10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2005
or
o	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 0-51027

USA Mobility, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware	16-1694797
(State of incorporation)	(I.R.S. Employer Identification No.)
6677 Richmond Highway Alexandria, Virginia (Address of principal executive offices)	22306 (Zip Code)

(703) 660-6677

(Registrant’s telephone number, including area code)

     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 þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes þ          No o

      Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 27,164,930 shares of the Registrant’s Common Stock ($0.0001 par value per share) were outstanding as of August 5, 2005.

USA MOBILITY, INC.

QUARTERLY REPORT ON FORM 10-Q

Index

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2004 and June 30, 2005		3
	Unaudited Condensed Consolidated Results of Operations for the Three and Six Months Ended June 30, 2004 and 2005		4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2005		5
	Unaudited Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31
Item 4.	Controls and Procedures		31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		33
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		33
Item 3.	Defaults upon Senior Securities		33
Item 4.	Submission of Matters to a Vote of Security Holders		33
Item 5.	Other Information		33
Item 6.	Exhibits		33
Exhibit 10.10
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

USA MOBILITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

			December 31,		June 30,
			2004		2005
			(In thousands)
					(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	46,995	$	42,643
	Accounts receivable, net			37,750		35,545
	Prepaid rent, expenses and other			15,460		13,504
	Deferred income tax assets			26,906		28,088
		Total current assets	$	127,111	$	119,780
Property and equipment, net				216,508		163,771
Goodwill				151,791		152,250
Intangible assets, net				67,129		52,004
Deferred income tax assets				225,253		223,682
Other assets				5,517		5,010
	TOTAL ASSETS		$	793,309	$	716,497
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current maturities of long-term debt		$	47,558	$	17,681
	Accounts payable and other accrued liabilities			76,420		74,772
	Customer deposits			4,316		3,606
	Deferred revenue			23,623		20,921
		Total current liabilities	$	151,917	$	116,980
Long-term debt, less current maturities				47,500		8,833
Other long-term liabilities				10,555		5,233
	TOTAL LIABILITIES		$	209,972	$	131,046
Stockholders’ equity:
	Preferred stock			—		—
	Common stock			3		3
	Additional paid-in capital			554,946		558,417
	Retained earnings			28,388		27,031
	TOTAL STOCKHOLDERS’ EQUITY			583,337		585,451
	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	793,309	$	716,497

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

3

USA MOBILITY, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

			Three Months Ended June 30,						Six Months Ended June 30,
			2004			2005			2004			2005
			(In thousands, except share and per share amounts)
			(Unaudited)
Revenue:
	Service, rental and maintenance, net of service credits		$	111,174		$	151,483		$	230,720		$	310,633
	Product sales			4,623			6,054			8,736			12,581
		Total revenue		115,797			157,537			239,456			323,214
Operating expenses:
	Cost of products sold (exclusive of depreciation and amortization shown separately below)			856			929			1,794			2,208
	Service, rental and maintenance (exclusive of depreciation, amortization, stock based compensation, severance and related costs shown separately below)			36,988			56,429			75,976			113,078
	Selling and marketing (exclusive of depreciation, amortization, stock based compensation, severance and related costs shown separately below)			8,757			11,156			17,825			21,558
	General and administrative (exclusive of depreciation, amortization, stock based compensation, severance and related costs shown separately below)			28,968			47,624			60,085			96,136
Depreciation and amortization				31,071			32,890			57,380			71,425
Stock based compensation				2,054			668			4,321			2,079
Severance and related costs				456			9,442			4,145			14,462
		Total operating expenses		109,150			159,138			221,526			320,946
Operating income (loss)				6,647			(1,601	)		17,930			2,268
Interest expense, net				(1,700	)		(499	)		(5,029	)		(1,712	)
Loss on extinguishment of long-term debt				—			(432	)		—			(1,026	)
Other income (expense)				177			(73	)		345			219
Income (loss) before income tax expense				5,124			(2,605	)		13,246			(251	)
Income tax expense				(2,060	)		(44	)		(5,325	)		(1,106	)
Net income (loss)			$	3,064		$	(2,649	)	$	7,921		$	(1,357	)
Basic net income (loss) per common share			$	0.15		$	(0.10	)	$	0.40		$	(0.05	)
Diluted net income (loss) per common share			$	0.15		$	(0.10	)	$	0.39		$	(0.05	)
Basic weighted average common shares outstanding				19,965,076			27,226,076			19,982,635			27,167,381
Diluted weighted average common shares outstanding				20,109,191			27,404,543			20,093,617			27,393,390

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

4

USA MOBILITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

			Six Months Ended
			June 30,
			2004			2005
			(Unaudited and in
			thousands)
Cash flows from operating activities:
	Net income (loss)		$	7,921		$	(1,357	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization		57,380			71,425
		Amortization of deferred financing costs		—			630
		Amortization of stock based compensation		1,448			2,079
		Deferred income tax expense		5,325			389
		Loss on extinguishment of long-term debt		—			1,026
		Gain on disposals of property and equipment		(230	)		(32	)
		Provisions for doubtful accounts, service credits and other		4,268			11,328
Changes in assets and liabilities:
	Accounts receivable			1,395			(9,304	)
	Prepaid expenses and other			(129	)		2,018
	Intangibles and other long-term assets			—			1,346
	Accounts payable and accrued expenses			(18,711	)		(1,650	)
	Customer deposits and deferred revenue			(4,161	)		(3,412	)
	Other long-term liabilities			2,801			(5,322	)
Net cash provided by operating activities			$	57,307		$	69,164
Cash flows from investing activities:
	Purchases of property and equipment			(8,138	)		(5,383	)
	Proceeds from disposals of property and equipment			1,618			176
	Receipts from note receivable			110			181
Net cash used for investing activities			$	(6,410	)	$	(5,026	)
Cash flows from financing activities:
	Repayment of long-term debt			(60,000	)		(68,544	)
	Proceeds from exercise of options			—			54
	Purchase of treasury shares			(3,112	)		—
Net cash used for financing activities			$	(63,112	)	$	(68,490	)
Net decrease in cash and cash equivalents			$	(12,215	)	$	(4,352	)
Cash and cash equivalents, beginning of period				34,582			46,995
Cash and cash equivalents, end of period			$	22,367		$	42,643
Supplemental disclosure:
	Interest paid		$	6,690		$	1,996
	Income taxes paid		$	—		$	—

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

5

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      (a) Preparation of Interim Financial Statements — The consolidated financial statements of USA Mobility, Inc. (“USA Mobility” or the “Company”) have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The financial information included herein, other than the consolidated balance sheet as of December 31, 2004, has been prepared without audit. The consolidated balance sheet at December 31, 2004 has been derived from, but does not include all the disclosures contained in, the audited consolidated financial statements for the year ended December 31, 2004. In the opinion of management, these unaudited statements include all adjustments and accruals, 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 Mobility’s Annual Report on Form 10-K for the year ended December 31, 2004. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year. Certain prior years’ amounts have been reclassified to conform with the current year’s presentation.

      (b) Merger of Arch and Metrocall — The merger of Arch Wireless, Inc., and subsidiaries (“Arch”) and Metrocall Holdings, Inc., and subsidiaries (“Metrocall”) occurred on November 16, 2004. Under the terms of the merger agreement, holders of 100% of the outstanding Arch common stock received one share of the Company’s common stock for each common share held of Arch. Holders of 2,000,000 shares of Metrocall common stock received cash consideration totaling $150 million and the remaining 7,236,868 shares of Metrocall’s common stock were each exchanged for 1.876 shares of USA Mobility common stock. Upon consummation of the merger exchange, former Arch and Metrocall common shareholders held approximately 72.5% and 27.5%, respectively, of USA Mobility’s common stock on a fully diluted basis.

      The merger was accounted for using the purchase method of accounting. Arch was the accounting acquirer. Accordingly, the basis of Arch’s assets and liabilities as of the acquisition date are reflected in the balance sheet of USA Mobility at their historical basis. Amounts allocated to Metrocall’s assets and liabilities were based upon the total purchase price and the estimated fair values of such assets and liabilities. The results of operations of Metrocall have been included in the USA Mobility results from November 16, 2004, therefore, the results presented for the three and six months ended June 30, 2004 do not include results associated with Metrocall.

      USA Mobility expects to achieve operating and other synergies through elimination of redundant overhead and duplicative network structures. Subsequent to the merger, the Company began an extensive review of all operating systems, the rationalization of the one-way and two-way messaging networks, and the composition of the sales force. The Company expects to continue its reviews through 2005 and beyond as it deconstructs networks and standardizes its systems. In this process, the Company expects to incur additional costs.

      The following unaudited pro forma summary presents the consolidated results of operations as if the merger had occurred at the beginning of the period presented, after giving effect to certain adjustments, including depreciation and amortization of acquired assets and interest expense on merger-related debt. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the merger been completed at the beginning of the period presented, or of results that may occur in the future.

6

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months Ended
	June 30, 2004		June 30, 2005
	(Proforma)
	(In thousands except
	per share amounts)
Revenues	$	417,286	$	323,214
Net income (loss)		26,180		(1,357	)
Basic net income (loss) per common share		0.97		(0.05	)
Diluted net income (loss) per common share		0.96		(0.05	)

      (c) Business — USA Mobility is a leading provider of wireless messaging in the United States. Currently, USA Mobility provides one-way and two-way messaging services. One-way messaging consists of numeric and alphanumeric messaging services. Numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number, while alphanumeric messages may include numbers and letters, which enable subscribers to receive text messages. Two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants (“PDAs”) and personal computers. USA Mobility also offers voice mail, personalized greeting, message storage and retrieval and equipment loss and/or maintenance protection to both one-way and two-way messaging subscribers. These services are commonly referred to as wireless messaging and information services.

      (d) Risks and Other Important Factors — Based on current and anticipated levels of operations, USA Mobility’s management believes the Company’s net cash provided by operating activities, together with cash on hand, should be adequate to meet its cash requirements for the foreseeable future.

      In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, USA Mobility may be required to reduce planned capital expenditures, sell assets or seek additional financing. USA Mobility can provide no assurance that reductions in planned capital expenditures or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that additional financing would be available or, if available, offered on acceptable terms.

      USA Mobility believes that future fluctuations in its revenue and operating results may occur due to many factors, particularly the decreased demand for its messaging services. If the rate of decline for the Company’s messaging services exceeds its expectations, revenues may be negatively impacted, and such impact could be material. USA Mobility’s plan to consolidate its networks may also negatively impact revenues as customers experience a reduction in, and possible disruptions of, service in certain areas. Under these circumstances, USA Mobility may be unable to adjust spending in a timely manner to compensate for any future revenue shortfall. It is possible that, due to these fluctuations, USA Mobility’s revenue or operating results may not meet the expectations of investors, which could reduce the value of USA Mobility’s common stock.

