UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF
1934 X
For the Fiscal Year Ended December 31, 1999

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from               to

Commission file numbers 0-23232/1-14248

                         ARCH COMMUNICATIONS GROUP, INC.
             (Exact name of Registrant as specified in its Charter)

            DELAWARE                               31-1358569
     (State of incorporation)           (I.R.S. Employer Identification No.)

     1800 West Park Drive, Suite 250
       Westborough, Massachusetts                            01581
 (address of principal executive offices)                  (Zip Code)

                                 (508) 870-6700
              (Registrant's telephone number, including area code)

                 SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
                     OF THE SECURITIES EXCHANGE ACT OF 1934:
  10 7/8% Senior Discount Notes due 2008         American Stock Exchange
             (Title of Class)             (Name of exchange on which registered)

                 SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934:
                      Common Stock Par Value $.01 Per Share
                  Class B Common Stock Par Value $.01 Per Share
                                    Warrants
                                (Title of class)

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant at March 10, 2000 was approximately $691,156,000.

The number of shares of Registrant's  common stock outstanding on March 10, 2000
was  60,412,237.  The  number  of shares of  Registrant's  class B common  stock
outstanding on March 10, 2000 was 2,712,397.

Portions of Registrant's  Definitive Proxy Statement for the 2000 Annual Meeting
of Stockholders  of the Registrant to be held on May 16, 2000, are  incorporated
by reference into Part III.



<PAGE>
                                     PART I

ITEM 1.   BUSINESS

GENERAL

   Arch is a leading provider of wireless  communications services in the United
States. Arch has established a market presence in major metropolitan  markets as
well as in middle and small  markets.  Arch's  third-party  retail  distribution
agreements complement the more than 375 Arch-operated retail outlets. Similarly,
Arch's  nationwide  coverage  utilizing two paging  frequencies  enables Arch to
provide   higher-revenue   nationwide  services  to  more  subscribers.   Arch's
nationwide  coverage  also  enhances  Arch's  local  coverage  and  provides  an
opportunity for Arch to take advantage of Arch's distribution networks.

   Arch's  plan to deploy  its  nationwide  narrowband  personal  communications
services spectrum using its existing network  infrastructure,  together with its
strategic   alliances,   should  permit  Arch  to  market  narrowband   personal
communications  services,  such as multi-market  alphanumeric and other advanced
messaging  services,  sooner  than it  would  otherwise  be able to,  and  these
services  are expected to offer higher  revenue and more growth  potential  than
basic paging services.  Arch's  investments to date in two national call centers
and additional regional call centers should supplement its previously  developed
call center and complement its strategy of evolving to regional customer service
centers. Achieving these intended benefits,  however, will depend on a number of
factors and no  assurance  can be given that the benefits  will be realized,  in
whole or in  part.  See  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations" and "--Networks and Licenses".

PENDING PAGENET MERGER

   In November 1999,  Arch signed a definitive  agreement  with Paging  Network,
Inc.  (PageNet)  pursuant  to which  PageNet  will  merge  with a  wholly  owned
subsidiary  of Arch.  Each  outstanding  share of PageNet  common  stock will be
converted into 0.1247 share of Arch common stock in the merger.

   Under the merger agreement,  PageNet is required to make an exchange offer of
PageNet common stock to holders of its  outstanding  8.875% senior  subordinated
notes due  2006,  its  10.125%  senior  subordinated  notes due 2007 and its 10%
senior subordinated notes due 2008 (collectively,  the "PageNet Notes"),  having
an aggregate  outstanding  principal  amount of $1.2 billion.  Under the PageNet
exchange  offer,  an aggregate of  616,830,757  shares of PageNet  common stock,
together  with  68.9% of the  equity  interest  in  PageNet's  subsidiary,  Vast
Solutions,  Inc.  would  be  exchanged  for  all of the  PageNet  Notes,  in the
aggregate.  In  connection  with the merger,  PageNet  would  distribute  to its
stockholders  (other than  holders who received  shares in the PageNet  exchange
offer),  11.6% of the equity interests in Vast Solutions.  After the merger, the
combined company would retain a 19.5% equity interest in Vast Solutions.

   Under the merger  agreement  Arch is required to make an exchange offer of up
to  29,651,984  shares of its  common  stock (in the  aggregate)  for all of its
107/8% senior  discount  notes due 2008.  As of March 16, 2000,  Arch has issued
11,640,321  shares of its common stock in exchange for $176.0  million  maturity
value of its 107/8% senior  discount  notes.  See  "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations  --  Liquidity  and
Capital Resources -- Sources of Funds". On March 24, 2000, Arch announced it had
entered into an agreement  with  Resurgence  Asset  Management,  L.L.C.  for the
exchange of an additional $100 million  maturity value of 107/8% senior discount
notes for Arch preferred stock convertible into common stock at an exchange rate
of  66.1318  shares of Arch  common  stock  per  $1,000 of  maturity  value.  In
addition, the agreement also requires Resurgence to sell to a third party, to be
selected by Resurgence,  $53.9 million  maturity value of 107/8% senior discount
notes which in turn is required to exchange the notes for 66.1318 shares of Arch
common stock per $1,000 of maturity value.

   If the  PageNet  exchange  offer  and the  Arch  exchange  offer  were  fully
subscribed,  immediately  following  the merger (and the issuance of Arch common
stock in exchange for PageNet common stock, in the Arch exchange offer), current
holders of Arch common stock would own  approximately  36.9% of the  outstanding
Arch common stock,  current holders of the Arch senior discount notes (including
Resurgence) would own approximately  10.5% of the outstanding Arch common stock,
current  holders of PageNet  common  stock would own  approximately  7.6% of the

                                       2
<PAGE>

outstanding  Arch common stock and current  holders of the PageNet Notes (in the
aggregate) would own  approximately  45.0% of the outstanding Arch common stock.
In addition,  following the merger Arch would have, on a pro forma basis,  total
debt of approximately $1.8 billion.

   Under the merger agreement,  the Arch board of directors at the closing would
consist  of 12  individuals,  at least six of whom  would be  designated  by the
existing Arch board of directors. The PageNet board of directors would designate
three  members,  and the three  largest  holders of PageNet  Notes would each be
entitled to designate one member. To the extent any such holder of PageNet Notes
did not elect to designate a director, the number of directors designated by the
Arch board of directors would increase.

   Arch expects the merger,  which has been  approved by the boards of directors
of Arch and PageNet, but is subject to regulatory review,  shareholder approval,
other  third-party  consents and the  completion of the exchange  offers,  to be
completed in the second or third quarter of 2000.  Each of the PageNet  exchange
offer and the Arch exchange offer is conditioned  upon acceptance by the holders
of 97.5% of the PageNet Notes and the Arch senior discount  notes,  respectively
subject to reduction in specified circumstances.

   Under the merger  agreement,  PageNet is required to include a  "prepackaged"
plan of reorganization  under Chapter 11 of the Bankruptcy Code in the materials
relating  to the  PageNet  exchange  offer,  and to  solicit  consents  for this
prepackaged plan from holders of the PageNet Notes and its senior creditors.  In
certain  circumstances PageNet has agreed either to file the prepackaged plan in
lieu of completing the PageNet exchange offer or to pay Arch a termination fee.

INDUSTRY OVERVIEW

   The  mobile  wireless  communications  industry  originated  in 1949 when the
Federal Communications Commission allocated a group of radio frequencies for use
in  providing  one-way  and  two-way  types of mobile  communications  services.
Throughout its history,  the industry has been characterized by rapid changes in
technology  and  growing  consumer  demand  for mobile  wireless  communications
products with increased  capabilities.  Particularly since the 1980s, the number
of firms  competing  in this  business  has  increased  and now  includes  major
telecommunications companies such as AT&T, SBC Communications, and MCI/Worldcom.

   Multiple  voice and data providers  compete among one another,  both directly
and indirectly,  for subscribers.  Providers in the mobile wireless industry may
offer  both   two-way   interactive   voice   services   referred  to  as  voice
communications,  and traditional paging services, either separately or through a
device  which  combines  two way voice  communications  and  traditional  paging
services,  referred to as short messaging services,  or may focus on providing a
more narrow  range of  services,  e.g.  data only.  Arch  presently  offers both
numeric and alphanumeric  messaging services, as well as guaranteed receipt, and
send and receive  messaging  services which have in part been offered  initially
over  facilities of other  carriers.  Arch provides  voice  communications  as a
distributor for other carriers.

   Technological improvements have generally contributed to strong growth in the
market for mobile wireless  communications  services and the provision of better
quality services at lower prices to subscribers. Companies providing traditional
paging have benefited from  technological  advances  resulting from research and
development  conducted  by vendors of paging units and  transmission  equipment.
These advances  include  microcircuitry,  liquid crystal display  technology and
standard digital encoding  formats.  These advances have enhanced the capability
and capacity of mobile wireless  messaging services while lowering equipment and
air time costs.

   Other mobile wireless communications  alternatives have similarly experienced
rapid  changes  through  technological  improvement  which has  resulted in more
consumer  interest  and demand.  Much of this  development  has  occurred in the
broadband services market which is currently  dominated by providers using three
types of Federal Communications  Commission licenses:  cellular  radiotelephone,
broadband personal communications services, and digital specialized mobile radio
services.  While all three of these broadband services were created at different
times and utilize different  technologies,  they are used to offer two-way voice
as well as short messaging  services.  The short messaging  services  offered by
these  broadband  service  providers are  functionally  identical to numeric and
alphanumeric paging services.

                                       3
<PAGE>

   The number of new  subscribers  to broadband  services  continues to increase
each year.  By one  analyst's  estimates,  there were a total of over 86 million
subscribers to cellular, broadband personal communications services, and digital
specialized  mobile radio services in the U.S. at the end of 1999. This estimate
reflects an  increase of  approximately  25% over the  approximately  69 million
subscribers  estimated  at the end of 1998.  This trend is expected to continue.
The same analysts predict, for broadband services,  an average annual subscriber
growth rate of approximately 13% through the year 2003.

   With regard to the paging market, Arch believes that there were approximately
45 million  subscribers to basic numeric and alphanumeric paging services in the
United States at the end of 1999.  Arch believes that the basic paging  industry
did not grow during 1999,  that demand for basic paging services will decline in
2000 and the  following  years  and that any  significant  future  growth in the
paging  industry will be attributable to advanced  messaging  services,  such as
send and receive and guaranteed receipt paging services.

   Paging   has   historically   been  a  distinct   form  of  mobile   wireless
communications;  however, a significant percentage of two-way voice services are
now combining short messaging services with two-way voice capability in a single
unit.  Customers  who have  traditionally  used both  services may now choose to
discontinue  their  traditional  paging services in favor of the single unit and
combine services. Arch is committed to expanding its service offerings,  such as
guaranteed receipt and send and receive  messaging,  to ensure that its services
remain competitive under rapidly changing market conditions.

   Messaging subscribers such as those served by Arch pay a flat monthly service
fee for paging services,  unlike  subscribers of cellular telephone or broadband
personal  communications  services,  whose bills  typically  have a  significant
variable   usage   component.   However,   cellular   and   broadband   personal
communications  services  firms are beginning to offer one rate, and other plans
which lower the price point so that these  services  compete  directly  with the
paging  services  Arch  offers.  Arch is sensitive  to these  technological  and
availability  changes and is working to design  competitively  attractive values
for the  consumer  even in the midst of these  changes  by  cellular,  broadband
personal communications services and digital specialized mobile radio providers.

   The  mobile  wireless  communications  industry  originally  distributed  its
services  through  direct  marketing  and sales  activities.  Later,  additional
channels of distribution  evolved.  These channels include: (1) carrier-operated
stores, (2) resellers,  who purchase services on a wholesale basis from carriers
and resell those services on a retail basis to their own  customers;  (3) agents
who solicit  customers for carriers and are  compensated on a commission  basis;
(4) retail outlets that often sell a variety of  merchandise,  including  pagers
and other telecommunications equipment; and (5) most recently, the Internet.

BUSINESS STRATEGY

   Arch's  strategic  objective  is to  strengthen  its  position  as one of the
leading providers of wireless  communications  services in the United States and
at the same time begin to position  itself to remain  competitive in the rapidly
expanding   wireless    communications   market   which   now   includes   major
telecommunications companies such as MCI/Worldcom and AT&T.

   Arch is  committed  to  continuing  to  provide  high-quality  service to its
current  customers  while  at the same  time  working  to  expand  the  wireless
communications  choices  it  provides  them.  Arch  has  already  begun to offer
guaranteed  receipt  messaging  and  send and  receive  messaging  and  seeks to
continue that development.  Arch has recognized that in order to fully serve its
current  customers  it will  need to have a strong  presence  in the  narrowband
personal  communications  services  market  which  will  allow it to expand  its
present offerings even further. The wireless communications industry is going to
continue  to  change  and  Arch  seeks to  position  itself  to  offer  wireless
communication  options that are broad enough to meet the needs of most potential
customers.  At the same time,  Arch recognizes the need to offer a good value to
consumers,  letting them utilize the services  they need at  economical  prices.
This means providing local,  regional and national services that allow customers
to choose the type of coverage that they require.  Arch is aggressively  seeking
cost savings and working to continue to operate more efficiently.

                                       4
<PAGE>

   Operating Strategy.  Arch's operating objectives are to increase its adjusted
earnings before interest,  income taxes,  depreciation and amortization,  deploy
its capital  efficiently,  reduce its financial leverage and expand its customer
relationships.  Arch  will  pursue  the  following  strategies  to  achieve  its
operating objectives:

      o  Low-Cost  Operating  Structure.  Arch has selected a low-cost operating
         strategy as its principal competitive tactic.  Management believes that
         a low-cost  operating  structure,  compared to  differentiated  premium
         pricing and niche  positioning,  the other two fundamental  competitive
         tactics in the  wireless  communications  industry,  will  maximize its
         flexibility to offer  competitive  prices while still achieving  target
         margins  and  adjusted   earnings   before   interest,   income  taxes,
         depreciation  and  amortization.  Arch will  continue  to  improve  its
         low-cost operating structure by consolidating some operating functions,
         including  centralized purchases from key vendors, to achieve economies
         of  scale,  and  installing   technologically   advanced  and  reliable
         transmission systems.

      o  Efficient Capital  Deployment.  Arch's principal financial objective is
         to reduce  financial  leverage by  reducing  capital  requirements  and
         increasing   adjusted   earnings   before   interest,   income   taxes,
         depreciation and amortization. To reduce capital expenditures, Arch has
         implemented a  company-wide  focus on the sale,  rather than lease,  of
         pagers since  subscriber-owned  units  require a lower level of capital
         investment than company-owned units.

      o  Balanced   Distribution.    Arch's   combination   of   direct   sales,
         company-owned  stores and third party resellers are supplemented by its
         distribution   agreements  with   third-party   regional  and  national
         retailers.  In addition,  Arch's national  accounts sales force enables
         Arch to improve distribution to nationwide customers.

      o  Capitalize on Revenue  Enhancement  Opportunities.  Arch has one of the
         broadest  product  offerings  in the  industry,  including  traditional
         paging  services as well as new  services  such as  guaranteed  receipt
         messaging and send and receive messaging services,  wireless e-mail and
         content delivery  services.  Arch has entered into a strategic alliance
         with  Weblink  Wireless,   formerly  known  as  PageMart  Wireless,  to
         accelerate  delivery  of these  new  services,  utilizing  portions  of
         Weblink Wireless' narrowband personal  communications  services network
         in conjunction  with Arch's own network while sharing  specified  costs
         with Weblink Wireless.  This will provide Arch with more economical and
         broader access to higher average revenue per unit nationwide,  regional
         or text messaging  services.  To date, Arch has marketed these services
         only on a limited basis through the resale of other carriers'  services
         on less attractive  terms.  Arch believes there will be a number of new
         revenue  opportunities  associated with its  approximately  6.9 million
         units in service,  including  selling enhanced services which add value
         such as voice mail. See "-- Wireless Communications Services,  Products
         and Operations" and "--Networks and Licenses".

WIRELESS COMMUNICATIONS SERVICES, PRODUCTS AND OPERATIONS

   Arch provides wireless messaging services,  including numeric,  alphanumeric,
guaranteed  messaging  and send and receive  messaging.  Arch operates in all 50
states and the  District of Columbia  and in each of the 100 largest  markets in
the  United  States.  Arch  offers  these  services  on a  local,  regional  and
nationwide basis employing digital networks covering more than 90% of the United
States population.

   The following table sets forth  information  about the approximate  number of
units in  service  with  Arch  subscribers  and net  changes  in number of units
through internal operations and acquisitions since 1995:
<TABLE>
<CAPTION>
                                                Net Increase
                                 Units in       (Decrease) in
                                Service at      Units through     Increase in       Units in
                               Beginning of       Internal       Units through     Service a
     Year Ended December 31,      Period         Operations       Acquisitions   End of Period
     -----------------------      ------         ----------       ------------   -------------
<S>                              <C>               <C>              <C>             <C>
     1995...................       538,000         366,000          1,102,000       2,006,000
     1996...................     2,006,000         815,000            474,000       3,295,000
     1997...................     3,295,000         595,000                 --       3,890,000
     1998...................     3,890,000         386,000                 --       4,276,000
     1999...................     4,276,000         (89,000)         2,762,000       6,949,000
</TABLE>



                                       5
<PAGE>

   Net  increase  (decrease)  in  units  through  internal  operations  includes
internal changes from acquired paging businesses after their acquisition by Arch
and is net of subscriber  cancellations during each applicable period.  Increase
in units through  acquisitions  is based on units in service of acquired  paging
businesses at the time of their acquisition by Arch.

   A numeric  pager  permits a caller to  transmit to the  subscriber  a numeric
message  that may  consist of a  telephone  number,  an account  number or coded
information,  and has the  capability to store several such numeric  messages in
memory for later recall by the subscriber.  An alphanumeric display pager allows
subscribers  to  receive  and store  messages  consisting  of both  numbers  and
letters.

   Numeric paging service, which was introduced by the paging industry nearly 20
years ago, currently  represents a majority of all units in service.  The growth
of  alphanumeric  paging service has been  constrained by certain  difficulties,
such as inputting data,  specialized  equipment  requirements and its relatively
high use of system capacity during transmission, which has, to some extent, been
relieved by deploying alternate communications pathways, such as the Internet.

   The  following  table  summarizes  the types of Arch's  units in  service  at
specified dates:
<TABLE>
<CAPTION>

                                                           December 31,
                                 ----------------------------------------------------------------
                                         1997                 1998                  1999
                                 --------------------- --------------------  --------------------
                                     Units        %        Units       %        Units        %
<S>                                <C>           <C>     <C>           <C>     <C>          <C>
     Local Numeric...............  3,284,000     85%     3,586,000     84%     5,299,000    76%
     Local Alphanumeric..........    524,000     13        621,000     14      1,215,000    18
     Tone-only and Voice.........     82,000      2         69,000      2         48,000     1
     Nationwide Numeric..........         --     --             --     --        219,000     3
     Nationwide Alphanumeric.....         --     --             --     --        168,000     2
                                 ------------ -------- ------------ -------  ----------- --------
          Total..................  3,890,000    100%     4,276,000    100%     6,949,000   100%
                                 ============ ======== ============ =======  =========== ========
</TABLE>

   Units  reflected in chart include  guaranteed and send and receive  messaging
units.

   Arch provides messaging service to subscribers for a monthly fee. Subscribers
either lease the unit from Arch for an additional  fixed monthly fee or they own
the  unit,  having  purchased  it  either  from  Arch  or from  another  vendor.
Arch-owned units leased to subscribers require capital investment by Arch, while
customer-owned  and maintained  units,  commonly  referred to as COAM units, and
those owned by resellers do not. The monthly service fee is generally based upon
the type of service provided,  the geographic area covered,  the number of units
provided  to  the  customer  and  the  period  of the  subscriber's  commitment.
Subscriber-owned   units  provide  a  more  rapid  recovery  of  Arch's  capital
investment  than units  owned and  maintained  by Arch,  but may  generate  less
recurring revenue.  Arch also sells units to third-party  resellers who lease or
resell  units to their own  subscribers  and resell  Arch's  wireless  messaging
services  under  marketing  agreements.  Resellers  are  responsible  for sales,
billing,  collection and equipment  maintenance costs. Arch sells other products
and  services,   including  units  and  accessories  and  unit  replacement  and
maintenance  contracts.  The following table summarizes the number of Arch-owned
and leased,  subscriber-owned  and reseller-owned  units in service at specified
dates.  Although the  following  table  reflects an increase in  Arch-owned  and
leased units, this increase is due to Arch's acquisition of MobileMedia in 1999.
MobileMedia  had a customer base that had  proportionately  larger accounts that
negotiated for leased units rather than subscriber units:
<TABLE>
<CAPTION>

                                                             December 31,
                                 ----------------------------------------------------------------
                                           1997                 1998                  1999
                                 --------------------- --------------------  --------------------
                                     Units        %        Units       %        Units        %
<S>                                <C>           <C>     <C>           <C>     <C>          <C>
     Arch-owned and leased.......  1,740,000     45%     1,857,000     43%     3,605,000    52%
     Subscriber-owned............  1,087,000     28      1,135,000     27      1,518,000    22
     Reseller-owned..............  1,063,000     27      1,284,000     30      1,826,000    26
                                 ------------ -------- ------------ -------  ----------- --------
          Total..................  3,890,000    100%     4,276,000    100%     6,949,000   100%
                                 ============ ======== ============ =======  =========== ========
</TABLE>



                                       6
<PAGE>

   Arch  provides  enhancements  and  ancillary  services  such as  voice  mail,
wireless information delivery services,  personalized greetings, message storage
and retrieval,  pager loss protection and pager maintenance services. Voice mail
allows  a  caller  to  leave  a  recorded  message  that  is  stored  in  Arch's
computerized  message retrieval  center.  When a message is left, the subscriber
can be automatically alerted through the subscriber's pager and can retrieve the
stored message by calling Arch's paging terminal.  Personalized  greetings allow
the  subscriber to record a message to greet callers who reach the  subscriber's
pager or voice mail box.  Message storage and retrieval  allows a subscriber who
leaves  Arch's   service  area  to  retrieve   calls  that  arrived  during  the
subscriber's  absence  from the  service  area.  Pager  loss  protection  allows
subscribers  who lease pagers to limit their costs of  replacement  upon loss or
destruction of a pager.  Pager  maintenance  services are offered to subscribers
who own their own equipment. Wireless information delivery allows subscribers to
receive stock quotes, news and weather through their Arch service.  Arch is also
in the process of test marketing  various other services that add value, and can
be integrated with existing paging services.

NETWORKS AND LICENSES

   Arch  operates  local,  regional  and  national  networks  which  enable  its
customers  to  receive  pages  over a broad  geographical  area.  Many of  these
networks  were  acquired  in  the  MobileMedia  acquisition.   Arch's  extensive
geographic  coverage may be  attractive  to large  corporate  clients and retail
chains,  which  frequently  demand national  network  coverage from their paging
service provider.

   Although Arch's networks provide local,  regional and national coverage,  its
networks  operate  over  numerous   frequencies  and  are  subject  to  capacity
constraints  in certain  geographic  markets.  Although  the  capacity of Arch's
networks varies  significantly  market by market, Arch has an adequate amount of
spectrum  licensed to meet the capacity demands of projected growth for the next
several years.

   Arch is seeking to improve  overall  network  efficiency by deploying  paging
terminals,  consolidating  subscribers on fewer,  higher  capacity  networks and
increasing  the  transmission  speed,  or baud rate,  of certain of its existing
networks.  Arch  believes its  investments  in its network  infrastructure  will
facilitate  and improve the  delivery of high  quality  communications  services
while at the same time reducing associated costs of such services.

Nationwide Wireless Networks

   Arch operates two nationwide 900 MHz networks.  As part of its acquisition of
MobileMedia,  Arch acquired  MobileMedia's fully operational nationwide wireless
"8875" network,  which was upgraded in 1996 to incorporate  high-speed FLEX (TM)
technology developed by Motorola.  In addition,  in 1996,  MobileMedia completed
the  construction  of a second  nationwide  "5375"  network  that uses FLEX (TM)
technology. The use of FLEX (TM) technology significantly increases transmission
capacity and represents a marked  improvement  over other systems that use older
paging protocols.

Narrowband Personal Communications Services Networks and Licenses

   Narrowband   personal   communications   services  networks  enable  wireless
communications  companies  to offer send and receive  messaging  services and to
make more  efficient use of radio spectrum than do  non-personal  communications
services  networks.  Arch has taken the  following  steps to position  itself to
participate in new and emerging narrowband personal  communications services and
applications.

