** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,DC 20549**

** **

**FORM 10-Q**

 

**QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended March 31, 2004**

 

**Commission File Number**

**000-30761**

 

**UbiquiTel Inc.**

(Exact name ofCo-Registrant as specified in its charter)

 
| **Delaware**                                                      |   | **23-3017909**                        |
|-------------------------------------------------------------------|--------|---------------------------------------|
| (State of  incorporation)                                         |   | (I.R.S. Employer  Identification No.) |
|                                                              |   |                                  |
| **One West Elm Street, Suite 400,  Conshohocken, PA**             |   | **19428**                             |
| (Address of principal  executive office)                          |   | (Zip code)                            |
|                                                              |   |                                  |
| Co-Registrant’s  telephone number:  **(610)  832-3300** |
|                                                              |   |                                  |
| Commission File Number                                            |
| **333-39950**                                                     |

 

**UbiquiTel Operating Company**

(Exactname of Co-Registrant as specified in its charter)

### ** **

| **Delaware**                                                    |   | **23-3024747**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State of incorporation)                                        |   | (I.R.S. Employer Identification No.) |
|                                                            |   |                                 |
| **One West Elm Street, Suite 400, Conshohocken, PA**            |   | **19428**                            |
| (Address of principal executive office)                         |   | (Zip code)                           |
|                                                            |   |                                 |
| Co-Registrant’s telephone number:  **(610) 832-3300** |

 

Indicate by check mark whether eachof the co-registrants (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that each co-registrant was required tofile such reports), and (2) has been subject to such filing requirements forthe past 90 days.

Yes ý        Noo

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).

Yes ý        Noo

 

There were 92,688,044 shares of common stock, $0.0005 par value, of UbiquiTel Inc. outstanding at May 6,2004.

 

There were 1,000 shares of common stock, $0.01 par value, of UbiquiTelOperating Company outstanding at May 6, 2004, all of which were owned byUbiquiTel Inc.

 

 

----

 

**UbiquiTel Inc. and Subsidiaries**

 

**Form 10-Q for the Quarter Ended March 31, 2004**

 

**INDEX**

 
| PART I. FINANCIAL  INFORMATION |                                                                                        |
|--------------------------------|---------------------------------------------------------------------------------------------|
|                           |                                                                                        |   |
| Item 1.                        | Financial Statements                                                                        |   |
|                           | Consolidated Balance Sheets  as of March 31, 2004 and December 31, 2003                     |   |
|                           | Consolidated  Statements of Operations for the three months ended March 31, 2004 and 2003   |   |
|                           | Consolidated  Statements of Cash Flows for the three months ended March 31, 2004 and 2003   |   |
|                           | Notes to  Consolidated Financial Statements                                                 |   |
|                           |                                                                                        |   |
| Item  2.                       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|                           |                                                                                        |   |
| Item  3.                       | Quantitative  and Qualitative Disclosures About Market Risk                                 |   |
|                           |                                                                                        |   |
| Item  4.                       | Controls  and Procedures                                                                    |   |
|                           |                                                                                        |   |
| PART II. OTHER INFORMATION     |                                                                                        |
|                           |                                                                                        |   |
| Item 1.                        | Legal Proceedings                                                                           |   |
|                           |                                                                                        |   |
| Item 2.                        | Changes in Securities, Use of  Proceeds and Issuer Purchases of Equity Securities           |   |
|                           |                                                                                        |   |
| Item  3.                       | Defaults  Upon Senior Securities                                                            |   |
|                           |                                                                                        |   |
| Item 4.                        | Submission of Matters to a Vote of Security  Holders                                        |   |
|                           |                                                                                        |   |
| Item  5.                       | Other  Information                                                                          |   |
|                           |                                                                                        |   |
| Item  6.                       | Exhibits  and Reports on Form 8-K                                                           |   |
|                           |                                                                                        |   |
| Signatures                     |                                                                                        |

 

2

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**ExplanatoryNote:**

 

The Consolidated Financial Statements included herein are those ofUbiquiTel Inc. (“UbiquiTel”).  TheCo-Registrants are UbiquiTel and UbiquiTel Operating Company (“OperatingCompany”), which is a wholly-owned subsidiary of UbiquiTel and the issuer of9.875% senior notes due 2011, 14% senior subordinated discount notes due 2010and 14% senior discount notes due 2010 (collectively, the “Notes”).  UbiquiTel has provided a full,unconditional, joint and several guaranty of Operating Company’s obligationsunder the Notes.  UbiquiTel has nooperations separate from its investment in Operating Company.  Pursuant to Rule 12h-5 of the SecuritiesExchange Act, no separate financial statements and other disclosures concerningOperating Company other than narrative disclosures set forth in Notes 5 and 6to the Consolidated Financial Statements have been presented herein. As usedherein and except as the context otherwise may require, the “Company,” “we,”“us,” “our” or “UbiquiTel” means, collectively UbiquiTel, Operating Company andtheir consolidated subsidiary, UbiquiTel Leasing Company.

