<PAGE>   1
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       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 NO. 0-19494


                              PAGING NETWORK, INC.
             (Exact name of the Registrant as specified in charter)

                DELAWARE                                 04-2740516
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification Number)

                               14911 QUORUM DRIVE
                               DALLAS, TEXAS 75240
          (Address of principal executive offices, including zip code)

                                 (972) 801-8000
              (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 Registrant's
classes of Common Stock, as of the latest practicable date.

               Title                  Shares Outstanding as of October 31, 1999
   -----------------------------    -----------------------------------------
   Common Stock, $ .01 par value                    103,960,240


The Company's Common Stock is publicly traded on the Nasdaq Stock Market and the
Chicago Stock Exchange under the symbol "PAGE".


================================================================================
<PAGE>   2
                         PART I - FINANCIAL INFORMATION




ITEM 1.  FINANCIAL STATEMENTS.


                          Index to Financial Statements
<TABLE>
<CAPTION>
                                                                                      PAGE
                                                                                      ----
<S>                                                                                   <C>
Consolidated Balance Sheets as of
     December 31, 1998 and September 30, 1999 (Unaudited).............................  3

Consolidated Statements of Operations
     for the Three and Nine Months Ended September 30, 1998 and 1999 (Unaudited)......  4

Consolidated Statements of Cash Flows
     for the Nine Months Ended September 30, 1998 and 1999 (Unaudited)................  5

Notes to Consolidated Financial Statements............................................  6
</TABLE>



                                       2

<PAGE>   3

                           CONSOLIDATED BALANCE SHEETS
                    (in thousands, except share information)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,  SEPTEMBER 30,
                                                                                     1998          1999
                                                                                 -----------    -----------
<S>                                                                              <C>            <C>
ASSETS

Current assets:
     Cash and cash equivalents ...............................................   $     3,077    $   102,961
     Accounts receivable, less allowance
          for doubtful accounts ..............................................        84,440         77,253
     Inventories .............................................................         6,379         10,278
     Prepaid expenses and other assets .......................................        15,065         12,983
                                                                                 -----------    -----------
          Total current assets ...............................................       108,961        203,475

Property, equipment, and leasehold improvements, at cost .....................     1,452,870      1,511,209
     Less accumulated depreciation ...........................................      (547,599)      (727,712)
                                                                                 -----------    -----------
          Net property, equipment, and leasehold improvements ................       905,271        783,497

Other non-current assets, at cost ............................................       629,372        612,231
     Less accumulated amortization ...........................................       (62,360)       (78,318)
                                                                                 -----------    -----------
          Net other non-current assets .......................................       567,012        533,913
                                                                                 -----------    -----------
                                                                                 $ 1,581,244    $ 1,520,885
                                                                                 ===========    ===========
LIABILITIES AND SHAREOWNERS' DEFICIT

Current liabilities:
     Accounts payable ........................................................   $    96,478    $   109,962
     Accrued expenses ........................................................        49,692         33,800
     Accrued interest ........................................................        43,209         38,585
     Accrued restructuring costs, current portion ............................         8,256         12,521
     Customer deposits .......................................................        22,735         17,785
     Deferred revenue ........................................................        15,874         20,553
                                                                                 -----------    -----------
          Total current liabilities ..........................................       236,244        233,206
                                                                                 -----------    -----------

Long-term obligations ........................................................     1,815,137      1,999,320

Accrued restructuring costs, non-current portion .............................        18,765         12,783

Minority interest ............................................................         1,517             --

Commitments and contingencies ................................................            --             --

Shareowners' deficit:
 Common Stock - $.01 par, authorized 250,000,000 shares;
    103,640,554 and 103,960,240 shares issued and outstanding
    as of December 31, 1998 and  September 30, 1999, respectively ............         1,036          1,040
 Paid-in capital .............................................................       132,950        134,161
 Accumulated other comprehensive income ......................................         2,378          1,161
 Accumulated deficit .........................................................      (626,783)      (860,786)
                                                                                 -----------    -----------
          Total shareowners' deficit .........................................      (490,419)      (724,424)
                                                                                 -----------    -----------
                                                                                 $ 1,581,244    $ 1,520,885
                                                                                 ===========    ===========
</TABLE>

                             See accompanying notes


                                       3

<PAGE>   4


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share information)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED        NINE MONTHS ENDED
                                                      SEPTEMBER 30,            SEPTEMBER 30,
                                                 ----------------------    ----------------------
                                                    1998         1999        1998          1999
                                                 ---------    ---------    ---------    ---------
<S>                                              <C>          <C>          <C>          <C>
Services, rent and maintenance revenues ......   $ 239,689    $ 223,063    $ 704,722    $ 696,566
Product sales ................................      25,382       24,347       80,600       68,969
                                                 ---------    ---------    ---------    ---------
     Total revenues ..........................     265,071      247,410      785,322      765,535
Cost of products sold ........................     (18,276)     (16,374)     (62,540)     (43,013)
                                                 ---------    ---------    ---------    ---------
                                                   246,795      231,036      722,782      722,522
Operating expenses:
     Services, rent and maintenance ..........      52,643       63,033      158,011      193,705
     Selling .................................      27,284       24,231       72,320       70,223
     General and administrative ..............      79,811       84,648      224,035      260,877
     Depreciation and amortization ...........      69,059       72,623      213,220      268,171
     Provision for asset impairment ..........          --           --           --       17,798
     Restructuring charge ....................          --           --       74,000           --
                                                 ---------    ---------    ---------    ---------
          Total operating expenses ...........     228,797      244,535      741,586      810,774
                                                 ---------    ---------    ---------    ---------

Operating income (loss) ......................      17,998      (13,499)     (18,804)     (88,252)

Other income (expense):
     Interest expense ........................     (35,822)     (37,296)    (109,353)    (111,097)
     Interest income .........................         534          681        1,564        1,986
     Minority interest .......................         862          626        2,174          806
                                                 ---------    ---------    ---------    ---------
          Total other income (expense) .......     (34,426)     (35,989)    (105,615)    (108,305)
                                                 ---------    ---------    ---------    ---------

Loss before cumulative effect of a change in
    accounting principle .....................     (16,428)     (49,488)    (124,419)    (196,557)
Cumulative effect of a change in accounting
    principle ................................          --           --           --      (37,446)
                                                 ---------    ---------    ---------    ---------
Net loss .....................................   $ (16,428)   $ (49,488)   $(124,419)   $(234,003)
                                                 =========    =========    =========    =========

Net loss per share (basic and diluted):

Loss before cumulative effect of a change in
   accounting principle ........................ $   (0.16)   $   (0.48)   $   (1.20)   $   (1.89)
Cumulative effect of a change in
   accounting principle ........................        --           --           --        (0.36)
                                                 ---------    ---------    ---------    ---------
Net loss per share ............................. $   (0.16)   $   (0.48)   $   (1.20)   $   (2.25)
                                                 =========    =========    =========    =========
</TABLE>


                             See accompanying notes

                                       4
<PAGE>   5



                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                       NINE MONTHS ENDED
                                                                                                         SEPTEMBER 30,
                                                                                                     ----------------------
                                                                                                       1998         1999
                                                                                                     ---------    ---------
<S>                                                                                                  <C>          <C>
Operating activities:
     Net loss ....................................................................................   $(124,419)   $(234,003)
          Adjustments to reconcile net loss to net cash provided by operating
           activities:
                 Provision for asset impairment ..................................................          --       17,798
                 Cumulative effect of a change in accounting principle ...........................          --       37,446
                 Restructuring  charge ...........................................................      74,000           --
                 Depreciation.....................................................................     193,242      254,884
                 Amortization ....................................................................      19,978       13,287
                 Provision for doubtful accounts .................................................      13,780       20,896
                 Amortization of debt issuance costs .............................................       3,316        3,411
                 Minority interest ...............................................................      (2,174)        (806)
                 Other............................................................................       4,160           --

