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USA Mobility Reports Fourth Quarter and 2004 Operating Results

Arch, Metrocall Merger Integration and Debt Reduction on Target

ALEXANDRIA, Va., March 16 /PRNewswire-FirstCall/ -- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the fourth quarter and year ended December 31, 2004. The fourth quarter of 2004 represents the first quarter of combined operations for USA Mobility, formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. These results include 46 days of combined operations with Metrocall and a full year and full quarter of Arch's operations. USA Mobility's historical financials are those of Arch Wireless which was deemed the accounting acquirer in the merger.

Reported revenue for the fourth quarter of 2004 increased 4.7% to $141.3 million, compared to $135.0 million in the fourth quarter of 2003, with the increase due entirely to the inclusion of Metrocall revenue for 46 days. Reported net loss for the fourth quarter was $1.2 million, or $0.05 per share, compared to a net loss of $1.4 million, or $0.07 per share, for the fourth quarter of 2003. For 2004, reported revenue totaled $490.2 million, compared to $597.5 million in 2003. Reported net income in 2004 totaled $13.5 million, or $0.65 per share, compared to net income of $16.1 million, or $0.81 per share, in the prior year.

As shown below on a pro-forma basis, total revenues for the fourth quarter of 2004 decreased to $179.9 million, compared to $191.5 million in the third quarter of 2004 and $232.5 million in the fourth quarter of 2003.

    ($'s in millions)                   Pro Forma Revenues

                                       4Q03            3Q04          4Q04
    Arch or USA Mobility (1)         $135.0          $109.4        $141.3
    Metrocall (2)                      87.1            82.1          38.6
    WebLink Wireless (3)               10.4              --            --
     Pro Forma Total                 $232.5          $191.5        $179.9

    (1) Reflects historical Arch revenues for the respective periods and
        Metrocall revenues from November 16, 2004 to December 31, 2004.
    (2) Reflects historical Metrocall revenues for the respective period
        through November 15, 2004.
    (3) Reflects historical revenues of WebLink Wireless through Metrocall's
        acquisition on November 18, 2003.

USA Mobility's messaging units in service decreased by 314,000 during the fourth quarter and 979,000 for the year, excluding the impact of 2,744,000 units acquired in the merger with Metrocall. Total units in service at December 31, 2004 were 6,202,000, including 5,003,000 direct units in service and 1,199,000 indirect units in service. Of the 6,202,000 total units in service at year-end 2004, 5,673,000 were one-way messaging units and 529,000 were two-way messaging units. Pro forma for the merger, the company had 7,902,000 units in service at December 31, 2003. Consolidated average revenue per unit decreased to $9.17 in 2004 from $9.85 in 2003; however, a unit adjustment made by Arch in the fourth quarter of 2003 resulted in $0.45 of the year-to-year decline.

"While the merger closing occurred later than we originally planned, we made significant progress on our integration initiatives in our first 46 days of operations," said Vincent D. Kelly, president and chief executive officer. "However, the wireless messaging industry remains very challenging, and those challenges continue to validate the importance of the merger of Arch and Metrocall. As we move forward with the integration process, we look to gain further benefit from cost reductions and operational synergies that will make us more efficient and enable us to better serve our customers for a longer period of time than either Arch or Metrocall would have been capable of on a stand-alone basis. We have continued to strengthen our financial position during the past four months through the repayment of debt incurred in the merger. USA Mobility repaid $45 million on our $140 million credit facility through December 31, 2004, and we have paid an additional $28.5 million through March 1, 2005, leaving a balance of $66.5 million. The company had $47 million cash on hand at December 31, 2004."

Merger integration activities commenced in the fourth quarter and included consolidation of the sales and marketing function. In addition, numerous back-office and administrative functions have been, or are now being, consolidated into USA Mobility's headquarters offices and operations center, both located in Alexandria, VA, and its technical center based in Plano, TX. Other integration initiatives launched in the fourth quarter included planning for conversion to a single customer service and billing platform and the reconfiguration of both one-way and two-way networks.

