8-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A
Amendment No. 2

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 14, 2004

METROCALL HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	0-21924	54-1215634
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
6677 Richmond Highway, Alexandria, Virginia		22306
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (703) 660-6677

EXPLANATORY NOTE

      On March 29, 2004, Metrocall Holdings, Inc. (“Metrocall”) and Arch Wireless, Inc. (“Arch”) entered into an Agreement and Plan of Merger. On May 14, 2004 Metrocall filed a Current Report on Form 8-K to file (i) historical financial statements of Arch Wireless, Inc. pursuant to the requirements of Rule 3-05(a) and (b) of Regulation S-X promulgated under the Securities Exchange Act of 1934 and (ii) the pro forma financial information required by Article 11 of Regulation S-X, in connection with Metrocall’s proposed merger with Arch. On July 23, 2004, Metrocall filed Amendment No. 1 to Form 8-K to replace the pro forma financial information previously provided in Exhibit 99.3 of the Form 8-K. The sole purpose of this Amendment No. 2 to Form 8-K is to amend and replace the unaudited interim financial statements and the pro forma financial information previously provided in Exhibits 99.2 and 99.3, respectively, of the Form 8-K, as amended, in their entirety. With the exception of the revisions made to the unaudited interim financial statements and the pro forma financial information in Exhibits 99.2 and 99.3, no other changes have been made to the finanical information previously filed with the form 8-K. Neither Metrocall nor its auditors, Ernst & Young LLP, participated in the preparation or review of Arch’s financial statements referred to in Item 9.01(a) of this filing and we do not express any opinion or any form of assurance on these financial statements.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial statements of businesses acquired.

     The following audited financial statements of Arch and notes thereto as required by this Item 9.01(a), have been previously filed as Exhibit 99.1:

Consolidated Balance Sheets as of December 31, 2002 and 2003 (Reorganized Arch).

Consolidated Statements of Operations for the Year Ended December 31, 2001, the Five Months Ended May 31, 2002 (Predecessor Company of Arch), the Seven Months Ended December 31, 2002 and the Year Ended December 31, 2003 (Reorganized Company of Arch).

Consolidated Statements Stockholders’ Equity (Deficit) for the Year Ended December 31, 2001, the Five Months Ended May 31, 2002 (Predecessor Company of Arch), the Seven Months Ended December 31, 2002 and the Year Ended December 31, 2003 (Reorganized Company of Arch).

Notes to Consolidated Financial Statements.

The following unaudited interim consolidated financial statements of Arch as required by this Item 9.01(a), is filed herewith as Exhibit 99.2:

Unaudited Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003.

Unaudited Consolidated Statements of Operations for the Six Months Ended June 30, 2004 and 2003.

Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003.

Notes to Unaudited Consolidated Financial Statements.

(b) Pro Forma Financial Information

     The following unaudited pro forma financial information of the combination of Metrocall and Arch, as required by this Item 9.01(b), is filed herewith as Exhibit 99.3:

Unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30, 2004.

Unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2004.

Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 2003.

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(c) Exhibits.

23.1	Consent of PricewaterhouseCoopers LLP (previously filed)
99.1	Consolidated balance sheets of Arch Wireless, Inc, as of December 31, 2003 and December 31, 2002, and the related consolidated statements of operations, cash flows and changes in stockholders’ equity for the year ended December 31, 2003, and for the periods from January 1, 2002 through May 31, 2002 (Predecessor Company of Arch), and June 1, 2002 through December 31, 2002 and for the year ended December 31, 2001 (previously filed)
99.2	Unaudited consolidated balance sheets of Arch Wireless, Inc. as of June 30, 2004 and December 31, 2003, and the related consolidated statements of operations and cash flows for the six month periods ended as of June 30, 2004 and June 30, 2003
99.3	USA Mobility, Inc., formerly Wizards-Patriots Holdings, Inc. (“Holding Company”), unaudited pro forma condensed consolidated financial statements

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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 hereunto duly authorized.

METROCALL HOLDINGS, INC.

By: /s/ George Z. Moratis

Name: George Z. Moratis

Title: Chief Financial Officer and Treasurer

Dated: September 10, 2004

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EX-99.2

Exhibit 99.2

ARCH WIRELESS, INC.

Index to Financial Statements

	Page
Unaudited Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003		2
Unaudited Consolidated Statements of Operations for the Six Months Ended June 30, 2004 and 2003		3
Unaudited Consolidated Statements of Cash Flows Six Months Ended June 30, 2004 and 2003		4
Unaudited Notes to Consolidated Financial Statements		5

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ARCH WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)

