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USA Mobility Reports Second Quarter Operating Results

Significant Improvement in Subscriber and Revenue Trends

Continued Debt Reduction and Cash Generation

Solid Progress on Merger Integration Objectives

Financial Guidance for 2005

ALEXANDRIA, Va., Aug. 9 /PRNewswire-FirstCall/ -- USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging services, today announced operating results for the second quarter ended June 30, 2005. USA Mobility was formed on November 16, 2004 by the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. USA Mobility's historical financials are those of Arch Wireless, which was deemed the accounting acquirer in the merger.

Reported revenue for the second quarter of 2005 was $157.5 million, compared to $115.8 million in the second quarter of 2004, with the increase due entirely to the inclusion of Metrocall revenue for the three-month period ended June 30, 2005. Second quarter revenue decreased 4.9% from $165.7 million reported for the first quarter of 2005.

The company's reported net loss for the second quarter of 2005 was $2.6 million, or $0.10 per fully diluted share, compared to net income of $3.1 million, or $0.15 per fully diluted share, in the second quarter of 2004. Included in second quarter 2005 operating expenses were non-recurring severance and related costs of $9.4 million.

Units in service totaled 5,348,000 at June 30, 2005, with 4,496,000 direct units in service and 852,000 indirect units in service. USA Mobility reported a reduction of 510,000 units in service in the second quarter, including a one-time adjustment of 238,000 units (see explanation below). Excluding the one-time adjustment, net unit loss activity for the second quarter was 272,000 units in service, including 256,000 one-way units and 16,000 two-way units. One-way units in service at June 30, 2005 totaled 4,876,000 while two-way units in service totaled 472,000. For the quarter, average revenue per unit was $9.89 for direct units in service and $4.58 per indirect unit in service.

"We continue to see steady improvement in the rate of subscriber losses and pace of revenue decline," said Vincent D. Kelly, president and chief executive officer. "Unit losses of 272,000 during the quarter compared to 347,000 in the first quarter and 388,000 in the fourth quarter of 2004 on a pro forma basis, represent an improvement in the sequential rate of decline from 6.1% to 5.8% to 4.8% over the past three quarters. At the same time," Kelly said, "the decrease in revenue of 4.9% for the second quarter improved from a decrease of 7.9% in the prior period. While we cannot ensure a continuation of these trends, we are encouraged by these results."

"In addition," Kelly said, "we continued to make significant progress during the quarter to integrate our company. Key steps included consolidating the company's operating structure, reorganizing senior management, streamlining sales and marketing operations, conversion to a single customer billing platform, and solid progress in network rationalization. While the paging and wireless messaging industry remains highly competitive," he added, "we believe our efforts to successfully implement merger-related cost savings and operational synergies will allow us to continue to generate positive results over time."

Kelly also noted that the company's financial position improved significantly during the second quarter. "Our outstanding bank debt was $26.5 million at June 30, 2005 and our cash balance was $42.6 million, putting us in a positive net cash position at mid-year. In addition, since June 30 we have repaid an additional $8.5 million of debt, leaving us with a total bank debt balance of $18 million and a cash balance of $39.8 million as of July 31, 2005. Because we expect to be debt free before the end of the current quarter," Kelly added, "our Board of Directors has determined that it is in the best interest of our shareholders to declare a special one-time dividend near the end of the year. The exact amount of the dividend and the date of payment have not yet been determined and will be disclosed in the future. Additionally, we have made no determination on future uses of cash beyond this one-time dividend. However, our Board will consider our options to return capital to our shareholders as time progresses."

The company also announced financial guidance for 2005. Thomas L. Schilling, chief financial officer, said: "While projections are based on current trends and are always subject to change, USA Mobility expects to generate between $605 million and $615 million of revenue for the 12-month period ending December 31, 2005. The company also expects 2005 operating expenses (excluding depreciation and amortization expense) to be in a range between $465 million and $475 million. In addition, we expect capital expenditures for 2005 to range between $12 million and $15 million. This would put our potential year-end cash balance at approximately $75 million. We currently anticipate retaining approximately $25 million for working capital purposes and will revisit this requirement as time goes by and our operating expenses are reduced."

Ending units in service at June 30th and revenue per unit for the second quarter reflect a one-time unit adjustment of 238,000 units (see attached schedule). The adjustment was made in connection with the company's recently completed billing system consolidation of Metrocall's legacy billing system to Arch's billing system. As a result of the consolidation, 77,000 units were adjusted due to the definitional differences between the two systems, and another 161,000 units were adjusted to remove cellular phones sold by Metrocall in prior periods that had been inadvertently counted as paging units in service in Metrocall's billing system. The unit adjustment had no impact on reported revenue, income or expenses for the second quarter or previous quarters.

USA Mobility plans to host a conference call for investors on its second quarter results at 11:00 a.m. Eastern Time on Wednesday, August 10, 2005. The call-in number is 888-203-7667 (toll-free) or 719-955-1567 (toll). The pass code for the call is 2516741 (followed by the # sign). A replay of the call will be available from 3:00 p.m. ET on August 10 until 11:59 p.m. on Friday, August 26. The replay number is 888-203-1112 (toll-free) or 719-457-0820 (toll). The pass code for the replay is 2516741 (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.

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.

