METROCALL INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

COMMISSION FILE NUMBER: 0-21924

METROCALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 54-1215634
(STATE OF INCORPORATION) (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

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NOT APPLICABLE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

TITLE OF CLASS
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COMMON STOCK ($.01 PAR VALUE)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the common stock held by non-affiliates of
the Registrant was approximately $27,919,815 based on the closing sales price on
March 3, 2001.

COMMON STOCK, PAR VALUE $0.01 -- 89,975,772 SHARES OUTSTANDING ON MARCH 3, 2001

DOCUMENTS INCORPORATED BY REFERENCE:

The information required by Item III will be provided in the Proxy
Statement for the registrant's Annual Meeting of stockholders and incorporated
by reference thereto or will be filed by amendment to this annual report on Form
10-K.
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TABLE OF CONTENTS

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PART I
Item 1 Business.................................................... 3
Item 2 Properties.................................................. 16
Item 3 Legal Proceedings........................................... 16
Item 4 Submission of Matters to a Vote of Security Holders......... 16

PART II
Item 5 Market for Metrocall's Common Stock and Related Security
Holder Matters.............................................. 16
Item 6 Selected Financial Data..................................... 19
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 20
Item 7A Quantitative and Qualitative Disclosures about Market
Risk........................................................ 35
Item 8 Financial Statements and Supplementary Data................. 36
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 36
PART III
Item 10 Directors and Executive Officers of the Company............. 36
Item 11 Executive Compensation...................................... 36
Item 12 Security Ownership of Certain Beneficial Owners and
Management.................................................. 36
Item 13 Certain Relationships and Related Transactions.............. 37

PART IV
Item 14 Exhibits.................................................... 37
Signatures........................................................... 41

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes or incorporates forward-looking
statements. Metrocall Inc. has based these forward-looking statements on its
current expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties and assumptions including, among
other things those discussed under "Business" and "Management's Discussion and
Analysis of Financial Condition, and Results of Operations," and as follows:

- Metrocall's high leverage and need for substantial capital;

- Metrocall's ability to service debt; possible acceleration of Metrocall's
indebtedness as a result of its failure to pay scheduled subordinated
debt interest payments;

- Metrocall's history of net operating losses;

- the effects of a filing of a petition under the Bankruptcy Code by or
against Metrocall;

- Metrocall's ability to implement its business strategies;

- Metrocall's reliance on another messaging company -- itself in financial
difficulties -- to provide access to a two-way messaging network;

- Metrocall's ability to cover fixed charges;

- Metrocall's anti-takeover defenses;

- the risks associated with Metrocall's investment in its technology-based
joint venture, Inciscent;

- the amortization of Metrocall's intangible assets;

- the restrictive covenants governing Metrocall's indebtedness;

- the impact of competition and technological developments;

- satellite transmission failures;

- subscriber turnover;

- litigation;

- regulatory changes;

- dependence on key suppliers; and

- dependence on key management personnel.

Other matters set forth in this Annual Report on Form 10-K may also cause
actual results to differ materially from those described in the forward-looking
statements. Metrocall undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this Annual Report on Form 10-K might not
occur.

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PART I

ITEM 1. BUSINESS

GENERAL

Metrocall is a leading provider of local, regional and national one-way or
"traditional" paging and advanced wireless data and messaging services. Through
its nationwide wireless network, Metrocall provides messaging services to over
1,000 U.S. cities, including the top 100 Standard Metropolitan Statistical Areas
(SMSAs). Since 1993, Metrocall's subscriber base has increased from less than
250,000 to greater than 6.25 million. Approximately 112,500 subscribers received
advanced data and messaging services. This growth was achieved through a
combination of internal growth and a program of mergers and acquisitions. As of
December 31, 2000, Metrocall was the second largest messaging company in the
United States based on the number of subscribers.

RECENT DEVELOPMENTS

Metrocall's traditional one-way paging operations account for more than 90%
of its revenues and operating cash flow (earnings before interest, taxes,
depreciation and amortization, or "EBITDA"). Although Metrocall experienced
growth in the number of one-way subscribers in 2000, this growth was primarily
achieved through Metrocall's indirect distribution channels, which are
characterized by lower average monthly revenues per unit ("ARPU"). As discussed
below in "Management's Discussion and Analysis," service, rent and maintenance
revenues in Metrocall's traditional operations declined by approximately $53.0
million during 2000, and Metrocall's operating cash flow declined by
approximately $27.8 million. Metrocall expects that service, rent and
maintenance revenues of its traditional paging operations will continue to
decline in 2001.

During 2000, Metrocall began to provide advanced wireless data and
messaging services. In 2000, these services generated approximately $9.1 million
in service, rent and maintenance revenues, which only partially offset the $53.0
million decline in traditional paging revenues discussed above. Metrocall's
advanced messaging services are characterized by higher ARPU, but also higher
operating and capital costs, than traditional paging services. Metrocall will
seek to expand its advanced messaging data operations during 2001, if its
financial resources are adequate to continue its investment in wireless data
devices.

Since the beginning of 2001, traditional paging revenues have continued to
decline. The decline in revenues and operating cash flows and the impact of
recurring net losses have placed pressures on Metrocall's financial condition
and liquidity position. Metrocall expects that cash generated from operations
will be sufficient in 2001 to fund operations, capital expenditures and interest
on its senior secured bank debt; however, operations will not generate enough
cash also to pay interest on Metrocall's subordinated debt. It is unlikely that
Metrocall will be able to increase its operating cash flow for the three months
ended March 31, 2001 to the level currently required by covenants in its senior
bank credit facility. Moreover, Metrocall will be unable to access the credit
facility for additional borrowings due to prohibitions in the facility and in
the indentures governing Metrocall's senior subordinated notes. In light of
current conditions in the financial markets, Metrocall believes it is unlikely
that it can attract new debt or equity financing.

In light of these circumstances, Metrocall has suspended the payments of
interest due on March 15, 2001 to holders of its 11% senior subordinated notes
(11% notes) and on April 1, 2001 to holders of its 10 3/8% senior subordinated
notes (10 3/8% notes). The aggregate payments due under these notes were
approximately $19.5 million. Metrocall's Board of Directors approved this action
in order to provide cash to finance operations and thereby to generate operating
cash flow and preserve value for stakeholders. These defaults will permit
holders of the subordinated notes in question to accelerate this indebtedness
after expiration of a 30 day grace period, or upon acceleration of other series
of subordinated notes or bank debt.

Metrocall's bank lenders have delivered a notice of default based on the
failure to make the subordinated debt interest payments. The bank lenders have
reserved their rights with respect to this default, and, absent a waiver or
other agreement by the banks, could accelerate Metrocall's bank debt. In the
event any lender seeks to accelerate its indebtedness, Metrocall likely would
file for protection under chapter 11 of the Bankruptcy

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Code. As a result of the suspension of interest payments on the senior
subordinated notes, notice of default on the bank debt and the likely
non-compliance with bank loan covenants, Metrocall has classified all
outstanding indebtedness under its bank credit facility and its senior
subordinated notes as a current liability at December 31, 2000.

Metrocall believes that its operations can continue to generate positive
operating cash flow before payment of subordinated debt interest. Even with
decreasing revenues, Metrocall's operating cash flow in 2000 was $128.7 million.
Metrocall believes further that, given time and sufficient funds to acquire
necessary inventory, it can increase revenues from two-way messaging and thereby
offset declines in traditional one-way revenues. Metrocall expects that it will
generate enough operating cash flow to service its senior secured bank debt,
which totalled $133.0 million at March 29, 2001. However, at current expected
levels, operating cash flow cannot support Metrocall's approximately $625.5
million in outstanding senior subordinated notes. Nonetheless, Metrocall
believes its level of operating cash flow can provide a basis for a
restructuring of its subordinated notes that will better enable it to generate
increases in future operating cash flow and the improvement in its financial
condition and liquidity.

Accordingly, Metrocall decided to seek to restructure its outstanding debt,
either in conjunction with a strategic transaction or on a standalone basis. It
engaged Lazard Freres and Deutsche Banc Alex. Brown to advise it with respect to
evaluating its strategic and financial options, including a strategic business
combination and/or potential debt restructuring. In addition, Metrocall retained
Banc of America Securities and Wit Soundview to advise it with respect to
potential strategic transactions. On April 2, 2001, Metrocall executed an
agreement with Weblink Wireless, Inc. This agreement provides for the merger of
Weblink and Metrocall in conjunction with restructuring of each party's
respective outstanding indebtedness. The merger and restructuring will be
implemented by each party filing for protection under chapter 11 of the
Bankruptcy Code and obtaining confirmation of plans of reorganization.
Completion of the transaction is subject to a number of conditions, including
regulatory approvals, obtaining post-petition financing, and confirmation of the
parties respective plans of reorganization. There is no assurance that the
parties will be able to obtain the requisite financing on acceptable terms or
that the creditors of the respective parties will approve their plans of
reorganization.

TRADITIONAL PAGING AND WIRELESS MESSAGING INDUSTRY OVERVIEW

Metrocall believes that traditional paging and advanced wireless messaging
is the most cost-effective and reliable means of conveying a variety of
information rapidly over a wide geographic area either directly to a person
traveling or to various fixed locations. Traditional paging, as a one-way
communications tool, is a way to communicate at a lower cost than current
two-way communication methods, such as cellular and personal communication
services (PCS) telephones. For example, the paging and messaging equipment and
air time required to transmit an average message cost less than the equipment
and air time for cellular and PCS telephones. Furthermore, pagers operate for
longer periods due to superior battery life, often exceeding one month on a
single battery. Numeric and alphanumeric subscribers generally pay a flat
monthly service fee, which covers a fixed number of messages sent to the
subscriber. In addition, these messaging devices are unobtrusive and portable
and historically have withstood substantial technological advances in the
communications industry. Many mobile telephone customers also use paging devices
in conjunction with their telephones to screen incoming calls and minimize
battery wear and usage charges.

Although the U.S. traditional paging industry has over 500 licensed paging
companies, Metrocall estimates that the six largest paging companies, including
Metrocall, currently serve more than 75% of the total paging subscribers in the
United States. These companies are facilities-based, Commercial Mobile Radio
Service (CMRS) providers, previously classified as either Radio Common Carrier
(RCC) or Private Carrier Paging (PCP) operators, servicing over 100,000
subscribers each in multiple markets and regions.

Metrocall continues to develop and market advanced wireless data and
messaging services, which use narrowband PCS networks and currently include
two-way messaging and other short messaging-based services and applications.
Metrocall believes that this relatively new method of communication is also a
way to communicate at a lower cost than other forms of two-way wireless
communications and for longer periods of time due to superior battery life. In
addition, advanced messaging devices, which are supported by the ReFlex
communications technology, cover a substantially larger geographic area than
broadband PCS networks.

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Because advanced wireless messaging uses narrowband PCS networks, which utilize
a two-way spectrum, advanced messaging devices offer advantages over the
traditional one-way spectrum that some paging networks use. The two-way spectrum
enables a wireless device to emit a signal that notifies the network of the
device's location and permits the network to send the message to transmitters
closest to the messaging device. In contrast, a one-way spectrum requires the
message to be sent to all transmitters within a geographic area and not
necessarily to those transmitters closest to the messaging device. Therefore, a
two-way device utilizes less air-time of the spectrum and creates more airtime
efficiency, particularly in the areas farthest from the messaging device. New
two-way web querying devices are rapidly being deployed that also utilize this
functionality. This allows networks to operate at maximum efficiency even when
users are "scraping" the World Wide Web.

Examples of advanced messaging services include:

- "Confirmation" or "response" messaging that sends a message back to the
network confirming that a message has been received;

- two-way messaging, which permits users to communicate wirelessly with
other portable messaging devices, Internet e-mail, as well as short
message "information pulls" which are initiated by the user and is known
as "scraping the web." This functionality is completely wireless and
untethers the user from the personal computer.

- short message "information pulls", which enable subscribers to receive
customized stock quotes/portfolio information, weather reports, Internet
information access, corporate Intranet information retrieval, and other
information.

Metrocall believes the future of the advanced wireless messaging industry
will include technological improvements and advancements that will provide
greater flexibility and additional wireless applications and content programs.
While these narrowband PCS services have been proven technologically feasible,
their economic viability has not been fully tested based on the cost of
licenses, infrastructure and capital requirements, and increased operating
costs, and competitive, similarly priced two-way broadband PCS and cellular
services.

METROCALL'S BUSINESS OBJECTIVES

Metrocall's business objectives for 2001 include achieving growth in its
advanced wireless data and messaging subscribers, revenues and monthly ARPU;
retention to the extent possible of the subscriber base in its traditional
operations; additional reductions in operating expenses and improvement in its
liquidity position and financial condition. The principal elements to achieve
these objectives include:

Maximize Internal Growth Potential. Since December 31, 1994, Metrocall has
added approximately 1.7 million new subscribers through internal growth.
Metrocall expects to seek to preserve subscribers and revenues in its
traditional paging operations and to maximize its internal growth potential in
its wireless data and messaging operations:

In 2001, Metrocall expects that there will continue to be significant
pressures on its traditional paging operations. Metrocall expects to continue to
focus on its traditional operations across all of its distribution channels to
help reduce the impact that an increased churn (turnover of subscribers) may
cause. Metrocall has adopted incentive commission plans for members of its sales
force who are successful in getting subscribers to retain their traditional
service when they also subscribe to Metrocall's advanced messaging services.
Metrocall also has placed renewed emphasis on its 100 retail stores and its
virtual storefront that enables customers to shop and receive customer care and
service "on-line" using the Internet. Still, Metrocall expects that a
significant portion of its initial advanced wireless data subscribers will come
from subscribers that currently receive traditional paging services. Metrocall
believes that certain of its subscribers in its traditional direct distribution
channels will convert their subscription to advanced wireless data and messaging
services and applications.

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Metrocall has also expanded its direct and indirect distribution channels
to gain access to different market segments. As part of this strategy, Metrocall
has formed strategic alliances with:

- local, long-distance, cellular and PCS providers, such as ALLTEL, AT&T
Wireless Services, ("AT&T Wireless"), Sprint and Verizon;

- cable television companies, such as Adelphia Cable Communications and
Suburban Cable; and

- retail outlets, such as Circle K Stores, Ritz Camera and Walgreens.

- other companies that provide functionality in the wireless industry such
as Data Critical, Locate Networks Inc., and Wireless MD.

In addition, Metrocall has a national distribution agreement through 2003
with AT&T Wireless, which enables Metrocall to exclusively distribute its paging
and wireless messaging products in over 625 AT&T Wireless retail stores.
Metrocall also has a broadband PCS distribution alliance with AT&T Wireless,
which has enabled it to further diversify its product mix by distributing AT&T's
digital PCS wireless products and AT&T's Digital One Rate (SM) service plans via
Metrocall's direct distribution channels. In 2001, Metrocall may continue to
expand its multi-tiered distribution network and marketing relationships.

Continued Rationalization of Operations and Maintenance of Low Cost
Operations. During 2000, Metrocall continued to eliminate redundant expenses
within its operations and implement process changes and web centric initiatives
designed to improve efficiencies in its operations. Such initiatives included
the deconstruction of 758 towers and transmitters in regions in which Metrocall
had extensive network coverage and redundancies and continued consolidation of
Metrocall's separate billing platforms. During 2001, Metrocall expects to
continue with its cost containment initiatives through further consolidation of
its separate billing platforms, deconstruction of additional tower sites,
reduction in expenses incurred with third party traditional paging providers and
other reductions in non-revenue generating areas.

Metrocall also believes that as use of its strategic alliances and other
indirect distribution channels increase, its operating costs will decrease as
participants in these channels typically bear a portion of its sales and
customer service expenses. Similarly, Metrocall believes its focus on maximizing
monthly recurring revenues and promoting value-added services will improve
operating margins.

Metrocall has also sought to increase its market presence through
Inciscent, Inc. (Inciscent). Inciscent is a technology-based joint venture that
is a business-to-business wired-to-wireless application service provider (ASP)
to small office/home office (SOHO) and small to medium-sized businesses.
Metrocall believes that its investment in Inciscent will provide strategic
benefits by permitting Metrocall to complement its products and services with
those of Inciscent. Metrocall believes the complementary nature of Inciscent's
services with Metrocall's products and services will enable Metrocall to
diversify and expand its market presence to other areas associated with wireless
messaging.

Pursue Cost-Efficient Technological Advances. Metrocall has historically
concentrated its capital spending on the development of its local, regional and
nationwide one-way paging networks. During 2000, Metrocall began offering
advanced wireless data and messaging products and services using narrowband PCS.
Metrocall was able to begin offering these services with minimal capital outlay
because it acquired an FCC narrowband PCS license in connection with the
acquisition of the advanced messaging division of AT&T (AMD) and formed a
strategic alliance with WebLink, a leading provider of paging and messaging
services, to develop and offer narrowband PCS. Metrocall's alliance with WebLink
consists of two phases: a switch-based resale phase and a shared network
build-out phase. The alliance is currently in its first phase in which Metrocall
provides narrowband PCS using WebLink's advanced messaging transmit and receive
network. Metrocall began offering guaranteed-delivery messaging during 1999 and
launched two-way and data-intensive messaging services in the first quarter of
2000. In the second phase, Metrocall will install and operate its own outbound
narrowband PCS frequency on its nationwide network and WebLink will provide
turnkey installation and operation of a receiver network. Metrocall believes
this alliance will enable it to comply with the FCC's mandated narrowband PCS
build-out requirements. Under the alliance, Metrocall shares certain capital
expenditures and operating expenses. Metrocall believes that the WebLink
alliance has enabled it to

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provide narrowband PCS in a faster and more cost-effective manner than if it had
developed and funded the network itself. However, it has also made Metrocall
dependent on Weblink to provide the network for advanced messaging services.

In February 2001, Weblink announced that it expects it will need $70.0
million of additional capital funding in 2001, beginning in the second quarter
of 2001 to support its business. If Weblink is not successful in its capital
raising efforts, Weblink will have liquidity difficulties and its financial
condition and business, including the services provided under its strategic
alliance could be materially adversely affected. There can be no assurance that
Weblink will be successful in its capital raising efforts or that Metrocall will
not be adversely affected by Weblink's liquidity difficulties or financial
condition.

Optimize Customer Relationships. Metrocall seeks to maintain a close
relationship with its existing customers and to develop stronger relationships
with the subscribers of acquired companies by maintaining decentralized sales,
marketing and customer service operations and providing value-added services
tailored to customers' needs. The value-added services provided by Metrocall are
billed as enhancements to its basic service and generally result in higher ARPU.
Metrocall's specific value-added services include:

- Customized information content using Metrocall's OnTheGoInfo(SM) suite of
information services.

- Customized wireless messaging applications for specific segments of the
public, such as the medical community;

- Dispatch services; and

- An enterprise-wide messaging management software and database system
focused on the medical community and campus-type settings.

METROCALL'S PAGING AND WIRELESS MESSAGING OPERATIONS

Services and Subscribers

Metrocall currently provides several traditional and advanced wireless data
and messaging services, including:

Traditional Paging and Other Services

- Digital display (numeric) paging, which permits a subscriber to receive a
telephone number or other numeric coded information and to store several
such numeric messages that the customer can recall when desired;

- alphanumeric display paging, which allows subscribers to receive and
store text messages from a variety of sources including the Internet;

- digital broadband and PCS phones and other products of AT&T under a
distribution agreement with AT&T Wireless, which allows users to place
and receive calls under AT&T's Digital One Rate(SM) service plans.

Metrocall provides digital display, alphanumeric display and two-way
messaging devices in all of its markets. In addition, alphanumeric paging access
is available via its Internet website, www.metrocall.com, where any Internet
user can access Metrocall's on-line alphanumeric paging software. At December
31, 2000, approximately 86% of its subscriber devices in service were digital
display devices and approximately 14% were alphanumeric display devices. At
December 31, 2000, 6,141,811 subscribers received traditional paging services.

Advanced Wireless Data and Messaging Services

- Hand-held wireless devices, which provide guaranteed delivery of messages
and the ability to respond to messages.

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- Two-way messaging devices, which permit interactive peer to peer
messaging, device to e-mail messaging and ability to access
Internet-based, wireless content and enterprise, server based e-mail
solutions.

- Internet-based, wireless content includes Internet information on demand:
news, weather, flight status, financial updates, entertainment and
traffic.

- Enterprise, server-based e-mail solutions include the ability to:

- Send and receive e-mails to and from the messaging device with PCs
and other wireless devices;

- Access an e-mail inbox or open e-mail messages;

- Filter e-mails received on the messaging device through user
controls located on the device; and

- Redirect e-mail attachments using the messaging device.

Metrocall introduced its advanced wireless data and messaging services in 2000.
At December 31, 2000, approximately 112,500 subscribers received these services.

Subscribers who use paging and advanced wireless data and messaging
services traditionally included small business operators and employees,
professionals, medical personnel, sales and service providers, construction and
trades-people, and real estate brokers and developers; however, the appeal of
paging to the residential user has grown, with service being adopted by
individuals for private, non-business uses such as communicating with family
members and friends.

Metrocall subscribers either buy or lease their messaging and paging
devices. Metrocall also receives additional revenue for enhanced services such
as voice mail, personalized greetings and One Touch(TM) service, which is an
advanced messaging service. Volume discounts on lease payments and service fees
are typically offered to large volume subscribers. In some instances,
Metrocall's subscribers are resellers that purchase services at substantially
discounted rates, but are responsible for marketing, billing, collection and
related costs with respect to their customers.

Metrocall also provides enhancements and ancillary services such as:

- personalized automated answering services, which allow a subscriber to
record a message that greets callers who reach the subscriber's voice
mailbox;

- message protection, which allows a traditional subscriber to retrieve any
calls that come in during the period when the subscriber was beyond the
reach of our radio transmitters;

- annual loss protection, which allows subscribers of leased messaging
devices to limit their cost of replacement upon loss or destruction of
the device; and

- maintenance services, which are offered to subscribers who own their own
pagers and advanced messaging devices.

Sales and Marketing

Metrocall's sales and marketing strategy incorporates a multi-tiered
distribution system designed to maximize internal growth and geographic presence
to place both its traditional and advanced wireless data and messaging services.
At December 31, 2000, Metrocall through more than 193 sales and administrative
offices and retail outlets, employed a sales force of over 1,500 sales
representatives, including its direct sales staff, telemarketing professionals
and sales representatives who call on retailers and resellers. Metrocall's major
distribution channels are described briefly below.

Direct Distribution Channels

- Direct Sales. Metrocall's direct sales personnel sell its messaging
services and products primarily to businesses, placing special emphasis
on key accounts of strategic importance to it. Metrocall's direct sales
personnel generally target businesses that have multiple work locations
or have highly mobile
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employees. Metrocall's sales compensation plans are designed to motivate
direct sales personnel to focus on selling rather than leasing
traditional pagers and advanced wireless data and messaging devices,
which reduces capital requirements, and to increase sales of higher
revenue product enhancements, such as nationwide coverage, alphanumeric
service, voice mail and One Touch(TM).

- Database Telemarketing. Metrocall's internal, professionally trained
staff generates sales by utilizing computerized lead management and
telemarketing techniques combined with its proprietary lead screening and
development protocol. Using acquired lists to focus their efforts,
Metrocall's internal staff targets groups of consumers and small
businesses who have a propensity to use paging and messaging services but
are either in a region where Metrocall does not have a direct sales
effort or has not been reached by other distribution channels. In
Metrocall's marketing efforts, it uses only commercially available public
information to analyze and target new customers and does not use
"Customer Proprietary Network Information" in a way that would conflict
with the Communications Act of 1934, as amended (the "Communications
Act"), or the Federal Communications Commission (FCC) rules.

- Company-Owned Retail Stores. Metrocall's retail outlets are designed to
sell higher ARPU services to the consumer market segment directly while
providing Metrocall with a point of presence to enhance its brand
recognition. These retail outlets take a variety of forms, such as mall
stores, kiosks, mall carts, retail merchandising units and mall center
locations. Products sold to consumers at company owned retail stores
include paging, messaging, cellular, long distance and PCS services and
related accessories. Many of these locations function as customer service
and payment centers in addition to offices for direct sales
representatives.

Indirect Distribution Channels

- Resellers. Metrocall sells resellers bulk paging services for resale to
their own business clients and individual customers. Metrocall issues one
monthly bill to each reseller who is responsible for marketing, billing
and collection, and equipment maintenance. Through this channel,
Metrocall achieves high network utilization at low incremental cost, but
realizes much lower ARPU than through other distribution channels.

- Retail Outlets. Metrocall sells pagers on a wholesale basis to retail
outlets, such as office supply, electronics and general merchandise
chains, for resale to their customers. Metrocall selects these outlets
based on factors such as the number of stores in a region and the extent
of their advertising. These outlets then sell the messaging device itself
and provide limited customer service to the consumer. Metrocall provides
sales incentives and advertising support, and train sales personnel to
enhance a retail outlet's effectiveness and to ensure that the customer
is well educated regarding the product.

- Dealer Network. Metrocall contracts with independent dealers,
representatives and agents, including such outlets as small cellular
phone dealers and independent specialty electronics stores. Metrocall
typically uses these dealers to reach specific consumer niches (e.g.,
ethnic or non-English speaking communities) and small businesses that are
more efficiently accessed through this channel than through Metrocall's
other distribution channels. In addition to selling the paging devices,
independent dealers assist the subscriber in choosing a service plan and
collecting the initial payments. Metrocall pays independent dealers
commissions based on their sales of Metrocall services. It should be
noted that these dealers are finding it more difficult to generate
profitable business given the aggressive pricing by the large principals
in the industry and accordingly this channel is shrinking.

