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ARCH COMMUNICATIONS GROUP ANNOUNCES FIRST QUARTER RECORD NET GAINS AND CASH FLOW

 WESTBOROUGH, Mass., Jan. 6 /PRNewswire/ -- Arch Communications Group, Inc. (NASDAQ: APGR) announced first quarter results for the period ended Nov. 30, 1992. During the first quarter, Arch added through internal growth a record 13,168 net new subscriber units in service. This represents a 32.9 percent annualized growth rate for the quarter. Cash flow for the quarter was $2,667,000, also a record for the Company. The Company acquired a small business with 1,300 subscriber units in service towards the end of the quarter bringing total subscriber pager units in service at Nov. 30, 1992 to 174,602. This is a 31.1 percent increase over Nov. 30, 1991.
 Financial Highlights
 (In thousands, except for share and per share data)
 Three Months Ended
 November 30
 1992 1991
 Revenues $9,836 $8,198
 Operating cash flow (a) 2,667 2,395
 Net income (loss) (996) (2,123)
 Pro forma net income (loss) ($0.14) ($0.48)
 per common share
 Pro forma weighted 7,124,745 4,449,476
 average shares (b)
 (a) Operating cash flow is Earnings Before Interest, Taxes, Depreciation and Amortization, "EBITDA."
 (b) Pro forma weighted average shares reflects the effects of issuance of 2,593,250 shares in a public offering closed Jan. 27, 1992.
 First quarter revenues of $9,836,000 represented an increase of 20 percent over the same period for a year earlier. First quarter EBITDA was $2,667,000, which was a 11.4 percent increase over the prior year. These increases are primarily a result of the growth in the Company's subscriber base.
 CEO C. Edward Baker, Jr. described the strong results: "As we had previously indicated in a press release estimating results, the record internal growth in net subscribers of 13,168 new units were well ahead of our net gains of 10,932 achieved in the previous quarter. These results were also more than double the growth achieved for the same quarter of a year ago when we added 6,154 new subscribers. We are particularly pleased that our growth rate continues to accelerate.
 "Additionally, we are happy to report that we have closed one fold- in acquisition of a small paging business late in the period and expect to close another in the second fiscal quarter. We continue to pursue other attractive fold-in acquisitions." Fold-in acquisitions are located within Arch's current operating footprint and offer excellent consolidation opportunities.
 Baker discussed plans for the balance of Fiscal 1993: "Arch's growth plan includes internal growth, acquisitions, and market expansions. We expect strong cash flow growth in core (existing) markets with additional cash flow from acquired businesses for Fiscal 1993. We plan to invest part of that increased cash flow growth in new market expansions in the Northeast. We believe that substantial value will be created over the long term by aggressively pursuing these opportunities to grow our subscriber base rapidly and by broadening our market coverage at this time. Our experience with 9 previous market expansions is that they typically reach breakeven cash flow in 18 months or less."
 Arch seeks to build shareholder equity value by growing earnings before interest, taxes, depreciation and amortization, "EBITDA" and by increasing paging units in service. EBITDA, or operating cash flow, is the key performance measure for paging companies and is the basis for valuation as well as for borrowings from institutional lenders. The Company believes it can best grow EBITDA and paging units in service by establishing the lowest cost operating structure within its service areas, installing efficient high-quality transmission systems, and quickly and effectively responding to its customers through its decentralized organizational structure.
 Arch Communications Group, Inc. provides paging services in 13 states, serving primarily middle and small market areas with populations ranging from 250,000 to 1,000,000. The Company's operations are organized into 5 business units operating as Page New England; Page New York; Page Michigan; Page South in North Carolina, South Carolina and Georgia; and Interlink Paging in Louisiana and Florida.
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (in thousands)
 November 30, August 31,
 1992 1992
 (Unaudited)
 Current assets:
 Cash and equivalents $9,448 $12,501
 Accounts receivable, net 1,715 1,649
 Prepaid advertising 180 177
 Prepaid expense and other 660 539
 Total current assets 12,003 14,866
 Property and equipment, at cost 45,401 42,209
 Less accumulated depreciation
 and amortization 16,600 16,631
 Property and equipment, net 28,801 25,578
 Intangible and other assets, net 14,105 14,707
 Total $54,909 $55,151
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Current maturities of long-term debt $2,676 $172
 Accounts payable, accrued expenses and
 other liabilities 7,372 6,640
 Total current liabilities 10,048 6,812
 Long-term debt, less current
 maturities 38,575 41,057
 Stockholders' equity (deficit):
 Common stock - $.01 par 71 71
 Additional paid-in capital 44,694 44,694
 Accumulated deficit (38,479) (37,483)
 Total stockholders' equity (deficit) 6,286 7,282
 Total $54,909 $55,151
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended November 30,
 (unaudited and in thousands, except share and per share amounts)
 1992 1991
 Services, rental and maintenance
 revenues $8,803 $7,537
 Product sales 1,033 661
 Total revenues 9,836 8,198
 Operating expenses:
 Services, rental and maintenance 2,087 1,954
 Cost of products sold 602 406
 Selling 1,599 1,079
 General and administrative 2,881 2,364
 Depreciation and amortization 2,985 3,198
 Total operating expenses 10,154 9,001
 Operating income (loss) (318) (803)
 Interest expense, net 678 1,320
 Net income (loss) $(996) $(2,123)
 Pro forma net income (loss) per
 common share (14 cents) (48 cents)
 Pro forma weighted average number
 of common shares outstanding 7,124,745 4,449,476
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 Three Months Ended November 30,
 (unaudited and in thousands)
 1992 1991
 Cash provided by operating activities $2,557 $1,506
 Cash flows from investing activities:
 Additions to property and equipment, net (4,613) (1,712)
 Additions to intangibles and other (493) (228)
 Net cash used for investing activities (5,606) (1,940)
 Cash flows from financing activities;
 Issuance of long-term debt --- 200
 Repayment of long-term debt (4) (920)
 Net cash provided by financing activities (4) (720)
 Net increase in cash and equivalents (3,053) (1,154)
 Cash and equivalents at beginning
 of period 12,501 1,274
 Cash and equivalents at end of period $9,448 $120
 -0- 1/6/93
 /CONTACT: William A. Wilson, Vice President,Finance and CFO, Arch Communications, 508-898-0962/
 (APGR)


CO: Arch Communications ST: Massachusetts IN: CPR SU: ERN

TM -- NE002 -- 2034 01/06/93 08:02 EST
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