      (e) Goodwill and Other Intangible Assets — Goodwill of $152.3 million at June 30, 2005 resulted from the purchase accounting related to the Metrocall merger as previously discussed. The Company’s operations consists of one reporting unit to evaluate goodwill. Goodwill is not amortized, but is evaluated for impairment annually or when events or circumstances suggest a potential impairment may have occurred. The Company has selected the fourth quarter to perform its annual impairment test. Other intangible assets were recorded at fair value at the date of acquisition and amortized over periods generally ranging from one to five years. Aggregate amortization expense for intangible assets for the six months ended June 30, 2004 and 2005 was zero and $13.5 million, respectively.

7

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Amortizable intangible assets are comprised of the following at June 30, 2005 (dollars in thousands):

			Gross
	Useful Life		Carrying		Accumulated
	(in years)		Amount		Amortization			Net Balance
Purchased subscriber lists		5	$	68,593	$	(19,216	)	$	49,377
Purchased Federal Communications Commission (“FCC”) licenses		5		3,750		(2,323	)		1,427
Deferred financing costs		2		3,459		(3,074	)		385
Other		1		2,160		(1,345	)		815
			$	77,962	$	(25,958	)	$	52,004

      (f) Long-term Debt — On November 16, 2004, Metrocall and Arch as Borrowers, along with USA Mobility and its bank lenders, entered into a credit agreement (the “credit agreement”) to borrow $140.0 million. Under the credit agreement, the Company may designate all or any portion of the borrowings outstanding at either a floating base rate or a Eurodollar rate advance with an applicable margin of 1.50% for base rate advances and 2.50% for Eurodollar advances. The cash proceeds under the credit agreement were used by USA Mobility to fund a portion of the cash consideration paid to Metrocall shareholders in accordance with the merger agreement. The borrowings are secured by substantially all of the assets of USA Mobility. During the second quarter of 2005, the Company made a mandatory principal payment of $5.9 million and optional prepayments of $24.1 million, reducing the outstanding principal balance to $26.5 million as of June 30, 2005, which approximated its fair value. Subsequent to June 30, 2005, the Company made a voluntary principal repayment of $8.5 million.

      (g) Accounts Payable and Other Accrued Liabilities  — Accounts payable and other accrued liabilities consist of the following (dollars in thousands):

	December 31, 2004		June 30, 2005
Accounts payable	$	6,010	$	3,777
Accrued compensation and benefits		17,792		8,976
Accrued network costs		8,956		10,111
Accrued property and sales tax		27,862		28,033
Accrued severance		1,511		11,695
Accrued restructuring charges		3,463		—
Accrued other		10,826		12,180
Total accounts payable and other accrued liabilities	$	76,420	$	74,772

      Accrued property and sales taxes are based on the Company’s estimate of outstanding state and local taxes. This balance may be adjusted in the future as the Company settles with various taxing jurisdictions. A portion of this liability relates to contingencies identified at the merger of Arch and Metrocall and, accordingly, are considered preliminary in the purchase price allocation of the acquisition. As the Company obtains additional information to refine the estimate, including potential settlement discussions with taxing authorities, increases or decreases to the liability and goodwill could occur. The Company is required to complete its estimation process for these contingencies within one year of the acquisition.

8

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      (h) Stockholders’ Equity — The authorized capital stock of the Company consists of 75 million shares of common stock and 25 million shares of preferred stock, par value $0.0001 per share.

•  General — At December 31, 2004 and June 30, 2005, there were 26,827,071 and 27,164,930 shares of common stock outstanding and no shares of preferred stock outstanding, respectively. In addition, at June 30, 2005, there were 277,303 shares of common stock reserved for issuance from time to time to satisfy general unsecured claims under the Arch plan of reorganization. For financial reporting purposes, the number of shares reserved for issuance under the Arch plan of reorganization have been included in the Company’s reported outstanding share balance.

        In connection with and prior to the merger, the Company established the USA Mobility, Inc. Equity Incentive Plan (“Equity Plan”). Under the Equity Plan, the Company has the ability to issue up to 1,878,976 shares of its common stock to eligible employees and non-employee members of its Board of Directors in the form of stock options, restricted stock, stock grants or units. Restricted shares awarded under the plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, exchanged, or otherwise disposed of during the restriction period, which will be determined by the Compensation Committee of the Board of Directors of the Company.

        On June 7, 2005, the Company awarded 103,937 shares of restricted stock to certain eligible employees. These outstanding restricted shares vest fully on January 1, 2008. The Company used the fair-value based method of accounting for the award and will ratably amortize the $2.8 million to expense over the vesting period.

        In lieu of cash payments for directors’ fees earned from the date of the merger on November 16, 2004, through March 31, 2005, two directors elected to receive a total of 1,530 unrestricted shares of the Company’s common stock during June 2005 based upon the fair market value of a share of common stock at the date of issuance.

•  Earnings per Share — Basic earnings per share is computed on the basis of the weighted average common shares outstanding. Diluted earnings per share is computed on the basis of the weighted average common shares outstanding plus the effect of outstanding stock options and restricted stock using the “treasury stock” method. The components of basic and diluted earnings per share were as follows (in thousands, except share and per share amounts):

		Three Months Ended June 30,					Six Months Ended June 30,
		2004		2005			2004		2005
Net income (loss)		$	3,064	$	(2,649	)	$	7,921	$	(1,357	)
Weighted average shares of common stock outstanding			19,965,076		27,226,076			19,982,635		27,167,381
Dilutive effect of:
	Options to purchase common stock and restricted stock		144,115		178,467			110,982		226,009
Weighted average shares of common stock and common stock equivalents			20,109,191		27,404,543			20,093,617		27,393,390
Earnings (loss) per share:
	Basic	$	0.15	$	(0.10	)	$	0.40	$	(0.05	)
	Diluted	$	0.15	$	(0.10	)	$	0.39	$	(0.05	)

9

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      (i) Revenue Recognition — Revenue consists primarily of monthly service and rental fees charged to customers on a monthly, quarterly, semi-annual or annual basis. Revenue also includes the sale of messaging devices directly to customers and other companies that resell our services. In accordance with the provisions of Emerging Issues Task Force Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, (“EITF No. 00-21”), the Company evaluated these revenue arrangements and determined that two separate units of accounting exist, messaging service revenue and product sale revenue. Accordingly, the Company recognizes messaging service revenue over the period the service is performed and revenue from product sales is recognized at the time of shipment. The Company recognizes revenue when four basic criteria have been met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services rendered, (3) the fee is fixed or determinable and (4) collectibility is reasonably assured. Amounts billed but not meeting these recognition criteria are deferred until all four criteria have been met. The Company has a variety of billing arrangements with its customers resulting in deferred revenue in advance billing and accounts receivable for billing in-arrears arrangements.

      Our customers may subscribe to one-way or two-way messaging services for a monthly service fee which is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. Voice mail, personalized greeting and equipment loss and/or maintenance protection may be added to either one-way or two-way messaging services, as applicable, for an additional monthly fee. Equipment loss protection allows subscribers who lease devices to limit their cost of replacement upon loss or destruction of a messaging device. Maintenance services are offered to subscribers who own their device.

      In June 2005, the Company announced an alliance with Advanced Metering Data Systems, LLC (“AMDS”) and Sensus Metering Systems to provide meter monitoring services over a narrow-band PCS network. The Company has agreed to sell one of its FCC licenses and to provide tower space and other custom network services to AMDS. Proceeds from these sales include a note receivable of $1.5 million and a royalty of 1% to 3% of net monitoring revenue derived from the use of the FCC license. Collectibility of the note receivable is not yet reasonably assured. The sale of this license is contingent upon regulatory approval which is expected in the third quarter of 2005. Accordingly, the Company has not recorded any amounts related to any of the elements of this transaction.

      (j) Stock Based Compensation — Compensation expense associated with options and restricted stock was recognized in accordance with the fair value provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock Based Compensation (“SFAS No. 123”), over the instruments’ vesting period. Pursuant to Staff Accounting Bulletin 107, Share-Based Payment, (“SAB 107”), the following table reflects the classification of $4.3 million and $2.1 million in stock based compensation for the six months ended June 30, 2004 and 2005, respectively (dollars in thousands):

	Six Months Ended
	June 30,
	2004		2005
Service, rental and maintenance expense	$	331	$	154
Selling and marketing expense		20		123
General and administrative expense		3,970		1,802
Total stock based compensation	$	4,321	$	2,079

      (k) Severance Expenses — In the six months ended June 30, 2004 and 2005, USA Mobility recorded severance charges of $4.1 and $14.5 million, respectively. During the second quarter 2005, the Company announced a reorganization plan to adjust its management structure and consolidate three operating divisions of five regions into two operating divisions of six regions. Under this plan and in an effort to continue to

10

USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

integrate operations of Arch and Metrocall, the Company will eliminate more than 400 additional positions through the end of 2005. As a result, as of June 30, 2005, the Company has $11.7 million accrued for postemployment benefits, including severance and health benefits, for the employees that were or will be terminated. In addition, a $4.3 million settlement agreement with three former Arch executives was paid during second quarter 2005.

      At June 30, 2005, the balance of the liability was as follows (dollars in thousands):

										Remaining
	Balance at									Liability at
	December 31, 2004		Charges in 2005		Reclassifications		Cash Paid			June 30, 2005
Lease obligation costs	$	3,463	$	—	$	—	$	(3,463	)	$	—
Severance costs		1,511		10,162		2,531		(2,509	)		11,695
Litigation settlement costs		—		4,300		—		(4,300	)		—
Total	$	4,974	$	14,462	$	2,531	$	(10,272	)	$	11,695

      Reclassifications represent reclassification of accrued liabilities for vacation and long-term incentives to be paid to severed employees.

      (l) Settlement Agreements — During the three months ended March 31, 2005, the Company reached a settlement agreement with a vendor for roaming credits held by USA Mobility and recorded a $1.5 million reduction to service, rental and maintenance expenses for this cash consideration. The Company will also utilize additional benefits of $0.5 million over the next 58 months as USA Mobility customers incur roaming charges on the vendor’s network.

      On November 10, 2004, three former Arch senior executives (the “Former Executives”) filed a Notice of Claim before the JAMS/ Endispute arbitration forum in Boston, Massachusetts asserting they were terminated from their employment by Arch pursuant to a “change in control” as defined in their respective executive employment agreements (the “Claims”). On May 9, 2005, the Former Executives agreed to dismiss the Claims with prejudice against all parties in exchange for a settlement payment of $4.3 million. The Company recorded this settlement as an increase to severance expenses for the six months ended June 30, 2005.

