QUARTERLY REPORT UNDER SECTION 13 0R 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
______________ to _____________
Commission File Numbers 0-23232/1-14248
ARCH WIRELESS, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1358569
(State of incorporation) (I.R.S. Employer Identification No.)
1800 WEST PARK DRIVE, SUITE 250
WESTBOROUGH, MASSACHUSETTS 01581
(address of principal executive offices) (Zip Code)
(508) 870-6700
(Registrant's telephone number, including area code)
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 Exchange 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 182,434,590 shares of the
Company's Common Stock ($.01 par value) were outstanding as of April 30, 2002.
ARCH WIRELESS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION PAGE
--------------------- ----
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets as of March 31, 2002
and December 31, 2001 3
Consolidated Condensed Statements of Operations for the
Three Months Ended March 31, 2002 and 2001 4
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2002 and 2001 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARCH WIRELESS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited and in thousands)
MARCH 31, DECEMBER 31,
2002 2001
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 66,433 $ 72,200
Accounts receivable, net 71,009 90,158
Inventories 2,361 939
Prepaid expenses and other 85,536 81,156
----------- -----------
Total current assets 225,339 244,453
----------- -----------
Property and equipment, at cost 1,429,985 1,437,763
Less accumulated depreciation and amortization (1,049,420) (1,031,741)
----------- -----------
Property and equipment, net 380,565 406,022
----------- -----------
Intangible and other assets, net 1,077 1,158
----------- -----------
$ 606,981 $ 651,633
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise:
Current liabilities:
Current maturities of long-term debt $ 65,219 $ 67,271
Accounts payable 7,741 9,032
Accrued expenses 65,174 66,459
Customer deposits and deferred revenue 51,616 54,519
----------- -----------
Total current liabilities 189,750 197,281
----------- -----------
Other long-term liabilities 15,883 14,983
----------- -----------
Liabilities subject to compromise 2,053,636 2,096,280
----------- -----------
Stockholders' equity (deficit):
Common stock-- $.01 par value 1,824 1,824
Additional paid-in capital 1,107,233 1,107,233
Accumulated other comprehensive income 2,068 1,991
Accumulated deficit (2,763,413) (2,767,959)
----------- -----------
Total stockholders' equity (deficit) (1,652,288) (1,656,911)
----------- -----------
$ 606,981 $ 651,633
=========== ===========
The accompanying notes are an integral part of these consolidated
condensed financial statements.
3
ARCH WIRELESS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except share and per share amounts)
THREE MONTHS ENDED
MARCH 31,
2002 2001
---- ----
Revenues $ 233,545 $ 327,429
Operating expenses:
Cost of products sold (exclusive of items shown separately below) 5,410 11,511
Service, rental, and maintenance (exclusive of items shown separately below) 67,610 81,043
Selling 22,179 36,656
General and administrative (exclusive of items shown separately below) 76,128 108,677
Depreciation and amortization 48,931 247,088
Reorganization expense 6,223 --
------------- -------------
Total operating expenses 226,481 484,975
------------- -------------
Operating income (loss) 7,064 (157,546)
Interest expense, net (2002 unrecorded contractual interest $45,592) (1,274) (63,927)
Other expense (1,244) (8,210)
------------- -------------
Income (loss) before income tax benefit, extraordinary item and cumulative
effect of change in accounting principle 4,546 (229,683)
Benefit from income taxes -- 35,500
------------- -------------
Income (loss) before extraordinary item and cumulative effect of change in
accounting principle 4,546 (194,183)
Extraordinary gain from early extinguishment of debt -- 14,956
Cumulative effect of change in accounting principle -- (6,794)
------------- -------------
Net income (loss) 4,546 (186,021)
Preferred stock dividend -- (602)
------------- -------------
Net income (loss) to common stockholders $ 4,546 $ (186,623)
============= =============
Basic/diluted net income (loss) per common share before extraordinary item and
accounting change $ 0.02 $ (1.17)
Extraordinary gain per basic/diluted common share -- 0.09
Cumulative effect of change in accounting principle per basic/diluted common
share -- (0.04)
------------- -------------
Basic/diluted net income (loss) per common share $ 0.02 $ (1.12)
============= =============
Basic weighted average number of common shares outstanding 182,434,590 167,193,881
============= =============
Diluted weighted average number of common shares outstanding 184,457,821 167,193,881
============= =============
The accompanying notes are an integral part of these consolidated
condensed financial statements.
4
ARCH WIRELESS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
THREE MONTHS ENDED
MARCH 31,
2002 2001
---- ----
Net cash provided by (used for) operating activities $ 62,225 $ (9,581)
--------- ---------
Cash flows from investing activities:
Additions to property and equipment, net (23,460) (25,750)
Additions to intangible and other assets (1) (2,757)
Acquisition of company, net of cash acquired -- 174
--------- ---------
Net cash used for investing activities (23,461) (28,333)
--------- ---------
Cash flows from financing activities:
Issuance of long-term debt -- 1,045
Issuance of notes payable to Nextel -- 250,000
Repayment of long-term debt (44,478) (175,836)
--------- ---------
Net cash (used for) provided by financing activities (44,478) 75,209
--------- ---------
Effect of exchange rate changes on cash (53) (34)
--------- ---------
Net (decrease) increase in cash and cash equivalents (5,767) 37,261
Cash and cash equivalents, beginning of period 72,200 55,007
--------- ---------
Cash and cash equivalents, end of period $ 66,433 $ 92,268
========= =========
Supplemental disclosure:
Interest paid $ 1,348 $ 52,922
========= =========
Reorganization expenses paid $ 4,317 $ --
========= =========
Accretion of discount on senior notes and assumed bank debt $ -- $ 12,188
========= =========
Issuance of common stock in exchange for debt $ -- $ 7,353
========= =========
Preferred stock dividend $ -- $ 602
========= =========
The accompanying notes are an integral part of these consolidated
condensed financial statements.
