob Lougee (508) 435-6117 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited and in thousands) September 30, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $45,292 $34,582 Accounts receivable, net 20,987 26,052 Deposits 3,122 6,776 Prepaid rent 489 514 Prepaid expenses and other 13,381 7,381 Deferred income tax 22,226 30,206 Total current assets 105,497 105,511 Property and equipment 392,869 394,436 Less accumulated depreciation and amortization (242,029) (180,563) Property and equipment, net 150,840 213,873 Assets held for sale 1,322 1,139 Intangible and other assets, net 3 3 Deferred income tax 191,395 189,346 $449,057 $509,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $- $20,000 Accounts payable 11,580 8,836 Accrued compensation and benefits 9,850 17,820 Accrued network costs 7,274 7,893 Accrued property and sales taxes 9,102 10,076 Accrued interest - 1,520 Accrued restructuring charges 5,541 11,481 Accrued other 5,956 8,104 Customer deposits and deferred revenue 19,396 25,477 Total current liabilities 68,699 111,207 Long-term debt, less current maturities - 40,000 Other long-term liabilities 8,203 4,042 Stockholders' equity: Common stock - $0.0001 par value 2 2 Treasury stock (3,112) - Additional paid-in capital 344,876 339,928 Deferred stock compensation (1,644) (2,682) Retained earnings 32,033 17,375 Total stockholders' equity 372,155 354,623 $449,057 $509,872 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenues: One-way messaging $88,468 $116,946 $282,510 $380,579 Two-way messaging 20,949 26,677 66,363 81,873 Total revenues 109,417 143,623 348,873 462,452 Operating expenses: Cost of products sold 691 1,319 2,485 4,351 Service, rental, and maintenance 36,904 46,736 112,880 145,382 Selling 7,862 11,488 25,687 35,703 General and administrative 27,438 39,526 87,523 132,505 Depreciation and amortization 22,302 27,998 79,682 91,859 Stock based and other compensation 3,093 2,761 8,541 9,232 Restructuring charges - - 3,018 - Total operating expenses 98,290 129,828 319,816 419,032 Operating income 11,127 13,795 29,057 43,420 Interest income (expense), net 71 (3,511) (4,958) (13,984) Other income, net 66 232 411 315 Income before income tax expense 11,264 10,516 24,510 29,751 Income tax expense (4,527) (4,330) (9,852) (12,250) Net income $6,737 $6,186 $14,658 $17,501 Basic net income per common share $0.34 $0.31 $0.73 $0.88 Diluted net income per common share $0.34 $0.31 $0.73 $0.87 Basic weighted average common shares outstanding 19,914,099 20,000,000 19,967,708 20,000,000 Diluted weighted average common shares outstanding 20,041,555 20,080,572 20,091,801 20,028,504 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Nine Months Ended September 30, 2004 2003 Cash flows from operating activities: Net income $14,658 $17,501 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 79,682 91,859 Accretion of long-term debt - 4,681 Amortization of stock and other compensation 2,065 2,436 Deferred income tax provision 9,852 12,250 (Gain) loss on disposals of property and equipment (240) 6 Other income (168) (179) Provisions for doubtful accounts and service adjustments 7,517 20,065 Changes in assets and liabilities: Accounts receivable (2,452) (4,032) Prepaid expenses and other (5,182) 14,724 Accounts payable and accrued expenses (16,427) (7,968) Customer deposits and deferred revenue (6,081) (7,124) Other long-term liabilities 4,083 2,600 Net cash provided by operating activities 87,307 146,819 Cash flows from investing activities: Additions to property and equipment (15,328) (18,395) Proceeds from disposals of property and equipment 1,675 3,106 Receipts from note receivable 168 173 Net cash used for investing activities (13,485) (15,116) Cash flows from financing activities: Repayment of long-term debt (60,000) (110,000) Purchase of treasury shares (3,112) - Net cash used for financing activities (63,112) (110,000) Net increase (decrease) in cash and cash equivalents 10,710 21,703 Cash and cash equivalents, beginning of period 34,582 37,187 Cash and cash equivalents, end of period $45,292 $58,890 Supplemental disclosures: Interest paid $6,709 $6,177 Asset retirement obligations $- $1,244 ARCH WIRELESS, INC. UNIT IN SERVICE ACTIVITY Three Months Ended December March June September 2003 2004 2004 2004 Direct One-Way: Beginning units in service 3,300,000 3,393,000 3,247,000 3,122,000 Unit in service growth (decline) 93,000 (146,000) (125,000) (125,000) Ending units in service 3,393,000 3,247,000 3,122,000 2,997,000 Revenues (000s) $101,497 $92,940 $87,226 $82,723 Average revenue per unit $9.35 $9.00 $8.77 $8.62 Two-Way: Beginning units in service 300,000 281,000 269,000 258,000 Unit in service growth (decline) (19,000) (12,000) (11,000) (8,000) Ending units in service 281,000 269,000 258,000 250,000 Revenues (000s) $24,630 $22,756 $21,593 $20,494 Average revenue per unit $27.27 $26.66 $26.28 $25.74 Indirect One-Way: Beginning units in service 860,000 754,000 654,000 577,000 Unit in service growth (decline) (106,000) (100,000) (77,000) (66,000) Ending units in service 754,000 654,000 577,000 511,000 Revenues (000s) $8,256 $7,422 $6,454 $5,745 Average revenue per unit $3.39 $3.49 $3.47 $3.53 Two-Way: Beginning units in service 8,000 9,000 8,000 12,000 Unit in service growth (decline) 1,000 (1,000) 4,000 2,000 Ending units in service 9,000 8,000 12,000 14,000 Revenues (000s) $643 $541 $524 $455 Average revenue per unit $21.24 $21.09 $14.92 (1) $10.37 (1) Total: Beginning units in service 4,468,000 4,437,000 4,178,000 3,969,000 Unit in service growth (decline) (280,000) (259,000) (209,000) (197,000) Adjustment 249,000 - - - Ending units in service 4,437,000 4,178,000 3,969,000 3,772,000 (1) Average revenue per unit includes the effect of approximately 4,900 telemetry unit additions during the quarter ended June 30, 2004 and 2,300 telemetry unit additions during the quarter ended September 30, 2004. These telemetry unit additions have lower monthly charges than typical indirect units. DATASOURCE: Arch Wireless, Inc. CONTACT: Bob Lougee of Arch Wireless, Inc., +1-508-435-6117 Web site: http://www.arch.com/

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