USA Mobility plans to host a conference call for investors on its fourth quarter and year-end results at 9:30 a.m. Eastern time on Thursday, March 17, 2005. The call-in number is 877-502-9276 (toll-free) or 913-981-5591 (toll). The pass code for the call is 4476409 (followed by the # sign). A replay of the call will be available from 2:00 p.m. on March 17 until 8:00 p.m. on April 1. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 4476409 (followed by the # sign).

About USA Mobility

USA Mobility, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to the business, government and healthcare sectors. USA Mobility offers traditional one-way and advanced two-way paging via its nationwide networks covering more than 90% of the U.S. population and with roaming partners in Canada and Mexico. In addition, the company offers mobile voice and data services through Nextel and Cingular/AT&T Wireless, including BlackBerry and GPS location applications. The company's product offerings include wireless connectivity systems for medical, business, government and other campus environments. USA Mobility focuses on the business-to-business marketplace and supplies mobile connectivity solutions to over two-thirds of the Fortune 1000 companies. For further information visit http://www.usamobility.com.

CONTACT: Bob Lougee (508) 435-6117

Safe Harbor Statement under the Private Securities Litigation Reform Act:

Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility's expectations for future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, the timely and efficient integration of the operations and facilities of Metrocall and Arch as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.


                                USA Mobility, Inc
                      Consolidated Condensed Balance Sheets
                           (unaudited and in thousands)


                                                December 31,      December 31,
                                                     2004              2003

                             ASSETS

    Current assets:
        Cash and cash equivalents                   $46,995           $34,582
        Accounts receivable, net                     37,750            26,052
        Deposits                                      3,369             6,776
        Prepaid rent                                    864               514
        Prepaid expenses and other                   14,479             7,381
        Deferred income tax                          18,445            30,206
            Total current assets                    121,902           105,511
    Property and equipment                          483,895           394,436
    Less accumulated depreciation and amortization (267,387)         (180,563)
    Property and equipment, net                     216,508           213,873
    Goodwill                                        151,791                --
    Assets held for sale                                 --             1,139
    Intangible and other assets, net                 67,129                --
    Deferred income tax                             233,714           189,346
    Other assets                                      2,267                 3
                                                   $793,311          $509,872

              LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
        Current maturities of long-term debt        $47,558           $20,000
        Accounts payable                              6,011             8,836
        Accrued compensation and benefits            17,792            17,820
        Accrued network costs                         8,956             7,893
        Accrued property and sales taxes             27,862            10,076
        Accrued interest                                547             1,520
        Accrued restructuring charges                 4,974            11,481
        Accrued other                                10,280             8,104
        Customer deposits and deferred revenue       27,939            25,477
            Total current liabilities               151,919           111,207
    Long-term debt, less current maturities          47,500            40,000
    Other long-term liabilities                      10,555             4,042
    Commitments and contintgencies
    Stockholders' equity:
        Preferred stock                                  --                --
        Common stock                                      3                 2
        Additional paid-in capital                  555,083           339,928
        Deferred stock compensation                    (137)           (2,682)
        Retained earnings                            28,388            17,375
            Total stockholders' equity              583,337           354,623
                                                   $793,311          $509,872

                                USA Mobility, Inc
                          Consolidated Income Statements
         (unaudited and in thousands, except share and per share amounts)

                                    Three Months Ended          Year Ended
                                        December 31,            December 31,
                                     2004        2003        2004        2003
    Revenues:
      Services, rental and
       maintenance               $135,246    $129,533    $470,751    $571,989
      Product sales                 6,041       5,493      19,409      25,489
            Total revenues        141,287     135,026     490,160     597,478

    Operating expenses:
      Cost of products sold         1,862       1,229       4,347       5,580
      Service, rental, and
       maintenance                 48,192      46,777     161,071     192,159
      Selling and marketing        10,398       9,936      36,085      45,639
      General and administrative   41,775      33,662     129,299     166,167
      Depreciation and
       amortization                34,685      27,058     114,367     118,917
      Stock based and other
       compensation                 4,387       2,188      12,927      11,420
      Restructuring charges            --      11,481       3,018      11,481
            Total operating
             expenses             141,299     132,331     461,114     551,363