5
ARCH WIRELESS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(a) Preparation of Interim Financial Statements - The consolidated
condensed financial statements of Arch Wireless, Inc. have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission. The financial information included herein has been prepared by
management without audit by independent accountants who do not express an
opinion thereon. The consolidated condensed balance sheet at December 31, 2001
has been derived from, but does not include all the disclosures contained in,
the audited consolidated financial statements for the year ended December 31,
2001. In the opinion of management, all of these unaudited statements include
all adjustments and accruals consisting only of normal recurring accrual
adjustments which are necessary for a fair presentation of the results of all
interim periods reported herein. These consolidated condensed financial
statements should be read in conjunction with the consolidated financial
statements and accompanying notes included in Arch's Annual Report on Form 10-K
for the year ended December 31, 2001. The results of operations for the periods
presented are not necessarily indicative of the results that may be expected for
a full year.
(b) Petition for Relief Under Chapter 11 - Certain holders of 12 3/4%
Senior Notes due 2007 of Arch Wireless Communications, Inc. ("AWCI"), a
wholly-owned subsidiary of Arch, filed an involuntary petition against AWCI on
November 9, 2001 under chapter 11 of the U.S. Bankruptcy Code in the United
States Bankruptcy Court for the District of Massachusetts, Western Division. On
December 6, 2001, AWCI consented to the involuntary petition and the bankruptcy
court entered an order for relief with respect to AWCI under chapter 11 of the
Bankruptcy Code. Also on December 6, 2001, Arch and 19 of Arch's other
wholly-owned, domestic subsidiaries, including Arch Wireless Holdings, Inc.
("AWHI"), filed voluntary petitions for relief, under chapter 11, with the
bankruptcy court. These cases are being jointly administered under the docket
for Arch Wireless, Inc., et al., Case No. 01-47330-HJB. From December 6, 2001
through May 15, 2002, Arch and its domestic subsidiaries (collectively, the
"Debtors") operated their businesses and managed their property as
debtors-in-possession under the Bankruptcy Code. On May 15, 2002, the bankruptcy
court entered an order confirming the Debtors' First Amended Joint Plan of
Reorganization, as modified, and the plan is expected to become effective in
late May. As a result of the bankruptcy court's order confirming the plan or
reorganization, Arch and its domestic subsidiaries will operate as reorganized
entities following their emergence from chapter 11.
Chapter 11 is the principal business reorganization chapter of the Bankruptcy
Code. Under chapter 11, a debtor is authorized to continue to operate its
business and to reorganize its business for the benefit of its creditors and
stockholders. In addition to permitting the rehabilitation of the debtor,
another goal of chapter 11 is to promote equality of treatment of creditors and
equity security holders of equal rank with respect to the restructuring of debt.
In furtherance of these two goals, upon the filing of a petition for
reorganization under chapter 11, the Bankruptcy Code generally provides for an
automatic stay of substantially all acts and proceedings against a debtor and
its property, including all attempts to collect claims or enforce liens that
arose prior to the commencement of the debtor's case under chapter 11. In
addition, the debtors may reject or assume pre-petition executory contracts and
unexpired leases, and other parties to contracts or leases that are rejected may
assert rejection damage claims as permitted by the Bankruptcy Code.
An official committee of unsecured creditors and a special subcommittee were
appointed in the chapter 11 cases in accordance with provisions of the
Bankruptcy Code. The official committee had the right to be heard on all matters
that come before the bankruptcy court and the subcommittee had the right to be
heard with respect to matters in which its interests diverge from those of the
official committee. In addition to the official committee and subcommittee, a
steering committee of Arch's secured bank lenders was represented in the chapter
11 cases as was an informal committee of secured note holders representing the
interests of the USAM noteholders.
Confirmation and consummation of a plan of reorganization are the principal
objectives of a chapter 11 reorganization case. A plan of reorganization sets
forth the means for satisfying claims against, and interests in, a debtor.
6
Confirmation of a plan requires, among other things, the affirmative vote of
creditors holding at least two-thirds in total dollar amount and more than
one-half in number of the allowed claims in each impaired class of claims that
vote on the plan, and two-thirds in amount of equity interests in each impaired
class of interests that vote on the plan. Section 1129(b) of the Bankruptcy
Code, commonly referred to as the "cramdown" provision, permits confirmation of
a plan of reorganization over the objection of one or more impaired classes
under certain circumstances. Confirmation of a plan of reorganization by a
bankruptcy court makes the plan binding upon the debtor, any issuer of
securities under the plan, any person acquiring property under the plan and any
creditor or equity security holder of the debtor. Subject to certain limited
exceptions, the confirmation order discharges the debtor from any debt that
arose prior to the effective date of the plan and substitutes the obligations
specified under the confirmed plan.