     Changes in operating assets and liabilities:
                 Accounts receivable .............................................................     (11,990)     (14,841)
                 Inventories......................................................................       2,512       (4,066)
                 Prepaid expenses and other assets ...............................................       2,430        1,939
                 Accounts payable ................................................................      11,752       15,132
                 Accrued expenses and accrued interest ...........................................       3,248      (20,147)
                 Accrued restructuring costs .....................................................      (2,101)      (1,717)
                 Customer deposits and deferred revenue ..........................................       3,010         (197)
                                                                                                     ---------    ---------
Net cash provided by operating activities ........................................................     190,744       89,016
                                                                                                     ---------    ---------

Investing activities:
   Capital expenditures ..........................................................................    (171,295)    (162,830)
   Payments for spectrum licenses ................................................................      (6,044)      (3,835)
   Business acquisitions and joint venture investments ...........................................      (6,528)          --
   Other, net ....................................................................................      10,873       (9,047)
                                                                                                     ---------    ---------
Net cash used in investing activities.............................................................    (172,994)    (175,712)
                                                                                                     ---------    ---------
Financing activities:
   Borrowings of long-term obligations ...........................................................     216,710      321,353
   Repayments of long-term obligations ...........................................................    (230,907)    (135,979)
   Proceeds from exercise of stock options .......................................................       7,607        1,206
                                                                                                     ---------    ---------
Net cash provided by (used in) financing activities ..............................................      (6,590)     186,580
                                                                                                     ---------    ---------

Net increase in cash and cash equivalents ........................................................      11,160       99,884
Cash and cash equivalents at beginning of period .................................................       2,924        3,077
                                                                                                     ---------    ---------
Cash and cash equivalents at end of period .......................................................   $  14,084    $ 102,961
                                                                                                     =========    =========
</TABLE>


                             See accompanying notes


                                       5
<PAGE>   6
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999
                                   (Unaudited)

1.       MERGER AGREEMENT AND LIQUIDITY

                  On November 8, 1999, Paging Network, Inc. (the Company)
         announced that the Company had signed a definitive agreement (the
         Merger Agreement) to merge (the Merger) with Arch Communications Group,
         Inc. (Arch). Under the terms of the Merger Agreement, each share of the
         Company's common stock will be exchanged for 0.1247 share of Arch
         common stock. Under the terms of the Merger Agreement, the Company's
         8.875% senior subordinated notes due 2006, its 10% senior subordinated
         notes due 2008, and its 10.125% senior subordinated notes due 2007
         (collectively, the Notes), along with all accrued interest thereon,
         will be exchanged in a registered exchange offer under which the
         holders of each $1,000 of outstanding principal of Notes will receive,
         upon consummation of the Merger, approximately 64 shares of common
         stock of Arch. The Merger Agreement also requires that certain senior
         notes and preferred stock of Arch be converted into Arch common stock
         as part of a recapitalization of the combined company.

                  As part of the Merger, the Company intends to distribute 80.5%
         of its interest in Silverlake Communications, Inc., a wholly-owned
         subsidiary of the Company doing business as Vast Solutions (Vast
         Solutions), to holders of the Notes and the Company's common stock.
         Holders of the Notes will receive an effective 68.9% interest in Vast
         Solutions, while holders of the Company's common stock will receive an
         effective 11.6% interest. The remaining 19.5% interest will be held by
         the combined company following the Merger.

                  The Merger Agreement and related recapitalization of the
         combined company require a 97.5% acceptance by the holders of the Notes
         and Arch's senior discount noteholders, in addition to the affirmative
         votes of a majority of the Company's stockholders, Arch's stockholders,
         and Arch's Series C preferred stockholders, to complete the Merger.
         Consent of the lenders under the Company's $1 billion revolving credit
         facility (the Credit Agreement) is also required. The Merger Agreement
         also provides for the Company to file a "pre-packaged" Chapter 11
         reorganization plan if the level of acceptances from the holders of the
         Notes is below 97.5%, but greater than 66.7%, the level required for
         consummation of a "pre-packaged" Chapter 11 reorganization plan.

                  Consummation of the Merger is subject to completion of the
         recapitalization described, customary regulatory review, certain
         third-party consents, and the approvals noted above. The Company
         anticipates the Merger to be completed during the first half of 2000.

                  The Company is currently in compliance with the financial
         covenants set forth in all of its U.S. and Canadian debt agreements.
         The Company is pursuing various efforts to improve the Company's
         domestic earnings before interest, income taxes, depreciation, and
         amortization (EBITDA) for the fourth quarter of 1999. However, if these
         efforts prove unsuccessful, the Company will cease to remain in
         compliance with the interest coverage covenant set forth in the
         Company's Credit Agreement following the close of the fourth quarter of
         1999. In that event, the Company would seek to obtain a waiver for such
         non-compliance under the Credit Agreement. If the Company is unable to
         obtain a waiver for such non-compliance, the lenders will have various
         rights, including the right to accelerate the outstanding indebtedness.
         Such acceleration would also result in the Company being in default
         under the cross-default provisions of the Notes.

                  The Company is currently precluded from further borrowings by
         the terms of its Notes. As of November 5, 1999, the Company had
         approximately $50 million in cash, which, combined with cash expected
         to be generated from operations, the Company believes is sufficient to
         meet its obligations into the first quarter of 2000. If the Company
         does not achieve an improvement in its domestic EBITDA, the Company may
         not have sufficient cash or borrowing capacity to meet its obligations
         through the first quarter of 2000. The Company is currently exploring
         certain strategic and financing alternatives to ensure continued
         liquidity through the consummation of the Merger. However, there can be
         no assurance that the Company's efforts to obtain additional liquidity
         will prove timely or successful or that the Merger will be completed,
         and the Company may be required to reduce the level of its operations
         and/or file for protection under Chapter 11 of the U.S. Bankruptcy Code
         to restructure its obligations, including those under the Notes. Such a
         filing would likely have a material impact on the Company's results of
         operations and financial position. Furthermore, if the Merger is not
         ultimately consummated, the Company may incur significant charges,
         including charges for asset impairments and restructuring the Company's
         operations.




                                       6



<PAGE>   7


2.       THE COMPANY

                  The Company is a provider of wireless messaging and
         information delivery services. The Company provides service in all 50
         states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico,
         Canada, and Spain, including service in all of the largest 100 markets
         (in population) in the United States, and owns a minority interest in a
         wireless messaging company in Brazil. The consolidated financial
         statements include the accounts of all of its wholly and majority-owned
         subsidiaries. All intercompany transactions have been eliminated.

3.       UNAUDITED INTERIM FINANCIAL STATEMENTS

                  The interim consolidated financial information contained
         herein is unaudited but, in the opinion of management, includes all
         adjustments, which are of a normal recurring nature, except for the
         cumulative effect of a change in accounting principle discussed in Note
         4, the provision for asset impairment discussed in Note 5, and the
         restructuring charge discussed in Note 6, necessary for a fair
         presentation of the financial position, results of operations, and cash
         flows for the periods presented. These financial statements have been
         prepared in accordance with generally accepted accounting principles
         for interim financial information and the instructions to Form 10-Q and
         Article 10 of Regulation S-X. Accordingly, these financial statements
         do not include all of the information and footnotes required by
         generally accepted accounting principles for complete financial
         statements. The balance sheet as of December 31, 1998, has been derived
         from the audited financial statements as of that date. Results of
         operations for the periods presented herein are not necessarily
         indicative of results of operations for the entire year. These
         financial statements and related notes should be read in conjunction
         with the financial statements and notes included in the Company's
         Annual Report on Form 10-K for the year ended December 31, 1998.