- Strategic Partners. Metrocall has entered into contractual agreements
with several selected national distribution partners who market its
paging services to their existing and future customers. Metrocall
supplies many of these partners with custom branded turnkey solutions for
network services, products, customer services, billing, collections and
fulfillment. Metrocall's strategy is to provide these value-added
services to enhance the business relationship and margin opportunities
for both parties. Metrocall has entered into alliances with companies in
the long distance, local exchange, cable,
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Internet, retail, direct response and multi-level marketing businesses
and believes that these programs will help deliver paging, advanced
messaging services and two-way messaging to market segments that its
other distribution channels may not reach cost-effectively.

- Affiliates. Metrocall operates a network of paging carriers or
affiliates that resell services on the 152.480 MHz private carrier paging
frequency. These affiliates are independent owners of paging systems in
various markets throughout the nation who sell expanded coverage to their
customers. Utilizing Metrocall's infrastructure, these independent
networks provide wide area and nationwide paging on a single channel.

Subscribers by Geographic Region. Set forth below is the number of
messaging devices that Metrocall has in service by geographic region.

NUMBER OF DEVICES IN SERVICE

FOR THE YEARS ENDED DECEMBER 31, 1998(1) 1999 2000
-------------------------------- --------- --------- ---------

Northeast........................................ 772,463 781,663 843,617
Mid-Atlantic..................................... 693,631 799,775 848,379
Southeast........................................ 1,179,548 1,261,545 1,303,382
Midwest.......................................... 400,150 431,072 470,600
Southwest........................................ 1,356,218 1,448,090 1,491,826
West............................................. 768,829 750,000 792,546
Northwest........................................ 488,711 455,794 504,023
--------- --------- ---------
Total....................................... 5,659,550 5,927,939 6,254,373
========= ========= =========

- ---------------
(1) Includes approximately 1.2 million pagers in service acquired in the AMD
acquisition.

Subscribers by Distribution Channel. Set forth below are the respective
numbers and percentages of messaging devices that Metrocall services through its
distribution channels:

OWNERSHIP OF DEVICES IN SERVICE

1998(1) 1999 2000
---------------------- ---------------------- ----------------------
FOR THE YEARS ENDED DECEMBER 31, NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE
- -------------------------------- --------- ---------- --------- ---------- --------- ----------

DIRECT CHANNELS:
Company-owned and leased to
subscribers.............. 1,980,297 35% 1,925,903 33% 1,967,613 32%
Customer-owned and
maintained............... 629,352 11 616,829 10 667,962 11
Company-owned retail stores
(CORS)................... 207,493 4 184,010 3 145,022 2
INDIRECT CHANNELS:
Resellers................... 2,369,686 42 2,579,286 44 2,771,394 44
Strategic Partners and
affiliates............... 274,844 5 475,487 8 585,777 9
Retail...................... 197,878 3 146,424 2 116,605 2
--------- --- --------- --- --------- ---
Total.................... 5,659,550 100% 5,927,939 100% 6,254,373 100%
========= === ========= === ========= ===

- ---------------
(1) Includes approximately 1.2 million pagers in service acquired in the AMD
acquisition.

Network and Equipment

Metrocall has developed a state-of-the-art paging and messaging system
utilizing current technology, which achieves optimal building penetration,
wide-area coverage and the ability to deliver new and enhanced

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messaging services. This existing paging transmission equipment has significant
capacity to support future growth.

Metrocall's messaging services are initiated when a telephone user calls or
short message based text services are placed to its Company-maintained paging
terminals. A sender uses one of the above-mentioned input sources to send the
message or page through the local phone system, or PSTN. The PSTN "switches" the
page to one of Metrocall's paging terminals. Once the paging terminal receives
the page, it processes, stores and forwards information from the caller.
Additionally, it encodes the page for transmission and routes the page to
Metrocall's "Global Messaging Gateway". Typically, an encoder accepts the
incoming page, validates the pager address and "encodes" the address and message
content into the appropriate paging signaling protocol. Most of the encoding
takes place at Metrocall's primary satellite transmission hub located in
Stockton, California. This facility receives paging data from around the country
via Metrocall's private ATM network. Here the data is encoded and then delivered
via satellite to terrestrial based network transmitters providing RF coverage
throughout the service area. Metrocall transmits a majority of its traffic
through this facility. The facility operates 24 hours per day, seven days per
week.

Metrocall launched interactive two-way messaging services, incorporating
send and receive data messaging with wireless email and instant messaging
applications, and other interactive features, in April 2000. Two-way messaging
services allow subscribers to send and receive messages to and from any email
address worldwide, send and receive messages to and from another device
activated on Metrocall's network and access information on the Internet such as
weather, sports, headline news and financial market information. Prior to April
2000, Metrocall offered 1.5/1.7 way assured messaging services marketed under a
service offering called MessageTrac(SM). This service provided guaranteed
delivery of alphanumeric messages to devices nationwide.

Metrocall launched its interactive two-way services in April 2000 by
introducing Metrocall's My2Way(TM) products and services. The My2Way(TM)
service, initiated in April 2000, enables users to send, receive and forward
data messages and email wirelessly, as well as access various other interactive
services, such as retrieving content (such as stock quotes, travel information,
weather and entertainment) on command, through added software applications.
Another service, operating through a two-way wireless messaging module that
plugs into the back of a PDA, enables a subscriber to maintain constant
connectivity with the Metrocall network, so that the subscriber can send
messages from a PDA to email accounts as well as other devices, and access
information such as stock quotes, weather and travel updates from the Internet.
Other planned two-way messaging services include telemetry products, such as
vehicle location services that report the location of vehicles at predetermined
intervals to a Web-based map, Security/Loss Prevention that will allow the
tracking of high-value shipments, barge tracking, shipping container tracking,
bank bag tracking, auto recovery; and rental car tracking and recovery.
Additional services will include asset management, personal security and
emergency services location and machine-to-machine telemetric services.

Metrocall has three exclusive nationwide one-way frequencies and a
nationwide 50/50 KHz narrowband personal communication (NBPCS) license issued by
the Federal Communications Commission and are operating in each of the largest
100 SMSA's. Metrocall began operating the nationwide network on one of the three
one-way channels in November 1993. Metrocall is also capable of providing local
paging in many markets served by the nationwide network by using transmitters to
carry local messages. Services provided through the nationwide network are
marketed to subscribers directly through Metrocall's sales force and indirectly
through retailers and resellers. Metrocall also operates a series of regional
operating systems or networks consisting of primary one-way networks serving
Arizona, California, Utah, Texas, Florida, Illinois, Oregon, Washington,
Colorado and Nevada, and the area from Boston to the Virginia/North Carolina
border, and ten (10) state region in the Southeastern portion of the U.S.

Metrocall does not manufacture any of the pager's messaging devices or
infrastructure equipment used in its operations. While the equipment used in
Metrocall's operations is available for purchase from multiple sources,
Metrocall has historically limited the number of suppliers to achieve volume
cost savings and, therefore, depends on such manufacturers to obtain sufficient
inventory. Metrocall anticipates that equipment and messaging devices will
continue to be available to it in the foreseeable future, consistent with normal
manufacturing and delivery lead times but cannot assure you that it will not
experience unexpected delays in

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obtaining one-way and two-way messaging devices and infrastructure equipment in
the future. A significant number of delays could have an adverse effect on
Metrocall's operations, network development plans and future revenues. Metrocall
continually evaluates new developments in wireless messaging technology in
connection with the design and enhancement of its messaging systems and
selection of products to be offered to subscribers.

Management Systems and Billing

Metrocall has centralized certain operating functions and utilizes common
and distributed billing and subscriber management systems. This permits
Metrocall to reduce costs, increase operating efficiencies, obtain synergies
from acquisitions and focus regional management on sales and distribution.

The functions Metrocall has centralized into its national operations center
in Alexandria, Virginia, include accounting, management information systems,
inventory and order fulfillment. It has also integrated the information systems
of the acquired companies into its structure.

Metrocall also maintains three national call centers, which are critical
factors in marketing and servicing the nationwide network to all markets in the
United States. Metrocall's centers handle customer inquiries from existing and
potential customers and support its distribution channels initiatives. At
December 31, 2000, its three centers were staffed with approximately 420
employees. Each center offers a toll-free access number. One of these centers is
open seven days per week, 24 hours per day. The other two centers are open six
days a week and provide emergency service seven days a week, 24 hours a day.
Metrocall attempts to satisfy customers upon initial inquiry to avoid repeat
calls, thereby increasing customer satisfaction and decreasing costs. Metrocall
employs state-of-the-art call management technology (such as an automated call
distribution system and interactive voice response capabilities) to provide
quality customer service and to track both the productivity and the quality of
the performance of its customer service representatives.

COMPETITION

The wireless communications industry is very competitive. Metrocall has
competed in its traditional paging operations by maintaining competitive pricing
of its products and services, by providing a broad assortment of coverage
options using its own messaging network infrastructure and through quality,
reliable customer service. Metrocall competes with hundreds of companies that
provide only traditional paging services on a local, regional or nationwide
basis and several companies that provide advanced wireless data and messaging
services using narrowband and broadband PCS services.

While Metrocall competes with traditional paging carriers, it also competes
directly and indirectly with providers of narrowband and broadband PCS services.
Narrowband PCS provides enhanced or advanced paging and messaging capabilities,
such as "confirmation" or "response" paging and two-way messaging, services
which Metrocall provides in its advanced wireless data and messaging operations
through its alliance with WebLink. Broadband PCS provides new types of
communications devices that include multi-functional portable phones and imaging
devices. In addition, the flat rate digital broadband PCS services is declining
to a level that directly competes with the traditional paging services offered
by Metrocall. Metrocall has a distribution agreement with AT&T Wireless enabling
it to offer digital broadband PCS telephones which may be bundled to subscribers
along with traditional paging or advanced wireless data and messaging services.

Although some of Metrocall's competitors are small, privately owned
companies that service one market, others are large diversified
telecommunications companies that serve several markets. Some of these
competitors possess financial, technical and other resources greater than those
of Metrocall. Major wireless messaging providers that Metrocall competes with in
more than one market include Arch Wireless Inc., WebLink, Skytel Inc., a
subsidiary of Worldcom, Inc., Airtouch/Vodafone, Nextel Communications, Inc.,
Cingular, Verizon, and Motient, Inc.

The intensity of competition for communication service customers will
continue to increase as wireless communication products and technologies
continue to be developed and offer new and different services and applications.
In addition, FCC regulation concerning auctioning of new spectrum for wireless
communication

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services has created additional potential sources of competition. Furthermore,
entities offering service on wireless two-way communications technology,
including cellular, digital broadband PCS and narrowband PCS, and providers of
specialized mobile radio and mobile satellite services, also compete with the
services that Metrocall provides. There can be no assurances that existing
competing wireless communication technologies will not continue to adversely
impact Metrocall's traditional operations or that the future development of new
generation technologies and products will not adversely affect Metrocall's
traditional and advanced wireless messaging operations.

GOVERNMENT REGULATION

From time to time, federal and state legislators propose legislation that
could affect Metrocall's business, either beneficially or adversely, such as by
increasing competition or affecting the cost of its operations. Additionally,
the FCC and, to a lesser extent, state regulatory bodies, may adopt rules,
regulations or policies that may affect Metrocall's business. Metrocall cannot
predict the impact of such legislative actions on its operations. The following
description of certain regulatory factors does not purport to be a complete
summary of all present and proposed legislation and regulations pertaining to
Metrocall's operations.

Federal. Metrocall's operations are subject to extensive regulation by the
FCC under the Communications Act of 1934, as amended (the "Communications Act").
Under the Communications Act, Metrocall is required to obtain FCC licenses for
the use of radio frequencies to conduct its operations within specified
geographic areas. These licenses set forth the technical parameters, such as
maximum power and tower height, under which Metrocall may use such frequencies.
Metrocall is licensed by the FCC to operate "Commercial Mobile Radio Service"
(CMRS) messaging services.

The FCC also requires messaging licensees to construct their stations and
begin service to the public within a specified period of time, and failure to do
so results in termination of the authorization. Under the traditional
site-specific approach to messaging licensing, a licensee received a
construction permit for facilities at a specific site, and that permit
automatically terminated if the facilities were not timely constructed and the
licensee failed to request an extension prior to the deadline. The failure to
construct some facilities did not, however, affect other facilities in a
licensee's system that had been constructed and placed into operation timely.
However, certain services that Metrocall has recently begun to offer are subject
to harsher penalties for failure to construct. For example, the NBPCS license
Metrocall acquired in the AMD acquisition is subject to the condition that
Metrocall build sufficient stations to cover 750,000 square kilometers, or 37.5%
of the U.S. population, by the fifth anniversary of the initial license grant;
by the tenth anniversary of the grant, it must build sufficient stations to
cover 1,500,000 square kilometers, or 75% of the U.S. population. Metrocall has
met the first construction benchmark for its two-way messaging license, and
expects to meet the FCC's 10-year build out requirements.

The FCC has "forbearance" authority, which means it need not enforce
against all CMRS licensees the following common carrier regulations under Title
II of the Communications Act: any interstate tariff requirements, including
regulation of CMRS rates and practices; the collection of intercarrier
contracts; certification concerning interlocking directorates; and FCC approval
relating to market entry and exit. Additionally, the 1993 Budget Act preempted
state authority over CMRS entry and rate regulation. The Telecommunications Act
of 1996 (the "1996 Act") provided the FCC with additional "forbearance"
authority with regard to all telecommunications services. Pursuant to that
authority, the FCC has forborne from requiring wireless carriers to receive
prior FCC approval for certain non-substantial corporate stock transfers and
reorganizations.

The FCC issues CMRS Messaging licenses for terms of 10 years. Metrocall's
current licenses have expiration dates ranging from 2001 to 2010. The FCC must
approve renewal applications. In the past, the FCC has routinely granted
Metrocall's FCC renewal applications. Metrocall is also required to obtain prior
FCC approval for its acquisition of radio licenses held by other companies, as
well as transfers of controlling interests of any entities that hold radio
licenses. Although there can be no assurance that any future renewal or transfer
applications it files will be approved or acted upon in a timely manner by the
FCC, Metrocall knows of no reason to believe such applications would not be
approved or granted, based upon its experience to date.

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The FCC has authority to restrict the operation of licensed radio facilities or
to revoke or modify such licenses. The FCC may adopt changes to its radio
licensing rules at any time, and may impose fines for violations of its rules.

The Communications Act also places limitations on foreign ownership of CMRS
licenses. These foreign ownership restrictions limit the percentage of Metrocall
common stock that may be owned or voted, directly or indirectly, by aliens or
their representatives, foreign governments or their representatives, or foreign
corporations. Metrocall's certificate of incorporation permits the redemption of
its common stock from stockholders where necessary to protect its compliance
with these requirements.

Messaging licenses have traditionally been issued on a site-specific basis.
In February 1997, the FCC adopted new rules to issue most messaging licenses for
large, FCC-defined service areas. Licenses for 929 MHz and 931 MHz messaging
frequencies will be issued for "Major Economic Area" or "MEA" geographic areas;
licenses for exclusive messaging frequencies in lower frequency bands will be
licensed in "Economic Areas" or "EAs." Shared messaging frequencies will
continue to be allocated on a shared basis and licensed in accordance with
existing, site-specific procedures; however, the FCC is considering changes to
the application and licensing rules for these frequencies. Mutually exclusive
geographic area applications for all exclusive messaging frequencies will be
awarded through an auction process. A filing "freeze" is in effect for the non-
nationwide, exclusive messaging frequencies pending commencement of auctions or
further actions by the FCC. The auction for 929 MHz and 931 MHz MEA licenses was
held in February to March of 2000. Metrocall was the successful high bidder for
145 MEA licenses, and has met all of its license payment obligations Incumbent
licensees that did not bid (or bid successfully) at this auction will be able to
trade in their existing licenses for a single "wide-area" license based upon
their current coverage. Incumbents will be entitled to interference protection
from the auction winners and will be able to modify their facilities within that
area, but they will not be permitted to expand their existing coverage.

Because auctions are new to the messaging industry, Metrocall cannot
predict their impact on its business. At least initially, competitive bidding
may increase its costs of obtaining licenses. The FCC's wide-area licensing and
auction rules may also serve as entry barriers to new participants in the
industry. In any service area where Metrocall is the successful bidder, or where
it trades in its licenses for "wide-area" licenses, Metrocall will save on the
application costs associated with modifying and adding facilities within its
service areas, and no other entity will be able to apply for its frequencies
within those areas. Conversely, in geographic areas where it is not the high
bidder, Metrocall's ability to expand its service territories in those
geographic areas will be curtailed. Metrocall's three nationwide frequencies
will not be subject to competitive bidding.

The 1996 Act imposes a duty on all telecommunications carriers to provide
interconnection to other carriers, and requires local exchange carriers (LECs;
i.e., local telephone companies) to, among other things, establish reciprocal
compensation arrangements for the transport and termination of calls and provide
other telecommunications carriers access to their network elements on an
unbundled basis on reasonable and non-discriminatory rates, terms and
conditions. The LECs are now prohibited from charging messaging carriers for the
"transport and termination" of LEC-originated local calls. This prohibition
could lead to further cost savings for us. Moreover, under the 1996 Act and the
FCC's rules, messaging carriers are entitled to compensation from any LEC for
local calls that terminate on a messaging network, which has already led to
additional revenues for Metrocall.

The 1996 Act also requires the FCC to appoint an impartial entity to
administer telecommunications numbering and to make numbers available on an
equitable basis. In addition, the 1996 Act requires that state and local zoning
regulations shall not unreasonably discriminate among providers of "functionally
equivalent" wireless services, and shall not have the effect of prohibiting the
provision of personal wireless services. The 1996 Act provides for expedited
judicial review of state and local zoning decisions. Additionally, state and
local governments may not regulate the placement, construction and modification
of personal wireless service facilities on the basis of the environmental
effects of radio frequency emissions, if the facilities comply with the FCC's
requirements. Other provisions of the 1996 Act, however, may increase
competition, such as the provisions which allow the FCC to forbear from applying
regulations and provisions of the Communications Act to any class of carriers,
not only to CMRS, and the provisions allowing public utilities to provide

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telecommunications services directly. These provisions may impose additional
regulatory costs (for example, provisions requiring contributions to universal
service by providers of interstate telecommunications). Some of these FCC rules
are subject to pending petitions for reconsideration and Court appeals.
Metrocall cannot predict the final outcome of any judicial or FCC proceeding or
the possible impact of future FCC proceedings on its business.

State. The 1993 Budget Act preempts all state and local rate and entry
regulation of all CMRS operators. Entry regulations typically refer to the
process whereby a CMRS operator must apply to the state to obtain a certificate
to provide service in that state. Rate regulation typically refers to the
requirement that CMRS operators file a tariff describing our billing rates,
terms and conditions by which we provide messaging services. Apart from rate and
entry regulations, some states may continue to regulate other aspects of
Metrocall's business in the form of zoning regulations (subject to the 1996
Act's prohibition on discrimination against or among wireless telecommunications
carriers), or "health and safety" measures. The 1993 Budget Act does not preempt
state authority to regulate such matters. Although there can be no assurances
given with respect to future state regulatory approvals, based on Metrocall's
experience to date, it knows of no reason to believe such approvals would not be
granted.

In 1997, the FCC held that the Budget Act does not prohibit states from
imposing requirements of CMRS carriers to contribute to funding "universal"
telephone service within the states. Approximately 25 states now impose such
"universal service fund" obligations. Although Metrocall incurs additional costs
in contributing to state universal service funds, Metrocall typically passes
through these costs/taxes to its subscribers.

Litigation. Metrocall has filed complaints with the FCC against a number
of Regional Bell Operating Companies (RBOCs) and the largest independent
telephone company for violations of the FCC's interconnection and local
transport rules and the 1996 Act. The complaints alleged that these local
telephone companies are unlawfully charging for local transport of the telephone
companies' local traffic. Metrocall petitioned the FCC to rule that these local
transport charges are unlawful and to award Metrocall a reimbursement or credit
for any past charges assessed by the respective carriers since November 1, 1996,
the effective date of the FCC's transport rules. On May 31, 2000, the FCC
adopted a Memorandum, Opinion and Order granting most of the relief requested by
Metrocall; that decision has been appealed by the defendants to the U.S. Court
of Appeals for the D.C. Circuit. The FCC is now in the process of determining
what damages will be awarded to Metrocall. Metrocall has settled its damages
claims with some, but not all, of these defendants.

SEASONALITY

Generally, Metrocall's operating results are not significantly affected by
seasonal factors.

TRADEMARKS AND SERVICE MARKS

Metrocall uses the following trademarks and service marks:

- "Metrocall" -- a registered trademark with the U.S. Patent and Trademark
Office;

- "Datacall," "Metronet," "Metromessage" and "In-Touch" -- service marks
under which we market our paging services.

- "Metrotext" -- a computer program designed for use in transmitting
alphanumeric messages from personal computers to pagers (copyright
registration has been granted).

- "Metrofax", "One Touch", "Message Track" and "The Power in
Paging" -- service marks.

- "Americas Wireless Network", "MyOnTheGoPortfolio", "OnTheGoInfo", "EZ
Pack Paging", "My2Way", "Mye-link" and "Notesender" -- service marks
(applications with the U.S. Patent and Trademark Office are pending).

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EMPLOYEES

As of December 31, 2000, Metrocall employed approximately 3,571 full and
part-time people none of whom is represented by a labor union. Metrocall
believes that its relations with its employees are good.

ITEM 2. PROPERTIES

Metrocall does not hold title to any significant real, property; although
Metrocall and its affiliates own interests in certain properties. At December
31, 2000, Metrocall leased commercial office and retail space, including its
executive offices, at more than 360 locations used in its operations. These
office leases provided for monthly payments ranging from approximately $60 to
$111,000 and expire, subject to renewal options, on various dates through July
2012.

Metrocall also leases numerous sites under long-term leases for its
transmitters on commercial broadcast towers, buildings and other fixed
structures. At December 31, 2000, Metrocall leased these transmitter sites for
monthly rentals ranging from approximately $420 to $8,000 that expire, subject
to renewal options, on various dates through December 2010.

ITEM 3. LEGAL PROCEEDINGS

Information regarding contingencies and legal proceedings is included in
Note 9 of the Notes to the Consolidated Financial Statements for the year ended
December 31, 2000, which is included under Item 8 of this report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

STOCK TRADING

Metrocall's common stock is traded on the Nasdaq SmallCap Market under the
symbol "MCLLC."

COMMON STOCK PRICE RANGES

1999 2000
------------- -------------
HIGH LOW HIGH LOW
---- --- ---- ---

Quarter ended March 31............................... $5 1/2 $2 11/16 $17 7/32 $1 7/8
Quarter ended June 30................................ 4 2 1/16 10 5/8 2 9/16
Quarter ended September 30........................... 4 3/8 1 3/16 8 15/16 2 1/4
Quarter ended December 31............................ 3 1/8 1 1/8 3 1/4 1/4

On March 3, 2001 the last reported sales price of Metrocall's common stock
on the Nasdaq SmallCap Market was $0.53 per share and, there were 1,894
stockholders of record.

Metrocall's common stock is presently listed on the SmallCap Market
pursuant to a temporary exception to the $1.00 minimum bid requirement that will
expire on May 10, 2001. Nasdaq has reserved the right to terminate the exception
and Metrocall's listing if there is a material change in Metrocall's
circumstances. The Nasdaq SmallCap Market listing maintenance standards also
require, among other things, that Metrocall maintain either net tangible assets
of $2 million or a market capitalization of $35 million. Metrocall is presently
not in compliance with either requirement. There can be no assurance that
Metrocall will be able to regain compliance. If Metrocall fails to regain
compliance, its common stock would be removed from the

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Nasdaq SmallCap Market. If Metrocall's securities cease to be listed on the
Nasdaq SmallCap Market, they may continue to be listed on the OTC-Bulletin
Board.

DIVIDEND POLICY

Metrocall has not declared or paid any cash dividends or distributions on
its common stock since its initial public offering of common stock in July 1993.
Metrocall does not anticipate paying any cash dividends on its common stock in
the foreseeable future. Future cash dividends, if any, will be determined by its
Board of Directors. Certain covenants in Metrocall's credit facility, its
indentures and the terms of its Series A Convertible Preferred Stock (the
"Series A Preferred") restrict or prohibit the payment of cash dividends on
Metrocall's common stock.

UNREGISTERED SECURITIES

Exchange of Senior Subordinated Notes for Common Stock. As further
described under Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," during 2000, Metrocall issued 8,619,537
shares of its common stock in exchange for $73.372 million aggregate principal
amount of its outstanding senior subordinated notes. The following table
provides information about these issuances:

SHARES OF
PRINCIPAL COMMON
AMOUNT OF STOCK
NOTES ISSUED
SERIES OF SENIOR SUBORDINATED NOTES INVOLVED EXCHANGED IN EXCHANGE DATES
- -------------------------------------------- --------------- ----------- ----------------

11 7/8% senior subordinated notes due 2005 $ 7.032 million 895,089 April 20, 2000
May 4, 2000
11% senior subordinated notes due 2008 $22.650 million 2,383,972 April 20, 2000
April 26, 2000
May 2, 2000
July 10, 2000
July 11, 2000
October 27, 2000
10 3/8% senior subordinated notes due 2007 $15.030 million 2,079,176 April 20, 2000
May 5, 2000
June 30, 2000
July 10, 2000
October 25, 2000
October 27, 2000
9 3/4% senior subordinated notes due 2007 $28.660 million 3,261,301 April 20, 2000
April 26, 2000
June 30, 2000
July 17, 2000
July 18, 2000
October 25, 2000
October 26, 2000

These exchanges were conducted without registration under the Securities
Act of 1933 in reliance upon the exemption in Section 3(a)(9) of that act.