 

3

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**PART I.FINANCIAL INFORMATION**

 

**Item 1.  Financial Statements**

 

# **UbiquiTel Inc. andSubsidiaries**

# **Consolidated Balance Sheets**

# **(Unaudited)**

# **(In Thousands, Except PerShare Data)**

 
|                                                                                                                                                       |   | **March 31, 2004** |    | **December 31, 2003** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|-----------------------|--------|
| **ASSETS**                                                                                                                                                 |   |               |    |                  |   |
| CURRENT  ASSETS:                                                                                                                                           |   |               |    |                  |   |
| Cash  and cash equivalents                                                                                                                                 |   | $                  | 53,339  |                  | $      | 57,225 |   |
| Restricted  cash                                                                                                                                           |   | 3,566              |    | 3,562                 |   |
| Accounts  receivable, net of allowance for doubtful accounts of $2,438 at  March 31, 2004 and $2,722 at December 31,  2003                            |   | 20,770             |    | 19,614                |   |
| Inventory                                                                                                                                                  |   | 3,632              |    | 3,408                 |   |
| Prepaid  expenses and other assets                                                                                                                         |   | 17,714             |    | 15,848                |   |
| Income  tax receivable                                                                                                                                     |   | 217                |    | 217                   |   |
| Total  current assets                                                                                                                                      |   | 99,238             |    | 99,874                |   |
| PROPERTY  AND EQUIPMENT, NET                                                                                                                               |   | 254,720            |    | 259,556               |   |
| CONSTRUCTION  IN PROGRESS                                                                                                                                  |   | 5,113              |    | 5,045                 |   |
| DEFERRED  FINANCING COSTS, NET                                                                                                                             |   | 9,002              |    | 8,918                 |   |
| GOODWILL                                                                                                                                                   |   | 38,138             |    | 38,138                |   |
| OTHER  INTANGIBLE ASSETS, NET                                                                                                                              |   | 67,793             |    | 68,869                |   |
| OTHER  LONG-TERM ASSETS                                                                                                                                    |   | 2,938              |    | 3,004                 |   |
| Total  assets                                                                                                                                              |   | $                  | 476,942 |                  | $      | 483,404 |   |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                                                                                             |   |               |    |                  |   |
| CURRENT  LIABILITIES:                                                                                                                                      |   |               |    |                  |   |
| Current  portion of long-term debt                                                                                                                         |   | $                  | 232     |                  | $      | 8,209 |   |
| Accounts  payable                                                                                                                                          |   | 8,204              |    | 3,633                 |   |
| Book  cash overdraft                                                                                                                                       |   | —             |    | 5,671                 |   |
| Accrued  expenses                                                                                                                                          |   | 18,616             |    | 16,591                |   |
| Accrued  compensation and benefits                                                                                                                         |   | 1,464              |    | 3,978                 |   |
| Interest  payable                                                                                                                                          |   | 2,740              |    | 1,563                 |   |
| Taxes  payable                                                                                                                                             |   | 4,204              |    | 4,049                 |   |
| Deferred  revenue                                                                                                                                          |   | 11,875             |    | 11,347                |   |
| Other                                                                                                                                                      |   | 4,524              |    | 4,110                 |   |
| Total  current liabilities                                                                                                                                 |   | 51,859             |    | 59,151                |   |
| LONG-TERM  DEBT AND CAPITAL LEASE OBLIGATIONS, EXCLUDING CURRENT MATURITIES                                                                                |   | 406,015            |    | 396,664               |   |
| OTHER  LONG-TERM LIABILITIES                                                                                                                               |   | 9,406              |    | 9,369                 |   |
| Total  long-term liabilities                                                                                                                               |   | 415,421            |    | 406,033               |   |
| Total  liabilities                                                                                                                                         |   | 467,280            |    | 465,184               |   |
| COMMITMENTS  AND CONTINGENCIES                                                                                                                             |   |               |    |                  |   |
| STOCKHOLDERS’  EQUITY:                                                                                                                                |   |               |    |                  |   |
| Preferred  stock, par value $0.001 per share; 10,000 shares authorized; 0 shares issued  and  outstanding at March 31, 2004 and  December 31, 2003    |   | —             |    | —                |   |
| Common  stock, par value $0.0005 per share; 240,000 shares authorized; 92,579  shares issued and outstanding at March 31,  2004 and December 31, 2003 |   | 46                 |    | 46                    |   |
| Additional  paid-in-capital                                                                                                                                |   | 299,955            |    | 299,955               |   |
| Accumulated  deficit                                                                                                                                       |   | (290,339           | )       | (281,781              | )      |
| Total  stockholders’ equity                                                                                                                           |   | 9,662              |    | 18,220                |   |
| Total  liabilities and stockholders’ equity                                                                                                           |   | $                  | 476,942 |                  | $      | 483,404 |   |

 