   Arch's Narrowband  Personal  Communications  Services  Licenses.  MobileMedia
purchased five regional licenses through the Federal Communications Commission's
1994 auction of narrowband personal communications services licenses,  providing
the equivalent of a nationwide 50 kHz  outbound/12.5  kHz inbound PCS system. In
addition, MobileMedia acquired a second 2-way narrowband personal communications
services license for a nationwide 50 kHz  outbound/12.5  kHz inbound system.  In
order to retain these narrowband personal communications services licenses, Arch
must comply with specified minimum build-out requirements.  With respect to each
of the  regional  personal  communications  service  licenses  purchased  at the
Federal Communication  Commission's 1994 auction, Arch has built out the related
personal communications service system to cover 150,000 sq. km. or 37.5% of each
of the five  regional  populations  in  compliance  with  applicable  build  out
requirements  and is still  required  to extend  the  build out of the  personal


                                       7
<PAGE>

communications  service  system to cover  300,000  sq. km. or 75% of each of the
five  regional  populations  by April 27, 2005.  With respect to the  nationwide
personal  communications  service  license  acquired as part of the  MobileMedia
acquisition,  Arch built out the related personal  communications service system
to cover  750,000 sq. km. or 37.5% of the U.S.  population  in  compliance  with
applicable  build out requirements and is still required to extend the build out
of the related personal communications service system to cover 1,500,000 sq. km.
or 75% of the U.S.  population  by September  29, 2004.  In each  instance,  the
population  percentage will be determined by reference to population  figures at
the time of the  applicable  deadline.  Arch  estimates  that the costs of these
minimum build-outs would be approximately $9.0 million; however, Arch may exceed
these minimum build-out  requirements in order to be able to provide  nationwide
narrowband  personal  communications  services.  If Arch  chooses  to exceed its
minimum narrowband personal communications services build-out requirements, Arch
estimates that the costs will exceed $9.0 million.

   Weblink Wireless, Inc. In May 1999, Arch and Weblink Wireless, Inc., formerly
PageMart  Wireless,  Inc.  signed a five-year  agreement  for the  provision  of
narrowband personal communications services. Arch believes its arrangements with
Weblink will provide it with more  economical  and broader  access to narrowband
personal  communications  services.  The agreement calls for Arch and Weblink to
share  capital and  operating  expenses.  Under the  agreement,  Arch can market
narrowband  personal  communications  advanced  messaging  services,   including
guaranteed messaging and send and receive messaging, using portions of Weblink's
network in conjunction with Arch's network.

SUBSCRIBERS AND MARKETING

   Arch's  wireless   communications  accounts  are  generally  businesses  with
employees  who travel  frequently  but must be  immediately  accessible to their
offices  or  customers.   Arch's  subscribers   include   proprietors  of  small
businesses,  professionals,  management  personnel,  field sales  personnel  and
service forces,  members of the construction  industry and construction  trades,
real  estate  brokers  and  developers,  medical  personnel,  sales and  service
organizations,  specialty trade organizations,  manufacturing  organizations and
governmental agencies.

   Arch markets its services  through  three  primary  sales  channels:  direct,
reseller and retail.

   Direct. In the direct channel, Arch leases or sells equipment directly to its
customers  and bills and  services  such  customers.  Arch  markets its services
through a direct marketing and sales organization  which operated  approximately
375 retail stores as of December 31, 1999.  Arch's direct  customers  range from
individuals  and small- and  medium-sized businesses to Fortune 500 accounts and
government agencies.  Business and government accounts typically experience less
turnover than consumer  accounts.  The direct  channel will continue to have the
highest  priority  among  Arch's  marketing  and sales  efforts,  because of its
critical  contribution to recurring revenue and projected growth.  Arch has been
engaged in  efforts to improve  sales  productivity  and  strengthen  its direct
channel  sales  force,  segments  of which  had  previously  suffered  from high
turnover and open positions under  MobileMedia's  ownership and  management.  In
addition,  Arch commenced  implementing  consumer direct marketing techniques in
1998. As of December 31, 1999,  the direct channel  accounted for  approximately
86.6% of recurring revenue.

   Reseller.  In the reseller  channel,  Arch sells  access to its  transmission
networks in bulk to a third party,  who then resells such  services to consumers
or small  businesses  or other end users.  Arch offers  access to its network to
resellers at bulk discounted  rates. The third party reseller  provides customer
service, is responsible for pager maintenance and repair costs, invoices the end
user and  retains  the credit risk of the end user,  although  Arch  retains the
credit risk of the  reseller.  Because  resellers are  responsible  for customer
equipment, the capital costs that would otherwise be borne by Arch are reduced.

   Arch's resellers generally are not exclusive  distributors of Arch's services
and often have access to networks of more than one provider.  Competition  among
service  providers  to  attract  and  maintain  reseller  distribution  is based
primarily upon price, including the sale of equipment to resellers at discounted
rates.  Arch intends to be an active  participant in the reseller channel and to
concentrate on accounts that are  profitable and where longer term  partnerships
can be  established  with  selected  resellers.  As of December  31,  1999,  the
reseller channel accounted for approximately 8.4% of recurring revenue.



                                       8
<PAGE>

   Retail.  In the retail channel,  Arch sells equipment to retailers and, after
the consumer  purchases the pager from the retailer,  the consumer contacts Arch
to activate  service.  The retail channel is targeted at the consumer market and
consists  primarily of national  retail chains.  Consumers  served by the retail
channel typically purchase,  rather than lease,  equipment.  This reduces Arch's
capital  investment  requirements.  Subscribers  obtained through  retailers are
billed and  serviced  directly  by Arch.  Retail  distribution  permits  Arch to
penetrate  the consumer  market by  supplementing  direct sales  efforts.  As of
December  31, 1999,  the retail  channel  accounted  for  approximately  5.0% of
recurring revenue.

   The wireless communications industry is highly competitive. Companies in this
industry  compete  on the basis of price,  coverage  area,  available  services,
transmission quality, system reliability and customer service.

   Arch  competes  by  maintaining  competitive  pricing  of  its  products  and
services,  by providing broad coverage  options through  high-quality,  reliable
transmission networks and by furnishing subscribers a superior level of customer
service.  Arch, the second  largest  paging  carrier in the United States,  also
offers enhanced services such as alphanumeric  messaging,  guaranteed  messaging
and send and receive messaging,  voice mail and voice mail notifications,  news,
sports,  weather  reports  and  stock  quotes  and  other  information  delivery
services.  Arch's primary competitors in the paging market, including Metrocall,
the  third  largest  paging   carrier  in  the  United   States,   and  each  of
Vodafone/AirTouch  and Weblink  Wireless,  both of which are among the top eight
largest  paging  carriers  in the United  States  offer  similar  services.  The
products  and  services  Arch offers also compete with a broad array of wireless
communications  services provided by broadband service providers.  Some of these
broadband  service providers  possess  financial,  technical and other resources
greater than those of Arch. Such providers  currently competing with Arch in one
or more markets include MCI/WorldCom, Sprint PCS, AirTouch/Vodafone, Nextel, and
Bell Atlantic.

   The  provision  of  broadband  wireless  services is  currently  dominated by
providers  using  three  types of  Federal  Communication  Commission  licenses:
cellular radiotelephone, broadband personal communications services, and digital
specialized  mobile radio services.  While all three of these broadband services
were created at different  times and utilize  different  technologies,  they are
used to offer  two-way  voice as well as short  messaging  services.  The  short
messaging services are identical to numeric and alphanumeric paging services and
thus broadband services can serve as a replacement to paging services.

   Insofar as broadband  services provide short messaging  service together with
two-way voice service,  they are more  sophisticated  than basic paging services
and command a greater  price.  The price of  broadband  services,  however,  has
fallen dramatically.  The decline in price of these services is reflected in the
decline of the  average  monthly  bill for  broadband  services  from  $42.78 in
December  1997 to  $39.43 in  December  1998.  Moreover,  today  many  broadband
providers  offer basic  service  packages for  approximately  $20 per month.  By
contrast, the average revenue per unit for pagers was estimated to be $10.17 per
month.

   While  broadband  services are more  expensive  than basic paging,  broadband
service  providers  typically  provide short messaging  service as an element of
their  basic  service  package  without  additional  charges.  In  other  words,
subscribers  that  purchase  broadband  service no longer need to subscribe to a
separate  paging  service  as well.  As a  result,  a large  fraction  of paging
customers  can readily  switch from paging to broadband  services.  The dramatic
decrease  in prices for  broadband  services  has led many  consumers  to select
broadband  services as an alternative to paging  services.  Indeed,  survey data
indicates that roughly 20 percent of paging customers that drop their service do
so in favor of broadband services.

   The  intensity of  competition  for  customers  will  continue to increase as
wireless  communications  products continue to be developed.  For example,  Arch
holds  one  nationwide  and five  regional  narrowband  personal  communications
services   licenses.   Competitors  of  Arch  also  hold   narrowband   personal
communications  services licenses.  Some of these competitors have substantially
greater resources than Arch. Some competitors currently offer a 2-way narrowband
personal  communications  wireless  data service from its own network.  Although
Arch cannot  predict the types of narrowband  personal  communications  services
which will be offered by those companies,  Arch expects that those services will
compete with the narrowband personal communications services and paging services
offered by Arch.



                                       9
<PAGE>

SOURCES OF EQUIPMENT

   Arch does not manufacture  any of the messaging  equipment or other equipment
used in operations.  The equipment used in Arch's paging operations is generally
available  for  purchase  from  multiple  sources.  Arch  centralizes  price and
quantity  negotiations  for all of its  operating  subsidiaries  to achieve cost
savings from volume  purchases.  Arch buys  customer  equipment  primarily  from
Motorola,  NEC and Panasonic and purchased terminals and transmitters  primarily
from Glenayre and Motorola.  Motorola has announced its intention to discontinue
manufacturing transmitters and other paging infrastructure during 2000, although
it will  continue  to  maintain  and service  existing  infrastructure  into the
future.  Arch  anticipates  that  equipment will continue to be available in the
foreseeable  future,  consistent  with normal  manufacturing  and delivery  lead
times.

   Because  of the high  degree  of  compatibility  among  different  models  of
transmitters,  computers and other equipment manufactured by suppliers,  Arch is
able to design its systems  without  being  dependent  upon any single source of
such  equipment.  Arch  routinely  evaluates new  developments  in technology in
connection  with the design and  enhancement of its paging systems and selection
of  products  to be  offered  to  subscribers.  Arch  believes  that its  system
equipment  is  among  the  most  technologically  sophisticated  in  the  paging
industry.

REGULATION

Federal Regulation--Overview

   Arch's wireless messaging operations are subject to regulation by the Federal
Communications  Commission  under the  Communications  Act of 1934,  as amended.
Arch's operations are all classified as commercial mobile radio services and are
subject to common carrier regulation by the Federal  Communications  Commission.
The Federal Communications Commission has granted Arch licenses to use the radio
frequencies   necessary  to  conduct  its   commercial   mobile  radio  services
operations. Licenses issued by the Federal Communications Commission to Arch set
forth the technical  parameters,  such as power strength and tower height, under
which Arch is authorized to use those frequencies.  Each Federal  Communications
Commission  license held by Arch has construction  and operational  requirements
that must be  satisfied  within  set time  frames.  The  Federal  Communications
Commission  has the authority to auction all new licenses over which  commercial
mobile radio services can be offered. The Federal Communications Commission does
not  have  the  authority  to use  auctions  for  license  renewals  or  license
modifications.

   The Federal  Communications  Commission licenses granted to Arch have varying
terms of up to 10 years, at the end of which time renewal  applications  must be
approved  by  the  Federal  Communications  Commission.  In  the  past,  Federal
Communications  Commission renewal  applications have been routinely granted, in
most  cases upon a  demonstration  of  compliance  with  Federal  Communications
Commission   regulations  and  adequate  service  to  the  public.  The  Federal
Communications Commission has granted each renewal license Arch has filed, other
than those  which are  pending.  Although  Arch is unaware of any  circumstances
which would prevent the grant of any pending or future renewal applications,  no
assurance  can be given  that any of  Arch's  licenses  will be  renewed  by the
Federal  Communications   Commission.   Furthermore,   although  revocation  and
involuntary  modification of licenses are extraordinary regulatory measures, the
Federal Communications Commission has the authority to restrict the operation of
licensed  facilities or revoke or modify  licenses.  No license of Arch has ever
been revoked or modified involuntarily.

   The  Federal  Communications   Commission's  review  and  revision  of  rules
affecting  companies  such as Arch is ongoing.  The regulatory  requirements  to
which Arch is subject  may change  significantly  over time.  For  example,  the
Federal  Communications  Commission has decided to adopt a market area licensing
scheme for non-nationwide  paging channels under which carriers will be licensed
to operate on a particular  channel throughout a broad geographic area, termed a
major   economic   area,   rather   than  being   licensed   on  a   transmitter
site-by-transmitter site basis. These geographic area licenses are being awarded
through an auction.  Incumbent  paging licensees that do not acquire licenses at
auction  will be  entitled  to  interference  protection  from the  market  area
licensee.

   In many  instances  Arch still  requires  the prior  approval  of the Federal
Communications  Commission  before it can implement any  significant  changes to
their radio systems.  Once the Federal  Communications  Commission's market area


                                       10
<PAGE>

licensing  rules  are  implemented,   however,  these  site-specific   licensing
obligations will be eliminated, with specific exceptions.

   The Federal Communications Commission has issued a Further Notice of Proposed
Rulemaking in which the Federal  Communications  Commission  seeks  comments on,
among  other  matters:

      o  whether  it should  impose  coverage  requirements  on  licensees  with
         nationwide exclusivity, such as Arch;

      o  whether these coverage  requirements  should be imposed on a nationwide
         or regional basis; and

      o  whether  - if such  requirements  are  imposed  -  failure  to meet the
         requirements  should  result in a revocation  of the entire  nationwide
         license or merely a portion of the license.

   If the Federal Communications Commission were to impose additional, stringent
coverage requirements on licensees with nationwide exclusivity,  Arch might have
to accelerate the build out of its systems.

   The  Communications  Act  requires  licensees  such as Arch to  obtain  prior
approval from the Federal Communications  Commission for the transfer of control
of any  construction  permit or station  license.  The  Communications  Act also
requires prior approval by the Federal Communications Commission of acquisitions
of other commercial mobile radio service companies by Arch and transfers by Arch
of a controlling interest in any of their licenses or construction  permits. The
Federal Communications  Commission has approved each acquisition and transfer of
control  for which Arch has sought  approval.  Arch also  regularly  applies for
Federal  Communications  Commission  authority  to use  additional  frequencies,
modify the  technical  parameters  of existing  licenses,  expand their  service
territory,  provide new  services,  and modify the  conditions  under which they
provide  service.  Although  there can be no  assurance  that any  requests  for
approval  of  applications  filed by Arch will be  approved  or acted  upon in a
timely  manner by the  Federal  Communications  Commission,  or that the Federal
Communications  Commission  will  grant the relief  requested,  Arch knows of no
reason  to  believe  any such  requests,  applications,  or  relief  will not be
approved or granted. Arch makes no representations, however, about the continued
availability of additional frequencies used to provide their services.

Foreign Ownership Restrictions

   The  Communications  Act also  limits  foreign  ownership  of  entities  that
directly or indirectly  hold certain  licenses  from the Federal  Communications
Commission,  including  some of those held by Arch.  Because Arch holds licenses
from the Federal Communications Commission only through subsidiaries,  up to 25%
of its common stock can be owned or voted by aliens or their representatives,  a
foreign government or its  representatives,  or a foreign  corporation,  without
restriction.  However, if more than 25% of its common stock is owned or voted by
aliens or their representatives,  a foreign corporation, or a foreign government
or its  representatives,  the  Telecommunications  Act of 1996 gives the Federal
Communications Commission the right to revoke or refuse to grant licenses if the
Federal  Communications  Commission finds that such revocation or refusal serves
the public interest. The Federal  Communications  Commission has indicated that,
pursuant to the World Trade Organization  Telecommunications Agreement, it would
waive the 25% limitation in appropriate  circumstances.  Based upon  information
obtained by Arch, Arch believes that  substantially  less than 25% of its issued
and  outstanding  common  stock  is owned by  aliens  or their  representatives,
foreign  governments or their  representatives,  or foreign  corporations.  Arch
subsidiaries  that are  radio  common  carrier  licensees  are  subject  to more
stringent requirements and may have only up to 20% of their stock owned or voted
by   aliens  or  their   representatives,   a   foreign   government   or  their
representatives  or a foreign  corporation.  This  ownership  restriction is not
subject to waiver.

Limitations on Allocation of Numbers

   Increased demand for telephone numbers,  particularly in metropolitan  areas,
is causing  depletion of numbers in some of the more popular area codes.  Recent
plans to address this increased demand have included  elements that could impact
Arch's  operations,  including the take-back of numbers already assigned for use
and  service-specific  plans  whereby  only some  services,  such as paging  and
cellular,  would be  assigned  numbers  using a new area  code,  or plans  which
require  the pooling of blocks of numbers  for use by  multiple  carriers.  Arch
cannot provide any assurance that such plans will not be adopted by a federal or
state  commission,  or that such plans will not require  Arch to incur  further,
substantial  expenses in order to continue to obtain  telephone  numbers for its
subscribers.



                                       11
<PAGE>

Interconnection

   Recent  amendments  to  the   Communications  Act  are  intended  to  promote
competition  in local  exchange  services  through the removal of legal or other
barriers to entry. Specifically,  all telecommunications  carriers have the duty
to  interconnect  with the facilities and equipment of other  telecommunications
carriers.  The Federal Communications  Commission,  and the 9th Circuit Court of
Appeals,  among others,  have  interpreted this duty as requiring local exchange
carriers  to  compensate  mobile  wireless  carriers  for  calls  originated  by
customers of the local exchange  carriers which  terminate on a mobile  wireless
carrier's network. The Federal Communications Commission has also found unlawful
charges levied against messaging carriers in the past that have been assessed on
a monthly basis by the local  exchange  carriers for the use of  interconnection
facilities,   including  telephone  numbers.   These  findings  by  the  Federal
Communications  Commission  have been  challenged at the Federal  Communications
Commission  and in the courts.  Arch cannot  predict with certainty the ultimate
outcome  of  these  proceedings.  Compensation  amounts  may  be  determined  in
subsequent  proceedings  either  at  the  federal  or  state  level,  or  may be
determined  based on  negotiations  between the local exchange  carriers and the
paging companies. Any agreements reached between the local exchange carriers and
the  paging  companies  may be  required  to be  submitted  to state  regulatory
commission for approval.  Arch is in negotiations with local exchange  carriers,
but it may or may not be successful in securing refunds, future relief, or both,
with respect to charges for  termination of local exchange  carriers  originated
local  traffic.  If these  issues are  ultimately  decided in favor of the local
exchange  carriers,  Arch may be required to pay past due contested  charges and
may also be assessed interest and late charges for amounts withheld.

Additional Regulatory Obligations

   While the  Communications Act has had a beneficial effect for mobile wireless
providers,  some provisions place or may place additional financial  obligations
on Arch, and other carriers. As an example, some regulatory and judicial bodies,
interpret some sections of the Communications Act as requiring commercial mobile
radio service  providers  such as Arch to  contribute to "Universal  Service" or
other funds to assure the continued  availability  of local exchange  service to
high cost areas, as well as to contribute  funds to cover other designated costs
or societal goals.  Further,  providers of payphones must be compensated for all
calls placed from pay telephones to toll-free  numbers.  This latter requirement
increases Arch's costs of providing  toll-free number service,  and there are no
assurances  that Arch will be able to  continue  to pass on their costs to their
subscribers.  Beneficially,  the Communications Act now limits the circumstances
under  which  states and local  governments  may deny a request by a  commercial
mobile service provider to place transmission facilities,  and gives the Federal
Communications   Commission   the  authority  to  preempt  the  states  in  some
circumstances.

   The   Communications   Assistance  for  Law  Enforcement  Act  requires  some
telecommunications  companies,  including  Arch,  to modify  the design of their
equipment or services to ensure that electronic  surveillance  or  interceptions
can be performed.  Technical  parameters  applicable to the paging industry have
been  established  but not  acknowledged  by all  governmental  bodies  to date.
Therefore,  Arch cannot determine at this time what compliance  measures will be
required  or  the  costs  thereof.  In  addition,   the  Federal  Communications
Commission   has   instituted   proceedings   addressing  the  manner  in  which
telecommunications  carriers are  permitted to jointly  market  certain types of
services, and the manner in which  telecommunications  carriers render bills for
these services.  Depending on the outcome of these proceedings,  Arch, and other
telecommunications carriers could incur higher administration and other costs in
order to comply.

State Regulation

   In addition to potential regulation by the Federal Communications Commission,
some states have the authority to regulate  paging  services,  except where such
regulation  affects  or relates to the rates  charged  to  customers  and/or the
ability of a  commercial  mobile  radio  service  provider  like Arch to enter a
market.  Such  regulations  have been  preempted by the  Communications  Act, as
interpreted by the Federal  Communications  Commission.  States may petition the
Federal  Communications   Commission  for  authority  to  continue  to  regulate
commercial  mobile radio  service  rates if certain  conditions  are met.  State
filings   seeking   rate   authority   have  all  been  denied  by  the  Federal
Communications Commission,  although new petitions seeking such authority may be
filed in the future.  Furthermore,  some states and localities continue to exert
jurisdiction  over (1)  approval  of  acquisitions  of assets and  transfers  of
licenses of mobile wireless  systems and (2) resolution of consumer  complaints.


                                       12
<PAGE>

Arch  believes  that to date all required  filings for their  respective  paging
operations have been made. All state approvals of acquisitions or transfers made
by Arch have been approved, and Arch does not know of any reason to believe such
approvals  will not  continue  to be  granted  in  connection  with  any  future
requests, even if states exercise that review.

   The Communications Act does not preempt state regulatory authority over other
aspects  of Arch's  operations,  and some  state may  choose  to  exercise  such
authority.  Some state and local  governments  have imposed  additional taxes or
fees upon some of the  activities  in which Arch is engaged.  In  addition,  the
construction and operation of radio transmitters may be subject to zoning,  land
use,  public health and safety,  consumer  protection  and other state and local
taxes,  levies  and  ordinances.  As noted  above,  the  Federal  Communications
Commission may delegate to the states authority over telephone number allocation
and assignment.

TRADEMARKS

   In May 1997, Arch established a single national  identity,  Arch Paging,  for
its paging services which previously had been marketed under various trademarks.
In  addition,  Arch adopted a new  corporate  logo,  developed a  corporate-wide
positioning  strategy  tied to  customer  service  delivery,  and  launched  its
Internet Web site at www.arch.com.  At present,  Arch has continued to market to
former  MobileMedia  customers under the MobileComm and MobileMedia brand names,
but is working to transition its marketing under the Arch name.

   Arch owns the service marks "Arch", "Arch Paging" and "Arch  Communications",
and  holds  federal   registrations  for  the  service  marks  "MobileComm"  and
"MobileMedia" as well as various other trademarks.

EMPLOYEES

   At December 31, 1999,  Arch employed  approximately  5,000  persons.  None of
Arch's  employees  is  represented  by a labor  union.  Arch  believes  that its
employee relations are good.



                                       13
<PAGE>

ITEM 2.   PROPERTIES

   At December 31, 1999, Arch owned 10 office buildings and leased office space,
including its executive offices, in approximately 375 locations in 42 states for
use  in its  paging  operations.  Arch  leases  transmitter  sites  and/or  owns
transmitters  on  commercial   broadcast  towers,   buildings  and  other  fixed
structures in  approximately  4,800 locations in all 50 states,  the U.S. Virgin
Islands and Puerto  Rico.  Arch's  leases are for various  terms and provide for
monthly lease payments at various  rates.  Arch believes that it will be able to
obtain  additional  space as needed at  acceptable  cost.  Substantially  all of
Arch's and  MobileMedia's  tower  sites were sold  during 1998 and 1999 and Arch
currently rents transmitter space.


ITEM 3.   LEGAL PROCEEDINGS

   Arch, from time to time, is involved in lawsuits arising in the normal course
of business.  Arch believes that its currently  pending lawsuits will not have a
material adverse effect on its financial condition or results of operations.


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

   No matters were submitted to a vote of  stockholders  during the three months
ended December 31, 1999.




                                       14
<PAGE>
                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   Arch's  common  stock,  $0.01 par value per share,  is included in the NASDAQ
National Market under the symbol "APGR".  The following table sets forth for the
periods  indicated  the high and low sales prices per share of Arch common stock
as reported by the NASDAQ National Market.

   1999                                                 High        Low
   ----                                                 ----        ---
   First Quarter.............................         $  7.500    $  3.188
   Second Quarter............................         $ 11.625    $  3.375
   Third Quarter.............................         $  8.875    $  4.000
   Fourth Quarter............................         $  7.750    $  3.500

   1998                                                 High        Low
   ----                                                 ----        ---
   First Quarter.............................         $ 18.375    $  9.000
   Second Quarter............................         $ 20.813    $ 10.500
   Third Quarter.............................         $ 15.000    $  5.063
   Fourth Quarter............................         $  5.438    $  2.063

   The number of common  stockholders  of record as of March 15, 2000 was 1,633.
Arch believes that the number of beneficial common  stockholders is in excess of
5,000.

