AWIN AERWINS Technologies Inc

Arch Wireless Reports First Quarter Operating Results WESTBOROUGH, Mass., May 6 /PRNewswire-FirstCall/ -- Arch Wireless, Inc. , a leading wireless messaging and mobile information company, today announced consolidated net income of $4.9 million, or $0.24 per share, for the quarter ended March 31, 2004, compared to consolidated net income of $6.1 million, or $0.30 per share, for the first quarter of 2003. Consolidated revenues for the first quarter of 2004 were $124 million, compared to $165 million for the first quarter of 2003. "While the wireless messaging industry remains competitive, we continued to make steady improvements to our network operations, business processes and customer service, resulting in a 24% decline in total operating expenses from the same quarter a year earlier," said C. Edward Baker, Jr., chairman and chief executive officer. Baker added that Arch's units in service disconnect rate continued to improve during the quarter. Arch reported a net decline of 259,000 messaging units in service during the first quarter of 2004, comprised of 246,000 one-way messaging units and 13,000 two-way messaging units. Messaging units in service totaled 4,178,000 at March 31, 2004, with 3,516,000 direct units in service and 662,000 indirect units in service. During the first quarter, average revenue per direct unit in service was $10.35 compared to $3.70 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 first quarter through the reduction of operating expenses and repayment of debt. Pottle noted that the company's wholly owned subsidiary, Arch Wireless Holdings, Inc. (AWHI), completed optional redemptions totaling $20 million of its 12% Subordinated Secured Compounding Notes due 2009. "With the completion of an additional optional redemption of $20 million compounded value of 12% Notes on April 30, 2004," he added, "AWHI has redeemed $40 million compounded value of the 12% Notes since January 1, 2004 and, as of today, there is $20 million in aggregate compounded value of the notes outstanding." Pottle also noted: "On April 28, 2004, AWHI announced its intention to redeem the final portion of its 12% Notes on May 28, 2004. Upon completion of the May 28 redemption, Arch will be debt free, having fully redeemed $300 million of original principal within two years of emerging from its restructuring." On March 29, 2004, Arch announced the execution of a definitive merger agreement with Metrocall Holdings, Inc. ("Metrocall"). Under terms of the agreement, a new holding company will be formed to own both Arch and Metrocall of which Arch and Metrocall shareholders will own approximately 72.5% and 27.5%, respectively. The merger is subject to shareholder and various regulatory approvals. Arch and Metrocall have made various applications for these approvals and are currently developing a joint proxy/registration statement to obtain shareholder approvals. Arch and Metrocall anticipate the merger to be completed in the second half of 2004. 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 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 and maintain operating margins, 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. Contact: Bob Lougee (508) 435-6117 Tables to Follow ARCH WIRELESS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited and in thousands) March 31, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $34,207 $34,582 Accounts receivable, net 20,363 26,052 Deposits 6,387 6,776 Prepaid rent 454 514 Prepaid expenses and other 9,847 7,381 Deferred income tax 30,206 30,206 Total current assets 101,464 105,511 Property and equipment 395,613 394,436 Less accumulated depreciation and amortization (202,430) (180,563) Property and equipment, net 193,183 213,873 Assets held for sale 658 1,139 Intangible and other assets, net 3 3 Deferred income tax 189,346 189,346 $484,654 $509,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $40,000 $20,000 Accounts payable 5,816 8,836 Accrued compensation and benefits 8,584 17,820 Accrued network costs 7,345 7,893 Accrued property and sales taxes 8,196 10,076 Accrued interest 3,017 1,520 Accrued restructuring charges 11,467 11,481 Accrued other 7,445 8,104 Customer deposits and deferred revenue 23,611 25,477 Total current liabilities 115,481 111,207 Long-term debt, less current maturities - 40,000 Other long-term liabilities 9,005 4,042 Stockholders' equity: Common