The Debtors filed an amended plan of reorganization with the bankruptcy court
on March 13, 2002 and subsequently modified the plan of reorganization on May 8,
2002 and May 14, 2002. The bankruptcy court entered an order confirming the
plan, as modified, on May 15, 2002, and the plan is expected to become effective
in late May. The plan provides for separate classes of claims and interests for
creditors and equity holders of each of the Debtors. Under the plan, holders of
AWCI's 9 1/2% Senior Notes due 2004 and AWCI's 14% Senior Notes due 2004 and the
lenders under AWHI's credit agreement (collectively, the "Secured Creditors")
will receive in the aggregate (1) $200 million of new 10% Subordinated Secured
Notes due 2007 to be issued by AWHI; (2) $100 million of new 12% Subordinated
Secured Compounding Notes due 2009 to be issued by AWHI; (3) 14,648,854 shares
of new common stock to be issued by Arch; and (4) 100% of the cash available for
distribution as detailed below. The unsecured creditors of AWHI, including the
deficiency claims of secured creditors, and its subsidiaries will receive a
maximum of 3,600,000 shares of new common stock to be issued by Arch. In
addition, pursuant to the first modification to the plan, the unsecured
creditors of AWHI, exclusive of the deficiency claims of secured creditors, will
receive a pro rata share of a special distribution of 550,000 shares of new
common stock to be issued by Arch. Unsecured creditors of Arch and its
subsidiaries other than AWCI and AWHI and its subsidiaries will receive no
distribution. The unsecured creditors of AWCI, including the deficiency claims
of the secured creditors, will receive a pro rata share of 66,902 shares of new
common stock to be issued by Arch. Under the terms of the second modification to
the plan, the unsecured creditors of AWCI, exclusive of secured creditor
deficiency claims, will receive a pro rata share of a special distribution of
234,244 shares of new common stock to be issued by Arch. Holders of common and
preferred equity interests will receive no distributions under the plan and all
pre-petition equity interests in Arch will be cancelled. The plan also provides
for the creation of a management stock plan pursuant to which up to 950,000
shares of new common stock may be distributable to management for a nominal
price, 900,000 of which will be distributed on the effective date, portions of
which will vest on each of the first three anniversaries following the effective
date. Except for the shares of new common stock issuable pursuant to the
management stock plan, the new common stock to be issued to the secured and
unsecured creditors will constitute 100% of the outstanding common stock on the
effective date of the plan of reorganization. The cash available for
distribution to the secured creditors is an amount of cash equal to the amount
by which the Debtors' cash plus the amount of availability under a revolving
line of credit, if any, exceeds $45 million less administrative expense claims
reasonably expected to be payable for services provided and fees earned through
the closing of the transactions contemplated by the plan of reorganization.
The accompanying Consolidated Condensed Financial Statements have been
prepared in accordance with SOP 90-7 and on a going concern basis, which
contemplates continuity of operations, realization of assets and liquidation of
liabilities in the ordinary course of business. As of March 31, 2002,
substantially all of the Company's pre-petition debt was in default. As
described below, the accompanying Consolidated Financial Statements present the
Debtors' pre-petition debt under the caption "Liabilities Subject to
Compromise." This includes debt under the pre-petition credit facility and
senior notes. As required by SOP 90-7, the Company has recorded the Debtors'
pre-petition debt instruments at the allowed amount, as defined by SOP 90-7.
As reflected in the Consolidated Financial Statements, "Liabilities subject
to compromise" refer to Debtors' liabilities incurred prior to the commencement
of the chapter 11 cases. The amounts of the various liabilities that are subject
to compromise are set forth below following the Debtor-In-Possession financial
7
statements. These amounts represent Arch's estimate of known or potential
pre-petition claims to be resolved in connection with the chapter 11 cases. Such
claims remain subject to future adjustments. Adjustments may result from (1)
negotiations; (2) actions of the bankruptcy court; (3) rejection of executory
contracts and unexpired leases; (4) proofs of claims; or (5) other events.
Payment terms for these amounts were established pursuant to the plan of
reorganization. Further, the confirmation of the plan of reorganization will
result in Arch adopting fresh-start accounting in accordance with SOP 90-7 which
will materially change the amounts and classifications reported in future
consolidated financial statements.
The Debtors received approval from the bankruptcy court to pay or otherwise
honor certain of their pre-petition obligations, including employee wages,
salaries, benefits and other employee obligations, pre-petition claims of one
critical vendor, cure payments under contracts assumed under the Bankruptcy
Code, and certain other pre-petition claims. These amounts are included in the
liabilities not subject to compromise section of the Consolidated Balance Sheets
at December 31, 2001 and March 31, 2002 to the extent they had not been paid.
During the three months ended March 31, 2002, Arch recorded reorganization
expense of $6.2 million consisting of professional fees and other expenses
directly related to the bankruptcy filing. Contractual interest expense not
accrued or recorded on pre-petition debt totaled $45.6 million for the three
months ended March 31, 2002.
At March 31, 2002, Arch had $66 million of cash. In addition, in connection
with the chapter 11 filing, the Debtors obtained a $50 million
debtor-in-possession credit facility from a group of lenders led by Toronto
Dominion (Texas), Inc. (the "DIP financing"). Arch believes, based on
information presently available to it, that cash available from operations will
provide sufficient liquidity to allow it to continue as a going concern for the
foreseeable future under its confirmed plan of reorganization. However, the
ability of Arch to continue as a going concern following the effectiveness of
the plan of reorganization (including its ability to meet post-petition
obligations of the Debtors and to meet obligations of the non-debtor
subsidiaries) and the appropriateness of using the going concern basis for its
financial statements are dependent upon, among other things, the ability of Arch
to maintain adequate cash on hand and the ability of Arch to generate cash from
operations.
In connection with the bankruptcy filing, if the aggregate average daily cash
balance for any fiscal month exceeds $45 million, Arch is required to pay the
pre-petition secured lenders such excess less amounts due under the DIP credit
facility, provided, however, that after such payment the aggregate cash balance
shall not be less than $45 million. Such cash payment is to be applied to the
outstanding principal amount of the pre-petition secured debt. In the three
months ended March 31, 2002, Arch paid $42.6 million pursuant to this provision
and in April 2002, Arch paid $15.7 million pursuant to this provision.
8
The condensed financial statements of the Debtors are presented as follows:
ARCH WIRELESS, INC.