   Arch has never  declared or paid cash  dividends on the common stock and does
not  intend  to  declare  or pay  cash  dividends  on its  common  stock  in the
foreseeable  future.  Covenants in the credit  facility and debt  obligations of
Arch and its  subsidiaries  effectively  prohibit the  declaration or payment of
cash dividends by Arch for the  foreseeable  future.  In addition,  the terms of
Arch's Series C preferred stock generally prohibit the payment of cash dividends
on common  stock  unless  all  accrued  and  unpaid  dividends  on the  series C
preferred  stock  are paid in full.  See  Note 3 to the  consolidated  financial
statements.


ITEM 6.   SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

   The following table sets forth selected historical consolidated financial and
operating  data of Arch for each of the five years ended  December 31, 1999. The
selected  financial and operating data as of December 31, 1995, 1996, 1997, 1998
and 1999 and for each of the five  years  ended  December  31,  1999  have  been
derived from Arch's audited  consolidated  financial  statements and notes.  You
should read the following consolidated financial information in conjunction with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and the consolidated financial statements and notes set forth below.

   In the following table,  equity in loss of affiliate  represents Arch's share
of net losses of USA Mobile Communications Holdings, Inc. for the period of time
from Arch's  acquisition  of its  initial 37%  interest in USA Mobile on May 16,
1995 through the completion of Arch's  acquisition of USA Mobile on September 7,
1995 and Arch's share of net losses of Benbow PCS  Ventures,  Inc.  since Arch's
acquisition of Westlink Holdings, Inc. in May 1996. See "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations--Liquidity  and
Capital Resources".

   The  extraordinary  item is an  extraordinary  gain or  loss  resulting  from
prepayment  of  indebtedness.  See  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations--Results of Operations".

   Adjusted EBITDA,  as determined by Arch,  consists of EBITDA (earnings before
interest,  taxes,  depreciation and amortization) net of restructuring  charges,
equity in loss of  affiliate  and  extraordinary  items;  consequently  adjusted
EBITDA may not  necessarily  be  comparable  to  similarly  titled data of other
paging  companies.  EBITDA is  commonly  used by  analysts  and  investors  as a
principal  measure  of  financial  performance  in the  wireless  communications
industry.  Adjusted EBITDA is also one of the primary financial measures used to


                                       15
<PAGE>

calculate  whether Arch and its  subsidiaries  are in compliance  with covenants
under their debt  agreements.  These  covenants,  among other things,  limit the
ability of Arch and its  subsidiaries to: incur  additional  indebtedness,  make
investments,  pay dividends,  grant liens on its assets,  merge, sell or acquire
assets,  repurchase or redeem  capital  stock,  incur capital  expenditures  and
prepay certain  indebtedness.  EBITDA is also one of the financial measures used
by  analysts  to  value  Arch.  Therefore  Arch  management  believes  that  the
presentation of EBITDA provides relevant information to investors. EBITDA should
not be  construed  as an  alternative  to  operating  income or cash  flows from
operating  activities as  determined in accordance  with GAAP or as a measure of
liquidity.  Amounts  reflected as EBITDA or adjusted  EBITDA are not necessarily
available for discretionary use as a result of restrictions imposed by the terms
of existing  indebtedness  or  limitations  imposed by  applicable  law upon the
payment of dividends or distributions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

   Adjusted  EBITDA margin is calculated by dividing  Arch's  adjusted EBITDA by
total revenues less cost of products sold.  EBITDA margin is a measure  commonly
used in the  wireless  communications  industry to  evaluate a company's  EBITDA
relative to total  revenues  less cost of products  sold as an  indicator of the
efficiency of a company's operating structure.
<TABLE>
<CAPTION>


                                                                             Year Ended December 31,
                                                         --------------------------------------------------------
                                                             1995        1996       1997        1998       1999
                                                         ----------  ---------- ----------  ---------- ----------
                                                               (dollars in thousands except per share amounts)
<S>                                                      <C>         <C>        <C>         <C>        <C>
Statements of Operations Data:
   Service, rental and maintenance revenues............  $  138,466  $  291,399 $  351,944  $  371,154 $  591,389
   Product sales.......................................      24,132      39,971     44,897      42,481     50,435
                                                         ----------  ---------- ----------  ---------- ----------
   Total revenues......................................     162,598     331,370    396,841     413,635    641,824
   Cost of products sold...............................     (20,789)    (27,469)   (29,158)    (29,953)   (34,954)
                                                         ----------  ---------- ----------  ---------- ----------
                                                            141,809     303,901    367,683     383,682    606,870
   Operating expenses:
     Service, rental and maintenance...................      29,673      64,957     79,836      80,782    132,400
     Selling...........................................      24,502      46,962     51,474      49,132     84,249
     General and administrative........................      40,448      86,181    106,041     112,181    180,726
     Depreciation and amortization.....................      60,205     191,871    232,347     221,316    309,434
     Restructuring charge..............................          --          --         --      14,700     (2,200)
                                                         ----------  ---------- ----------  ---------- ----------
   Operating income (loss).............................     (13,019)    (86,070)  (102,015)    (94,429)   (97,739)
   Interest and non-operating expenses, net............     (22,522)    (75,927)   (97,159)   (104,213)  (188,249)
   Equity in loss of affiliate.........................      (3,977)     (1,968)    (3,872)     (5,689)    (3,200)
                                                         ----------  ---------- ----------  ---------- ----------
   Income (loss) before  income tax benefit,
     extraordinary item and accounting change..........     (39,518)   (163,965)  (203,046)   (204,331)  (289,188)
   Income tax benefit..................................       4,600      51,207     21,172          --         --
                                                         ----------  ---------- ----------  ---------- ----------
   Income (loss) before extraordinary item and
     accounting change.................................     (34,918)   (112,758)  (181,874)   (204,331)  (289,188)
   Extraordinary item..................................      (1,684)     (1,904)        --      (1,720)     6,963
   Cumulative effect of accounting change..............          --          --         --          --     (3,361)
                                                         ----------  ---------- ----------  ---------- ----------
   Net income (loss)...................................  $  (36,602) $ (114,662)$ (181,874) $ (206,051)$ (285,586)
                                                         ==========  ========== ==========  ========== ==========

   Basic/diluted income (loss) per common share before
     extraordinary item and accounting change..........  $    (7.79) $   (16.59)$   (26.31) $   (29.34)$    (9.21)
   Extraordinary item per basic/diluted common share...       (0.37)      (0.27)        --       (0.25)      0.22
   Cumulative effect of accounting change per
     basic/diluted common share........................          --          --         --          --      (0.11)
                                                         ----------  ---------- ----------  ---------- ----------
   Basic/diluted net income per common share...........  $    (8.16) $   (16.86)$   (26.31) $   (29.59)$    (9.10)
                                                         ==========  ========== ==========  ========== ==========
Other Operating Data:
   Capital expenditures, excluding acquisitions........  $   60,468  $  165,206 $  102,769  $  113,184 $  113,651
   Cash flows provided by operating activities.........  $   14,749  $   37,802 $   63,590  $   83,380 $   99,536
   Cash flows used in investing activities.............  $ (192,549) $ (490,626)$ (102,769) $  (82,868)$ (627,166)
   Cash flows provided by (used in) financing activities $  179,092  $  452,678 $   39,010  $   (2,207)$  529,158
   Adjusted EBITDA.....................................  $   47,186  $  105,801 $  130,332  $  141,587 $  209,495
   Adjusted EBITDA margin..............................        33%         35%        35%         37%        35%
   Units in service at end of period...................   2,006,000   3,295,000  3,890,000   4,276,000  6,949,000

</TABLE>




                                       16
<PAGE>
<TABLE>
<CAPTION>
                                                                             As of December 31,
                                                         --------------------------------------------------------
                                                             1995        1996       1997        1998       1999
                                                         ----------  ---------- ----------  ---------- ----------
<S>                                                      <C>         <C>        <C>         <C>        <C>
Balance Sheet Data:                                                         (dollars in thousands)
   Current assets......................................  $   33,671  $   43,611 $   51,025  $   50,712 $   85,303
   Total assets........................................     785,376   1,146,756  1,020,720     904,285  1,353,045
   Long-term debt, less current maturities.............     457,044     918,150    968,896   1,001,224  1,322,508
   Redeemable preferred stock..........................       3,376       3,712         --          --         --
   Stockholders' equity (deficit)......................     246,884     147,851    (33,255)   (213,463)  (217,559)
</TABLE>

   The following  table  reconciles net income to the  presentation  of adjusted
EBITDA:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                         --------------------------------------------------------
                                                             1995        1996       1997        1998       1999
                                                         ----------  ---------- ----------  ---------- ----------
                                                                            (dollars in thousands)
<S>                                                      <C>         <C>        <C>         <C>        <C>
   Net income (loss)...................................  $  (36,602) $ (114,662)$ (181,874) $ (206,051)$ (285,586)
   Interest and non-operating expenses, net............      22,522      75,927     97,159     104,213    188,249
   Income tax benefit..................................      (4,600)    (51,207)   (21,172)         --         --
   Depreciation and amortization.......................      60,205     191,871    232,347     221,316    309,434
   Restructuring charge................................          --          --         --      14,700     (2,200)
   Equity in loss of affiliate.........................       3,977       1,968      3,872       5,689      3,200
   Extraordinary Item..................................       1,684       1,904         --       1,720     (6,963)
   Cumulative effect of accounting change..............          --          --         --          --      3,361
                                                         ----------  ---------- ----------  ---------- ----------
   Adjusted EBITDA.....................................  $   47,186  $  105,801 $  130,332  $  141,587 $  209,495
                                                         ==========  ========== ==========  ========== ==========
</TABLE>





                                       17
<PAGE>


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

FORWARD-LOOKING STATEMENTS

   This  annual  report  contains  forward-looking  statements  and  information
relating  to Arch and its  subsidiaries  that are based on the beliefs of Arch's
management as well as assumptions made by and information currently available to
Arch's  management.  These  statements  are made  pursuant  to the  safe  harbor
provisions of the Private  Securities  Litigation  Reform Act of 1995. When used
herein, words such as "anticipate",  "believe",  "estimate",  "expect", "intend"
and  similar  expressions,  as they relate to Arch or its  management,  identify
forward-looking  statements.  Such statements  reflect the current views of Arch
with respect to future  events and are subject to certain  risks,  uncertainties
and  assumptions,  including  but not  limited to those  factors set forth below
under the caption "Factors  Affecting Future Operating  Results".  Should one or
more  of  these  risks  or  uncertainties  materialize,   or  should  underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those  described  herein  as  anticipated,   believed,  estimated,  expected  or
intended.  Investors  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking statements,  which speak only as of their respective dates. Arch
undertakes no obligation to update or revise any forward-looking statements. All
subsequent written or oral  forward-looking  statements  attributable to Arch or
persons  acting on behalf of Arch are expressly  qualified in their  entirety by
the discussion under "Factors Affecting Future Operating Results".

OVERVIEW

   The following  discussion  and analysis  should be read in  conjunction  with
Arch's consolidated financial statements and notes thereto included elsewhere in
this annual report.

   Arch  derives  the  majority  of its  revenues  from  fixed  monthly or other
periodic fees charged to subscribers for wireless communication  services.  Such
fees are not generally  dependant on usage.  As long as a subscriber  remains on
service,  operating  results  benefit from the  recurring  payments of the fixed
periodic fees without  incurrence of additional selling expenses by Arch. Arch's
service,  rental and  maintenance  revenues  and the  related  expenses  exhibit
substantially  similar growth trends.  Arch's average revenue per subscriber has
declined over the last three years for three principal reasons:

   o  an increase in the number of reseller customers whose airtime is purchased
      at wholesale rates;

   o  an increase in the number of subscriber owned and reseller owned units for
      which Arch receives no recurring equipment revenue; and

   o  an  increase  in  competition  in  certain  of the  markets  in which Arch
      operates.

   The reduction in average  revenue per subscriber  resulting from these trends
has been more than offset by the  reduction  of expenses so that Arch's  margins
had been  improving  until the  consummation  of the  MobileMedia  merger  which
resulted in redundant management and administrative  headcount. Arch expects the
margins to improve as the  integration  of the two  companies  eliminates  these
redundant expenses.

   Arch  has  achieved  significant  growth  in units in  service  and  adjusted
earnings before interest,  taxes, depreciation and amortization (EBITDA) through
acquisitions and, prior to 1999, internal growth.  During 1999, units in service
decreased by 89 thousand units,  excluding the addition of subscribers  from the
MobileMedia acquisition.  From January 1, 1997 through December 31, 1999, Arch's
total  number of units in service  grew from 3.3 million to 6.9  million  units.
Arch's  total  revenues  have  increased  from $396.8  million in the year ended
December 31, 1997 to $413.6  million in the year ended  December 31, 1998 and to
$641.8  million  in the year ended  December  31,  1999.  Arch had net losses of
$181.9  million,  $206.1  million and $285.6 million in the years ended December
31, 1997, 1998 and 1999,  respectively,  as a result of significant depreciation
and amortization  expenses related to acquired and developed assets and interest
charges associated with indebtedness.  As its subscriber base has grown,  Arch's
adjusted EBITDA has increased from $130.3 million in the year ended December 31,
1997 to $141.6 million in the year ended December 31, 1998 and to $209.5 million
in the year ended December 31, 1999.

   EBITDA is a commonly  used measure of financial  performance  in the wireless
communications  industry.  Adjusted EBITDA is also one of the financial measures
used to calculate  whether Arch and its  subsidiaries are in compliance with the


                                       18
<PAGE>

covenants under their respective debt agreements.  Adjusted EBITDA should not be
construed as an  alternative  to operating  income or cash flows from  operating
activities  as  determined  in  accordance  with GAAP.  One of Arch's  financial
objectives  is to increase  its  adjusted  EBITDA,  since this is a  significant
source of funds for  servicing  indebtedness  and for  investment  in  continued
growth,  including  purchase of messaging units and messaging system  equipment,
construction  and  expansion of messaging  systems,  and possible  acquisitions.
Adjusted  EBITDA,  as determined by Arch,  may not  necessarily be comparable to
similarly  titled  data of  other  wireless  communications  companies.  Amounts
reflected as adjusted EBITDA are not necessarily available for discretionary use
as a  result  of  restrictions  imposed  by the  terms  of  existing  or  future
indebtedness,  including  the repayment of such  indebtedness  or the payment of
associated  interest,  limitations imposed by applicable law upon the payment of
dividends or distributions or capital expenditure requirements.

PENDING PAGENET MERGER

   In November 1999,  Arch signed a definitive  agreement  with Paging  Network,
Inc.  (PageNet)  pursuant  to  which  PageNet  will  merge  with a  wholly-owned
subsidiary  of Arch.  Each  outstanding  share of PageNet  common  stock will be
converted into 0.1247 share of Arch common stock in the merger.

   Under the merger agreement,  PageNet is required to make an exchange offer of
PageNet common stock to holders of its  outstanding  8.875% senior  subordinated
notes due  2006,  its  10.125%  senior  subordinated  notes due 2007 and its 10%
senior subordinated notes due 2008 (collectively,  the "PageNet Notes"),  having
an aggregate  outstanding  principal  amount of $1.2 billion.  Under the PageNet
exchange  offer,  an aggregate of  616,830,757  shares of PageNet  common stock,
together  with  68.9% of the  equity  interest  in  PageNet's  subsidiary,  Vast
Solutions, would be exchanged for all of the PageNet Notes, in the aggregate. In
connection with the merger,  PageNet would distribute to its stockholders (other
than holders who received shares in the PageNet  exchange  offer),  11.6% of the
equity interests in Vast Solutions. After the merger, the combined company would
retain a 19.5% equity interest in Vast Solutions.

   Under the merger  agreement  Arch is required to make an exchange offer of up
to  29,651,984  shares of its  common  stock (in the  aggregate)  for all of its
107/8% senior  discount  notes due 2008.  As of March 16, 2000,  Arch has issued
11,640,321  shares of its common stock in exchange for $176.0  million  maturity
value of its 107/8% senior discount notes. See "Liquidity and Capital  Resources
-- Sources of Funds".  If the PageNet exchange offer and the Arch exchange offer
were fully  subscribed,  immediately  following  the merger (and the issuance of
Arch common stock in exchange for PageNet  common  stock,  in the Arch  exchange
offer),  current holders of Arch common stock would own  approximately  36.9% of
the outstanding  Arch common stock,  current holders of the Arch senior discount
notes  would own  approximately  10.5% of the  outstanding  Arch  common  stock,
current  holders of PageNet  common  stock would own  approximately  7.6% of the
outstanding  Arch common stock and current  holders of the PageNet Notes (in the
aggregate) would own  approximately  45.0% of the outstanding Arch common stock.
In addition,  following the merger Arch would have, on a pro forma basis,  total
debt of approximately $1.8 billion.

   Under the merger agreement,  the Arch board of directors at the closing would
consist  of 12  individuals,  at least six of whom  would be  designated  by the
existing Arch board of directors. The PageNet board of directors would designate
three  members,  and the three  largest  holders of PageNet  Notes would each be
entitled to designate one member. To the extent any such holder of PageNet Notes
did not elect to designate a director, the number of directors designated by the
Arch board of directors would increase.

   Arch expects the merger,  which has been  approved by the boards of directors
of Arch and PageNet, but is subject to regulatory review,  shareholder approval,
other  third-party  consents and the  completion of the exchange  offers,  to be
completed in the second or third quarter of 2000.  Each of the PageNet  exchange
offer and the Arch exchange offer is conditioned  upon acceptance by the holders
of 97.5% of the PageNet Notes and the Arch senior discount  notes,  respectively
subject to reduction in specified circumstances.

   Under the merger  agreement,  PageNet is required to include a  "prepackaged"
plan of reorganization  under Chapter 11 of the Bankruptcy Code in the materials
relating  to the  PageNet  exchange  offer,  and to  solicit  consents  for this
prepackaged plan from holders of the PageNet Notes and its senior creditors.  In


                                       19
<PAGE>

certain  circumstances PageNet has agreed either to file the prepackaged plan in
lieu of completing the PageNet exchange offer or to pay Arch a termination fee.

   The  agreement  provides  that each party may be obligated to pay the other a
termination fee equal to $40.0 million under the terms described under Note 2 to
the Notes to consolidated financial statements.

POTENTIAL EFFECTS OF THE PAGENET MERGER

   If Arch acquires  PageNet on the terms described  above, the combined company
will have substantially larger assets, liabilities,  revenues and expenses. On a
pro forma  basis at December  31,  1999,  the  combined  company  would have had
approximately  15.2 million  units in service,  total assets of $2.9 billion and
total  long  term debt of $1.8  billion,  assuming  that all of the  outstanding
discount notes are exchanged for common stock.

   The  PageNet  merger is  subject to  regulatory  approvals,  stockholder  and
noteholder  consents and many other  conditions and, in consequence,  it may not
take place. If Arch does not acquire PageNet,  the contemplated  benefits of the
merger will not be realized,  despite the incurrence of substantial  transaction
costs,  which are estimated at $10.0  million each for Arch and PageNet.  If the
merger does not take place after one company  pursues an  alternative  offer and
either  company  decides to terminate the merger  agreement,  one company may be
required to pay the other a $40.0 million termination fee.

MOBILEMEDIA MERGER

   In June 1999, Arch acquired MobileMedia Communications,  Inc., which is now a
wholly  owned   subsidiary  of  Arch.   MobileMedia  had  been  operating  as  a
debtor-in-possession under chapter 11 of the Bankruptcy Code.

   Arch acquired  MobileMedia for a combination of cash and Arch securities,  as
follows:

   o  Arch paid  approximately  $479.0  million in cash to secured  creditors of
      MobileMedia;

   o  Arch paid a total of $37.6 million to pay fees, expenses and other debts;

   o  Arch issued 4,781,656 shares of its common stock to unsecured creditors of
      MobileMedia;

   o  Arch issued and sold 36,207,265  additional  shares of its common stock to
      unsecured  creditors  of  MobileMedia  and Arch  stockholders  for a total
      purchase price of $217.2 million; and

   o  Arch issued to four unsecured creditors,  who had agreed to act as standby
      purchasers  and to  purchase  shares  not  purchased  by  other  unsecured
      creditors,  warrants to acquire 1,225,219 shares of its common stock on or
      before September 1, 2001 for $9.03 per share.

   Arch also  issued to the  holders of its common  stock and Series C preferred
stock on January 27, 1999  non-transferable  rights to acquire up to  14,964,388
shares of its  common  stock at a price of $6.00 per  share.  A total of 102,964
non-transferable  rights  were  exercised.  Because  non-transferable  rights to
acquire  14,861,424  shares  were not  exercised,  Arch  issued  in their  place
warrants to purchase 14,861,424 shares of its common stock for $9.03 per share.

   Subsidiaries of Arch also borrowed a total of $320.8 million to help fund the
MobileMedia acquisition.

   During the third quarter of 1999,  Arch's board of directors  approved  plans
covering the  elimination  of redundant  headcount and  facilities in connection
with the overall integration of operations. It is expected that integration will
be completed by December 31, 2000.  Because Arch  anticipates a net reduction of
approximately 10% of MobileMedia's  workforce and the closing of some facilities
and tower sites,  it  established a $14.5 million  acquisition  reserve which is
included as part of the purchase price of MobileMedia.  The initial  acquisition
reserve consisted of  approximately:

   o  $6.1 million for employee severance;

   o  $7.9 million for lease obligations and terminations; and

   o  $0.5  million of other costs.



                                       20
<PAGE>

There can be no assurance that the desired cost savings will be achieved or that
the   integration   of  the  two  companies  will  be   accomplished   smoothly,
expeditiously  or successfully.  See Note 9 to the Notes to Arch's  consolidated
financial statements.

RESULTS OF OPERATIONS

     The  following  table  presents  certain  items  from  Arch's  consolidated
statements  of  operations  as a percentage  of net  revenues and certain  other
information  for the periods  indicated  (dollars in  thousands  except per unit
data):
<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                      ---------------------------------------------
                                                          1997             1998            1999
                                                       --------         --------         --------
<S>                                                    <C>              <C>              <C>
Total revenues....................................        107.9 %          107.8 %          105.8 %
Cost of products sold.............................         (7.9)            (7.8)            (5.8)
                                                       --------         --------         --------
Net revenues......................................        100.0            100.0            100.0
Operating expenses:
  Service, rental and maintenance.................         21.7             21.1             21.8
  Selling.........................................         14.0             12.8             13.9
  General and administrative......................         28.8             29.2             29.8
  Depreciation and amortization...................         63.2             57.7             51.0
  Restructuring charge............................           --              3.8             (0.4)
                                                       --------         --------         --------

Operating income (loss)...........................        (27.7)%          (24.6)%          (16.1)%
                                                       ========         ========         ========

Net income (loss).................................        (49.5)%          (53.7)%          (47.1)%
                                                       ========         ========         ========

     Adjusted EBITDA..............................         35.4 %           36.9 %           34.5 %
                                                       ========         ========         ========

Cash flows provided by operating activities.......     $   63,590       $   83,380       $   99,536
Cash flows used in investing activities...........     $ (102,769)      $  (82,868)      $ (627,166)
Cash flows provided by (used in) financing
  activities......................................     $   39,010       $   (2,207)      $  529,158
Annual service, rental and maintenance expenses
  per unit in service.............................     $      22        $       20       $       23

</TABLE>


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

   Total revenues  increased to $641.8 million,  a 55.2% increase,  in 1999 from
$413.6  million  in 1998 as the number of units in  service  increased  from 4.3
million at December 31, 1998 to 6.9 million at December 31, 1999  primarily  due
to the  MobileMedia  acquisition in June 1999. Net revenues  increased to $606.9
million,  a 58.2% increase,  in 1999 from $383.7 million in 1998. Total revenues
and net  revenues  in 1999 were  adversely  affected by (1) the lack of industry
growth  for  basic  numeric  and  alphanumeric  paging  services  and  (2)  Arch
subscriber  cancellations  which led to a decrease  of 89,000  units in service,
excluding the addition of subscribers from the MobileMedia acquisition. Revenues
were also  adversely  affected  in the fourth  quarter of 1998 and in 1999 by:

   o  Arch's decision,  in anticipation of the MobileMedia  acquisition,  not to
      replace normal attrition among direct sales personnel;

   o  the reduced effectiveness of Arch's reseller channels of distribution; and

   o  reduced sales through Arch-operated retail stores.

   Arch  expects  revenue  to  continue  to be  adversely  affected  in  2000 by
declining  demand for basic  numeric  and  alphanumeric  paging  services.  Arch
believes  that the basic paging  industry did not grow during 1999,  that demand
for basic paging  services will decline in 2000 and the following years and that
any  significant  future growth in the paging  industry will be  attributable to
advanced  messaging  services,  such as send and receive and guaranteed  receipt
paging  services.  See "Industry  Overview." As a result,  Arch believes that it


                                       21
<PAGE>

will  experience  a net  decline  in the number of its units in service in 2000,
excluding the addition of subscribers  from the PageNet  acquisition,  as Arch's
addition  of  advanced  messaging  subscribers  is exceeded by its loss of basic
paging subscribers.