      (m) Income Taxes — USA Mobility accounts for income taxes under the liability method. Deferred income tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, given the provisions of enacted laws. The Company would provide a valuation allowance against net deferred income tax assets if, based on available evidence, it is more likely than not that the deferred income tax assets would not be realized.

      USA Mobility evaluates the recoverability of its deferred income tax assets on an ongoing basis. The assessment is required to consider all available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that all of USA Mobility’s net deferred income tax assets will be realized in future periods. Management continues to believe no further valuation allowance is required.

      The evaluation of the recoverability of the deferred income tax assets is based on historical evidence of profitability since emerging from bankruptcy and the Company’s projections of increased profitability as a result of anticipated cost synergies made available through the November 2004 merger. To the extent that these anticipated synergies are not realized, or the Company is unable to generate sufficient revenue and projections of future revenue are adjusted downward, a partial, or full, valuation allowance of these assets may be required.

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USA MOBILITY, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      (n) Related Party Transactions — Two of our directors, effective November 16, 2004, also serve as directors for entities from which the Company leases transmission tower sites. During the six months ended June 30, 2005, the Company paid $13.5 million and $1.7 million, respectively, to these landlords as rent expenses. Each director has recused himself from any discussions or decisions made on matters relating to the relevant vendor.

      (o) Segment Reporting — USA Mobility believes it currently has one operating segment.

      (p) New Accounting Pronouncements — In May 2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154, Accounting Changes and Error Corrections, (“SFAS No. 154”), that supercedes APB Opinion No. 20 and SFAS No. 3. This statement requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle, due to accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Management does not expect SFAS No. 154 to materially affect the reported results of operations, cash flows, or financial position of the Company.

      In December 2004 the FASB issued a revision of SFAS No. 123, Accounting for Stock Based Compensation (“SFAS No. 123R”), Share-Based Payment. SFAS No. 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,and its related implementation guidance. SFAS No. 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in SFAS No. 123 as originally issued and EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

      The SEC adopted a rule that defers the effective date of SFAS No. 123R until the beginning of the first fiscal year beginning after June 15, 2005. The Company has elected to postpone adoption of SFAS No. 123R until 2006. Management does not expect SFAS No. 123R to materially affect the reported results of operations, cash flows or financial position of the Company.

      In March 2005, the FASB issued Financial Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (“FIN 47”). FIN 47 clarifies the application of certain aspects of SFAS No. 143, Asset Retirement Obligations. Management does not expect the adoption of FIN 47 to materially affect the cash flows or financial position of the Company.

      (q) Commitments and Contingencies — USA Mobility was named as a defendant, along with Arch, Metrocall and Metrocall’s former board of directors, in two lawsuits filed in the Court of Chancery of the State of Delaware, New Castle County, on June 29, 2004 and July 28, 2004. The Company and the other defendants entered into a settlement agreement with the plaintiffs prior to the merger which was approved by the court on May 18, 2005 and the case was dismissed. As noted in note (l), Settlement Agreements, on May 9, 2005, three former executives of Arch agreed to dismiss all claims against Arch and its subsidiaries in exchange for a settlement payment of $4.3 million.

      USA Mobility, from time to time, is involved in lawsuits arising in the normal course of business. USA Mobility believes that its pending lawsuits will not have a material adverse effects on its financial position, results of operations, or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

      This quarterly report contains forward-looking statements and information relating to USA Mobility, Inc. and its subsidiaries (“USA Mobility” or the “Company”) that are based on management’s beliefs as well as assumptions made by and information currently available to management. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to USA Mobility or its management are forward-looking statements. Although these statements are based upon assumptions management considers reasonable, they are subject to certain risks, uncertainties and assumptions, including but not limited to those factors set forth within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the discussion under “Risk Factors Affecting Future Operating Results” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

      The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and “Risk Factors Affecting Future Operating Results,” which describe key risks associated with our operations and industry and the following subsections of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2004: “Overview,” “Results of Operations,” “Liquidity and Capital Resources”, “Inflation”, and “Application of Critical Accounting Policies.”

      USA Mobility is a holding company that was formed to effect the merger of Arch Wireless, Inc. and subsidiaries (“Arch”) and Metrocall Holdings, Inc. and subsidiaries (“Metrocall”) which occurred on November 16, 2004. Prior to the merger, USA Mobility had conducted no operations other than those incidental to its formation. For financial reporting purposes, Arch was deemed to be the accounting acquirer of Metrocall. The historical information for USA Mobility includes the historical financial information of Arch for 2004 and the acquired operations of Metrocall from November 16, 2004. Accordingly, the results of operations reflect increases in revenues and costs due to the inclusion of Metrocall during the three and six month periods ended June 30, 2005 as compared to the three and six month periods ended June 30, 2004, which included the results of Arch only.

Integration

      We continue to believe that the combination of Arch and Metrocall provides us with the potential to generate stronger operating and financial results than either company could have achieved separately, by reducing overall costs while the Company’s revenue continues to decline sequentially. During the second quarter of 2005, our integration and cost reduction efforts continue to focus on:

      Technical Infrastructure and Network Operations — We have begun decommissioning and deconstructing one of our two-way networks. That process is expected to be completed by the end of 2005. We are also focused on rationalizing our one-way networks. This consolidation and rationalization will be an ongoing process as we attempt to match our network capacity to the requirements of our customers.

      Selling and Marketing — We continued the process to eliminate redundant and unnecessary sales offices to match the staff reductions that were taken in the fourth quarter of 2004 and which have occurred to date.

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      Billing System Consolidation — We continued the efforts to convert the Metrocall stand alone billing system into the Arch billing system. This conversion was completed during July 2005.

      Inventory Fulfillment — We continued our efforts to consolidate our remaining three distribution centers to one distribution center by the end of the third quarter 2005.

      Back-office Operations — We expect to consolidate our customer service operations, from five to two centers by the end of 2006. Other administrative and support functions such as accounting, finance, human resources, credit and collections, information technology and other overhead functions are being consolidated throughout 2005.

Sales and Marketing

      We market and distribute our services through a direct sales force and a small indirect sales force.

      Direct. Our direct sales force rents or sells products and messaging services directly to customers ranging from small and medium-sized businesses to Fortune 1000 companies, health care and related businesses and government agencies. We intend to continue to market to commercial enterprises utilizing our direct sales force as these commercial enterprises have typically disconnected service at a lower rate than individual consumers. As of June 30, 2005, our sales personnel were located in approximately 123 offices in 36 states throughout the United States. In addition, we maintain several corporate sales groups focused on national business accounts; federal government accounts; advanced wireless services; systems sales applications; telemetry and other product offerings.

      Indirect. Within our indirect channel we contract with and invoice an intermediary for airtime services. The intermediary or “reseller” in turn markets, sells and provides customer service to the end-user. There is no contractual relationship that exists between us and the end subscriber. Therefore, operating costs per unit to provide these services are lower than those required in the direct distribution channel. Indirect units in service typically have lower average monthly revenue per unit than direct units in service. The rate at which subscribers disconnect service in our indirect distribution channel has been higher than the rate experienced with our direct customers and we expect this to continue in the foreseeable future.

      The following table sets forth units in service associated with our channels of distribution:

							As of
		As of June 30,					March 31,					As of June 30,
		2004(a)					2005(b)					2005(b), (c)
		Units		%			Units		%			Units		%
		(Units in thousands)
Direct			3,380		85	%		4,790		82	%		4,496		84	%
Indirect			589		15			1,068		18			852		16
	Total		3,969		100	%		5,858		100	%		5,348		100	%

(a)	Includes units in service of Arch only.
(b)	Includes units in service of Arch and Metrocall.
(c)	Includes a 238,000 reduction of units in service due to the conversion of the Metrocall billing system to the Arch billing system.

      During our billing system conversion, which was completed in early July 2005, we became aware of errors in the Metrocall units in service counts and differences in the definition of units in service between Metrocall and Arch. As a result, as of June 30, 2005, we reduced our units in service by 238,000 units to correct the errors and to conform to the Arch billing system standard unit definition. There was no impact on revenue.

      Our customers may subscribe to one-way or two-way messaging services for a monthly service fee which is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. Voice mail, personalized greeting and equipment loss and/or maintenance protection may be added to either one or two-way messaging services, as applicable, for

14

an additional monthly fee. Equipment loss protection allows subscribers who lease devices to limit their cost of replacement upon loss or destruction of a messaging device. Maintenance services are offered to subscribers who own their device.

      A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Local coverage generally allows the subscriber to receive messages within a small geographic area, such as a city. Regional coverage allows a subscriber to receive messages in a larger area, which may include a large portion of a state or sometimes groups of states. Nationwide coverage allows a subscriber to receive messages in major markets throughout the United States. The monthly fee generally increases with coverage area. Two-way messaging is generally offered on a nationwide basis.

      The following table summarizes the breakdown of our one-way and two-way units in service at specified dates:

							As of
		As of June 30,					March 31,					As of June 30,
		2004(a)					2005(b)					2005(b), (c)
		Units		%			Units		%			Units		%
		(Units in thousands)
One-way messaging			3,699		93	%		5,357		91	%		4,876		91	%
Two-way messaging			270		7			501		9			472		9
	Total		3,969		100	%		5,858		100	%		5,348		100	%

(a)	Includes one-way and two-way messaging units in service of Arch.
(b)	Includes one-way and two-way messaging units of Arch and Metrocall.
(c)	Includes a 238,000 reduction of units in service due to the conversion of the Metrocall billing system to the Arch billing system.

      We provide wireless messaging services to subscribers for a monthly fee, as described above. In addition, subscribers either lease a messaging device from us for an additional fixed monthly fee or they own a device, having purchased it either from the Company or from another vendor. We also sell devices to resellers who lease or resell devices to their subscribers and then sell messaging services utilizing our networks.

      The following table summarizes the number of units in service owned by us, our subscribers and our indirect customers at specified dates:

							As of
		As of June 30,					March 31,					As of June 30,
		2004(a)					2005(b)					2005(b), (c)
		Units		%			Units		%			Units		%
		(Units in thousands)
Owned and leased			3,079		78	%		4,565		78	%		3,983		74	%
Owned by subscribers			300		8			225		4			513		10
Owned by indirect customers or their subscribers			590		15			1,068		18			852		16
	Total		3,969		100	%		5,858		100	%		5,348		100	%

(a)	Includes units in service of Arch.
(b)	Includes units of Arch and Metrocall.
(c)	Includes a 238,000 reduction of units in service due to the conversion of the Metrocall billing system to the Arch billing system.