4.       ACCOUNTING CHANGES

                  The Company adopted the provisions of Statement of Position
         98-5 "Reporting on the Costs of Start-Up Activities" (SOP 98-5),
         effective January 1, 1999. SOP 98-5 requires the expensing of all
         start-up costs as incurred as well as writing off the remaining
         unamortized balance of capitalized start-up costs at the date of
         adoption of SOP 98-5. The impact of the Company's adoption of SOP 98-5
         was a charge of $37 million representing the cumulative effect of a
         change in accounting principle to write-off all unamortized start-up
         costs as of January 1, 1999, and an increase in services, rent and
         maintenance expenses of $5 million and $16 million, respectively, for
         the three and nine months ended September 30, 1999, and a decrease in
         depreciation and amortization expense of $1 million and $4 million,
         respectively, for the three and nine months ended September 30, 1999.

                  Effective April 1, 1999, the Company changed the depreciable
         lives for its subscriber devices and certain network equipment. The
         Company changed the depreciable lives of its subscriber devices from
         three years to two years and the depreciable life of certain of its
         network equipment from seven years to ten years. The changes resulted
         from a review by the Company of the historical usage periods of its
         subscriber devices and its network equipment and the Company's
         expectations regarding future usage periods for subscriber devices
         considering current and projected technological advances. As a result
         of these changes, depreciation expense increased by approximately $8
         million and $77 million, respectively, during the three and nine months
         ended September 30, 1999.

                  In March 1998, the Accounting Standards Executive Committee of
         the American Institute of Certified Public Accountants issued Statement
         of Position 98-1, "Accounting for the Costs of Computer Software
         Developed For of Obtained for Internal Use" (SOP 98-1). SOP 98-1
         requires the capitalization of certain costs of developing or acquiring
         computer software for internal use. The Company adopted the provisions
         of SOP 98-1, effective January 1, 1999. The adoption of SOP 98-1 did
         not have a significant impact on the Company's results of operations or
         financial position, as the Company's policy for accounting for the
         costs of developing or acquiring computer software for internal use
         prior to the adoption of SOP 98-1 was generally consistent with the
         provisions of SOP 98-1.


                                       7
<PAGE>   8


5.       PROVISION FOR ASSET IMPAIRMENT

                 The Company recorded a provision of $18 million during the
         quarter ended March 31, 1999, for the impairment of the assets of the
         Company's majority-owned Spanish subsidiaries in accordance with
         Statement of Financial Accounting Standards No. 121, "Accounting for
         the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
         Disposed Of ", which requires impairment losses to be recorded on
         long-lived assets used in operations when indicators of impairment are
         present and the undiscounted cash flows estimated to be generated by
         those assets are less than the assets' carrying amount. During the
         first quarter of 1999, the Company made the decision to narrow its
         focus to its North American operations and, as a result, made the
         decision to sell or otherwise dispose of its operations in Spain. As a
         result of this decision, the Company analyzed the estimated future cash
         flows expected to be generated from its Spanish operations and
         determined that they would not be sufficient to recover the net book
         value of the assets of the subsidiaries and, accordingly, recorded a
         provision to write down the assets of the Spanish subsidiaries based on
         the estimated value of the Company's investment in its Spanish
         subsidiaries as of March 31, 1999. No cash costs have been incurred or
         are expected as a result of the provision for the impairment of the
         assets of the Company's Spanish subsidiaries.

6.       RESTRUCTURING CHARGE

                 In February 1998, the Company's Board of Directors approved a
         restructuring of the Company's domestic operations (the Restructuring).
         As part of the Restructuring, the Company is in the process of
         reorganizing its operations to expand its sales organization, eliminate
         local and redundant administrative operations, and consolidate certain
         key support functions. Subject to the potential merger described in
         Note 1, the Company expects to eliminate a total of approximately 1,600
         positions, including positions already eliminated and net of positions
         added, through the consolidation of redundant administrative operations
         and certain key support functions located in offices throughout the
         country into central facilities (the Centers of Excellence). As a
         result of the Restructuring, the Company recorded a charge of $74
         million, or $0.72 per share (basic and diluted), during the quarter
         ended March 31, 1998. The components of the charge included (in
         thousands):

<TABLE>
<S>                                                               <C>
                           Write-down of property and equipment   $ 38,900
                           Lease obligations and terminations       18,900
                           Severance and related benefits           12,700
                           Other                                     3,500
                                                                  --------
                                Total restructuring charge        $ 74,000
                                                                  ========
</TABLE>

                 The writedown of property and equipment related to a non-cash
         charge to reduce the carrying amount of certain machinery and
         equipment, furniture and fixtures, and leasehold improvements that the
         Company would not continue to utilize following the Restructuring to
         their estimated net realizable value as of the date such assets were
         projected to be disposed of or abandoned by the Company, allowing for
         the recognition of normal depreciation expense on such assets through
         their projected disposal date. The net realizable value of these assets
         was determined based on management estimates, which considered such
         factors as the nature and age of the assets to be disposed of, the
         timing of the assets' disposal, and the method and potential costs of
         the disposal. Such estimates are subject to change.

                 The provision for lease obligations and terminations related
         primarily to future lease commitments on local and regional office
         facilities that would be closed as part of the Restructuring. The
         charge represented future lease obligations, net of projected sublease
         income, on such leases past the dates the offices would be closed by
         the Company, or, for certain leases, the cost of terminating the leases
         prior to their scheduled expiration. Projected sublease income was
         based on management estimates, which are subject to change. Cash
         payments on the leases and lease terminations will occur over the
         remaining lease terms, the majority of which expire prior to 2003.


                                       8
<PAGE>   9
                  Through the elimination of certain local and regional
         administrative operations and the consolidation of certain support
         functions, the Company expects to eliminate a total of approximately
         1,600 net positions, including positions already eliminated, the
         majority of which are non-sales related positions in local and regional
         offices. As a result of eliminating these positions, the Company
         expects to involuntarily terminate an estimated 1,950 employees. The
         majority of the remaining severance and benefits costs to be paid by
         the Company will be paid during 2000. The number of positions
         eliminated and employees involuntarily terminated may be significantly
         impacted if the Merger discussed in Note 1 is consummated.

                  During the fourth quarter of 1998, the Company identified
         additional furniture, fixtures, and equipment that would not be
         utilized following the Restructuring, resulting in an additional
         non-cash charge of $3 million. This charge was offset by reductions in
         the provisions for lease obligations and terminations and severance
         costs as a result of refinements to the Company's schedule for local
         and regional offices closures. Also as a result of the refinements to
         the office closing schedule, the Company adjusted, effective October 1,
         1998, the depreciable lives of certain of the assets written down in
         the first quarter of 1998, resulting in a decrease in depreciation
         expense of approximately $5 million for the third quarter of 1999 and
         $15 million for the nine months ended September 30, 1999.

                  The Company's restructuring activity from January 1, 1999
         through September 30, 1999 is as follows (in thousands):

<TABLE>
<CAPTION>
                              Beginning  Utilization of Reserve   Remaining
                               Reserve    Cash         Non-Cash    Reserve
                               -------   -------       --------    -------
<S>                            <C>       <C>           <C>         <C>
Lease obligation costs .....   $16,917   $   527       $     --    $16,390
Severance costs ............    10,104     1,190             --      8,914
                               -------   -------       --------    -------
         Total .............   $27,021   $ 1,717       $     --    $25,304
                               =======   =======       ========    =======
</TABLE>

7.       LONG-TERM OBLIGATIONS

                  As of September 30, 1999, the Company had $745 million of
         borrowings outstanding under its Credit Agreement.