   Service,  rental  and  maintenance  revenues,   which  consist  primarily  of
recurring  revenues  associated  with the sale or lease of units,  increased  to
$591.4  million,  a 59.3% increase,  in 1999 from $371.2 million in 1998.  These
increases  in revenues  were due  primarily to the net increase in the number of
units in  service  from 4.3  million  at  December  31,  1998 to 6.9  million at
December 31,  1999.  This net  increase in units was due to the  acquisition  of
MobileMedia  on June 3,  1999,  offset  by a net  decrease  of  89,000  units in
service. Maintenance revenues represented less than 10% of total service, rental
and maintenance  revenues in 1999 and 1998. Arch does not differentiate  between
service  and  rental  revenues.  Product  sales,  less  cost of  products  sold,
increased to $15.5  million,  a 23.6%  increase,  in 1999 from $12.5  million in
1998, respectively, as a result of a the MobileMedia acquisition.

   Service,  rental  and  maintenance  expenses,   which  consist  primarily  of
telephone,  third party  carrier  fees and site rental  expenses,  increased  to
$132.4 million,  21.8% of net revenues, in 1999 from $80.8 million, 21.1% of net
revenues,  in  1998.  The  increase  was due  primarily  to  increased  expenses
associated with the provision of wireless  communications  services to a greater
number of units due to the MobileMedia  acquisition.  Annualized service, rental
and  maintenance  expenses  per unit  increased to $23 in 1999 from $20 in 1998.
This  increase was due primarily to the increase in wireless  messaging  systems
and associated expenses as a result of the MobileMedia merger.  However, the per
unit costs should decrease in the future if expected  synergies are achieved and
as existing systems become more populated  through the addition of new units and
the fixed costs of operating these systems are spread over a larger unit base.

   Selling expenses increased to $84.2 million,  13.9% of net revenues,  in 1999
from $49.1  million,  12.8% of net revenues,  in 1998.  The increase in absolute
dollars  was  primarily  due  to  increased  headcount  and  the  increase  as a
percentage of net revenues was primarily due to redundant  headcount as a result
of the MobileMedia merger.

   General and administrative expenses increased to $180.7 million, 29.8% of net
revenues,  in 1999 from $112.2  million,  29.2% of net  revenues,  in 1998.  The
increase  in  absolute  dollars  was  due  primarily  to  increased   headcount,
administrative  and  facility  costs and the  increase  as a  percentage  of net
revenues  was  primarily  due to the  redundant  headcount,  administrative  and
facility costs associated with MobileMedia.

   Depreciation  and amortization  expenses  increased to $309.4 million in 1999
from  $221.3  million  in  1998.  The  increase  in these  expenses  principally
reflected the acquisition of MobileMedia. Additionally,  depreciation expense in
1999 included the write-off of  approximately  $7.1 million of costs  associated
with the  development  of an  integrated  billing and  management  system.  Arch
decided  to  discontinue   further   development  of  that  system  due  to  the
capabilities of the system acquired through the MobileMedia merger.

   Operating  losses were $97.7  million in 1999  compared  to $94.4  million in
1998, as a result of the factors outlined above.

   Net interest expense  increased to $143.0 million in 1999 from $102.3 million
in 1998.  The increase  was  principally  attributable  to an increase in Arch's
outstanding debt due to the MobileMedia  acquisition.  Interest expense for 1999
included  approximately  $41.6  million of accreted  interest  on Arch's  senior
discount  notes,  the payment of which is  deferred.  Interest  expense for 1998
included approximately $37.1 million of accretion on these notes.

   Other  expense  increased to $45.2 million in 1999 from $2.0 million in 1998.
Other expense in 1999 included:

   o  $6.5  million  for a  write-off  of  Arch's  entire  investment  in CONXUS
      Communications,  Inc.,  a holder of send and receive  messaging  licenses.
      CONXUS filed for bankruptcy protection in May 1999.

   o  a $35.8  million  write-off of Arch's  investment  in Benbow PCS Ventures,
      Inc. another holder of send and receive messaging licenses.  In June 1999,
      Arch,  Benbow and  Benbow's  controlling  shareholder  agreed to terminate
      their business relationship and wind-up Benbow's business.  For additional
      information see "Liquidity and Capital  Resources -- Other Commitments and
      Contingencies".



                                       22
<PAGE>

   In October 1999, Arch recognized an extraordinary gain of $7.0 million on the
retirement  of  debt  exchanged  for  Arch  common  stock.  In June  1998,  Arch
recognized an extraordinary charge of $1.7 million representing the write-off of
unamortized   deferred   financing  costs  associated  with  the  prepayment  of
indebtedness under prior credit facilities.

   On January 1, 1999, Arch adopted the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants  Statement of Position
98-5 (SOP 98-5). SOP 98-5 requires costs of start-up activities and organization
costs to be expensed as incurred.  Initial application of SOP 98-5 resulted in a
$3.4 million charge which was reported as the  cumulative  effect of a change in
accounting principle. This charge represents the unamortized portion of start-up
and organization costs which had been deferred in prior years.

   Net loss  increased to $285.6 million in 1999 from $206.1 million in 1998, as
a result of the factors outlined above.

   YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

   Total revenues  increased to $413.6 million,  a 4.2% increase,  in 1998, from
$396.8  million  in 1997 as the number of units in  service  increased  from 3.9
million at December 31, 1997 to 4.3 million at December  31, 1998.  Net revenues
increased  to $383.7  million, a 4.4%  increase in 1998 from $367.7  million in
1997.  Total  revenues  and net  revenues in 1998 were  adversely  affected by a
general slowing of industry growth,  compared to prior years. Revenues were also
adversely  affected  in the  fourth  quarter of 1998 by:

   o  Arch's decision,  in anticipation of the MobileMedia  acquisition,  not to
      replace normal attrition among direct sales personnel;

   o  the reduced effectiveness of Arch's reseller channels of distribution; and

   o  reduced sales through Arch-operated retail stores.

   Service, rental and maintenance revenues, increased to $371.2 million, a 5.5%
increase,  in 1998 from $351.9 million in 1997. These increases in revenues were
due primarily to the increase,  through internal growth,  in the number of units
in service  from 3.9 million at December 31, 1997 to 4.3 million at December 31,
1998.  Maintenance revenues  represented less than 10% of total service,  rental
and maintenance  revenues in 1998 and 1997. Product sales, less cost of products
sold,  decreased to $12.5 million, a 20.4% decrease,  in 1998 from $15.7 million
in 1997, respectively,  as a result of a decline in the average revenue per unit
sold.

   Service,  rental and maintenance expenses,  increased to $80.8 million, 21.1%
of net revenues, in 1998 from $79.8 million, 21.7% of net revenues, in 1997. The
increase  was  due  primarily  to  increased  expenses  associated  with  system
expansions  and an  increase  in the  number  of  units in  service.  Annualized
service,  rental  and  maintenance  expenses  per  subscriber  were  $20 in 1998
compared to $22 in 1997.

   Selling expenses decreased to $49.1 million,  12.8% of net revenues,  in 1998
from  $51.5  million,  14.0% of net  revenues,  in 1997.  The  decrease  was due
primarily  to a  decrease  in the  number  of net new  units in  service  and to
nonrecurring  marketing costs incurred in 1997 to promote Arch's new Arch Paging
brand identity.  The number of net new units in service  resulting from internal
growth  decreased by 35.1% in 1998 compared to 1997 primarily due to the factors
set forth above that adversely affected revenues.

   General and administrative expenses increased to $112.2 million, 29.2% of net
revenues,  in 1998,  from $106.0  million,  28.8% of net revenues,  in 1997. The
increase was due primarily to administrative  and facility costs associated with
supporting more units in service.

   Depreciation  and amortization  expenses  decreased to $221.3 million in 1998
from  $232.3  million  in 1997.  These  expenses  principally  reflected  Arch's
acquisitions  in prior periods  accounted for as purchases.  They also reflected
investment in units and other system expansion equipment to support growth.

   Operating  losses were $94.4  million in 1998  compared to $102.0  million in
1997, as a result of the factors outlined above.



                                       23
<PAGE>

   Net interest  expense  increased to $104.2 million in 1998 from $97.2 million
in 1997.  The increase  was  principally  attributable  to an increase in Arch's
outstanding debt. Interest expense for 1998 included approximately $37.0 million
of interest which accretes on Arch's senior  discount notes even though the cash
payment  of the  interest  is  deferred.  Interest  expense  for  1997  included
approximately $33.3 million of accretion on these notes.

   Arch  recognized an income tax benefit of $21.2 million in 1997. This benefit
represented  the tax benefit of  operating  losses  incurred  subsequent  to the
acquisitions  of USA Mobile and Westlink which were available to offset deferred
tax  liabilities  arising  from  those  acquisitions.  The tax  benefit of these
operating  losses  was  fully  recognized  during  1997.  Accordingly,  Arch has
established  a valuation  reserve  against its deferred tax assets which reduced
the income tax benefit to zero as of December  31,1998.  Arch does not expect to
recover its deferred tax asset in the  foreseeable  future and will  continue to
increase its valuation reserve  accordingly.  See Note 5 to Arch's  Consolidated
Financial Statements.

   In June  1998,  Arch  recognized  an  extraordinary  charge  of $1.7  million
representing  the write-off of unamortized  deferred  financing costs associated
with the prepayment of indebtedness under prior credit facilities.

   Net loss increased to $206.1 million in the year ended December 31, 1998 from
$181.9  million in the year ended  December 31, 1997, as a result of the factors
outlined above.

LIQUIDITY AND CAPITAL RESOURCES

   Arch's business  strategy  requires the availability of substantial  funds to
finance the expansion of existing  operations,  to fund capital expenditures for
subscriber  equipment  and  network  system  equipment,  to service  debt and to
finance  acquisitions.  Arch's  net cash  flows from  operating,  investing  and
financing  activities  for the  periods  indicated  in the  table  below  are as
follows:
<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                                1997       1998       1999
                                                                ----       ----       ----
                                                                   (dollars in millions)
<S>                                                           <C>        <C>        <C>
   Net cash provided by operating activities...............   $  63.6    $  83.4    $  99.5
   Net cash used for investing activities..................   $(102.8)   $ (82.9)   $(627.2)
   Net cash provided by (used in) financing activities.....   $  39.0    $  (2.2)   $ 529.2
</TABLE>

   Investing  activities in 1999 included  $516.6 million for the acquisition of
MobileMedia.  Financing activities in 1999 included $217.2 million from the sale
of common stock to unsecured  creditors of MobileMedia  and borrowings of $320.8
million in connection with the acquisition of MobileMedia as described above.

   CAPITAL EXPENDITURES AND COMMITMENTS

   Excluding  acquisitions  of wireless  messaging  businesses,  Arch's  capital
expenditures  were  $102.8  million in 1997,  $113.2  million in 1998 and $113.7
million in 1999. To date,  Arch  generally  has funded its capital  expenditures
with net cash provided by operating activities and the incurrence of debt.

   Arch's 1999 capital expenditures  primarily involved the purchase of wireless
messaging units,  system and  transmission  equipment,  information  systems and
capitalized financing costs.

   Arch  estimates  the amount of capital  that will be required to fund capital
expenditures for 2000 will be approximately  $120 million ($227 million on a pro
forma basis if the PageNet  merger were  consummated  on January 1, 2000).  Such
expenditures   will  be  used  primarily  for  subscriber   equipment,   network
infrastructure,  information systems and the construction of certain markets for
the nationwide network of narrowband personal communications services.  However,
the actual amount of capital to be required by the combined  company will depend
on a number of factors.  These include  subscriber  growth, the type of products
and services demanded by customers,  service revenues,  the nature and timing of
Arch's  strategy  to deploy  its  narrowband  personal  communications  services
network,  and acquisition  strategies and  opportunities.  Arch believes that it
will have  sufficient  cash available from  operations and credit  facilities to
fund its capital expenditures for 2000.



                                       24
<PAGE>

   OTHER COMMITMENTS AND CONTINGENCIES

   Through Arch's May 1996 acquisition of Westlink, Arch acquired a 49.9% equity
interest in Benbow PCS Ventures,  Inc. Benbow holds exclusive  rights to a 50kHz
outbound/12.5kHz  inbound narrowband personal communications services license in
each of the five regions of the United  States.  Arch was formerly  obligated to
advance Benbow  sufficient funds to service debt obligations  incurred by Benbow
in connection  with its  acquisition of its narrowband  personal  communications
services  licenses  and  to  finance   construction  of  a  narrowband  personal
communications  services system unless funds were available to Benbow from other
sources.  Arch estimates that this obligation totaled approximately $100 million
at March 31,  1999.  This  obligation  was  subject  to the  approval  of Arch's
designee on Benbow's board of directors.  As of March 31, 1999 Arch had advanced
approximately  $23.7 million to Benbow.  In June 1999, Arch, Benbow and Benbow's
controlling  stockholder  agreed  that:

   o  the shareholders  agreement,  the management  agreement and the employment
      agreement  governing  the  establishment  and  operation of Benbow will be
      terminated;

   o  Benbow  will  not  make  any  further  Federal  Communications  Commission
      payments  and will  not  pursue  construction  of an  narrowband  personal
      communications services system;

   o  Arch  will not be  obligated  to fund  Federal  Communications  Commission
      payments or construction of a narrowband personal  communications services
      system by Benbow;  and

   o  the  closing of the  transaction  will occur on the earlier of January 23,
      2001 or receipt of Federal Communications Commission approval.

   On December 20, 1999, Benbow filed with the Federal Communications Commission
a  proposal  for debt  forgiveness  which,  if  approved,  would  result  in (1)
surrender  by Benbow of its five  narrowband  personal  communications  services
licenses back to the  government,  and (2)  forgiveness by the government of the
remaining  debt owed on the  surrendered  licenses and waiver of any  applicable
default payments.  A total of approximately  $35.25 million in principal debt to
the  government  remains  payable  by  Benbow  on the five  narrowband  personal
communications services licenses.  Benbow's debt forgiveness proposal is pending
and  Arch  can not  determine  whether  the  Federal  Communications  Commission
ultimately will approve it. In its debt-forgiveness  proposal,  however,  Benbow
demonstrated  that the  proposal  meets  standards  for debt  forgiveness  under
applicable federal law.

   The June  1999  agreement  between  Arch,  Benbow  and  Benbow's  controlling
shareholder  provides,  regardless  of  the  outcome  of  the  debt  forgiveness
proposal, that (1) Arch will fulfill all of its current financial obligations to
Benbow, (2) Arch is released from any further  obligations to provide funding to
Benbow,  and (3) Benbow's  controlling  shareholder  will be paid for her Benbow
stock consistent with the preexisting agreement with Arch which requires Arch to
pay the controlling stockholder in Benbow, in installments,  an aggregate amount
of $3.5  million (if the  transaction  closes  before  January 23, 2001) or $3.8
million  (if the  transaction  closes on January 23,  2001).  In addition to the
narrowband personal communications services licenses,  Benbow holds conventional
paging  licenses which would be transferred to Arch upon Federal  Communications
Commission approval.

   As a  result  of these  arrangements,  Benbow  will  not have any  meaningful
business   operations  and  is  unlikely  to  retain  its  narrowband   personal
communications services licenses. The closing of the transaction will not affect
the funding  obligations  of Arch in  connection  with Benbow's  acquisition  of
PageCall in June 1998 described below.

   On June 29, 1998,  Benbow acquired all of the outstanding  stock of Page Call
by  issuing  to  Page  Call's  former  stockholders  preferred  stock  and a 12%
promissory note for $17.2 million.  Benbow also agreed to pay one of Page Call's
stockholders  $911,000  over  five  years  for  consulting  services.   Benbow's
preferred  stock and  promissory  note,  which will  total  $22.8  million  upon
maturity at April 8, 2000, are exchangeable for Arch common stock:

   o  at any time at the  holders'  option,  at an  exchange  price equal to the
      higher of (1)  $39.00  per share or (2) the  market  price of Arch  common
      stock,

   o  mandatorily  on April 8,  2000,  at the then  prevailing  market  price of
      common stock, or

   o  automatically  at an  exchange  price of $39.00 per  share,  if the market
      price of Arch common  stock  equals or exceeds  $39.00 for 20  consecutive
      trading days.

   Arch is  permitted  to  require  Benbow to  redeem  its  preferred  stock and
promissory  note at any time for cash. Arch guaranteed all obligations of Benbow
under the Benbow  preferred  stock,  promissory  note and  consulting  agreement


                                       25
<PAGE>

described  above.  Arch may elect to make payments under its guarantee in common
stock or cash.  Benbow's  redemption of its preferred  stock and promissory note
for cash,  or Arch's  payment of cash  pursuant  to its  guarantees  of Benbow's
preferred  stock and  promissory  note,  would depend upon the  availability  of
capital and any restrictions  contained in applicable debt instruments and under
the Delaware  corporations  statute,  which  currently would not permit any such
cash redemptions or payments.  If Arch issues common stock or pays cash pursuant
to its  guarantees,  Arch  will  receive  from  Benbow  a  promissory  note  and
non-voting,  non-convertible  preferred  stock of Benbow with an annual yield of
14.5%  payable  upon an  acquisition  of Benbow or earlier  to the  extent  that
available  cash and  applicable  law  permit.  Page Call's  former  stockholders
received customary  registration rights for any shares of common stock issued in
exchange for Benbow's  preferred stock and promissory note or pursuant to Arch's
guarantees.  Since  it is  unlikely  that  Benbow  will be  able  to meet  these
obligations  and Arch is currently  required to settle the  obligation in stock,
Arch  has  recorded  the  issuance  of  $22.8  million  of its  common  stock in
additional  paid-in  capital  and as a charge  to  operations,  to  satisfy  the
obligation in April 2000.

   Interest payments commence September 15, 2001 on the $272.4 million principal
amount at maturity of Arch's  107/8% senior  discount  notes  outstanding  as of
March 16,  2000.  Unless all of the senior  discount  notes are  tendered in the
exchange offer,  Arch expects to service such interest payments out of cash made
available to it by its subsidiaries.  Based on the principal amount  outstanding
at March  16,  2000 and  assuming  that no notes  are  tendered,  such  interest
payments  will equal a maximum of $14.8  million on March 15 and September 15 of
each year until scheduled maturity on March 15, 2008.

   If  the  PageNet  merger  agreement  is  terminated  after  Arch  pursues  an
alternative  offer,  Arch  may be  required  to pay a  termination  fee of $40.0
million.

   SOURCES OF FUNDS

   Arch  believes  that its  capital  needs for the  foreseeable  future will be
funded with  borrowings  under  current and future credit  facilities,  net cash
provided by  operations  and,  depending on Arch's needs and market  conditions,
possible sales of equity or debt  securities.  For additional  information,  see
Note 3 to Arch's consolidated financial statements.  Arch's ability to borrow in
the future will  depend,  in part,  on its  ability to continue to increase  its
adjusted earnings before interest, taxes, depreciation and amortization.

Recent Issuance of Notes

   In June 1999, a subsidiary or Arch issued $147.0 million  principal amount of
13 3/4% senior notes due 2008 in a private placement pursuant to Rule 144A under
the  Securities  Act.  The notes were sold at 95.091% of the face amount for net
proceeds of $134.6 million.

Credit Facility

   An Arch subsidiary has a senior credit facility that currently  permits it to
borrow  up to  $577.9  million  consisting  of  (i) a  $175.0  million  reducing
revolving  tranche A  facility,  (ii) a $100.0  million  tranche B term loan and
(iii) a $302.9 million tranche C term loan.

     The tranche A facility will be reduced on a quarterly  basis  commencing on
September  30,  2000 and will mature on June 30,  2005.  The tranche B term loan
will be amortized in quarterly installments  commencing September 30, 2000, with
an  ultimate  maturity  date of June 30,  2005.  The  tranche C term loan  began
amortizing  in annual  installments  on  December  31,  1999,  with an  ultimate
maturity date of June 30, 2006.

     On March 23, 2000,  the senior credit  facility was amended to add a $746.6
million  tranche B-1 term loan to be used to repay  obligations  under PageNet's
existing credit  facility upon  completion of the pending  PageNet  merger.  The
tranche B term loan will be amortized in quarterly installments commencing March
31, 2001, with an ultimate maturity date of June 30, 2006.



                                       26
<PAGE>



Equity Issued in Exchange for Debt

   In October 1999, Arch issued 809,545 shares of Arch common stock, which had a
weighted  average  closing  price of  $4.03  per  share  as of the  dates of the
transactions,  and warrants to purchase  540,487 shares of Arch common stock for
$9.03  per  share  in  exchange  for  $8.9  million  principal  amount  of  Arch
convertible debentures.  Arch also issued 2,327,120 shares of Arch common stock,
which had a weighted average closing price of $4.01 per share as of the dates of
the  transactions,  in exchange for $16.3 million  accreted value ($19.0 million
maturity value) of its senior discount notes.

   In February and March 2000,  Arch issued 285,715 shares of Arch common stock,
which  had a  closing  price  of  $10.875  per  share  as of  the  date  of  the
transaction,  in exchange for $3.5 million  principal amount of Arch convertible
debentures. Arch also issued 11,640,321 shares of Arch common stock, which had a
weighted  average  closing  price of  $12.87  per  share as of the  dates of the
transactions,  in exchange for $157.4  million  accreted  value ($176.0  million
maturity value) of its senior discount notes.  Following these transactions,  on
March 16,  2000,  Arch had $1.0  million  principal  amount  of the  convertible
debentures and $244.6 million  accreted value ($272.4 million maturity value) of
senior discount notes outstanding.

   On March 24, 2000,  Arch  announced  it had entered  into an  agreement  with
Resurgence  Asset  Management  L.L.C. for the exchange of $90.0 million accreted
value ($100.0  million  maturity value) of senior discount notes held by various
Resurgence  entities  for a new  class of  Arch's  preferred  stock to be called
Series D preferred stock. The Series D preferred stock will:

   o  be  convertible  at the  holder's  option at any time into an aggregate of
      6,613,180 shares of common stock at an exchange ratio of 66.1318 shares of
      common  stock  per  $1,000  maturity  value;

   o  be subject to mandatory  conversion into an aggregate of 6,613,180  shares
      of common stock upon  completion of Arch's pending merger with PageNet;

   o  if not earlier  converted,  commencing  March 15, 2001,  bear  semi-annual
      dividends  at the rate of 10 7/8% per annum,  payable at Arch's  option in
      cash or through the issuance of a new class of Arch's  preferred  stock to
      be called Series E preferred  stock;

   o  be subject to mandatory redemption on March 15, 2008 if redemption is then
      permitted  by  applicable  law;

   o  vote  with the  common  stock on an as  converted  basis;  and

   o  rank upon  liquidation  senior to the  common  stock and on a parity  with
      Arch's existing Series C preferred stock.

   If Arch  issues  Series E  preferred  stock  as a  dividend  on the  Series D
preferred  stock, the Series E preferred stock will be identical to the Series D
preferred stock except that it will not (1) be subject to conversion into common
stock, (2) have any voting rights as required by law or (3) bear dividends.

   Completion of the Resurgence exchange transactions is subject to:

   o  the sale by  Resurgence  to a third party to be selected by  Resurgence of
      $48.5 million  accreted  value ($53.9  million  maturity  value) of senior
      discount  notes and the third party's  exchange of the notes for 3,562,189
      shares of common  stock at an exchange  ratio of 66.1318  shares of common
      stock per $1,000 of maturity value;

   o  receipt of Arch stockholder  approval of a proposed increase in the number
      of authorized shares of common stock from 65,000,000 to 150,000,000, which
      approval will be sought at a special  meeting of stockholder  scheduled to
      be held on April 3, 2000;

   o  filing of amendments to Arch's certificate of incorporation to reflect the
      increase in the number of authorized shares of common stock and create the
      Series D preferred stock and Series E preferred stock;

   o  receipt of all required regulatory and lender approvals; and

   o  completion of the transactions by April 30, 2000.





                                       27
<PAGE>


INFLATION

   Inflation has not had a material effect on Arch's operations to date. Systems
equipment and operating costs have not increased in price and wireless messaging
units have  tended to  decline  in recent  years.  This  reduction  in costs has
generally been  reflected in lower prices  charged to  subscribers  who purchase
their wireless  messaging  units.  Arch's general  operating  expenses,  such as
salaries,   employee  benefits  and  occupancy  costs,  are  subject  to  normal
inflationary pressures.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Continued losses are likely

   Arch has reported net losses in the past,  as has  MobileMedia.  Arch expects
that it will continue to report net losses and cannot give any  assurance  about
when, if ever, it is likely to attain profitability.