	June 30,			December 31,
	2004			2003
ASSETS
Current assets:
Cash and cash equivalents	$	22,367		$	34,582
Accounts receivable, net		20,279			26,052
Deposits		3,224			6,776
Prepaid rent		384			514
Prepaid expenses and other		8,331			7,381
Deferred income taxes		25,893			30,206
Total current assets		80,478			105,511
Property and equipment		391,936			394,436
Less accumulated depreciation and amortization		(224,615	)		(180,563	)
Property and equipment, net		167,321			213,873
Assets held for sale		—			1,139
Intangible and other assets, net		3			3
Deferred income taxes		191,955			189,346
	$	439,757		$	509,872
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	20,000
Accounts payable		8,403			8,836
Accrued compensation and benefits		7,131			17,820
Accrued network costs		7,100			7,893
Accrued property and sales taxes		8,887			10,076
Accrued interest		—			1,520
Accrued restructuring charges		8,470			11,481
Accrued other		7,028			8,104
Customer deposits and deferred revenue		21,316			25,477
Total current liabilities		68,335			111,207
Long-term debt, less current maturities		—			40,000
Other long-term liabilities		6,921			4,042
Stockholders’ equity:
Common stock — $0.0001 par value		2			2
Treasury stock		(3,112	)		—
Additional paid-in capital		344,576			339,928
Deferred stock compensation		(2,261	)		(2,682	)
Retained earnings		25,296			17,375
Total stockholders’ equity		364,501			354,623
	$	439,757		$	509,872

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ARCH WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)

	Six Months Ended June 30,
	2004			2003
Revenues	$	239,456		$	318,829
Operating expenses:
Cost of products sold (exclusive of depreciation and amortization shown separately below)		1,794			3,032
Service, rental, and maintenance (exclusive of depreciation, amortization and stock based and other compensation shown separately below)		75,976			98,646
Selling (exclusive of stock based and other compensation shown separately below)		17,825			24,215
General and administrative (exclusive of depreciation, amortization and stock based and other compensation shown separately below)		60,085			92,979
Depreciation and amortization		57,380			63,861
Stock based and other compensation		5,448			6,471
Restructuring charge		3,018			—
Total operating expenses		221,526			289,204
Operating income		17,930			29,625
Interest expense, net		(5,029	)		(10,473	)
Other income, net		345			83
Income before income tax expense		13,246			19,235
Income tax expense		(5,325	)		(7,920	)
Net income	$	7,921		$	11,315
Basic net income per common share	$	0.40		$	0.57
Diluted net income per common share	$	0.39		$	0.57
Basic weighted average common shares outstanding		19,982,635			20,000,000
Diluted weighted average common shares outstanding		20,093,617			20,012,848

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ARCH WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

	Six Months Ended June 30,
	2004			2003
Cash flows from operating activities:
Net income	$	7,921		$	11,315
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		57,380			63,861
Accretion of long-term debt		—			4,750
Amortization of stock based compensation		1,448			1,773
Deferred income tax expense		5,325			7,920
(Gain) loss on disposals of property and equipment		(230	)		61
Other income		(110	)		(119	)
Provisions for doubtful accounts and service adjustments		4,378			15,294
Changes in assets and liabilities:
Accounts receivable		1,395			(2,298	)
Prepaid expenses and other		(129	)		13,071
Accounts payable and accrued expenses		(18,711	)		(16,708	)
Customer deposits and deferred revenue		(4,161	)		(4,340	)
Other long-term liabilities		2,801			1,733
Net cash provided by operating activities		57,307			96,313
Cash flows from investing activities:
Additions to property and equipment		(8,138	)		(9,695	)
Proceeds from disposals of property and equipment		1,618			2,232
Receipts from note receivable		110			119
Net cash used for investing activities		(6,410	)		(7,344	)
Cash flows from financing activities:
Repayment of long-term debt		(60,000	)		(80,000	)
Purchase of treasury shares		(3,112	)		—
Net cash used for financing activities		(63,112	)		(80,000	)
Net increase (decrease) in cash and cash equivalents		(12,215	)		8,969
Cash and cash equivalents, beginning of period		34,582			37,187
Cash and cash equivalents, end of period	$	22,367		$	46,156
Supplemental disclosures:
Interest paid	$	6,690		$	5,456
Asset retirement obligations	$	—		$	1,244

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ARCH WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     (a) Preparation of Interim Financial Statements – The consolidated financial statements of Arch Wireless, Inc. (“Arch” or the “Company”) have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. The financial information included herein, other than the consolidated balance sheet as of December 31, 2003, has been prepared without audit. The consolidated balance sheet at December 31, 2003 has been derived from, but does not include all the disclosures contained in, the audited consolidated financial statements for the year ended December 31, 2003. In the opinion of management, these unaudited statements include all adjustments and accruals consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of all interim periods reported herein. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in Arch’s Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year.

     (b) Risks and Other Important Factors – Based on current and anticipated levels of operations, Arch’s management anticipates that net cash provided by operating activities, together with the $22.4 million of cash on hand at June 30, 2004, will be adequate to meet its 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, Arch may be required to reduce planned capital expenditures, sell assets or seek additional financing. Arch can provide no assurances 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.

     Arch believes that future fluctuations in its revenues and operating results may occur due to many factors, particularly the decreased demand for its messaging services. If the rate of decline of messaging units in service exceeds Arch’s expectations, its revenues will be negatively impacted, and such impact could be material. Arch’s plan to consolidate its networks may also negatively impact revenues as customers may experience a reduction in, and possible disruptions of, service in certain areas. Arch 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, Arch’s revenue or operating results may not meet the expectations of investors and creditors, which could impair the value of its equity securities.