    Tables to Follow

    Contact:
     Bob Lougee
     (703) 721-3080



                               USA MOBILITY, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                          December 31, 2004    June 30, 2005
                                                                 (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



                              USA MOBILITY, INC.
                 CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
       (unaudited and in thousands, except share and per share amount)

                                   Three Months Ended       Six Months Ended
                                         June 30,                June 30,
                                    2004        2005        2004        2005
    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            856         929       1,794       2,208
     Service, rental and
      maintenance                  36,988      56,429      75,976     113,078
     Selling and marketing          8,757      11,156      17,825      21,558
     General and administrative    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



                               USA MOBILITY, INC.
                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                          (unaudited and in thousands)

                                                    Six Months Ended June 30,
                                                      2004              2005
    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                                  $-                $-



                              USA MOBILITY, INC.
           PRO FORMA AND ADJUSTED UNITS IN SERVICE ACTIVITY (a) (b)
                        units in thousands (unaudited)

                                         Three Months Ended
                        March      June  September December   March    June
                         2004      2004     2004     2004      2005    2005
    Direct    One-Way:
      Beginning units
       in service      5,329     5,100   4,909    4,690     4,464   4,273
      Gross placements   225       182     182      166       141     134
      Disconnects       (455)     (372)   (401)    (392)     (332)   (293)
      Ending units in
       service         5,100     4,909   4,690    4,464     4,273   4,114

              Two-Way:
      Beginning units
       in service        506       483     462      449       422     397
      Gross placements    40        32      35       29        22      29
      Disconnects        (63)      (53)    (48)     (56)      (47)    (44)
      Ending units in
       service           483       462     449      422       397     382

    Indirect  One-Way:
      Beginning units
       in service      1,716     1,474   1,253    1,101       987     859
      Gross placements   157       145     160      143       107      92
      Disconnects       (399)     (366)   (312)    (257)     (235)   (189)
      Ending units in
       service         1,474     1,253   1,101      987       859     762

              Two-Way:
      Beginning units
       in service        131       123     121      115        94      91
      Gross placements    20        16      20        7         7       7
      Disconnects        (28)      (18)    (26)     (28)      (10)     (8)
      Ending units in
       service           123       121     115       94        91      90

    Total
      Beginning units
       in service      7,683     7,180   6,746    6,355     5,967   5,620
      Gross placements   442       375     397      345       277     262
      Disconnects       (945)     (809)   (787)    (733)     (624)   (534)
      Ending units in
       service         7,180     6,746   6,355    5,967     5,620   5,348


    (a) Assumes Arch and Metrocall combined as of January 1, 2004 and the unit
        in service adjustment reflected in March 2004.
    (b) Amounts have been adjusted for rounding.



                              USA MOBILITY, INC.
                 IMPACT OF THE ADJUSTMENT TO UNITS IN SERVICE
       (unaudited and in thousands except for average revenue per unit)

                                          Three Months Ended
                          March    June  September  December  March      June
                          2004     2004     2004      2004     2005      2005

    Units in Service Adjustment Summary

    Revised Adjusted Proforma Ending UIS
      Direct One-Way     5,100    4,909    4,690     4,464    4,273     4,114
      Direct Two-Way       483      462      449       422      397       382
      Indirect One-Way   1,474    1,253    1,101       987      859       762
      Indirect Two-Way     123      121      115        94       91        90
      Total              7,180    6,746    6,355     5,967    5,620     5,348

    Previous Unadjusted Proforma & Reported Ending UIS
      Direct One-Way     5,181    4,994    4,779     4,557    4,368
      Direct Two-Way       507      486      473       446      422
      Indirect One-Way   1,603    1,382    1,230     1,117      989
      Indirect Two-Way     112      110      104        83       80
      Total              7,403    6,972    6,586     6,202    5,858

    Adjustment to Ending UIS
      Direct One-Way       (81)     (85)     (89)      (93)     (95)
      Direct Two-Way       (24)     (24)     (24)      (24)     (25)
      Indirect One-Way    (129)    (129)    (129)     (130)    (129)
      Indirect Two-Way      11       11       11        11       12
      Total               (223)    (226)    (231)     (235)    (238)


    ARPU Adjustment Summary

    Revised Adjusted Proforma ARPU
      Direct One-Way     $9.10    $8.96    $8.89     $8.75    $8.65     $8.62
      Direct Two-Way    $25.15   $24.68   $24.22    $23.93   $24.00    $23.69
      Indirect One-Way   $4.06    $4.26    $4.12     $4.26    $4.07     $4.11
      Indirect Two-Way  $12.89   $12.07   $11.30    $10.41    $9.12     $8.63
      Total              $9.15    $9.16    $9.14     $9.09    $9.01     $9.02

    Previous Unadjusted Proforma & Reported ARPU
      Direct One-Way     $8.96    $8.81    $8.73     $8.58    $8.46
      Direct Two-Way    $23.98   $23.48   $23.00    $22.68   $22.64
      Indirect One-Way   $3.76    $3.89    $3.71     $3.79    $3.57
      Indirect Two-Way  $14.17   $13.32   $12.51    $11.69   $10.46
      Total              $8.89    $8.84    $8.79     $8.75    $8.67

    Adjustment to ARPU
      Direct One-Way     $0.14    $0.15    $0.16     $0.17    $0.19
      Direct Two-Way     $1.17    $1.20    $1.22     $1.25    $1.36
      Indirect One-Way   $0.30    $0.37    $0.41     $0.47    $0.50
      Indirect Two-Way  ($1.28)  ($1.25)  ($1.21)   ($1.28)  ($1.34)
      Total              $0.26    $0.32    $0.35     $0.34    $0.34

SOURCE USA Mobility, Inc. -0- 08/09/2005 /CONTACT: Bob Lougee of USA Mobility, Inc., +1-703-721-3080/ /Web site: http://www.usamobility.com/ (USMO)