*Theaccompanying notes are an integral part of these consolidated financialstatements.*

 

4

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**UbiquiTelInc. and Subsidiaries**

# **Consolidated Statements of Operations**

**(Unaudited)**

**(InThousands, Except Per Share Data)**

 
|                                                                                        |   | **Three Months Ended  March 31, 2004** |   | **Three Months Ended  March 31, 2003** |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
| REVENUES:                                                                                   |   |                                   |   |                                   |   |
| Service  revenue                                                                            |   | $                                      | 77,438 |                                   | $      | 56,244 |   |
| Equipment  revenue                                                                          |   | 3,872                                  |   | 2,239                                  |   |
| Total  revenues                                                                             |   | 81,310                                 |   | 58,483                                 |   |
| COSTS  AND EXPENSES:                                                                        |   |                                   |   |                                   |   |
| Cost  of service and operations (exclusive of depreciation as shown  separately below) |   | 34,248                                 |   | 29,401                                 |   |
| Cost  of products sold                                                                      |   | 9,215                                  |   | 9,301                                  |   |
| Selling  and marketing                                                                      |   | 16,977                                 |   | 12,081                                 |   |
| General  and administrative expenses excluding non-cash compensation charges                |   | 9,240                                  |   | 7,474                                  |   |
| Non-cash  compensation for general and administrative matters                               |   | —                                 |   | 94                                     |   |
| Depreciation,  amortization and accretion                                                   |   | 12,930                                 |   | 13,048                                 |   |
| Total  costs and expenses                                                                   |   | 82,610                                 |   | 71,399                                 |   |
| OPERATING  LOSS                                                                             |   | (1,300                                 | )      | (12,916                                | )      |
| INTEREST  INCOME                                                                            |   | 135                                    |   | 193                                    |   |
| INTEREST  EXPENSE                                                                           |   | (8,430                                 | )      | (10,127                                | )      |
| GAIN  ON DEBT RETIREMENTS                                                                   |   | 1,109                                  |   | 39,018                                 |   |
| INCOME  (LOSS) BEFORE INCOME TAXES                                                          |   | (8,486                                 | )      | 16,168                                 |   |
| INCOME  TAX BENEFIT (EXPENSE)                                                               |   | (72                                    | )      | 33                                     |   |
| NET  INCOME (LOSS)                                                                          |   | $                                      | (8,558 | )                                      | $      | 16,201 |   |
|                                                                                        |   |                                   |   |                                   |   |
| NET INCOME (LOSS) PER SHARE:                                                                |   |                                   |   |                                   |   |
| BASIC                                                                                       |   | $                                      | (0.09  | )                                      | $      | 0.20 |   |
| DILUTED                                                                                     |   | $                                      | (0.09  | )                                      | $      | 0.18 |   |
|                                                                                        |   |                                   |   |                                   |   |
| WEIGHTED  AVERAGE SHARES OUTSTANDING:                                                       |   |                                   |   |                                   |   |
| BASIC                                                                                       |   | 92,579                                 |   | 81,541                                 |   |
| DILUTED                                                                                     |   | 92,579                                 |   | 90,891                                 |   |

 

*Theaccompanying notes are an integral part of these consolidated financialstatements*.

 

5

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# **UbiquiTel Inc. andSubsidiaries**