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ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected financial and other data of
Metrocall. The historical financial data has been derived from the audited
consolidated financial statements and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and Metrocall's consolidated financial statements,
related notes thereto and other financial information included in the
consolidated financial statements.

The consolidated statements of operations data for fiscal years 1996, 1997,
1998, and 2000 presented below include the results of operations of the acquired
companies from their respective acquisition dates. Consolidated statements of
operations data for fiscal year 1997 exclude the operations of ProNet, Inc.
because this merger was completed on December 30, 1997. Units in service at
December 31, 1997 include approximately 1.3 million units acquired in the ProNet
merger. Metrocall completed the acquisition of AMD on October 1, 1998.

YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ----------- ----------- -----------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE, UNIT, AND PER UNIT DATA

CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Service, rent and maintenance revenues.......... $124,029 $249,900 $ 416,352 $ 548,700 $ 504,800
Product sales................................... 25,928 39,464 48,372 61,487 57,183
-------- -------- --------- --------- ---------
Total revenues............................ 149,957 289,364 464,724 610,187 561,983
Net book value of products sold................. (21,633) (29,948) (31,791) (39,071) (37,509)
-------- -------- --------- --------- ---------
128,324 259,416 432,933 571,116 524,474
Operating expenses:
Service, rent and maintenance................... 29,696 69,254 115,432 142,961 120,312
Selling and marketing........................... 24,101 53,802 73,546 97,051 103,413
General and administrative...................... 42,905 73,753 121,644 174,592 172,017
Depreciation and amortization................... 58,196 91,699 234,948 307,343 300,318
-------- -------- --------- --------- ---------
Loss from operations............................ (26,574) (29,092) (112,637) (150,831) (171,586)
Interest and other income (expense)............. (607) 156 849 407 (2,450)
Interest expense................................ (20,424) (36,248) (64,448) (85,115) (84,169)
-------- -------- --------- --------- ---------
Loss before income tax benefit and extraordinary
item.......................................... (47,605) (65,184) (176,236) (235,539) (258,205)
Income tax provision benefit.................... 1,021 4,861 47,094 63,055 20,775
-------- -------- --------- --------- ---------
Loss before extraordinary item.................. (46,584) (60,323) (129,142) (172,484) (237,430)
Extraordinary item(a)........................... (3,675) -- -- -- 22,876
-------- -------- --------- --------- ---------
Net loss...................................... (50,259) (60,323) (129,142) (172,484) (214,554)
Preferred dividends............................. (780) (7,750) (11,767) (16,462) (9,816)
Series C preferred exchange inducement.......... -- -- -- -- (6,308)
Gain on repurchase of preferred stock........... -- -- -- 2,208 --
-------- -------- --------- --------- ---------
Loss attributable to common stockholders...... $(51,039) $(68,073) $(140,909) $(186,738) $(230,678)
======== ======== ========= ========= =========
Loss per share attributable to common
stockholders:
Loss per share before extraordinary item
attributable to common stockholders......... $ (2.91) $ (2.51) $ (3.43) $ (4.47) $ (3.30)
Extraordinary item, net of income tax
benefit..................................... (0.23) -- -- -- 0.30
-------- -------- --------- --------- ---------
Loss per share attributable to common
stockholders................................ $ (3.14) $ (2.51) $ (3.43) $ (4.47) $ (3.00)
======== ======== ========= ========= =========

- ---------------
a) In 1996, Metrocall recorded an extraordinary item for costs of approximately
$3.7 million paid to purchase the A+ Network 11 7/8% senior subordinated
notes outstanding. In 2000, Metrocall recorded an extraordinary item of $22.9
million for the gain realized on the exchange of senior subordinated notes
for common stock.

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You should find the following definitions below useful in understanding
Metrocall's operating and other data:

- EBITDA means earnings before interest, taxes, depreciation and
amortization, and certain one-time charges. While not a measure under
generally accepted accounting principles, EBITDA is a standard measure of
financial performance in the paging industry. Metrocall believes EBITDA
can be used to measure its ability to service debt, fund capital
expenditures and expand its business. EBITDA as defined by Metrocall is
used in its credit facility and indentures as part of the tests to
determine its ability to incur debt and make restricted payments. EBITDA
as defined by Metrocall may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate
EBITDA in the same manner. EBITDA should not be considered in isolation
or as an alternative to net income (loss), income (loss) from operations,
cash flows from operating activities, or any other measure of performance
under GAAP. Cash expenditures for various long-term assets, interest
expense and income taxes have been, and will be, incurred which are not
reflected in the EBITDA presentations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial
Condition, Liquidity and Capital Resources" for discussion of significant
capital requirements and commitments.

- EBITDA margin is calculated by dividing EBITDA by the amount of total
revenues less the net book value of products sold.

- ARPU is average monthly paging revenue per unit. ARPU is calculated by
dividing (a) service, rent and maintenance revenues for the period by (b)
the average number of units in service for the period. The ARPU
calculation excludes revenues derived from non-paging services such long
distance services.

- Average monthly operating expense per unit is calculated by dividing (a)
total recurring operating expenses before depreciation and amortization
for the period by (b) the average number of units in service for the
period.

YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1996 1997 1998 1999 2000
----------- ----------- ----------- ----------- -----------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE, UNIT, AND PER UNIT DATA

OPERATING AND OTHER DATA:
Net cash provided by operating activities....... $ 15,608 $ 27,166 $ 41,154 $ 64,534 $ 39,764
Net cash used in investing activities........... $ (327,904) $ (176,429) $ (191,747) $ (88,228) $ (123,334)
Net cash provided by financing activities....... $ 199,639 $ 163,242 $ 134,133 $ 18,045 $ 107,380
EBITDA.......................................... $ 31,622 $ 62,607 $ 122,311 $ 156,513 $ 128,732
EBITDA margin................................... 24.6% 24.1% 28.3% 27.4% 24.5%
ARPU............................................ $ 8.01 $ 8.25 $ 7.57 $ 7.86 $ 6.92
Average monthly operating expense per unit...... $ 6.35 $ 6.74 $ 5.71 $ 5.95 $ 5.42
Units in service (end of period)................ 2,142,351 4,030,836 5,659,550 5,927,939 6,254,373
Units in service per employee (end of period)... 1,086 1,366 1,512 1,660 1,751
Capital expenditures............................ $ 62,110 $ 69,935 $ 78,658 $ 93,327 $ 108,623
---------- ---------- ---------- ---------- ----------

1996 1997 1998 1999 2000
-------- ---------- ---------- ---------- ---------

CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)(b).................... $ (8,396) $ (36,747) $ (41,828) $ (36,908) $(764,532)
Cash and cash equivalents....................... 10,917 24,896 8,436 2,787 26,597
Total assets.................................... 646,577 1,078,023 1,251,038 1,025,547 757,145
Total long-term debt, net of current
portion(b).................................... 327,092 598,989 742,563 776,984 301
Total stockholders' equity...................... 165,169 170,505 33,780 (152,134) (166,352)
-------- ---------- ---------- ---------- ---------

- ---------------
(b) Working capital deficit at December 31, 2000 includes current debt balance
of $759.3 million which largely constitutes debt with scheduled maturities
beyond 2001; which has been classified as current debt. See Note 5 to the
consolidated financial statements for a more detailed explanation.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

You should read the following discussion and analysis of the financial
condition and results of operations of Metrocall together with the Consolidated
Financial Statements and the notes to the Consolidated Financial Statements
included elsewhere in this Annual Report and the description of Metrocall's
business in "Business."

OVERVIEW

Metrocall is a leading provider of local, regional and national paging and
advanced wireless data messaging services. Through its nationwide wireless
network, Metrocall provides messaging services to over 1,000 U.S. cities,
including the top 100 SMSAs. Since 1993, Metrocall's subscriber base has
increased from less than 250,000 to nearly 6.3 million. Metrocall has achieved
this growth through a combination of internal growth and a program of mergers
and acquisitions. As of December 31, 2000, Metrocall was the second largest
messaging company in the United States based on the number of subscribers.

Metrocall derives a majority of its revenues from fixed, periodic (usually
monthly) fees, generally not dependent on usage, charged to subscribers for
paging and wireless data services. While a subscriber continues to use its
services, operating results benefit from this recurring stream with minimal
requirements for incremental selling expenses or fixed costs. Metrocall has
grown internally by broadening its distribution network and expanding its target
market to capitalize on the growing appeal of messaging and other wireless
products and services, to gain access to different market segments and to
increase the penetration and utilization of our nationwide network. Since
January 1, 1996, Metrocall has added approximately 2.6 million new subscribers
through internal growth and 3.7 million through mergers and acquisitions.

RECENT DEVELOPMENTS

Metrocall's traditional one-way paging operations account for more than 90%
of its revenues and operating cash flow. Although Metrocall experienced growth
in the number of one-way subscribers in 2000, this growth was primarily achieved
through Metrocall's indirect distribution channels, which are characterized by
lower ARPU. As discussed below, service, rent and maintenance revenues in
Metrocall's traditional operations declined by approximately $53.0 million
during 2000, and Metrocall's operating cash flow declined by approximately $27.8
million. Metrocall expects that service, rent and maintenance revenues of its
traditional paging operations will continue to decline in 2001.

During 2000, Metrocall began to provide advanced wireless data and
messaging services. At December 31, 2000, approximately 112,500 subscribers
received these services, and, in 2000, these services generated approximately
$9.1 million in service, rent and maintenance revenues, which only partially
offset the $53.0 million decline in traditional paging revenues discussed above.
Metrocall's advanced messaging services are characterized by higher ARPU, but
also higher operating and capital costs, than traditional paging services.
Metrocall will seek to expand its advanced messaging data operations during
2001, if its financial resources are adequate to continue its investment in
wireless data devices.

Since the beginning of 2001, traditional paging revenues have continued to
decline. The decline in revenues and operating cash flows and the impact of
recurring net losses have placed pressures on Metrocall's financial condition
and liquidity position. Metrocall expects that cash generated from operations
will be sufficient in 2001 to fund operations, capital expenditures and interest
on its senior secured bank debt; however, operations will not generate enough
cash also to pay interest on Metrocall's subordinated debt. It is unlikely that
Metrocall will be able to increase its operating cash flow for the three months
ended March 31, 2001 to the level currently required by covenants in its senior
bank credit facility. Moreover, Metrocall will be unable to access the credit
facility for additional borrowings due to prohibitions in the facility and in
the indentures governing Metrocall's senior subordinated notes. In light of
current conditions in the financial markets, Metrocall believes it is unlikely
that it can attract new debt or equity financing.

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21

In light of these circumstances, Metrocall has suspended the payments of
interest due on March 15, 2001 to holders of its 11% senior subordinated notes
(11% notes) and on April 1, 2001 to holders of its 10 3/8% senior subordinated
notes (10 3/8% notes). The aggregate payments due under these notes were
approximately $19.5 million. Metrocall's Board of Directors approved this action
in order to provide cash to finance operations and thereby to generate operating
cash flow and preserve value for stakeholders. These defaults will permit
holders of the subordinated notes in question to accelerate this indebtedness
after expiration of a 30 day grace period, or upon acceleration of other series
of subordinated notes or bank debt.

In addition, Metrocall's bank lenders have delivered a notice of default
based on the failure to make the subordinated debt interest payments. The bank
lenders have reserved their rights with respect to this default, and, absent a
waiver or other agreement by the banks, could accelerate Metrocall's bank debt.
In the event any lender seeks to accelerate its indebtedness, Metrocall likely
would file for protection under chapter 11 of the Bankruptcy Code. As a result
of the suspension of interest payments on the senior subordinated notes, notice
of default on bank debt and the likely non-compliance with bank loan covenants,
Metrocall has classified all outstanding indebtedness under its bank credit
facility and its senior subordinated notes as a current liability at December
31, 2000.

Metrocall believes that its operations can continue to generate positive
operating cash flow before payment of subordinated debt interest. Even with
decreasing revenues, Metrocall's operating cash flow in 2000 was $128.7 million.
Metrocall believes further that, given time and sufficient funds to acquire
necessary inventory, it can increase revenues from two-way messaging and thereby
offset declines in traditional one-way revenues. Metrocall expects that it will
generate enough operating cash flow to service its senior secured bank debt,
which totalled $133.0 million at March 29, 2001. However, at current expected
levels, operating cash flow cannot support Metrocall's approximately $625.5
million in outstanding senior subordinated notes. Nonetheless, Metrocall
believes its level of operating cash flow can provide a basis for a
restructuring of its balance sheet that will better enable it to generate
increases in future operating cash flow and improvement in its financial
condition and liquidity position. Any such restructuring is likely to result in
a substantial reduction in the aggregate principal amount of Metrocall's
subordinated notes, which could be substantially dilutive to existing holders of
its preferred and common stock, or result in cancellation of the preferred and
common stock altogether.

Accordingly, Metrocall decided to seek to restructure its outstanding debt,
either in conjunction with a strategic transaction or on a standalone basis. It
has engaged Lazard Freres and Deutsche Banc Alex. Brown to advise it with
respect to evaluating its strategic and financial options, including a strategic
business combination and/or potential debt restructuring. In addition, Metrocall
retained Banc of America Securities and Wit Soundview to advise it with respect
to potential strategic transactions. On April 2, 2001, Metrocall executed an
agreement with Weblink Wireless, Inc. This agreement provides for the merger of
Weblink and Metrocall in conjunction with restructuring of each party's
respective outstanding indebtedness. The merger and restructuring will be
implemented by each party filing for protection under chapter 11 of the
Bankruptcy Code and obtaining confirmation of plans of reorganization.
Completion of the transaction is subject to a number of conditions, including
regulatory approvals, obtaining post-petition financing, and confirmation of the
parties respective plans of reorganization. There is no assurance that the
parties will be able to obtain the requisite financing on acceptable terms or
that the creditors of the respective parties will approve their plans of
reorganization.

Metrocall's deteriorating financial results and lack of additional
liquidity indicate that it may not be able to continue as a going concern.
Metrocall's ability to continue as a going concern is dependent upon several
factors, including, but not limited to, the continued non-demand for immediate
payment of outstanding indebtedness by the holders of its subordinated notes and
the bank lenders under its credit facility agreement and Metrocall's ability (i)
to generate sufficient cash flows to meet its obligations, other than the cash
interest payments due under its subordinated notes, on a timely basis, (ii) to
obtain additional or restructured financing, including potential
debtor-in-possession borrowings if it is required to file for protection under
Chapter 11, (iii) to continue to obtain uninterrupted supplies and services from
its vendors and to retain employees, and (iv) to reduce capital expenditures and
operating expenses.

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SIGNIFICANT EQUITY TRANSACTIONS

During 2000, Metrocall completed several transactions that resulted in the
issuance of approximately 45.2 million newly issued shares of its common stock.
An explanation of each of these transactions follows:

Exchange of Series C Preferred: On March 17, 2000, Metrocall and AT&T
Wireless, as the sole holder of Metrocall's Series C Convertible Preferred
Stock, exchanged 10,378 shares of Series C Preferred, representing all of the
issued and outstanding shares of the Series C Preferred, into 13,250,000 shares
of Metrocall common stock.

AT&T Wireless has limited rights to sell all or a portion of the shares it
receives from the exchange at any time more than six months after consummation
of the exchange in privately negotiated sales to any person or group that
Metrocall and AT&T Wireless has not designated as restricted and subject to
Metrocall's right of negotiation and the transferee's consent to be bound by the
exchange agreement between AT&T Wireless and Metrocall. In addition, AT&T
Wireless may sell all or portion of the shares of Metrocall common stock it
received from the exchange at any time more than twelve months after
consummation of the exchange in one or more sales in any available
over-the-counter market for the common stock and/or through any exchange on
which the common stock is then traded, subject to the following permitted period
sales: 20% beginning March 17, 2001; an additional 20% beginning September 17,
2001; an additional 20% beginning March 17, 2002; and all remaining shares of
common stock beginning September 17, 2002. Metrocall registered the shares of
common stock issued in the exchange for resale during 2000.

Common Stock Investments: On March 17, 2000, Metrocall issued 7.8 million
shares of its common stock to each of three equity investors: PSINet Inc.,
Aether Systems, Inc., and an affiliate of Hicks, Muse, Tate & Furst,
Incorporated (HMT&F). Each investor paid $2.19 per share or a total of
approximately $17.0 million each or $51.3 million in the aggregate. HMT&F also
acquired options to purchase additional shares of common stock. Options to
purchase 8,333,333 shares of common stock expired on March 17, 2001. Options to
purchase additional shares in connection with certain transactions remain in
effect. See Note 7 to the Financial Statements. Each of the three entities has
the right to nominate a representative to Metrocall's Board of Directors.
Metrocall used the proceeds from the sale of its common stock for general
corporate purposes.

Each of the three equity investors agreed to certain limitations through
March 17, 2002. These limitations include the following: each investor will not,
directly or indirectly, (i) increase its beneficial ownership of any securities
or rights or options to acquire beneficial ownership of any securities of
Metrocall, except by way of stock dividends, stock splits or distributions made
by Metrocall to holders of common stock (Aether may acquire up to 15% of the
issued and outstanding common stock, and HMT&F may acquire up to 15% of the
issued and outstanding common stock, which 15% ownership limit does not include
the shares issuable under or purchased pursuant to the Option Agreement); (ii)
make any public announcement with respect to or submit to Metrocall any proposal
for the acquisition of securities of Metrocall or for any merger, consolidation,
or business combination involving Metrocall or its affiliates or for any
purchase of a substantial portion of the assets of Metrocall or its affiliates;
(iii) make, or in any way participate in, any "solicitation" of "proxies" to
vote any voting securities of Metrocall or become a participant in any "election
contest" (as those terms are defined in Regulation 14A under the Securities
Exchange Act of 1934, as amended (the Exchange Act)); (iv) form, join, or in any
way participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any voting securities of Metrocall; or (v) seek to
influence or influence the management or policies of Metrocall, with the
exception of the investor's designee on the Board of Directors may act to take
action in his capacity as a director of Metrocall.

Exchange of Senior Subordinated Notes. During 2000, Metrocall issued
8,619,537 shares of its common stock in exchange for $73.372 million aggregate
principal amount of its outstanding senior subordinated notes. As a result of
the exchanges, Metrocall has reduced its annual interest costs by approximately
$7.7 million.

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The aggregate principal amounts of senior subordinated notes retired by notes
series is reflected below (dollars in thousands):

11 7/8% senior subordinated notes due 2005.................. $ 7,032
10 3/8% senior subordinated notes due 2007.................. 15,030
9 3/4% senior subordinated notes due 2007................... 28,660
11% senior subordinated notes due 2008...................... 22,650
-------
$73,372
=======

Metrocall conducted these exchanges without registration under the
Securities Act of 1933 in reliance upon the exemption in Section 3(a)(9) of that
act. However, because the notes for which they were exchanged were registered,
the common stock issued in the exchanges is freely tradable. Metrocall
recognized an extraordinary gain for the difference between the book value of
the senior subordinated notes exchanged (including a pro rata portion of
deferred financing costs) and the fair value of the common shares issued of
$22.9 million.

RESULTS OF OPERATIONS

The definitions below will be helpful in understanding the discussion of
Metrocall's results of operations.

- Service, rent and maintenance revenues: include primarily monthly,
quarterly, semi-annually and annually billed recurring revenue, not
generally dependent on usage, charged to subscribers for paging and
related services such as voice mail and pager repair and replacement.
Service, rent and maintenance revenues also include revenues derived from
cellular and long-distance services.

- Net revenues: include service, rent and maintenance revenues and sales
of customer owned and maintained (COAM) pagers less net book value of
products sold.

- Service, rent and maintenance expenses: include costs primarily related
to the management, operation and maintenance of Metrocall's network
systems and infrastructure.

- Selling and marketing expenses: include salaries, commissions and
administrative costs of our sales force and related marketing and
advertising expenses.

- General and administrative expenses: include costs related to executive
management, accounting, office telephone, management information systems,
facilities and employee benefits.

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH DECEMBER 31, 1999

The following table sets forth the amounts of revenues and the percentage
of net revenues (defined as total revenues less the net book value of products
sold) represented by certain items in Metrocall's Consolidated Statements of
Operations and certain other information for fiscal years 2000 and 1999:

% OF % OF INCREASE OR
REVENUES 1999 REVENUES 2000 REVENUES (DECREASE)
-------- ---------- -------- ---------- -------- -----------

Service, rent and maintenance............. $ 548,700 96.0 $ 504,800 96.2 $(43,900)
Product sales............................. 61,487 10.8 57,183 10.9 (4,304)
---------- ----- ---------- ----- --------
Total revenues.................. 610,187 106.8 561,983 107.1 (48,204)
Net book value of products sold........... (39,071) (6.8) (37,509) (7.1) 1,562
---------- ----- ---------- ----- --------
Net revenues......................... $ 571,116 100.0 $ 524,474 100.0 $(46,642)
========== ===== ========== ===== ========
ARPU...................................... $ 7.86 $ 6.92 $ (0.94)
Number of Subscribers..................... 5,927,939 6,254,373 326,434

Service, rent and maintenance revenues. Service, rent and maintenance
revenues decreased approximately $43.9 million, or 8.0%, from $548.7 million in
1999 to $504.8 million in 2000. The decrease in net

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revenues was primarily the result of a change in subscriber mix to one more
heavily weighted toward the indirect distribution channels, which are
characterized by lower ARPU. Since December 31, 1999, the total number of
subscribers receiving airtime services has increased by 326,434. Of this
increase, approximately 50,000 new subscribers were added with the acquisition
of NationPage in May 2000. The majority of the remaining increase occurred in
Metrocall's reseller and strategic alliance distribution channels. In addition,
since December 31, 1999, Metrocall has also experienced a 26,700 decline in the
number of subscribers in its direct distribution channels, channels that are
characterized by higher ARPU. Metrocall expects that the service, rent and
maintenance revenues of its traditional paging operations will continue to be
affected by the shift in distribution mix that occurred during 1999 and 2000.
Revenues and ARPU are expected to decrease within its traditional operations
during 2001 as two-way messaging products and other competing messaging products
and technologies attract existing subscribers. Given these circumstances,
Metrocall cannot assure you that internal growth in its traditional one-way
subscriber base will continue, and declines in this base are possible. Metrocall
expects to focus its direct sales and marketing resources in 2001 to concentrate
on selling advanced wireless data and messaging products and airtime services to
existing and new subscribers. These products and services are generally
characterized by higher ARPU than Metrocall's current ARPU. Metrocall's ARPU for
traditional paging services decreased $0.94 from $7.86 per unit in 1999 to $6.92
per unit in 2000.

Product sales. Product sales decreased approximately $4.3 million from
$61.5 million in 1999 to $57.2 million in 2000 and increased as a percentage of
net revenues from 10.8% in 1999 to 10.9% in 2000. This decrease in product sales
was primarily the result of a $6.1 million decline associated with the
divestiture of Metrocall's Electronic Tracking System division, which occurred
in November 1999, offset by an increase in unit sales of pagers and advanced
messaging devices during the quarter.

The following tables set forth the amounts of operating expenses and
related percentages of net revenues represented by certain items in Metrocall's
Consolidated Statements of Operations and certain other information for fiscal
years 1999 and 2000.

% OF INCREASE OR
OPERATING EXPENSES 1999 REVENUES 2000 % OF REVENUES (DECREASE)
------------------ -------- ------------- -------- ------------- -----------

Service, rent and maintenance........ $146,961 25.7 $120,312 22.9 $(26,649)
Selling and marketing................ 97,051 17.0 103,413 19.7 6,362
General and administrative........... 170,592 29.9 172,017 32.8 1,425
Depreciation......................... 96,984 17.0 124,515 23.7 27,531
Amortization......................... 210,359 36.8 175,803 33.5 (34,556)
-------- ----- -------- ----- --------
$721,947 126.4 $696,060 132.6 $(25,887)
======== ===== ======== ===== ========

OPERATING EXPENSES PER UNIT IN SERVICE 1999 2000 INCREASE OR (DECREASE)
-------------------------------------- ----- ----- ----------------------

Monthly service, rent and maintenance....................... $2.11 $1.65 $(0.46)
Monthly selling and marketing............................... 1.39 1.42 0.03
Monthly general and administrative.......................... 2.45 2.36 (0.09)
----- ----- ------
Average monthly operating expense........................... $5.95 $5.43 $(0.52)
===== ===== ======

Overall in 2000, Metrocall experienced a decrease in average monthly
operating costs per unit in service (operating expenses per unit before
depreciation and amortization) of $0.52 per unit. Each operating expense is
discussed separately below.

Service, rent and maintenance expenses. Service, rent and maintenance
expenses decreased approximately $26.7 million from $147.0 million in 1999 to
$120.3 million in 2000 and decreased as a percentage of revenues from 25.7% in
1999 to 22.9% in 2000. Monthly service, rent and maintenance expense per unit of
$1.65 in 2000 has decreased $0.46 per unit from $2.11 in 1999. Service, rent and
maintenance expenses have

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decreased in amount and as a percentage of revenues primarily due to a decrease
in telecommunication expenses as a result of renegotiated telecommunications
contracts, deconstruction of redundant transmitter and antenna sites and other
cost reduction initiatives. Metrocall expects that its service, rent and
maintenance expenses will increase in 2001 as a result of costs incurred to
provide advanced wireless data and messaging to a greater number of subscribers
but may be partially offset by a decrease in service, rent and maintenance
expenses incurred in its traditional operations due to anticipated tower
deconstructions and a fewer number of traditional subscribers.

Selling and marketing expenses. Selling and marketing expenses increased
approximately $6.4 million from $97.0 million in 1999 to $103.4 million in 2000
and increased as a percentage of net revenues from 17.0% in 1999 to 19.7% in
2000. The overall expense increase was primarily the result of an increase in
personnel costs related to an increase in the employee sales base and
advertising costs related to launching advanced messaging services. Selling and
marketing expenses increased as a percentage of revenues during 2000 as a result
of the decline in revenues. Monthly selling and marketing expenses per unit has
increased $0.03 from $1.39 per unit in 1999 to $1.42 per unit in 2000 as a
result of these. Metrocall expects that selling and marketing expenses may
increase slightly during 2001 as it promotes its advanced messaging services.