   Arch has reported net losses in all of the periods shown in the table below:

                                                Year Ended December 31,
                                           ---------------------------------
                                              1997        1998        1999
                                           ---------   ---------   ---------
                                                  (dollars in millions)
     Net income (loss):
        Arch........................       $ (181.9)   $ (206.1)   $ (285.6)
        MobileMedia.................       $ (124.6)   $   35.6    $  387.3 (1)

      (1) Through Arch's acquisition of MobileMedia on June 3, 1999

   These  historical  net losses  have  resulted  principally  from  substantial
depreciation and amortization  expense,  primarily  related to intangible assets
and  messaging  device   depreciation,   interest  expense,  the  impairment  of
long-lived  assets,  other costs of growth.  MobileMedia had net income of $35.6
million  during the year  ended  December  31,  1998  solely  because of a $94.2
million gain on the sale of  transmission  towers and related  equipment and net
income  of  $387.3  million  for  the  period  ended  June  3,  1999  due to the
forgiveness of debt arising out of MobileMedia's  bankruptcy proceedings.  After
giving effect to the MobileMedia acquisition, Arch would have incurred, on a pro
forma  basis,  losses  before  extraordinary  items  and  cumulative  effect  of
accounting  change of $193.2  million for the year ended  December  31, 1998 and
$316.6 million for the year ended December 31, 1999.

Declines in units in service are likely

   Cancellation  of units in service  can  significantly  affect the  results of
operations of wireless communications service providers. The sales and marketing
costs associated with attracting new subscribers are substantial compared to the
costs  of  providing  service  to  existing  customers.   Because  the  wireless
communications  business is  characterized  by high fixed  costs,  cancellations
directly and adversely affect earnings before interest,  taxes, depreciation and
amortization.  In 1999, Arch  experienced a decrease of 89,000 units in service,
excluding the addition of subscribers  from the  MobileMedia  acquisition.  Arch
believes  that the basic paging  industry did not grow during 1999,  that demand
for basic paging  services will decline in 2000 and the following years and that
any  significant  future growth in the paging  industry will be  attributable to
advanced  messaging  services,  such as send and receive and guaranteed  receipt
paging  services.  As a result,  Arch  believes  that it will  experience  a net
decline in the number of its units in service in 2000, excluding the addition of
subscribers  from the  PageNet  acquisition,  as  Arch's  addition  of  advanced
messaging subscribers is exceeded by its loss of basic paging subscribers.

Revenues and operating results may fluctuate, leading to fluctuations in trading
prices and possible liquidity problems

   Arch believes that future  fluctuations in its revenues and operating results
may occur due to many  factors.  Arch's  current and planned  expenses  and debt
repayment levels are, to a large extent,  fixed in the short term, and are based
in part on its expectations as to future revenues and cash flow growth. Arch may
be unable to adjust spending in a timely manner to compensate for any revenue or
cash flow  shortfall.  It is possible that, due to future  fluctuations,  Arch's


                                       28
<PAGE>

revenue,  cash  flow or  operating  results  may not  meet the  expectations  of
securities analysts or investors. This may have a material adverse effect on the
price of Arch's common stock.  If shortfalls  were to cause Arch not to meet the
financial  covenants  contained in its debt  instruments,  the debtholders could
declare a default  and seek  immediate  repayment.  In the worst  case,  if Arch
lacked funds to repay its debt, it could file for bankruptcy protection.

High degree of leverage may continue to burden operations

   Arch has been  highly  leveraged,  and will  remain  substantially  leveraged
following the PageNet merger. The following table compares the total debt, total
assets and latest  three-month  annualized  adjusted  earnings before  interest,
taxes,  depreciation and amortization  (EBITDA) of Arch at or as of December 31,
1999.

                                                     (dollars in millions)
     Total debt..........................                $ 1,330.6
     Total assets........................                $ 1,353.0
     Annualized adjusted EBITDA..........                $   266.3

   Adjusted EBITDA is not a measure defined in GAAP and should not be considered
in  isolation  or as a  substitute  for  measures  of  performance  prepared  in
accordance  with  GAAP.   Adjusted  EBITDA,  as  determined  by  Arch,  may  not
necessarily be comparable to similarly  titled data of other wireless  messaging
companies.

   Substantial leverage may have the following adverse consequences for Arch:

   o  This leverage may impair  Arch's  ability to obtain  additional  financing
      necessary for acquisitions, working capital, capital expenditures or other
      purposes on acceptable terms, if at all.

   o  A substantial portion of Arch's cash flow will be required to pay interest
      expense; this will reduce the funds which would otherwise be available for
      operations and future business opportunities.

   o  Arch's credit facilities and indentures  contain financial and restrictive
      covenants;  the  failure to comply with these  covenants  may result in an
      event of default which could have a material adverse effect on Arch if not
      cured or waived.

   o  Arch may be more  highly  leveraged  than some of its  competitors  in the
      wireless  communications  industry, and this may place it at a competitive
      disadvantage.

   o  Any degree of leverage will make Arch more vulnerable to a downturn in its
      business or the economy generally than if it were not as leveraged.

Arch may not be able to reduce its financial leverage as it intends, and may not
be able to achieve an  appropriate  balance  between  growth  which it considers
acceptable and future reductions in financial  leverage.  If Arch is not able to
achieve  continued growth in adjusted EBITDA, it may be precluded from incurring
additional indebtedness due to cash flow coverage requirements under existing or
future debt instruments.

Growth and acquisition strategy

   Arch believes that the wireless communications industry has experienced,  and
will  continue to  experience,  consolidation  due to factors that favor larger,
multi-market companies, including:

   o  the ability to obtain additional radio spectrum;

   o  greater access to capital markets and lower costs of capital;

   o  broader geographic coverage of wireless messaging systems;

   o  economies of scale in the purchase of capital equipment;

   o  operating efficiencies; and

   o  enhanced access to executive personnel.

   Arch has pursued, and intends to continue to pursue, acquisitions of wireless
communications  businesses as a key component of its growth  strategy.  However,
the  process  of  integrating   acquired   businesses  may  involve   unforeseen
difficulties and may require a disproportionate amount of the time and attention


                                       29
<PAGE>

of Arch's management.  No assurance can be given that suitable  acquisitions can
be identified,  financed and completed on acceptable  terms,  or that any future
acquisitions by Arch will be successful.

   Implementation  of Arch's growth  strategy will be subject to numerous  other
contingencies beyond the control of its management.  These contingencies include
national and regional economic conditions, interest rates, competition,  changes
in  regulation  or  technology  and the  ability to attract  and retain  skilled
employees.  Accordingly,  no assurance can be given that Arch's growth  strategy
will prove effective or that its goals will be achieved. See "Business--Business
Strategy" and "--Competition".

Amortization  charges  from  the  PageNet  merger  and the  earlier  MobileMedia
acquisition may reduce Arch's earnings sooner than management expects

   Under purchase  accounting  treatment for the pending  PageNet merger and the
acquisition of MobileMedia Communications, Inc. in June 1999, Arch must record a
substantial amount of goodwill and other intangible assets.  This will result in
substantial  amortization  charges to the  consolidated  income of Arch over the
useful lives of those  assets.  Arch  estimates the amount of those charges will
total  approximately  $57.0  million  per year for ten  years.  However,  actual
charges in the early years could adversely affect reported results of operations
more than is currently  anticipated if the underlying  assets are impaired or if
the useful lives of the assets are less than currently estimated.

The  PageNet  merger may not take place.  If it does not take  place,  Arch will
incur  substantial  costs  and its  investors  will not  enjoy  the  anticipated
benefits of the merger

   The PageNet  merger will not take place unless many  conditions are satisfied
or waived.  These  conditions  include  stockholder  and  noteholder  approvals,
governmental approvals and the availability of senior credit facilities.  If the
PageNet merger does not take place, the contemplated benefits of the merger will
not be realized,  and Arch will not enjoy the anticipated benefits of the merger
despite incurring substantial transaction costs. If the PageNet merger agreement
is terminated after Arch pursues an alternative  offer,  Arch may be required to
pay a termination fee of $40.0 million.

Arch may need additional capital to expand its business which could be difficult
to obtain

   Arch's  business  strategy  requires  substantial  funds to be  available  to
finance  the  continued  development  and  future  growth and  expansion  of its
operations, including possible acquisitions.  Arch's future capital requirements
will depend on factors that include:

   o  subscriber growth;

   o  the type of  wireless  communications  devices  and  services  demanded by
      customers;

   o  technological developments;

   o  marketing and sales expenses;

   o  competitive conditions;

   o  the nature and timing of Arch's narrowband personal communications service
      strategy; and

   o  acquisition  strategies  and  opportunities.

Arch  cannot  be  certain  that  additional  equity  or debt  financing  will be
available  to Arch when needed on  acceptable  terms,  if at all. If  sufficient
financing is unavailable  when needed,  Arch may be unable to develop or enhance
its  products,  take  advantage  of future  opportunities,  grow its business or
respond to competitive pressures or unanticipated needs.

Competition and  technological  change may undermine  Arch's market position and
adversely affect its results of operations

   Arch  may  not be  able to  compete  successfully  with  current  and  future
competitors in the wireless communications business or with competitors offering
alternative communication technologies. In particular:



                                       30
<PAGE>

   Competition may intensify from large companies and may reduce Arch's revenues
   and operating margins

      Arch may face significant additional competition in the future. This could
   have a material  adverse effect on its revenues and earnings before interest,
   taxes,  depreciation  and  amortization.  Some  competitors  possess  greater
   financial,  technical  and  other  resources  than  those of Arch.  Increased
   competition  from  broadband  personal   communications   service  providers,
   cellular  providers,  digital  specialized mobile radio providers,  dedicated
   data networks and wireless  information delivery service providers has led to
   competition from increasingly larger and better capitalized  competitors.  In
   addition,  Arch competes with the many other providers of paging and advanced
   messaging  services.  If any of such  competitors  were to devote  additional
   resources  to  the  wireless  communications  business  or  focus  on  Arch's
   historical  business segments,  they could secure Arch's customers and reduce
   demand for its products.  This could  materially  reduce  Arch's  revenue and
   operating margins.

   New send and receive  wireless  messaging  technology  may  adversely  affect
   Arch's competitive position

      Competitors  are  currently  using and  developing  a variety  of send and
   receive wireless messaging technologies. Arch currently resells such send and
   receive  services  over the network of a  competitor.  Due to the  relatively
   recent  availability  of send and receive  messaging  products and  services,
   there have not yet been sales which would be sufficient  to fully  indicate a
   proven demand for such services among business or consumer subscribers.  Such
   services  will compete with other  available  methods of  telecommunications,
   including cellular and broadband personal communications  services, which are
   commonly  referred to as PCS, as well as specialized  mobile radio,  services
   and services  provided  over  dedicated  data  networks  which use  hand-held
   devices to send and receive  data.  Although  these  services  are  primarily
   focused on send and receive voice  communications,  they may include wireless
   messaging as an adjunct  service or may replace the need for send and receive
   messaging entirely. It is less expensive for an end user to obtain a cellular
   or PCS unit with data  capability  than the send and receive  messaging units
   currently available. This is because the nationwide cellular and PCS carriers
   have  subsidized the purchase of these units and because prices for broadband
   services have been  declining  rapidly,  making the two types of services and
   product offerings more comparable.

      Future  technological   advances  in  the   telecommunications   industry,
   including these send and receive messaging technologies,  as well as wireless
   information  and machine to machine and  machine to person  messaging,  among
   others,  could increase the number and type of new services or products which
   compete with the wireless  messaging services  historically  offered by Arch.
   Firms  seeking to provide  wireless  communications  through  these and other
   technologies  may bring  their  products  to market  faster or in packages of
   products that  consumers find more valuable than those which Arch proposes to
   provide.

      All of these factors could reduce Arch's market share and adversely affect
   its revenues and operating margins.

Obsolescence in company-owned units may impose additional costs on Arch

   Technological  change may also adversely  affect the value of the units owned
by Arch  that are  leased to its  subscribers.  If  Arch's  current  subscribers
request more technologically  advanced units,  including send and receive units,
Arch could incur additional inventory costs and capital expenditures if required
to replace units leased to its  subscribers  within a short period of time. Such
additional costs or capital expenditures could have a material adverse effect on
Arch's results of operations.

Government regulation may burden operations

   Licenses may not be automatically renewed

      Arch's Federal  Communications  Commission paging licenses are for varying
   terms of up to 10 years. When the licenses expire,  renewal applications must
   be approved by the Federal  Communications  Commission.  To date, the Federal
   Communications  Commission  has  approved  each  assignment  and  transfer of
   control for which Arch has sought  approval  but, no  assurance  can be given


                                       31
<PAGE>

   that any future  renewal  applications  will be free of  challenge or will be
   granted by the Federal  Communications  Commission.  Loss of  licenses  would
   impair Arch's operations.

   Regulatory changes could add burdens or benefit competing technologies

      The Federal Communications  Commission continually reviews and revises its
   rules affecting  wireless  communications  companies.  Therefore,  regulatory
   requirements that apply to Arch may change significantly over time.

   Acquisitions of Arch's stock by foreigners could jeopardize Arch's licenses

      The Communications Act limits foreign investment in and ownership of radio
   common carriers licensed by the Federal Communications Commission, as well as
   their parent companies. Arch may not have more than 25% of its stock owned or
   voted by  aliens  or  their  representatives,  a  foreign  government  or its
   representatives  or a  foreign  corporation  if  the  Federal  Communications
   Commission  finds that the public  interest  would be served by denying  such
   ownership.  Arch's  subsidiaries  that are radio common carrier licensees are
   subject to more stringent  requirements  and may have only up to 20% of their
   stock owned or voted by aliens or their representatives, a foreign government
   or their representatives or a foreign corporation. This ownership restriction
   is not subject to waiver.  Arch's charter permits the redemption of shares of
   Arch's  capital stock from foreign  stockholders  where  necessary to protect
   Federal Communications  Commission licenses held by Arch or its subsidiaries,
   but such a redemption would be subject to the availability of capital to Arch
   and any  restrictions  contained in applicable debt instruments and under the
   Delaware corporation statute.  These restrictions  currently would not permit
   any such redemptions.  The failure to redeem shares promptly could jeopardize
   the  Federal   Communications   Commission  licenses  held  by  Arch  or  its
   subsidiaries.

Because Arch depends on third  parties,  that it does not control,  for products
and services, Arch's operations may be disrupted

   Arch  does  not  manufacture  any of the  equipment  customers  need  to take
advantage of its services.  It is dependent primarily on Motorola,  Inc. and NEC
America Inc. to obtain  sufficient  equipment  inventory for new subscribers and
replacement needs and on Glenayre Electronics,  Inc. and Motorola for sufficient
terminals and  transmitters to meet its expansion and replacement  requirements.
Significant delays in obtaining  equipment,  terminals or transmitters,  such as
MobileMedia  experienced before its bankruptcy filing, could lead to disruptions
in operations  and adverse  financial  consequences.  Motorola has announced its
intention   to   discontinue   manufacturing   transmitters   and  other  paging
infrastructure  during 2000,  although it will  continue to maintain and service
existing infrastructure into the future. Arch's purchase agreement with Motorola
expires on March 17, 2001.  There can be no assurance  that the  agreement  with
Motorola will be renewed or, if renewed,  that the renewed  agreement will be on
terms and  conditions  as favorable  to the combined  company as those under the
current agreement.

   Arch  relies on third  parties to  provide  satellite  transmission  for some
aspects  of its  wireless  communications  services.  To the  extent  there  are
satellite  outages or if satellite  coverage is impaired in other ways, Arch may
experience a loss of service until such time as satellite  coverage is restored,
which could have a material adverse effect due to customer complaints.

Loss of key personnel could adversely impact operations

   Arch's success will depend, to a significant extent, upon the continued
services of a relatively small group of executive personnel.  Arch does not have
employment  agreements with any of its current executive  officers,  or maintain
life insurance on their lives, although all executive officers have entered into
executive  retention  agreements with Arch. The loss or unavailability of one or
more of its  executive  officers  or the  inability  to  attract  or retain  key
employees in the future could have a material adverse effect on Arch.

Charter  provisions  may  impede  takeovers  of Arch  that  might  benefit  Arch
stockholders

   Arch's certificate of incorporation and bylaws provide for:

   o  a  classified  board of  directors,  divided  into three  classes  who are
      elected for three-year terms;



                                       32
<PAGE>

   o  the issuance of "blank check"  preferred stock whose terms may be fixed by
      Arch's board of directors without further stockholder approval;

   o  a  prohibition  on  stockholder  action by  written  consent  in lieu of a
      meeting; and

   o  procedural requirements governing stockholder meetings.

   Arch also has a  stockholders  rights plan.  In addition,  Section 203 of the
Delaware  corporations  statute will, with some  exceptions,  prohibit Arch from
engaging in any business  combination  with any "interested  stockholder"  for a
three-year  period after such  stockholder  becomes an  interested  stockholder.
These  provisions  may have the effect of  delaying,  making more  difficult  or
preventing a change in control or  acquisition of Arch even though a transaction
like that might be beneficial to Arch's stockholders.

Restrictions  under debt  instruments may prevent Arch from taking actions which
its board considers beneficial

   Various debt instruments impose operating and financial restrictions on Arch.
Arch's senior credit facility  requires  various Arch operating  subsidiaries to
maintain  specified  financial  ratios,  including a maximum  leverage  ratio, a
minimum  interest  coverage  ratio, a minimum debt service  coverage ratio and a
minimum fixed charge coverage ratio.  The senior credit facility was amended and
restated  on March  23,  2000 to  permit  the  PageNet  merger  and  includes  a
restriction on capital expenditures and a minimum revenue test. In addition, the
senior credit facility limits or restricts, among other things, Arch's operating
subsidiaries'  ability to:

   o  declare dividends or repurchase capital stock;

   o  incur or pay back indebtedness;

   o  engage in mergers, consolidations, acquisitions and asset sales; or

   o  alter its lines of business or accounting methods.

   Arch's ability to comply with such covenants may be affected by events beyond
its control, including prevailing economic and financial conditions. A breach of
any of these  covenants  could  result in a  default  under  the  senior  credit
facility  and/or  other debt  instruments.  Upon the  occurrence  of an event of
default,  the  creditors  could elect to declare all amounts  outstanding  to be
immediately due and payable,  together with accrued and unpaid interest. If Arch
were  unable to repay any such  amounts,  the  senior  creditors  could  proceed
against any  collateral  securing  the  indebtedness.  If the lenders  under the
senior credit facility or other debt instruments accelerated the payment of such
indebtedness,  there  can be no  assurance  that  the  assets  of Arch  would be
sufficient to repay in full such indebtedness and other indebtedness of Arch. In
addition,  because the senior credit facility and other debt  instruments  limit
Arch's ability to engage in some types of  transactions,  Arch may be prohibited
from entering into transactions that could be beneficial to Arch.


RECENT AND PENDING ACCOUNTING PRONOUNCEMENTS

   In June 1998, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  (SFAS)  No.  133  "Accounting  for  Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that every derivative
instrument  be  recorded in the  balance  sheet as either an asset or  liability
measured at its fair value and that  changes in the  derivative's  fair value be
recognized in earnings. Arch intends to adopt this standard effective January 1,
2001.  Arch has not yet  quantified  the impact of adopting  SFAS No. 133 on its
financial statements;  however,  adopting SFAS No. 133 could increase volatility
in earnings and other comprehensive income.

   The Securities and Exchange  Commission  released Staff  Accounting  Bulletin
(SAB) No. 101,  "Revenue  Recognition in Financial  Statements",  on December 3,
1999.  This SAB  provides  additional  guidance  on the  accounting  for revenue
recognition,  including  both broad  conceptual  discussions  as well as certain
industry-specific  guidance. The guidance is effective for the second quarter of
fiscal  2000.  Arch does not  expect  SAB 101 to have a  material  impact on its
results of operations upon adoption.



                                       33
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The majority of Arch's  long-term  debt is subject to fixed rates of interest
or  interest  rate  protection.  In the event that the  interest  rate on Arch's
non-fixed  rate debt  fluctuates by 10% in either  direction,  Arch believes the
impact  on its  results  of  operations  would  be  immaterial.  Arch  transacts
infrequently  in foreign  currency and  therefore is not exposed to  significant
foreign currency market risk.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The financial  statements  and schedules  listed in Item 14(a)(1) and (2) are
included in this Report beginning on Page F-1.


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

   None.


                                    PART III

   The information required by Items 10 through 13 are incorporated by reference
to the  Registrant's  definitive  Proxy Statement for its 2000 annual meeting of
stockholders scheduled to be held on May 16, 2000.






                                       34
<PAGE>




                                     PART IV

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

(a) (1)  Financial Statements

         Consolidated Balance Sheets as of December 31, 1998 and 1999

         Consolidated  Statements of  Operations  for Each of the Three Years in
            the Period Ended December 31, 1999

         Consolidated  Statements of Stockholders'  Equity (Deficit) for Each of
            the Three Years in the Period Ended December 31, 1999

         Consolidated  Statements  of Cash Flows for Each of the Three  Years in
            the Period Ended December 31, 1999

         Notes to Consolidated Financial Statements

(a) (2)  Financial Statement Schedule

         Schedule II - Valuation and Qualifying Accounts

(b)      Reports on Form 8-K

         The following reports  on Form 8-K were filed  during the three  months
            ended  December 31, 1999.

         Current Report on Form 8-K dated November 7, 1999  (reporting  that the
            Company signed a definitive  merger  agreement with Paging Network,
            Inc.) filed November 19, 1999.

(c)      Exhibits

         The exhibits listed in the accompanying  index to exhibits are filed as
            part of this annual report on Form 10-K.




                                       35
<PAGE>




                                   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.

                                        ARCH COMMUNICATIONS GROUP, INC.


                                        By: /s/ C. Edward Baker, Jr.
                                           -------------------------
                                             C. Edward Baker, Jr.
                                             Chairman of the Board and Chief
                                             Executive Officer
     March 29, 2000

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


/s/ C. Edward Baker, Jr.    Chairman of the Board and Chief      March 29, 2000
-------------------------   Executive Officer (principal
C. Edward Baker, Jr.        executive officer)


/s/ John B. Saynor          Executive Vice President, Director   March 29, 2000
-------------------------
John B. Saynor


/s/ J. Roy Pottle           Executive Vice President and         March 29, 2000
-------------------------   Chief Financial Officer (principal
J. Roy Pottle               financial officer and principal
                            accounting officer)

/s/ R. Schorr Berman        Director                             March 29, 2000
-------------------------
R. Schorr Berman


/s/ Edwin M. Banks          Director                             March 29, 2000
-------------------------
Edwin M. Banks


/s/ James S. Hughes         Director                             March 29, 2000
-------------------------
James S. Hughes


 /s/ John Kornreich         Director                             March 29, 2000
-------------------------
John Kornreich


/s/ H. Sean Mathis          Director                             March 29, 2000
-------------------------
H. Sean Mathis


/s/ Allan L. Rayfield       Director                             March 29, 2000
-------------------------
Allan L. Rayfield


/s/ John A. Shane           Director                             March 29, 2000
-------------------------
John A. Shane




                                       36
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                           Page
Report of Independent Public Accountants................................   F-2

Consolidated Balance Sheets as of December 31, 1998 and 1999............   F-3

Consolidated Statements of Operations for Each of the Three
   Years in the Period Ended December 31,1999...........................   F-4

Consolidated Statements of Stockholders' Equity (Deficit) for
   Each of the Three Years in the Period Ended December 31, 1999........   F-5

Consolidated Statements of Cash Flows for Each of the Three
   Years in the Period Ended December 31,1999...........................   F-6

Notes to Consolidated Financial Statements..............................   F-7





                                      F-1
<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Arch Communications Group, Inc.:

We  have  audited  the   accompanying   consolidated   balance  sheets  of  Arch
Communications   Group,  Inc.  (a  Delaware  corporation)  (the  "Company")  and
subsidiaries  as of  December  31, 1998 and 1999,  and the related  consolidated
statements of operations, stockholders' equity (deficit) and cash flows for each
of the three years in the period ended  December 31,  1999.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of Arch
Communications  Group,  Inc. and  subsidiaries as of December 31, 1998 and 1999,
and the results of their  operations  and their cash flows for each of the three
years in the period ended  December  31, 1999,  in  conformity  with  accounting
principles generally accepted in the United States.