8.       INCOME TAX PROVISION

                  No provision or benefit for income taxes has been made for the
         three and nine months ended September 30, 1998 and 1999, as the
         deferred benefit from operating losses was offset by an increase in the
         valuation allowance.


                                       9
<PAGE>   10


9.         COMMON STOCK AND NET LOSS PER SHARE

                  Net loss per share amounts are computed based on the weighted
         average number of common shares outstanding. The number of shares used
         to compute per share amounts for both the three months ended September
         30, 1998 and 1999 were 104 million. The number of shares used to
         compute per share amounts for the nine months ended September 30, 1998
         and 1999 were 103 million and 104 million, respectively. The average
         number of options to purchase shares of the Company's Common Stock
         during the three and nine months ended September 30, 1998 were 8
         million and 7 million, respectively, at exercise prices ranging from
         $2.67 per share to $25.50 per share. The average number of options to
         purchase shares of the Company's Common Stock during the three and nine
         months ended September 30, 1999 were 10 million, at exercise prices
         ranging from $2.73 per share to $17.13 per share. These stock options
         were not included in the computation of diluted earnings per share
         because the effect of assuming their exercise would have been
         antidilutive.

                  The Company has 275 million authorized shares, of which 250
         million are Common Stock and 25 million are preferred stock. As of
         September 30, 1999, there were no preferred shares issued or
         outstanding.


10.      COMPREHENSIVE LOSS

                  Comprehensive loss for the three and nine months ended
         September 30, 1998 and 1999, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                Three Months                  Nine Months
                                                             Ended September 30,           Ended September 30,
                                                           -----------------------      ------------------------
                                                              1998          1999           1998           1999
                                                           ---------     ---------      ---------      ---------
<S>                                                        <C>           <C>            <C>            <C>
            Net loss...................................... $ (16,428)    $ (49,488)     $(124,419)     $(234,003)
            Foreign currency translation adjustments .....       526          (210)         1,636         (1,217)
                                                           ---------     ---------      ---------      ---------
             Total comprehensive loss..................... $ (15,902)    $ (49,698)     $(122,783)     $(235,220)
                                                           =========     =========      =========      =========
</TABLE>

11.      STATEMENT OF CASH FLOWS INFORMATION

                  Cash and cash equivalents include highly liquid debt
         instruments with an original maturity of three months or less. As of
         September 30, 1999, cash equivalents also include investments in money
         market instruments, which are carried at fair market value. Cash
         payments made for interest during the nine months ended September 30,
         1998 and 1999, were approximately $108 million and $112 million,
         respectively, net of interest capitalized during the nine months ended
         September 30, 1998 and 1999 of $14 million and $17 million,
         respectively. There were no significant federal or state income taxes
         paid or refunded for the nine months ended September 30, 1998 and 1999.

12.      SEGMENT INFORMATION

                  The Company has determined that it has two reportable
         segments, core operations and advanced messaging operations. The
         Company's basis for the segments relates to the types of products and
         services each segment provides. The core operating segment includes the
         traditional display and alphanumeric services, which are basic one-way
         services, and 1 1/2-way paging services. The advanced messaging
         operating segment consists of the Company's new two-way wireless
         messaging services, VoiceNow service and Iridium WorldPage, and the
         operations of Vast Solutions, which include wireless integration
         products, consumer content, and wireless software development and
         sales.


                                       10
<PAGE>   11
                  The following table presents certain information related to
         the Company's business segments for the three and nine months ended
         September 30, 1998 and 1999.

<TABLE>
<CAPTION>
                                        Three Months                 Nine Months
                                      Ended September 30,        Ended September 30,
                                    ----------------------    -------------------------
                                       1998         1999        1998            1999
                                    ---------    ---------    ---------       ---------
<S>                                 <C>          <C>          <C>             <C>
 Net Revenues (1):
         Core (2) ...............   $ 246,134    $ 227,238    $ 721,960       $ 712,469
         Advanced  Messaging ....         661        3,798          822          10,053
                                    ---------    ---------    ---------       ---------
                                    $ 246,795    $ 231,036    $ 722,782       $ 722,522
                                    =========    =========    =========       =========
Operating income (loss):
         Core (2) ...............   $  28,353    $    (379)   $   1,778(3)    $ (54,625)(4)
         Advanced Messaging .....     (10,355)     (13,120)     (20,582)        (33,627)
                                    ---------    ---------    ---------       ---------
                                    $  17,998    $ (13,499)   $ (18,804)      $ (88,252)
                                    =========    =========    =========       =========
Adjusted EBITDA (5):
         Core (2) ...............   $  92,759    $  71,694    $ 276,855       $ 229,551
         Advanced Messaging .....      (5,702)     (12,570)      (8,439)        (31,834)
                                    ---------    ---------    ---------       ---------
                                    $  87,057    $  59,124    $ 268,416       $ 197,717
                                    =========    =========    =========       =========
Free Cash Flow (6):
         Core (2) ...............   $  30,432    $  29,009    $ 107,255       $  91,176
         Advanced Messaging .....     (62,232)     (63,374)    (117,923)       (165,400)
                                    ---------    ---------    ---------       ---------
                                    $ (31,800)   $ (34,365)   $ (10,668)      $ (74,224)
                                    =========    =========    =========       =========
</TABLE>


          (1)  Net Revenues are revenues from services, rent, and maintenance
               plus product sales less the cost of products sold.

          (2)  The international operations of the Company currently consist
               entirely of core services and accordingly are included in the
               Company's core business segment.

          (3)  Operating loss for the core business segment for the first nine
               months of 1998 includes a restructuring charge of $74 million.
               See Note 6.

          (4)  Operating loss for the core business segment for the first nine
               months of 1999 includes a provision for asset impairment of $18
               million. See Note 5.

          (5)  Adjusted EBITDA is earnings before interest, income taxes,
               depreciation, amortization, minority interest, restructuring
               charge, provision for asset impairment, and cumulative effect of
               a change in accounting principle.

          (6)  Free Cash Flow is Adjusted EBITDA less capital expenditures
               (excluding payments for spectrum licenses) and debt service.

         The Company's method for allocating costs to business segments is not
consistent with the contemplated asset transfer in connection with the intended
distribution of Vast Solutions in connection with the Merger. See Note 1.

         Adjusted EBITDA and Free Cash Flow are not measures defined in
generally accepted accounting principles and should not be considered in
isolation or as substitutes for measures of performance in accordance with
generally accepted accounting principles.


                                       11
<PAGE>   12

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         The statements contained in this filing which are not historical facts,
including but not limited to future capital expenditures, future borrowings,
performance and market acceptance of new products and services, impact of Year
2000 issues on the Company's operations, anticipated costs and expenses related
to, and the timetable for, the remediation of Year 2000 issues, expected annual
recurring performance improvements and cost savings as a result of a
restructuring of the Company's domestic operations (the Restructuring), and
sales productivity increases and incremental annual increases in revenues
expected to result from the Restructuring together with associated price
increases, are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. Among the factors that could cause
actual future results to differ materially are competitive pricing pressures,
growth rates, the introduction of products and services by competitors of the
Company, the performance of the Company's vendors and independent contractors,
third-party Year 2000 remediation plans, the introduction of competing
technologies, the transition of the Company's regional office operations into
centralized facilities (the Centers of Excellence) infrastructure, the
construction, testing and placement of the Company's advanced messaging network
into operation, and acceptance of the Company's products and services in the
marketplace.