General and administrative expenses. General and administrative expenses
increased approximately $1.4 million from $170.6 million in 1999 to $172.0
million in 2000 and increased as a percentage of net revenues from 29.9% in 1999
to 32.8% in 2000. The increases in general and administrative expenses were
primarily the result of approximately $4.0 million in legal, financing, advisory
and other costs incurred in connection with Metrocall's efforts to present a
competing reorganization plan and merger proposal for PageNet, which was offset
by a decrease in contract services of $1.5 million and medical insurance of $1.5
million. Monthly general and administrative expenses per unit decreased by $0.09
from $2.45 in 1999 to $2.36 per unit in 2000 as a result of these events and the
increase in units outstanding.

Depreciation expense. Depreciation expense increased approximately $27.5
million from $97.0 million in 1999 to $124.5 million in 2000. Metrocall changed
the depreciable lives of its subscriber devices purchased after June 30, 2000
from three years to two years. This change resulted from Metrocall's
expectations regarding future usage periods for subscriber devices considering
current and projected technological advances and customer desires for new
messaging technology. This change resulted in an increase in depreciation
expense of $7.8 million in fiscal year 2000. The remaining increase in
depreciation expense was the result of depreciation expenses incurred on fixed
assets acquired in the NationPage acquisition and the impact of 2000
depreciation on 1999 and 2000 additions to other property, plant and equipment
and computer hardware and software.

Amortization expense. Amortization expense related to the amortization of
identified intangible assets of companies acquired by Metrocall decreased
approximately $34.6 million from $210.4 million in 1999 to $175.8 million in
2000. This decrease was primarily the result of a reduction in intangibles due
to certain adjustments to the purchase accounting for prior business
combinations resulting from revisions to required valuation allowances on net
operating loss carryforwards partially offset by amortization of intangibles
recorded in connection with the NationPage acquisition. Amortization expense was
comprised of the following elements in 1999 and 2000:

AMORTIZATION DECEMBER 31, DECEMBER 31,
AMORTIZATION EXPENSES PERIOD 1999 2000 DECREASE
--------------------- ------------ ------------ ------------ --------

Subscriber lists............................... 3 years $144,349 $123,442 $(20,907)
FCC licenses................................... 10 years 36,023 28,899 (7,124)
Goodwill....................................... 10 years 22,869 17,247 (5,622)
Other.......................................... Various 7,118 6,215 (903)
-------- -------- --------
$210,359 $175,803 $(34,556)
======== ======== ========

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Amortization expenses in 2001 are expected to decrease by approximately
$80.0 million as subscriber list amounts associated with Metrocall's acquisition
of ProNet, Inc in 1997 were fully amortized as of December 31, 2000.

INCREASE OR
OTHER 1999 2000 (DECREASE)
----- --------- --------- -----------

Interest and other income, net.............................. $ 407 $ (2,450) $ (2,857)
Interest expense............................................ (85,115) (84,169) (946)
Income tax benefit.......................................... 63,055 20,775 (42,280)
Extraordinary item, net of tax effect....................... -- 22,876 22,876
Net loss.................................................... (172,484) (214,554) 42,070
Preferred dividends......................................... (16,462) (9,816) (6,646)
Series C Preferred exchange inducement...................... -- (6,308) 6,308
Gain on repurchase of preferred stock....................... 2,208 -- (2,208)
EBITDA...................................................... 156,512 128,732 (27,780)

Interest expense. Interest expense decreased approximately $0.9 million
from $85.1 million in 1999 to $84.2 million in 2000. The decrease was a result
of lower average debt balances during 2000. The average balance of Metrocall's
credit facility during 2000 was $102.7 million and the average principal amount
outstanding on the senior subordinated notes was $657.1 during 2000. Average
debt balances were approximately $31.2 million lower in 2000 than in 1999
primarily as a result of the exchange of senior subordinated notes into common
stock in 2000, but were partially offset by higher balances outstanding under
the credit facility. Total debt decreased $15.7 million from $777.6 million in
1999 to $761.9 million in 2000.

Income tax benefit. Income tax benefit decreased approximately $42.3
million from $63.1 million in 1999 to $20.8 million in 2000. The decrease in the
income tax benefit was primarily the result of a $62.5 million valuation
allowance provided against Metrocall's deferred tax assets in 2000.

Extraordinary item. Extraordinary item represents the net extraordinary
gain recorded as a result of the exchange of $73.4 million aggregate principal
amount of Metrocall's senior subordinated notes into Metrocall's common stock.
The $22.9 million net gain represented the difference between the carrying value
of the notes at the time of exchange and the fair value of the common stock
issued less the write-off of a portion of the deferred financing costs.

Net loss. Metrocall's net loss increased approximately $42.1 million from
$172.5 million in 1999 to $214.6 million in 2000. The increase in net loss was
primarily the result of the decrease in revenues as a result of the reduction in
ARPU, the decrease in the income tax benefit partially offset by the decrease in
operating expenses and gain from the exchange of senior subordinated notes into
common stock. Metrocall expects net losses to continue in future periods.

Preferred dividends. Preferred dividends decreased approximately $6.6
million from $16.4 million in 1999 to $9.8 million in 2000. The decrease was
primarily the result of the cessation of accrual dividends on the Series C
Preferred in February 2000 as a result of the exchange of the Series C Preferred
for Metrocall common stock.

Series C Preferred exchange inducement. In February 2000, Metrocall and
the holder of all the issued and outstanding shares of Metrocall's Series C
Preferred reached an agreement in which the holder of the Series C Preferred
agreed to exchange such shares for 13.25 million shares of Metrocall common
stock. The number of shares of common stock issued by Metrocall in the
transaction was approximately 3.1 million shares in excess of what Metrocall
would have issued had the holder elected to convert the Series C Preferred based
on its original conversion provisions. The $6.3 million inducement expense
represents the fair market value of the 3.1 million additional shares of common
stock that were issued by Metrocall. At the time of the transaction, the
carrying value of the Series C Preferred was approximately $105.4 million and
represented an obligation to Metrocall because the holder had the option to
require Metrocall to redeem the Series C Preferred in cash at the end of its
maturity period in 2010. Metrocall recorded the issuance of common stock and the
reduction of the $105.4 million carrying value of the Series C Preferred as an
increase to stockholders'

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equity, which represented an excess of $78.6 million over the fair value of the
common stock issued by Metrocall of $26.8 million.

Gain on repurchase of preferred stock. In January 1999, Metrocall
repurchased and retired all of the outstanding shares of its Series B Preferred
for $16.2 million, representing a $2.2 million discount from its carrying value.
The $2.2 million had been reflected as a gain for purposes of determining
Metrocall's loss attributable to common stockholders in 1999.

EBITDA. The decrease in EBITDA in 2000 of approximately $27.8 million was
primarily the result of the decrease in revenues in 2000 partially offset by the
decrease in service, rent and maintenance, selling and marketing and general and
administrative expenses. Metrocall's EBITDA margin decreased from 27.4% in 1999
to 24.5% in 2000.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH DECEMBER 31, 1998

The following table sets forth the amounts of revenues and the percentage
of net revenues (defined as total revenues less the net book value of products
sold) represented by certain items in Metrocall's Consolidated Statements of
Operations and certain other information for fiscal years 1999 and 1998.

$ OF % OF
REVENUES 1998 REVENUES 1999 REVENUES INCREASE
-------- ---------- -------- ---------- -------- --------

Service, rent and maintenance............. $ 416,352 96.2 $ 548,700 96.0 $132,348
Product sales............................. 48,372 11.1 61,487 10.8 13,115
---------- ----- ---------- ----- --------
Total revenues....................... 464,724 107.3 610,187 106.8 145,463
Net book value of products sold........... (31,791) (7.3) (39,071) (6.8) (7,280)
---------- ----- ---------- ----- --------
Net revenues......................... $ 432,933 100.0 $ 571,116 100.0 138,183
========== ===== ========== ===== ========
ARPU...................................... $ 7.57 $ 7.86 $ 0.29
Number of Subscribers..................... 5,659,550 5,927,939 268,389

Service, rent and maintenance revenues. Service, rent and maintenance
revenues increased approximately $132.3 million, or 31.8%, from $416.4 million
in 1998 to $548.7 million in 1999. The increase in revenues was primarily due to
the 268,389 increase in the number of subscribers receiving Metrocall's paging
and other wireless messaging services. Metrocall's service, rent and maintenance
revenue per unit ("ARPU") for paging services increased $0.29 from $7.57 per
unit in 1998 to $7.86 per unit. This increase was primarily the result of the
high premium, value-added service characteristics of the subscriber base
acquired in the AMD acquisition in October 1998, for which Metrocall provided
services for an entire fiscal year. Service, rent and maintenance revenues also
increased from the continued migration of subscribers to alphanumeric paging
devices and selected rate increases partially offset by a reduction in
subscribers in direct distribution channels and growth in the strategic
alliances and reseller indirect distribution channels, which are characterized
by lower ARPU and lower operating costs.

Product sales revenues. Product sales revenues increased approximately
$13.1 million from $48.4 million to $61.5 million in 1999 and decreased as a
percentage of net revenues from 11.1% in 1998 to 10.8% in 1999. The increase in
product sales was the result of the operations of AMD being included in
Metrocall's operations for a full fiscal year. Net book value of products sold
increased approximately $7.3 million from $31.8 million in 1998 to $39.1 million
in 1999 and decreased as a percentage of net revenues from 7.3% in 1998 to 6.8%
in 1999. On November 1, 1999 Metrocall completed the sale of electronic tracking
business, therefore, product sales revenues generated from this business were
only recognized through October 1999. Product sales attributable to the
electronic tracking business were approximately $6.0 million through October 31,
1999, which represented a decrease of approximately $200,000 in 1999 from the
twelve months ended December 31, 1998.

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The following tables set forth the amounts of operating expenses and
related percentages of net revenues represented by certain items in Metrocall's
Consolidated Statements of Operations and certain other information for fiscal
years 1998 and 1999.

% OF % OF
OPERATING EXPENSES 1998 REVENUES 1999 REVENUES INCREASE
------------------ -------- ------------- -------- ------------- --------

Service, rent and maintenance........ $115,432 26.7 $146,961 25.7 $ 31,529
Selling and marketing................ 73,546 17.0 97,051 17.0 23,505
General and administrative........... 121,644 28.1 170,592 29.9 48,948
Depreciation......................... 75,111 17.4 96,984 16.9 21,873
Amortization......................... 159,837 36.9 210,359 36.9 50,522
-------- ----- -------- ----- --------
$545,570 126.1 $721,947 126.4 $176,377
======== ===== ======== ===== ========

INCREASE
OPERATING EXPENSES PER UNIT IN SERVICE 1998 1999 OR (DECREASE)
-------------------------------------- ----- ----- -------------

Monthly service, rent and maintenance....................... $2.12 $2.11 $(0.01)
Monthly selling and marketing............................... 1.35 1.39 0.04
Monthly general and administrative.......................... 2.24 2.45 0.21
----- ----- ------
Average monthly operating expense........................... $5.71 $5.95 $ 0.24
===== ===== ======

Overall in 1999, Metrocall experienced an increase in average monthly
operating costs per unit in service (operating expenses per unit before
depreciation and amortization) of $0.24 per unit. Each operating expense is
discussed separately below.

Service, rent and maintenance expenses. Service, rent and maintenance
expenses increased approximately $31.5 million from $115.4 million in 1998 to
$147.0 million in 1999 and decreased as a percentage of revenues from 26.7% in
1998 to 25.7% in 1999. Approximately $31.7 million of this increase was the
result of expenses incurred by the operations of AMD, which was acquired in
October 1998 and therefore not included in Metrocall's operating results until
the fourth quarter of 1998. The expenses incurred were comprised primarily of
third-party dispatching, telecommunications expenses and tower site rents.
Monthly service, rent and maintenance expense per unit of $2.11 in 1999
decreased $0.01 per unit from $2.12 in 1998. Service, rent and maintenance
expenses have decreased as a percentage of revenues primarily due to a decrease
in telecommunication expenses as a result of renegotiated telecommunications
contracts, deconstruction of redundant tower sites and other cost reduction
initiatives.

Selling and marketing expenses. Selling and marketing expenses increased
approximately $23.5 million from $73.5 million in 1998 to $97.1 million in 1999
and remained flat as a percentage of net revenues at 17%. Approximately $17.6
million of the increase in selling and marketing expenses was attributable to
increased personnel costs related to the acquired AMD sales force. Exclusive of
the AMD acquisition, selling and marketing expenses have increased as a result
of an increase in the sales force in existing markets. Monthly selling and
marketing costs per unit increased as a result of the events described above.

General and administrative expenses. General and administrative expenses
increased approximately $48.9 million from $121.6 million in 1998 to $170.6
million in 1999 and increased as a percentage of net revenue from 28.1% in 1998
to 29.9% in 1999. Approximately $24.3 million of the increase in general and
administrative expenses was attributable to the AMD acquisition primarily
representing expenses incurred for support staff, personnel costs and facilities
rents. Exclusive of the AMD acquisition, general and administrative expenses
increased $24.6 million, which was primarily the result of an increase in rent
and facility costs of approximately $3.0 million, technical consulting costs
primarily associated with year 2000 readiness efforts of $6.1 million, personnel
costs of $5.1 million and other expenses incurred of $10.4. Monthly general and
administrative expenses per unit increased by $0.21 from $2.24 in 1998 to $2.45
in 1999 as a result of these events.

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Depreciation expense. Depreciation expense increased approximately $21.9
million from $75.1 million in 1998 to $97.0 million in 1999. This increase was
primarily the result of depreciation expense recognized on subscriber paging
equipment and other plant and equipment acquired in the AMD acquisition and the
impact of 1999 depreciation on 1998 and 1999 additions to other property, plant
and equipment and computer hardware and software.

Amortization expense. Amortization expense related to the amortization of
identified intangible assets of companies acquired by Metrocall increased
approximately $50.5 million from $159.8 million in 1998 to $210.4 million in
1999. This increase was primarily as a result of the amortization of intangibles
recorded in connection with the AMD acquisition. Amortization expense was
comprised of the following elements in 1998 and 1999:

AMORTIZATION DECEMBER 31, DECEMBER 31,
AMORTIZATION EXPENSES PERIOD 1998 1999 INCREASE
--------------------- ------------ ------------ ------------ --------

Subscriber lists................................ 3 years $102,652 $144,349 $41,697
FCC licenses.................................... 10 years 33,189 36,023 2,834
Goodwill........................................ 10 years 21,354 22,869 1,515
Other........................................... Various 2,642 7,118 4,476
-------- -------- -------
$159,837 $210,359 $50,522
======== ======== =======

INCREASE
OTHER 1998 1999 OR (DECREASE)
----- --------- --------- -------------

Interest and other income net............................. $ 849 $ 407 $ (442)
Interest expense.......................................... (64,448) (85,115) 20,667
Income tax benefit........................................ 47,094 63,055 15,961
Net loss.................................................. (129,142) (172,484) 43,342
Preferred dividends....................................... (11,767) (16,462) 4,695
Gain on repurchase of preferred stock..................... -- 2,208 2,208
EBITDA.................................................... 122,311 156,512 34,201

Interest expense. Interest expense increased approximately $20.7 million
from $64.4 million in 1998 to $85.1 million in 1999. The increase in interest
expense in 1999 was the result of higher average debt balances outstanding
during the fiscal year. Total debt increased $34.3 million from $743.3 million
in 1998 to $777.6 million in 1999. Average debt balances were $151.8 million
greater in 1999 than in 1998 as a result of debt incurred in connection with the
AMD acquisition in October 1998, the repurchase of the Series B preferred in
January 1999 and working capital requirements.

Income tax benefit. The increase in the income tax benefit in 1999 of
approximately $16.0 million was the result of a full year's impact of the tax
benefit recorded on the amortization of non-goodwill related intangible assets
generated from the AMD acquisition.

Net loss. Metrocall's net loss increased approximately $43.3 million from
$129.1 million in 1998 to $172.4 million in 1999. The increase in net loss was
primarily the result of the increase in depreciation, amortization and interest
expenses in 1999 offset by the increase in EBITDA.

Preferred dividends. The increase in preferred dividends of $4.7 million
was the result of higher dividends paid to the holders of the Series A Preferred
due to the compounding nature of the preferred stock and a full year's dividend
distribution to the holder of the Series C Preferred. These dividend payments
were offset by the impact of the repurchase of the Series B Preferred, which
occurred in January 1999.

Gain on Series B Repurchase. In January 1999, Metrocall repurchased and
retired all of the outstanding shares of its Series B Preferred for $16.2
million, representing a $2.2 million discount from its carrying value. The $2.2
million has been reflected as a gain for purposes of determining Metrocall's
loss attributable to common stockholders.

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EBITDA. The increase in EBITDA in 1999 of approximately $34.2 million was
primarily the result of the increase in revenues in 1999 offset to a lesser
extent the increase in operating expenses. Metrocall's EBITDA margin decreased
from 28.3% in 1998 to 27.4% in 1999.

INFLATION

Inflation is presently not a material factor affecting Metrocall's
business. Traditional one-way paging system equipment and operating costs have
not increased and one-way pager costs have declined significantly in recent
years. This reduction in costs has been reflected in lower prices charged to our
subscribers. General operating expenses such as salaries, employee benefits and
occupancy costs are, however, subject to inflationary pressures.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

During the three years ended December 31, 2000, Metrocall's operations have
required significant funding, primarily to support mergers and acquisitions and
capital expenditures for paging infrastructure and equipment requirements.
Metrocall has met its funding requirements with cash generated from operating
activities, borrowings under its credit facilities, proceeds from senior
subordinated notes offerings and the sale of common stock.

As of March 29, 2001, Metrocall has approximately $20.0 million in cash.
Metrocall believes that this cash, plus cash expected to be generated from
operations, should be sufficient to meet its financial obligations and to fund
capital expenditures during 2001, except for payments of interest on Metrocall's
senior subordinated notes. As discussed above in "Recent Developments,"
Metrocall intends to seek to restructure its outstanding indebtedness, which may
involve a filing under chapter 11 of the Bankruptcy Code. Metrocall has
commenced discussions with its bank lenders regarding use of cash collateral in
a chapter 11 proceeding. While Metrocall believes that its cash flow would be
adequate to fund its operations in a chapter 11 proceeding without additional
borrowings, Metrocall may seek to obtain a debtor-in-possession loan facilility.
Metrocall is also initiating additional measures to further reduce capital
expenditures and operating expenses.

Cash Flows. Metrocall's cash flows from operating activities decreased
approximately $24.7 million from $64.5 million for the twelve months ended
December 31, 1999 to $39.8 million for the twelve months ended December 31,
2000. Approximately $27.8 million of the decrease was attributable to the
decrease in EBITDA for the twelve-month period ended December 31, 2000.

Net cash used in investing activities increased approximately $35.1 million
from $88.2 million for the twelve months ended December 31, 1999 to $123.3
million for the twelve months ended December 31, 2000. The net increase was the
result of an increase of $12.5 million in cash used for business acquisitions
and an increase of $14.7 million in cash required for capital expenditures
during 2000. Capital expenditures during 2000 included approximately $99.4
million for subscriber equipment on hand and net increases to the rental
subscriber base. The balance of capital expenditures was primarily for network
and infrastructure development and information systems and computer related
equipment. Total capital expenditures for fiscal year 2001 are expected to
approximate $90.0 million. However, capital expenditures may be limited to a
lower amount due to Metrocall's liquidity position. A major component of
Metrocall's capital expenditure requirements is for acquisition of equipment for
resale to customers. Two-way equipment is generally more expensive than
traditional one-way equipment, and growth in this business may contribute to
higher capital expenditure requirements. However, if Metrocall reduces these
purchases, that may affect its ability to increase two-way subscribers and
revenues.

Net cash provided by financing activities increased approximately $89.4
million from $18.0 million for the twelve months ended December 31, 1999 to
$107.4 million for the twelve months ended December 31, 2000. During fiscal year
2000, Metrocall borrowed an additional $58.0 million under its credit facility
primarily to fund working capital and capital expenditure requirements.
Metrocall also raised $51.3 million through the issuance of 23.4 million shares
of common stock which was used for general corporate purposes during 2000.

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Total Debt. At December 31, 2000 and 1999, debt consisted of:

INCREASE
TOTAL DEBT 1999 2000 OR (DECREASE)
---------- -------- -------- -------------

Borrowings under the credit facility........................ $ 75,000 $133,000 $ 58,000
Senior subordinated notes................................... 698,608 625,551 (73,057)
Capital leases and other debt............................... 4,019 3,376 (643)
-------- -------- --------
Total debt........................................ $777,627 $761,927 $(15,700)
======== ======== ========

Borrowings, repayments and compliance under the credit facility. During
2000, net borrowings under Metrocall's credit facility increased by $58.0
million, which represented gross borrowings of $67.5 million, net of repayments
of $9.5 million.

Subject to certain conditions set forth in its credit facility agreement,
as amended and restated on March 17, 2000, Metrocall may borrow up to $200
million under two loan facilities through June 1, 2005. The first facility
(Facility A) is a $150 million reducing revolving credit facility and the second
(Facility B) is a $50 million reducing term credit. The credit facility is
secured by substantially all of Metrocall's assets. Required quarterly principal
repayments, as defined, begin on March 31, 2002 and continue through June 1,
2005.

Under the credit facility, Metrocall is required to comply with or maintain
certain financial and operating covenants including certain financial ratios,
such as total debt to annualized operating cash flow, senior debt to annualized
operating cash flow, annualized operating cash flow to pro forma debt service,
total sources of cash to total uses of cash, and operating cash flow to interest
expense (in each case, as such terms are defined in the credit facility
agreement). The covenants also limit additional indebtedness and future mergers
and acquisitions without the approval of the lenders and restrict the payment of
cash dividends and other stockholder distributions by Metrocall. The credit
facility agreement also provides that certain changes of control of Metrocall,
as defined, will constitute a default.

Effective June 30, 2000, Metrocall and its bank lenders entered into the
first amendment to the credit facility, which amended the operating cash flow to
interest expense ratio covenant for the three months ended June 30, 2000 and
September 30, 2000 to a ratio of 1.50 to 1.00. Effective December 31, 2000,
Metrocall and its bank lenders entered into the second amendment to the credit
facility, which lowered the operating cash flow to interest expense ratio
covenant to 1.65 to 1.00 for the three months ended December 31, 2000 and to
1.75 to 1.00 and for the three months ended March 31, 2001. This amendment also
limited the aggregate principal amount of borrowings that may be outstanding
through June 30, 2001 to $153.0 million and $173.0 million through December 31,
2001. Had Metrocall not entered into the first and second amendments to the
credit facility, it would not have been in compliance with the operating cash
flow to interest expense ratio covenants for the three months ended June 30,
2000, September 30, 2000 and December 31, 2000. At December 31, 2000, Metrocall
was in compliance with all of the financial covenants of its credit facility.
However, Metrocall is currently in default under the credit facility and may not
access additional funds under it. See "Recent Developments."

Senior Subordinated Notes. There were no principal payments required under
the senior subordinated notes in 2000. Please refer to "Recent Developments" and
"Significant Equity Transactions" for a discussion of liquidity matters and
senior subordinated notes exchanged into Metrocall common stock during 2000.

RISK FACTORS

RISKS TO THE BUSINESS -- METROCALL'S BUSINESS MIGHT BE ADVERSELY AFFECTED BY
FACTORS BEYOND ITS CONTROL.

Metrocall cannot identify nor can it control all circumstances that could
occur in the future that may adversely affect its business and results of
operations. Some of the circumstances that may occur and may impair Metrocall's
business are described below. If any of the following circumstances were to
occur, Metrocall's business, financial conditions or results of operations could
be materially adversely affected.

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LIQUIDITY -- METROCALL'S DETERIORATING FINANCIAL RESULTS, SUSPENSION OF
SUBORDINATED DEBT INTEREST PAYMENTS, AND LACK OF ACCESS TO ADDITIONAL LIQUIDITY
COULD IMPAIR ITS ABILITY TO CONTINUE AS A GOING CONCERN.

Metrocall is experiencing erosion of its revenues from traditional one-way
paging business. This has led to reduced operating cash flow as revenues from
advanced messaging have not increased sufficiently to offset the decline in
one-way revenues. As a result, Metrocall does not expect that its operations
will generate sufficient cash to enable it pay current interest on its
outstanding subordinated debt. Nor does Metrocall expect to have access to
additional debt or equity funding. Metrocall therefore has defaulted on interest
payments on its subordinated debt. As a result, Metrocall may not be able to
continue as a going concern unless it restructures its outstanding indebtedness.
Metrocall's ability to continue as a going concern could be affected by several
factors, including:

- Holders of Metrocall's indebtedness could exercise their rights to
accelerate such debt, which Metrocall cannot pay.

- Metrocall's operations may not generate sufficient cash to meet its
continuing obligations other than interest on subordinated debt and to
fund required capital expenditures.

- Metrocall's current financial condition may adversely affect its ability
to obtain supplies and services from vendors on acceptable terms and to
retain and attract employees and customers, which could, in turn,
contribute to reduced revenues and operating cash flow.

- Metrocall may not achieve reductions in capital expenditures and
operating expenses.

- Metrocall may not be able to restructure its existing bank and
subordinated indebtedness on terms acceptable to creditors.

- Metrocall may have to seek protection under chapter 11 of the Bankruptcy
Code, which will subject many transactions to court approval and result
in additional costs associated with the chapter 11 process, including
professional fees and other costs of administration.

