ALEXANDRIA, Va., March 15 /PRNewswire/ -- Metrocall, Inc. (Nasdaq: MCLLC), a nationwide provider of advanced two-way interactive messaging service, announced results for the fourth quarter of 2000. Although the results for the fourth quarter, as described in further detail below, evidenced some positive aspects, the negative effects of competition in the wireless industry continued to cause erosion in the revenues received from traditional one-way paging customers throughout the fourth quarter and into the first quarter of 2001. This revenue erosion will more than likely inhibit the company's ability to grow its first quarter 2001 operating cashflow to the level currently required to maintain compliance with the financial covenants in its revolving credit facility. As a result, absent a waiver from Metrocall's existing senior secured lenders, the company will not have the ability to further access its revolver and will not have sufficient cash for operations and debt service. Additionally, without a bank waiver and access to additional capital, Metrocall expects to receive a going concern modification to its unqualified audit opinion from Arthur Andersen in Metrocall's, soon to be filed, 10-K for the fiscal year ending December 31, 2000.

As a result of the above, Metrocall's Board of Directors has determined that in order to maximize value to all of Metrocall's stakeholders while at the same time preserving cash necessary for continued generation of the company's positive operating cashflow, it will be necessary to defer the payment of interest due on March 15, 2001 to holders of its 11% senior subordinated notes due 2008 as well as interest due on April 1, 2001 to holders of Metrocall's 10 3/8% senior subordinated notes due 2007. The aggregate of the semi-annual interest payments due on these notes is approximately $19.5 million. Metrocall's Board of Directors has determined that deferral of these payments is necessary and prudent at this time to address the company's liquidity.

With respect to this decision, William L. Collins III, Chairman, President and Chief Executive Officer of Metrocall, stated "Metrocall regrets having to make this decision but remains hopeful that the long term effect of these decisions will increase the company's value and benefit all interested parties, including bondholders. Metrocall remains committed to maximizing value and resolving its intermediate liquidity issues. Metrocall placed the largest number of advanced messaging units into service in the fourth quarter compared to any of its competitors and during this restructuring process, and Metrocall will seek to continue to grow its revenue from its two-way messaging business in order to maximize value. Metrocall is also proud of the fact that we have been able to retain and grow more traditional one-way subscribers than our competitors and the revenue erosion we have sustained in our traditional business has been much lower relative to that of our direct competitors." Metrocall has engaged Lazard Freres to advise it with respect to evaluating strategic and financial options, including a strategic business combination and potential balance sheet restructuring. Metrocall has also engaged Banc of America Securities, LLC and Wit Soundview to advise it as to specific strategic M & A transactions. In addition, Metrocall's Board has formed a subcommittee to work directly with Lazard Freres and the company's other professionals in these endeavors.

Total revenues for the fourth quarter were $141.7 million and net revenues were $128.4 million. EBITDA (earnings before interest, taxes, depreciation and amortization) was $32.6 million for the quarter, an increase of $2.5 million or 8.3% over the third quarter results. Ending subscriber units were 6,254,373 representing net additions of 120,632. Advanced messaging units increased by 63,005 units to 112,526 and traditional paging units increased by 57,627 to 6,141,847.

Additional detail on Metrocall's fourth quarter and full-year 2000 results is contained later in this release.

As of December 31, 2000 and currently Metrocall has $133.0 million outstanding under its $200.0 million secured credit facility. Metrocall expects EBITDA in 2001 to be adequate to pay interest on its bank debt and fund capital expenditures. Metrocall presently has approximately $626.0 million aggregate principal amount outstanding of senior subordinated notes. These outstandings include Metrocall's 11% senior subordinated notes due 2008, 10 3/8% senior subordinated notes due 2007, 11 7/8% senior subordinated notes due 2005, and 9 3/4% senior subordinated notes due 2007. Metrocall does not anticipate at this juncture that EBITDA in 2001 will be sufficient to satisfy the entire interest expense associated with these senior subordinated notes absent accomplishing a financial restructuring. There is a 30 day grace period with respect to the interest payments due under the applicable series during which the notes may not be accelerated until the expiration of this grace period. Metrocall will seek to promptly commence discussions with its banks and bondholders about potential restructuring alternatives.