DEBTOR-IN-POSSESSION BALANCE SHEETS
(in thousands)
MARCH 31, DECEMBER 31,
ASSETS 2002 2001
Current assets:
Cash and cash equivalents ........................... $ 64,492 $ 70,131
Accounts receivable, net ............................ 69,608 88,557
Inventories ......................................... 2,247 820
Prepaid expenses and other .......................... 86,783 81,758
----------- -----------
Total current assets ............................. 223,130 241,266
----------- -----------
Property and equipment, at cost ........................ 1,413,730 1,421,318
Less accumulated depreciation and amortization ......... (1,044,492) (1,028,653)
----------- -----------
Property and equipment, net ............................ 369,238 392,665
----------- -----------
Intangible and other assets, net ....................... 7,054 7,054
----------- -----------
$ 599,422 $ 640,985
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise:
Current liabilities:
Accounts payable ................................. $ 7,691 $ 8,718
Accrued expenses and other liabilities ........... 114,304 118,487
----------- -----------
Total current liabilities ........................... 121,995 127,205
----------- -----------
Other long-term liabilities ......................... 14,258 15,298
----------- -----------
Liabilities subject to compromise ...................... 2,053,636 2,096,280
----------- -----------
Stockholders' equity (deficit):
Common stock--$.01 par value ........................ 1,824 1,824
Additional paid-in capital .......................... 1,107,233 1,107,233
Accumulated deficit ................................. (2,699,524) (2,706,855)
----------- -----------
Total stockholders' equity (deficit) ............. (1,590,467) (1,597,798)
----------- -----------
$ 599,422 $ 640,985
=========== ===========
ARCH WIRELESS, INC.
DEBTOR-IN-POSSESSION STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2002
(in thousands)
Revenues .................................................................... $ 229,005
Operating expenses:
Cost of products sold (exclusive of items shown separately below) ........ 5,183
Service, rental and maintenance (exclusive of items shown separately below) 66,366
Selling .................................................................. 21,500
General and administrative (exclusive of items shown separately below) ... 73,802
Depreciation and amortization ............................................ 46,656
Reorganization expense ................................................... 6,223
---------
Total operating expenses .............................................. 219,730
---------
Operating income (loss) ..................................................... 9,275
Interest expense, net (unrecorded contractual interest $45,592) ............. (701)
Other expense ............................................................... (1,243)
---------
Net income (loss) ........................................................... $ 7,331
=========
9
ARCH WIRELESS, INC.
DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2002
(in thousands)
Net cash provided by operating activities .......... $ 60,260
--------
Cash flows from investing activities:
Additions to property and equipment, net ........ (23,269)
Additions to intangible and other assets ........ --
--------
Net cash provided by investing activities .......... (23,269)
--------
Cash flows from financing activities:
Repayment of long-term debt ..................... (42,630)
--------
Net cash used in financing activities .............. (42,630)
--------
Net (decrease) increase in cash and cash equivalents (5,639)
Cash and cash equivalents, beginning of period ..... 70,131
--------
Cash and cash equivalents, end of period ........... $ 64,492
========
Supplemental disclosure:
Interest paid ...................................... $ 701
========
Reorganization expenses paid ....................... $ 4,317
========
The amounts subject to compromise in the Consolidated and
Debtor-in-Possession Balance Sheets consist of the following items (in
thousands):
MARCH 31, DECEMBER 31,
2002 2001
Accounts payable ............................... $ 22,642 $ 21,790
Accrued restructuring .......................... 17,340 17,496
Accrued expenses ............................... 45,652 45,664
Accrued interest ............................... 109,523 109,523
Debt ........................................... 1,693,059 1,735,689
Other long-term liabilities .................... 45,720 46,418
Series C and series F redeemable preferred stock 119,700 119,700
---------- ----------
Total liabilities subject to compromise ........ $2,053,636 $2,096,280
========== ==========
(c) Risks and Other Important Factors- Arch does not manufacture any of
the equipment customers need to take advantage of its services. It is dependent
primarily on Motorola, Inc. to obtain sufficient equipment inventory for new
subscribers and replacement needs and on Glenayre Electronics, Inc. for
sufficient terminals and transmitters to meet its expansion and replacement
requirements. Both Motorola and Glenayre have publicly announced their
intentions to discontinue the production of messaging devices and network
equipment. Arch has entered into a supply agreement with Motorola pursuant to
which Motorola will supply Arch with a sufficient number of messaging devices to
meet expected inventory requirements through September 30, 2002. Arch has
entered into an agreement with Glenayre which will provide it with certain
continued services and equipment for two years and the option to license
upgrades to its network software under certain circumstances. In addition, Arch
has entered into development agreements with certain other vendors to obtain
alternative sources of messaging devices and network equipment. Significant
delays in developing these alternative sources could lead to disruptions in
operations and adverse financial consequences. There can be no assurance that
Arch will be able to secure alternative sources of messaging devices and network
equipment.
(d) Current maturities of long-term debt - Arch's Canadian subsidiaries
are in default under their credit agreements; as a result Arch has classified
this debt as current. The Canadian subsidiaries were not included in Arch's
chapter 11 filing.
10
(e) Recent Accounting Pronouncements - In July 2001, the FASB issued SFAS
No. 142, "Goodwill and Other Intangible Assets." Arch adopted the requirements
of SFAS No. 142 effective January 1, 2002. SFAS No. 142 requires companies to
cease amortization of certain assets and provides a methodology to test these
assets for impairment on a periodic basis. Arch did not have any assets subject
to SFAS No. 142 on its balance sheet as of January 1, 2002 and therefore the
adoption had no impact on Arch's results of operations or financial condition.
Depreciation and amortization expense in the first quarter of 2001 would have
been reduced by $54.4 million had the provisions of this statement been applied
to that period.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-lived Assets." Arch adopted SFAS No. 144 on January 1, 2002,
the adoption had no impact on Arch's results of operations or financial
condition.
(f) Segment Reporting - Arch has determined that it has three reportable
segments; traditional paging operations, two-way messaging operations and
international operations. Management makes operating decisions and assesses
individual performances based on the performance of these segments. The
traditional paging operations consist of the provision of paging and other
one-way wireless messaging services to Arch's U.S. customers. Two-way messaging
operations consist of the provision of two-way wireless messaging services to
Arch's U.S. customers. International operations consist of the operations of the
Company's Canadian subsidiary.
Each of these segments incur, and are charged, direct costs associated with
their separate operations. Common costs shared by the traditional paging and
two-way messaging operations are allocated based on the estimated utilization of
resources using various factors that attempt to mirror the true economic cost of
operating each segment.