                                        /s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 16, 2000 (except with
respect to the matters discussed
in Note 3 as to which the date
is March 16, 2000)




                                      F-2
<PAGE>

                         ARCH COMMUNICATIONS GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                            December 31,
                                                                                     ---------------------------
                                                                                         1998          1999
                                                                                     ------------   ------------
                                      ASSETS
   <S>                                                                                <C>            <C>
   Current assets:
      Cash and cash equivalents ...................................................   $     1,633    $     3,161
      Accounts receivable (less reserves of $6,583 and $16,473 in 1998 and
        1999, respectively) .......................................................        30,753         61,167
      Inventories .................................................................        10,319          9,101
      Prepaid expenses and other ..................................................         8,007         11,874
                                                                                      -----------    -----------
        Total current assets ......................................................        50,712         85,303
                                                                                      -----------    -----------
   Property and equipment, at cost:
      Land, buildings and improvements ............................................        10,480         20,503
      Messaging and computer equipment ............................................       400,312        667,820
      Furniture, fixtures and vehicles ............................................        17,381         26,321
                                                                                      -----------    -----------
                                                                                          428,173        714,644
      Less accumulated depreciation and amortization ..............................       209,128        314,445
                                                                                      -----------    -----------
      Property and equipment, net .................................................       219,045        400,199
                                                                                      -----------    -----------
   Intangible and other assets (less accumulated amortization of $372,122
      and $515,195 in 1998 and 1999, respectively) ................................       634,528        867,543
                                                                                      -----------    -----------
                                                                                      $   904,285    $ 1,353,045
                                                                                      ===========    ===========
                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
   Current liabilities:
      Current maturities of long-term debt ........................................   $     1,250    $     8,060
      Accounts payable ............................................................        25,683         30,016
      Accrued restructuring charges ...............................................        11,909         17,111
      Accrued expenses ............................................................        11,689         43,629
      Accrued interest ............................................................        20,997         30,294
      Customer deposits ...........................................................         4,528          7,526
      Deferred revenue ............................................................        10,958         28,175
                                                                                      -----------    -----------
        Total current liabilities .................................................        87,014        164,811
                                                                                      -----------    -----------
   Long-term debt, less current maturities ........................................     1,001,224      1,322,508
                                                                                      -----------    -----------
   Other long-term liabilities                                                             29,510         83,285
                                                                                      ------------   -----------
   Commitments and contingencies
   Stockholders' equity (deficit):
      Preferred stock--$.01 par value, authorized 10,000,000 shares; issued 250,000
        shares (aggregate liquidation preference of $26,030 and
        $28,176 in 1998 and 1999, respectively) ...................................             3              3
      Common stock--$.01 par value, authorized 65,000,000 shares, issued and
        outstanding: 7,071,861 and 47,263,500 shares in 1998 and 1999,
        respectively ..............................................................            71            472
      Class B common stock--$.01 par value, authorized 10,000,000 shares;
        issued and outstanding: no shares in 1998 and 3,968,164 shares in
        1999 ......................................................................          --               40
      Additional paid-in capital ..................................................       378,218        661,413
      Accumulated deficit .........................................................      (591,755)      (879,487)
                                                                                      -----------    -----------
        Total stockholders' equity (deficit) ......................................      (213,463)      (217,559)
                                                                                      -----------    -----------
                                                                                      $   904,285    $ 1,353,045
                                                                                      ===========    ===========
</TABLE>




              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                      F-3
<PAGE>

                         ARCH COMMUNICATIONS GROUP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                            --------------------------------------------
                                                                 1997            1998            1999
                                                            ------------    ------------    ------------

<S>                                                         <C>             <C>             <C>
   Service, rental and maintenance revenues .............   $    351,944    $    371,154    $    591,389
   Product sales ........................................         44,897          42,481          50,435
                                                            ------------    ------------    ------------
        Total revenues ..................................        396,841         413,635         641,824
   Cost of products sold ................................        (29,158)        (29,953)        (34,954)
                                                            ------------    ------------    ------------
                                                                 367,683         383,682         606,870
                                                            ------------    ------------    ------------
   Operating expenses:
      Service, rental and maintenance ...................         79,836          80,782         132,400
      Selling ...........................................         51,474          49,132          84,249
      General and administrative ........................        106,041         112,181         180,726
      Depreciation and amortization .....................        232,347         221,316         309,434
      Restructuring charge ..............................           --            14,700          (2,200)
                                                            ------------    ------------    ------------
        Total operating expenses ........................        469,698         478,111         704,609
                                                            ------------    ------------    ------------
   Operating income (loss) ..............................       (102,015)        (94,429)        (97,739)
   Interest expense .....................................        (96,482)       (104,019)       (144,924)
   Interest income ......................................            904           1,766           1,896
   Other expense ........................................         (1,581)         (1,960)        (45,221)
   Equity in loss of affiliate ..........................         (3,872)         (5,689)         (3,200)
                                                            ------------    ------------    ------------
   Income (loss) before income tax benefit, extraordinary
      items and accounting change .......................       (203,046)       (204,331)       (289,188)
   Benefit from income taxes ............................         21,172            --              --
                                                            ------------    ------------    ------------
   Income (loss) before extraordinary items and
      accounting change .................................       (181,874)       (204,331)       (289,188)
   Extraordinary gain (loss) from early extinguishment of
      debt ..............................................           --            (1,720)          6,963
   Cumulative effect of accounting change ...............           --              --            (3,361)
                                                            ------------    ------------    ------------
   Net income (loss) ....................................       (181,874)       (206,051)       (285,586)
   Accretion of redeemable preferred stock ..............            (32)           --              --
   Preferred stock dividend .............................           --            (1,030)         (2,146)
                                                            ------------    ------------    ------------
   Net income (loss) applicable to common stockholders ..   $   (181,906)   $   (207,081)   $   (287,732)
                                                            ============    ============    ============
   Basic/diluted income (loss) per common share before
      extraordinary item and accounting change ..........   $     (26.31)   $     (29.34)   $      (9.21)
   Extraordinary gain (loss) from early extinguishment of
      debt per basic/diluted common share ...............           --             (0.25)           0.22
   Cumulative effect of accounting change per
      basic/diluted common share ........................           --              --             (0.11)
                                                            ------------    ------------    ------------
   Basic/diluted net income (loss) per common share .....   $     (26.31)   $     (29.59)   $      (9.10)
                                                            ============    ============    ============
   Basic/diluted weighted average number of common shares
      outstanding .......................................      6,915,413       6,997,730      31,603,410
                                                            ============    ============    ============
</TABLE>




              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                      F-4
<PAGE>

                         ARCH COMMUNICATIONS GROUP, INC.

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                                               Total
                                                                        Class B   Additional               Stockholders'
                                                     Preferred  Common  Common     Paid-in    Accumulated     Equity
                                                        Stock    Stock   Stock     Capital      Deficit      (Deficit)
                                                       ------   ------  ------   ----------   -----------   ----------
<S>                                                    <C>      <C>     <C>      <C>          <C>           <C>
Balance, December 31, 1996........................     $   --   $   70  $   --   $  350,581   $  (202,800)  $  147,851
   Issuance of 50,447 shares of common stock
     under Arch's employee stock purchase plan....         --       --      --          800            --          800
   Accretion of redeemable preferred stock........         --       --      --          (32)           --          (32)
   Net loss.......................................         --       --      --           --      (181,874)    (181,874)
                                                       ------   ------  ------   ----------   -----------   ----------
Balance, December 31, 1997........................         --       70      --      351,349      (384,674)     (33,255)
   Exercise of options to purchase 31,344 shares
     of common stock..............................         --       --      --          294            --          294
   Issuance of 250,000 shares of preferred stock..          3       --      --       24,997            --       25,000
   Issuance of 85,996 shares of common stock
     under Arch's employee stock purchase plan....         --        1      --          548            --          549
   Preferred stock dividend.......................         --       --      --        1,030        (1,030)          --
   Net loss.......................................         --       --      --           --      (206,051)    (206,051)
                                                       ------   ------  ------   ----------   -----------   ----------
Balance, December 31, 1998........................          3       71      --      378,218      (591,755)    (213,463)
   Issuance of 30,847,004 shares of common stock
     and 5,360,261 of Class B common stock in
     rights offering..............................         --      308      54      216,881            --      217,243
   Issuance of 4,781,656 shares of common stock
     to acquire company...........................         --       48      --       20,035            --       20,083
   Shares to be issued in connection with the
     Benbow settlement............................         --       --      --       22,836            --       22,836
   Issuance of 3,136,665 shares of common stock
     in exchange for debt.........................         --       31      --       21,106            --       21,137
   Issuance of 34,217 shares of common stock
     under Arch's employee stock purchase plan....         --       --      --          191            --          191
   Conversion of Class B common stock into common
     stock........................................         --       14     (14)          --            --           --
   Preferred stock dividend.......................         --       --      --        2,146        (2,146)          --
   Net loss.......................................         --       --      --           --      (285,586)    (285,586)
                                                       ------   ------  ------   ----------   -----------   ----------
Balance, December 31, 1999........................     $    3   $  472  $   40   $  661,413   $  (879,487)  $ (217,559)
                                                       ======   ======  ======   ==========   ===========   ==========
</TABLE>





              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                      F-5
<PAGE>

                         ARCH COMMUNICATIONS GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                                 -----------------------------------

                                                                    1997         1998         1999
                                                                 ---------    ---------    ---------
<S>                                                              <C>          <C>          <C>
Cash flows from operating activities:
      Net income (loss) ......................................   $(181,874)   $(206,051)   $(285,586)
      Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
        Depreciation and amortization ........................     232,347      221,316      309,434
        Deferred income tax benefit ..........................     (21,172)        --           --
        Extraordinary loss (gain) from early extinguishment of        --          1,720       (6,963)
           debt
        Cumulative effect of accounting change ...............        --           --          3,361
        Equity in loss of affiliate ..........................       3,872        5,689        3,200
        Accretion of discount on senior notes ................      33,259       37,115       41,566
        Other non-cash interest expense ......................        --           --          2,904
        Gain on Tower Site Sale ..............................        --         (1,859)      (1,871)
        Write-off of N-PCS investments .......................        --           --         37,498
        Accounts receivable loss provision ...................       7,181        8,545       15,265
        Changes in assets and liabilities, net of effect from
           acquisition of company:
           Accounts receivable ...............................     (11,984)      (9,151)     (18,369)
           Inventories .......................................      (2,394)       2,314        1,728
           Prepaid expenses and other ........................        (386)      (3,090)       7,000
           Accounts payable and accrued expenses .............       3,683       24,649       (2,986)
           Customer deposits and deferred revenue ............       1,058          549       (7,554)
           Other long-term liabilities .......................        --          1,634          909
                                                                 ---------    ---------    ---------
   Net cash provided by operating activities .................      63,590       83,380       99,536
                                                                 ---------    ---------    ---------
   Cash flows from investing activities:
      Additions to property and equipment, net ...............     (87,868)     (79,249)     (95,208)
      Additions to intangible and other assets ...............     (14,901)     (33,935)     (18,443)
      Net proceeds from tower site sale ......................        --         30,316        3,046
      Acquisition of company, net of cash acquired ...........        --           --       (516,561)
                                                                 ---------    ---------    ---------
   Net cash used for investing activities ....................    (102,769)     (82,868)    (627,166)
                                                                 ---------    ---------    ---------
   Cash flows from financing activities:
      Issuance of long-term debt .............................      91,000      460,964      473,783
      Repayment of long-term debt ............................     (49,046)    (489,014)    (162,059)
      Repayment of redeemable preferred stock ................      (3,744)        --           --
      Net proceeds from sale of preferred stock ..............        --         25,000         --
      Net proceeds from sale of common stock .................         800          843      217,434
                                                                 ---------    ---------    ---------
   Net cash provided by (used in) financing activities .......      39,010       (2,207)     529,158
                                                                 ---------    ---------    ---------
   Net (decrease) increase in cash and cash equivalents ......        (169)      (1,695)       1,528
   Cash and cash equivalents, beginning of period ............       3,497        3,328        1,633
                                                                 ---------    ---------    ---------
   Cash and cash equivalents, end of period ..................   $   3,328    $   1,633    $   3,161
                                                                 =========    =========    =========
   Supplemental disclosure:
      Interest paid ..........................................   $  62,231    $  57,151    $  91,151
                                                                 =========    =========    =========
      Issuance of common stock for debt ......................   $    --      $    --      $  21,137
                                                                 =========    =========    =========
      Issuance of common stock for acquisition of company ....   $    --      $    --      $  20,083
                                                                 =========    =========    =========
      Liabilities assumed in acquisition of company ..........   $    --      $    --      $ 134,429
                                                                 =========    =========    =========
      Preferred stock dividend ...............................   $    --      $   1,030    $   2,146
                                                                 =========    =========    =========
      Accretion of redeemable preferred stock ................   $      32    $    --      $    --
                                                                 =========    =========    =========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                      F-6
<PAGE>
                         ARCH COMMUNICATIONS GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

   Organization--Arch  Communications Group, Inc. ("Arch" or the "Company") is a
leading provider of wireless messaging services.

   Principles  of   Consolidation--The   accompanying   consolidated   financial
statements   include  the   accounts   of  the  Company  and  its   wholly-owned
subsidiaries.  All significant  intercompany accounts and transactions have been
eliminated in consolidation.

   Revenue  Recognition--Arch   recognizes  revenue  under  rental  and  service
agreements  with customers as the related  services are  performed.  Maintenance
revenues and related costs are recognized  ratably over the respective  terms of
the agreements. Sales of equipment are recognized upon delivery. Commissions are
recognized as an expense when incurred.  The Securities and Exchange  Commission
released  Staff  Accounting  Bulletin  (SAB) No. 101,  "Revenue  Recognition  in
Financial  Statements",  on  December  3,  1999.  This SAB  provides  additional
guidance  on the  accounting  for  revenue  recognition,  including  both  broad
conceptual  discussions  as  well as  certain  industry-specific  guidance.  The
guidance  is  effective  for the second  quarter of fiscal  2000.  Arch does not
expect  SAB 101 to have a material  impact on its  results  of  operations  upon
adoption.

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

   Cash  Equivalents--Cash  equivalents  include  short-term,   interest-bearing
instruments  purchased  with  remaining  maturities of three months or less. The
carrying amount  approximates  fair value due to the relatively  short period to
maturity of these instruments.

   Inventories--Inventories  consist  of new  messaging  devices  which are held
primarily  for  resale.  Inventories  are stated at the lower of cost or market,
with cost determined on a first-in, first-out basis.

   Property and  Equipment--Leased  messaging  devices sold or otherwise retired
are  removed  from the  accounts  at their net book  value  using the  first-in,
first-out  method.  Property and equipment is stated at cost and is  depreciated
using the straight-line method over the following estimated useful lives:

                                                             Estimated
   Asset Classification                                     Useful Life
   --------------------                                     -----------
   Buildings and improvements..........................      20 Years
   Leasehold improvements..............................     Lease Term
   Messaging devices...................................       3 Years
   Messaging and computer equipment....................      5-8 Years
   Furniture and fixtures..............................      5-8 Years
   Vehicles............................................       3 Years

   Depreciation  and  amortization  expense  related to property  and  equipment
totaled  $108.0  million,  $101.1 million and $144.9 million for the years ended
December 31, 1997, 1998 and 1999, respectively.






                                      F-7
<PAGE>




   Intangible and Other  Assets--Intangible and other assets, net of accumulated
amortization, are composed of the following (in thousands):

                                                              December 31,
                                                             1998      1999
                                                            ----       ----

   Purchased Federal Communications Commission licenses   $256,519   $354,246
   Goodwill ...........................................    271,808    249,010
   Purchased subscriber lists .........................     56,825    239,114
   Deferred financing costs ...........................     22,072     19,915
   N-PCS investments ..................................     17,847       --
   Other ..............................................      9,457      5,258
                                                          --------   --------
                                                          $634,528   $867,543
                                                          ========   ========

     Amortization  expense related to intangible and other assets totaled $124.3
million,  $120.2  million and $164.6  million for the years ended  December  31,
1997, 1998 and 1999, respectively.

   Subscriber lists, Federal Communications Commission licenses and goodwill are
amortized  over their  estimated  useful  lives,  ranging from five to ten years
using the straight-line  method.  Non-competition  agreements are amortized over
the terms of the agreements using the straight-line method. Other assets consist
of  contract  rights,   organizational  and  Federal  Communications  Commission
application  and development  costs which are amortized using the  straight-line
method over their estimated useful lives, not exceeding ten years.

   In April 1998, the Accounting  Standards Executive Committee of the Financial
Accounting Standards Board issued Statement of Position (SOP) 98-5 "Reporting on
the  Costs  of  Start-Up  Activities".  SOP  98-5  requires  costs  of  start-up
activities and  organization  costs to be expensed as incurred.  Development and
start up costs include  nonrecurring,  direct costs incurred in the  development
and expansion of messaging  systems.  Arch adopted SOP 98-5 effective January 1,
1999. Initial  application of SOP 98-5 resulted in a $3.4 million charge,  which
was reported as the cumulative effect of a change in accounting principle.  This
charge  represents the unamortized  portion of start-up and organization  costs,
which had been deferred in prior years.

   Deferred financing costs incurred in connection with Arch's credit agreements
(see Note 3) are being  amortized  over  periods  not to exceed the terms of the
related agreements.  As credit agreements are amended and restated,  unamortized
deferred  financing  costs are written off as an  extraordinary  charge.  During
1998, a charge of $1.7 million was recognized in connection  with the closing of
a new credit facility.

   In accordance with Statement of Financial Accounting Standards (SFAS) No. 121
"Accounting for the Impairment of Long-Lived  Assets and Long-Lived Assets To Be
Disposed Of" Arch  evaluates  the  recoverability  of its carrying  value of the
Company's  long-lived  assets and certain  intangible  assets based on estimated
undiscounted  cash flows to be generated from each of such assets as compared to
the original estimates used in measuring the assets. To the extent impairment is
identified,  Arch reduces the carrying value of such impaired  assets.  To date,
Arch has not had any such impairments except as described below.

   N-PCS Investments--In connection with Arch's May 1996 acquisition of Westlink
Holdings,  Inc.,  Arch acquired  Westlink's  49.9% share of the capital stock of
Benbow  PCS  Ventures,   Inc.   Benbow  holds   exclusive   rights  to  a  50kHz
outbound/12.5kHz  inbound narrowband personal communications services license in
each of the five regions of the United  States.  Arch was formerly  obligated to
advance Benbow  sufficient funds to service debt obligations  incurred by Benbow
in connection  with its  acquisition of its narrowband  personal  communications
services  licenses  and  to  finance   construction  of  a  narrowband  personal
communications  services system unless funds were available to Benbow from other
sources.  This  obligation  was subject to the  approval  of Arch's  designee on
Benbow's board of directors. Arch's investment in Benbow was accounted for under
the equity method whereby Arch's share of Benbow's losses, since the acquisition
date of Westlink, are recognized in Arch's accompanying  consolidated statements
of operations under the caption equity in loss of affiliate.

   In June 1999, Arch, Benbow and Benbow's controlling stockholder, agreed that:

   o  the shareholders  agreement,  the management  agreement and the employment
      agreement  governing  the  establishment  and  operation of Benbow will be
      terminated;


                                      F-8
<PAGE>

   o  Benbow  will  not  make  any  further  Federal  Communications  Commission
      payments  and will  not  pursue  construction  of an  narrowband  personal
      communications  services  system;

   o  Arch  will not be  obligated  to fund  Federal  Communications  Commission
      payments or construction of a narrowband personal  communications services
      system by Benbow;

   o  the parties will seek Federal  Communications  Commission  approval of the
      forgiveness of Benbow's remaining payment  obligations and the transfer of
      the controlling stockholder's equity interest in Benbow to Arch;

   o  the  closing of the  transaction  will occur on the earlier of January 23,
      2001 or receipt of Federal Communications Commission approval;

   o  Arch will pay the controlling stockholder,  in installments,  an aggregate
      amount of $3.5 million (if the transaction closes before January 23, 2001)
      or $3.8 million (if the transaction closes on January 23, 2001).

   As a  result  of these  arrangements,  Benbow  will  not have any  meaningful
business   operations  and  is  unlikely  to  retain  its  narrowband   personal
communications services licenses.  Therefore, Arch has written off substantially
all of its  investment  in Benbow in the amount of $8.2  million.  Arch has also
accrued the payment to the controlling stockholder of $3.8 million and legal and
other  expenses  of  approximately  $1.0  million  which is  included in accrued
expenses. In addition,  Arch guaranteed Benbow's obligations in conjunction with
Benbow's June 1998 purchase of the stock of PageCall.  Since it is unlikely that
Benbow will be able to meet these obligations and Arch is currently  required to
settle the  obligation  in its stock,  Arch has  recorded  the issuance of $22.8
million of its common  stock in  additional  paid-in  capital and as a charge to
operations, to satisfy the obligation in April 2000.

   On November 8, 1994, CONXUS Communications,  Inc. was successful in acquiring
the rights to an interactive messaging license in five designated regions in the
United  States in the  Federal  Communications  Commission  narrowband  wireless
spectrum auction. On May 18, 1999, CONXUS filed for Chapter 11 protection in the
U.S.  Bankruptcy  Court in  Delaware,  which case was  converted to a case under
Chapter 7 on August 17,  1999.  In June 1999,  Arch  wrote-off  its $6.5 million
investment in CONXUS.  On November 3, 1999, in order to document its disposition
of any  interest it has, if any, in CONXUS,  Arch  offered to transfer to CONXUS
its shares in CONXUS for no  consideration.  Which was accepted by the Chapter 7
trustee on December 9, 1999.

   All of the above  charges,  totaling  $42.3  million,  are  included in other
expense in 1999 in the accompanying statement of operations.

   Fair Value of Financial Instruments--Arch's financial instruments, as defined
under SFAS No. 107  "Disclosures  about  Fair Value of  Financial  Instruments",
include its cash,  its debt financing and interest rate  protection  agreements.
The fair value of cash is equal to the  carrying  value at December 31, 1998 and
1999.

   As  discussed  in Note 3, Arch's  debt  financing  primarily  consists of (1)
senior bank debt, (2) fixed rate senior notes and (3)  convertible  subordinated
debentures. Arch considers the fair value of senior bank debt to be equal to the
carrying  value  since the  related  facilities  bear a current  market  rate of
interest.  Arch's fixed rate senior  notes are traded  publicly.  The  following
table depicts the fair value of the fixed rate senior notes and the  convertible
subordinated  debentures  based on the current  market  quote as of December 31,
1998 and 1999 (in thousands):
<TABLE>
<CAPTION>
                                                          December 31, 1998     December 31, 1999
                                                         -------------------   -------------------
                                                         Carrying     Fair     Carrying     Fair
   Description                                            Value      Value      Value      Value
   -----------                                           --------   --------   --------   --------
<S>                                                      <C>        <C>        <C>        <C>
   10 7/8% Senior Discount Notes due 2008 ............   $369,506   $221,704   $393,917   $173,323
   9 1/2% Senior Notes due 2004 ......................    125,000    112,500    125,000     95,000
   14% Senior Notes due 2004 .........................    100,000    103,000    100,000     83,000
   12 3/4% Senior Notes due 2007 .....................    127,604    127,604    127,887    101,030
   13 3/4% Senior Notes due 2008 .....................       --         --      140,365    113,685
   6 3/4% Convertible Subordinated Debentures due 2003     13,364      6,682      4,459      1,812
</TABLE>

   Arch had off-balance-sheet  interest rate protection agreements consisting of
interest  rate  swaps and  interest  rate caps with  notional  amounts of $265.0
million and $40.0 million, respectively, at December 31, 1998 and $107.0 million
and $10.0 million, respectively, at December 31, 1999. The cost to terminate the
outstanding  interest rate swaps and interest rate caps at December 31, 1998 and
1999 would have been $6.4 million and $4.5 million, respectively. See Note 3.



                                      F-9
<PAGE>

   Basic/Diluted  Net Income  (Loss) Per Common Share -- On June 28, 1999,  Arch
effected a one for three reverse  stock split.  All share and per share data for
all periods presented have been adjusted to give effect to this reverse split.

   In February 1997, the Financial  Accounting  Standards  Board issued SFAS No.
128  "Earnings  Per  Share".  The Company  adopted  this  standard in 1997.  The
adoption  of this  standard  did not have an effect on the  Company's  financial
position,  results of operations  or income  (loss) per share.  Basic net income
(loss) per common share is based on the weighted average number of common shares
outstanding.  Shares  of  stock  issuable  pursuant  to stock  options  and upon
conversion of the subordinated debentures (see Note 3) or the Series C Preferred
Stock  (see  Note  4) have  not  been  considered,  as  their  effect  would  be
anti-dilutive and thus diluted net income (loss) per common share is the same as
basic net income (loss) per common share.

   In June 1998, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  (SFAS)  No.  133  "Accounting  for  Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that every derivative
instrument  be  recorded in the  balance  sheet as either an asset or  liability
measured at its fair value and that  changes in the  derivative's  fair value be
recognized in earnings. Arch intends to adopt this standard effective January 1,
2001.  Arch has not yet  quantified  the impact of adopting  SFAS No. 133 on its
financial statements;  however,  adopting SFAS No. 133 could increase volatility
in earnings and other comprehensive income.

   Reclassifications--Certain  amounts of prior  periods  were  reclassified  to
conform with the 1999 presentation.

2. ACQUISITIONS

   On June 3, 1999 Arch completed its acquisition of MobileMedia Communications,
Inc. for $671.1 million,  consisting of cash paid of $516.6  million,  including
direct transaction costs,  4,781,656 shares of Arch common stock valued at $20.1
million and the assumption of liabilities of $134.4  million.  The cash payments
were financed through the issuance of approximately  36.2 million shares of Arch
common stock (including  approximately 5.4 million shares of Arch Class B common
shares) in a rights offering for $6.00 per share, the issuance of $147.0 million
principal  amount of 13 3/4% senior  notes due 2008 (see Note 3) and  additional
borrowings under the Company's credit facility.