# **Consolidated Statements of Cash Flows**

**(Unaudited)**

**(InThousands)**

 
|                                                                                      |   | **Three Months Ended  March 31, 2004** |   | **Three Months Ended  March 31, 2003** |   |
|-------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
| CASH  FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                                   |   |                                   |   |
| Net  income (loss)                                                                        |   | $                                      | (8,558 | )                                      | $      | 16,201 |   |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities: |   |                                   |   |                                   |   |
| Amortization  of deferred financing costs                                                 |   | 410                                    |   | 488                                    |   |
| Amortization  of debt discount                                                            |   | 303                                    |   | 366                                    |   |
| Amortization  of intangible assets                                                        |   | 1,076                                  |   | 3,830                                  |   |
| Depreciation  and accretion                                                               |   | 11,854                                 |   | 9,218                                  |   |
| Interest  accrued on discount notes                                                       |   | 3,149                                  |   | 5,885                                  |   |
| Non-cash  compensation from stock options granted to employees                            |   | —                                 |   | 94                                     |   |
| Deferred  income taxes                                                                    |   | 72                                     |   | —                                 |   |
| Gain  on sale of equipment                                                                |   | (58                                    | )      | —                                 |   |
| Gain  on debt retirements                                                                 |   | (1,109                                 | )      | (39,018                                | )      |
| Interest  earned on restricted cash balances                                              |   | (4                                     | )      | (6                                     | )      |
| Changes  in operating assets and liabilities exclusive of capital expenditures:           |   |                                   |   |                                   |   |
| Accounts  receivable                                                                      |   | (1,156                                 | )      | 5,884                                  |   |
| Inventory                                                                                 |   | (224                                   | )      | 119                                    |   |
| Prepaid  expenses and other assets                                                        |   | (1,807                                 | )      | 348                                    |   |
| Income  tax receivable                                                                    |   | —                                 |   | (33                                    | )      |
| Accounts  payable and accrued expenses                                                    |   | 5,232                                  |   | 696                                    |   |
| Net  cash provided by operating activities                                                |   | 9,180                                  |   | 4,072                                  |   |
| CASH  FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                                   |   |                                   |   |
| Capital  expenditures                                                                     |   | (5,941                                 | )      | (4,645                                 | )      |
| Net  cash used in investing activities                                                    |   | (5,941                                 | )      | (4,645                                 | )      |
| CASH  FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                                   |   |                                   |   |
| Repayments  under senior secured credit facility                                          |   | (230,000                               | )      | (15,000                                | )      |
| Proceeds  from issuance of 9.875% senior notes                                            |   | 265,302                                |   | —                                 |   |
| Proceeds  from issuance of 14% Series B senior discount notes                             |   | —                                 |   | 9,636                                  |   |
| Cash  payments for amount of 14% senior subordinated discount notes exchanged             |   | —                                 |   | (9,636                                 | )      |
| Repayment  of 14% Series B senior discount notes                                          |   | (12,478                                | )      | —                                 |   |
| Purchase  of 14% senior discount notes                                                    |   | (15,872                                | )      | —                                 |   |
| Financing  costs                                                                          |   | (8,296                                 | )      | (3,500                                 | )      |
| Change  in book cash overdraft                                                            |   | (5,671                                 | )      | —                                 |   |
| Proceeds  from issuance of common stock                                                   |   | —                                 |   | 32                                     |   |
| Repayment  of capital lease obligations and other long-term liabilities                   |   | (110                                   | )      | (198                                   | )      |
| Net  cash used in financing activities                                                    |   | (7,125                                 | )      | (18,666                                | )      |
| NET  DECREASE IN CASH AND CASH EQUIVALENTS                                                |   | (3,886                                 | )      | (19,239                                | )      |
| CASH  AND CASH EQUIVALENTS, beginning of period                                           |   | 57,225                                 |   | 73,481                                 |   |
| CASH  AND CASH EQUIVALENTS, end of period                                                 |   | $                                      | 53,339 |                                   | $      | 54,242 |   |
| SUPPLEMENTAL  DISCLOSURE OF CASH FLOW INFORMATION:                                        |   |                                   |   |                                   |   |
| Cash  paid for interest                                                                   |   | $                                      | 3,489  |                                   | $      | 3,388 |   |
| Cash  paid for taxes                                                                      |   | 8                                      |   | 228                                    |   |
| SUPPLEMENTAL  DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:                                |   |                                   |   |                                   |   |
| Non-cash  portion of equipment acquisitions                                               |   | $                                      | 480    |                                   | $      | — |   |

 

*The accompanying notes are anintegral part of these consolidated financial statements.*

 

6

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**UbiquiTelInc. and Subsidiaries**

# **Notes to Consolidated Financial Statements**

**(Unaudited)**

 

**1.             SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES**

 

**Basis ofPresentation of Unaudited Interim Financial Information**

 

The consolidated financial information as of March 31, 2004 and for thethree months ended March 31, 2004 and 2003 is unaudited, but has been preparedin accordance with generally accepted accounting principles for interimfinancial information and Article 10 of Regulation S-X.  Accordingly, they do not include all theinformation and footnotes required by generally accepted accountingprinciples.  In the opinion ofmanagement, the interim data includes all adjustments, consisting only ofnormal recurring adjustments that are considered necessary for a fairpresentation of the Company’s interim results. Operating results for the three months ended March 31, 2004 are notnecessarily indicative of results that may be expected for the entireyear.  This financial information shouldbe read in conjunction with the audited consolidated financial statements andnotes thereto for the year ended December 31, 2003 of UbiquiTel which areincluded in its and Operating Company’s Joint Annual Report on Form 10-K forthe year ended December 31, 2003.

 

**Principlesof Consolidation and Use of Estimates**

 

The accompanying financial statements include the accounts of UbiquiTelInc. and its subsidiaries (see Note 2). All significant intercompany balances and transactions have beeneliminated.

 

The preparation of financial statements in conformitywith generally accepted accounting principles requires management to makeestimates and assumptions.  Theseestimates and assumptions affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of thefinancial statements.  These assumptionsalso affect the reported amounts of revenues and expenses during the reportingperiods.  Actual results could differfrom those estimates and assumptions.

 

# **Stock-BasedCompensation**

# ** **

At March 31, 2004,UbiquiTel had two stock-based employee compensation plans, an employee stockpurchase plan and an equity incentive plan. The employee stock purchase plan was suspended effective with theoffering period beginning January 1, 2003 and resumed effective with the offeringperiod beginning January 1, 2004. The Company accounts for these plans inaccordance with Accounting Principles Board Opinion No. 25, “Accounting forStock Issued to Employees,” and related interpretations. The following tableillustrates the effect on net income and earnings per share if the Company hadapplied the fair value recognition provisions of Statement of FinancialAccounting Standards (“SFAS”) No. 123, “Accounting for Stock-BasedCompensation.”