         Certain statements in this filing relating to the consummation of a
merger (the Merger) of Paging Network, Inc. (the Company) with Arch
Communications Group, Inc. (Arch), including statements regarding the rates at
which the Company's common stock and senior subordinated notes will be exchanged
or converted into shares of the common stock of Arch, the percentage
distribution of the Company's interest in a wholly-owned subsidiary to holders
of the Company's common stock and senior subordinated notes, and other
statements regarding the manner and timing of the Merger, are forward-looking in
nature and are subject to risks and uncertainties that could cause the actual
results to differ materially from those set forth in such forward-looking
statements. Among the factors that could cause actual future results to differ
materially are the failure to receive the necessary approvals of stockholders,
bondholders and lenders of the Company and Arch, the failure to receive the
necessary antitrust and other regulatory approvals, the filing of an involuntary
bankruptcy proceeding by creditors of the Company, the emergence of a competing
offer to acquire either the Company or Arch, the material breach of the Merger
agreement by the Company or Arch, or the failure to satisfy any of the other
conditions to the closing of the Merger.

INTRODUCTION

         Throughout this section the Company makes reference to earnings before
interest, income taxes, depreciation, amortization, minority interest,
restructuring charge, provision for asset impairment, and cumulative effect of a
change in accounting principle (Adjusted EBITDA). EBITDA (earnings before
interest, income taxes, depreciation, and amortization) is a key performance
measure used in the wireless messaging industry and is one of the financial
measures by which the Company's covenants are calculated under the agreements
governing its debt obligations. EBITDA and Adjusted EBITDA are not measures
defined in generally accepted accounting principles and should not be considered
in isolation or as substitutes for measures of performance in accordance with
generally accepted accounting principles.

MERGER AGREEMENT AND LIQUIDITY

         On November 8, 1999, the Company announced that the Company had signed
a definitive agreement (the Merger Agreement) to merge (the Merger) with Arch.
Under the terms of the Merger Agreement, each share of the Company's common
stock will be exchanged for 0.1247 share of Arch common stock. Under the terms
of the Merger Agreement, the Company's 8.875% senior subordinated notes due
2006, its 10% senior subordinated notes due 2008, and its 10.125% senior
subordinated notes due 2007 (collectively, the Notes), along with all accrued
interest thereon, will be exchanged in a registered exchange offer under which
the holders of each $1,000 of outstanding principal of Notes will receive, upon
consummation of the Merger, approximately 64 shares of common stock of Arch. The
Merger Agreement also requires that certain senior notes and preferred stock of
Arch be converted into Arch common stock as part of a recapitalization of the
combined company.

         As part of the Merger, the Company intends to distribute 80.5% of its
interest in Silverlake Communications, Inc., a wholly-owned subsidiary of the
Company doing business as Vast Solutions (Vast Solutions), to holders of the
Notes and the Company's common stock. Holders of the Notes will receive an
effective 68.9% interest in Vast Solutions, while holders of the Company's
common stock will receive an effective 11.6% interest. The remaining 19.5%
interest will be held by the combined company following the Merger.

         The Merger Agreement and related recapitalization of the combined
company require a 97.5% acceptance by the holders of the Notes and Arch's senior
discount noteholders, in addition to the affirmative votes of a majority of the
Company's stockholders, Arch's stockholders, and Arch's Series C preferred
stockholders, to complete the Merger. Consent of the lenders under the Company's
$1 billion revolving credit facility (the Credit Agreement) is also required.
The Merger Agreement also provides for the Company to file a "pre-packaged"
Chapter 11 reorganization plan if the level of acceptances from the holders of
the Notes is below 97.5%, but greater than 66.7%, the level required for
consummation of a "pre-packaged" Chapter 11 reorganization plan.

         Consummation of the Merger is subject to completion of the
recapitalization described, customary regulatory review, certain third-party
consents, and the approvals noted above. The Company anticipates the Merger to
be completed during the first half of 2000.

         The Company is currently in compliance with the financial covenants set
forth in all of its U.S. and Canadian debt agreements. The Company is pursuing
various efforts to improve the Company's domestic EBITDA for the fourth quarter
of 1999. However, if these efforts prove unsuccessful, the Company will cease to
remain in compliance with the interest coverage covenant set forth in the
Company's Credit Agreement following the close of the fourth quarter of 1999. In
that event, the Company would seek to obtain a waiver for such non-compliance
under the Credit Agreement. If the Company is unable to obtain a waiver for such
non-compliance, the lenders will have various rights, including the right to
accelerate the outstanding indebtedness. Such acceleration would also result in
the Company being in default under the cross-default provisions of the Notes.

         The Company is currently precluded from further borrowings by the terms
of its Notes. As of November 5, 1999, the Company had approximately $50 million
in cash, which, combined with cash expected to be generated from operations, the
Company believes is sufficient to meet its obligations into the first quarter of
2000. If the Company does not achieve an improvement in its domestic EBITDA, the
Company may not have sufficient cash or borrowing capacity to meet its
obligations through the first quarter of 2000. The Company is currently
exploring certain strategic and financing alternatives to ensure continued
liquidity through the consummation of the Merger. However, there can be no
assurance that the Company's efforts to obtain additional liquidity will prove
timely or successful or that the Merger will be completed, and the Company may
be required to reduce the level of its operations and/or file for protection
under Chapter 11 of the U.S. Bankruptcy Code to restructure its obligations,
including those under the Notes. Such a filing would likely have a material
impact on the Company's results of operations and financial position.
Furthermore, if the Merger is not ultimately consummated, the Company may incur
significant charges, including charges for asset impairments and restructuring
the Company's operations.


                                       12
<PAGE>   13

STRATEGIC INITIATIVES

         The Company is aggressively implementing its previously announced
Restructuring, which includes eliminating redundant administrative operations by
consolidating certain key support functions. While progress has been made, the
Company's efforts to convert all of its offices to its new billing and customer
service software platforms have fallen behind schedule. The Company's original
plans called for the conversions to be substantially complete during early 1999.
The Company now believes the conversions will not be substantially complete
until early 2000. The Company also has made progress in the build-out of its
advanced wireless network, which, when completed in late December 1999 or early
January 2000, will permit enhanced delivery of a broad portfolio of wireless
information products and services. In April 1999, the Company completed a
realignment of its sales and marketing organizations to more clearly align those
groups with customers' needs and the Company's overall strategic direction.

         In June 1999, the Company formed Vast Solutions to accelerate the
development and commercialization of business opportunities in three related
areas: the Company's Internet-based wireless information content; its business
solutions capabilities; and its wireless content gateway. Separating Vast
Solutions from the Company's other subsidiaries on an organizational basis is
expected to enhance the Company's ability to focus on discrete opportunities
and, potentially, different business models.

RESULTS OF OPERATIONS

         Revenues from services, rent and maintenance plus product sales less
the cost of products sold (Net Revenues) for the three-month period ended
September 30, 1999, were $231 million, a decrease of 6.4% from $247 million for
the corresponding period of 1998. Net Revenues for both the nine months ended
September 30, 1998 and 1999, were $723 million. Revenues from services, rent and
maintenance, which the Company considers its primary business, decreased 6.9% to
$223 million for the three months ended September 30, 1999, compared to $240
million for the three months ended September 30, 1998. Services, rent and
maintenance revenues for the nine months ended September 30, 1999 decreased 1.2%
to $697 million, compared to $705 million for the nine months ended September
30, 1998. Increases in average revenue per unit resulting from pricing
initiatives and the changing mix of the Company's subscriber base toward higher
revenue products and services were offset by the decrease in revenues


                                       13
<PAGE>   14


associated with the net decrease in units in service during both the three and
nine months ended September 30, 1999 as described below.