The following tables present segment financial information related to the
Company's segments for the periods indicated (in thousands):
March 31, 2002 Traditional Two-way Messaging International
-------------- Paging Operations Operations Operations Consolidated
----------------- ---------- ---------- ------------
Revenues................................... $ 196,278 $ 32,727 $ 4,540 $ 233,545
Depreciation and amortization expense...... 25,307 21,349 2,275 48,931
Operating income (loss).................... 24,179 (14,823) (2,292) 7,064
Adjusted EBITDA(1)......................... 55,621 6,526 71 62,218
Total assets............................... 335,700 220,180 51,101 606,981
Capital expenditures....................... 11,825 11,444 192 23,461
March 31, 2001 Traditional Two-way Messaging International
-------------- Paging Operations Operations Operations Consolidated
----------------- ---------- ---------- ------------
Revenues................................... $ 305,266 $ 17,247 $ 4,916 $ 327,429
Depreciation and amortization expense...... 228,174 13,874 5,040 247,088
Operating income (loss).................... (131,673) (21,582) (4,291) (157,546)
Adjusted EBITDA(1)......................... 96,501 (7,708) 749 89,542
Total assets............................... 1,801,531 261,600 55,499 2,118,630
Capital expenditures....................... 17,270 10,337 900 28,507
(1) Adjusted earnings before interest, income taxes, depreciation and
amortization, as determined by Arch, does not reflect interest, income
taxes, depreciation and amortization, reorganization expense and
extraordinary items; consequently adjusted earnings before interest, income
taxes, depreciation and amortization may not necessarily be comparable to
similarly titled data of other wireless messaging companies. Earnings
before interest, income taxes, depreciation and amortization should not be
construed as an alternative to operating income or cash flows from
operating activities as determined in accordance with generally accepted
accounting principles or as a measure of liquidity. Amounts reflected as
earnings before interest, income taxes, depreciation and amortization or
adjusted earnings before interest, income taxes, depreciation and
amortization are not necessarily available for discretionary use as a
result of restrictions imposed by the terms of existing indebtedness or
limitations imposed by applicable law upon the payment of dividends or
distributions among other things.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and analysis of financial condition and results of operations
should be read in conjunction with Management's discussion and analysis of
financial condition and results of operations included in Arch's Annual Report
on Form 10-K for the year ended December 31, 2001. Arch considered the
disclosure requirements of FR-60 regarding critical accounting policies and
FR-61 regarding liquidity and capital resources, certain trading activities and
related party/certain other disclosures, and concluded that nothing materially
changed during the quarter that would warrant further disclosure under these
releases.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause the Company's actual results to differ materially from
those indicated or suggested by such forward-looking statements. These factors
include, without limitation, those set forth below under the caption "Factors
Affecting Future Operating Results".
RESULTS OF OPERATIONS
Revenues decreased to $233.5 million, a 28.7% decrease, for the three months
ended March 31, 2002 from $327.4 million for the three months ended March 31,
2001 as the number of units in service decreased from 11.1 million at March 31,
2001 to 7.7 million at March 31, 2002. Net revenues (revenues less cost of
products sold) decreased to $228.1 million, a 27.8% decrease, for the three
months ended March 31, 2002 from $315.9 million for the corresponding 2001
period. Revenues and net revenues in the periods ended March 31, 2001 and 2002
were adversely affected by the declining demand for traditional paging services
which led to net subscriber cancellations of 759,000 units in service for the
quarter ended March 31, 2002.
Two-way messaging revenues increased to $32.7 million, 14.0% of total
revenue, in the three months ended March 31, 2002 from $17.2 million, 5.3% of
total revenue, in the corresponding 2001 period. Two-way messaging net revenues
increased to $28.5 million, 12.5% of total net revenue, in the three months
ended March 31, 2002 from $14.5 million, 4.6% of total net revenues, in the
three months ended March 31, 2001. Two-way units in service increased from
215,000 at March 31, 2001 to 360,000 at March 31, 2002.
Revenues consist primarily of recurring revenues associated with the
provision of messaging services, rental of leased units and product sales.
Product sales represented less than 10% of total revenues for the three months
ended March 31, 2002 and 2001. Arch does not differentiate between service and
rental revenues.
The demand for traditional messaging services declined in 2001. Arch believes
that demand for traditional messaging services will continue to decline in the
foreseeable future and that future growth in the wireless messaging industry, if
any, will be attributable to two-way messaging and information services. As a
result, Arch expects to continue to experience significant declines of units in
service during 2002 as the addition of two-way messaging subscribers will be
exceeded by losses of traditional messaging subscribers.
Service, rental and maintenance expenses, which consist primarily of
telephone, third party carrier fees, site rental expenses and repairs and
maintenance expenses, decreased to $67.6 million, or 29.6% of net revenues, in
the three months ended March 31, 2002 from $81.0 million, or 25.7% of net
revenues, in the three months ended March 31, 2001. Since many of these costs
are fixed in the short term, Arch has not been able to reduce its service,
rental and maintenance expenses to date at the same rate of decline as units in
service and net revenues, resulting in an increase as a percentage of net
revenues. For the three months ended March 31, 2002 and 2001, there was $11.7
million and $11.1 million, respectively, of service, rental and maintenance
expenses associated with the provision of two-way messaging and information
services.
12
Selling expenses decreased to $22.2 million, or 9.7% of net revenues, for the
three months ended March 31, 2002 from $36.7 million, or 11.6% of net revenues,
for the corresponding 2001 period. The decrease was due to reduced headcount
resulting from the integration of Arch and PageNet sales forces and the
consolidation of operating divisions. Selling expenses related to two-way
messaging and information services were $7.0 million and $7.2 million for the
three months ended March 31, 2002 and 2001, respectively.