      We derive the majority of our revenues from fixed monthly or other periodic fees charged to subscribers for wireless messaging services. Such fees are not generally dependent on usage. As long as a subscriber maintains service, operating results benefit from recurring payment of these fees. Revenues are generally driven by the number of units in service and the monthly charge per unit. The number of units in service changes based on subscribers added, referred to as gross placements, less subscriber cancellations, or

15

disconnects. The net of gross placements and disconnects is commonly referred to as net gains or losses of units in service. The absolute number of gross placements as well as the number of gross placements relative to average units in service in a period, referred to as the gross placement rate, is monitored on a monthly basis. Disconnects are also monitored on a monthly basis. The ratio of units disconnected in a period to beginning units in service for the same period, called the disconnect rate, is an indicator of our success in retaining subscribers which is important in order to maintain recurring revenues and to control operating expenses.

      The following table sets forth our gross placements and disconnects for the periods stated.

		Three Months Ended
		June 30, 2004(a)				March 31, 2005(b)				June 30, 2005(b), (c)
		Gross				Gross				Gross
		Placements		Disconnects		Placements		Disconnects		Placements		Disconnects
		(Units in thousands)
Direct			131		267		166		379		165		459
Indirect			35		108		114		245		99		315
	Total		166		375		280		624		264		774

(a)	Includes gross placements and disconnects of Arch only.
(b)	Includes gross placements and disconnects of Arch and Metrocall.
(c)	Includes a 238,000 reduction of units in service due to the conversion of the Metrocall billing system to the Arch billing system.

      The demand for one-way and two-way messaging services declined during the six months ended June 30, 2005, and we believe demand will continue to decline for the foreseeable future.

      The other factor that contributes to revenue, in addition to the number of units in service, is the monthly charge per unit. As previously discussed, the monthly charge is dependent on the subscriber’s service, extent of geographic coverage, whether the subscriber leases or owns the messaging device and the number of units the customer has on his or her account. The ratio of revenues for a period to the average units in service for the same period, commonly referred to as average revenue per unit (“ARPU”), is a key revenue measurement as it indicates whether monthly charges for similar services and distribution channels are increasing or decreasing. ARPU by distribution channel and messaging service are monitored regularly. The following table sets forth our ARPU by distribution channel for the periods stated.

	Three Months Ended
	June 30,		March 31,		June 30,
	2004(a)		2005(b), (c)		2005(b), (c)
Direct	$	10.10	$	9.96	$	9.89
Indirect	$	3.66	$	4.53	$	4.58
Consolidated	$	9.12	$	9.01	$	9.02

(a)  Includes average revenue per unit for Arch only.

(b)	Includes average revenue per unit for Arch and Metrocall.
(c)	Includes a 238,000 reduction of units in service due to the conversion of the Metrocall billing system to the Arch billing system at the beginning of the period in calculating average revenue per unit.

      While ARPU for similar services and distribution channels is indicative of changes in monthly charges and the revenue rate that we add new subscribers, this measurement on a consolidated basis is affected by several factors, most notably the mix of units in service. Gross revenues have increased year over year due to the Metrocall merger, but we expect future sequential quarterly revenues to decline. The change in our consolidated average revenue per unit for the quarter ended June 30, 2005 from the quarters ended June 30, 2004 and March 31, 2005, was due primarily to the change in mix in customers and considered the 238,000 unit adjustment referred to above. The change in ARPU in our direct distribution channel is the most

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significant indicator of rate-related changes in our revenues. We expect ARPU for our direct units in service will decline in future periods.

      Our revenues were $115.8 million and $157.5 million for the three months ended June 30, 2004 and 2005, respectively. The 2004 revenues include historical information for Arch only. Certain of our operating expenses are especially important to overall expense control; these operating expenses are categorized as follows:

•  Service, rental and maintenance. These are expenses associated with the operation of our networks and the provision of messaging services and consist largely of telecommunications charges to deliver messages over our networks, lease payments for transmitter locations and payroll expenses for our engineering and pager repair functions.

•  Selling and marketing. These are expenses associated with our direct and indirect sales forces. This classification consists primarily of salaries, commissions and other payroll related expenses.

•  General and administrative. These are expenses associated with customer service, inventory management, billing, collections, bad debts and other administrative functions.

      We review the percentages of these operating expenses to revenues on a regular basis. Even though the operating expenses are classified as described above, expense controls are also performed on a functional expense basis. For the quarter ended June 30, 2005, we incurred approximately 76% of the expenses referred to above in three functional expense categories: payroll and related expenses, lease payments for transmitter locations and telecommunications expenses.

      Payroll and related expenses include wages, commissions, incentives, employee benefits and related taxes. We review the number of employees in major functional categories such as direct sales, engineering and technical staff, customer service, collections and inventory on a monthly basis. We also review the design and physical locations of functional groups to continuously improve efficiency, to simplify organizational structures and to minimize the number of physical locations.

      Lease payments for transmitter locations are largely dependent on our messaging networks. We operate local, regional and nationwide one-way and two-way messaging networks. These networks each require locations on which to place transmitters, receivers and antennae. Generally, lease payments are incurred for each transmitter location. Therefore, lease payments for transmitter locations are highly dependent on the number of transmitters, which in turn is dependent on the number of networks. In addition, these expenses generally do not vary directly with the number of subscribers or units in service, which is detrimental to our operating margin as revenues decline. In order to reduce this expense, we have an active program to consolidate the number of networks and thus transmitter locations, which we refer to as network rationalization.

      Telecommunications expenses are incurred to interconnect our messaging networks and to provide telephone numbers for customer use, points of contact for customer service and connectivity among our offices. These expenses are dependent on the number of units in service and the number of office and network locations we maintain. The dependence on units in service is related to the number of telephone numbers provided to customers and the number of telephone calls made to our call centers, though this is not always a direct dependency. For example, the number or duration of telephone calls to our call centers may vary from period to period based on factors other than the number of units in service, which could cause telecommunications expense to vary regardless of the number of units in service. In addition, certain phone numbers we provide to our customers may have a usage component based on the number and duration of calls to the subscriber’s messaging device. Telecommunications expenses do not necessarily vary in direct relationship to units in service. Therefore, based on the factors discussed above, efforts are underway to review and reduce telephone circuit inventories and capacities and to reduce the number of transmitter and office locations from which we operate.

      The total of our cost of products sold, service, rental and maintenance, selling and marketing, and general and administrative expenses was $155.7 million and $233.0 million for the six months ended June 30, 2004

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and 2005, respectively. Since we believe the demand for and our revenues from one-way and two-way messaging will continue to decline in future quarters, expense reductions will be necessary in order for us to mitigate the financial impact of such revenue declines. However, there can be no assurance that the Company will be able to maintain margins or generate net cash from operating activities.

Results of Operations

      As previously discussed, Arch and Metrocall merged on November 16, 2004. The results of operations and cash flows discussed below for 2004 include the operating results and cash flows of Arch only for the three and six months ended June 30, 2004, while the 2005 period includes the operating results of Arch and Metrocall. Accordingly, the apparent growth in operations is due to the merger.

Comparison of the Results of Operations for the Three Months Ended June 30, 2004 and 2005

Revenues

		Three Months Ended June 30,
		2004					2005					Change Between
												2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Revenues:
	Service, rental and maintenance	$	111,174		96.0	%	$	151,483		96.2	%	$	40,309		36.3	%
	Product sales		4,623		4.0			6,054		3.8			1,431		31.0
		$	115,797		100	%	$	157,537		100	%	$	41,740
Selected operating expenses:
	Cost of products sold	$	856		0.7	%	$	929		0.6	%	$	73		8.5	%
	Service, rental and maintenance		36,988		31.9			56,429		35.8			19,441		52.6
	Selling and marketing		8,757		7.6			11,156		7.1			2,399		27.4
	General and administrative		28,968		25.0			47,624		30.2			18,656		64.4
		$	75,569		65.2	%	$	116,138		73.7	%	$	40,569

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      Service, rental and maintenance revenues consist primarily of recurring fees associated with the provision of messaging services and rental of leased units. Product sales consist largely of revenues associated with the sale of devices and charges for leased devices that are not returned. The increase in revenues in each revenue type is the result of including revenues of Metrocall during 2005 as compared to Arch only during 2004. The combined Company has experienced, and expects to continue to experience, revenue declines for the foreseeable future.

			Three Months Ended
			June 30,
			2004		2005
			(Dollars in thousands)
Service, rental and maintenance revenues:
Paging:
	Direct:
		One-way messaging	$	83,299	$	108,353
		Two-way messaging		20,739		27,678
			$	104,038	$	136,031
	Indirect:
		One-way messaging	$	6,369	$	9,999
		Two-way messaging		482		2,369
			$	6,851	$	12,368
Total Paging:
		One-way messaging	$	89,668	$	118,352
		Two-way messaging		21,221		30,047
			$	110,889	$	148,399
Non-Paging revenue				285		3,084
Total service, rental and maintenance revenues			$	111,174	$	151,483

      The table below sets forth units in service and service revenues, the changes in each between the three months ended June 30, 2004 and 2005 and the change in revenue associated with differences in the number of units in service and the ARPU.

		Units in Service						Revenues
		As of June 30,						Three Months Ended June 30,						Change Due to:
		2004		2005		Change		2004(a)		2005(a)		Change		ARPU			Units
		(Units in thousands)						(Dollars in thousands)
One-way messaging			3,699		4,876		1,177	$	89,668	$	118,352	$	28,684	$	(200	)	$	35,254
Two-way messaging			270		472		202		21,221		30,047		8,826		(10,624	)		13,562
	Total		3,969		5,348		1,379	$	110,889	$	148,399	$	37,510	$	(10,824	)	$	48,816

(a)  Amounts shown exclude non-paging revenues.

      As previously discussed, demand for messaging services has declined over the past several years and we anticipate that it may continue to decline for the foreseeable future, which would result in reductions in service revenue due to the lower number of subscribers.

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Operating Expenses

      Cost of Products Sold. Cost of products sold consists primarily of the cost basis of devices sold to or lost by our customers. The increase for the three months ended June 30, 2005 was due primarily to an increase in the number of device transactions due to the Metrocall merger.

      Service, Rental and Maintenance. Service, rental and maintenance expenses consist primarily of the following significant items:

		Three Months Ended June 30,
		2004					2005					Change Between
												2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Lease payments for transmitter locations		$	19,490		16.8	%	$	32,067		20.4	%	$	12,577		64.5	%
Telecommunications related expenses			6,866		5.9			11,821		7.5			4,955		72.2
Payroll and related expenses			6,147		5.3			7,600		4.8			1,453		23.6
Other			4,485		3.9			4,941		3.1			456		10.2
	Total	$	36,988		31.9	%	$	56,429		35.8	%	$	19,441		52.6	%

      As illustrated in the table above, service, rental and maintenance expenses increased $19.4 million or 52.6% from 2004. The percentage of these costs to revenues also increased, primarily due to the acquisition of the Metrocall one-way and two-way networks that resulted in increased lease and telecommunications-related expenses.