     (c) Proposed Merger – On March 29, 2004, Arch announced the execution of a definitive merger agreement with Metrocall Holdings, Inc. (“Metrocall”). Under terms of the merger agreement, a new holding company was formed to own both Arch and Metrocall. In the aggregate, Metrocall common stockholders will receive $150 million in cash pursuant to a cash election and approximately 27.5% of the shares of the new holding company’s common stock on a fully diluted basis. Under the cash election, Metrocall shareholders will be entitled to elect to receive cash in the amount of $75.00 per Metrocall share for up to two million Metrocall shares. The remaining approximately four million fully diluted Metrocall shares will be converted into approximately 27.5% of the new holding company’s outstanding common stock on a fully diluted basis. To the extent that cash elections are made in respect of a number greater than or less than two million shares, the merger consideration will be adjusted on a pro rata basis so that two million of Metrocall’s outstanding shares are exchanged for cash.

     Arch shareholders will receive one share of new holding company common stock for each share of Arch common stock they own. Based on Arch’s outstanding shares and options as of July 30, 2004, 20,151,773 shares and options of the new holding company would be issued to Arch stakeholders. This amount consists of 19,623,094 shares currently outstanding, 278,683 shares remaining to be issued pursuant to Arch’s plan of reorganization and options to purchase 249,996 shares of Arch common stock issued to certain members of the

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board of directors which fully vested on May 29, 2004. The current balance of outstanding shares above includes 316,002 shares of restricted stock issued to certain members of management that are currently subject to repurchase and other restrictions. If all 316,002 shares were repurchased, Arch shareholders would receive 19,835,771 shares of the new holding company’s common stock and Metrocall’s shareholders would receive 7,560,515 shares of the new holding company’s common stock, reflecting an exchange ratio of 1.876 new holding company shares for each Metrocall share.

     Arch and Metrocall have received opinions from tax counsel indicating the merger will qualify as a tax-free reorganization to the extent that shareholders receive stock rather than cash. Upon completion of the merger, Arch shareholders will own approximately 72.5% and Metrocall shareholders will own approximately 27.5% of the new company on a fully diluted basis.

     Arch expects the new holding company will incur up to $150.0 million of indebtedness to provide the funds necessary to purchase the two million Metrocall shares subject to the cash election referred to above. If such financing is not available or is not available on acceptable terms, the merger may be abandoned by either Arch or Metrocall.

     The merger will be accounted for under the purchase method of accounting pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations. Arch has been deemed the acquiring entity due its former shareholders holding a majority of the common stock of the new holding company. Accordingly, the basis of Arch’s assets and liabilities as of the acquisition date will be reflected on the new holding company’s balance sheet at their historical basis. Amounts allocated to Metrocall’s assets and liabilities will be based upon the total purchase price and the estimated fair values of such assets and liabilities as of the acquisition date.

     Arch expects the merger, which has been approved by the boards of directors of Arch and Metrocall, but is subject to regulatory review, shareholder approval and other third-party consents, to be completed in the late third or early fourth quarter.

     (d) Long-lived Assets – Intangible and other assets were comprised of the following at June 30, 2004 and December 31, 2003 (in thousands):

		Gross
		Carrying		Accumulated
	Useful Life	Amount		Amortization		Net Balance
Purchased subscriber lists	3 yrs	$	3,547	$	3,547	$	—
Purchased Federal Communications Commission licenses	5 yrs		2,119		2,119		—
Other			3		—		3
		$	5,669	$	5,666	$	3

     Aggregate amortization expense for intangible assets for the six months ended June 30, 2004 and 2003 was zero and $1.8 million, respectively. The balance of Arch’s intangible assets were fully amortized in 2003, therefore there is no additional amortization expense to recognize in future periods.

     (e) Restructuring Charges – In the year ended December 31, 2003 and the six month period ended June 30, 2004, Arch recorded restructuring charges of $11.5 million and $3.0 million, respectively, related to certain lease agreements for transmitter locations. Under the terms of these agreements, Arch is required to pay minimum amounts for a designated number of transmitter locations. However, Arch determined the designated number of transmitter locations was in excess of its current and anticipated needs. At June 30, 2004, the balance of the restructuring reserve was as follows (in thousands):

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							Remaining
	Balance at		Restructuring				Reserve at
	December 31, 2003		Charge in 2004		Cash Paid		June 30, 2004
Lease obligation costs	$	11,481	$	3,018	$	6,029	$	8,470

     The remaining obligations associated with these agreements are expected to be paid over the next four quarters.

     (f) Income Taxes – Arch accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes (“SFAS No. 109"). Deferred 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.

     On May 29, 2004, 316,999 shares of restricted stock previously issued to certain members of senior management vested. The value of the shares when they vested was higher than the compensation expense recorded in accordance with generally accepted accounting principles, which will result in an incremental deduction for tax purposes. In accordance with SFAS No. 109, the tax effect of this incremental deduction of $3.6 million was recognized as an increase to Arch’s long-term deferred tax assets and additional paid-in capital.