- If a chapter 11 proceeding is filed, Metrocall may not be able to propose
or have confirmed a plan of reorganization acceptable to creditors, and
to emerge from chapter 11.

If Metrocall cannot continue as a going concern the value of its assets may be
less than currently reflected on its balance sheet and as such, the ability of
Metrocall's creditors to recover such amounts when due may be impaired.

Metrocall intends to seek to restructure its outstanding debt at a
significant discount to its face value either in connection with a strategic
transaction or on a stand-alone basis. Metrocall may file for protection under
chapter 11 in order to effectuate such restructuring.

Metrocall cannot predict the terms on which its indebtedness will be
restructured or whether any restructuring will retain any value for the holders
of its preferred and common stock. There is no assurance that as to the value,
if any, that will be received by creditors in any restructuring.

TWO-WAY NETWORK -- METROCALL'S ABILITY TO GENERATE REVENUES FROM TWO-WAY
MESSAGING COULD BE IMPAIRED IF WEBLINK WERE TO REJECT ITS AGREEMENT WITH
METROCALL.

Metrocall depends on Weblink to provide the network on which messages over
Metrocall's two-way messaging devices are transmitted. If Metrocall lost access
to this network, its revenues from two-way messaging would be impaired, unless
Metrocall could enter into acceptable arrangements for access to another
network. Weblink is also suffering financial difficulties, and if it were to
file for protection from creditors under chapter 11, it could reject and
terminate the contract and deprive Metrocall of access to the Weblink network.
If that happened, Metrocall cannot assure you that it could gain access to
another two-way network.

OPERATING LOSSES -- METROCALL HAS A HISTORY OF OPERATING LOSSES AND EXPECTS TO
CONTINUE TO INCUR OPERATING LOSSES IN THE FUTURE. AS A RESULT, METROCALL MAY NOT
BE ABLE TO MEET ITS CASH NEEDS FROM OPERATIONS OR PAY DEBT OBLIGATIONS.
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Metrocall historically has had operating losses and expects these losses to
continue. These losses make it more difficult for it to meet its cash and other
working capital needs, to support its business operations and to pay its debt
obligations as they become due because Metrocall must rely on its abilities to
obtain financing or generate additional revenues. The losses have resulted in
part because Metrocall has focused mainly on its consolidation and growth
strategies and its capital expenditure requirements, instead of focusing mainly
on current earnings. Metrocall has sustained net losses of $129.1 million,
$172.5 million and $214.6 million for fiscal years 1998, 1999 and 2000. At
December 31, 2000, Metrocall's accumulated deficit was approximately $724.3
million. Metrocall expects to continue to incur losses from operations in the
future because it expenses significant amounts for depreciation expenses from
capital expenditures and amortization expenses related to intangible assets
recorded on acquisitions. Metrocall cannot assure you that it can reverse
operating losses and achieve profitability in the future and that it will be
able to meet all of its cash and other working capital needs from operations in
the future.

INTANGIBLE ASSETS -- MOST OF METROCALL'S ASSETS ARE INTANGIBLE ASSETS WHOSE
VALUE MAY DECREASE FROM FACTORS BEYOND METROCALL'S CONTROL. IF THE VALUE OF
THOSE ASSETS WERE TO DECREASE AND METROCALL WERE REQUIRED TO SATISFY ITS DEBT
OBLIGATIONS BASED ON ITS ASSETS' VALUE, METROCALL MIGHT NOT BE ABLE TO SATISFY
THOSE DEBT OBLIGATIONS.

Most of Metrocall's assets are intangible assets. Primarily FCC licenses
and certificates, goodwill, subscriber lists and deferred financing costs. At
December 31, 2000, Metrocall's total assets were approximately $757.1 million,
of which net intangible assets were approximately $391.7 million. If Metrocall
was required to satisfy its obligations under its credit facility because, for
example, it defaulted under its debt agreements, became insolvent or were
liquidated, and the lenders under the credit facility proceeded against
Metrocall's assets to satisfy those obligations, the value of its assets might
not be sufficient to satisfy those obligations. The reason the value of
Metrocall's assets might be insufficient is because the value of intangible
assets could be impaired by factors beyond Metrocall's control, such as changes
in technology, regulation, and available financing or competitive pressures.
Metrocall cannot assure you that the value of its assets is or will be
sufficient to repay its debt obligations under the credit facility.

ADDITIONAL COMPETITION DUE TO TECHNOLOGICAL DEVELOPMENTS -- TECHNOLOGICAL
DEVELOPMENTS COULD LEAD TO INCREASED COMPETITION TO METROCALL.

Future technological developments in the wireless communications industry,
such as narrowband PCS and broadband PCS, could create new services or products
that compete with Metrocall's paging and wireless messaging services. See
"Competition" in Part I, Item 1 for a discussion of these developments. That
increased competition might result in loss of existing or future subscribers,
loss of revenues and increase in expenses to stay competitive.

Developments in narrowband PCS, which provide advanced messaging
capabilities, have lead to increased competition. Some of Metrocall's largest
competitors in the traditional paging market have narrowband PCS licenses, which
permit them to provide advanced messaging services on a nationwide basis.
Metrocall expects other companies to offer advanced messaging services and, as a
result, Metrocall's growth in terms of subscriber base might be impaired.
Metrocall offers two-way and other advanced messaging services through its
alliance with WebLink. Metrocall relies on Weblink's Reflex 25 network to
provide its advanced messaging services. To the extent Weblink's operations are
affected by financial difficulties and liquidity issues as explained in Part 1,
Item 1, "Metrocall's Business Objectives", Metrocall's ability to offer these
services could be materially, adversely affected. In addition, Metrocall's
success of offering these services is dependent upon several other factors.
Those factors include market acceptance, cost of equipment and other capital
requirements, technological changes in wireless messaging services, competitors'
marketing and sales strategies, regulatory developments and general economic
conditions. These factors are beyond our control. Metrocall cannot assure you
that its offering of these services will be beneficial to its business
operations or financial condition.

Further developments of broadband PCS could also lead to increased
competition. Many companies now provide wireless telephone service using
broadband PCS technology and either have begun or will begin
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providing paging service. As result, Metrocall might experience losses in
subscribers and recurring revenues and cost increases to stay competitive.

Other changes in technology could lower the cost of competing services and
products to a level at which Metrocall's services and products would become too
costly to offer or produce or would require it to reduce its prices. Metrocall
cannot assure you that it will be able to develop or introduce new services and
products on a timely basis and at competitive prices, if at all, nor can
Metrocall assure you that its profit margins, inventory costs and cash flows
will not be adversely affected by technological developments.

SATELLITE FAILURES -- METROCALL'S ABILITY TO DELIVER PAGING AND MESSAGING
SERVICES COULD BE INTERRUPTED IF SATELLITE FAILURES OCCUR.

Metrocall relies on satellite facilities operated by other companies to
control many of the transmitters on its nationwide and wide-area networks. Any
interruptions in satellite transmissions might result in loss of subscribers,
loss of revenues and increased costs to find alternative ways to respond to the
interruptions. Metrocall has no control over the operation and maintenance of
those satellite facilities. Metrocall also uses land-based communications
facilities such as microwave stations and landline telephone facilities to
connect and control the paging base station transmitters in its networks. The
failure of disruption of transmissions by these satellites and other facilities
could disrupt its paging and messaging services and impair its results of
operations. Metrocall transmits a majority of its paging traffic through its
satellite facility in Stockton, California. Any interruptions in satellite
transmissions from this facility could adversely affect Metrocall's ability to
gain more subscribers and increase its revenues.

SUBSCRIBER TURNOVER -- WHEN SUBSCRIBERS CANCEL OR SWITCH THEIR SERVICE, THE COST
TO ATTRACT NEW SUBSCRIBERS IS HIGHER THAN THE COST TO PROVIDE SERVICES TO
EXISTING SUBSCRIBERS AND AS A RESULT ADVERSELY AFFECT METROCALL'S RESULTS OF
OPERATIONS.

Subscriber turnover adversely affects Metrocall's results of operations
because it increases fixed costs. When subscribers cancel their paging or other
messaging services or switch their service to another carrier, Metrocall
attempts to attract new subscribers to replace the disconnected subscribers. The
sales and marketing costs associated with attracting new subscribers exceed the
costs to continue servicing existing subscribers and increase our high fixed
costs. For the twelve months ended December 31, 1998, 1999 and 2000, Metrocall's
subscriber net turnover rates were 1.7%, 1.8% and 1.9% respectively.

REGULATORY CHANGES AND COMPLIANCE -- CHANGES IN THE REGULATIONS THAT GOVERN
METROCALL'S BUSINESS MIGHT MAKE IT MORE DIFFICULT OR COSTLY TO OPERATE ITS
BUSINESS OR COMPLY WITH ITS CHANGES.

The FCC and to a lesser extent state regulatory agencies regulate
Metrocall's paging and messaging operations. Those agencies might take actions,
such as changing licensing requirements or the allocation of radio spectrum that
would make it more difficult or costly for Metrocall to operate its business.
For example, the FCC has adopted rules under which it will issue licenses that
would permit companies increase-operating expense to offer paging services on a
wide-area basis through competitive bidding. Metrocall believes these rules may
simplify its regulatory compliance burdens, particularly regarding adding or
relocating transmitter sites; however, those rules may also increase its costs
of obtaining paging licenses in the future. In addition, Metrocall cannot assure
you that it will be able to comply with all changes implemented by the agencies
regulating its business, such as changes in licensing or build-out requirements.

CHALLENGES OF ACQUISITIONS -- METROCALL MIGHT NOT BE ABLE TO IDENTIFY OR FINANCE
BUSINESSES TO ACQUIRE. METROCALL MAY NOT BE ABLE TO INTEGRATE SUCCESSFULLY
BUSINESS IT HAS ALREADY ACQUIRED OR MANAGE ITS EXISTING BUSINESS OPERATIONS AS
IT ACQUIRES AND INTEGRATES BUSINESSES.

Metrocall might be unable to identify attractive businesses to acquire, to
finance potential acquisitions and to integrate acquired businesses. Even if
Metrocall can pursue an acquisition, it would encounter many

34
35

obstacles before the acquisition could be successful and increase its revenues
or decrease its costs. The challenges of acquisitions include:

- potential strain on management;

- unanticipated liabilities or contingencies from the acquired company;

- reduced earnings due to increased intangible asset amortization,
increased interest costs, and costs related to integration;

- integrating the acquired business's financial, personnel, computer and
other systems into its own; and

- need to manage growth and implement controls and information systems
appropriate to a growing company.

If Metrocall is unsuccessful in meeting these challenges, its business
could suffer because of the diversion of management's attention away from
existing operations and the increase in costs.

DEPENDENCE ON KEY MANAGEMENT PERSONNEL -- IF METROCALL IS UNABLE TO RETAIN KEY
MANAGEMENT PERSONNEL, IT MIGHT NOT BE ABLE TO FIND SUITABLE REPLACEMENTS ON A
TIMELY BASIS AND ITS BUSINESS OPERATIONS MIGHT BE ADVERSELY AFFECTED.

Metrocall's existing operations and continued future developments are
dependent to a significant extent upon the efforts and abilities of certain key
individuals, including William L. Collins III, its Chief Executive Officer,
Steven D. Jacoby, its Chief Operating Officer, and Vincent D. Kelly, its Chief
Financial Officer. These individuals have substantial expertise and experience
in the paging and messaging industry, know the intricacies of Metrocall's
business operations and have insights into the future developments and goals of
the business. If Metrocall is unable to retain these individuals, it is unlikely
Metrocall could find individuals to replace them that would have the same degree
of expertise, experience, knowledge and insight into the industry and the
business operations. Even if Metrocall could find replacements, its business
would be impaired from the disruption associated with changes in management. For
example, Metrocall is largely dependent on these individuals in pursuing its
growth and consolidation strategies and in integrating successfully acquired
businesses. As a result, Metrocall's business operations could be adversely
affected. Metrocall has employment contracts with the named individuals but does
not have non-competition contracts with or "key man" life insurance for any of
them.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At December 31, 2000, total debt consisted of borrowings outstanding under
its credit facility and fixed rate senior subordinated notes. Metrocall's total
debt has been classified as a current liability on the accompanying balance
sheet as a result of the suspension of interest payments to holders of certain
of its senior subordinated notes and the expected non-compliance with certain of
the financial covenants of its credit facility at March 31, 2001. As such, there
is a risk that the lenders of such debt will request immediate payment of such
amounts. Please refer to "Recent Developments" in Item I.

SENIOR SECURED DEBT, VARIABLE RATE DEBT:

The borrowings outstanding under Metrocall's credit facility are secured by
substantially all of Metrocall's assets. The credit facility debt is closely
held by a group of lenders.

PRINCIPAL WEIGHTED AVERAGE SCHEDULED INTEREST PAYMENTS
BALANCE FAIR VALUE INTEREST RATE MATURITY DUE
--------- -------------- ---------------- --------- -----------------

$133.0 million $133.0 million 11.5% 2005 Quarterly

Metrocall's credit facility bears interest at floating rates and matures in 2005
an as such is subject to risks associated with changes in interest rates.
Effective March 16, 2001, Metrocall's lenders exercised their option to increase
the borrowing rate under the facility to the prime rate plus a margin of up to
1.875% and a 2.0% default rate. As a result of this action, interest expenses
incurred under the credit facility are expected to

35
36

increase by $3.9 million based on $133.0 million outstanding. To the extent
there are fluctuations by 1/4% in the prime lending rate, Metrocall's interest
expense would increase or decrease by $332,500 for each 1/4% fluctuation.

SENIOR SUBORDINATED NOTES, FIXED RATE:

Metrocall's senior subordinated notes are publicly traded and subject to
market risk. In addition, they are subordinated to borrowings under the credit
facility.

PRINCIPAL STATED SCHEDULED
BALANCE FAIR VALUE INTEREST RATE MATURITY
--------- ------------- ------------- ---------

$ 93.0 million $23.2 million 11 7/8% 2005
$ 0.2 million $ 0.2 million 11 7/8% 2005
$135.0 million $33.7 million 10 3/8% 2007
$171.3 million $41.1 million 9 3/4% 2007
$226.1 million $54.3 million 11% 2008

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

DESCRIPTION PAGE
----------- ----

FINANCIAL STATEMENTS:
Report of Arthur Andersen LLP, Independent Public
Accountants........................................... F-2
Consolidated Balance Sheets, as of December 31, 1999
and 2000.............................................. F-3
Consolidated Statements of Operations for the three
years ended December 31, 1998, 1999 and 2000.......... F-4
Consolidated Statements of Stockholders' Equity for the
three years ended December 31, 1998, 1999 and 2000.... F-5
Consolidated Statements of Cash Flows for the three
years ended December 31, 1998, 1999 and 2000.......... F-6
Notes to Consolidated Financial Statements............. F-7

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning our directors and executive officers is incorporated
by reference from our Proxy Statement for the 2001 Annual Meeting of
Stockholders (the "2001 Proxy Statement") or will be provided by amendment to
this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation will be incorporated by
reference from the 2001 Proxy Statement or will be provided by amendment to this
Annual Report on Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding the stock ownership of each person known to Metrocall
to be the beneficial owner of more than 5% of the common stock of each director
and executive officer of Metrocall and all directors and

36
37

executive officers as a group will be incorporated by reference from the 2001
Proxy Statement or will be provided by amendment to this Annual Report on Form
10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions will
be incorporated by reference from the 2001 Proxy Statement or will be provided
by amendment to this Annual Report on Form 10-K.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)(1) FINANCIAL STATEMENTS

The following financial statements are included in Part II Item 8

DESCRIPTION PAGE
----------- ----

FINANCIAL STATEMENTS:
Report of Arthur Andersen LLP, Independent Public
Accountants........................................... F-2
Consolidated Balance Sheets, as of December 31, 1999
and 2000.............................................. F-3
Consolidated Statements of Operations for the three
years ended December 31, 1998, 1999 and 2000.......... F-4
Consolidated Statements of Stockholders' Equity for the
three years ended December 31, 1998, 1999 and 2000.... F-5
Consolidated Statements of Cash Flows for the three
years ended December 31, 1998, 1999 and 2000.......... F-6
Notes to Consolidated Financial Statements............. F-7

(A)(2) FINANCIAL STATEMENT SCHEDULE
Schedule II Valuation and Qualifying Accounts.......... S-1

All other schedules are omitted because they are not required,
inapplicable, or the information is otherwise shown in the financial statements
or notes thereto.

(B) REPORTS ON FORM 8-K

A report dated October 21, 2000 regarding terminating efforts to present a
competing plan of reorganization in the bankruptcy proceedings of Paging
Network, Inc., filed with the Commission on October 24, 2000.

37
38

(C) EXHIBITS

The following exhibits are filed herewith:

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------

3.1 Restated Certificate of Incorporation of Metrocall, Inc. (Metrocall), as amended.+
3.2 Ninth Amended and Restated Bylaws of Metrocall.+
4.1 Rights Agreement, dated as of February 25, 2000, between Metrocall and First Chicago Trust Company of
New York, as Rights Agent.(a)
4.2 Indenture for Metrocall 11% Senior Subordinated Notes due 2008, dated as of December 22, 1998.(b)
4.3 Indenture for 9 3/4 Senior Subordinated Notes due 2007 dated October 21, 1997.(c)
4.4 Indenture for Metrocall 10 3/8% Senior Subordinated Notes due 2007 dated September 27, 1995.(d)
4.5 Indenture for ProNet Inc. (ProNet) 11 7/8% Senior Subordinated Notes due 2005 ("ProNet Notes") dated
June 15, 1995.(e)
4.6 Supplemental Indenture dated May 28, 1996 for ProNet Notes.(f)
4.7 Second Supplemental Indenture dated December 30, 1997 for ProNet Notes.(g)
4.8 Indenture for A+ Network, Inc. 11 7/8% Senior Subordinated Notes due 2005 ("A+ Notes") dated October
24, 1995.(h)
4.9 First Supplemental Indenture dated November 14, 1996 for A+ Notes.(i)
4.10 Second Supplemental Indenture dated November 15, 1996 for A+ Notes.(i)
4.11 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and
Other Rights of Series A Convertible Preferred Stock of Metrocall.(j)
4.12 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and
Other Rights of Series E Junior Participating Preferred Stock as filed with the Secretary of State of
the State of Delaware on February 25, 2000.(a)
4.13 Warrant Agreement between Metrocall and the First National Bank of Boston as Warrant Agent dated as
of November 15, 1996.(j)
10.1 Fifth Amended and Restated Loan Agreement by and among Metrocall, certain lenders and Toronto
Dominion (Texas), Inc. as administrative agent, dated as of March 17, 2000 ("Loan Agreement").(k)
10.2 First Amendment to Loan Agreement, dated June 30, 2000.(l)
10.3 Second Amendment to Loan Agreement, dated December 31, 2000.(m)
10.4 Securities Exchange Agreement by and between AT&T Wireless Services, Inc. and Metrocall dated
February 2, 2000.(n)
10.5 Common Stock Purchase Agreement by and between HMTF Bridge MCI, LLC and Metrocall dated February 2,
2000.(n)
10.6 Common Stock Purchase Agreement by and between Aether Systems, Inc. and Metrocall dated February 2,
2000.(n)
10.7 Common Stock Purchase Agreement by and between PSINet Inc. and Metrocall dated February 2, 2000.(n)
10.8 Stock Purchase Agreement by and among Metrocall and AT&T Wireless Services, Inc., McCaw
Communications Companies, Inc. and AT&T Two Way Messaging Communications, Inc, dated June 26,
1998.(o)
10.9 Units Purchase Agreement among Metrocall and the entities listed thereto dated November 15, 1996.(j)
10.10 Registration Rights Agreement between Metrocall and the entities listed thereto dated November 15,
1996.(j)
10.11 Employment Agreement between Metrocall and William L. Collins III.(p)
10.12 Amendment to Employment Agreement between Metrocall and William L. Collins III.(q)

38
39

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------

10.13 Second Amendment to Employment Agreement between Metrocall and William L. Collins III.(r)
10.14 Third Amendment to Employment Agreement between Metrocall and William L. Collins III.(s)
10.15 Fourth Amendment to Employment Agreement between Metrocall and William L. Collins III.(l)
10.16 Employment Agreement between Metrocall and Steven D. Jacoby.(p)
10.17 Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(q)
10.18 Second Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(r)
10.19 Third Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(s)
10.20 Fourth Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(l)
10.21 Employment Agreement between Metrocall and Vincent D. Kelly.(p)
10.22 Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(q)
10.23 Second Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(r)
10.24 Third Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(s)
10.25 Fourth Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(l)
10.26 Change of Control Agreement between Metrocall and William L. Collins III.(p)
10.27 Change of Control Agreement between Metrocall and Steven D. Jacoby.(p)
10.28 Change of Control Agreement between Metrocall and Vincent D. Kelly.(p)
10.29 Noncompetition Agreement between Metrocall and Jackie R. Kimzey dated August 8, 1997.(t)
10.30 Metrocall 1996 Stock Option Plan, as amended.(u)
10.31 Metrocall Amended Employee Stock Purchase Plan.(u)
10.34 Directors' Stock Option Plan, as amended.(v)
10.35 Deed of Lease between Douglas and Joyce Jemal, as landlord, and Metrocall, as tenant, dated April 14,
1994.(w)
10.36 Lease Agreement dated December 20, 1983 between Beacon Communications Associates, Ltd. and a
predecessor of Metrocall.(x)
11.1 Statement re computation of per share earnings.+
21.1 Subsidiaries of Metrocall, Inc.+
23.1 Consent of Arthur Andersen LLP, as independent public accountants for Metrocall.+
27.1 Financial Data Schedule.+

- ---------------

+ Filed herewith.
(a) Incorporated by reference to Metrocall's Registration
Statement on Form 8-A filed with the Commission on February
25, 2000.
(b) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on January 4, 1999.
(c) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on October 23, 1997.
(d) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042) filed
with the Commission on September 27, 1995.
(e) Incorporated by reference to ProNet's Current Report on Form
8-K filed with the Commission on July 5, 1995.
(f) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1998 filed with
the Commission on March 31, 1999.
(g) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 filed with
the Commission on May 15, 1998.
(h) Incorporated by reference to the Registration Statement on
Form S-1 of A+ Communications, Inc., as amended (File No.
33-95208) filed with the Commission on September 18, 1995.
(i) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1996 filed with
the Commission on March 31, 1997.
(j) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on November 21, 1996.

39
40

(k) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000 filed with
the Commission on May 15, 2000.
(l) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000 filed with the
Commission on August 14, 2000.
(m) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on February 2, 2001.
(n) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with
the Commission on March 11, 2000.
(o) Incorporated by reference to Metrocall's Proxy Statement
filed with the Commission on August 31, 1998.
(p) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 333-06919) filed
with the Commission on June 27, 1996.
(q) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997 filed
with the Commission on November 14, 1997.
(r) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 filed with the
Commission on August 14, 1998.
(s) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999 filed with the
Commission on August 13, 1999.
(t) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 333-36079) filed
with the Commission on September 22, 1997.
(u) Incorporated by reference to Metrocall's Proxy Statement
filed with the Commission on April 4, 2000.
(v) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A, as amended, for the year ended December 31,
1993 filed with the Commission on July 21, 1994.
(w) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 filed
with the Commission on November 14, 1994.
(x) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-63886) filed
with the Commission on July 12, 1993.

40
41

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 2nd day of
April 2001.

METROCALL, INC.

By: /s/ WILLIAM L. COLLINS III
------------------------------------
William L. Collins III
Chairman of the Board

Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed by the following persons in the capacities and on
the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

/s/ WILLIAM L. COLLINS III Chairman of the Board, President, April 2, 2001
- -------------------------------------- Chief Executive Officer and Director
William L. Collins III

Chief Financial Officer, Executive April 2, 2001
/s/ VINCENT D. KELLY Vice President, and Treasurer
- -------------------------------------- (Principal Financial and Accounting
Vincent D. Kelly Officer)

/s/ STEVEN D. JACOBY Chief Operating Officer and Executive April 2, 2001
- -------------------------------------- Vice President
Steven D. Jacoby

/s/ FRANCIS A. MARTIN, III Director April 2, 2001
- --------------------------------------
Francis A. Martin, III

/s/ RONALD V. APRAHAMIAN Director April 2, 2001
- --------------------------------------
Ronald V. Aprahamian

/s/ MICHAEL GREENE Director April 2, 2001
- --------------------------------------
Michael Greene

/s/ MAX D. HOPPER Director April 2, 2001
- --------------------------------------
Max D. Hopper

/s/ EDWARD E. JUNGERMAN Director April 2, 2001
- --------------------------------------
Edward E. Jungerman

/s/ JACKIE R. KIMZEY Director April 2, 2001
- --------------------------------------
Jackie R. Kimzey

/s/ ANDREW S. ROSEN Director April 2, 2001
- --------------------------------------
Andrew S. Rosen

/s/ HAROLD S. WILLS Director April 2, 2001
- --------------------------------------
Harold S. Wills

/s/ ROYCE R. YUDKOFF Director April 2, 2001
- --------------------------------------
Royce R. Yudkoff

41
42

METROCALL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
NUMBER
------

Report of Arthur Andersen LLP, Independent Public
Accountants............................................... F-2
Consolidated Balance Sheets, as of December 31, 1999 and
2000...................................................... F-3
Consolidated Statements of Operations for the three years
ended December 31, 1998,
1999 and 2000............................................. F-4
Consolidated Statements of Stockholders' Equity for the
three years ended December 31, 1998, 1999 and 2000........ F-5
Consolidated Statements of Cash Flows for the three years
ended December 31, 1998,
1999 and 2000............................................. F-6
Notes to Consolidated Financial Statements.................. F-7

F-1
43

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Metrocall, Inc.:

We have audited the accompanying consolidated balance sheets of Metrocall,
Inc. and subsidiaries as of December 31, 1999 and 2000, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements and related schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
an audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Metrocall, Inc., and
subsidiaries as of December 31, 1999 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has net capital and working capital deficiencies that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result should the company be unable to continue as a going concern.

Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed at Item 14(a)(2) is
presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

Vienna, Virginia
February 9, 2001 (except with respect to the matters discussed in Note 2 as to
which the date is April 2, 2001.)

F-2
44

METROCALL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)

DECEMBER 31,
----------------------
1999 2000
--------- ---------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,787 $ 26,597
Accounts receivable, less allowance for doubtful accounts
of $7,103 and $5,494 as of December 31, 1999 and 2000,
respectively............................................ 52,015 51,122
Prepaid expenses and other current assets (Note 5)........ 3,333 7,498
--------- ---------
Total current assets............................... 58,135 85,217
--------- ---------
PROPERTY AND EQUIPMENT:
Land, buildings and leasehold improvements................ 15,685 16,451
Furniture, office equipment and vehicles.................. 76,962 88,901
Paging and plant equipment................................ 377,047 374,205
Less -- Accumulated depreciation and amortization......... (192,329) (216,565)
--------- ---------
277,365 262,992
--------- ---------
INTANGIBLE ASSETS, net of accumulated amortization of
approximately $398,634 and $633,411 at December 31, 1999
and 2000, respectively (Note 3)........................... 554,317 391,689
OTHER ASSETS................................................ 8,021 17,247
--------- ---------
TOTAL ASSETS....................................... $ 897,838 $ 757,145
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 6)............. $ 643 $ 759,286
Accounts payable.......................................... 28,144 25,370
Accrued expenses and other current liabilities (Note 5)... 42,022 43,544
Deferred revenue and subscriber deposits.................. 24,235 21,549
--------- ---------
Total current liabilities.......................... 95,044 849,749
--------- ---------
CAPITAL LEASE OBLIGATIONS, less current maturities (Note
6)........................................................ 3,001 2,340
CREDIT FACILITY AND OTHER LONG-TERM DEBT, less current
maturities (Note 6)....................................... 75,375 301
SENIOR SUBORDINATED NOTES (Note 6).......................... 698,608 --
LONG TERM DEFERRED REVENUE.................................. -- 10,212
DEFERRED INCOME TAX LIABILITY............................... 18,678 --
MINORITY INTEREST IN PARTNERSHIP............................ 510 510
--------- ---------
Total liabilities.................................. 891,216 863,112
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 9)
SERIES A CONVERTIBLE PREFERRED STOCK, 14% cumulative; par
value $.01 per share; 810,000 shares authorized; 227,585
shares and 247,149 shares issued and outstanding as of
December 31, 1999 and 2000, respectively and a liquidation
preference of $57,892 and $66,280 at December 31, 1999 and
2000, respectively (Note 7)............................... 53,939 60,385
--------- ---------
SERIES C CONVERTIBLE PREFERRED STOCK, 8% cumulative; par
value $.01 per share; 25,000 shares authorized; 10,378
shares and 0 shares issued and outstanding as of December
31, 1999 and 2000, respectively and a liquidation
preference of $104,817 and $0 at December 31, 1999 and
2000 respectively (Note 7)................................ 104,817 --
--------- ---------
STOCKHOLDERS' EQUITY(DEFICIT) (Note 7)
Common stock, par value $.01 per share; 200,000,000 shares
authorized; 41,901,908 shares and 89,214,532 shares
issued and outstanding at December 31, 1999 and 2000,
respectively............................................ 419 892
Additional paid-in capital................................ 341,070 557,057
Accumulated deficit....................................... (493,623) (724,301)
--------- ---------
(152,134) (166,352)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $ 897,838 $ 757,145
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.
F-3
45

METROCALL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)

YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1999 2000
----------- ----------- -----------

REVENUES:
Service, rent and maintenance............................. $ 416,352 $ 548,700 $ 504,800
Product sales............................................. 48,372 61,487 57,183
----------- ----------- -----------
Total revenues.................................... 464,724 610,187 561,983
Net book value of products sold........................... (31,791) (39,071) (37,509)
----------- ----------- -----------
432,933 571,116 524,474
OPERATING EXPENSES:
Service, rent and maintenance............................. 115,432 146,961 120,312
Selling and marketing..................................... 73,546 97,051 103,413
General and administrative................................ 121,644 170,591 172,017
Depreciation and amortization............................. 234,948 307,344 300,318
----------- ----------- -----------
545,570 721,947 696,060
----------- ----------- -----------
Loss from operations.............................. (112,637) (150,831) (171,586)
INTEREST AND OTHER INCOME(EXPENSE), NET..................... 849 407 (2,450)
INTEREST EXPENSE............................................ (64,448) (85,115) (84,169)
----------- ----------- -----------
LOSS BEFORE INCOME TAX BENEFIT AND EXTRAORDINARY ITEM (Note
6)........................................................ (176,236) (235,539) (258,205)
INCOME TAX BENEFIT.......................................... 47,094 63,055 20,775
----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM.............................. (129,142) (172,484) (237,430)
EXTRAORDINARY ITEM.......................................... -- -- 22,876
----------- ----------- -----------
Net loss.......................................... (129,142) (172,484) (214,554)
PREFERRED DIVIDENDS (Note 7)................................ (11,767) (16,462) (9,816)
SERIES C PREFERRED EXCHANGE INDUCEMENT...................... -- -- (6,308)
GAIN ON REPURCHASE OF PREFERRED STOCK....................... -- 2,208 --
----------- ----------- -----------
Loss attributable to common stockholders.......... $ (140,909) $ (186,738) $ (230,678)
=========== =========== ===========
BASIC AND DILUTED LOSS PER SHARE ATTRIBUTABLE TO COMMON
STOCKHOLDERS:
Loss per share before extraordinary item attributable to
common stockholders.................................... $ (3.43) $ (4.47) $ (3.30)
Extraordinary item........................................ -- -- 0.30
=========== =========== ===========
Basic and diluted loss per share attributable to common
stockholders........................................... $ (3.43) $ (4.47) $ (3.00)
=========== =========== ===========
Weighted-average common shares outstanding................ 41,029,601 41,773,789 76,984,096
=========== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
46

METROCALL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE INFORMATION)

COMMON STOCK
----------------------- ADDITIONAL
SHARES PAID-IN ACCUMULATED
OUTSTANDING PAR VALUE CAPITAL DEFICIT TOTAL
----------- --------- ---------- ----------- ---------

BALANCE, December 31, 1997...................... 40,548,414 $405 $336,076 $(165,976) $ 170,505
Issuance of shares in employee stock purchase
plan and other (Note 8).................... 134,989 2 573 -- 575
Shares issued in settlement of litigation
related to the ProNet merger............... 900,000 9 3,600 -- 3,609
Preferred dividends (Note 7).................. -- -- -- (11,767) (11,767)
Net loss...................................... -- -- -- (129,142) (129,142)
---------- ---- -------- --------- ---------
BALANCE, December 31, 1998...................... 41,583,403 416 340,249 (306,885) 33,780
Issuance of shares in employee stock purchase
plan and other (Note 8).................... 318,505 3 821 -- 824
Preferred dividends........................... -- -- -- (16,462) (16,462)
Gain on repurchase of Series B Preferred (Note
7)......................................... -- -- -- 2,208 2,208
Net loss...................................... -- -- -- (172,484) (172,484)
---------- ---- -------- --------- ---------
BALANCE, December 31, 1999...................... 41,901,908 419 341,070 (493,623) (152,134)
Issuance of shares in employee stock purchase
plan and other (Note 7).................... 928,534 9 3,414 -- 3,423
Warrants exercised (Note 7)................... 1,102,920 11 2,667 -- 2,678
Issuance of shares in exchange for senior
subordinated notes (Note 6)................ 8,619,537 86 47,316 -- 47,402
Issuance of shares in exchange for Series C
preferred stock (Note 7)................... 13,250,000 133 111,543 (6,308) 105,368
Other common stock issuance (Note 7).......... 23,411,633 234 51,047 -- 51,281
Preferred dividends........................... -- -- -- (9,816) (9,816)
Net loss...................................... -- -- -- (214,554) (214,554)
---------- ---- -------- --------- ---------
BALANCE, December 31, 2000...................... 89,214,532 $892 $557,057 $(724,301) $(166,352)
========== ==== ======== ========= =========

The accompanying notes are an integral part of these consolidated financial
statements.
F-5
47

METROCALL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED DECEMBER 31,
-----------------------------------
1998 1999 2000
--------- --------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(129,142) $(172,484) $(214,554)
Adjustments to reconcile net loss to net cash provided by
operating activities --
Extraordinary item..................................... (22,876)
Depreciation and amortization.......................... 234,948 307,344 300,318
Equity in loss of affiliate............................ -- -- 4,966
Amortization of debt financing costs................... 1,771 3,130 3,273
Decrease in deferred income taxes...................... (47,391) (63,255) (20,955)
Other.................................................. (130) -- --
Changes in current assets and liabilities, net of effects
of acquisitions:
Accounts receivable.................................... (2,387) (9,275) 2,111
Prepaid expenses and other current assets.............. (1,693) 1,157 (4,017)
Accounts payable....................................... 2,175 (9,237) (2,773)
Deferred revenues and subscriber deposits.............. (12,263) 1,865 (6,508)
Accrued expenses and other current liabilities......... (4,734) 5,289 779
--------- --------- ---------
Net cash provided by operating activities......... 41,154 64,534 39,764
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash acquired.......... (110,000) -- (12,575)
Capital expenditures, net................................. (78,658) (93,327) (108,623)
Proceeds from sale of businesses (Note 4)................. -- 8,572 --
Additions to intangibles.................................. (1,885) (819) --
Other..................................................... (3,089) (3,473) (2,136)
--------- --------- ---------
Net cash used in investing activities............. (191,747) (88,228) (123,334)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt (Note 6)..................... 248,260 81,000 67,497
Repayment of long-term debt (Note 6)...................... -- (46,000) (9,497)
Principal payments on long-term debt...................... (104,362) (882) (643)
Repurchase of Series B Preferred.......................... -- (16,240) --
Net proceeds from issuance of common stock................ 577 767 51,886
Deferred debt financing costs and other................... (10,342) (600) (1,863)
--------- --------- ---------
Net cash provided by financing activities......... 134,133 18,045 107,380
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (16,460) (5,649) 23,810
CASH AND CASH EQUIVALENTS, beginning of period.............. 24,896 8,436 2,787
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period.................... $ 8,436 $ 2,787 $ 26,597
========= ========= =========

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
48

METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

Metrocall, Inc. and subsidiaries, is a leading provider of local, regional
and national paging and advanced wireless data and messaging services in the
United States. Through its nationwide wireless network, Metrocall provides
messaging services to over 1,000 U.S. cities, including the top 100 Standard
Metropolitan Statistical Areas.

2. LIQUIDITY AND RISKS

Metrocall's operations require the availability of substantial funds to
finance the maintenance and growth of its existing paging operations and
subscriber base, development and construction of future wireless communications
networks, expansion into new markets, and the acquisition of other wireless
communications companies. At December 31, 2000, Metrocall had approximately
$761.9 million outstanding under its credit facility, senior subordinated notes,
capital leases and other debt. Amounts available under its credit facility are
subject to certain financial covenants and other restrictions.

Metrocall's consolidated financial statements as of December 31, 2000, and
for the year then ended, have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. At December 31, 2000, Metrocall had an
accumulated deficit of approximately $724.3 million and a deficit in working
capital of $764.5 million. Metrocall has had recurring losses from operations
and net losses ($129.1 million, $172.5 million, and $214.6 million during the
years ended December 31, 1998, 1999 and 2000, respectively), which are expected
to continue for additional periods in the future. There can be no assurance that
its operations will become profitable.

Metrocall's traditional one-way paging operations account for more than 90%
of its revenues and operating cash flow (earnings before interest, taxes,
depreciation and amortization, or "EBITDA"). Although Metrocall experienced
growth in the number of one-way subscribers in 2000, this growth was primarily
achieved through Metrocall's indirect distribution channels, which are
characterized by lower average monthly revenues per unit ("ARPU"). Service, rent
and maintenance revenues in Metrocall's traditional operations declined by
approximately $53.0 million during 2000, and Metrocall's operating cash flow
declined by approximately $27.8 million. Metrocall expects that service, rent
and maintenance revenues of its traditional paging operations will continue to
decline in 2001.

During 2000, Metrocall began to provide advanced wireless data and
messaging services. At December 31, 2000, approximately 112,500 subscribers
received these services, and in 2000, these services generated approximately
$9.1 million in service, rent and maintenance revenues, which only partially
offset the $53.0 million decline in traditional paging revenues discussed above.
Metrocall's advanced messaging services are characterized by higher ARPU, but
also higher operating and capital costs, than traditional paging services.
Metrocall will seek to expand its advanced messaging data operations during
2001, if its financial resources are adequate to continue its investment in
wireless data devices.

Since the beginning of 2001, traditional paging revenues have continued to
decline. The decline in revenues and operating cash flows and the impact of
recurring net losses have placed pressures on Metrocall's financial condition
and liquidity position. It is unlikely that Metrocall will be able to increase
its operating cash flow for the three months ended March 31, 2001 to the level
currently required by covenants in its senior bank credit facility. Moreover,
Metrocall will be unable to access the credit facility for additional borrowings
due to prohibitions in the facility and in the indentures governing Metrocall's
senior subordinated notes. In light of current conditions in the financial
markets, Metrocall believes it is unlikely that it can attract new debt or
equity financing.

In light of these circumstances, Metrocall has suspended the payments of
interest due on March 15, 2001 to holders of its 11% senior subordinated notes
and on April 1, 2001 to holders of its 10 3/8% senior subordinated notes. The
aggregate payments due under these notes were approximately $19.5 million.
Metrocall's Board of Directors approved this action in order to provide cash to
finance operations and thereby to generate operating cash flow and preserve
value for stakeholders. These defaults will permit holders of the subordinated
notes in question to accelerate this indebtedness after expiration of a 30 day
grace period, or upon acceleration of other series of subordinated notes or bank
debt.

F-7
49
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Metrocall's bank lenders have delivered a notice of default based on the
failure to make the subordinated debt interest payments. The bank lenders have
reserved their rights with respect to this default, and, absent a waiver or
other agreement by the banks, could accelerate Metrocall's bank debt. In the
event any lender seeks to accelerate its indebtedness, Metrocall likely would
file for protection under chapter 11 of the Bankruptcy Code. As a result of the
suspension of interest payments on the senior subordinated notes, notice of
default on the bank debt and the likely non-compliance with bank loan covenants,
Metrocall has classified all outstanding indebtedness under its bank credit
facility and its senior subordinated notes as a current liability at December
31, 2000.

At current expected levels, operating cash flow cannot support Metrocall's
$625.5 million in outstanding senior subordinated notes. Nonetheless, Metrocall
believes its level of operating cash flow can provide a basis for a
restructuring of its balance sheet that will better enable it to generate
increases in future cash flow and thereby increase value for Metrocall's
stakeholders.

Accordingly, Metrocall decided to seek to restructure its outstanding debt,
either in conjunction with a strategic transaction or on a standalone basis. It
has engaged Lazard Freres and Deutsche Banc Alex. Brown to advise it with
respect to evaluating its strategic and financial options, including a strategic
business combination and/or potential debt restructuring. In addition, Metrocall
has retained Banc of America Securities and Wit Soundview to advise it with
respect to potential strategic transactions. On April 2, 2001, Metrocall
executed an agreement with Weblink Wireless, Inc. This agreement provides for
the merger of Weblink and Metrocall in conjunction with restructuring of each
party's respective outstanding indebtedness. The merger and restructuring will
be implemented by each party filing for protection under chapter 11 of the
Bankruptcy Code and obtaining confirmation of plans of reorganization.
Completion of the transaction is subject to a number of conditions, including
regulatory approvals, obtaining post-petition financing, and confirmation of the
parties respective plans of reorganization. There is no assurance that the
parties will be able to obtain the requisite financing on acceptable terms or
that the creditors of the respective parties will approve their plans of
reorganization.

Metrocall's deteriorating financial results and lack of additional
liquidity indicate that it may not be able to continue as a going concern.
Metrocall's ability to continue as a going concern is dependent upon several
factors, including, but not limited to, the continued non-demand for immediate
payment of outstanding indebtedness by the holders of its subordinated notes and
the bank lenders under its credit facility agreement and Metrocall's ability (i)
to generate sufficient cash flows to meet its obligations, other than the cash
interest payments due under its subordinated notes, on a timely basis, (ii) to
obtain additional or restructured financing, including potential
debtor-in-possession borrowings if it is required to file for protection under
Chapter 11, (iii) to continue to obtain uninterrupted supplies and services from
its vendors and to retain employees, and (iv) to reduce capital expenditures and
operating expenses.

The accompanying financial statements do not include any adjustments
relating to the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that might be
necessary should Metrocall file for protection under Chapter 11 and/or be unable
to continue as a going concern.

Metrocall is also subject to additional risks and uncertainties including,
but not limited to, changes in technology, business integration, competition,
government regulation and subscriber turnover.

3. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

In addition to Metrocall, the accompanying consolidated financial
statements include the accounts of Metrocall's 61% interest in Beacon Peak
Associates Ltd. ("Beacon Peak") and Metrocall of Virginia, Inc. and Metrocall,
USA, Inc., non-operating wholly owned subsidiaries that hold certain Metrocall
regulatory licenses issued by the Federal Communications Commission (the "FCC").
Beacon Peak owns land, adjacent to Metrocall's headquarters building, which is
valued at cost. The minority interest in Beacon Peak was $510,000 as of December
31, 1999 and 2000.

All significant inter-company transactions have been eliminated in
consolidation.

F-8
50
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Accounting for Investment in Inciscent

During 2000, Metrocall invested $15 million in the form of in-kind services
in Inciscent, Inc. in return for convertible preferred stock, which on a
fully-diluted basis represents an approximate 42% interest in Inciscent.
Metrocall has accounted for its preferred stock investment in Inciscent similar
to the equity method of accounting. Metrocall has reflected its investment in
other assets and its obligation for in-kind services and obligation to provide
access to its subscriber base as deferred revenue on the accompanying balance
sheet. Metrocall recognizes revenue on the in-kind services provided to
Inciscent as they are performed. Metrocall recognizes revenue ratably on the
license to access its customer base over the five-year license period. The
Company recognized revenue related to these services of $848,000 in 2000 and
recognized losses related to its preferred stock investment in Inciscent of $5.0
million in 2000.

Revenue Recognition

Metrocall recognizes revenue under service, rental and maintenance
agreements with customers as the related services are performed. Metrocall
leases (as lessor) pagers and messaging devices under operating leases.
Substantially all the leases are on a month-to-month basis. Advance billings for
services are deferred and recognized as revenue when earned. Sales of one-way
and ancillary equipment are recognized upon delivery. The Company bundles the
sale of two-way paging equipment with the related service and recognizes the
revenue and related cost of sales over the expected customer relationship which
the Company estimates is two years.

Cash and Cash Equivalents

Cash equivalents consist primarily of repurchase agreements, all having
maturities of ninety days or less when purchased. The carrying amount reported
in the accompanying balance sheets for cash equivalents approximates fair value
due to the short-term maturity of these instruments.

Property and Equipment

Property and equipment are carried at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives.

YEARS
-------

Buildings and leasehold improvements........................ 10 - 31
Furniture and office equipment.............................. 5 - 10
Vehicles.................................................... 3 - 5
Subscriber paging equipment................................. 2 - 3
Transmission and plant equipment............................ 5 - 12

New pagers and advanced messaging devices are depreciated using the
half-year convention upon acquisition. Betterments to acquired pagers and the
net book value of lost pagers are charged to depreciation expense. Subscriber
equipment sold is recorded in the consolidated statements of operations at net
book value at the date of sale. Devices leased to customers under operating
leases continue to be depreciated over their remaining useful lives.

On July 1, 2000, Metrocall revised the estimated depreciable life of its
subscriber equipment purchased after June 30, 2000 from three years to two
years. The change in useful life resulted from Metrocall's expectations
regarding

F-9
51
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

future usage periods for subscriber devices considering current and projected
technological advances and customer desires for new messaging technology. As a
result of this change, the net book value of products sold decreased by $1.75
million and depreciation expense increased by $7.8 million in fiscal year 2000.
As of December 31, 1999 and 2000, the balance of subscriber equipment was $183.3
million and $180.3 million, respectively, net of accumulated depreciation of
$79.1 million and $80.9 million, respectively.

Purchases of property and equipment in the accompanying consolidated
statements of cash flows are reflected net of the net book value of products
sold to approximate the net addition to subscriber equipment.

Metrocall currently purchases a significant amount of its subscriber paging
and advanced messaging equipment from one supplier. Although there are other
manufacturers of similar subscriber equipment, the inability of this supplier to
provide equipment required by Metrocall could result in a decrease of pager and
advanced messaging placements and a decline in sales, which could adversely
affect operating results.

Intangible Assets

Intangible assets, net of accumulated amortization, consist of the
following at December 31, 1999 and 2000 (dollars in thousands):

DECEMBER 31, AMORTIZATION
----------------------- PERIOD IN
1999 2000 YEARS
------------ -------- ------------

State certificates and FCC licenses................. 233,166 206,275 10
Goodwill............................................ 125,293 115,306 10
Customer lists...................................... 163,008 46,885 3
Debt financing costs................................ 21,184 18,065 8-12
Non-compete covenants............................... 10,406 4,458 3
Other............................................... 1,260 700 3-7
-------- --------
$554,317 $391,689
======== ========

Debt financing costs represent fees and other costs incurred in connection with
the issuance of long-term debt. These costs are amortized as interest expense
over the term of the related debt using the effective interest rate method.
Accumulated amortization on deferred financing costs are $6.7 million and $2.9
million as of December 31, 1999 and 2000, respectively.

Long-Lived Assets

Long-lived assets and identifiable intangibles, including goodwill
allocated thereto, to be held and used are reviewed for impairment on a periodic
basis and whenever events or changes in circumstances indicate that the carrying
amount should be reviewed. Impairment is measured by comparing the book value to
the estimated undiscounted future cash flows expected to result from use of the
assets and their eventual disposition. Metrocall has determined that there has
been no impairment in the carrying value of long-lived assets at December 31,
1999 and 2000.

Metrocall currently evaluates enterprise level goodwill for impairment by
comparing estimated future undiscounted cash flows over the remaining life of
the goodwill to the carrying value of goodwill. If an impairment exists,
enterprise level goodwill is written down to its fair value based on estimated
future cash flows of Metrocall discounted at risk adjusted interest rates.

Loss Per Common Share Attributable to Common Stockholders

Basic earnings per share is computed by dividing loss attributable to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted earnings per share is similar to basic earnings per
share, except the weighted-average number of common shares outstanding is
increased to include stock options and warrants,

F-10
52
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

that dilute earnings. Stock options and warrants were not included in the
computation of loss per share in any period presented as the effect would be
anti-dilutive. As a result, the basic and diluted earnings per share amounts are
identical.

Income Taxes

Metrocall utilizes the asset and liability method of accounting for income
taxes. Under this method, deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities, less
valuation allowances, if required.

Reclassifications

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the current year's presentation. In 2000, the
Company, upon completion of review of its net operating loss carry forwards
position, reduced its valuation allowance on net operating loss carry forwards
with a corresponding reduction in the related intangible assets recorded in
connection with prior business combinations. In connection with that review, the
Company reclassified amounts in the December 31, 1999 balance sheet.

New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires the recognition
of all derivatives as either assets or liabilities measured at fair value. SFAS
No. 133 was originally effective for fiscal years beginning after June 15, 1999.
In June 1999, FASB issued SFAS No. 137, which deferred the effective date of
SFAS No. 133 until fiscal years beginning after June 15, 2000. In June 2000, the
FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities," which amends SFAS No. 133. SFAS No. 138 limits the
scope to certain derivatives and hedging activities. The effective date of SFAS
No. 138 is for fiscal years beginning after June 15, 2000. The Company does not
believe that the adoption of these statements will have a material impact on its
financial position, results of operations and cash flows.

In 2000, the Company adopted Staff Accounting Bulletin No. 101, "Revenue
Recognition" ("SAB 101"), issued by the Securities and Exchange Commission. SAB
101 provides guidance on the recognition, presentation and disclosure of revenue
in financial statements. Among the requirements of SAB 101, is the requirement
to defer the recognition of revenue and costs in certain circumstances related
to equipment sold as part of a service agreement. The Company implemented SAB
101 during the fourth quarter of the year, retroactive to January 1, 2000. The
adoption of SAB 101 did not have a material impact on the Company's financial
statements.

4. ACQUISITION AND DISPOSITION

Acquisition of NationPage

In May 2000, Metrocall purchased 100% of the outstanding common stock of
NationPage, Inc. and NPI Holdings, Inc. (collectively "NationPage") for $12.2
million in cash. The acquisition was financed through cash balances on hand.

Sale of Electronic Tracking Systems Business

Effective November 1, 1999, Metrocall sold to a third party the assets of
its Electronic Tracking Systems business that Metrocall had acquired in its
December 1997 merger with ProNet, Inc. Total proceeds were approximately $12.7
million including cash proceeds of approximately $8.7 million and a note
receivable of approximately $4.0 million. Metrocall recorded the note receivable
at its fair value on the accompanying balance sheet. No gain or loss was
recognized on the transaction for financial reporting purposes.