   Arch  issued to four  unsecured  creditors,  who had agreed to act as standby
purchasers and to purchase shares not purchased by other unsecured  creditors in
the rights offering, warrants to acquire 1,225,219 shares of its common stock on
or  before  September  1,  2001 for $9.03  per  share.  The fair  value of these
warrants was determined to be immaterial.

  The  purchase  price  was  allocated  based on the fair  values  of  assets
acquired and  liabilities  assumed.  The acquisition has been accounted for as a
purchase, and the results of MobileMedia's  operations have been included in the
consolidated  financial  statements from the date of the  acquisition.  Goodwill
resulting from the  acquisition is being  amortized over a ten-year period using
the straight-line method.

   The  liabilities  assumed,  referred to above,  include an unfavorable  lease
accrual related to MobileMedia's  rentals on communications towers which were in
excess of market  rental rates.  This accrual  amounted to  approximately  $52.9
million and is included in other  long-term  liabilities.  This  accrual will be
amortized  over the remaining  lease term of 13 3/4 years.  Concurrent  with the
consummation  of the  acquisition,  Arch commenced the  development of a plan to
integrate the operations of MobileMedia.  The liabilities  assumed,  referred to
above, also includes a $14.5 million restructuring accrual to cover the costs to
eliminate  redundant  headcount and  facilities  in connection  with the overall
integration of operations (see Note 9).

   The following  unaudited pro forma summary presents the consolidated  results
of operations as if the  acquisition had occurred at the beginning of the period
presented,  after giving effect to certain adjustments,  including  depreciation
and  amortization of acquired assets and interest  expense on acquisition  debt.
These pro forma results have been prepared for comparative  purposes only and do
not purport to be  indicative  of what would have  occurred had the  acquisition
been completed at the beginning of the period presented,  or of results that may
occur in the future.

                                                      Year Ended December 31,
                                                      ----------------------
                                                         1998         1999
                                                      ---------    ---------
                                                   (unaudited and in thousands
                                                   except for per share amounts)
   Revenues .......................................   $ 854,862    $ 817,686
   Income (loss) before extraordinary item ........    (193,151)    (316,590)
   Net income (loss) ..............................    (194,871)    (309,627)
   Basic/diluted net income (loss) per common share       (4.09)       (6.39)



                                      F-10
<PAGE>

   Pending  Acquisition -- In November 1999, Arch signed a definitive  agreement
with Paging Network,  Inc. (PageNet) pursuant to which PageNet will merge with a
wholly-owned  subsidiary of Arch. Each outstanding share of PageNet common stock
will be converted into 0.1247 share of Arch common stock in the merger.

   Under the merger agreement,  PageNet is required to make an exchange offer of
PageNet common stock to holders of its  outstanding  8.875% senior  subordinated
notes due  2006,  its  10.125%  senior  subordinated  notes due 2007 and its 10%
senior subordinated notes due 2008 (collectively,  the "PageNet Notes"),  having
an aggregate  outstanding  principal  amount of $1.2 billion.  Under the PageNet
exchange  offer,  an aggregate of  616,830,757  shares of PageNet  common stock,
together  with  68.9% of the  equity  interest  in  PageNet's  subsidiary,  Vast
Solutions, would be exchanged for all of the PageNet Notes, in the aggregate. In
connection with the Merger,  PageNet would distribute to its stockholders (other
than holders who received shares in the PageNet  exchange  offer),  11.6% of the
equity  interests in Vast  Solutions.  After the merger,  PageNet would retain a
19.5% equity interest in Vast Solutions.

   Under the merger  agreement  Arch is required to make an exchange offer of up
to  29,651,984  shares of its  common  stock (in the  aggregate)  for all of its
107/8% senior discount notes due 2008.

   Arch expects the merger,  which has been  approved by the boards of directors
of Arch and PageNet, but is subject to regulatory review,  shareholder approval,
other  third-party  consents  and the  completion  of the  exchange  offers  and
preferred  stock  conversion,  to be completed in the second or third quarter of
2000.  Each of the  PageNet  exchange  offer  and the  Arch  exchange  offer  is
conditioned upon acceptance by the holders of 97.5% of the PageNet Notes and the
Arch senior discount notes,  respectively,  subject to reduction under specified
circumstances.

   The merger agreement  provides that under certain  circumstances a fee may be
payable  by  Arch  or  PageNet  upon   termination  of  the   agreement.   These
circumstances include withdrawal of the recommendation or approval of the merger
agreement or the merger by the Arch or PageNet board of  directors,  the failure
of shareholders  or noteholders to approve the transaction or exchange  followed
by the making of an  alternative  proposal and Arch or PageNet  entering into an
agreement with a third party within 12 months of such termination, and PageNet's
failure to file a  prepackaged  bankruptcy  plan in certain  circumstances.  The
termination  fee payable by Arch or PageNet under the merger  agreement is $40.0
million.

   The merger agreement  provides that either party may terminate the agreement,
without paying the above fee, if the merger is not consummated by June 30, 2000.
This  termination  date is  subject  to  extension  for 90 days  for  regulatory
approval  and is subject to  extension  to as late as  December  31,  2000 under
certain  circumstances  where  PageNet  files  for  protection  under  the  U.S.
Bankruptcy Code.

3.   LONG-TERM DEBT

   Long-term debt consisted of the following:

                                                      December  31,
                                                 -----------------------
                                                    1998         1999
                                                 ----------   ----------
                                                      (in thousands)
   Senior Bank Debt ..........................   $  267,000   $  438,940
   107/8% Senior Discount Notes due 2008 .....      369,506      393,917
   9 1/2% Senior Notes due 2004 ..............      125,000      125,000
   14% Senior Notes due 2004 .................      100,000      100,000
   12 3/4% Senior Notes due 2007 .............      127,604      127,887
   13 3/4% Senior Notes due 2008 .............         --        140,365
   Convertible Subordinated Debentures .......       13,364        4,459
                                                 ----------   ----------
                                                  1,002,474    1,330,568
   Less--Current maturities                           1,250        8,060
                                                 ----------   ----------
   Long-term debt ............................   $1,001,224   $1,322,508
                                                 ==========   ==========

   Senior Bank Debt--The Company, through its operating subsidiary, Arch Paging,
Inc. (API) has a senior credit  facility in the current amount of $577.9 million
consisting of (i) a $175.0 million reducing revolving tranche A facility, (ii) a
$100.0  million  tranche B term loan and (iii) a $302.9  million  tranche C term
loan.



                                      F-11
<PAGE>

   The tranche A facility  will be reduced on a quarterly  basis  commencing  on
September  30,  2000 and will mature on June 30,  2005.  The tranche B term loan
will be amortized in quarterly installments  commencing September 30, 2000, with
an  ultimate  maturity  date of June 30,  2005.  The  tranche C term loan  began
amortizing  in annual  installments  on  December  31,  1999,  with an  ultimate
maturity date of June 30, 2006.

   API's  obligations under the senior credit facility are secured by its pledge
of its  interests in certain of its  operating  subsidiaries.  The senior credit
facility is  guaranteed  by Arch and certain of Arch's  operating  subsidiaries.
Arch's  guarantee  is  secured  by a pledge  of  Arch's  stock  and notes in its
wholly-owned  subsidiary Arch  Communications  Inc. (ACI), and the guarantees of
the operating  subsidiaries are secured by a security interest in certain assets
of those operating subsidiaries.

   Borrowings  under  the  senior  credit  facility  bear  interest  based  on a
reference rate equal to either the agent bank's alternate base rate or LIBOR, in
each case plus a margin based on specified ratios of debt to annualized earnings
before interest, taxes, depreciation and amortization (EBITDA).

   The senior  credit  facility  requires  payment of fees on the daily  average
amount  available to be borrowed  under the tranche A facility.  These fees vary
depending on specified ratios of total debt to annualized EBITDA.

   The  senior  credit  facility  requires  that at least 50% of total ACI debt,
including outstanding borrowings under the senior credit facility, be subject to
a fixed  interest rate or interest  rate  protection  agreements.  Entering into
interest  rate  protection  agreements  involves both the credit risk of dealing
with  counterparties  and their  ability to meet the terms of the  contracts and
interest rate risk. In the event of  nonperformance by the counterparty to these
interest rate  protection  agreements,  Arch would be subject to the  prevailing
interest rates specified in the senior credit facility.

   Under the interest rate swap agreements,  the Company will pay the difference
between  LIBOR and the fixed swap rate if the swap rate exceeds  LIBOR,  and the
Company will  receive the  difference  between  LIBOR and the fixed swap rate if
LIBOR  exceeds the swap rate.  Settlement  occurs on the  quarterly  reset dates
specified by the terms of the  contracts.  No interest  rate swaps on the senior
credit facility were outstanding at December 31, 1999. At December 31, 1998, the
Company had a net payable of $47,000, on the interest rate swaps.

   The interest rate cap agreements will pay the Company the difference  between
LIBOR and the cap level if LIBOR  exceeds the cap levels at any of the quarterly
reset dates.  If LIBOR  remains  below the cap level,  no payment is made to the
Company. The total notional amount of the interest rate cap agreements was $10.0
million with a cap level of 8% at December 31, 1999.  The  transaction  fees for
these instruments are being amortized over the terms of the agreements.

     The senior credit facility contains  restrictions  that limit,  among other
things, Arch's operating subsidiaries' ability to: o declare dividends or redeem
or repurchase  capital stock;

   o  prepay, redeem or purchase debt;

   o  incur liens and engage in sale/leaseback transactions;

   o  make loans and investments;

   o  incur indebtedness and contingent obligations;

   o  amend or otherwise alter debt instruments and other material agreements;

   o  engage in mergers, consolidations, acquisitions and asset sales;

   o  alter its lines of business or accounting methods.

   In addition, the senior credit facility requires Arch and its subsidiaries to
meet certain financial  covenants,  including ratios of EBITDA to fixed charges,
EBITDA to debt service,  EBITDA to interest  service and total  indebtedness  to
EBITDA.  As of December 31, 1999,  Arch and its operating  subsidiaries  were in
compliance with the covenants of the senior credit facility.

   As of December 31, 1999,  $438.9 million was  outstanding  and $139.0 million
was  available  under the senior  credit  facility.  At December 31, 1999,  such
advances bore interest at an average annual rate of 11.62%.

   Senior  Notes--Interest  on Arch's 107/8% senior discount notes due 2008 does
not accrue prior to March 15, 2001.  Commencing  September 15, 2001, interest on
the senior discount notes is payable  semi-annually at an annual rate of 107/8%.
The maturity value of the senior discount notes outstanding at December 31, 1999
was $448.4 million.



                                      F-12
<PAGE>

   On June 3,  1999,  ACI,  a  wholly-owned  subsidiary  of Arch,  received  the
proceeds  of an offering of $147.0  million  principal  amount at maturity of 13
3/4% senior notes due 2008.  The 13 3/4% notes were sold at an initial  price to
investors of 95.091% for proceeds of $139.8  million less  offering  expenses of
$5.2 million.  The 13 3/4% notes mature on April 15, 2008 and bear interest at a
rate of 13 3/4% per  annum,  payable  semi-annually  in  arrears on April 15 and
October 15 of each year, commencing October 15, 1999.

   Interest  on the 13 3/4% notes, ACI's 12 3/4% senior  notes due 2007,  ACI's
14% senior notes due 2004 and ACI's 9 1/2% senior notes due 2004  (collectively,
the  "Senior  Notes") is payable  semiannually.  The senior  discount  notes and
Senior Notes contain certain restrictive and financial  covenants,  which, among
other things, limit the ability of Arch or ACI to:

   o  incur additional indebtedness;

   o  pay dividends;

   o  grant liens on its assets;

   o  sell assets;

   o  enter into  transactions  with related  parties;

   o merge, consolidate or transfer substantially all of its assets;

   o redeem capital stock or subordinated debt;

   o make certain investments.

   Arch has entered into  interest rate swap  agreements in connection  with the
ACI 14% Notes.  Under the interest rate swap  agreements,  Arch has  effectively
reduced the  interest  rate on the ACI 14% Notes from 14% to the fixed swap rate
of 9.45%. In the event of  nonperformance  by the counterparty to these interest
rate  protection  agreements,  Arch would be subject  to the 14%  interest  rate
specified on the notes.  As of December 31, 1999, Arch had received $6.8 million
in excess of the amounts  paid under the swap  agreements,  which is included in
other long-term liabilities in the accompanying balance sheet.

   Convertible  Subordinated  Debentures-- The Arch  convertible  debentures are
convertible  at their  principal  amount into shares of Arch common stock at any
time prior to  redemption or maturity at an initial  conversion  price of $50.25
per  share,  subject  to  adjustment.   The  Arch  convertible   debentures  are
redeemable,  at the  option  of Arch,  in whole or in part,  at  certain  prices
declining  annually to 100% of the  principal  amount at maturity  plus  accrued
interest.  The Arch convertible debentures also are subject to redemption at the
option of the holders,  at a price of 100% of the principal  amount plus accrued
interest, upon the occurrence of certain events. The Arch convertible debentures
bear interest at a rate of 6 3/4% per annum,  payable semiannually on June 1 and
December 1. The Arch  convertible  debentures are unsecured and are subordinated
to all existing indebtedness of Arch.

   Debt  Exchanged for Equity -- In October 1999,  Arch  completed  transactions
with four  bondholders in which Arch issued an aggregate of 3,136,665  shares of
Arch common stock and warrants to purchase  540,487  shares of Arch common stock
for  $9.03 per  share in  exchange  for  $25.2  million  accreted  value of debt
securities.  Under two of the exchange agreements, Arch issued 809,545 shares of
Arch common stock and warrants to purchase  540,487  shares of Arch common stock
for  $9.03 per  share in  exchange  for $8.9  million  principal  amount of Arch
convertible debentures.  Arch recorded $2.9 million of non-cash interest expense
in conjunction with these transactions. Under the remaining exchange agreements,
Arch issued  2,327,120 shares of Arch common stock in exchange for $16.3 million
accreted value ($19.0 million maturity value) of its senior discount notes. Arch
recorded an extraordinary  gain of $7.0 million on the early  extinguishment  of
debt as a result of these transactions.

   In February and March 2000, Arch completed  transactions in which Arch issued
an  aggregate  of  11,926,036  shares  of Arch  common  stock  in  exchange  for
approximately $160.9 million accreted value of debt securities. Under one of the
exchange agreements, Arch issued 285,715 shares of Arch common stock in exchange
for $3.5 million  principal  amount of Arch  convertible  debentures.  Under the
other exchange agreements, Arch issued 11,640,321 shares of Arch common stock in
exchange for $157.4 million  accreted value ($176.0  million  maturity value) of
its senior discount notes.





                                      F-13
<PAGE>

   Maturities of Debt--Scheduled  long-term debt maturities at December 31, 1999
are as follows (in thousands):


     Year Ending December 31,
   --------------------------
   2000 .............................................   $    8,060
   2001 .............................................       15,560
   2002 .............................................       20,560
   2003 .............................................       30,019
   2004 .............................................      274,060
   Thereafter .......................................      982,309
                                                        ----------
                                                        $1,330,568
                                                        ==========

4. REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

   Redeemable Preferred Stock--In connection with the its merger with USA Mobile
Communications  Holdings,  Inc.,  Arch assumed the  obligations  associated with
22,530 outstanding  shares of Series A Redeemable  Preferred Stock issued by USA
Mobile. The preferred stock was recorded at its accreted redemption value, based
on 10% annual  accretion  through the redemption  date. On January 30, 1997, all
outstanding preferred stock was redeemed for $3.7 million in cash.

   Redeemable Series C Cumulative Convertible Preferred Stock--On June 29, 1998,
two  partnerships  managed by  Sandler  Capital  Management  Company,  Inc.,  an
investment management firm, together with certain other private investors,  made
an  equity  investment  in  Arch of  $25.0  million  in the  form  of  Series  C
Convertible  Preferred  Stock of Arch.  The  Series C  Preferred  Stock:  (i) is
convertible  into Arch common stock at a  conversion  price of $16.38 per share,
subject to certain adjustments;  (ii) bears dividends at an annual rate of 8.0%,
(A) payable  quarterly  in cash or, at Arch's  option,  through the  issuance of
shares of Arch common stock valued at 95% of the then prevailing market price or
(B)  if  not  paid  quarterly,  accumulating  and  payable  upon  redemption  or
conversion of the Series C Preferred Stock or liquidation of Arch; (iii) permits
the holders after seven years to require Arch, at Arch's  option,  to redeem the
Series C Preferred  Stock for cash or convert such shares into Arch common stock
valued at 95% of the then prevailing  market price of Arch common stock; (iv) is
subject to redemption  for cash or  conversion  into Arch common stock at Arch's
option in certain  circumstances;  (v) in the event of a "Change of  Control" as
defined in the indenture governing the senior discount notes,  requires Arch, at
its  option,  to redeem the Series C  Preferred  Stock for cash or convert  such
shares into Arch common stock valued at 95% of the then prevailing  market price
of Arch common stock,  with such cash redemption or conversion  being at a price
equal  to  105% of the  sum of the  original  purchase  price  plus  accumulated
dividends;  (vi) limits certain mergers or asset sales by Arch; (vii) so long as
at least 50% of the Series C Preferred  Stock  remains  outstanding,  limits the
incurrence  of  indebtedness  and  "restricted  payments"  in the same manner as
contained in the senior discount notes indenture;  and (viii) has certain voting
and preemptive rights. Upon an event of redemption or conversion, Arch currently
intends to convert  such  Series C  Preferred  Stock into  shares of Arch common
stock.

   Class B Common  Stock--Shares  of Arch Class B common stock are  identical in
all  respects  to shares of Arch common  stock,  except that a holder of Class B
common  stock  is not  entitled  to vote in the  election  of  directors  and is
entitled  to  1/100th  vote per  share  on all  other  matters  voted on by Arch
stockholders.  Shares of class B common stock will automatically convert into an
identical  number  of shares of common  stock  upon  transfer  of Class B common
shares to any person or entity,  other than any person or entity  that  received
shares of Class B common  stock in the initial  distribution  of those shares or
any affiliate of such person or entity.

   Warrants--In  connection  with the  acquisition of  MobileMedia,  Arch issued
approximately  48.3 million warrants to purchase Arch common stock. Each warrant
represents the right to purchase  one-third of one share of Arch common stock at
an exercise price of $3.01 ($9.03 per share).  The warrants  expire on September
1, 2001.

   Stock  Options--Arch  has stock option  plans which  provide for the grant of
incentive  and  nonqualified  stock  options  to key  employees,  directors  and
consultants to purchase Arch common stock.  Incentive  stock options are granted
at  exercise  prices not less than the fair  market  value on the date of grant.
Options generally vest over a five-year period from the date of grant.  However,
in  certain  circumstances,  options  may be  immediately  exercisable  in full.
Options  generally  have a  duration  of 10  years.  The plans  provide  for the
granting of options to purchase a total of 2,304,135 shares of common stock.

   On December 16, 1997, the Compensation Committee of the board of directors of
Arch  authorized  the  Company to offer an  election  to its  employees  who had
outstanding  options at a price  greater  than $15.19 to cancel such options and


                                      F-14
<PAGE>

accept  new  options at a lower  price.  In  January  1998,  as a result of this
election by certain of its employees,  the Company canceled 361,072 options with
exercise prices ranging from $17.82 to $61.88 and granted the same number of new
options with an exercise price of $15.19 per share, the fair market value of the
stock on December 16, 1997.

   The following  table  summarizes the activity under Arch's stock option plans
for the periods presented:

                                                           Weighted
                                                 Number    Average
                                                   of      Exercise
                                                Options     Price
                                              ----------    ------
   Options Outstanding at December 31, 1996      349,065    $34.11
     Granted ..............................      166,785     20.03
     Exercised ............................         --        --
     Terminated ...........................      (62,207)    31.97
                                              ----------    ------
   Options Outstanding at December 31, 1997      453,643     29.22
     Granted ..............................      656,096     14.27
     Exercised ............................      (31,344)     9.38
     Terminated ...........................     (429,627)    28.54
                                              ----------    ------
   Options Outstanding at December 31, 1998      648,768     15.51
     Granted ..............................    1,295,666      7.80
     Exercised ............................         --        --
     Terminated ...........................     (109,672)    13.89
                                              ----------    ------
   Options Outstanding at December 31, 1999    1,834,762     10.16
                                              ==========    ======
   Options Exercisable at December 31, 1999      255,264    $17.00
                                              ==========    ======

   The  following   table   summarizes  the  options   outstanding  and  options
exercisable by price range at December 31, 1999:

                                              Weighted
                                               Average    Weighted    Weighted
                                              Remaining    Average    Average
      Range of        Options    Contractual  Exercise     Options    Exercise
   Exercise Prices  Outstanding     Life        Price    Exercisable   Price
   ---------------  -----------     ----        -----    -----------   -----
   $ 4.31 - $ 6.31      26,400      9.58       $ 5.70        7,900     $ 5.46
     7.83 -   7.83   1,263,266      9.42         7.83        2,000       7.83
    10.69 -  15.19     500,954      8.09        14.33      210,996      14.49
    18.75 -  23.63      32,974      5.99        20.76       23,516      21.03
    37.50 -  82.68      11,168      5.52        66.56       10,852      66.99
   ------   ------   ---------      ----       ------    ---------     ------
   $ 4.31 - $82.68   1,834,762      8.98       $10.16      255,264     $17.00
   ======   ======   =========      ====       ======    =========     ======

   Employee Stock Purchase  Plans--The  Company's  employee stock purchase plans
allow eligible  employees the right to purchase  common stock,  through  payroll
deductions not exceeding 10% of their  compensation,  at the lower of 85% of the
market price at the  beginning  or the end of each  six-month  offering  period.
During 1997, 1998 and 1999,  50,447,  85,996 and 34,217 shares were issued at an
average price per share of $15.87,  $6.39 and $5.60,  respectively.  At December
31, 1999, 465,783 shares are available for future issuance.

   Accounting for Stock-Based  Compensation--Arch  accounts for its stock option
and stock purchase  plans under APB Opinion No. 25 "Accounting  for Stock Issued
to Employees". Since all options have been issued at a grant price equal to fair
market value,  no  compensation  cost has been  recognized in the  statements of
operations.  Had  compensation  cost for these plans been determined  consistent
with SFAS No. 123, "Accounting for Stock-Based Compensation",  Arch's net income
(loss) and income  (loss) per share would have been  increased to the  following
pro forma amounts:

                                                    Years Ended December 31,
                                                    ------------------------
                                                1997         1998         1999
                                                ----         ----         ----
                                                  (in thousands, except per
                                                        share amounts)
   Net income (loss):         As reported..  $(181,874)   $(206,051)  $(285,586)
                              Pro forma....   (183,470)    (208,065)   (288,070)
   Basic net income (loss)
      per common share:       As reported..     (26.31)      (29.59)      (9.10)
                              Pro forma....     (26.55)      (29.88)      (9.18)



                                      F-15
<PAGE>

   Because  the SFAS No. 123 method of  accounting  has not been  applied to the
options  granted prior to January 1, 1995, the resulting pro forma  compensation
cost may not be  representative of that to be expected in future years. The fair
value  of each  option  grant  is  estimated  on the  date of  grant  using  the
Black-Scholes  option pricing model. In computing these pro forma amounts,  Arch
has assumed risk-free  interest rates of 4.5%--6%,  an expected life of 5 years,
an expected dividend yield of zero and an expected volatility of 50%--87%.

   The weighted average fair values  (computed  consistent with SFAS No. 123) of
options  granted under all plans in 1997,  1998 and 1999 were $10.11,  $8.34 and
$5.56,  respectively.  The weighted  average fair value of shares sold under the
employee stock purchase plans in 1997, 1998 and 1999 was $8.49, $5.64 and $3.13,
respectively.

   Deferred  Compensation  Plan for  Nonemployee  Directors--Under  the deferred
compensation  plan for  nonemployee  directors,  outside  directors may elect to
defer, for a specified period of time,  receipt of some or all of the annual and
meeting  fees which would  otherwise  be payable  for  service as a director.  A
portion of the deferred  compensation may be converted into phantom stock units,
at the  election of the  director.  The number of phantom  stock  units  granted
equals the amount of compensation to be deferred as phantom stock divided by the
fair  value  of Arch  common  stock  on the date  the  compensation  would  have
otherwise been paid. At the end of the deferral period,  the phantom stock units
will be converted to cash based on the fair market value of Arch common stock on
the date of distribution. Deferred compensation is expensed when earned. Changes
in the value of the phantom stock units are recorded as income/expense  based on
the fair market value of Arch common stock.

   Stockholders  Rights Plan--In October 1995, Arch's board of directors adopted
a  stockholders  rights  plan and  declared a dividend  of one  preferred  stock
purchase right for each  outstanding  share of common stock to  stockholders  of
record at the close of business on October 25,  1995.  Each Right  entitles  the
registered holder to purchase from Arch one  one-thousandth of a share of Series
B  Junior  Participating  Preferred  Stock,  at a cash  purchase  price of $150,
subject to adjustment.  Pursuant to the Plan, the Rights automatically attach to
and trade  together  with each share of common  stock.  The  Rights  will not be
exercisable or transferable  separately from the shares of common stock to which
they are attached until the occurrence of certain events. The Rights will expire
on October 25, 2005,  unless earlier redeemed or exchanged by Arch in accordance
with the Plan.