General and administrative expenses decreased to $76.1 million, or 33.4% of
net revenues, for the three months ended March 31, 2002 from $108.7 million, or
34.4% of net revenues, in the corresponding 2001 period. The decrease was due to
various cost savings initiatives including workforce reductions, facilities
closures and operating division consolidations. General and administrative
expenses associated with the provision of two-way messaging and information
services were $3.2 million in the 2002 period and $3.9 million in the 2001
period.
Depreciation and amortization expenses decreased to $48.9 million for the
three months ended March 31, 2002 from $247.1 million for the three months ended
March 31, 2001. The decrease in these expenses is principally due to the
reduction in the carrying value of Arch's fixed and intangible assets as a
result of a $976.2 million impairment charge recorded in June 2001.
Reorganization expense was $6.2 million in the three months ended March 31,
2002. These expenses consisted of professional and other fees associated with
the bankruptcy filing.
Operating income was $7.1 million for the three months ended March 31, 2002
compared to an operating loss of $157.5 million in 2001, as a result of the
factors outlined above.
Net interest expense decreased to $1.3 million for the three months ended
March 31, 2002 from $63.9 million for the corresponding 2001 period. As a result
of its filing for protection under chapter 11, Arch stopped recording interest
expense on its bank debt and senior notes. Contractual interest expense not
accrued or recorded for the three months ended March 31, 2002 on pre-petition
debt was $45.6 million.
Other expense decreased to $1.2 million for the three months ended March 31,
2002 from $8.2 million for the three months ended March 31, 2001. In 2001, other
expense included a $5.9 million charge resulting from the application of SFAS
No. 133.
For the three months ended March 31, 2001, Arch recognized extraordinary
gains of $15.0 million on the retirement of debt exchanged for Arch stock.
Arch recognized an income tax benefit of $35.5 million for the three months
ended March 31, 2001. The benefit represented the tax benefit of operating
losses incurred subsequent to the acquisition of PageNet which were available to
offset deferred tax liabilities arising from the PageNet acquisition.
On January 1, 2001, Arch adopted SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the derivative's fair value be
recognized in earnings. Initial application of SFAS No. 133 resulted in a $6.8
million charge in the quarter ended March 31, 2001, which was reported as the
cumulative effect of a change in accounting principle. This charge represents
the impact of initially recording the derivatives at fair value as of January 1,
2001.
Net income was $4.5 million for the three months ended March 31, 2002
compared to a net loss of $186.0 million for the corresponding 2001 period, as a
result of the factors outlined above.
LIQUIDITY AND CAPITAL RESOURCES
Arch, and substantially all of its domestic subsidiaries, filed for chapter
11 bankruptcy protection on December 6, 2001 and subsequently entered into a
debtor-in-possession credit facility. The matters discussed under this caption
"Liquidity and Capital Resources," to the extent that they relate to future
events or expectations, may be significantly affected by the chapter 11
reorganization. During the quarterly period ended March 31, 2002, the
proceedings relating to the chapter 11 case involved, or resulted in, various
13
restrictions on Arch's activities, limitations on financings, the need to obtain
bankruptcy court approval for various matters and uncertainty as to
relationships with venders, suppliers, customers and others with whom Arch
conducted or sought to conduct business. At March 31, 2002, Arch had $66.4
million in cash and cash equivalents. During the pendency of the chapter 11
cases, if the aggregate average daily cash balance for any fiscal month exceeded
$45 million, Arch was required to repay such excess amounts less amounts due
under the DIP credit facility to the secured lenders on a monthly basis. In
addition, the plan of reorganization confirmed on May 15, 2002, provides that
Arch will repay the secured creditors to the extent the cash balance plus
available borrowings under a revolving credit facility on the effective date of
the plan, if any, less a reserve for reasonable anticipated administrative
expenses exceeds $45 million.
Arch's business requires the availability of substantial funds to finance
capital expenditures for subscriber equipment and network system equipment and
to service debt once Arch emerges from chapter 11.
CAPITAL EXPENDITURES AND COMMITMENTS
Arch's capital expenditures decreased from $28.5 million for the three months
ended March 31, 2001 to $23.5 million for the three months ended March 31, 2002.
These capital expenditures primarily include the purchase of wireless messaging
devices, system and transmission equipment, and information systems. Arch
generally has funded its capital expenditures with net cash provided by
operating activities and the incurrence of debt. Arch estimates that capital
expenditures for 2002 will be approximately $100 million. These expenditures
will be used primarily for subscriber equipment, network infrastructure,
information systems and expansion of Arch's two-way messaging network. However,
the actual amount of capital required by Arch will depend on a number of
factors, including; subscriber growth, the type of products and services
demanded by customers, service revenues, and the nature and timing of Arch's
strategy to enhance its two-way messaging networks.
ADEQUACY OF CAPITAL RESOURCES
As discussed above, during the quarterly period ended March 31, 2002, Arch
and substantially all of its domestic subsidiaries operated their businesses as
debtors-in-possession under chapter 11 of the bankruptcy code. Arch incurred
significant professional fees and other restructuring costs in connection with
the chapter 11 case and the restructuring of its business operations. However,
based on current and anticipated levels of operations, and efforts to
effectively manage working capital, Arch anticipates that its cash flow from
operations, together with cash on hand will be adequate to meet its anticipated
cash requirements for the foreseeable future under its confirmed plan of
reorganization.
In the event that cash flows are not sufficient to meet future cash
requirements, Arch may be required to reduce planned capital expenditures, sell
assets or seek additional financing. Arch can provide no assurances that
reductions in planned capital expenditures or proceeds from asset sales would be
sufficient to cover shortfalls in available cash or that additional financing
would be available or, if available, offered on acceptable terms.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The following important factors, among others, could cause Arch's actual
operating results to differ materially from those indicated or suggested by
forward-looking statements made in this Form 10-Q or presented elsewhere by
Arch's management from time to time.
Although Arch's plan of reorganization has been confirmed by the bankruptcy
court, Arch's bankruptcy may have adversely affected its business relationships.