         The number of units in service with subscribers at September 30, 1999
was 9,314,000, compared to 10,110,000 and 10,484,000 units in service with
subscribers at December 31, 1998 and September 30, 1998, respectively. The
Company experienced a net reduction of approximately 462,000 domestic units in
service in the third quarter of 1999, mainly due to the Company's continued
rationalization of its customer base and intensifying price competition in the
market for paging services. Approximately two-thirds of the loss in units in
service was a result of continued weakness in the Company's reseller channel and
most of the loss were of subscribers to lower cost numerical services. The
cancellation of units from a national account relationship and the bankruptcy of
a major reseller accounted for a loss of approximately 120,000 units. In
addition, another 122,000 units were reduced based upon the reconciliation of
certain of the Company's reseller account records as they were converted to the
Centers of Excellence platform.

         The average revenue per unit (ARPU) for the Company's core domestic
operations increased to $7.78 and $7.96, respectively, for the three and nine
months ended September 30, 1999, compared to $7.59 and $7.52, respectively, for
the corresponding periods of 1998. ARPU for the three months ended September 30,
1999 declined to $7.78 from $7.84 per unit for the second quarter of 1999. The
decrease in the third quarter of 1999 resulted from the Company's efforts to
maintain market share in the face of heightened price competition.

         Product sales decreased 4.1% to $24 million for the three months ended
September 30, 1999, compared to $25 million for the same period in 1998. Product
sales decreased 14.4% to $69 million for the nine months ended September 30,
1999, compared to $81 million for the corresponding period of 1998. The
decreases in product sales and corresponding decreases in cost of products sold
from 1998 to 1999 resulted primarily from the Company's efforts to reduce the
number of customers using unprofitable services through certain pricing
initiatives, which resulted in a substantial decrease in sales through the
Company's reseller channel. In addition, the decreases in cost of products sold
from 1998 to 1999 also resulted from the decrease in the depreciable lives of
the Company's subscriber devices from three years to two years, effective April
1, 1999. This change had the effect of increasing depreciation expense and
thereby reducing the net book values of sold subscriber devices.

         Services, rent and maintenance expenses increased 19.7% to $63 million
for the three months ended September 30, 1999, compared to $53 million for the
three months ended September 30, 1998. Services, rent and maintenance expenses
increased 22.6% to $194 million for the nine months ended September 30, 1999,
compared to $158 million for the nine months ended September 30, 1998. The
increases in services, rent and maintenance expenses were primarily attributable
to the adoption of Statement of Position 98-5, Reporting on the Costs of
Start-up Activities (SOP 98-5), effective January 1, 1999, which required the
expensing of certain costs previously capitalized, increased contracted dispatch
costs related to advanced messaging units placed in service during 1998 and the
first nine months of 1999, increased pager parts and repairs expense, and
expenses associated with an increase in transmitter sites. The increase for the
nine months ended September 30, 1999 was partially offset by the decline in the
Company's reserve for non-recoverable subscriber devices resulting from the
change in the depreciable lives of its subscriber devices from three years to
two years.

         Selling expenses decreased 11.2% to $24 million for the third quarter
of 1999, compared to $27 million for the same period in 1998. Selling expenses
decreased 2.9% to $70 million for the first nine months of 1999, compared to $72
million for the corresponding period of 1998. The decrease in selling expenses
for the three months ended September 30, 1999 resulted primarily from a decrease
of approximately $4 million in the Company's advertising expenditures, including
advertising costs for its core operations and its advanced messaging operations.
The decrease in selling expenses for the nine months ended September 30, 1999
was primarily due to a one-time adjustment to sales commissions made during the
second quarter of 1999 to better reflect the period in which the commission is
earned. As a result of this change, selling expenses decreased by $2 million
during the nine months ended September 30, 1999. The decrease in selling
expenses for the first nine months of 1999 also resulted from a lower amount of
sales commissions paid in conjunction with the net decrease in units in service
as compared to the same period of 1998. Marketing research, development costs,
and advertising expenses associated with the Company's core and advanced
messaging operations are expected to grow in future periods due to expanded
promotion of its core and advanced messaging operations, including such costs
related to its SurePage and Two-Way services.

         General and administrative expenses increased 6.1% to $85 million for
the third quarter of 1999, compared to $80 million for the third quarter of
1998. General and administrative expenses increased 16.4% to $261 million for


                                       14
<PAGE>   15


the first nine months of 1999, compared to $224 million for the first nine
months of 1998. The increases in general and administrative expenses were
primarily related to expenses associated with establishing the Company's Centers
of Excellence, redundant operating costs associated with operating both its new
Centers of Excellence infrastructure and its traditional decentralized
infrastructure, and increased levels of contract labor utilized during the
transition to the Centers of Excellence infrastructure. Such costs are expected
to decrease in 2000 as the Company completes the transition to its Centers of
Excellence.

         Depreciation and amortization expense increased 5.2% to $73 million for
the three months ended September 30, 1999, compared to $69 million for the three
months ended September 30, 1998. Depreciation and amortization expense increased
25.8% to $268 million for the nine months ended September 30, 1999, compared to
$213 million for the nine months ended September 30, 1998. The increases in
depreciation and amortization expense resulted primarily from the Company's
change in the depreciable lives of its subscriber devices and certain of its
network equipment, effective April 1, 1999. The Company changed the depreciable
lives of its subscriber devices from three years to two years and the
depreciable life of certain of its network equipment from seven years to ten
years. The changes resulted from a review by the Company of the historical usage
periods of its subscriber devices and its network equipment and the Company's
expectations regarding future usage periods for subscriber devices considering
current and projected technological advances. As a result of these changes,
depreciation expense increased by approximately $8 million and $77 million,
respectively, during the three and nine months ended September 30, 1999 and is
expected to increase by approximately $3 million during the fourth quarter of
1999. Depreciation and amortization expense was reduced during the three and
nine months ended September 30, 1999 by certain property and equipment becoming
fully depreciated, certain non-current assets becoming fully amortized, and the
write-off of start-up costs upon the adoption of SOP 98-5. The Company commenced
depreciation and amortization on the assets related to its Centers of Excellence
during the third quarter of 1999. This is expected to increase depreciation and
amortization expense during the fourth quarter of 1999 by approximately $2
million. The Company expects to commence depreciation and amortization on the
assets related to its advanced messaging operations during the first quarter of
2000, which is expected to increase depreciation and amortization expense during
2000 by approximately $25 million.

         The Company recorded a provision of $18 million during the quarter
ended March 31, 1999, for the impairment of the assets of the Company's
majority-owned Spanish subsidiaries. See further discussion in Note 5 to the
Consolidated Financial Statements.

         The Company recorded a restructuring charge of $74 million during the
quarter ended March 31, 1998, as a result of a Restructuring approved by the
Company's Board of Directors in February 1998. See further discussion in Note 6
to the Consolidated Financial Statements.

         As a result of the above factors, Adjusted EBITDA decreased 32.1% to
$59 million for the third quarter of 1999, compared to $87 million for the
corresponding period of 1998. Adjusted EBITDA decreased 26.3% to $198 million
for the first nine months of 1999, compared to $268 million for the same period
in 1998. Adjusted EBITDA and Adjusted EBITDA as a percentage of Net Revenues
were negatively impacted by the Company's advanced messaging operations, the
development and implementation of its Centers of Excellence, its international
operations, and the adoption of SOP 98-5. Adjusted EBITDA and Adjusted EBITDA as
a percentage of Net Revenues for the three and nine months ended September 30,
1999 were positively impacted by approximately $0.5 million and approximately $3
million, respectively, as a result of the change in the depreciable lives of
subscriber devices as previously discussed.