      Following is a discussion of each significant item listed above:

•  Lease payments for transmitter locations — The increase in lease payments for transmitter locations consists of an increase of $12.6 million primarily due to the Metrocall one-way and two-way networks. As discussed earlier, we have begun to deconstruct one of our two-way networks and to rationalize our one-way networks. However, lease payments are subject to underlying obligations contained in each lease agreement, some of which do not allow immediate savings when our equipment is removed. Further, leases may consist of payments for multiple sets of transmitters, antenna structures or network infrastructures on a particular site. In some cases, we remove only a portion of the equipment to which the lease payment relates. Under these circumstances, reduction of future rent payments is often subject to negotiation and our success is dependent on many factors, including the number of other sites we lease from the lessor, the amount and location of equipment remaining at the site and the remaining term of the lease. Therefore, lease payments for transmitter locations are generally fixed in the short term, and as a result, to date, we have not been able to reduce these payments at the same rate as the rate of decline in units in service and revenues, resulting in an increase in these expenses as a percentage of revenues. Lease payments in 2005 include $0.2 million for lease termination penalties associated with the deconstruction of our one-way and two-way networks.

•  Telecommunications related expenses — The increase in telecommunications expenses reflected an increase of $5.0 million resulting from the Metrocall merger. We have also begun the process to reduce these costs as we consolidate and rationalize our one-way and two-way networks. Reductions in these expenses should occur as our networks are consolidated throughout 2005.

•  Payroll and related expenses — Payroll consists largely of field technicians and their managers. This functional work group does not vary as closely to direct units in service as other work groups since these individuals are a function of the number of networks we operate rather than the number of units in service on our networks. Payroll for this category increased $1.5 million, primarily due to an increase in employees resulting from the Metrocall merger.

      Selling and Marketing. Selling and marketing expenses consist primarily of payroll and related expenses. Selling and marketing payroll and related expenses increased $2.0 million or 23.5% over 2004. This

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increase was due primarily to an increase in the number of sales representatives and sales management which resulted from the Metrocall merger.

      General and Administrative. General and administrative expenses consist of the following significant items:

		Three Months Ended June 30,
		2004					2005					Change Between
												2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Payroll and related expenses		$	13,659		11.8	%	$	17,926		11.4	%	$	4,267		31.2	%
Bad debt			292		0.3			963		0.6			671		229.8
Facility expenses			3,350		2.9			5,679		3.6			2,329		69.5
Telecommunications			1,702		1.5			2,416		1.5			714		42.0
Outside services			2,771		2.4			7,988		5.1			5,217		188.3
Taxes and permits			2,895		2.5			5,762		3.6			2,867		99.0
Other			4,299		3.6			6,890		4.4			2,591		60.3
	Total	$	28,968		25.0	%	$	47,624		30.2	%	$	18,656		64.4	%

      As illustrated in the table above, general and administrative expenses increased $18.7 million from the three-month period ended June 30, 2004 due to the inclusion of Metrocall operations. The percentages of these expenses to revenue also increased, primarily due to the following:

•  Payroll and related expenses — Payroll and related expenses include employees in customer service, inventory, collections, finance and other back office functions as well as executive management. We anticipate staffing reductions over the next several quarters in conjunction with the merger integration as we consolidate billing systems, customer service, and other back-office functions.

•  Bad debt — The increase in bad debt expenses reflected an increase of $0.7 million due to higher levels of overall accounts receivable of the combined operations.

•  Telecommunications — The increase in telecommunications expense reflects the inclusion of Metrocall operations.

•  Outside Services — Outside services consists primarily of costs associated with printing and mailing invoices, outsourced customer service, temporary help and various professional fees. The increase in 2005 was due primarily to higher temporary help and professional fees due to integration related activities.

•  Taxes and Permits — Taxes and permits consist primarily of property, franchise and gross receipts taxes. The increase in taxes and permits consists primarily of an increase resulting from the inclusion of Metrocall operations. The increase in taxes and permits expense as a percentage of revenue was due primarily to gross receipts taxes enacted in several jurisdictions in 2005 and the recognition of state and local tax contingencies resulting from billing system conversion activities.

•  Other expenses — Other expenses consist primarily of postage and express mail costs associated with the shipping and receipt of messaging devices ($1.8 million), repairs and maintenance associated with computer hardware and software ($1.2 million) and insurance ($1.2 million) which increased primarily due to the merger with Metrocall.

      Depreciation and Amortization. Depreciation and amortization expenses increased to $32.9 million for the three month period ended June 30, 2005 from $31.1 million for the same period in 2004. This increase was due primarily to depreciation and amortization expense of the tangible and intangible assets acquired from Metrocall, of $15.1 million, partially offset by a decrease of $13.3 million related to groups of assets becoming fully depreciated in legacy Arch operations.

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      Stock Based Compensation. Stock based compensation consists primarily of amortization of compensation expense associated with restricted common stock and options issued to certain members of management. USA Mobility uses the fair-value based method of accounting for stock based compensation. Stock based compensation decreased to $0.7 million for the three month period ended June 30, 2005 from $2.1 million for the same period in 2004 since the outstanding options vested in May 2005, offset by the grant of 103,937 shares of restricted common stock to eligible employees on June 7, 2005.

      Severance and Related Costs. Severance increased to $9.4 million for the three month period ended June 30, 2005 from $0.5 million for the same period in 2004. The increase consists primarily of both actual and planned reductions in headcount due to the reorganization plan to adjust management structure and consolidate three operating divisions of five regions into two operating divisions of six regions.

      Interest Expense. Net interest expense decreased to $0.5 million for the three month period ended June 30, 2005 from $1.7 million for the same period in 2004. This decrease was due to the repayment of Arch’s 12% notes on May 28, 2004 partially offset by $0.7 million of expense associated with the $140.0 million of debt incurred to partially fund the cash election to former Metrocall shareholders in accordance with the terms of the merger agreement.

      Income Tax Expense. For the three month period ended June 30, 2005, we recognized $44,000 of income tax expense based on an effective tax rate of approximately 43%, exclusive of $1.3 million in income tax expense due to changes in tax laws in the state of Ohio. The provision for the three months ended June 30, 2004 was $2.1 million with an effective tax rate of approximately 40%. The decrease in the provision for the current year was primarily due to lower income before income tax expense due to the factors outlined above. We anticipate recognition of provisions for income taxes to be required for the foreseeable future, but we do not anticipate these provisions to result in current tax liabilities.

Comparison of the Results of Operations for the Six Months Ended June 30, 2004 and 2005

Revenues

		Six Months Ended June 30,
		2004					2005					Change Between
												2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Revenues:
	Service, rental and maintenance	$	230,720		96.4	%	$	310,633		96.1	%	$	79,913		34.6	%
	Product sales		8,736		3.6			12,581		3.9			3,845		44.0
		$	239,456		100	%	$	323,214		100	%	$	83,758
Selected operating expenses:
	Cost of products sold	$	1,794		0.7	%	$	2,208		0.7	%	$	414		23.1	%
	Service, rental and maintenance		75,976		31.7			113,078		35.0			37,102		48.8
	Selling and marketing		17,825		7.4			21,558		6.7			3,733		20.9
	General and administrative		60,085		25.1			96,136		29.7			36,051		60.0
		$	155,680		64.9	%	$	232,980		72.1	%	$	77,300

      Service, rental and maintenance revenues consist primarily of recurring fees associated with the provision of messaging services and rental of leased units. Product sales consist largely of revenues associated with the sale of devices and charges for leased devices that are not returned. The increase in revenues in each revenue type is the result of including revenues of Metrocall during 2005 as compared to Arch only during 2004.

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			Six Months Ended
			June 30,
			2004		2005
			(Dollars in thousands)
Service, rental and maintenance revenues:
Paging:
	Direct:
		One-way messaging	$	172,704	$	221,654
		Two-way messaging		42,689		57,158
			$	215,393	$	278,812
	Indirect:
		One-way messaging	$	13,728	$	21,260
		Two-way messaging		1,014		4,915
			$	14,742	$	26,175
Total Paging:
		One-way messaging	$	186,432	$	242,914
		Two-way messaging		43,703		62,073
			$	230,135	$	304,987
Non-Paging revenue				585		5,646
Total service, rental and maintenance revenues			$	230,720	$	310,633

      The table below sets forth units in service and service revenues, the changes in each between the six months ended June 30, 2004 and 2005 and the change in revenue associated with differences in the number of units in service and the average revenue per unit, known as ARPU.

		Units in Service						Revenues
		As of June 30,						Six Months Ended June 30,						Change Due to:
		2004		2005		Change		2004(a)		2005(a)		Change		ARPU			Units
		(Units in thousands)						(Dollars in thousands)
One-way messaging			3,699		4,876		1,177	$	186,432	$	242,914	$	56,482	$	(9,600	)	$	66,081
Two-way messaging			270		472		202		43,703		62,073		18,370		(3,344	)		21,714
	Total		3,969		5,348		1,379	$	230,135	$	304,987	$	74,852	$	(12,944	)	$	87,795

      As previously discussed, demand for messaging services has declined over the past several years and we anticipate that it will continue to decline for the foreseeable future, which would result in reductions in service revenue due to the lower number of subscribers.

Operating Expenses

      Cost of Products Sold. Cost of products sold consists primarily of the cost basis of devices sold to or lost by our customers. The increase for the six months ended June 30, 2005 was due primarily to an increase in the number of device transactions due to the Metrocall merger.

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      Service, Rental and Maintenance. Service, rental and maintenance expenses consist primarily of the following significant items:

		Six Months Ended June 30,
		2004					2005					Change Between
												2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Lease payments for transmitter locations		$	40,104		16.7	%	$	65,108		20.1	%	$	25,004		62.3	%
Telecommunications related expenses			16,398		6.9			22,107		6.9			5,709		34.8
Payroll and related expenses			12,805		5.3			16,516		5.1			3,711		29.0
Other			6,669		2.8			9,347		2.9			2,678		40.2
	Total	$	75,976		31.7	%	$	113,078		35.0	%	$	37,102		48.8	%

      As illustrated in the table above, service, rental and maintenance expenses increased $37.1 million or 48.8% from 2004. The percentage of these costs to revenues also increased, primarily due to the acquisition of the Metrocall one-way and two-way networks that resulted in increased lease and telecommunications related expenses.