    Operating income                  (12)      2,695      29,046      46,115
    Interest expense, net            (955)     (5,253)     (5,914)    (19,237)
    Loss on extinguishment of debt (1,031)         --      (1,031)         --
    Other income, net                 247         201         658         516
    Income (loss) before
     reorganization items          (1,751)     (2,357)     22,759      27,394
    Reorganization items               --        (425)         --        (425)
    Income before income tax
     benefit (expense)             (1,751)     (2,782)     22,759      26,969
    Income tax benefit (expense)      574       1,409      (9,278)    (10,841)
    Net income (loss)             $(1,177)    $(1,373)    $13,481     $16,128


    Basic net income (loss)
     per common share              $(0.05)     $(0.07)      $0.65       $0.81
    Diluted net income (loss)
     per common share              $(0.05)     $(0.07)      $0.64       $0.81
    Basic weighted average
     common shares outstanding 23,461,642  20,000,000  20,839,959  20,000,000
    Diluted weighted average
     common shares outstanding 23,612,842  20,034,806  20,965,205  20,034,476


                               USA Mobility, Inc.
                      Consolidated Statements Of Cash Flows
                 Twelve Months Ended December 31, 2004 and 2003
                          (unaudited and in thousands)


                                                      2004              2003
    Cash flows from operating activities:
       Net income                                  $13,481           $16,128
       Adjustments to reconcile net income
        to net cash provided by operating
          activities:
          Depreciation and amortization            114,367           118,917
          Accretion of long-term debt and
           other non-cash interest expense             372             4,681
          Deferred stock compensation                2,078             3,149
          Deferred income tax provision              9,278            10,841
          (Loss) on disposals of property and
           equipment                                   (93)              (16)
          Other income                                (271)             (286)
          Loss on extinguishment of debt             1,036                --
          Provisions for doubtful accounts and
           service adjustments                      13,836            23,244
       Changes in assets and liabilities:
          Accounts receivable                       (1,963)           (3,988)
          Prepaid expenses and other                 3,601            18,065
          Other long-term assets                    (1,712)               --
          Accounts payable and accrued expenses    (32,875)           (1,840)
          Customer deposits and deferred revenue    (8,790)          (10,227)
          Other long-term liabilities                1,920             2,577
    Net cash provided by operating activities      114,265           181,245

    Cash flows from investing activities:
       Additions to property and equipment         (19,232)          (25,446)
       Proceeds from disposals of property and
        equipment                                    2,998             3,176
       Receipts from note receivable                   271               286
       Merger of companies, net of cash acquired  (117,759)               --

    Net cash used for investing
     activities                                   (133,722)          (21,984)

    Cash flows from financing activities:
       Issuance of long-term debt                  140,000                --
       Repayment of long-term debt                (105,017)         (161,866)
       Purchase of common stock                     (3,113)               --
    Net cash provided by/ (used for) financing
     activities                                     31,870          (161,866)

    Net increase (decrease) in cash and cash
     equivalents                                    12,413            (2,605)
    Cash and cash equivalents, beginning of period  34,582            37,187
    Cash and cash equivalents, end of period       $46,995           $34,582

    Supplemental disclosures:
       Interest paid                                $6,966           $15,033
       Asset retirement obligations                 $2,197            $2,236
       Income taxes paid                            $1,729              $ --
       Common stock and options issued in
        Metrocall merger                          $214,236              $ --
       Liabilities assumed in merger               $57,214              $ --


                                USA Mobility, Inc.
                            Units In Service Activity
                                   (unaudited)

                                               Three Months Ended

                                     March       June    September   December
                                      2004       2004       2004       2004
    Direct     One-Way:
       Beginning units in service  3,393,000  3,247,000  3,122,000  2,997,000
       Unit in service acquired                                     1,757,000
       Unit in service growth
        (decline)                   (146,000)  (125,000)  (125,000)  (197,000)
       Ending units in service     3,247,000  3,122,000  2,997,000  4,557,000