         Interest expense, net of amounts capitalized, was relatively flat for
the three and nine months ended September 30, 1999, compared to the same periods
in 1998. Interest expense, net of amounts capitalized, was $37 million for the
third quarter of 1999, compared to $36 million for the third quarter of 1998.
Interest expense, net of amounts capitalized, was $111 million for the nine
months ended September 30, 1999, compared to $109 million for the nine months
ended September 30, 1998. Interest expense is expected to increase in early 2000
as the amount of interest capitalized is anticipated to decrease upon the
completion of the build-out of the Company's advanced wireless network.

         The Company adopted the provisions of SOP 98-5 effective January 1,
1999 and recorded a charge of $37 million as a cumulative effect of a change in
accounting principle to write-off all unamortized start-up costs as of January
1, 1999.


                                       15
<PAGE>   16


CAPITAL RESOURCES

         The Company's operations and expansion into new markets and product
lines have required substantial capital investment for the development and
installation of wireless communications systems and for the procurement of
subscriber devices and related equipment. Furthermore, the Company is currently
in the process of building an advanced messaging network over which it can
deploy new enhanced messaging services and customized wireless information and
completing the formation of its Centers of Excellence. Capital expenditures
(excluding payments for spectrum licenses) were $163 million for the nine months
ended September 30, 1999, compared to $171 million for the corresponding period
of 1998. The decrease in capital expenditures in 1999 was primarily due to
declining capital expenditures related to the Company's advanced messaging
network and its Centers of Excellence. Capital expenditures related to the
Company's build-out of its advanced messaging network were $54 million for the
nine months ended September 30, 1999, compared to $55 million for the
corresponding period of 1998. Capital expenditures related to establishing the
Company's Centers of Excellence, including new system implementations, were $25
million for the nine months ended September 30, 1999, compared to $30 million
for the same period of 1998.

         The amount of capital expenditures may fluctuate from quarter to
quarter and on an annual basis due to several factors, including the variability
of units in service with subscribers. Based on current expectations, the Company
anticipates the total amount of capital expenditures to be approximately $50
million in the fourth quarter of 1999. As of September 30, 1999, the Company has
substantially completed capital expenditures related to the establishment of its
Centers of Excellence. The Company expects to substantially complete capital
expenditures made in connection with the Company's expansion of its advanced
messaging network during the fourth quarter of 1999. With the substantial
completion of these capital expenditures in 1999, the Company expects aggregate
capital expenditures in 2000 to decrease as compared to 1999. However, the
Company is currently unable to estimate its capital expenditures for 2000 due
to uncertainty surrounding the Merger and liquidity matters discussed in Note 1
to the Consolidated Financial Statements.

         For the first nine months of 1999, capital expenditures were funded by
net cash provided by operating activities of $89 million, as well as incremental
borrowings. Net cash provided by operating activities decreased $102 million for
the nine months ended September 30, 1999, as compared to the same period of
1998. The decrease resulted primarily from an increase in net loss before
non-cash charges and a decrease in accrued liabilities due to timing of
payments.

         The two credit agreements of the Company's Canadian subsidiaries, as
amended on August 5, 1999, provide for total borrowings of approximately $75
million. As of September 30, 1999, approximately $52 million of borrowings were
outstanding under the Canadian credit facilities. Additional borrowings are
available under these facilities, provided such borrowings are either
collateralized or certain financial covenants are met.

         The deficiency in Free Cash Flow, defined as Adjusted EBITDA less
capital expenditures (excluding payments for spectrum licenses) and debt
service, for the Company's consolidated operations for the three and nine months
ended September 30, 1999, was $34 million and $74 million, respectively. The
deficiency in Free Cash Flow for the Company's consolidated operations for the
three and nine months ended September 30, 1998 was $32 million and $11 million,
respectively. Free Cash Flow is not a measure defined in generally accepted
accounting principles and should not be considered in isolation or as a
substitute for a measure of performance in accordance with generally accepted
accounting principles. The decline in Free Cash Flow for the three and nine
months ended September 30, 1999 was primarily the result of a decrease in
Adjusted EBITDA, as previously noted.


YEAR 2000 READINESS DISCLOSURE

         Year 2000 issues affect virtually all companies and organizations
throughout the world. Many existing computer programs were designed and
developed to use and store only two digits to identify a calendar year, without
considering the capability of properly recognizing the upcoming change in the
century. If not corrected by January 1, 2000, the Company could potentially
experience system failures or interruptions, such as a temporary inability to
deliver paging transmissions, system generation of erroneous data, or other
disruptions of normal business operations.

         The Company implemented a task force and developed a comprehensive plan
to address Year 2000 issues, and continues to utilize both internal and external
resources to evaluate and test its systems. The Company has developed


                                       16
<PAGE>   17


an approach to address Year 2000 issues that includes phases for inventory of
business processes and systems, assessment of Year 2000 risk, remediation,
testing, implementation and evaluation. The Company has completed these phases
for all critical business processes. The Company has completed the process of
evaluating the project documentation that represents the Year 2000 readiness of
its application systems and embedded systems, such as its paging terminals and
paging network and is archiving the documentation in its corporate Y2K
Repository. Furthermore, in connection with the Restructuring, the Company is
currently in the process of replacing all of its core systems for its new
Centers of Excellence. The Company has completed Year 2000 readiness assessment
and testing on these systems.

         The Company anticipates its total cost associated with correcting Year
2000 problems, including the expenses necessary to remediate the Company's
existing systems and costs related to the collection of third-party Year 2000
readiness information, to be approximately $4 million, substantially all of
which has been incurred as of November 10, 1999. In addition, in connection with
the Restructuring, the Company is currently in the process of replacing all of
its core systems for its new Centers of Excellence at an estimated cost of
approximately $80 million to $100 million.

         The Company continues to work with Motorola, Inc., Glenayre
Technologies, Inc., and other primary vendors that currently supply the Company
with subscriber devices, wireless messaging terminals, and network facilities,
to assess their Year 2000 readiness. Assessment has been completed for the
Company's mission critical primary vendors. The Company's primary vendors are
making the preparations necessary for their products and services to be ready
for the Year 2000. However, there can be no assurance that third parties, on
which the Company's business relies, will successfully remediate their systems
on a timely basis. The Company also relies on the provision of electrical power
and telecommunications transmission services in the operation of its business.
The Company has queried its primary electrical and telecommunications suppliers
regarding Year 2000 compliance. Each supplier queried believes that it will be
Year 2000 ready by the end of 1999. The Company has no means of confirming these
statements, nor any ability to ensure Year 2000 compliance by these suppliers.
The Company believes that although it may experience power and/or transmission
outages related to Year 2000 noncompliance, these outages will be limited in
both scope and duration and will not have a material adverse effect on the
Company's ability to operate nor on its results of operations. In addition, the
possibility of power and/or transmission outages is being addressed in the
contingency planning process described below.

         The Company is working with a globally recognized consulting firm to
develop contingency plans to mitigate the impact of its potential system
failures related to Year 2000 issues. The contingency plans will address the
risk of potential failures related to internal software applications, embedded
systems, infrastructure, and third-party systems (including electrical power and
telecommunications transmission services). The contingency plans have been
completed for mission critical systems and selected failure scenarios will
continue to be practiced during the fourth quarter of 1999 to validate the
thoroughness of these plans.

         The Company believes it has met all project deliverables according to
schedule based on management's review and verification of the project
documentation. However, in particular due to the potential impact of third-party
modification plans, actual results could differ materially from those
anticipated. The Company's business, financial position, or results of
operations could be materially adversely affected by the failure of its computer
systems and applications, or those operated by third parties, to properly
operate or manage dates beyond 1999. In addition, disruptions in the economy
generally resulting from Year 2000 issues could materially adversely affect the
Company. The amount of any potential liability or lost revenue cannot be
estimated at this time.