     SFAS No. 109 requires Arch to evaluate the recoverability of its deferred 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 some portion or all of Arch’s net deferred assets will be realized in future periods.

     During the quarter ended December 31, 2003, management determined the available positive evidence carried more weight than the historical negative evidence and concluded it was more likely than not that the net deferred tax assets would be realized in future periods. The positive evidence management considered included operating income and cash flows for 2002 and 2003, Arch’s repayment of debt ahead of scheduled maturities and anticipated operating income and cash flows for future periods in sufficient amounts to realize the net deferred tax assets. Results for the six months ended June 30, 2004 and anticipated future results remain consistent with the assessment made in 2003; therefore, management continues to believe no valuation allowance is required.

     The effective income tax rate is expected to continue to differ from the statutory federal tax rate primarily due to the effect of state income taxes.

     (g) 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 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):

	Six Months Ended June 30,
	2004		2003
Net income	$	7,921	$	11,315
Weighted average common shares outstanding		19,982,635		20,000,000
Dilutive effect of:
Options to purchase common stock		110,982		12,848
Common stock and common stock equivalents		20,093,617		20,012,848
Earnings per share:
Basic	$	0.40	$	0.57
Diluted	$	0.39	$	0.57

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     For the three and six months ended June 30, 2004 and 2003, no shares were excluded from the calculations above due to the shares being anti-dilutive.

     (h) Treasury Stock – On May 29, 2004, Arch received 98,223 shares of its class A common stock with a value of approximately $3.1 million surrendered from certain members of senior management as consideration for Arch remitting certain payroll withholding taxes related to the vesting of 316,999 shares of restricted stock on that date. Arch accounted for this treasury stock at cost.

     (i) Long-term Debt – On May 28,2004, Arch completed the final redemption of its 12% notes and has no other borrowings outstanding.

     (j) Recently Issued Accounting Pronouncements – In January 2003, the Financial Accounting Standards Board (“FASB”) issued FIN No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB 51 and issued a revision to that guidance, FIN No. 46-R, in December 2003. FIN No. 46 and FIN No 46-R provide guidance on the identification of entities for which control is achieved through means other than through voting rights called “variable interest entities” or “VIEs” and how to determine when and which business enterprise should consolidate the VIE (the “primary beneficiary”). This model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, these interpretations require both the primary beneficiary and all other enterprises with a significant variable interest in a VIE to make additional disclosures. The provisions of FIN No. 46 were applicable to Arch for any interests entered into after January 31, 2003 and the provisions of FIN No. 46-R were effective on January 1, 2004. Arch does not have any interests that would change its current reporting entity or require additional disclosures outlined in FIN No. 46 or FIN No. 46-R.

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EX-99.3

Exhibit 99.3

USA MOBILITY, INC. UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      The following unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. Pursuant to the terms of the merger agreement, Patriots Acquisition Sub, Inc. and Wizards Acquisition Sub, Inc, two wholly owned subsidiaries of USA Mobility, Inc. (USA Mobility) will merge with and into Arch and Metrocall, respectively. USA Mobility presently has no operations and was formed specifically to facilitate the merger transaction. Under the terms of the merger agreement, holders of Arch common stock will receive one share of USA Mobility common stock for each common share held of Arch Wireless. Holders of Metrocall common stock will receive consideration totaling $150 million of cash and 7,560,515 shares of USA Mobility common stock assuming 1.876 USA Mobility shares will be exchanged for each Metrocall share not subject to the cash election. Upon consummation of the merger exchange, former Arch and Metrocall common shareholders will hold approximately 72.5% and 27.5%, respectively, of USA Mobility’s common stock on a fully diluted basis.

      These pro forma financial statements do not purport to be indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had the merger occurred on the dates specified in these pro forma financial statements.

      The merger will be accounted for under the purchase method of accounting pursuant to Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations. Arch Wireless, Inc. has been deemed the “accounting acquirer” as a result of its former shareholders holding a majority of the common stock of USA Mobility following the merger and Arch representatives holding five of nine board of director positions of the combined company. Accordingly, the basis of Arch’s assets and liabilities as of the acquisition date will be reflected on the balance sheet of USA Mobility at their historical basis. Amounts allocated to Metrocall’s assets and liabilities will be based upon the total purchase price and the estimated fair value of such assets and liabilities on the effective date of the merger. The purchase price allocations reflected in the accompanying pro forma condensed consolidated balance sheet were made based upon preliminary estimates and assumptions. The actual amount and allocation of purchase price may differ significantly from the pro forma amounts included herein.

      The unaudited pro forma condensed consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of Arch included herein and Metrocall as included in Metrocall’s Annual Report on Form 10-K for the year ended December 31, 2003 or Amendment No. 1 to quarterly report on Form 10-Q for the six months ended June 30, 2004.