F-11
53
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses and other current assets and accrued expenses and other
current liabilities consist of (in thousands):

DECEMBER 31,
-----------------
1999 2000
------- -------

PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Inventory................................................. $ -- $ 430
Prepaid advertising....................................... 1,282 2,514
Prepaid insurance......................................... 556 133
Prepaid rent.............................................. -- 411
Other receivables......................................... -- 3,703
Other..................................................... 1,495 307
------- -------
TOTAL............................................. $ 3,333 $ 7,498
======= =======
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
Accrued interest payable.................................. $21,829 $20,370
Accrued severance, payroll and payroll taxes.............. 7,813 10,290
Accrued state and local taxes............................. 5,817 8,038
Accrued insurance claims.................................. 1,771 1,008
Accrued acquisition liabilities........................... 2,217 1,545
Other..................................................... 2,575 2,293
------- -------
TOTAL............................................. $42,022 $43,544
======= =======

6. LONG-TERM DEBT AND LEASE OBLIGATIONS

Long-term debt consists of the following (in thousands):

DECEMBER 31,
-------------------
1999 2000
-------- --------

Credit Facility, interest at a floating rate, defined
below..................................................... $ 75,000 $133,000
10 3/8% Senior subordinated notes due in 2007 (the "1995
Notes")................................................... 150,000 134,970
9 3/4% Senior subordinated notes due in 2007 (the "1997
Notes")................................................... 200,000 171,340
11 7/8% Senior subordinated notes due in 2005 (the "ProNet
Notes")................................................... 100,000 92,968
11% Senior subordinated notes due in 2008 (the "1998 Notes")
(net of unamortized discount of $1,566 and $1,304 in 1999
and 2000)................................................. 248,434 226,099
11 7/8% Senior subordinated notes due in 2005 (the "A+
Notes")................................................... 174 174
Capital lease obligations at a weighted average interest
rate of 9.7%.............................................. 3,575 3,002
Other....................................................... 444 374
-------- --------
$777,627 $761,927
Less -- Current portion..................................... 643 759,286
-------- --------
Long-term portion........................................... $776,984 $ 2,641
======== ========

Scheduled maturities of long-term debt after December 31, 2000 are as
follows (in thousands): $735 in 2001; $19,720 in 2002; $65,536 in 2003; $12,082
in 2004; $101,892 in 2005 and $561,962 thereafter. The Company has classified
the entire amount outstanding under its credit facility and all outstanding
senior subordinated notes as current. Although there are no scheduled
maturities, the Company has classified its credit facility as current because
the Company does not

F-12
54
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

project compliance with existing covenants throughout 2001. The Company has
classified its senior subordinated notes as current because the Company has
failed to make its scheduled interest payments on the 1998 Notes. See further
discussion in Note 2.

The estimated fair value of the long-term debt excluding capital lease
obligations is listed below. The fair value of the senior subordinated notes is
based on market quotes as of the dates indicated.

DECEMBER 31, 1999 DECEMBER 31, 2000
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------

Credit Facility............................... $ 75,000 $ 75,000 $133,000 $133,000
Senior subordinated notes..................... 698,608 429,174 625,551 152,544
Other......................................... 444 444 301 301
-------- -------- -------- --------
Total debt, excluding capital
leases............................ $774,052 $504,618 $758,852 $285,845
======== ======== ======== ========

Credit Facility

On March 17, 2000, Metrocall and its bank lenders entered into an amended
and restated credit facility (the "credit facility"). Under the credit facility,
subject to certain conditions, Metrocall may borrow up to $200.0 million under
two loan facilities. Facility A is a $150.0 million reducing revolving credit
facility, and Facility B is a $50.0 million term loan facility. The credit
facility is secured by substantially all of the assets of Metrocall. Required
quarterly repayments begin on March 31, 2002, and continue through June 1, 2005
for both facilities. The final maturity of the facilities is June 1, 2005. At
December 31, 2000, there was $133.0 million outstanding under the credit
facility.

The credit facility contains various covenants that, among other
restrictions, require Metrocall to maintain certain financial ratios, including
net debt to annualized operating cash flow (not to exceed 6.00 to 1.00 through
December 31, 2000; 5.50 to 1.00 between January 1, 2001 and December 31, 2001
and declining thereafter), senior debt to annualized operating cash flow (not to
exceed 1.75 to 1.00 through December 31, 2000 and declining to 1.50 to 1.00
thereafter), annualized operating cash flow to pro forma debt service, total
sources of cash to total uses of cash and operating cash flow to interest
expense (in each case, as such terms are defined in the credit facility). The
covenants also limit additional indebtedness and future mergers and acquisitions
without the approval of the lenders and restrict the payment of cash dividends
and other stockholder distributions by Metrocall during the term of the credit
facility. The credit facility also prohibits certain changes in ownership of
Metrocall, as defined in the credit agreement. The credit facility also includes
a material adverse effect clause under which Metrocall could be in default if
there is a material adverse effect upon its assets, liabilities, financial
condition or results of operations.

Effective June 30, 2000, Metrocall and its bank lenders entered into the
first amendment to the credit facility, which amended the operating cash flow to
interest expense ratio covenant for the three months ended June 30, 2000 and
September 30, 2000 reducing this covenant to a ratio of 1.50 to 1.00. Effective
December 31, 2000, Metrocall and its bank lenders entered into the second
amendment to the credit facility, which lowered the operating cash flow to
interest expense ratio covenant to 1.65 to 1.00 for the three months ended
December 31, 2000 and 1.75 to 1.00 for the three months ended March 31, 2001.
This ratio will increase to 2.00 to 1.00 beginning June 30, 2001. The second
amendment also limited the aggregate principal amount of borrowings that may be
outstanding through June 30, 2001 to $153.0 million and $173.0 million through
December 31, 2001. Had Metrocall not entered into these amendments, it would not
have been in compliance with this covenant for the three months ended June 30,
2000, September 30, 2000 and December 31, 2000.

Under the Credit Facility, Metrocall may designate all or any portion of
the borrowings outstanding as either a floating base rate advance or a
Eurodollar rate advance with an applicable margin that ranges from 0.625% to
1.875% for base rate advances and 1.75% to 3.00% for Eurodollar rate advances.
The predefined margins are based upon the level of indebtedness outstanding
relative to annualized cash flow, as defined in the credit facility agreement.
Commitment fees of

F-13
55
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

0.375% to 0.750% per year (depending on the level of Metrocall's indebtedness
outstanding to annualized cash flow) are charged on the average undrawn balance
of the Facility A commitment and are charged to interest expense as incurred.

YEAR ENDED DECEMBER 31,
-----------------------------
OTHER CREDIT FACILITY DATA 1998 1999 2000
-------------------------- -------- ------- --------

Weighted average balances outstanding.................... $178,600 $79,536 $102,686
Interest expense......................................... $ 13,100 $ 7,067 $ 11,814
Weighted average interest rate........................... 7.3% 8.9% 11.5%
Effective interest rate at December 31................... 7.8% 8.9% 9.8%

Senior Subordinated Notes/Extraordinary Gain

During the year ended December 31, 2000, Metrocall issued 8,619,537 shares
of its common stock in exchange for $73.4 million aggregate principal amount of
its outstanding senior subordinated notes. As a result of these exchanges,
Metrocall recognized an extraordinary gain of $22.9 million, which represented
the difference between the carrying value of the notes at the time of the
exchange and the fair value of the common stock issued, less the write-off of a
pro-rata portion of the related deferred financing costs. The average conversion
price of each share of Metrocall common stock was $5.51. Metrocall conducted
these exchanges without registration under the Securities Act of 1933 in
reliance upon the exemption in section 3(a)(9) of that act.

10 3/8% Senior Subordinated Notes

In October 1995, Metrocall issued $150.0 million aggregate principal amount
of 10 3/8% senior subordinated notes due 2007 (the "1995 Notes"). At December
31, 2000, $135.0 million aggregate principal amount of the 1995 Notes were
outstanding. Interest on the 1995 Notes is payable semi-annually on April 1 and
October 1. The 1995 Notes are general unsecured obligations subordinated in
right to Metrocall's existing long-term debt and other senior obligations, as
defined. The 1995 Notes contain various covenants that, among other
restrictions, limit Metrocall's ability to incur additional indebtedness, pay
dividends, engage in certain transactions with affiliates, sell assets and
engage in mergers and consolidations except under certain circumstances.

The 1995 Notes may be redeemed at Metrocall's option after October 1, 2000
at the following redemption prices plus accrued and unpaid interest during the
12-month period beginning on October 1 of the years indicated below:

YEAR PERCENTAGE
---- ----------

2000........................................................ 105.188%
2001........................................................ 103.458
2002........................................................ 101.729
2003 and thereafter......................................... 100.000

In the event of a change in control of Metrocall, as defined, each holder
of the 1995 Notes will have the right, at such holder's option, to require
Metrocall to purchase that holder's 1995 Notes at a purchase price equal to 101%
of the principal amount thereof, plus any accrued and unpaid interest to the
date of repurchase.

9 3/4% Senior Subordinated Notes

In October 1997, Metrocall issued $200.0 million aggregate principal amount
of 9 3/4% senior subordinated notes due 2007 (the "1997 Notes"). At December 31,
2000, $171.3 million aggregate principal amount of the 1997 notes were
outstanding. The 1997 Notes bear interest, payable semi-annually on January 15
and July 15. The Notes are callable beginning November 1, 2002. The 1997 Notes
are unsecured obligations of Metrocall, subordinated to all its present and
future senior indebtedness. The 1997 Notes contain various covenants that, among
other restrictions, limit Metrocall's

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ability to incur additional indebtedness, pay dividends, engage in certain
transactions with affiliates, sell assets and engage in mergers and
consolidations except under certain circumstances.

The 1997 Notes may be redeemed at Metrocall's option after November 1, 2002
at the following redemption prices plus accrued and unpaid interest during the
12-month period beginning on November 1 of the years indicated below:

YEAR PERCENTAGE
---- ----------

2002........................................................ 104.8750%
2003........................................................ 102.4375
2004 and thereafter......................................... 100.0000

In the event of a change of control of Metrocall, as defined, each holder
of the 1997 Notes will have the right, at such holder's option, to require
Metrocall to repurchase that holder's 1997 Notes at a purchase price equal to
101% of the principal amount thereof, plus any accrued and unpaid interest to
the date of repurchase.

11 7/8% Senior Subordinated Notes

In connection with the ProNet merger, Metrocall assumed $100.0 million
aggregate principal amount of ProNet's 11 7/8% senior subordinated notes due
2005 (the "ProNet Notes"). At December 31, 2000, $93.0 million aggregate
principal amount of the ProNet Notes were outstanding. The ProNet Notes bear
interest, payable semi-annually on June 15 and December 15. The ProNet Notes are
general unsecured obligations subordinated in right to Metrocall's existing
long-term debt and other senior obligations, as defined. The ProNet Notes
contain various covenants that, among other restrictions, limit Metrocall's
ability to incur additional indebtedness, pay dividends, engage in certain other
transactions with affiliates, sell assets and engage in mergers and
consolidations except under certain conditions.

The ProNet Notes may be redeemed at Metrocall's option on or after June 15,
2000 at the following redemption prices plus accrued and unpaid interest during
the 12-month period beginning on June 15 of the years indicated below:

YEAR PERCENTAGE
---- ----------

2000........................................................ 105.938%
2001........................................................ 103.958
2002........................................................ 101.979
2003 and thereafter......................................... 100.000

In the event of a change of control of Metrocall, as defined, each holder
of the ProNet Notes will have the right to require that Metrocall repurchase
such holder's ProNet Notes at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of repurchase.

11% Senior Subordinated Notes

In December 1998, Metrocall completed the placement of $250.0 million
aggregate principal amount of 11% senior subordinated notes due 2008 (the "1998
Notes"). At December 31, 2000, $226.1 million aggregate principal amount of the
1998 Notes were outstanding. The 1998 Notes bear interest, payable semi-annually
on March 15 and September 15. The Notes are callable beginning September 15,
2003. The 1998 Notes are unsecured obligations of Metrocall, subordinated to all
its present and future senior indebtedness. The 1998 Notes contain various
covenants that, among other restrictions, limit Metrocall's ability to incur
additional indebtedness, pay dividends, engage in certain other transactions
with affiliates, sell assets and engage in mergers and consolidations except
under certain conditions.

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The 1998 Notes may be redeemed at Metrocall's option on or after September
15, 2003 at the following redemption prices plus accrued and unpaid interest
during the 12-month period beginning on September 15 of the years indicated
below:

YEAR PERCENTAGE
---- ----------

2003........................................................ 105.500%
2004........................................................ 103.667
2005........................................................ 101.833
2006 and thereafter......................................... 100.000

In the event of a change of control of Metrocall, as defined, each holder
of the 1998 Notes will have the right to require that Metrocall repurchase such
holder's 1998 Notes at a purchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest to the date of repurchase.

11 7/8% Senior Subordinated Notes (the "A+ Notes")

At December 31, 1999 and 2000, $174,000 aggregate principal amount of the
A+ Notes were outstanding. The A+ Notes bear interest, payable semi-annually on
May 1 and November 1.

Metrocall made cash payments for interest of $58.0 million, $74.1 million
and $82.0 million for the years ended December 31, 1998, 1999, and 2000,
respectively.

Lease Obligations

Metrocall is party to one capital lease agreement for office space. The
future minimum rental commitment under this lease is as follows (in thousands):
$923 in 2001, $951 in 2002, $980 in 2003, $752 in 2004 and $0 in 2005. At
December 31, 2000, the aggregate future minimum capital lease payment under this
lease was $3,606 including interest of $604.

Metrocall has various operating lease arrangements (as lessee) for office
space and communications equipment sites. Rental expenses related to operating
leases were approximately (in thousands) $37,362, $48,311 and $47,547 for the
years ended December 31, 1998, 1999 and 2000, respectively.

Minimum rental payments as of December 31, 2000, required under operating
leases that have initial or remaining non-cancelable lease terms in excess of
one year are as follows (in thousands): $10,976 in 2001, $7,902 in 2002, $4,618
in 2003, $3,195 in 2004, $1,884 in 2005 and $1,349 thereafter.

Rent expense for lease agreements with related parties for office space,
tower sites and transmission systems, excluding consolidated entities, was
approximately (in thousands) $1,033, $997 and $980 for the years ended December
31, 1998, 1999 and 2000, respectively. Metrocall leases office and warehouse
space from a company owned by a director. The annual rental commitment under
these leases, is approximately $525,000. Metrocall believes the terms of these
leases are at least as favorable as those that could be obtained from a
non-affiliated party.

7. COMMON AND PREFERRED STOCK

At December 31, 2000, Metrocall's authorized capital stock consisted of
200,000,000 shares of common stock and 1,000,000 shares of preferred stock, of
which 810,000 shares were designated Series A Convertible Preferred Stock (the
"Series A Preferred"), and 100,000 shares were designated Series E Junior
Participating Preferred Stock ("Series E Preferred"), all with a par value $0.01
per share.

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Common Stock

Due to FCC limitations on the foreign ownership of FCC licenses, no more
than 20 percent of Metrocall's common stock may, in the aggregate, be owned
directly, or voted by a foreign government, a foreign corporation, or resident
of a foreign country. Metrocall's amended and restated certificate of
incorporation permits the redemption of the common stock from stockholders,
where necessary, to protect its regulatory licenses. Such stock may be redeemed
at fair market value or, if the stock was purchased within one year of such
redemption, at the lower of fair market value or such holder's purchase price.

Issuances of Common Stock to Three Equity Investors

On March 17, 2000, Metrocall issued 23,411,633 shares of its common stock
for $2.19 per share to three investors including: PSINet Inc. (PSINet), Aether
Systems, Inc. (Aether) and an affiliate of Hicks, Muse, Tate & Furst
Incorporated (HMT&F). Total proceeds raised from the issuances were $51.3
million. Such proceeds were used for general corporate purposes. Pursuant to the
common stock purchase agreements with each of these investors, each investor has
the right to nominate a representative to Metrocall's Board of Directors.
Metrocall has agreed to register for resale the shares of common stock held by
these investors, subject in each case to certain conditions and limitations.
Because the common stock investments were transactions not involving a public
offering, each investment was exempt from registration pursuant to Section 4(2)
of the Securities Act.

Each of the three equity investors also agreed to certain limitations until
March 17, 2002. These limitations include the following: each investor will not,
directly or indirectly, (i) increase its beneficial ownership of any securities
or rights or options to acquire beneficial ownership of any securities of
Metrocall, except by way of stock dividends, stock splits or distributions made
by Metrocall to holders of common stock (Aether may acquire up to 15% of the
issued and outstanding common stock, and HMT&F may acquire up to 15% of the
issued and outstanding common stock, which 15% ownership limit does not include
the shares issuable under or purchased pursuant to the Option Agreement); (ii)
make any public announcement with respect to or submit to Metrocall any proposal
for the acquisition of securities of Metrocall or for any merger, consolidation,
or business combination involving Metrocall or its affiliates or for any
purchase of a substantial portion of the assets of Metrocall or its affiliates;
(iii) make, or in any way participate in, any "solicitation" of "proxies" to
vote any voting securities of Metrocall or become a participant in any "election
contest" (as those terms are defined in Regulation 14A under the Securities
Exchange Act of 1934, as amended (the Exchange Act)); (iv) form, join, or in any
way participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any voting securities of Metrocall; or (v) seek to
influence or influence the management or policies of Metrocall, with the
exception of the investor's designee on the Board of Directors may act to take
action in his capacity as a director of Metrocall.

Metrocall also granted HMT&F two options to purchase additional shares of
Metrocall common stock. Metrocall granted an option to purchase 8,333,333 shares
of common stock (Option I), at an exercise price of $3.00 per share, subject to
adjustment under certain events. Option I expired on March 17, 2001. Metrocall
also granted HMT&F (i) an option to purchase 12,500,000 shares of common stock
at an exercise price of $4.00 per share plus, (ii) if HMT&F has not exercised
Option I, 8,333,333 shares of common stock at an exercise price per share of
$3.00, in each case subject to adjustment under certain events (collectively,
Option II). Option II may be exercised in whole or in part but only in
connection with the issuance of new equity for cash to finance a business
combination or acquisition (by means of merger, consolidation, exchange, or
acquisition of assets, or otherwise) involving Metrocall or any of its
subsidiaries and an aggregate transactional consideration to the other entity or
its equity and debt holders or to Metrocall and its equity and debt holders
having a fair value (as determined in good faith by Metrocall's Board of
Directors) of at least $50,000,000 (a Qualified Transaction). Option II will
expire on March 17, 2002, except that it can be extended if there are pending
active discussions with respect to a potential Qualified Transaction or material
changes in the terms of a Qualified Transaction. The Option II transaction is
subject to the expiration of the applicable HSR Act waiting period, the receipt
of any required consent of the FCC, and other customary closing conditions.

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Series A Preferred

At December 31, 2000, there were 247,149 shares of the Series A Preferred
outstanding, including 32,977 shares of Series A Preferred shares issued during
2000 as dividends. Accrued but unpaid dividends were approximately $1.1 million.
Each share of the Series A Preferred has a stated value of $250 per share and
has a liquidation preference over shares of Metrocall's common stock equal to
the stated value. The Series A Preferred carries a dividend of 14% of the stated
value per year, payable semiannually in cash or in additional shares of the
Series A Preferred, at Metrocall's option. Upon the occurrence of a triggering
event, as defined in the certificate of designation for the Series A Preferred,
and so long as the triggering event continues, the dividend rate increases to
16% per year. Triggering events include, among other events, (i) Metrocall
issues or incurs indebtedness or equity securities senior with respect to
payment of dividends or distributions on liquidation or redemption to the Series
A Preferred in violation of limitations set forth in the certificate of
designation, and (ii) acceleration of the payment of indebtedness in an amount
of $5,000,000 or more.

Holders of the Series A Preferred have the right, beginning five years from
the date of issuance, to convert their Series A Preferred (including shares
issued as dividends) into shares of common stock based on the market price of
the common stock at the time of conversion. The Series A Preferred may, at the
holders' option, be converted sooner upon a change of control of Metrocall, as
defined in the certificate of designation. The Series A Preferred must be
redeemed on November 15, 2008, for an amount equal to the stated value plus
accrued and unpaid dividends.

Beginning November 15, 1999, Metrocall had the ability to redeem the Series
A Preferred in whole or in part (subject to certain minimums). The redemption
price prior to November 15, 2001, is equal to the stated value of the shares of
the Series A Preferred, plus accrued and unpaid dividends, and a redemption
premium, as defined. After November 15, 2001, the Series A Preferred Stock may
be redeemed for the stated value of $250 per share, without a premium.

Holders of Series A Preferred have the right to elect two members to
Metrocall's Board of Directors. If a triggering event has occurred and is
continuing, the holders of the Series A Preferred have the right to elect
additional directors so that directors elected by such holders shall constitute
no less than 40% of the members of the Board of Directors. Metrocall is required
to obtain the approval of the holders of not less than 75% of the Series A
Preferred before undertaking (i) any changes in Metrocall's certificate of
incorporation and bylaws that adversely affect the rights of holders of the
Series A Preferred, (ii) a liquidation, winding up or dissolution of Metrocall
or the purchase of shares of capital stock of Metrocall from holders of over 5%
of the issued and outstanding voting securities, (iii) any payment of dividends
on or redemption of common stock; or (iv) issuance of any additional shares of
the Series A Preferred (except in payment of dividends) or any shares of capital
stock having preferences on liquidation or dividends ranking equally to the
Series A Preferred. Metrocall is also required to obtain approval of holders of
not less than a majority of the issued and outstanding Series A Preferred before
undertaking (i) any acquisition involving consideration having a value equal to
or greater than 50% of the market capitalization of the Company or (ii) any sale
of Metrocall unless it redeems the Series A Preferred.

Series C Preferred

On March 17, 2000, Metrocall issued 13,250,000 shares of its common stock
to AT&T Wireless Services, Inc., the sole holder of Metrocall's Series C
Preferred in exchange for all the issued and outstanding shares of the Series C
Preferred pursuant to a securities exchange agreement dated February 2, 2000.
Metrocall recorded the exchange transaction by reducing the carrying value of
the Series C Preferred, at the time of the transaction of $105.4 million, with
an increase to common stock and additional paid-in capital on the balance sheet
of $111.5 million and an inducement expense, as explained below, of $6.3
million. This adjustment represented the issuance of the shares of Metrocall
common stock at its fair market value of $26.8 million based on the market price
per share of Metrocall's common stock on February 2, 2000 resulting in the
elimination of $78.6 million of excess carrying value of the Series C Preferred,
over the fair market value of the common stock issued.

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Metrocall recognized an "inducement" expense for purposes of determining
the net loss applicable to common stockholders. The inducement expense
represented the excess of (1) the fair value of the 13,250,000 shares of common
stock issued to the holder of the Series C Preferred over (2) the fair value of
the common stock that would have been issued pursuant to the original conversion
terms of the Series C Preferred. Although the Series C Preferred was not
convertible into common stock at the time the exchange transaction occurred, had
the original conversion terms been followed, Metrocall would have issued
approximately 10,100,000 shares based on the carrying value of the Series C
Preferred on the date of the exchange. The inducement expense represents the
fair value of the 3,150,000 additional shares of common stock that was received
by the holder in the exchange or $6.3 million.

Warrants

In connection with the issuance of the Series A Preferred discussed above,
Metrocall issued Warrants to purchase common stock. Each warrant represented the
right of the holder to purchase 18.266 shares of common stock or an aggregate of
2,915,254 shares of common stock at an exercise price per share of $7.40. The
warrants expire November 15, 2001.

As a result of the common stock issuances described above, the exercise
price of the Warrants and the number of shares of common stock that may be
purchased upon exercise of the Warrants was adjusted pursuant to the
anti-dilution provisions of the Warrants. The number of shares of common stock
that may be purchased upon the exercise of each Warrant increased from 18.266
shares to 18.531 shares of common stock or an aggregate of 2,957,529 shares and
the exercise price of the Warrants was adjusted from $7.40 per share to $2.74
per share. The exercise price of the Warrants and number of shares of common
stock that may be purchased upon exercise of the Warrants may be adjusted again
in the future as a result of anti-dilution and other provisions of the Warrants.
During 2000, 1,102,920 shares of common stock were issued upon exercise of
59,600 Warrants for proceeds of $2.678 million . Metrocall received 11,932
shares of Series A Preferred in lieu of full cash proceeds. At December 31,
2000, 100,000 warrants, convertible into 1,853,100 shares of common stock, were
outstanding.

Preferred Stock Rights Plan

In February 2000, the Board of Directors adopted a stockholders' rights
plan and declared a dividend distribution of one preferred share purchase right
("Right") for each outstanding share of the common stock. Each Right, when
exercisable, entitles the registered holder to purchase from Metrocall 1/1000th
of a share of Series E Preferred at a price of $50 per 1/1000th share, subject
to adjustment (the "Purchase Price"). For purposes of the Rights Plan, the Board
of Directors has designated 100,000 shares of Series E Preferred, which amount
may be increased or decreased by the Board of Directors.

The Rights will separate from the common stock and a distribution of Right
Certificates (as defined below) will occur upon the earlier of the following
dates (the earlier of such dates, the "Distribution Date"): (1) twenty business
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding shares of
common stock (the "Share Acquisition Date"), or (2) twenty business days (or
such later date as the Board of Directors may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person (other than the Excluded Persons as defined below) of 20%
or more of the outstanding shares of common stock, in either (1) or (2) other
than pursuant to a Qualified Offer (as defined below).

The Rights are not exercisable until the Distribution Date and will expire
at the close of business on February 25, 2010, unless earlier redeemed or
exchanged by Metrocall as provided in the Rights Agreement.