stock 2 2 Additional paid-in capital 340,143 339,928 Deferred stock compensation (2,209) (2,682) Retained earnings 22,232 17,375 Total stockholders' equity 360,168 354,623 $484,654 $509,872 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) Three Months Ended March 31, 2004 2003 Revenues: One-way messaging $100,362 $136,872 Two-way messaging 23,297 27,881 Total revenues 123,659 164,753 Operating expenses: Cost of products sold 938 1,658 Service, rental, and maintenance 38,988 50,135 Selling 9,068 12,494 General and administrative 31,117 49,092 Depreciation and amortization 26,309 33,223 Stock based and other compensation 2,938 2,195 Restructuring charge 3,018 - Total operating expenses 112,376 148,797 Operating income 11,283 15,956 Interest expense, net (3,329) (5,646) Other income, net 168 10 Income before income tax expense 8,122 10,320 Income tax expense (3,265) (4,249) Net income $4,857 $6,071 Basic net income per common share $0.24 $0.30 Diluted net income per common share $0.24 $0.30 Basic weighted average common shares outstanding 20,000,000 20,000,000 Diluted weighted average common shares outstanding 20,078,213 20,000,000 ARCH WIRELESS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three Months Ended March 31, 2004 2003 Cash flows from operating activities: Net income $4,857 $6,071 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,309 33,223 Accretion of long-term debt - 3,167 Amortization of stock and other compensation 688 448 Deferred income tax expense 3,265 4,249 (Gain) loss on disposals of property and equipment (109) 49 Other income (56) - Provisions for doubtful accounts and service adjustments 2,336 8,685 Changes in assets and liabilities: Accounts receivable 3,353 (705) Inventories - - Prepaid expenses and other (2,017) 9,205 Accounts payable and accrued expenses (13,860) (11,883) Customer deposits and deferred revenue (1,866) (1,341) Other long-term liabilities 1,620 39 Net cash provided by operating activities 24,520 51,207 Cash flows from investing activities: Additions to property and equipment (5,701) (3,416) Proceeds from disposals of property and equipment 750 2,145 Receipts from note receivable 56 59 Net cash used for investing activities (4,895) (1,212) Cash flows from financing activities: Repayment of long-term debt (20,000) (26,740) Net cash used for financing activities (20,000) (26,740) Net increase (decrease) in cash and cash equivalents (375) 23,255 Cash and cash equivalents, beginning of period 34,582 37,187 Cash and cash equivalents, end of period $34,207 $60,442 Supplemental disclosures: Interest paid $1,903 $919 Asset retirement obligations $- $1,244 ARCH WIRELESS, INC. UNIT IN SERVICE ACTIVITY Three Months Ended September December June 2003 2003 2003 March 2004 Direct One-Way: Beginning units in service 3,705,000 3,476,000 3,300,000 3,393,000 Unit in service growth (decline) (229,000) (176,000) 93,000 (146,000) Ending units in service 3,476,000 3,300,000 3,393,000 3,247,000 Revenues (000s) $116,360 $107,455 $101,497 $92,940 Average revenue per unit (1) $9.60 $9.43 $9.35 $9.00 Two-Way: Beginning units in service 326,000 310,000 300,000 281,000 Unit in service growth (decline) (16,000) (10,000) (19,000) (12,000) Ending units in service 310,000 300,000 281,000 269,000 Revenues (000s) $26,696 $25,940 $24,630 $22,756 Average revenue per unit $27.65 $27.67 $27.27 $26.66 Indirect One-Way: Beginning units in service 1,123,000 978,000 860,000 754,000 Unit in service growth (decline) (145,000) (118,000) (106,000) (100,000) Ending units in service 978,000 860,000 754,000 654,000 Revenues (000s) $10,401 $9,491 $8,256 $7,422 Average revenue per unit $3.31 $3.44 $3.39 $3.49 Two-Way: Beginning units in service 9,000 9,000 8,000 9,000 Unit in service growth (decline) - (1,000) 1,000 (1,000) Ending units in service 9,000 8,000 9,000 8,000 Revenues (000s) $619 $737 $643 $541 Average revenue per unit $22.66 $21.96 $21.24 $21.09 Total Beginning units in service 5,163,000 4,773,000 4,468,000 4,437,000 Unit in service growth (decline) (390,000) (305,000) (280,000) (259,000) Adjustment - - 249,000 - Ending units in service 4,773,000 4,468,000 4,437,000 4,178,000 (1)Recalculated to reflect the unit in service adjustment recorded on December 31, 2003. DATASOURCE: Arch Wireless, Inc. CONTACT: Bob Lougee for Arch Wireless, Inc. +1-508-435-6117 Web site: http://www.arch.com/

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