      The unaudited pro forma condensed consolidated balance sheet was prepared as if the merger occurred on June 30, 2004. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2003 and for the six months ended June 30, 2004 were prepared as if the merger occurred on January 1, 2003. To prepare the pro forma condensed consolidated statements of operations for the year ended December 31, 2003, Metrocall’s historical statement of operations for the year ended December 31, 2003 was combined on a pro forma basis with the historical statement of operations of WebLink Wireless for the period January 1, 2003 to November 17, 2003, as if Metrocall had acquired WebLink on January 1, 2003. Metrocall’s historical statement of operations includes the results of operations of WebLink for the period November 18 to December 31, 2003. Refer to “Metrocall Holdings, Inc. — WebLink Acquired Assets” for further information on this pro forma financial information.

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USA MOBILITY, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

June 30, 2004

(dollars in thousands)

								Pro Forma
								Adjustments
			Arch			Metrocall								USA Mobility
			(Historical)			(Historical)		Debit			Credit			(Pro Forma)
CURRENT ASSETS
	Cash and cash equivalents		$	22,367		$	26,659							$	49,026
	Accounts receivable			20,279			21,984								42,263
	Deposits			3,224			1,216								4,440
	Prepaid rent			384			224								608
	Prepaid expenses and other current assets			8,331			2,321								10,652
	Deferred tax assets, net of allowance			25,893			2,782				$	2,782	(2)		25,893
		Total current assets		80,478			55,186					2,782			132,882
Property and equipment, net				167,321			53,997	$	38,000	(1)					259,318
Intangible assets, net				—			2,302		276,549	(1)		2,302	(2)		296,366
									19,817	(4)
Deferred tax assets, net of allowance				191,955			45,412					45,412	(2)		191,955
												—
Other assets				3			5,003								5,006
		TOTAL ASSETS	$	439,757		$	161,900	$	334,366		$	50,496		$	885,527
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES
	Current maturities of other long-term debt		$	—		$	339							$	339
	Accounts payable			8,403			7,978								16,381
	Accrued compensation and benefits			7,131			7,878				$	2,934	(5)		17,943
	Accrued expenses and other current liabilities			23,015			14,525					10,000	(1)		47,540
	Accrued restructuring charges			8,470			565								9,035
	Deferred revenues and subscriber deposits			21,316			14,005								35,321
		Total current liabilities		68,335			45,290					12,934			126,559
Long-term debt, less current maturities				—			15					150,000	(1)		150,015
Other long-term liabilities				6,921			3,780					19,817	(4)		30,518
		Total liabilities		75,256			49,085					182,751			307,092
STOCKHOLDERS’ EQUITY
	Common stock			2			56	$	56			1	(1)		3
	Additional paid-in capital			344,576			85,012		85,012	(3)		216,867	(1)		558,331
									3,112	(6)
	Treasury stock			(3,112	)		—					3,112	(6)		—
	Unearned compensation			(2,261	)		—								(2,261	)
	Retained earnings			25,296			27,747					22,749	(3)		22,362
									50,496	(2)
									2,934	(5)
		Total stockholders’ equity		364,501			112,815		141,610			242,729			578,435
		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	439,757		$	161,900	$	141,610		$	425,480		$	885,527

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

2

USA MOBILITY, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Six Months Ended June 30, 2004

(in thousands, except share and per share amounts)

		Arch			Metrocall			Pro Forma			USA Mobility
		(Historical)			(Historical)			Adjustments			Pro Forma
Revenues		$	239,456		$	177,830					$	417,286
OPERATING EXPENSES
	Cost of products sold		1,794			2,283						4,077
	Service, rent and maintenance		75,976			56,380						132,356
	Selling and marketing		17,825			18,002						35,827
	General and administrative		60,085			50,361		$	(4,103	)(11)		106,343
	Depreciation and amortization		57,380			17,213			52,115	(7)		109,495
									(17,213	)(7)
	Stock based and other compensation		5,448			2,351						7,799
	Restructuring expenses		3,018			—						3,018
			221,526			146,590			30,799			398,915
Operating income			17,930			31,240			(30,799	)		18,371
Interest expense			(5,029	)		(273	)		(6,000	)(8)		(6,273	)
									5,029	(8)
Interest expense — Dividends and accretion of series A preferred			—			(4,479	)		4,479	(8)		—
Other income (expense)			345			(34	)					311
Income before income tax expense			13,246			26,454			(27,291	)		12,409
Income tax expense			(5,325	)		(11,730	)		12,066	(12)		(4,989	)
Net income (loss)		$	7,921		$	14,724		$	(15,225	)	$	7,420
Basic net income (loss) per common share		$	0.40								$	0.28
Diluted net income (loss) per common share		$	0.39								$	0.27
Basic weighted-average common shares outstanding			19,982,635						6,739,127			26,537,532
									(184,230	)(10)
Diluted weighted-average common shares outstanding			20,093,617						7,560,515			27,469,902
									(184,230	)(10)

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

3

USA MOBILITY, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2003

(in thousands, except share and per share amounts)