In the event that a person (other than the Excluded Persons, as defined)
becomes the beneficial owner of 20% or more of the then outstanding shares of
common stock (except pursuant to an offer for all outstanding shares of common
stock and on terms that at least a majority of independent directors determine
to be fair to and otherwise in the best

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interests of Metrocall and its stockholders (a "Qualified Offer")) (a "Flip-in
Event"), each holder of a Right will, after the end of the Redemption Period
(defined below), have the right to exercise the Right by purchasing, for an
amount equal to the Purchase Price, shares of common stock (or, in certain
circumstances, cash, property or other securities of Metrocall) having a value
(determined pursuant to a formula set forth in the Rights Agreement) equal to
two times such amount. Notwithstanding any of the foregoing, following the
occurrence of a Flip-in Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of a Flip-in Event until such time as the Rights are no
longer redeemable by Metrocall as set forth below.

In the event that, at any time following the Share Acquisition Date, (1)
Metrocall is acquired in a merger or other consolidation transaction in which
Metrocall is not the surviving corporation (other than a merger or consolidation
transaction that follows a Qualified Offer), (2) Metrocall engages in a merger
or consolidation transaction (other than a merger or consolidation transaction
that follows a Qualified Offer) in which Metrocall is the surviving corporation
and its common stock is changed into or exchanged for other securities or
assets, or (3) 50% or more of Metrocall's assets or earning power is sold or
transferred (other than to Metrocall or a wholly owned subsidiary of Metrocall),
each holder of a Right (except Rights that previously have been voided as set
forth above) shall, after the expiration of the Redemption Period (defined
below), have the right to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the Purchase Price of the Right.

At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Board of Directors may exchange the Rights
(other than Rights owned by such person or group, which have become void), in
whole or in part, at an exchange ratio of one share of common stock, per Right
(subject to adjustment).

The Purchase Price payable, and the number of 1/1000ths of a Preferred
Share or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution to holders of the
Rights in certain circumstances.

In general, the Board of Directors may cause Metrocall to redeem the Rights
in whole, but not in part, at any time ending on the earlier of the close of
business on (1) the 20th day following the Share Acquisition Date or (2)
February 25, 2010 (the "Redemption Period") at a price of $.0001 per Right
(payable in cash, common stock or other consideration deemed appropriate by the
Board of Directors). Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of Metrocall, including, without
limitation, the right to vote or to receive dividends.

8. EMPLOYEE STOCK OPTION AND OTHER BENEFIT PLANS

1993 Stock Option Plan

Under the 1993 Metrocall Stock Option Plan, as amended, (the "1993 Plan"),
options to purchase up to an aggregate of 975,000 shares of common stock were
reserved for grants to key employees. The 1993 Plan limits the maximum number of
shares that may be granted to any person eligible under the 1993 Plan to
325,000. All options have been issued with exercise prices equal to the fair
market value at date of grant. All options granted under the 1993 Plan become
fully vested and exercisable on the second anniversary of the date of grant.
Each option granted under the 1993 Plan will terminate no later than ten years
after the date the option was granted.

Under the 1993 Metrocall Directors Stock Option Plan (the "Directors
Plan"), options to purchase up to an aggregate of 25,000 shares of common stock
are available for grants to members of the Board of Directors who are neither
officers nor employees of Metrocall ("Eligible Director"). Options issued under
the Directors Plan vest fully on the six-month anniversary of the date of grant.
Each Eligible Director was also granted an option to purchase 1,000 shares of
common stock on the first and second anniversaries of the grant date of the
initial option if the director continues to be an Eligible Director on each of
such anniversary dates.

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METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1996 Stock Option Plan

Under the Metrocall 1996 Stock Option Plan (as amended, the "1996 Plan"),
options to purchase up to an aggregate of 10.5 million shares of common stock
have been reserved for grant to key employees, officers and non-employee
directors ("Qualified Directors"). The 1996 Plan limits the maximum number of
shares that may be granted to any person eligible under the 1996 Plan to 1
million in any calendar year. If any option granted under the 1996 Plan expires
or terminates prior to exercise in full, the shares subject to that option shall
be available for future grants under the 1996 Plan. Substantially all employees
and Qualified Directors of Metrocall are eligible to participate in the 1996
Plan. All options granted under the 1996 Plan become fully vested and
exercisable on the second anniversary of the date of grant. Each option granted
under the 1996 Plan will terminate no later than ten years from the date the
option was granted.

Under the 1996 Plan, both incentive stock options and nonstatutory stock
options are available for grant to employees. For incentive stock options, the
option price shall not be less than the fair market value of a share of common
stock on the date the option is granted. For nonstatutory options, the option
price shall not be less than the par value of common stock. All options granted
to Qualified Directors shall be nonstatutory options. Upon approval of the 1996
Plan, each Qualified Director was granted an initial option to purchase 10,000
shares of common stock. Thereafter, every Qualified Director will be granted an
initial option to purchase 10,000 shares of common stock at the time the
Qualified Director commences service on the Board of Directors. Subsequently,
each Qualified Director who received an initial grant of an option shall receive
an additional option to purchase 1,000 shares of common stock on each
anniversary of the initial option, provided that the director continues to be a
Qualified Director on each anniversary date. Options granted to Qualified
Directors shall become fully vested six months after the date of grant. The
exercise price for options granted to Qualified Directors shall be the fair
market value of common stock on the date the option is granted.

Employee Stock Purchase Plan

Under the Metrocall, Inc. 1996 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), up to 2 million shares of common stock may be purchased by
eligible employees through payroll deductions of up to 15% of their eligible
compensation. Substantially all full-time employees are eligible to participate
in the Stock Purchase Plan. Participants may elect to purchase shares of common
stock at the lesser of 85% of the fair market value on either the first or last
trading day of each deduction period. No employee may purchase in one calendar
year shares of common stock having an aggregate fair market value in excess of
$25,000. Employees were issued 138,413 shares, 276,967 shares and 426,726 shares
of common stock in 1998, 1999, and 2000, respectively, under the Stock Purchase
Plan. At December 31, 2000, 761,240 shares of common stock were due to Stock
Purchase Plan participants, which were subsequently issued in January 2001.

Accounting for Stock-Based Compensation

Metrocall accounts for its stock option plans under Accounting Principles
Board Opinion No. 25 "Accounting for Stock Issued to Employees." In accordance
with the recognition requirements set forth under this pronouncement, no
compensation expense was recognized for the three years ended December 31, 2000
because Metrocall had granted options to acquire common stock at exercise prices
equal to the fair value of the common stock on the dates of grant. In 1996,
Metrocall had elected to adopt SFAS No. 123 "Accounting for Stock Based
Compensation" for disclosure purposes only.

For disclosure purposes, the fair value of each stock purchase and option
grant was estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted-average assumptions in 1998, 1999, and 2000,
respectively: expected volatility of 69.7%, 79.77%, and 211.52%, risk free
interest rate of 4.7%, 6.4% and 5.1%, and expected life of ten years for all
option grants. The weighted-average fair value of stock options granted in 1998,
1999 and 2000 was $4.15 per share, $2.88 per share, and $0.47 per share,
respectively.

Under the above model, the total value of stock options granted in 1998,
1999 and 2000 was approximately $7.0 million, $5.0 million and $1.1 million,
respectively, which would be recognized ratably on a pro forma basis over the

F-21
63
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

two year vesting period. Had compensation been determined and recorded in the
statements of operations, in accordance with SFAS No. 123, Metrocall loss and
loss per share information would have been increased to the pro forma amounts
indicated below:

YEAR ENDED DECEMBER 31,
---------------------------------
1998 1999 2000
--------- --------- ---------

Pro forma loss attributable to common stockholders... $(146,673) $(190,077) $(233,728)
Pro forma loss per share attributable to common
stockholders....................................... (3.57) (4.55) (3.04)

The resulting pro forma compensation cost may not be representative of that
to be expected in future years. Stock option transactions are summarized as
follows:

NUMBER OF EXERCISE WEIGHTED-AVERAGE
SHARES PRICE RANGE EXERCISE PRICE
--------- -------------- ----------------

Options outstanding, December 31, 1997............... 3,470,655 $1.035-$22.125 $6.84
Options granted.................................... 1,681,700 5.125-6.75 5.13
Options exercised.................................. -- -- --
Options canceled................................... (144,802) 5.125-6.67 5.90
--------- -------------- -----
Options outstanding, December 31, 1998............... 5,007,553 $1.035-$22.125 $5.84
Options granted.................................... 1,748,500 2.75-5.6250 3.38
Options exercised.................................. -- -- --
Options canceled................................... (287,395) 3.2190-19.50 6.07
--------- -------------- -----
Options outstanding, December 31, 1999............... 6,468,658 $1.035-$22.125 $5.16
Options granted.................................... 2,338,000 1.969-9.00 2.49
Options exercised.................................. (501,808) 3.330-6.67 5.62
Options canceled................................... (432,695) 2.030-6.67 4.74
--------- -------------- -----
Options outstanding, December 31, 2000............... 7,872,155 $1.035-$22.125 $4.36
========= ============== =====
Options exercisable, December 31, 1998............... 2,972,353 $1.035-$22.125 $6.17
Options exercisable, December 31, 1999............... 3,465,658 $1.035-$22.125 $6.06
Options exercisable, December 31, 2000............... 4,236,655 $1.035-$22.125 $5.74

The following table summarizes information about the options outstanding at
December 31, 2000:

OPTIONS EXERCISABLE OPTIONS OUTSTANDING
------------------------------ -------------------------------------------------
WEIGHTED-AVERAGE
RANGE OF EXERCISE NUMBER WEIGHTED-AVERAGE NUMBER REMAINING LIFE WEIGHTED-AVERAGE
PRICES OUTSTANDING EXERCISE PRICE OUTSTANDING (YEARS) EXERCISE PRICE
- ----------------- ----------- ---------------- ----------- ---------------- ----------------

$1.035 - $2.21 94,323 $1.803 2,025,823 9.0 $ 2.02
$2.21 - $4.425 16,000 3.42 1,519,500 8.3 3.23
$4.43 - $6.63 3,337,252 5.61 3,537,752 6.0 5.65
$6.64 - $8.85 779,080 6.67 779,080 1.7 6.67
$8.86 - $22.13 10,000 16.99 10,000 4.4 16.99
--------- ------ --------- -------- ------
4,236,655 $ 5.74 7,872,155 6.8 $ 4.36
========= ====== ========= ======== ======

Profit Sharing Plan and Retirement Benefits

The Metrocall, Inc. Savings and Retirement Plan (the "Plan"), a combination
employee savings plan and discretionary profit-sharing plan, is open to all
employees working a minimum of twenty hours per week with at least six

F-22
64
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

months of service. The Plan qualifies under section 401(k) of the Internal
Revenue Code (the "IRC"). Under the Plan, participating employees may elect to
voluntarily contribute on a pretax basis between 1% and 15% of their salary up
to the annual maximum established by the IRC. Metrocall has agreed to match 50%
of the employee's contribution, up to 4% of each participant's gross salary.
Contributions made by Metrocall vest 20% per year beginning on the second
anniversary of the participant's employment. Other than Metrocall's matching
obligations, discussed above, profit sharing contributions are discretionary.
Metrocall's matching contributions under the Plan recorded were $1,033,000,
$1,426,000 and $1,499,000 for the years ended December 31, 1998, 1999 and 2000,
respectively.

9. CONTINGENCIES

Metrocall is subject to certain legal and regulatory matters in the normal
course of business. In the opinion of management, the outcome of such assertions
will not have a material adverse effect on the financial position or the results
of the operations of Metrocall.

In December 1998, Electronic Tracking Systems Pty Limited ("ETS"), an
Australian company, commenced a proceeding against ProNet Inc. (of which
Metrocall is the successor) before the Industrial Relations Board of New South
Wales, Australia. ETS challenged that ProNet orally agreed to extend a contract
with ETS pursuant to which ProNet had licensed its electronic tracking system to
ETS in Australia and that ProNet breached the agreement. The complaint seeks
declaratory relief and also contains a demand for payment of $33 million
(Australian) (approximately US $17.2 million at current exchange rates).
Metrocall had filed a motion to dismiss the proceeding on jurisdictional
grounds, including that the contract between ETS and ProNet provides for
arbitration in the State of Texas under Texas law. A justice of the Industrial
Commission ruled that the Commission would exercise jurisdiction over the
dispute, and that decision has been upheld by a ruling of the full Commission.
Metrocall has sought permission to appeal this order to the High Court of
Australia, and hearings in this matter are scheduled on June 22, 2001, Metrocall
believes the claim is without merit.

10. INCOME TAXES

As of December 31, 2000, Metrocall had net operating loss and investment
tax credit carryforwards of approximately $359 million and $94,000,
respectively, which expire in the years 2000 through 2020. The benefits of these
carryforwards may be limited in the future as a result of historical changes in
the ownership of Metrocall. Net operating loss carryforwards may be used to
offset up to 90 percent of Metrocall's alternative minimum taxable income. The
provision for alternative minimum tax will be allowed as a credit carryover
against regular tax in the future in the event regular tax exceeds alternative
minimum tax expense. To the extent that acquired net operating losses are
utilized in future periods, the benefit will first be recognized to reduce
acquired intangible assets before reducing the provision for income taxes.

As of December 31, 2000, the tax effect of the net operating loss and
investment tax credit carryforwards, together with net temporary differences,
represents a net deferred tax asset for which management has provided a 100%
valuation allowance due to the uncertainty of future taxable income. These
carryforwards will provide a benefit for financial reporting purposes if they
are utilized to offset taxable income in the future.

F-23
65
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of net deferred tax assets (liabilities) were as follows as
of December 31, 1999 and 2000. (in thousands):

DECEMBER 31,
---------------------
1999 2000
--------- ---------

Deferred tax assets:
Allowance for doubtful accounts........................... $ 2,729 $ 4,512
Management reorganization................................. 732 616
Contributions............................................. 241 275
New pagers on hand........................................ 735 2,277
Intangibles............................................... 14,126 6,850
Other..................................................... 6,388 6,883
Investment tax credit carryforward........................ 1,204 94
Net operating loss carryforwards.......................... 100,565 143,197
--------- ---------
Total deferred tax assets......................... 126,720 164,704
========= =========
Deferred tax liabilities:
Basis differences attributable to purchase Accounting..... (119,196) (78,508)
Depreciation and amortization expense..................... (10,097) (23,563)
Other..................................................... (14,900) (179)
--------- ---------
Total deferred tax liabilities.................... (144,193) (102,250)
Net deferred asset (liability).............................. (17,473) 62,454
Less: Valuation allowance................................... (1,205) (62,454)
--------- ---------
$ (18,678) $ --
========= =========

During 2000, the Company's net operating losses and reversal of existing
deferred tax liabilities caused an increase in total deferred tax assets, which
now exceed the total deferred tax liabilities. The valuation allowance was
increased to fully reserve the net deferred tax asset (total deferred tax assets
less total deferred tax liabilities) due to uncertainty as to realization of the
net deferred tax assets. The income tax benefit for the years ended December 31,
1998, 1999 and 2000, is primarily the result of the amortization of the basis
differences attributable to purchase accounting related mergers and acquisitions
occurring in 1998 and prior years and is composed of the following (in
thousands):

YEAR ENDED DECEMBER 31,
---------------------------
1998 1999 2000
------- ------- -------

Income tax (provision) benefit
Current --
Federal............................................... $ -- $ -- $ --
State................................................. (310) -- (180)
Deferred --
Federal............................................... 41,755 55,174 18,517
State................................................. 5,649 7,881 2,438
------- ------- -------
$47,094 $63,055 $20,775
======= ======= =======

F-24
66
METROCALL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The benefit for income taxes for the years ended December 31, 1998, 1999
and 2000, results in effective rates that differ from the Federal statutory rate
as follows:

YEAR ENDED DECEMBER
31,
-------------------
1998 1999 2000
---- ---- -----

Statutory Federal income tax rate........................... 35.0% 35.0% 35.0%
Effect of graduated rates................................... (1.0) (1.0) (1.0)
State income taxes, net of Federal tax benefit.............. 4.6 4.6 4.0
Increase in valuation allowance............................. -- -- (23.7)
Other....................................................... (5.8) (7.0) 0.4
Permanent differences....................................... (6.1) (4.8) (6.7)
---- ---- -----
26.7% 26.8% 8.0%
==== ==== =====

Metrocall made cash payments for income taxes of $690,000, $216,000 and
$80,000 for the years ended December 31, 1998, 1999 and 2000, respectively.

11. UNAUDITED QUARTERLY FINANCIAL DATA

The following table of quarterly financial data has been prepared from the
financial records of Metrocall, without audit, and reflects all adjustments that
are, in the opinion of management, necessary for a fair presentation of the
results of operations for the interim periods presented:

MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------------- ------------------- ------------------- -------------------
1999 2000 1999 2000 1999 2000 1999 2000
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Revenues.................................. $155,030 $140,052 $155,630 $140,667 $151,753 $139,517 $147,774 $141,747
Loss from operations...................... (36,879) (33,495) (39,776) (53,819) (37,968) (64,056) (36,208) (20,216)
Loss before extraordinary item............ (42,013) (33,400) (44,711) (59,768) (43,828) (68,672) (41,932) (75,590)
Loss attributable to common
stockholders............................ (43,808) (48,186) (48,759) (46,280) (47,979) (67,137) (46,192) (69,075)
Loss per share attributable to common
stockholders before extraordinary
item.................................... (1.05) (0.99) (1.17) (0.74) (1.15) (0.81) (1.10) (0.82)
Loss per share attributable to common
stockholders............................ (1.05) (0.99) (1.17) (0.56) (1.15) (0.77) (1.10) (0.78)

The sum of the per share amounts may not equal the annual amounts because
of the changes in the weighted-average number of shares outstanding during the
year.

The Company has increased (decreased) its previously reported loss from
operations, loss before extraordinary item and loss attributable to common
stockholders for the quarters ended March 31, 2000, June 30, 2000 and September
30, 2000 by $(8.6) million, $3.7 million and $7 million, respectively, and
increased (decreased) loss per share attributable to common stock shareholders
before and after extraordinary item by $(0.18), $0.05, and $0.08, respectively,
as a result of adjustments to the Company's tax benefit and amortization expense
that resulted from a review of the Company's required valuation allowance on net
operating loss carryforwards recorded in connection with previous business
combinations.

F-25
67

SCHEDULE II

METROCALL, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
(IN THOUSANDS)

ADDITIONS
------------------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES ACQUIRED(1) DEDUCTIONS(2) OF YEAR
----------- ---------- ---------- ----------- ------------- -------

Year ended December 31, 1998
Allowance for doubtful accounts.................. $6,843 $13,418 $1,377 $15,442 $6,196
====== ======= ====== ======= ======
Year ended December 31, 1999
Allowance for doubtful accounts.................. $6,196 $15,306 -- $14,399 $7,103
====== ======= ====== ======= ======
Year ended December 31, 2000
Allowance for doubtful accounts.................. $7,103 $17,441 897 $19,947 $5,494
====== ======= ====== ======= ======

- ---------------
(1) Allowance for doubtful accounts acquired in 1998 for AT&T Wireless Messaging
Division and in 2000 for NationPage.

(2) Deductions represent write-offs of accounts receivable.

S-1
68

EXHIBIT INDEX

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------

3.1 Restated Certificate of Incorporation of Metrocall, Inc. (Metrocall), as amended.+
3.2 Ninth Amended and Restated Bylaws of Metrocall.+
4.1 Rights Agreement, dated as of February 25, 2000, between Metrocall and First Chicago Trust Company of
New York, as Rights Agent.(a)
4.2 Indenture for Metrocall 11% Senior Subordinated Notes due 2008, dated as of December 22, 1998.(b)
4.3 Indenture for 9 3/4 Senior Subordinated Notes due 2007 dated October 21, 1997.(c)
4.4 Indenture for Metrocall 10 3/8% Senior Subordinated Notes due 2007 dated September 27, 1995.(d)
4.5 Indenture for ProNet Inc. (ProNet) 11 7/8% Senior Subordinated Notes due 2005 ("ProNet Notes") dated
June 15, 1995.(e)
4.6 Supplemental Indenture dated May 28, 1996 for ProNet Notes.(f)
4.7 Second Supplemental Indenture dated December 30, 1997 for ProNet Notes.(g)
4.8 Indenture for A+ Network, Inc. 11 7/8% Senior Subordinated Notes due 2005 ("A+ Notes") dated October
24, 1995.(h)
4.9 First Supplemental Indenture dated November 14, 1996 for A+ Notes.(i)
4.10 Second Supplemental Indenture dated November 15, 1996 for A+ Notes.(i)
4.11 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and
Other Rights of Series A Convertible Preferred Stock of Metrocall.(j)
4.12 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and
Other Rights of Series E Junior Participating Preferred Stock as filed with the Secretary of State of
the State of Delaware on February 25, 2000.(a)
4.13 Warrant Agreement between Metrocall and the First National Bank of Boston as Warrant Agent dated as
of November 15, 1996.(j)
10.1 Fifth Amended and Restated Loan Agreement by and among Metrocall, certain lenders and Toronto
Dominion (Texas), Inc. as administrative agent, dated as of March 17, 2000 ("Loan Agreement").(k)
10.2 First Amendment to Loan Agreement, dated June 30, 2000.(l)
10.3 Second Amendment to Loan Agreement, dated December 31, 2000.(m)
10.4 Securities Exchange Agreement by and between AT&T Wireless Services, Inc. and Metrocall dated
February 2, 2000.(n)
10.5 Common Stock Purchase Agreement by and between HMTF Bridge MCI, LLC and Metrocall dated February 2,
2000.(n)
10.6 Common Stock Purchase Agreement by and between Aether Systems, Inc. and Metrocall dated February 2,
2000.(n)
10.7 Common Stock Purchase Agreement by and between PSINet Inc. and Metrocall dated February 2, 2000.(n)
10.8 Stock Purchase Agreement by and among Metrocall and AT&T Wireless Services, Inc., McCaw
Communications Companies, Inc. and AT&T Two Way Messaging Communications, Inc, dated June 26,
1998.(o)
10.9 Units Purchase Agreement among Metrocall and the entities listed thereto dated November 15, 1996.(j)
10.10 Registration Rights Agreement between Metrocall and the entities listed thereto dated November 15,
1996.(j)
10.11 Employment Agreement between Metrocall and William L. Collins III.(p)
10.12 Amendment to Employment Agreement between Metrocall and William L. Collins III.(q)
10.13 Second Amendment to Employment Agreement between Metrocall and William L. Collins III.(r)
10.14 Third Amendment to Employment Agreement between Metrocall and William L. Collins III.(s)

S-2
69

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------

10.15 Fourth Amendment to Employment Agreement between Metrocall and William L. Collins, III.(l)
10.16 Employment Agreement between Metrocall and Steven D. Jacoby.(p)
10.17 Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(q)
10.18 Second Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(r)
10.19 Third Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(s)
10.20 Fourth Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(l)
10.21 Employment Agreement between Metrocall and Vincent D. Kelly.(p)
10.22 Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(q)
10.23 Second Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(r)
10.24 Third Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(s)
10.25 Fourth Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(l)
10.26 Change of Control Agreement between Metrocall and William L. Collins, III.(p)
10.27 Change of Control Agreement between Metrocall and Steven D. Jacoby.(p)
10.28 Change of Control Agreement between Metrocall and Vincent D. Kelly.(p)
10.29 Noncompetition Agreement between Metrocall and Jackie R. Kimzey dated August 8, 1997.(t)
10.31 Metrocall 1996 Stock Option Plan, as amended.(u)
10.32 Metrocall Amended Employee Stock Purchase Plan.(u)
10.33 Directors' Stock Option Plan, as amended.(v)
10.34 Deed of Lease between Douglas and Joyce Jemal, as landlord, and Metrocall, as tenant, dated April 14,
1994.(w)
10.35 Lease Agreement dated December 20, 1983 between Beacon Communications Associates, Ltd. and a
predecessor of Metrocall.(x)
11.1 Statement re computation of per share earnings.+
21.1 Subsidiaries of Metrocall, Inc.+
23.1 Consent of Arthur Andersen LLP, as independent public accountants for Metrocall.+

- ---------------

+ Filed herewith.
(a) Incorporated by reference to Metrocall's Registration
Statement on Form 8-A filed with the Commission on February
25, 2000.
(b) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on January 4, 1999.
(c) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on October 23, 1997.
(d) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042) filed
with the Commission on September 27, 1995.
(e) Incorporated by reference to ProNet's Current Report on Form
8-K filed with the Commission on July 5, 1995.
(f) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1998 filed with
the Commission on March 31, 1999.
(g) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 filed with
the Commission on May 15, 1998.
(h) Incorporated by reference to the Registration Statement on
Form S-1 of A+ Communications, Inc., as amended (File No.
33-95208) filed with the Commission on September 18, 1995.
(i) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1996 filed with
the Commission on March 31, 1997.
(j) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on November 21, 1996.
(k) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000 filed with
the Commission on May 15, 2000.
(l) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000 filed with the
Commission on August 14, 2000.

S-3
70

(m) Incorporated by reference to Metrocall's Current Report on
Form 8-K filed with the Commission on February 2, 2001.
(n) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with
the Commission on March 11, 2000.
(o) Incorporated by reference to Metrocall's Proxy Statement
filed with the Commission on August 31, 1998.
(p) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 333-06919) filed
with the Commission on June 27, 1996.
(q) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997 filed
with the Commission on November 14, 1997.
(r) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 filed with the
Commission on August 14, 1998.
(s) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999 filed with the
Commission on August 13, 1999.
(t) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 333-36079) filed
with the Commission on September 22, 1997.
(u) Incorporated by reference to Metrocall's Proxy Statement
filed with the Commission on April 4, 2000.
(v) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A, as amended, for the year ended December 31,
1993 filed with the Commission on July 21, 1994.
(w) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 filed
with the Commission on November 14, 1994.
(x) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-63886) filed
with the Commission on July 12, 1993.

S-4