                                       17
<PAGE>   18


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         There have been no material changes from the information provided in
Item 7A of the Company's Annual Report on Form 10-K for the year ended December
31, 1998.


                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

         The Company is involved in various lawsuits arising in the normal
course of business. In management's opinion, the ultimate outcome of these
lawsuits will not have a material adverse effect on the Company's business,
financial position, or results of operations.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits.

                  The exhibits listed on the accompanying index to exhibits are
                  filed as part of this quarterly report.

         (b)      Reports on Form 8-K.

                  None



                                       18
<PAGE>   19


                                   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.



                                   PAGING NETWORK, INC.




Date: November 12, 1999            By: /s/ John P. Frazee, Jr.
                                       -----------------------------------------
                                       John P. Frazee, Jr.
                                       Chairman of the Board of Directors
                                       and Chief Executive Officer
                                       (Principal Executive Officer)




Date: November 12, 1999            By: /s/ Julian B. Castelli
                                       -----------------------------------------
                                       Julian B. Castelli
                                       Senior Vice President and Chief
                                       Financial Officer (Principal Financial
                                       Officer and Principal Accounting Officer)



                                       19
<PAGE>   20


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                           DESCRIPTION
---------                          -----------
<S>            <C>
   3.1         Restated Certificate of Incorporation of the Registrant, as
               amended (1)

   3.3         By-laws of the Registrant, as amended (11)

   4.1         Articles Sixth, Seventh, Eighth, Twelfth, and Thirteenth of the
               Restated Certificate of Incorporation of the Registrant, as
               amended (1)

   4.2         Articles II, III, and VII and Section I of Article VIII of the
               Registrant's By-laws, as amended (11)

   4.3         Form of Indenture (2)

   4.4         Shareholder Rights Agreement (3)

   4.5         First Amendment to the Shareholder Rights Agreement (11)

   4.6         Second Amendment to the Shareholder Rights Agreement (13)

  10.1         1982 Incentive Stock Option Plan, as amended and restated (1)

  10.2         Form of Stock Option Agreement executed by recipients of options
               granted under the 1982 Incentive Stock Option Plan (1)

  10.3         Form of Management Agreement executed by recipients of options
               granted under the 1982 Incentive Stock Option Plan (1)

  10.4         Form of Vesting Agreement executed by recipients of options
               granted under the 1982 Incentive Stock Option Plan (1)

  10.5         Form of Indemnification Agreement executed by recipients of
               options granted under the 1991 Stock Option Plan (1)

  10.6         Form of First Amendment to Vesting Agreement executed by
               recipients of options granted under the 1982 Incentive Stock
               Option Plan (1)

  10.7         Form of First Amendment to Management Agreement executed by
               recipients of options granted under the 1982 Incentive Stock
               Option Plan (1)

  10.8         Amended and Restated Credit Agreement dated as of May 2, 1995
               among the Registrant, NationsBank of Texas, N.A., Toronto
               Dominion (Texas), Inc., The First National Bank of Boston, and
               certain other lenders (4)

  10.9         Amendment No. 1 dated as of December 12, 1995 to the Amended and
               Restated Credit Agreement dated as of May 2, 1995 among the
               Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas),
               Inc., The First National Bank of Boston, and certain other
               lenders (5)
</TABLE>


                                       20
<PAGE>   21


<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                           DESCRIPTION
---------                          -----------
<S>            <C>
  10.10        Second Amended and Restated Credit Agreement dated as of June 5,
               1996, among the Registrant, NationsBank of Texas, N.A., Toronto
               Dominion (Texas), Inc., The First National Bank of Boston, Chase
               Securities Inc., and certain other lenders (6)

  10.11        Loan Agreement dated as of June 5, 1996 among Paging Network of
               Canada Inc., The Toronto-Dominion Bank, and such other financial
               institutions as become banks (6)

  10.12        Loan Agreement dated as of June 5, 1996 among Madison
               Telecommunications Holdings, Inc., The Toronto-Dominion Bank, and
               such other financial institutions as become banks (6)

  10.13        1997 Restricted Stock Plan, as approved by shareowners on May 22,
               1997 (7)

  10.14        Employment Agreement dated as of August 4, 1997 among the
               Registrant and John P. Frazee, Jr. (8)

  10.15        First Amendment dated April 18, 1997 to the Loan Agreement dated
               as of June 5, 1996 among Paging Network of Canada Inc., The
               Toronto-Dominion Bank, and such other financial institutions as
               become banks (9)

  10.16        First Amendment dated April 18, 1997 to the Loan Agreement dated
               as of June 5, 1996 among Madison Telecommunications Holdings,
               Inc., The Toronto-Dominion Bank, and such other financial
               institutions as become banks (9)

  10.17        1992 Director Compensation Plan, as amended and restated on April
               22, 1998 (10)

  10.18        Amended and Restated 1991 Stock Option Plan, as approved by
               shareowners on May 21, 1998 (10)

  10.19        Letter dated May 26, 1998 regarding Second Amendments effective
               March 31, 1998 to the Loan Agreements dated as of June 5, 1996:
               (1) among Paging Network of Canada Inc., The Toronto-Dominion
               Bank, and such other financial institutions as become banks (2)
               among Madison Telecommunications Holdings, Inc., The
               Toronto-Dominion Bank, and such other financial institutions as
               become banks (10)

  10.20        Forms of Stock Option Agreement executed by recipients of options
               granted under the 1991 Stock Option Plan (11)

  10.21        Employee Stock Purchase Plan, as amended on December 16, 1998
               (11)

  10.22        Severance Pay Plan dated as of January 20, 1999 (11)

  10.23        Form of Stock Option Agreement executed by recipients of options
               granted under the 1992 Director Compensation Plan (11)

  10.24        Amended and Restated Loan Agreement dated August 5, 1999 among
               Paging Network of Canada Inc., The Toronto-Dominion Bank,
               Canadian Imperial Bank of Commerce, National Bank of Canada, and
               such other financial institutions as become banks (12)

  10.25        Amended and Restated Loan Agreement dated August 5, 1999 among
               Madison Telecommunications Holdings, Inc., The Toronto-Dominion
               Bank, Canadian Imperial Bank of Commerce, National Bank of
               Canada, and such other financial institutions as become banks
               (12)
</TABLE>


                                       21
<PAGE>   22


<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                           DESCRIPTION
---------                          -----------
<S>            <C>
   12          Ratio of Earnings to Fixed Charges for the three and nine months
               ended September 30, 1998 and 1999 (13)

   27          Financial Data Schedule (13)
</TABLE>

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

               (1)   Previously filed as an exhibit to Registration Statement
                     No. 33-42253 on Form S-1 and incorporated herein by
                     reference.

               (2)   Previously filed as an exhibit to Registration Statement
                     No. 33-46803 on Form S-1 and incorporated herein by
                     reference.

               (3)   Previously filed as an exhibit to the Registrant's Report
                     on Form 8-K on September 15, 1994.

               (4)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended June 30, 1995.

               (5)   Previously filed as an exhibit to the Registrant's Annual
                     Report on Form 10-K for the fiscal ended December 31, 1995.

               (6)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended June 30, 1996.

               (7)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended June 30, 1997.

               (8)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended September 30, 1997.

               (9)   Previously filed as an exhibit to the Registrant's Annual
                     Report on Form 10-K for the fiscal year ended December 31,
                     1997.

              (10)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended June 30, 1998.

              (11)   Previously filed as an exhibit to the Registrant's Annual
                     Report on Form 10-K for the fiscal year ended December 31,
                     1998.

              (12)   Previously filed as an exhibit to the Registrant's
                     Quarterly Report on Form 10-Q for the quarterly period
                     ended June 30, 1999.

              (13)   Filed herewith.



                                       22