			Arch			Metrocall			Pro Forma			USA Mobility
			(Historical)			(Pro Forma)			Adjustments			Pro Forma
Revenues			$	597,478		$	417,940					$	1,015,418
OPERATING EXPENSES
	Cost of products sold			5,580			9,465						15,045
	Service, rent and maintenance			192,159			132,042						324,201
	Selling and marketing			45,639			45,953						91,592
	General and administrative			166,167			112,736		$	(600	)(11)		278,303
	Depreciation and amortization			118,917			41,188			104,459	(7)		223,376
										(41,188	)(7)
	Stock based and other compensation			11,420			1,725						13,145
	Restructuring expenses			11,481			7,907						19,388
				551,363			351,016			62,671			965,050
Operating income				46,115			66,924			(62,671	)		50,368
Interest expense				(19,788	)		(4,944	)		(12,000	)(8)		(13,461	)
										23,271	(8)
Interest expense — Dividends and accretion of series A preferred				—			(12,428	)		12,428	(8)		—
Interest income				551			—						551
Other income (expense)				516			286						802
Income before reorganization items, net				27,394			49,838			(38,972	)		38,260
Reorganization items, net				(425	)		—						(425	)
Income before income tax expense				26,969			49,838			(38,972	)		37,835
Income tax expense				(10,841	)		(26,140	)		21,771	(12)		(15,210	)
		Net income (loss)	$	16,128		$	23,698		$	(17,201	)	$	22,625
Basic net income (loss) per common share			$	0.81								$	0.85
Diluted net income (loss) per common share			$	0.81								$	0.83
Basic weighted-average common shares outstanding				20,000,000						6,739,127			26,554,897
										(184,230	)(10)
Diluted weighted-average common shares outstanding				20,034,476						7,560,515			27,410,761
										(184,230	)(10)

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

4

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(1)

To record the issuance of 7,560,515 shares of $0.0001 par value USA Mobility common stock valued at $28.68 per share and $150 million of debt in exchange for all of the outstanding common stock and stock equivalents of Metrocall Holdings, Inc. The per share price was calculated by taking the average of the closing stock price of Arch common stock for the seven day period beginning three days before and ending three days after March 29, 2004, the date the merger was publicly announced. The value of Arch common stock was utilized in the purchase price calculation since Arch was deemed the “accounting acquirer”, its exchange ratio is 1 to 1 and it carries similar transfer restrictions to those of USA Mobility common stock. The amount of debt that will be incurred to finance the cash election is undetermined at this time, but may be as much as $150 million depending on the available cash on hand of Arch and Metrocall at the time of the closing of the merger.

The provisions of SFAS No. 141 require the purchase price to be allocated to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values as of the consummation date. The allocation below is based on management estimates. The actual allocation may differ significantly from the pro forma amounts included below. The preliminary calculation of the purchase price, excess of purchase price over the fair value of identifiable assets acquired and the allocation of purchase price are as follows (in thousands):

Consideration Exchanged:
	Fair value of shares issued to Metrocall stockholders — 7,560,515 shares at $28.68 per share)	$	216,868
	Cash election payments		150,000
	Transaction costs		10,000	(a)
Liabilities Assumed:
	Capital leases and other long-term obligations		354
	Accounts payable		7,978
	Accrued expenses		22,968
	Customer deposits and deferred revenue		14,005
	Other liabilities		3,780
Total purchase price			425,953
Less estimated fair value of identifiable assets acquired:
	Cash and cash equivalents		26,659
	Accounts receivable, net		21,984
	Prepaid expenses and other current assets		3,761
	Property and equipment		91,997	(b)
	Other assets		5,003
	Intangible assets		276,549	(c)
		$	425,953
Excess of purchase price over the estimated fair value of identifiable assets		$	—

(a)  Primarily includes investment banking, legal, accounting and other costs, which are currently known or have been incurred. This amount may increase as additional legal, accounting, printing, financing and other costs are incurred.

(b)  The fair value of property and equipment has been estimated by management based upon historical book values and the results of valuations, adjusted by management to reflect the passage of time since the valuation was prepared, performed for the purposes of Metrocall’s fresh-start accounting and its purchase of the WebLink assets. Management believes the amounts approximate fair value,

5

however they are preliminary and may change upon preparation of the third-party valuation that will be utilized in the final purchase price allocation.

(c)

Intangible assets consist primarily of assets related to customer relationships of approximately $220,000, FCC licenses of $2,300 and goodwill of $54,249. Assets representing customer relationships and FCC licenses will be amortized over their expected useful lives of 3 and 5 years respectively. Goodwill will not be amortized. The estimated fair value of customer relationships was based upon preliminary studies undertaken by management. The estimated fair value of FCC licenses was based on recent valuations and other studies recently performed. The estimated value allocated to goodwill was based on the residual of the preliminary purchase price over the preliminary fair values of the other identifiable tangible and intangible assets.

If it is later determined that the fair values of property and equipment, customer relationships or FCC licenses is less than included above or the consideration exchanged is less than determined above or other intangible assets are identified, the purchase price allocations could be significantly different than stated above and any such difference could result in higher or lower amortization expense than what is reflected on the pro forma statements of operations (see note 7). Further, if the purchase price exceeds the fair value of the identifiable tangible and intangible assets, any such excess will be classified as excess of purchase price over the fair value of the identifiable tangible and intangible assets and that balance would not be amortizable, which may result in less amortization expense in future periods.