5.   INCOME TAXES

   Arch  accounts  for  income  taxes  under  the  provisions  of SFAS  No.  109
"Accounting  for  Income  Taxes".   Deferred  tax  assets  and  liabilities  are
determined based on the difference between the financial statement and tax bases
of assets and liabilities, given the provisions of enacted laws

   The  components of the net deferred tax asset  (liability)  recognized in the
accompanying  consolidated  balance  sheets at December 31, 1998 and 1999 are as
follows (in thousands):

                                                   1998        1999
                                                   ----        ----
   Deferred tax assets.....................   $ 179,484   $ 312,527
   Deferred tax liabilities................     (67,652)    (41,617)
                                              ---------   ---------
                                                111,832     270,910
   Valuation allowance.....................    (111,832)   (270,910)
                                              ---------   ---------
                                              $      --   $      --
                                              =========   =========

   The approximate effect of each type of temporary  difference and carryforward
at December 31, 1998 and 1999 is summarized as follows (in thousands):

                                                 1998        1999
                                                 ----        ----
   Net operating losses....................   $ 128,213   $ 174,588
   Intangibles and other assets............     (62,084)     36,029
   Depreciation of property and equipment..      39,941      42,703
   Accruals and reserves...................       5,762      17,590
                                              ---------   ---------
                                                111,832     270,910
   Valuation allowance.....................    (111,832)   (270,910)
                                              ---------   ---------
                                              $      --   $      --
                                              =========   =========



                                      F-16
<PAGE>

   The  effective  income tax rate differs from the  statutory  federal tax rate
primarily due to the nondeductibility of goodwill amortization and the inability
to recognize the benefit of current net operating loss (NOL) carryforwards.  The
NOL  carryforwards  expire at various dates through 2014.  The Internal  Revenue
Code contains  provisions that may limit the NOL  carryforwards  available to be
used in any given year if certain events occur, including significant changes in
ownership, as defined.

   The Company has established a valuation  reserve against its net deferred tax
asset until it becomes  more likely than not that this asset will be realized in
the  foreseeable  future.  Of the  valuation  allowance  at December  31,  1999,
approximately $60.3 million will be recorded to goodwill when realized.

6.   COMMITMENTS AND CONTINGENCIES

   In the ordinary  course of  business,  the Company and its  subsidiaries  are
defendants in a variety of judicial  proceedings.  In the opinion of management,
there is no proceeding  pending,  or to the knowledge of management  threatened,
which, in the event of an adverse  decision,  would result in a material adverse
change in the financial condition or results of operations of the Company.

   Arch has operating leases for office and transmitting  sites with lease terms
ranging from one month to approximately fifty years. In most cases, Arch expects
that,  in the normal  course of business,  leases will be renewed or replaced by
other leases.

   Future  minimum  lease  payments  under  noncancellable  operating  leases at
December 31, 1999 are as follows (in thousands):

   Year Ending December 31,
   ------------------------
   2000......................................................    $   51,091
   2001......................................................        42,611
   2002......................................................        35,957
   2003......................................................        29,457
   2004......................................................        22,969
   Thereafter................................................       143,426
                                                                 ----------
       Total.................................................    $  325,511
                                                                 ==========

   Total rent expense under  operating  leases for the years ended  December 31,
1997, 1998 and 1999 approximated $19.8 million, $19.6 million and $48.3 million,
respectively.

7.   EMPLOYEE BENEFIT PLANS

   Retirement Savings Plans--Arch has retirement savings plans, qualifying under
Section  401(k) of the Internal  Revenue Code covering  eligible  employees,  as
defined.  Under the plans, a participant  may elect to defer receipt of a stated
percentage  of  the  compensation  which  would  otherwise  be  payable  to  the
participant for any plan year (the deferred amount) provided,  however, that the
deferred  amount shall not exceed the maximum  amount  permitted  under  Section
401(k) of the Internal  Revenue Code.  The plans  provide for employer  matching
contributions.  Matching  contributions  for the years ended  December 31, 1997,
1998 and 1999 approximated $302,000, $278,000 and $960,000, respectively.

8.   LONG-TERM LIABILITIES

   During 1998 and 1999,  Arch sold  communications  towers,  real estate,  site
management contracts and/or leasehold interests involving 133 sites in 22 states
and leased  space on the towers on which it  currently  operates  communications
equipment to service its own messaging network. Net proceeds from the sales were
approximately  $33.4 million,  Arch used the net proceeds to repay  indebtedness
under its credit facility.

   Arch entered into options to repurchase  each site and until this  continuing
involvement  ends the  gain on the  sale of the  tower  sites  is  deferred  and
included in other  long-term  liabilities.  At December 31, 1999,  approximately
$24.9  million of the gain is deferred  and  approximately  $1.9 million of this
gain has been  recognized  in the  statement  of  operations  and is included in
operating  income  for each of the  years  ended  December  31,  1998 and  1999,
respectively.



                                      F-17
<PAGE>

   Also included in other long-term  liabilities is an unfavorable lease accrual
related to MobileMedia's  rentals on communications  towers which were in excess
of market rental rates (see Note 2). At December 31, 1999, the remaining balance
of this accrual was approximately $51.5 million. This accrual is being amortized
over the  term of the  leases  with  approximately  13 3/4  years  remaining  at
December 31, 1999.

9.   RESTRUCTURING RESERVES

   Divisional reorganization -- In June 1998, Arch's board of directors approved
a reorganization of Arch's operations. As part of the divisional reorganization,
Arch is in the process of consolidating certain regional  administrative support
functions,  such as customer  service,  collections,  inventory and billing,  to
reduce  redundancy  and take  advantage of various  operating  efficiencies.  In
connection  with  the  divisional  reorganization,  Arch:

   o  anticipates a net reduction of approximately 10% of its workforce;

   o  is closing certain office  locations and redeploying  other assets;  and

   o  recorded a restructuring charge of $14.7 million in 1998.

   In conjunction  with the completion of the  MobileMedia  merger in June 1999,
the timing and implementation of the divisional reorganization announced in June
1998 was reviewed by Arch  management.  The plan was reviewed within the context
of the combined  company  integration  plan which was approved by the Company in
the third quarter of 1999.  After this review it was determined that significant
changes needed to be made to the divisional  reorganization plan. In the quarter
ended September 30, 1999, the Company  identified  certain of its facilities and
network  leases  that will not be  utilized  following  the  integration  of the
Company and MobileMedia, resulting in an additional charge of $2.6 million. This
charge was offset by reductions to previously provided severance and other costs
of $4.8 million.

   The provision for lease  obligations and  terminations  relates  primarily to
future lease  commitments on local,  regional and divisional  office  facilities
that will be closed as part of this reorganization. The charge represents future
lease  obligations,  on such leases past the dates the offices will be closed by
the Company,  or for certain leases, the cost of terminating the leases prior to
their scheduled  expiration.  Cash payments on the leases and lease terminations
will occur over the remaining lease terms, the majority of which expire prior to
2001.

   Through  the  elimination  of  certain  local  and  regional   administrative
operations and the consolidation of certain support functions,  the Company will
eliminate  approximately  280 net positions.  As a result of  eliminating  these
positions  approximately  900  employees  will be effected.  The majority of the
positions which have been or will be eliminated are related to customer service,
collections, inventory and billing functions in local and regional offices which
will be  closed.  As of  December  31,  1998 and  1999,  217  employees  and 414
employees,   respectively,   had   been   terminated   due  to  the   divisional
reorganization.  The remaining  severance and benefits costs will be paid during
2000.

   The  Company's  restructuring  activity as of December 31, 1999 is as follows
(in thousands):

                                Reserve
                               Initially    Reserve                   Remaining
                              Established  Adjustment  Amounts Paid    Reserve
                              -----------  ----------  ------------    -------
   Severance costs.........    $  9,700     $ (3,547)    $  5,123     $  1,030
   Lease obligation costs..       3,500        2,570          872        5,198
   Other costs.............       1,500       (1,223)         277           --
                               --------     --------     --------     --------
   Total...................    $ 14,700     $ (2,200)    $  6,272     $  6,228
                               ========     =========    ========     ========

   MobileMedia  Acquisition  Reserve  -- On  June  3,1999,  Arch  completed  its
acquisition of MobileMedia  and commenced the  development of plans to integrate
the operations of MobileMedia. During the third quarter of 1999, Arch's board of
directors  approved  plans covering the  elimination of redundant  headcount and
facilities in  connection  with the overall  integration  of  operations.  It is
expected that the integration  activity relating to the MobileMedia merger, will
be completed by December 31, 2000.

   In  connection  with the  MobileMedia  acquisition,  Arch  anticipates  a net
reduction of  approximately  10% of  MobileMedia's  workforce and the closing of
certain  facilities and tower sites.  This resulted in the establishment a $14.5
million  acquisition  reserve which is included as part of the purchase price of
MobileMedia. The initial acquisition reserve consisted of approximately (i) $6.1
million for  employee  severance,  (ii) $7.9 million for lease  obligations  and
terminations and (iii) $0.5 million of other costs.



                                      F-18
<PAGE>

   The provision for lease  obligations and  terminations  relates  primarily to
future lease  commitments on local,  regional and divisional  office  facilities
that will be closed as part of this reorganization. The charge represents future
lease  obligations,  on such leases past the dates the offices will be closed by
the Company,  or for certain leases, the cost of terminating the leases prior to
their scheduled  expiration.  Cash payments on the leases and lease terminations
will occur over the remaining lease terms, the majority of which expire prior to
2003.

   Through the  elimination of redundant  management,  administrative,  customer
service,  collections  and  inventory  functions,  the  Company  will  eliminate
approximately  500 positions.  As of December 31, 1999,  174 former  MobileMedia
employees had been terminated.

   The MobileMedia  acquisition  reserve activity as of December 31, 1999 was as
follows (in thousands):

                                        Reserve
                                       Initially                   Remaining
                                       Established  Amounts Paid    Reserve
                                       -----------  ------------    -------
   Severance costs...................    $  6,058     $  3,380     $  2,678
   Lease obligation costs............       7,950          122        7,828
   Other costs.......................         500          123          377
                                         --------     --------     --------
   Total.............................    $ 14,508     $  3,625     $ 10,883
                                         ========     ========     ========

10.  SEGMENT REPORTING


   The Company operates in one industry:  providing wireless messaging services.
On December 31, 1999, the Company  operated  approximately  375 retail stores in
the United States.

11.   QUARTERLY FINANCIAL RESULTS (UNAUDITED)

   Quarterly  financial  information  for the years ended  December 31, 1998 and
1999 is summarized below (in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                              First       Second      Third       Fourth
                                                             Quarter     Quarter     Quarter     Quarter
                                                             -------     -------     -------     -------
<S>                                                        <C>         <C>         <C>         <C>
   YEAR ENDED DECEMBER 31, 1998:
   Revenues...........................................     $ 102,039   $ 103,546   $ 104,052   $ 103,998
   Operating income (loss)............................       (19,418)    (33,956)    (20,783)    (20,272)
   Income (loss) before extraordinary item............       (45,839)    (60,877)    (47,994)    (49,621)
   Extraordinary charge...............................            --      (1,720)         --          --
   Net income (loss)..................................       (45,839)    (62,597)    (47,994)    (49,621)
   Basic/diluted net income (loss) per common share:
      Income (loss) before extraordinary item.........         (6.59)      (8.71)      (6.91)      (7.14)
      Extraordinary charge............................            --       (0.25)         --          --
      Net income (loss)...............................         (6.59)      (8.96)      (6.91)      (7.14)
   YEAR ENDED DECEMBER 31, 1999:
   Revenues...........................................       100,888     133,493     206,189     201,254
   Operating income (loss)............................       (16,086)    (34,546)    (27,075)    (20,032)
   Income (loss) before extraordinary item and
      accounting change...............................       (45,763)   (110,728)    (67,739)    (64,958)
   Extraordinary gain.................................            --          --          --       6,963
   Cumulative effect of accounting change.............        (3,361)         --          --          --
   Net income (loss)..................................       (49,124)   (110,728)    (67,739)    (57,995)
   Basic/diluted net income (loss) per common share:
      Income (loss) before extraordinary item and
        accounting change.............................         (6.54)      (5.65)      (1.42)      (1.29)
      Extraordinary gain..............................            --          --          --        0.14
      Cumulative effect of accounting change..........         (0.48)         --          --          --
      Net income (loss)...............................         (7.02)      (5.65)      (1.42)      (1.15)
</TABLE>




                                      F-19
<PAGE>


              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To Arch Communications Group, Inc.:

We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated  financial statements of Arch Communications
Group,  Inc. included in this Form 10-K and have issued our report thereon dated
February 16, 2000  (except with respect to the matters  discussed in Note 3, for
which the date is March 16, 2000).

Our audit was made for the purpose of forming
an  opinion on the basic  consolidated  financial  statements  taken as a whole.
Schedule II is the  responsibility of the Company's  management and is presented
for purposes of complying with the Securities  and Exchange  Commission's  rules
and is not part of the basic consolidated financial statements. The schedule has
been  subjected  to the  auditing  procedures  applied in the audit of the basic
consolidated  financial  statements  and, in our opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic consolidated financial statements taken as a whole.


                                        /s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 16, 2000






                                      S-1
<PAGE>

                                                                     SCHEDULE II
                         ARCH COMMUNICATIONS GROUP, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  Years Ended December 31, 1997, 1998 and 1999
                                 (in thousands)
<TABLE>
<CAPTION>

                                    Balance at                  Other                     Balance
                                    Beginning    Charged to  Additions to                at End of
Allowance for Doubtful Accounts     of Period     Expense    Allowance(1)   Write-Offs    Period
-------------------------------     ---------     -------    ------------   ----------    ------
<S>                                 <C>          <C>          <C>           <C>          <C>
Year ended December 31, 1997....    $   4,111    $   7,181    $       --    $  (5,548)   $  5,744
                                    =========    =========    ==========    =========    ========
Year ended December 31, 1998....    $   5,744    $   8,545    $       --    $  (7,706)   $  6,583
                                    =========    =========    ==========    =========    ========
Year ended December 31, 1999....    $   6,583    $  15,265    $   13,243    $ (18,618)   $ 16,473
                                    =========    =========    ==========    =========    ========
</TABLE>

(1)      Additions arising through acquisitions of messaging companies


<TABLE>
<CAPTION>

                                    Balance at                                            Balance
                                    Beginning    Charged to     Other                    at End of
Accrued Restructuring Charge        of Period     Expense     Additions     Deductions    Period
----------------------------        ---------     -------     ---------     ----------    ------
<S>                 <C> <C>         <C>          <C>          <C>           <C>          <C>
Year ended December 31, 1998....    $      --    $   14,700   $       --    $  (2,791)   $ 11,909
                                    =========    ==========   ==========    =========    ========
Year ended December 31, 1999....    $  11,909    $   (2,200)  $   14,508    $  (7,106)   $ 17,111
                                    =========    ==========   ==========    =========    ========
</TABLE>







                                      S-2
<PAGE>

                                  EXHIBIT INDEX

2.1   Agreement and Plan of Merger,  dated as of November 7, 1999,  among Paging
      Network,  Inc., Arch Communications  Group, Inc. and St. Louis Acquisition
      Corp. (1)
2.2   Amendment  to Agreement  and Plan of Merger,  dated as of January 7, 2000,
      between Paging Network,  Inc.,  Arch  Communications  Group,  Inc. and St.
      Louis Acquisition Corp. (2)
3.1   Restated Certificate of Incorporation. (3)
3.2   Certificate   of   Designations   establishing   the   Series   B   Junior
      Participating  Preferred  Stock,  filed with the Secretary of the State of
      Delaware on October 19, 1995. (4)
3.3   Certificate of  Correction,  filed with the Secretary of State of Delaware
      on February 15, 1996. (3)
3.4   Certificate  of  Designations   establishing   the  Series  C  Convertible
      Preferred Stock, filed with the Secretary of State of Delaware on June 29,
      1998. (5)
3.5   Certificate of Amendment of Restated  Certificate of Incorporation,  filed
      with the Secretary of State of Delaware on June 4, 1996.
3.6   Certificate of Amendment of Restated  Certificate of Incorporation,  filed
      with the Secretary of State of Delaware on May 27, 1999.
3.7   Certificate of Amendment of Restated  Certificate of Incorporation,  filed
      with the Secretary of State of Delaware on June 16, 1999.
3.8   By-laws, as amended. (3)
4.1   Indenture,  dated  February 1, 1994,  between  Arch  Communications,  Inc.
      (formerly known as USA Mobile  Communications,  Inc. II) and United States
      Trust Company of New York, as Trustee, relating to the 9 1/2% Senior Notes
      due 2004 of Arch Communications, Inc. (6)
4.2   Indenture, dated December 15, 1994, between Arch Communications,  Inc. and
      United States Trust  Company of New York, as Trustee,  relating to the 14%
      Senior Notes due 2004 of Arch Communications, Inc. (7)
4.3   Indenture,  dated June 29,  1998,  between Arch  Communications,  Inc. and
      U.S. Bank Trust National Association,  as Trustee, relating to the 12 3/4%
      Senior Notes due 2007 of Arch Communications, Inc. (5)
4.4   Indenture, dated April 9, 1999, between Arch Communications,  Inc. and IBJ
      Whitehall Bank & Trust Company, as Trustee, relating to the 13 3/4% Senior
      Notes due 2008. (8)
10.1  Second Amended and Restated  Credit  Agreement  (Tranche A and Tranche C
      Facilities),  dated June 29, 1998,  among Arch Paging,  Inc.,  the Lenders
      party  thereto,  The Bank of New York,  Royal Bank of Canada  and  Toronto
      Dominion (Texas), Inc. (5)
10.2  Second Amended and Restated Credit Agreement (Tranche B Facility), dated
      June 29, 1998,  among Arch Paging,  Inc., the Lenders party  thereto.  The
      Bank of New York, Royal Bank of Canada and Toronto Dominion (Texas),  Inc.
      (5)
10.3  Amendment No. 1 and  Amendment No. 2 to the Second  Amended and Restated
      Credit Agreement (Tranche A and Tranche C Facilities). (9)
10.4  Amendment No. 1 and  Amendment No. 2 to the Second  Amended and Restated
      Credit Agreement (Tranche B Facility). (9)
10.5  Amendment  No. 4 to the Second  Amended and  Restated  Credit  Agreement
      (Tranche A and Tranche C Facilities). (10)
10.6  Amendment  No. 4 to the Second  Amended and  Restated  Credit  Agreement
      (Tranche B Facility). (10)
+10.7   Amended and Restated Stock Option Plan (12)
+10.8   Non-Employee Directors' Stock Option Plan (13)
+10.9   1989 Stock Option Plan, as amended (3)
+10.10  1995 Outside Directors' Stock Option Plan (14)
+10.11  1997 Stock Option Plan (15)
+10.12* 1999 Employee Stock Purchase Plan
+10.13  Deferred Compensation Plan for Nonemployee Directors (16)
+10.14  Form of Executive  Retention  Agreement by and between Messrs.  Baker,
        Daniels, Kuzia, Pottle and Saynor (16)
10.15 Stock   Purchase   Agreement,   dated  June  29,   1998,   among  Arch
      Communications  Group,  Inc.,  Sandler Capital Partners IV, L.P.,  Sandler
      Capital Partners IV FTE, L.P., Harvey Sandler, John Kornreich,  Michael J.
      Marocco,  Andrew Sandler,  South Fork Partners, the Georgica International
      Fund Limited, Aspen Partners and Consolidated Press International Limited.
      (4)
10.16 Registration  Rights  Agreement,  dated  June  29,  1998,  among  Arch
      Communications  Group,  Inc.,  Sandler Capital Partners IV, L.P.,  Sandler
      Capital Partners IV FTE, L.P., Harvey Sandler, John Kornreich,  Michael J.
      Marocco,  Andrew Sandler,  South Fork Partners, The Georgica International
      Fund Limited, Aspen Partners and Consolidated Press International Limited.
      (4)
10.17 Amendment  No. 1 to  Registration  Rights  Agreement,  dated August 19,
      1998, amending the Registration Rights Agreement dated as of June 29, 1998
      by and among Arch  Communications  Group,  Inc.  and the  Sandler  Capital
      Partners IV, LP, Sandler Capital Partners IV, FTE LP, South Fork Partners,
      The Georgica  International Fund Limited,  Aspen Partners and Consolidated
      Press International Limited. (11)
10.18 Exchange   Agreement,   dated  June  29,   1998,   between   Adelphia
      Communications Corporation and Benbow PCS Ventures, Inc. (4)
10.19 Promissory  Note,  dated June 29,  1998,  in the  principal  amount of
      $285,015, issued by Benbow PCS Ventures, Inc. to Lisa-Gaye Shearing. (4)
10.20 Guaranty, dated June 29, 1998, given by Arch Communications Group, Inc.
      to Adelphia Communications Corporation. (4)
10.21 Guaranty, dated June 29, 1998, given by Arch Communications Group, Inc.
      to Lisa-Gaye Shearing. (4)
10.22 Registration  Rights  Agreement,  dated  June  29,  1998,  among  Arch
      Communications  Group,  Inc.,  Adelphia  Communications   Corporation  and
      Lisa-Gaye Shearing. (4)
10.23 Preferred  Distributor Agreement dated June 1, 1998 by and between Arch
      Communications Group, Inc. and NEC America, Inc. (9)(17)
10.24 Paging Products Sales  Agreement,  dated March 17, 1999, by and between
      Motorola, Inc. and the Company. (10) (17)
10.25 Satellite Services  Agreement,  dated September 1, 1998, between AvData
      Systems, Inc. and MobileMedia Communications, Inc. (10) (17)
10.26 Master  Lease For  Transmitter  Systems  Space by and between  Pinnacle
      Towers, Inc. and MobileMedia Communications, Inc. (10)
10.27* Letter agreement,  dated March 23, 2000,  between Arch  Communications
       Group, Inc. and Resurgence Asset Management L.L.C.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Arthur Andersen LLP.
27.1* Financial Data Schedule.

----------------
 *    Filed herewith.
 +    Identifies  exhibits  constituting a management  contract or  compensation
      plan.
(1)   Incorporated  by  reference  from the  Current  Report on Form 8-K of Arch
      Communications  Group,  Inc. dated November 7, 1999 and filed November 19,
      1999.
(2)   Incorporated  by  reference  from the  Current  Report on Form 8-K of Arch
      Communications  Group,  Inc.  dated  January 7, 2000 and filed January 21,
      2000.
(3)   Incorporated  by  reference  from the  Registration  Statement on Form S-3
      (File No. 333-542) of Arch Communications Group, Inc.
(4)   Incorporated  by  reference  from the  Current  Report on Form 8-K of Arch
      Communications Group, Inc. dated October 13, 1995 and filed on October 24,
      1995.
(5)   Incorporated  by  referenced  from the Current  Report on Form 8-K of Arch
      Communications Group, Inc. dated June 26, 1998.
(6)   Incorporated  by  reference  from the  Registration  Statement on Form S-1
      (File No. 33-72646) of Arch Communications, Inc.
(7)   Incorporated  by  reference  from the  Registration  Statement on Form S-1
      (File No. 33-85580) of Arch Communications, Inc.
(8)   Incorporated  by  reference  from the  Registration  Statement on Form S-4
      (File No. 333-83027) of Arch Communications, Inc.
(9)   Incorporated  by  reference  from the  Annual  Report on Form 10-K of Arch
      Communications Group, Inc. for the fiscal year ended December 31, 1998.
(10)  Incorporated by reference from the Quarterly Report on Form 10-Q of Arch
      Communications Group, Inc. for the quarter ended June 30, 1999.
(11)  Incorporated  by reference from the  Registration  Statement on Form S-4
      (file No. 333-63519) of Arch Communications Group, Inc.
(12)  Incorporated  by reference  from the Annual Report on Form 10-K of Arch
      Communications  Group,  Inc.  (then  known  as USA  Mobile  Communications
      Holdings, Inc.) for the fiscal year ended December 31, 1994.
(13)  Incorporated by reference from the Registration  Statement on Form S-4 (
      File No. 33-83648) of Arch  Communications  Group, Inc. (then known as USA
      Mobile Communications Holdings, Inc.)
(14)  Incorporated  by reference from the  Registration  Statement on Form S-3
      (File No. 33-87474) of Arch Communications Group, Inc.
(15)  Incorporated  by reference  from the Annual Report on Form 10-K of Arch
      Communications Group, Inc. for the fiscal year ended December 31, 1996.
(16)  Incorporated  by reference  from the Annual Report on Form 10-K of Arch
      Communications Group, Inc. for the fiscal year ended December 31, 1997.
(17)  A Confidential Treatment Request has been filed with respect to portions
      of this exhibit so incorporated by reference.