 

7

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|                                                                                                                   |   | **Three Months Ended March 31,**             |   |
|------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                                   |   | **2004**                                     |   | **2003** |   |
|                                                                                                                   |   | **(In Thousands, Except Per Share Amounts)** |   |
| Net  income (loss), as reported                                                                                        |   | $                                            | (8,558 | ) | $ | 16,201 |   |
| Add:  stock-based employee compensation included in reported net income (loss), net  of related tax                    |   | —                                       |   | 94 |   |
| Deduct:  total stock-based employee compensation expense determined under fair  value-based method, net of related tax |   | (364                                         | )      | (608 | ) |
| Pro  forma net income (loss)                                                                                           |   | $                                            | (8,922 | ) | $ | 15,687 |   |
|                                                                                                                   |   |                                         |   |   |   |
| Basic  net income (loss) per share:                                                                                    |   |                                         |   |   |   |
| As  reported                                                                                                           |   | $                                            | (0.09  | ) | $ | 0.20 |   |
| Pro  forma                                                                                                             |   | $                                            | (0.10  | ) | $ | 0.19 |   |
|                                                                                                                   |   |                                         |   |   |   |
| Diluted  net income (loss) per share:                                                                                  |   |                                         |   |   |   |
| As  reported                                                                                                           |   | $                                            | (0.09  | ) | $ | 0.18 |   |
| Pro  forma                                                                                                             |   | $                                            | (0.10  | ) | $ | 0.17 |   |

 

**OtherIntangible Assets**

 

**Other intangible assets were approximately $67.8million and $68.9 million, net of accumulated amortization expense ofapproximately $11.3 million and $10.3 million as of March 31, 2004 and December31, 2003, respectively.  Otherintangible assets represent the estimated value of VIA Wireless’ Sprint PCSmanagement agreement.  Amortizationexpense for other intangible assets was approximately $1.1 million for thethree months ended March 31, 2004 and 2003.**

** **

**Estimated future amortization expense of intangibleassets for the next five years at March 31, 2004 is as follows:**

 
| **Years Ending December 31,** |   | **(In  Thousands)** |   |
|-------------------------------|--------|---------------------|--------|
|                          |   |                |   |
| 2004                          |   | $                   | 3,228  |   |
| 2005                          |   | 4,304               |   |
| 2006                          |   | 4,304               |   |
| 2007                          |   | 4,304               |   |
| 2008                          |   | 4,304               |   |
|                               |        |                     |        |  |

 

**Reclassifications**

 

Certain prior year amounts have beenreclassified to conform with current year presentation.

 

**2.ORGANIZATION AND NATURE OF BUSINESS**

 

**Organizationand Nature of Business**

 

UbiquiTel Inc. and Subsidiaries (“UbiquiTel” or the “Company”) wasformed for the purpose of becoming the exclusive provider of Sprint PersonalCommunications Services (“PCS”) in certain defined midsize markets in thewestern and midwestern United States.

 

In October 1998, UbiquiTel L.L.C. (a Washington state limitedliability company), whose sole member was The Walter Group, entered into amanagement agreement with Sprint PCS for the exclusive rights to marketSprint’s 100% digital, 100% PCS products and services to the residents in theReno/Tahoe, Nevada market. UbiquiTel

 

8

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L.L.C. had no financialtransactions from its inception (August 24, 1998) to September 29,1999. On September 29, 1999, UbiquiTel Inc. (formerly, UbiquiTelHoldings, Inc.) was incorporated in Delaware. In November 1999,UbiquiTel L.L.C. assigned all of its material contracts including the rights tothe Sprint PCS agreements to UbiquiTel Inc. On November 9, 1999,UbiquiTel Operating Company (a Delaware corporation, formerly a Delawarelimited liability company) (“Operating Company”), was formed to serve as theoperating company for UbiquiTel Inc. Also, on March 17, 2000, UbiquiTelLeasing Company (a Delaware corporation) was formed to serve as the leasingcompany for UbiquiTel Inc. UbiquiTel Inc. assigned the Sprint PCSagreements to Operating Company following its formation. On December 28,1999, UbiquiTel amended its management agreement with Sprint PCS to expand itsmarkets to include northern California, Spokane/Montana, southernIdaho/Utah/Nevada and southern Indiana/Kentucky, which together withReno/Tahoe, contain approximately 7.7 million residents. On February 21,2001, in connection with UbiquiTel’s acquisition of VIA Wireless LLC, UbiquiTelamended its management agreement with Sprint PCS to expand its marketseffective at the closing in August 2001 to include 3.4 millionadditional residents from the six VIA Wireless BTAs including Bakersfield,Fresno, Merced, Modesto, Stockton and Visalia, California (also collectivelyreferred to as the central valley of California market). On August 13,2001, upon the closing of the merger agreement, VIA Wireless became a whollyowned subsidiary of Operating Company and was later merged into OperatingCompany in June 2003. On July 31, 2003, Operating Company amended itsmanagement agreement with Sprint PCS to eliminate the obligation to build outthe state of Montana, thereby reducing its licensed resident population in itsmarkets to approximately 10.0 million.