The bankruptcy court confirmed Arch's plan of reorganization on May 15, 2002,
and Arch will operate as a reorganized entity following its emergence from
chapter 11 in late May. However, Arch's bankruptcy filing could continue to
present Arch with additional challenges. For example, Arch's business may be
adversely affected by the taint associated with a bankruptcy petition filing.
Arch may also experience possible problems with its relationships with its
creditors, customers, suppliers and employees; and its ability to attract and
retain key employees may be adversely affected. Additionally, although Arch
believes that is has good relationships with its suppliers and vendors, there
14
can be no assurance that they will continue to provide goods and services to
Arch due to concerns regarding Arch's credit worthiness resulting from the
chapter 11 proceedings.
Recent declines in Arch's units in service may continue or even accelerate; this
trend may impair Arch's financial results.
During 2000, units in service decreased by 2,073,000 units, 888,000 due to
subscriber cancellations and 1,185,000 due to definitional changes, excluding
the addition of subscribers from the PageNet acquisition. During 2001, units in
service decreased by an additional 3,394,000 units due to subscriber
cancellations. During the first quarter of 2002, units in service decreased
759,000 units due to subscriber cancellations. The demand for traditional
messaging services declined in 2000 and 2001 and Arch believes it will continue
to decline in the foreseeable future. Arch believes that future growth in the
wireless messaging industry, if any, will be attributable to two-way messaging
and information services. As a result, Arch expects to continue to experience
significant declines of units in service and revenue during 2002 as the addition
of two-way messaging subscribers will be exceeded by losses of traditional
messaging subscribers.
Cancellation of units in service can significantly affect the results of
operations of wireless messaging service providers. The sale and marketing costs
associated with attracting new subscribers are substantial compared to the costs
of providing service to existing customers. Because the wireless messaging
business is characterized by high fixed costs, cancellations directly and
adversely affect earnings before interest, income taxes, depreciation and
amortization.
Because Arch depends on Motorola for pagers, on Glenayre for other equipment, on
a limited number of vendors for satellite transmission and on a concentration of
vendors for site leases, Arch's operations may be disrupted if it is unable to
obtain equipment or services from them in the future.
Arch does not manufacture any of the equipment customers need to take
advantage of its services. It is dependent primarily on Motorola, Inc. to obtain
sufficient equipment inventory for new subscribers and replacement needs and on
Glenayre Electronics, Inc. for sufficient terminals and transmitters to meet its
expansion and replacement requirements. Both Motorola and Glenayre have publicly
announced their intentions to discontinue the production of messaging devices
and network equipment. Arch has entered into a supply agreement with Motorola
pursuant to which Motorola will supply Arch with a sufficient number of
messaging devices to meet expected inventory requirements through September 30,
2002. Arch has entered into an agreement with Glenayre which will provide it
with certain continued services and equipment for two years and the option to
license upgrades to its network software under certain circumstances. In
addition, Arch has entered into development agreements with certain other
vendors to obtain alternative sources of messaging devices and network
equipment. Significant delays in developing these alternative sources could lead
to disruptions in operations and adverse financial consequences. There can be no
assurance that Arch will be able to secure alternative sources of messaging
devices and network equipment.
Approximately 35% of Arch's lease payments for tower sites are made to two
site lessors. Arch has negotiated amendments to existing leases with these and
other lessors. There can be no assurances that the bankruptcy court will approve
these lease amendments or that the other ongoing negotiations will result in
amendments to existing lease arrangements that will allow Arch to reduce future
lease payments as a result of Arch's efforts to reduce the number of tower sites
it leases through rationalization of Arch's existing messaging networks. If no
other agreements are reached, there could be a material adverse effect on Arch's
ability to reduce its future operating costs.
Arch relies on third parties to provide satellite transmission for some
aspects of its wireless messaging services. To the extent there are satellite
outages or if satellite coverage is impaired in other ways, Arch may experience
a loss of service until such time as satellite coverage is restored, which could
have a material adverse effect due to customer complaints.
15
Mobile, cellular and PCS telephone companies have introduced phones and services
with substantially the same features and functions as the two-way messaging
products and services provided by Arch, and have priced such devices and
services competitively.
Arch faces competition from other messaging providers in all markets in which
it operates, as well as from cellular and PCS telephone companies. Providers of
mobile wireless phone services now include wireless messaging as an adjunct
service to voice services. In addition, the availability of coverage for mobile
phone services has increased, making the two types of service and product
offerings more comparable. Thus, cellular and PCS companies seeking to provide
wireless messaging services may be able to bring their products to market
faster, at lower prices or in packages of products that consumers and businesses
find more valuable than those provided by Arch. In addition, many of these
competitors, particularly cellular and PCS phone companies, possess greater
financial, technical and other resources than those available to Arch.
Arch may need additional capital to expand or operate its business which could
be difficult to obtain. Failure to obtain additional capital may preclude Arch
from developing or enhancing its products, taking advantage of future
opportunities, growing its business or responding to competitive pressures.
The amount of capital required by Arch will depend on a number of factors,
including:
o subscriber growth;
o the type of wireless messaging devices and services demanded by customers;
o service revenues;
o technological developments;
o marketing and sales expenses and
o competitive conditions.
The funds to finance Arch's future capital needs are expected to be generated
from operations. No assurance can be given that Arch will be able to generate
sufficient cash flow to finance its future capital needs. If cash flow from
operations is not sufficient, no assurance can be given that additional equity
or debt financing will be available to Arch when needed on acceptable terms, if
at all.
In addition to the specific risks described above, an investment in Arch is
also subject to many risks which affect all companies, or all companies in its
industry.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Arch's debt financing primarily consists of senior bank debt and fixed rate
senior notes.
SENIOR SECURED DEBT, VARIABLE RATE DEBT:
Borrowings outstanding under Arch's credit facility are secured by
substantially all of Arch's assets. This debt trades and is quoted regularly,
therefore the fair value at March 31, 2002 was determined with reference to
market quotes. Arch considers the fair value of the Canadian bank debt to be
equal to the carrying value since the related facilities bear a current market
rate of interest and is not known to be traded and/or quoted.