      Following is a discussion of each significant item listed above:

•  Lease payments for transmitter locations — The increase in lease payments for transmitter locations consists of an increase of $25.0 million primarily due to the Metrocall one-way and two-way networks. As discussed earlier, we have begun to deconstruct one of our two-way networks and to rationalize our one-way networks. However, lease payments are subject to underlying obligations contained in each lease agreement, some of which do not allow for immediate savings when our equipment is removed. Further, leases may consist of payments for multiple sets of transmitters, antenna structures or network infrastructures on a particular site. In some cases, we remove only a portion of the equipment to which the lease payment relates. Under these circumstances, reduction of future rent payments is often subject to negotiation and our success is dependent on many factors, including the number of other sites we lease from the lessor, the amount and location of equipment remaining at the site and the remaining term of the lease. Therefore, lease payments for transmitter locations are generally fixed in the short term, and as a result, to date, we have not been able to reduce these payments at the same rate as the rate of decline in units in service and revenues, resulting in an increase in these expenses as a percentage of revenues. Lease payments in 2005 also include $0.2 million for lease termination penalties associated with the deconstruction of our one-way and two-way networks.

•  Telecommunications related expenses — The increase in telecommunications expenses reflected an increase of $5.7 million resulting from the Metrocall merger, net of $1.5 million benefit that was recorded as a reduction to telecommunications expense due to settlement of a roaming agreement. We have also begun the process to reduce these costs as we consolidate and rationalize our one-way and two-way networks. Reductions in these expenses should occur as our networks are consolidated throughout 2005.

•  Payroll and related expenses — Payroll consists largely of field technicians and their managers. This functional work group does not vary as closely to direct units in service as other work groups since these individuals are a function of the number of networks we operate rather than the number of units in service on our networks. Payroll for this category increased $3.7 million, primarily due to an increase in employees resulting from the merger with Metrocall.

      Selling and Marketing. Selling and marketing expenses consist primarily of payroll and related expenses. Selling and marketing payroll and related expenses increased $3.2 million or 18.7% over 2004. This increase was due primarily to an increase in the number of sales representatives and sales management which resulted from the merger with Metrocall.

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      General and Administrative. General and administrative expenses consist of the following significant items:

		Six Months Ended June 30,
												Change Between
		2004					2005					2004 and 2005
				% of					% of
		Amount		Revenue			Amount		Revenue			Amount		%
		(Dollars in thousands)
Payroll and related expenses		$	28,099		11.7	%	$	36,570		11.3	%	$	8,471		30.1	%
Bad debt			811		0.3			2,490		0.8			1,679		207.0
Facility expenses			6,974		2.9			11,914		3.7			4,940		70.8
Telecommunications			3,315		1.4			5,314		1.6			1,999		60.3
Outside services			5,607		2.3			14,756		4.5			9,149		163.2
Taxes and permits			6,095		2.6			10,901		3.4			4,806		78.9
Other			9,184		3.9			14,191		4.4			5,007		54.5
	Total	$	60,085		25.1	%	$	96,136		29.7	%	$	36,051		60.0	%

      As illustrated in the table above, general and administrative expenses increased $36.1 million from the six month period ended June 30, 2004 due to the inclusion of Metrocall operations. The percentages of these expenses to revenue also increased, primarily due to the following:

•  Payroll and related expenses — Payroll and related expenses include employees in customer service, inventory, collections, finance and other back office functions as well as executive management. We anticipate staffing reductions over the next several quarters in conjunction with the merger integration as we consolidate billing systems, customer service, and other back-office functions.

•  Bad debt — The increase in bad debt expenses reflected an increase of $1.7 million due to higher levels of overall accounts receivable of the combined operations.

•  Telecommunications — The increase in telecommunications expense reflects the inclusion of Metrocall operations.

•  Outside Services — Outside services consists primarily of costs associated with printing and mailing invoices, outsourced customer service, temporary help and various professional fees. The increase in 2005 was due primarily to higher temporary help and professional fees due to integration related activities.

•  Taxes and Permits — Taxes and permits consist primarily of property, franchise and gross receipts taxes. The increase in taxes and permits consists primarily of an increase resulting from the inclusion of Metrocall operations. The increase in taxes and permits expense as a percentage of revenue was due primarily to gross receipts taxes enacted in several jurisdictions in 2005 and the recognition of state and local tax contingencies resulting from billing system conversion activities.

•  Other expenses — Other expenses consist primarily of postage and express mail costs associated with the shipping and receipt of messaging devices ($3.7 million), repairs and maintenance associated with computer hardware and software ($2.9 million) and insurance ($2.4 million) which increased primarily due to the merger with Metrocall.

      Depreciation and Amortization. Depreciation and amortization expenses increased to $71.4 million for the six month period ended June 30, 2005 from $57.4 million for the same period in 2004. This increase was due primarily to depreciation and amortization expense of the tangible and intangible assets acquired from Metrocall, of $34.5 million, partially offset by a decrease of $20.5 million related to groups of assets becoming fully depreciated in legacy Arch operations.

      Stock Based Compensation. Stock based compensation consists primarily of amortization of compensation expense associated with restricted common stock and options issued to certain members of management.

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USA Mobility uses the fair-value based method of accounting for stock based compensation. Stock based compensation decreased to $2.1 million for the six month period ended June 30, 2005 from $4.3 million for the same period in 2004 since the outstanding options vested in May 2005, offset by the grant of 103,937 shares of restricted common stock to eligible employees on June 7, 2005.

      Severance and Related Costs. Severance increased to $14.5 million for the six month period ended June 30, 2005 from $4.1 million for the same period in 2004. The increase consists primarily of actual and planned reductions in headcount due to the reorganization plan to adjust management structure and consolidate three operating divisions of five regions into two operating divisions of six regions and the $4.3 million settlement agreement with three former Arch executives, which was paid during second quarter 2005.

      Interest Expense. Net interest expense decreased to $1.7 million for the six month period ended June 30, 2005 from $5.0 million for the same period in 2004. This decrease was due to the repayment of Arch’s 12% notes on May 28, 2004 partially offset by $2.1 million of expense associated with the $140.0 million of debt incurred to partially fund the cash election to former Metrocall shareholders in accordance with the terms of the merger agreement.

      Income Tax Expense. For the six month period ended June 30, 2005, we recognized $1.1 million of income tax expense based on an effective tax rate of approximately 43%, exclusive of a $1.3 million in income tax expense due to a change in the tax laws in the state of Ohio. The provision for the six months ended June 30, 2004 was $5.3 million recorded at an effective tax rate of approximately 40%. The decrease in the provision for the current year was primarily due to lower income before income tax expense due to the factors outlined above. We anticipate recognition of provisions for income taxes to be required for the foreseeable future, but we do not anticipate these provisions to result in current tax liabilities.

Liquidity and Capital Resources

Overview

      Based on current and anticipated levels of operations, we anticipate net cash provided by operating activities, together with the $42.6 million of cash on hand at June 30, 2005, should be adequate to meet our anticipated cash requirements for the foreseeable future.

      In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenditures, sell assets or seek additional financing. We can provide no assurance that reductions in planned capital expenditures or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that additional financing would be available on acceptable terms.

      Our net cash flows from operating, investing, and financing activities for the periods indicated in the table below were as follows (dollars in thousands):

	Six Months Ended
	June 30,
							Increase/
	2004			2005			(Decrease)
Net cash provided by operating activities	$	57,307		$	69,164		$	11,857
Net cash used in investing activities	$	(6,410	)		(5,026	)	$	(1,384	)
Net cash used in financing activities	$	(63,112	)		(68,490	)	$	5,378

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      Net Cash Provided by Operating Activities. As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements. Cash from operations varies depending on changes in various working capital items including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses. The following table includes the significant cash receipt and expenditure components of our cash flows from operating activities for the periods indicated and sets forth the change between the indicated periods (dollars in thousands):

			Six Months Ended
			June 30,
							Increase/
			2004		2005		(Decrease)
Cash received from customers			$	241,123	$	321,959	$	80,836
	Cash paid for —
		Payroll and related expenses		69,881		84,220		14,339
		Lease payments for tower locations		45,979		68,746		22,767
		Telecommunications expenses		18,105		24,857		6,752
		Interest expense		6,690		1,996		(4,694	)
		Other operating expenses		43,161		72,976		29,815
				183,816		252,795		68,979
	Net cash provided by operating activities		$	57,307	$	69,164	$	11,857

      Net cash provided by operating activities for the six months ended June 30, 2005 increased $11.9 million from the same period in 2004 due primarily to the following:

•  Cash received from customers increased $80.8 million in 2005 compared to the same period in 2004. This measure consists of revenues and direct taxes billed to customers adjusted for changes in accounts receivable, deferred revenue and tax withholding amounts. The increase was due primarily to revenue increases of $83.8 million, as discussed earlier, and a lower change in accounts receivable, $2.2 million in 2005 compared to $5.8 million in 2004. The change in accounts receivable was due to higher billings resulting from more units in service and higher revenue, which were a result of the merger with Metrocall.

•  Cash payments for payroll and related expenses increased $14.3 million due primarily to higher payroll expenses of $11.0 million, as discussed above, and $4.4 million of lower payments for incentives and other payroll amounts.

•  Lease payments for tower locations increased $22.8 million. This increase was due primarily to payments for a greater number of tower locations resulting from the merger with Metrocall.

•  Cash used for telecommunications related expenditures increased $6.8 million in 2005 compared to the same period in 2004. This increase was due primarily to factors presented above in the discussions of service, rental and maintenance expense and general and administrative expenses.

•  The decrease in interest payments for the six months ended June 30, 2005 compared to the same period in 2004 was due to the repayment of Arch’s 12% notes in May 2004. From June 2004 through November 16, 2004 we had no long-term debt outstanding. On November 16, 2004 we borrowed $140.0 million to partially fund a portion of the cash election in conjunction with the merger. Prior to December 31, 2004, we repaid $45.0 million of principal and subsequent to December 31, 2004 and through June 30, 2005 we repaid $68.5 million of principal. We anticipate repaying the remaining balance of the long-term debt in 2005.

•  Cash payments for other expenses primarily includes repairs and maintenance, outside services, facility rents, taxes and permits, office and various other expenses. The increase in these payments was primarily related to increased balances of prepaid expenses and other current assets, and higher payments for outside services of $9.7 million and taxes and permits of $5.2 million.