(2)	To writeoff Metrocall intangible and deferred income tax balances.
(3)	To eliminate the common stock, additional paid-in capital and retained earnings balances of Metrocall as follows:

Common stock	$	56
Additional paid-in capital	$	85,012
Metrocall retained earnings at June 30, 2004	$	27,747
Less: write-off of intangibles and deferred tax assets		(50,496	)
Adjustment to eliminate remaining retained earnings	$	(22,749	)

(4)	To record the deferred tax liability and the associated intangible asset resulting from the excess of purchase price over tax bases of the net assets acquired. As discussed above, the purchase price calculation and allocation are preliminary. SFAS No. 109, Accounting for Income Taxes, requires a deferred tax liability be recorded if the fair value of the net assets acquired exceeds the tax bases of those assets excluding any fair value allocated to goodwill (excess of purchase price over the fair value of identified assets). The amount recorded assumes the identifiable intangible assets referred to in note 1 are not goodwill and are amortizable for tax purposes. If it is later determined that the allocation of purchase price results in less intangibles and the recognition of goodwill or if the identified intangibles are not amortizable for tax purposes, that balance of the assets would be reduced or removed from the deferred tax assessment and would likely result in the recording of a lower deferred tax liability.
(5)	To record a restructuring charge in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, related to severance expense for certain Arch management personnel.
(6)	To eliminate Arch treasury stock that will be canceled as a result of the merger transaction.
(7)	To remove depreciation and amortization expense related to the Metrocall tangible and intangible assets and to record depreciation and amortization expense for the tangible and intangible assets referred to above on a straight-line basis. Depreciation and amortization expense was calculated assuming a three-year average estimated useful life for customer relationships and a five-year estimated useful life for FCC licenses. The three-year estimated useful life assumed to calculate the amortization expense reflected in the pro forma statements of operations for the customer relationship asset is consistent with current practices of both Arch and Metrocall, however, the underlying characteristics of the customer relationship asset may differ from past experience which may result in a longer or shorter estimated useful life. The estimated useful life assigned to FCC licenses is consistent with Arch’s historical accounting policy. As discussed

6

above, the amount, classification and estimated useful lives of the tangible and intangible assets are preliminary and based on management estimates. If any of these estimates change, the amount of depreciation and amortization expense could change materially.

(8)

To remove the historical Arch and Metrocall interest expenses associated with notes and preferred stock since the merger agreement requires both companies to fully redeem all of their debt prior to consummation of the merger and to record interest expense associated with the borrowings to finance the Metrocall cash election consideration. Interest expense was calculated using an assumed 8% rate on $150 million of borrowings resulting in $12 million and $6 million for the year ended December 31, 2003 and the six months ended June 30, 2004, respectively.

Interest expense on these borrowings would be as follows if interest rates were to increase or decrease by  1/8 of a percent (in thousands):

			Six Months
	Year Ended		Ended
	December 31,		June 30,
Assumed Change In Rate	2003		2004
Increase of  1/8%	$	12,188	$	6,094
Decrease of  1/8%	$	11,813	$	5,906

(9)  Arch has a long-term incentive plan for which compensation expense is recognized ratably over a 38 month service period which commenced on January 1, 2003. At June 30, 2004, other long-term liabilities includes $5.8 million related to this plan which represents the obligations due to plan participants as of the balance sheet date. In the event there is a “change in control” of Arch, as defined in the plan document, vesting would accelerate and result in an additional liability of $6.4 million. The board of directors of Arch and Metrocall have determined the merger does not constitute a change in control of Arch, therefore this additional amount has not been reflected in these pro forma financial statements. The liability at June 30, 2004 was valued at $27.94 per share, determined in accordance with the plan. The incentive payable in accordance with this plan is directly attributable to the performance of Arch’s common stock. An increase or decrease of one dollar in the per share price of Arch’s common stock will result in increases or decreases of up to $437,000 for each dollar fluctuation in the total amount payable in accordance with this plan.

(10)	To reduce the outstanding number of shares by 184,230 shares of Arch stock not contemplated to be exchanged by the merger agreement.
(11)	To eliminate legal, accounting and other expenses directly related to the merger incurred and expensed by Metrocall. Metrocall expensed these costs since Arch has been deemed the accounting acquirer.
(12)	To adjust income tax expense to the anticipated effective rate of approximately 40%.

7

METROCALL HOLDINGS, INC. — WEBLINK ACQUIRED ASSETS

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

      On November 18, 2003, Metrocall acquired certain assets and assumed certain of the liabilities of WebLink Wireless, Inc. and certain of its subsidiaries (“the WebLink Acquired Assets”) pursuant to an Asset Purchase Agreement. Metrocall and WebLink have also entered into a Management and Spectrum Lease Agreement under which WebLink will provide certain services and lease to Metrocall the spectrum usage rights granted under FCC licenses pending the FCC’s approval of the transfer of such licenses to Metrocall. Please refer to Metrocall’s Annual Report on Form 10-K for the year ended December 31, 2003 for additional information, which is incorporated herein by reference.