       Service, rental and
        maintenance revenues(000s)   $89,705    $83,584    $79,079    $99,560
       Average revenue per unit        $9.00      $8.77      $8.62      $8.63

               Two-Way:
       Beginning units in service    281,000    269,000    258,000    250,000
       Unit in service acquired                                       211,000
       Unit in service growth
        (decline)                    (12,000)   (11,000)    (8,000)   (15,000)
       Ending units in service       269,000    258,000    250,000    446,000

       Service, rental and
        maintenance revenues(000s)   $21,950    $20,739    $19,561    $24,961
       Average revenue per unit       $26.66     $26.28     $25.74     $23.76

    Indirect   One-Way:
       Beginning units in service    754,000    654,000    577,000    511,000
       Unit in service acquired                                       690,000
       Unit in service growth
        (decline)                   (100,000)   (77,000)   (66,000)   (85,000)
       Ending units in service       654,000    577,000    511,000  1,116,000

       Service, rental and
        maintenance revenues(000s)    $7,359     $6,369     $5,713     $8,942
       Average revenue per unit        $3.49      $3.47      $3.53      $3.67

          Two-Way:
       Beginning units in service      9,000      8,000     12,000     14,000
       Unit in service acquired                                        86,000
       Unit in service growth
        (decline)                     (1,000)     4,000      2,000    (17,000)
       Ending units in service         8,000     12,000     14,000     83,000

       Service, rental and maintenance
        revenues (000s)                 $532       $482       $432     $1,783
       Average revenue per unit       $21.24     $21.09     $14.92     $10.92

    Totals
       Beginning units in service  4,437,000  4,178,000  3,969,000  3,772,000
       Unit in service acquired           --         --         --  2,744,000
       Unit in service growth
        (decline)                   (259,000)  (209,000)  (197,000)  (314,000)
       Ending units in service     4,178,000  3,969,000  3,772,000  6,202,000

       Service, rental and
        maintenance revenues(000s)  $119,546   $111,174   $104,785   $135,246
       Average revenue per unit        $9.25      $9.12      $9.04      $8.91


                                  USA Mobility, Inc.
                       Pro Forma Units In Service Activity (a)
                                   (Unaudited)

                                               Three Months Ended

                                     March       June    September   December
                                      2004       2004       2004       2004

    Direct     One-Way:
        Beginning units in service 5,440,000  5,214,000  5,027,000  4,812,000
        Unit in service acquired          --         --         --         --
        Unit in service growth
         (decline)                  (226,000)  (187,000)  (215,000)  (222,000)
        Ending units in service    5,214,000  5,027,000  4,812,000  4,590,000


             Two-Way:
        Beginning units in service   497,000    474,000    453,000    440,000
        Unit in service acquired          --         --         --         --
        Unit in service growth
         (decline)                   (23,000)   (21,000)   (13,000)   (27,000)
        Ending units in service      474,000    453,000    440,000    413,000


    Indirect     One-Way:
        Beginning units in service 1,813,000  1,571,000  1,350,000  1,198,000
        Unit in service acquired          --         --         --         --
        Unit in service growth
         (decline)                  (242,000)  (221,000)  (152,000)  (114,000)
        Ending units in service    1,571,000  1,350,000  1,198,000  1,084,000


           Two-Way:
        Beginning units in service   152,000    144,000    142,000    136,000
        Unit in service acquired          --         --         --         --
        Unit in service growth
         (decline)                    (8,000)    (2,000)    (6,000)   (21,000)
        Ending units in service      144,000    142,000    136,000    115,000

    Total
        Beginning units in service 7,902,000  7,403,000  6,972,000  6,586,000
        Unit in service acquired          --         --         --         --
        Unit in service growth
         (decline)                  (499,000)  (431,000)  (386,000)  (384,000)
        Ending units in service    7,403,000  6,972,000  6,586,000  6,202,000

    (a) Assumes Arch and Metrocall combined as of January 1, 2004.

SOURCE USA Mobility, Inc. -0- 03/16/2005 /CONTACT: Bob Lougee of USA Mobility, +1-508-435-6117/ /Web site: http://www.usamobility.com / (USMO)