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      Net Cash Used In Investing Activities. Net cash used in investing activities in 2005 decreased $1.4 million from the same period in 2004 due primarily to lower capital expenditures. The merger of the two companies provided additional messaging devices allowing for reduced capital expenditures. Our business requires funds to finance capital expenditures which primarily include the purchase and repair of messaging devices, system and transmission equipment and information systems. Capital expenditures for 2005 consisted primarily of the purchase of messaging devices and expenditures related to transmission and information systems and other equipment, offset by the net proceeds from the sale of other assets. The amount of capital we require in the future will depend on a number of factors, including the number of existing subscriber devices to be replaced, the number of gross placements, technological developments, total competitive conditions and the nature and timing of our strategy to integrate and consolidate our networks. We anticipate our total capital expenditures for 2005 to be between $12.0 to $15.0 million.

      Net Cash Used In Financing Activities. Net cash used in financing activities in 2005 increased $5.4 million from the same period in 2004. In November 2004 as discussed below, we borrowed $140.0 million primarily to fund a portion of the cash consideration related to the Metrocall merger. Our use of cash in 2005 related primarily to principal repayments of those borrowings. In 2004, we used $20.0 million of net cash provided by operating activities to redeem Arch’s 12% notes.

      Borrowings. At March 31, 2005, we had aggregate principal amount of borrowings outstanding under our credit agreement of $56.5 million. During the three months ended June 30, 2005, we made additional optional principal prepayments of $24.1 million and a mandatory principal prepayment of $5.9 million, reducing the outstanding principal amount to $26.5 million as of June 30, 2005. The following table describes our principal borrowings at June 30, 2005 and associated debt service requirements.

Value	Interest	Maturity Date
$26.5 million	London InterBank Offered Rate plus 250 basis points	November 16, 2006

      Subsequent to June 30, 2005 and through August 9, 2005, we made a voluntary principal repayment of $8.5 million, reducing outstanding borrowings to $18.0 million. We expect to make additional prepayments of debt in the third quarter of 2005, including a mandatory principal prepayment of approximately $3.0 million due in August 2005. We were in compliance with our financial covenants at June 30, 2005.

Commitments and Contingencies

      Operating Leases. USA Mobility has operating leases for office and transmitter locations with lease terms ranging from one month to approximately eighteen years. (Total rent expense under operating leases for the six month period ending June 30, 2005 approximated $73.1 million.)

      Other Commitments. We have a commitment to fund annual cash flow deficits, if any, of GTES, LLC (“GTES”), a company in which we have a majority ownership interest, of up to $1.5 million during the initial three-year period following the investment date of February 11, 2004. Funds may be provided to GTES in the form of capital contributions or loans. No funding has been required through June 30, 2005.

      Off-Balance Sheet Arrangements. We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

      Contingencies. USA Mobility, from time to time, is involved in lawsuits arising in the normal course of business. USA Mobility believes that its pending lawsuits will not have a material adverse effects on its financial position, results of operations, or cash flows.

Related Party Transactions

      Two of our directors, effective November 16, 2004, also serve as directors for entities from which we lease transmission tower sites. During the six months ended June 30, 2005, the Company paid $13.5 million and

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$1.7 million, respectively, to these landlords for rent expenses. Each director has recused himself from any discussions or decisions we make on matters relating to the relevant vendor.

Application of Critical Accounting Policies

      The preceding discussions and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an on-going basis, we evaluate estimates and assumptions, including but not limited to those related to the impairment of long-lived assets, allowances for doubtful accounts and service credits, revenue recognition, asset retirement obligations, restructuring liabilities and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Risk Factors Affecting Future Operating Results

      The following important factors, among others, could cause our 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 management from time to time.

The rate of revenue erosion may not improve, or may deteriorate.

      We continue to face intense competition for subscribers due to technological competition from the mobile phone and PDA service providers as they continue to lower device prices while adding functionality. A key factor in our ability to be profitable and produce net cash flow from monthly subscription fees and operations is realizing improvement in the rate of revenue erosion from historical levels. If no improvement is realized, it may have a material adverse effect on our ability to be profitable and produce positive cash flow. We are dependent on net cash provided by operations as our principal source of liquidity. If our revenue continues to decline at the same or at an accelerated rate compared to the decline that we experienced on a pro forma basis assuming the Metrocall merger occurred at the beginning of 2004, it could outpace our ability to reduce costs, and adversely affect our ability to produce positive net cash flow from operations.

We may fail to successfully integrate the operations of Arch and Metrocall and therefore may not achieve the anticipated cost benefits of the merger.

      We face significant challenges in the integration of the operations of Arch and Metrocall. Some of the key issues include managing the combined Company’s networks, maintaining adequate focus on existing business and operations while working to integrate the two companies, managing marketing and sales efforts and integrating other key redundant systems for the combined operations.

      The integration of Arch and Metrocall requires substantial attention from our management, particularly in light of the companies’ geographically dispersed operations, different business cultures and compensation structures. The diversion of our management’s attention and any difficulties associated with integrating operations could have a material adverse effect on our revenues, level of expenses and results of operations. We may not succeed in the final system and operations integration efforts that we are striving to achieve without incurring substantial additional costs or achieve the integration efforts within a reasonable time and thus may not realize the anticipated cost benefits of the merger.

We may fail to achieve the cost savings expected from the merger.

      The anticipated cost savings resulting from the merger are based on a number of assumptions, including implementation of cost saving programs such as headcount reductions, consolidation of geographically dispersed operations and elimination of duplicative administrative systems and processes within a projected

29

period. In addition, the cost savings estimates assume that we will be able to realize efficiencies such as leverage in procuring messaging devices and other goods and services resulting from the increased size of the combined Company. Failure to successfully implement cost saving programs or otherwise realize efficiencies could materially adversely affect our cash flows, our results of operations and, ultimately, the value of our common stock.

If we are unable to retain key management personnel, we might not be able to find suitable replacements on a timely basis or at all and our business could be disrupted.

      Our success will depend, to a significant extent, upon the continued service of a relatively small group of key executive and management personnel. We have an employment agreement with our president and chief executive officer. Our board of directors has implemented a long-term incentive plan for senior management utilizing the equity incentive program approved by our shareholders in connection with our merger. We have issued restricted stock to our key executives that vest on January 1, 2008. The loss or unavailability of one or more of our executive officers or the inability to attract or retain key employees in the future could have a material adverse effect on our future operating results, financial position and cash flows.

We may be unable to find vendors willing to supply us with two-way paging equipment based on future demands.

      We purchase one-way and two-way paging equipment from third party vendors. This equipment is sold or leased to our customers in order to provide our wireless messaging services. The reduction in industry demand for two-way paging equipment has caused various suppliers to cease manufacturing this equipment. We believe that our current multiple vendor relationships, our current on-hand inventories of two-way paging equipment and our repair and maintenance programs will ensure an adequate supply of two-way paging equipment for the foreseeable future; however, we are unable to predict if the existing third party vendors will continue to supply two-way paging equipment. A lack of two-way paging equipment could impact our ability to provide certain wireless messaging services and could materially adversely affect our cash flows, results of operations, and ultimately, the value of our common stock.

Changes in ownership of our stock could prevent us from using our consolidated tax assets to offset future taxable income, which would materially reduce our expected after-tax net income and cash flows from operations. Actions available to us to preserve our consolidated tax assets could result in less liquidity for our common stock and/or depress the market value of our stock.

      If we were to undergo an “ownership change” as defined in Section 382 of the Internal Revenue Code our use of our consolidated tax assets would be significantly restricted, which would reduce our after-tax net income and cash flow. This in turn could reduce our ability to fund our operations or pay down the indebtedness we incurred in connection with the merger.

      Generally, an ownership change will occur if a cumulative shift in ownership of more than 50% of our common stock occurs during a rolling three year period. The cumulative shift in ownership is a measurement of the shift in ownership of our stock held by stockholders that own 5% or more of our stock. In general terms, it will equal the aggregate of any increases in the percentage of stock owned by each stockholder that owns 5% or more of our stock at any time during the testing period over the lowest percentage of stock owned by each such shareholder during the testing period. The testing period generally is the prior three years, but begins no earlier than May 30, 2002, the day after Arch emerged from bankruptcy.

      We believe, that as of June 30, 2005, we have undergone a cumulative change in ownership of approximately 40%. The determination of our percentage ownership change is dependent on provisions of the tax law that are subject to varying interpretations and on facts that are not precisely determinable by us at this time. Therefore, our cumulative shift in ownership may be more or less than approximately 40% and, in any event, may increase by reason of subsequent transactions in our stock by stockholders who own 5% or more of our stock, by transactions involving our stock that have already occurred that we were not yet informed of, and certain other transactions affecting the direct or indirect ownership of our stock.

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      There are transfer restrictions available to us in our Amended and Restated Certificate of Incorporation which permit us to generally restrict transfers by or to any 5% shareholder of our common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of our common stock. We intend to enforce these restrictions in order to preserve our consolidated tax assets, and such enforcement by us may result in less liquidity for our common stock and/or depress the market price for our shares.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      At June 30, 2005, our debt financing consisted primarily of amounts outstanding under our credit facility.

Senior Secured Debt, Variable Rate Debt:

      The borrowings outstanding under our credit facility are secured by substantially all of our assets. The credit facility debt is closely held by a group of lenders. Borrowings under our credit facility are sensitive to changes in interest rates. Given the existing level of debt of $26.5 million, as of June 30, 2005, a ¹/2% change in the weighted-average interest rate would have an interest impact of approximately $11,000 each month.

Principal Balance		Fair Value		Weighted-Average Cash Interest Rate		Scheduled Maturity
	$26.5 million		$26.5  million		5.2%		November 2006

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

      Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date we completed the evaluation, except as noted below.

Changes in Internal Control Over Financial Reporting

      During the first quarter of 2005, we converted the Arch payroll system into the Metrocall payroll system. During the first quarter of 2005 we also converted the Metrocall telecommunications cost management system to the Arch system. Similarly, we finalized the conversion of the Metrocall stand-alone billing system to the Arch billing system in July 2005.

      We will be converting the Arch site and office rent management system to the site and office rent management system of our Metrocall subsidiary in the third quarter of 2005.

      The internal control over financial reporting at our Metrocall subsidiary was excluded from the annual assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004. Outside of this assessment, management identified control deficiencies related to the financial reporting process at our Metrocall subsidiary. These deficiencies included the accounting for complex, non-routine transactions, the period-end financial closing process and the recording, billing, collection and payment of certain transactional taxes and similar fees owed to state and local jurisdictions. The accounting function at our Metrocall subsidiary did not have adequate staffing and resources to effectively communicate with operational personnel, properly account for complex non-routine transactions occurring at that subsidiary in accordance with generally accepted accounting principles and effectively mitigate other deficiencies in our business processes and information systems at that subsidiary. We do not believe that these control deficiencies resulted in a material weakness in our internal control over financial reporting because we had adequate transitional controls at the corporate level that effectively compensated for these deficiencies.