 

The consolidatedfinancial statements contain the financial information of UbiquiTel Inc.and its subsidiaries, UbiquiTel Operating Company and UbiquiTel LeasingCompany. The Company operates under one segment.

 

**3. BASICAND DILUTED NET INCOME (LOSS) PER SHARE**

 

The Company computes net income (loss) per common share in accordancewith SFAS No. 128, “Earnings per Share” (“SFAS No. 128”).  Under the provisions of SFAS No. 128,basic net income (loss) per common share is computed by dividing the net income(loss) applicable to common stockholders for the period by the weighted averagenumber of shares of common stock outstanding.  In accordance with SFAS No. 128, incremental potential common sharesfrom stock options and warrants are excluded in the calculation of diluted lossper share when the effect would be antidilutive.  Accordingly, the number of weighted average shares outstanding aswell as the amount of net loss per share are the same for basic and diluted pershare calculations for the three months ended March 31, 2004.

 

The calculationsfor basic and diluted net income (loss) per share were as follows:

 
|                                                 |   | **Three Months Ended March 31,**             |   |
|------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                 |   | **2004**                                     |   | **2003** |   |
|                                                 |   | **(In Thousands, Except Per Share Amounts)** |   |
| Basic                                                |   |                                         |   |   |   |
| Net  income (loss)                                   |   | $                                            | (8,558 | ) | $ | 16,201 |   |
| Average  common shares outstanding                   |   | 92,579                                       |   | 81,541 |   |
| Basic                                                |   | $                                            | (0.09  | ) | $ | 0.20 |   |
|                                                 |   |                                         |   |   |   |
| Diluted                                              |   |                                         |   |   |   |
| Net  income (loss)                                   |   | $                                            | (8,558 | ) | $ | 16,201 |   |
| Average  common shares outstanding                   |   | 92,579                                       |   | 81,541 |   |
| Effect  of:                                          |   |                                         |   |   |   |
| Dilutive  options                                    |   | —                                       |   | — |   |
| Dilutive  securities                                 |   | —                                       |   | 9,350 |   |
| Average  common shares outstanding assuming dilution |   | 92,579                                       |   | 90,891 |   |
| Diluted                                              |   | $                                            | (0.09  | ) | $ | 0.18 |   |

 

9

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The following table summarizes the securitiesoutstanding, which are excluded from the income (loss) per share calculation, as amounts would havean antidilutive effect.

 
|          |   | **Three Months Ended March 31,** |   |
|---------------|--------|----------------------------------|--------|
|          |   | **2004**                         |   | **2003** |   |
| Stock options |   | 6,506,200                        |   | 5,335,800 |   |
| Warrants      |   | 3,665,183                        |   | 13,301,183 |   |
| Total         |   | 10,171,383                       |   | 18,636,983 |   |

 

**4.PROPERTY AND EQUIPMENT**

 

Property and equipmentconsisted of the following: 

 
|                             |   | **March 31, 2004** |    | **December 31, 2003** |   |
|----------------------------------|--------|--------------------|---------|-----------------------|--------|
|                             |   | **(In Thousands)** |    |
| Network  equipment               |   | $                  | 337,020 |                  | $      | 330,738 |   |
| Vehicles                         |   | 1,381              |    | 1,381                 |   |
| Furniture  and office equipment  |   | 4,760              |    | 4,727                 |   |
| Computer  equipment and software |   | 7,803              |    | 7,687                 |   |
| Leasehold  improvements          |   | 4,196              |    | 4,196                 |   |
| Land                             |   | 130                |    | 130                   |   |
| Buildings                        |   | 4,670              |    | 4,670                 |   |
|                             |   | 359,960            |    | 353,529               |   |
| Accumulated  depreciation        |   | (105,240           | )       | (93,973               | )      |
| Property  and equipment, net     |   | $                  | 254,720 |                  | $      | 259,556 |   |

 

Depreciation expense wasapproximately $11.8 million and $9.2 million for the three months ended March31, 2004 and 2003, respectively.