      The following unaudited pro forma condensed consolidated statement of operations has been prepared to give effect to Metrocall’s acquisition of the WebLink Acquired Assets as if the transaction occurred on January 1, 2003, the beginning of Metrocall’s fiscal year. These pro forma financial statements do not purport to be indicative of the consolidated results of operations for future periods or the results that actually would have been realized had the acquired assets been consolidated during the specified period. A pro forma condensed consolidated balance sheet has not been presented as the WebLink Acquired Assets were included in Metrocall’s historical consolidated balance sheet as of June 30, 2004. Please refer to Amendment No. 1 to Metrocall’s Quarterly Report on Form 10-Q for the six months ended June 30, 2004, which is incorporated herein by reference.

      To prepare the pro forma statement of operations, Metrocall’s statement of operations for the year ended December 31, 2003, which included the results of operations of the WebLink Acquired Assets for the period November 18, 2003 to December 31, 2003, was combined with WebLink’s unaudited statements of operations for the period January 1, 2003 to April 22, 2003 and for the period April 23, 2003 to November 17, 2003.

      The unaudited pro forma condensed consolidated statement of operations including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of Metrocall which were previously reported in Metrocall’s Annual Report on Form 10-K for the year ended December 31, 2003, which is incorporated herein by reference.

8

METROCALL HOLDINGS, INC. — WEBLINK ACQUIRED ASSETS

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2003

						WebLink Acquired Assets
						January 1			April 23 to
			Metrocall			to April 22,			November 17,						Pro Forma			Metrocall
			Historical			2003			2003			Total			Adjustments			Pro Forma
Revenues			$	336,859		$	36,592		$	57,892		$	94,484		$	(13,403	)(1)	$	417,940
OPERATING EXPENSES
	Costs of good sold			4,804			2,056			2,605			4,661						9,465
	Service, rent and maintenance			94,098			18,968			32,379			51,347			(13,403	)(1)		132,042
	Selling and marketing			40,025			2,532			3,396			5,928						45,953
	General and administrative			93,663			7,668			11,405			19,073						112,736
	Restructuring expenses			6,842			337			728			1,065						7,907
	Stock-based compensation			1,725			—			—			—						1,725
	Depreciation and amortization			37,913			4,508			1,176			5,684			(2,409	)(2)		41,188
				279,070			36,069			51,689			87,758			(15,812	)		351,016
		Income from operations		57,789			523			6,203			6,726			2,409			66,924
Interest expense				(7,099	)		(865	)		(3,511	)		(4,376	)		2,155	(3)		(4,944	)
																4,376
Interest expense dividends and accretion of series A preferred				(12,428	)		—			—			—						(12,428	)
Loss on early extinguishment of debt				—			—			(8,214	)		(8,214	)		8,214	(4)		—
Interest and other income (expense)				463			106			(283	)		(177	)					286
Income (loss) before income taxes				38,725			(236	)		(5,805	)		(6,041	)		17,154			49,838
Income tax provision				(21,754	)		—			—						(4,386	)(5)		(26,140	)
		Net income (loss)	$	16,971		$	(236	)	$	(5,805	)	$	(6,041	)	$	12,768		$	23,698

The accompanying notes are an integral part of this unaudited pro forma condensed consolidated statement of operations.

9

METROCALL HOLDINGS, INC. — WEBLINK ACQUIRED ASSETS

NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

(Dollars in thousands)

(1)	Represents the elimination of revenues recorded by WebLink and expenses incurred by Metrocall for airtime services provided to Metrocall by WebLink under various operating arrangements.
(2)	Represents the adjustment required to reduce WebLink’s historical depreciation and amortization expenses to the expense that Metrocall would have recognized for the period had the transaction occurred on January 1, 2003. Purchase consideration allocated to fixed assets are being depreciated over the average useful lives of the various fixed assets acquired consistent with Metrocall’s long-lived asset accounting policies. Amounts allocated to intangible assets with definite useful lives are being amortized over such useful lives estimated to be a 3 year period for customer contracts and a 5 year period for trademarks and names. Amounts allocated to intangible assets with an indefinite life such as FCC licenses are not amortized but tested for impairment on an annual basis or more frequently if changes in circumstances indicate that the asset might be impaired. Please refer to the notes to the consolidated financial statements included in Metrocall’s Annual Report on Form 10-K for the year ended December 31, 2003.
(3)	Represents the elimination of historical interest expenses of WebLink as no long-term debt was acquired in the transaction and the elimination of accretion related to accrued long-term engineering charges that had been reflected on Metrocall’s balance sheet as of the acquisition date. This obligation was eliminated as a result of the transaction.
(4)	Represents the elimination of historical losses on early extinguishment of debt of WebLink as no long-term debt was acquired in the transaction.
(5)	Represents additional income tax expense based on the results of the acquired assets for the period at Metrocall’s statutory tax rates.

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