      A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 2), or combination of control deficiencies, that results

31

in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by employees in the normal course of their assigned functions. In connection with our efforts to integrate Metrocall into our operations and in order to remediate the above control deficiencies at our Metrocall subsidiary, the following is the current status of our actions through the second quarter.

      1. With respect to staffing we have:

      a. Hired a Director of Financial Reporting, who is responsible for reviewing complex and non-routine transactions for compliance with generally accepted accounting principles.

      b. Hired an Internal Audit Director and engaged a third party vendor to provide ongoing internal audit services.

      c. Engaged an outside search firm to assist in finding the required talent to meet our staffing requirements. Approximately 50% of our open positions have been filled. The Company expects to fill the remainder of these positions by year-end.

      d. Continued to engage outside consultants to supplement our existing staff until full-time staff can be hired. Outside consultants are also assisting us in reconciling, billing, collecting and paying certain transactional taxes and fees owed to local and state jurisdictions.

      2. With respect to the financial closing and reporting processes and controls we have:

      a. Assigned finance support staff to monitor and review transactions activity for site and office rents and telecommunication costs, and

      b. Established monthly review procedures with operating and finance management to ensure effective communication.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

      As previously disclosed, on November 10, 2004, three former Arch senior executives (the “Former Executives”) filed a Notice of Claim before the JAMS/ Endispute arbitration forum in Boston, Massachusetts, asserting they were terminated from their employment by Arch pursuant to a “change in control” as defined in their respective Executive Employment Agreements (the “Claims”). On May 9, 2005, the Former Executives agreed to dismiss the Claims with prejudice against all parties in exchange for a settlement payment of $4.3 million.

      USA Mobility was named as a defendant, along with Arch, Metrocall and Metrocall’s former board of directors, in two lawsuits filed in the Court of Chancery of the State of Delaware, New Castle County, on June 29, 2004 and July 28, 2004. We and the other defendants entered into a settlement agreement with the plaintiffs which was approved by the court on May 18, 2005 and the case was dismissed.

      USA Mobility, from time to time is involved in lawsuits arising in the normal course of business. We believe that our pending lawsuits will not have a material adverse effect on its financial position, results of operations, or cash flows.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

      None.

Item 3. Defaults upon Senior Securities

      None.

Item 4. Submission of Matters to a Vote of Security Holders

      On May 18, 2005, the Company held its annual meeting of stockholders. A total of 25,619,243 shares were represented in person or by proxy at the meeting. Nine directors were elected to hold office until the next annual meeting of stockholders and until their respective successors have been elected or appointed. The results of the election were as follows:

	In Favor		Against		Abstain
David Abrams		24,421,361		1,197,882		—
James V. Continenza		25,593,433		25,810		—
Nicholas A. Gallopo		25,163,075		456,168		—
Vincent D. Kelly		25,586,288		32,955		—
Brian O’Reilly		25,593,518		25,725		—
Matthew Oristano		25,542,797		76,446		—
William E. Redmond, Jr.(1)		25,592,946		26,297		—
Samme L. Thompson		25,165,109		454,134		—
Royce Yudkoff		25,541,887		77,356		—

(1)  Mr. Redmond subsequently resigned his position as director effective June 6, 2005, having accepted a position as Chief Executive Officer of another public company in an unrelated industry and decided to cut back on his Board service.

Item 5. Other Information

      None.

Item 6. Exhibits

      The exhibits listed in the accompanying Exhibit Index are filed as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.

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SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

USA MOBILITY, INC.

/s/ Thomas L. Schilling

Thomas L. Schilling

Chief Financial Officer

Dated: August 9, 2005

EXHIBIT INDEX

Exhibit No.			Description
	10	.10	Offer Letter, dated May 6, 2005, between USA Mobility, Inc. and Scott Tollefsen, filed herewith.
	31	.1*	Certificate of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2005
	31	.2*	Certificate of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2005
	32	.1*	Certificate of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 9, 2005
	32	.2*	Certificate of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 9, 2005

*  Filed herewith

EX-10.10

EXHIBIT 10.10

May 6, 2005

Scott Tollefsen
60 Truman Avenue
Princeton, NJ 08540-1699

Dear Scott:

We are pleased to offer you the position of General Counsel for USA Mobility, Inc. In this role you will be responsible for providing leadership and oversight to the legal function for USA Mobility. The responsibilities will also include planning and implementing the integration of these functions from the predecessor companies and ensuring the development and on-going leadership of these functions for USA Mobility. The General Counsel will be an integral member of the senior management team (i.e., similar to the COO, CTO, CFO) and will participate in regular senior management meetings, planning sessions and strategic initiatives.

     The overall responsibilities include, but are not limited to:

• Planning and developing the legal function to save outside legal costs in order to maximize productivity while achieving the synergy goals of the merger,

• Overseeing the above-mentioned functions to include planning and leading their rationalization and integration with Arch’s and Metrocall’s legacy systems, and providing oversight of related systems until successfully transitioned,

• Contribution in the development of, and on-going fiscal responsibility for, the 2005 & 2006 operating budgets for your areas of responsibility and achievement of fiscal and quarterly expense goals and targets,

• Sarbanes-Oxley, Section 404 internal controls and compliance for fiscal year 2005 and ongoing, as it relates to your areas of responsibility, and

• Contribution in the development of USA Mobility’s spectrum allocation strategy to maximize usage and revenue.

This position will report to the Chief Executive Officer for USA Mobility and will work closely with the other members of executive management to achieve our goals. The terms of this offer are outlined below.

1) Base Salary: $9,615.38 paid biweekly ($250,000 annually)

2) Bonus: up to 75% of base salary payable annually in accordance with USA Mobility policy, and pro-rated for the 2005 year. Bonus payment will be based upon accomplishment of pre-

determined goals and objectives, as set and agreed upon by the Board of Directors of USA Mobility.

3) Benefits: Company health, dental, vision plans and 401(k) participation will be available on the same terms as made available to other USA Mobility employees. The Benefits Booklet enclosed provides details on the company’s plans, eligibility requirements and related costs and benefits.

4) Vacation: You will accrue vacation each pay period at a rate equal to four weeks per year and may begin taking vacation following the first 90 days of employment. Payment of accrued and unused vacation at termination for any reason will be limited to 160 hours, consistent with company policy.

5) Expenses: Business related expenses including travel, lodging, meals and incidentals (i.e., telephone expenses) associated with work-related travel, will be reimbursed, following the submission of receipts consistent with USA Mobility policy. For a maximum of six months from your starting date, USA Mobility will reimburse for mutually agreed upon reasonable costs of an apartment, rental car and related travel expenses, including airfare between your current home in New Jersey and our corporate headquarters.

6) Severance: Should USA Mobility, in its sole discretion, terminate you for any reason other than “Cause”, as defined in the USA Mobility Severance Benefits Plan (the “USA Mobility Severance Plan”), you will become eligible for a severance benefit subject to your compliance with paragraph 10 below. This severance benefit will be calculated based upon your hire date at USA Mobility with continuous service through the date of termination. The amount of severance shall reflect the terms and conditions contained in the USA Mobility Severance Plan, or any successor severance plan of USA Mobility, and shall apply to the severance payments set forth in this paragraph 6, including, but not limited to, the requirement that you execute a valid severance and release agreement in effect at the time of your termination. Any capitalized terms not defined herein shall have the meanings set forth under the USA Mobility Severance Plan or any successor severance plan of USA Mobility. In the event that you were to be terminated as a result of a Change of Control, you would be eligible for a severance payment equal to one year’s base salary.

7) Equity Incentive Package: You will have meaningful participation in the Board/Management equity incentive program at a level below the CEO, but on a par with the CFO, COO and CTO, once a plan has been established for USA Mobility. A recommendation will be made to the Board of Directors to approve your participation in the plan at a level below the CEO, but on a par with the CFO, COO and CTO.

8) Relocation Assistance: You will receive relocation assistance (net of taxes) in the amount of $50,000.00 which represents the maximum sum to be paid in relocation expenses. In order for relocation expenses to be tax deductible, you must submit receipts with an expense report.

9) Signing Bonus: You will receive a signing bonus in the amount of $25,000.00 within ten (10) days of the date you begin employment with USA Mobility. If, within one calendar year of the date you begin employment with USA Mobility, you voluntarily terminate your employment with USA Mobility, or are terminated for “Cause”, you will be required to reimburse the Company for a prorated amount of the signing bonus.

10) Non-Competition, Non-Solicitation & Release: You must agree to not compete with USA Mobility by working for any competitor which earns the majority of its revenue from providing

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paging services or divulge trade secrets or confidential information, including customer information, for the period of one year following termination of employment. You will be expected to sign confidentiality agreements from time to time to protect the Company’s confidential information that may exceed the one year period following termination for any reason. In addition, you must agree not to solicit employees of USA Mobility for employment for the same one year period. Further, you must agree to release USA Mobility from any liability that might arise from your employment or termination consistent with the terms set forth in the severance agreement and release in effect at that time.

11) At Will Employment: Employment with USA Mobility will be “at will” and, thus, may be terminated at any time by USA Mobility.

12) Governing Law: The terms of this letter agreement shall be governed by the laws of the Commonwealth of Virginia.

This employment offer is contingent upon completion of USA Mobility’s pre-employment requirements including submission of a completed employment application, successful completion of a drug test within 48 hours of the extension of this offer and a satisfactory background check. For assistance and instructions on the completion of these requirements, please contact Bonnie Culp, SVP, Human Resources at 703-660-6677, x 6109.

Please sign and return one copy of this letter indicating your acceptance of this employment offer. As we discussed, we’d like you to officially join our staff on or before Tuesday, May 31, 2005. Scott, we are excited about our future and look forward to you becoming a part of the USA Mobility Leadership Team.

Sincerely,
 

/s/ Vincent D. Kelly  

Vincent D. Kelly 

President and CEO
USA Mobility, Inc. 

Accepted:

/s/ Scott Tollefsen	May 12, 2005
Scott Tollefsen	Date

cc: Human Resources, Personnel File

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Vincent D. Kelly, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of USA Mobility, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 9, 2005	/s/ Vincent D. Kelly
	Vincent D. Kelly
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Thomas L. Schilling, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of USA Mobility, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 9, 2005	/s/ Thomas L. Schilling
	Thomas L. Schilling
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the quarterly report on Form 10-Q of USA Mobility, Inc. (the “Company”) for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Vincent D. Kelly, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2005	/s/ Vincent D. Kelly
	Vincent D. Kelly
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the quarterly report on Form 10-Q of USA Mobility, Inc. (the “Company”) for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Thomas L. Schilling, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2005	/s/ Thomas L. Schilling
	Thomas L. Schilling
	Chief Financial Officer