Metrocall, along with Lazard Freres and Metrocall's other professionals anticipates that the proactive position that it has taken to address these concerns provides the best course for an expeditious resolution. Metrocall can make no assurances that the company's liquidity concerns will be successfully resolved, including whether or not such events may take place under a plan of reorganization in bankruptcy.

Summary of 4th Quarter Results

Metrocall's service, rent, and maintenance revenues from its advanced messaging operations increased to $4.5 million for the quarter from $2.1 million in the third quarter, due to the placement of 63,005 net additions for the quarter. Service, rent, and maintenance revenues from Metrocall's traditional operations decreased to approximately $119.6 million for the quarter ended December 31, 2000 from $123.2 million in the third quarter as net internal growth was geared heavily towards the company's indirect distribution channels such as resellers. Metrocall's net revenue, including margin on product sales decreased by $4 million to $128.4 million in the fourth quarter from $132.4 million in the third quarter.

Metrocall's EBITDA or operating cash flow for the quarter was $32.6 million an increase of $2.5 million from the quarter ended September 30, 2000. This increase was attributable to decreases in service, rent, and maintenance and general and administrative operating expenses. Capital expenditures during the quarter were approximately $28.7 million comprised of $8.8 million in property, plant and computer related equipment and $19.9 million for subscriber equipment.

During the fourth quarter, net borrowings under Metrocall's credit facility increased by $28.0 million. At December 31, 2000, Metrocall had $133.0 million outstanding under its $200.0 million credit facility and approximately $626.0 million aggregate principal amount of senior subordinated notes. Total debt was approximately $761.9 million, which included capital leases. Cash balances were $26.6 million.

Although Metrocall was in compliance with the financial covenants of its credit facility at December 31, 2000, Metrocall is currently unable to borrow any of the $67.0 million undrawn amount remaining under its credit facility because its total leverage (defined as net debt divided by annualized operating cash flow) exceeded 5.5:1.0 on January 1, 2001.

During 2000, Metrocall's operations generated approximately $128.7 million of EBITDA. In addition, it incurred $84.2 million in interest costs and $111.8 million in capital expenditures. Its free cash flow position was a negative $67.2 million, which was funded principally from sale of equity ($51 million) and borrowings under its credit facility.

Further details with respect to Metrocall's fourth quarter and full year performance will be available in the company's 10-K to be filed on or about March 30, 2001.

About Metrocall, Inc

Metrocall, Inc. headquartered in Alexandria, Virginia, is one of the largest wireless data and messaging companies in the United States providing both products and services to more than six million business and individual subscribers. Metrocall was founded in 1965, became a publicly traded company in 1993 and currently employs approximately 3,500 professional's coast to coast. The Company offers two-way interactive messaging, wireless e-mail and Internet connectivity, cellular and digital PCS phones, as well as one-way messaging services. Metrocall operates on many nationwide, regional and local networks, including a new Two-Way Interactive Network (TWIN), and can supply a wide variety of customizable Internet-based information content services. Also, Metrocall offers totally integrated resource management systems and communications solutions for business and campus environments. Metrocall's wireless networks operate in the top 1,000 markets all across the nation and the Company has offices and retail locations in more than forty states. Metrocall is the largest equity-owner of Inciscent, an independent business- to-business enterprise, that is a national full-service "wired-to-wireless" Application Service Provider (ASP). For more information on Metrocall please visit the Web site and On-line store at http://www.metrocall.com .