 

In the fourth quarter of 2003, the Companyentered into an agreement to systematically replace many of the Company’sexisting minicell base stations with an equivalent quantity of currentgeneration multi-carrier capable base stations, or modcells. As of the date ofthe agreement, the estimated useful life of each existing minicell base stationwas reduced to reflect the remaining number of months such assets will be inuse prior to conversion, thereby accelerating depreciation expense. The impactof this change increased depreciation expense by approximately$2.3 million for the three months ended March 31, 2004, and is estimatedto increase depreciation expense by approximately $5.0 million and$0.7 million for the years ending December 31, 2004 and 2005, respectively.Under this agreement, all existing equipment will be deinstalled and the newequipment will be installed in the same locations and will includesignificantly upgraded technology. The Company is committed to convert 285 basestations during the years 2004 through 2006 at prices fixed in the agreement.The minimum annual cash payments required under this agreement areapproximately $3.0 million, $4.6 million and $4.9 million forthe years ending December 31, 2004, 2005 and 2006, respectively.

 

**5.LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS AND DEBT RETIREMENTS**

 

Long-term debt andcapital lease obligations outstanding as of March 31, 2004 and December31, 2003 were as follows:

 

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|                                                                                       |   | **March 31, 2004** |    | **December 31, 2003** |   |
|--------------------------------------------------------------------------------------------|--------|--------------------|---------|-----------------------|--------|
|                                                                                       |   | **(In Thousands)** |    |
| 9.875%  senior notes                                                                       |   | $                  | 270,000 |                  | $      | — |   |
| Less:  discount                                                                            |   | (4,649             | )       | —                |   |
| 14%  senior discount notes                                                                 |   | 31,473             |    | 48,180                |   |
| Less:  discount                                                                            |   | (4,125             | )       | (7,691                | )      |
| 14%  senior subordinated discount notes                                                    |   | 100,380            |    | 100,380               |   |
| Less:  discount                                                                            |   | (13,182            | )       | (16,050               | )      |
| Less:  additional discount for detachable warrants                                         |   | (3,230             | )       | (3,364                | )      |
| 14%  Series B senior discount notes                                                        |   | —             |    | 14,515                |   |
| Less:  discount                                                                            |   | —             |    | (2,318                | )      |
| Less:  additional discount for detachable warrants                                         |   | —             |    | (3,730                | )      |
| Senior  secured credit facility                                                            |   | —             |    | 230,000               |   |
| Capital  lease obligations                                                                 |   | 22                 |    | 81                    |   |
| Building  mortgage and other long-term liabilities                                         |   | 3,402              |    | 3,453                 |   |
| Subtotal                                                                                   |   | 380,091            |    | 363,456               |   |
| Future  cash flows associated with 14% senior   discount notes for interest and other |   | 26,156             |    | 41,417                |   |
| Total  long-term debt and capital lease obligations                                        |   | 406,247            |    | 404,873               |   |
| Less:  current maturities                                                                  |   | 232                |    | 8,209                 |   |
| Total  long-term debt and capital lease obligations, excluding current maturities          |   | $                  | 406,015 |                  | $      | 396,664 |   |

 

**FirstQuarter 2003 Refinancing**

 

In February 2003,Operating Company consummated certain transactions which reduced its long-termdebt outstanding. Operating Company consummated a private placement exchange of$48.2 million aggregate principal amount of its 14% senior discount notesdue May 15, 2010 (“14% Senior Notes”) and $9.6 million in cash for$192.7 million aggregate principal amount of its outstanding 14% seniorsubordinated discount notes due April 15, 2010 (“14% Subordinated Notes”). The14% Senior Notes were subsequently registered with the Securities and ExchangeCommission.

 

Additionally, in February2003, Operating Company consummated a related financing, in a private placementoffering, of $12.8 million aggregate principal amount of 14% Series Bsenior discount notes due 2008 (“14% Series B Senior Notes”) in whichOperating Company received cash proceeds of $9.6 million to fund the cashportion of the exchange. Under the financing, the Company issued detachablewarrants to purchase up to approximately 9.6 million shares of UbiquiTel’scommon stock at an exercise price of $0.01 per share.

 

As a condition to thetransactions consummated in February 2003, Operating Company’s senior securedlenders required Operating Company to prepay $15.0 million of itsoutstanding term loans under its former senior secured credit facility, therebyreducing the outstanding term loans under the senior secured credit facility to$230.0 million. In addition, the $55.0 million unused revolving lineof credit was permanently reduced by $5.0 million to $50.0 million,which was further reduced to $47.7 million during the third quarter of2003.

 

The Company followed theprovisions of SFAS No. 15, “Accounting by Debtors and Creditors forTroubled Debt Restructurings,” and Emerging Issues Task Force IssueNo. 02-04, “Determining Whether a Debtor’s Modification or Exchange ofDebt Instruments Is Within the Scope of FASB Statement No. 15,” inrecording the private placement exchange transaction. These provisions requirethat the carrying value of the 14% Senior Notes be recorded at the total futurecash payments (principal and interest) specified by the 14% Senior Notes;therefore, the 14% Senior Notes were classified on the Company’s balance sheetas long-term liabilities and were valued at $81.9 million as of the transactiondate. As a result, no interest expense related to the 14% Senior Notes will berecognized in future periods. As a result of these transactions, the Companyreduced overall debt by approximately

 

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$146.7 millionaggregate principal amount ($113.8 million aggregate accreted value). Inthe first quarter of 2003, the Company recognized a gain of approximately$39.0 million as a result of the private placement exchange.

