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| Metrocall, Inc. (ticker: MCLLQ, exchange: OTC Bulletin Board) News Release | | 20-May-2002 |
| METROCALL ANNOUNCES FIRST QUARTER RESULTS
| | CONTINUES PROGRESS TOWARD PLAN OF REORGANIZATION | ALEXANDRIA, VA – Monday, May 20, 2002 Metrocall, Inc., (OTC Bulletin Board: MCLLQ), one of the nation's largest wireless data and messaging companies, today released its first quarter, 2002 operating results. Metrocall's subscriber base finished the quarter at approximately 5 million paging, advanced messaging, data and PCS subscribers. Quarterly net revenue decline rates were cut almost in half as net revenues of $107.2 million represented a 4% loss from the prior quarter as compared to an over 7% loss for the previous period. Net revenue for advanced messaging also showed great improvement with growth rates doubling from 7.1% in the fourth quarter of 2001 to 15.5% in the first quarter of 2002. Traditional paging net revenues also showed improvement losing 6.7% for the first quarter of 2002 as compared to a loss of 8.8% for the previous quarter. Earnings before interest, taxes, depreciation and amortization were $21.8 million.
As expected, in the first quarter of 2002, Metrocall’s traditional paging subscribers decreased by approximately 463,000 units. However, approximately 80% of this decline was in indirect (reseller wholesale) channels of distribution characterized by lower average revenue per unit statistics, resulting in less revenue erosion for Metrocall than that experienced by other competitors.
In recent quarters, the paging industry has experienced a reduction in demand for traditional numeric and alphanumeric paging services. Metrocall has taken actions to combat the decline in demand for traditional paging services and subscriber attrition with a continued focus on customer service and retention initiatives of existing direct distribution business, medical and government accounts. Additionally, Metrocall has focused on adding higher cost two-way advanced messaging products where revenue growth potential existed. As a result, Metrocall has outperformed its paging company competitors with respect to subscriber and revenue results in the first quarter of 2002 and throughout 2001.
In addition to one-way and short-messaging services (SMS), Metrocall product offerings also include the distribution of other advanced messaging communication products such as eLinkSM and BlackberryTM for those subscribers preferring an extension of their desktop e-mail. The company also offers cellular and PCS phone offerings under alliance relationships with AT&T Wireless, Inc., Nextel Communications, Inc. and other companies for subscribers seeking alternative or complimentary messaging and voice products. Metrocall is currently in discussions with several mobile telephony providers about offering advanced wireless data products and applications across these broadband networks. Metrocall believes that its network agnostic strategy of providing advanced messaging products and services will help position it to take advantage of its strong sales and distribution attributes, while mitigating risk associated with capital intensive and highly competitive wireless networks and wireless data product offerings. Currently, approximately 237,000 subscribers buy advanced messaging products and data services through Metrocall.
Metrocall believes the industry acceptance of advanced messaging products using the narrowband Reflex™ protocol has slowed in recent months due to the onslaught or anticipated entrance of new wireless data devices using other broadband based technologies and the lack of a committed viable product device manufacturer due to Motorola’s recent exit announcement. However, Metrocall intends to continue to support the placement of advanced messaging devices supported by the Reflex™ protocol and believes it has sufficient quantity of such devices in its inventory to serve demand through at least the end of 2002. During the first quarter the company continued its focus on operating expense and capital expenditure reductions. In the first quarter of 2002, operating expenses, which include service, rent and maintenance; selling and marketing; and general and administrative expenses decreased approximately $1.4 million (1.7%) and $15.4 million (15.2%) from the fourth and first quarters of 2001, respectively. This is a reduction of over $60.0 million on an annual basis since the first quarter of 2001. Metrocall expects to achieve significant additional annualized savings over the remainder of 2002 as a result of other scheduled cost containment and reduction initiatives. The company expects to continue to maintain its present high quality customer service and network airtime service standards throughout these containment efforts.
Capital expenditures for the period were $14.0 million including amounts for messaging devices of $11.9 million and $2.1 million for infrastructure and other equipment requirements. During the quarter, Metrocall placed and prepaid last time buy order commitments for advanced messaging devices from Motorola. Late in 2001, Motorola announced that they would no longer manufacturer traditional paging devices and advanced messaging devices that utilize the Reflex™ protocol after June 2002. Metrocall has alternative suppliers for traditional paging equipment. Currently there are no other suppliers that manufacture Reflex ™ devices at the quantity and quality levels previously attained by Motorola and no manufacturers are expected to be able to deliver such products until late in 2002. Metrocall has been operating its business without access to equity or debt financing for the past five quarters. Its present operations are free cash flow positive before debt service requirements. The recurring nature of its airtime service subscriptions and the cost containment and reduction initiatives have provided it with the positive cash flow from operations to fund its business plan and capital expenditure requirements over the past several quarters. Metrocall is currently in negotiations with its senior bank lenders and an Unofficial Committee of holders of a significant portion of its senior subordinated notes regarding the terms of a consensual pre-negotiated plan of reorganization. The plan proposed to its creditors includes the following objectives:
· Deleveraging Metrocall to provide a viable capital structure in light of declining traditional revenues and competitive pressures; · Restructuring existing debt obligations in exchange for significantly less debt and the majority of the equity in reorganized Metrocall; and · Extinguishing all current preferred and common stock claims.
While there can be no assurances that the Company will be successful in negotiating a "pre-packaged" plan, Metrocall believes that a consensual plan will be confirmed through a plan of reorganization under Chapter 11 of the Bankruptcy Code and expects to commence such proceedings by June 30, 2002. Metrocall further expects that its nationwide business operations will continue to operate without interruption or disruption during its reorganization process.
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 nearly five million business and individual subscribers. Metrocall was founded in 1965 and currently employs more than 2,300 people nationwide. The Company currently 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 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 across the nation and the Company has offices 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 our Web site and on-line store at www.Metrocall.com or call 800-800-2337.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 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 a restructuring of Metrocall's balance sheet. A number of risks and uncertainties could cause actual results, events, and developments to differ from expectations. Business Risks include the possibility that two-way service may lack vendor support, quantity and quality. Please refer to Metrocall's most recent annual report on Form 10-K, and any subsequently filed reports on form 10-Q and Form 8-K, 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.
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USA Mobility Contact:
Bob Lougee
Investor Relations & Corporate Communications
508-870-6771
Investor.Relations@usamobility.com
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© 2001 USA Mobility, Inc.
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