WEIGHTED AVERAGE INTEREST
PRINCIPAL BALANCE FAIR VALUE INTEREST RATE SCHEDULED MATURITY PAYMENTS DUE
----------------- ---------- ------------- ------------------ ------------
$1.081 billion $162.1 million 11.5% 2006 Quarterly
$65.2 million $65.2 million 8.4% 2004 Quarterly
Arch's credit facility bears interest at floating rates and matures in 2006 and
is therefore subject to risks associated with changes in interest rates. To the
extent there are fluctuations in the agent bank's alternate base rate or LIBOR,
Arch's annual interest expense would have increased or decreased by $2.8 million
for each 1/4% fluctuation. Consistent with the requirements of SOP 90-7, Arch
ceased to record interest expense on these debt instruments on December 6, 2001,
16
therefore variations in the underlying index rates would have no impact on the
annual interest expense in future periods.
SENIOR SUBORDINATED NOTES, FIXED RATE DEBT:
Arch's fixed rate senior notes are traded publicly and are subject to market
risk. The fair values of the fixed rate senior notes were based on market quotes
as of March 31, 2002. As previously noted, Arch filed for chapter 11 bankruptcy
protection on December 6, 2001 and trades for the debt issues are now
infrequent. In addition, Arch's plan of reorganization, which was confirmed by
the bankruptcy court on May 15, 2002, provides that holders of Arch's 9 1/2% and
14% senior notes and the lenders under Arch's credit facility will receive in
tHE aggregate (1) $200 million of new 10% Subordinated Secured Notes due 2007 to
be issued by AWHI; (2) $100 million of new 12% Subordinated Secured Compounding
Notes due 2009 to be issued by AWHI; (3) 14,648,854 shares of new common stock
to be issued by Arch; and (4) 100% of the cash available for distribution.
Holders of the 12 3/4% aND 13 3/4% senior notes, along with all other unsecured
creditors of AWCI, will receive a pro rata share of 66,902 shares of new common
stock to be issued by Arch. Under the terms of the second modification to the
plan, the unsecured creditors of AWCI, exclusive of secured creditor deficiency
claims, will receive a pro rata share of a special distribution of 234,244
shares of new common stock to be issued by Arch. Holders of the 10 7/8% senior
discount notes will receive no distribution under the proposed plan.
PRINCIPAL BALANCE FAIR VALUE STATED INTEREST RATE SCHEDULED MATURITY
----------------- ---------- -------------------- ------------------
$113.1 million $ -- 10 7/8% 2008
$122.9 million $7.7 million 9 1/2% 2004
$ 98.3 million $6.1 million 14% 2004
$130.0 million $650 thousand 12 3/4% 2007
$147.0 million $735 thousand 13 3/4% 2008
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain holders of 12 3/4% Senior Notes due 2007 of Arch Wireless
Communications, Inc. ("AWCI"), a wholly-ownED subsidiary of Arch, filed an
involuntary petition against AWCI on November 9, 2001 under chapter 11 of the
U.S. Bankruptcy Code in United States Bankruptcy Court for the District of
Massachusetts, Western Division. On December 6, 2001, AWCI consented to the
involuntary petition and the bankruptcy court entered an order for relief with
respect to AWCI under chapter 11 of the Bankruptcy Code. Also on December 6,
2001, Arch and 19 of Arch's other wholly-owned, domestic subsidiaries, including
Arch Wireless Holdings, Inc. ("AWHI"), filed voluntary petitions for relief,
under chapter 11, with the bankruptcy court. These cases are being jointly
administered under the docket for Arch Wireless, Inc., et al., Case No.
01-47330-HJB. From December 6, 2001 through May 15, 2002, Arch and its domestic
subsidiaries operated their businesses and managed their property as debtors in
possession under the Bankruptcy Code. Arch and substantially all of its domestic
subsidiaries filed a plan of reorganization with the bankruptcy court on January
15, 2002, which was amended on March 13, 2002 and subsequently modified on May
8, 2002 and May 14, 2002. On May 15, 2002, the bankruptcy court entered an order
confirming the plan of reorganization, as modified, and the plan is expected to
become effective in late May. As a result of the bankruptcy court's order
confirming the plan of reorganization, Arch and its domestic subsidiaries will
operate as reorganized entities following their emergence from chapter 11.
Arch is involved in a number of lawsuits which it does not believe will have
a material adverse effect on its financial condition. These lawsuits are subject
to the automatic stay provisions of the Bankruptcy Code by reason of filing for
relief under chapter 11 of the Bankruptcy Code.
17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are filed as part of this Quarterly Report on Form
10-Q.
(b) The following reports on Form 8-K were filed for the quarter for
which this report is filed:
Current Report on Form 8-K dated January 15, 2002 (reporting the filing
of Arch's Joint Plan of Reorganization with the bankruptcy court).
Current Report on Form 8-K dated January 18, 2002 (reporting the filing
of Arch's Disclosure Statement with the bankruptcy court).
Current Report on Form 8-K dated January 30, 2002 (reporting the filing
of Arch's December 2001 Operating Report with the bankruptcy court).
Current Report on Form 8-K dated March 1, 2002 (reporting the filing of
Arch's January 2002 Operating Report with the bankruptcy court).
Current Report on Form 8-K dated March 11, 2002 (reporting the filing
of Arch's Amended Joint Plan of Reorganization and Disclosure
Statement with the bankruptcy court).
Current Report on Form 8-K dated March 28, 2002 (reporting the filing
of Arch's February 2002 Operating Report with the bankruptcy court).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q for the quarter ended March
31, 2002, to be signed on its behalf by the undersigned thereunto duly
authorized.
ARCH WIRELESS, INC.
Dated: May 15, 2002 By: /S/ J. ROY POTTLE
---------------------------------
J. Roy Pottle
Executive Vice President and
Chief Financial Officer