This press release includes "forward-looking statements," within the meaning of the federal securities laws, that involve uncertainties and risks. These include statements regarding events or developments that Metrocall expects or anticipates will occur in the future, such as statements about Metrocall's plans to address its current liquidity situation. A number of risks and uncertainties could cause actual results, events, and developments to differ from expectations. These include (1) failure to pay subordinated debt interest when due, as well as the "going concern" modification to the audit opinion, (A) may constitute a default under Metrocall's senior bank loan and other obligations, and (B) may have an adverse impact on other aspects of Metrocall's business, including relations with customers, suppliers and employees; (2) there is no assurance that Metrocall's banks will agree to waive any defaults, modify applicable covenants, or otherwise forbear from exercising their remedies as secured lenders as a result of covenant breaches or other defaults by Metrocall; (3) there is no assurance that Metrocall will be able to successfully restructure its subordinated debt, either in conjunction with a strategic transaction or on a standalone basis; (4) Metrocall's operations can be adversely affected if revenues from one-way paging decline more than expected and/or revenues from two-way messaging do not increase as quickly as anticipated; and (5) Metrocall could be required to file for protection from creditors under the Bankruptcy Code, either as part of a restructuring plan or otherwise, or creditors could seek to commence an involuntary bankruptcy proceeding against Metrocall.

Please refer to Metrocall's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2000, as well as its other filings with the Securities and Exchange Commission for a complete discussion of these and other important factors that could cause actual results to differ materially from those projected by these forward-looking statements.

                         Metrocall, Inc and Subsidiaries
                      Consolidated Statements of Operations
                                    Unaudited
        (Dollars in thousands, except pager, share and per share amounts)

                            Three Months Ended          Twelve Months Ended
                               December 31,                December 31,
                             2000         1999          2000          1999
    Revenues
      Service, rent and
       maintenance
       revenues           $124,095      $132,696     $504,800      $548,700
      Product sales         17,652        15,078       57,183        61,487
                           141,747       147,774      561,983       610,187
      Net book value
       of products sold   (13,298)      (10,582)     (37,509)      (39,071)
                           128,449       137,192      524,474       571,116

    Operating Expenses
      Service, rent
       and maintenance      26,713        23,794      120,312       146,961
      Selling and
       marketing            26,379        24,152      103,413        97,051
      General and
       administrative       42,780        47,761      172,017       170,591
      Depreciation          36,655        25,369      124,515        96,985
      Amortization          18,198        52,324      175,803       210,359
                           150,725       173,400      696,060       721,947
        Loss from
         operations       (22,276)      (36,208)    (171,586)     (150,831)

    Interest expense      (20,752)      (21,622)     (84,169)      (85,115)
    Interest and
     other (expense)
     income                (3,130)            98      (2,450)           407
    Loss before
     income tax
     (expense) benefit
     and extraordinary
     item                 (46,158)      (57,732)    (258,205)     (235,539)
    Income tax
     (expense) benefit    (25,802)        15,800       20,775        63,055
    Loss before
     extraordinary item   (71,960)      (41,932)    (237,430)     (172,484)
    Extraordinary item
     (net of income tax)     3,227            --       22,876            --
        Net loss          (68,733)      (41,932)    (214,554)     (172,484)
    Preferred dividends    (2,402)       (4,260)      (9,816)      (16,462)
    Inducement on
     exchange of
     preferred stock            --            --      (6,308)            --
    Gain on
     repurchase of
     preferred stock            --            --           --         2,208
        Loss attributable
         to common
         stockholders    $(71,135)     $(46,192)   $(230,678)    $(186,738)

    Basic and diluted
     loss per share
     attributable to
     common stockholders
      Loss per
       share before
       extraordinary item
       attributable to
       common
       stockholders        $(0.84)       $(1.10)      $(3.30)       $(4.47)
      Extraordinary item,
       net of
       income tax benefit     0.04            --         0.30            --
        Basic and
         diluted loss
         per share
         attributable
         to common
         stockholders      $(0.80)       $(1.10)      $(3.00)       $(4.47)

    Weighted-average
     number of
     common shares
     outstanding        88,765,551    41,889,019   76,984,096    41,773,789

    Other Data:
      Net Revenues        $128,449      $137,192     $524,474      $571,116
      EBITDA               $32,577       $41,485     $128,732      $156,512
      EBITDA margin
       on net revenues       25.4%         30.2%        24.5%         27.4%
      Pagers in service
       (end of period)   6,254,373     5,927,939    6,254,373     5,927,939
      ARPU                   $6.68         $7.49        $6.92         $7.86