 

**FirstQuarter 2004 Refinancing**

 

On February 23, 2004,Operating Company issued $270.0 million in aggregate principal amount of 9.875%senior notes due March 1, 2011 (“9.875% Senior Notes”), in a transaction exemptfrom the registration requirements of the Securities Act. The 9.875% SeniorNotes were issued at a discount and generated approximately $265.3 millionin proceeds. The proceeds were used to repay and terminate Operating Company’ssenior secured credit facility, including the repayment of $230.0 millionin outstanding borrowings plus accrued interest and termination of itsunused  $47.7 million revolvingline of credit, to redeem all of Operating Company’s outstanding 14%Series B Senior Notes ($14.5 million outstanding principal amount)for approximately $12.5 million, to purchase $16.7 million principalamount of Operating Company’s outstanding 14% Senior Notes for approximately$15.9 million and to pay financing costs for the issuance of the 9.875%Senior Notes of approximately $7.8 million. The repayments of the senior securedcredit facility and the 14% Series B Senior Notes and the purchase of the 14%Senior Notes resulted in a net gain on debt retirements of approximately $1.1million, consisting of a loss on the purchase of the 14% Senior Notes ofapproximately $1.6 million, the write-off of deferred financing fees related tothe senior secured credit facility and the 14% Series B Senior Notes ofapproximately $7.7 million, the write-off of unamortized debt discount fordetachable warrants associated with the 14% Series B Senior Notes ofapproximately $3.6 million and costs of approximately $0.1 million related tothe termination of the senior secured credit facility, net of a gain ofapproximately $14.1 million recognized on the reduction in carrying value ofthe future cash payments associated with the purchased 14% Senior Notes.

 

The 9.875% Senior Notesrank pari passu in right of payment to the 14% Senior Notes and senior to the14% Subordinated Notes. Interest on the 9.875% Senior Notes will be payablesemiannually beginning on September 1, 2004. The 9.875% Senior Notes areredeemable in whole or in part on or after March 1, 2007. Prior to March 1,2007, up to 35% of the 9.875% Senior Notes are redeemable upon the occurrenceof certain events. The indenture governing the 9.875% Senior Notes containscustomary covenants, including covenants limiting indebtedness, dividends anddistributions on, and redemptions and repurchases of, capital stock and othersimilar payments, the acquisition and disposition of assets, and transactionswith affiliates or related persons. The indenture governing the 9.875% SeniorNotes provides for customary events of default, including cross defaults,judgment defaults and events of bankruptcy. Operating Company is permitted to issue additional 9.875% Senior Notesunder the indenture from time to time.

 

UbiquiTel has fully andunconditionally guaranteed Operating Company’s obligations under the 14%Subordinated Notes, the 14% Senior Notes and the 9.875% Senior Notes. UbiquiTelhas no independent assets or operations separate from its investment inOperating Company.

 

The Company presently isin compliance with all covenants associated with the 14% Subordinated Notes,the 14% Senior Notes and the 9.875% Senior Notes.

 

The Company may from timeto time purchase outstanding 14% Subordinated Notes, 14% Senior Notes and9.875% Senior Notes in the open market, in privately negotiated transactions orotherwise in accordance with its debt instruments and applicable law.

 

**6.**** WHOLLY-OWNEDOPERATING SUBSIDIARY**

 

UbiquiTel has fully and unconditionally guaranteed Operating Company’sobligations under the 14% Subordinated Notes, the 14% Senior Notes and the9.875% Senior Notes (see Note 5). UbiquiTel has no independent assets oroperations separate from its investment in Operating Company. UbiquiTel LeasingCompany

 

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is a minor subsidiary.

 

**Item 2****.Management’s Discussion and Analysis of Financial Condition and Results ofOperations**

 

**Forward-Looking Statements**

 

This Joint Quarterly Report on Form 10-Q includesforward-looking statements that involve known and unknown risks, uncertaintiesand other factors.  Our actual resultscould differ materially from the results anticipated in these forward-lookingstatements.   Investors are referred tothe documents filed by UbiquiTel and/or UbiquiTel Operating Company with theSecurities and Exchange Commission, specifically the most recent filings whichidentify important risk factors that could cause actual results to differ fromthose contained in the forward-looking statements, including, but not limitedto:

 

•                                          UbiquiTel’sdependence on its affiliation with Sprint;

 

•                                          thecompetitiveness of and changes in Sprint’s pricing plans, products andservices;

 

•                                          increasedcompetition in UbiquiTel’s markets;

 

•                                          ratesof penetration in the wireless communications industry;

 

•                                          thepotential to experience a high rate of customer turnover;

 

•                                          customerquality;

 

•                                          potentialdeclines in roaming revenue;

 

•                                          UbiquiTel’sreliance on the timeliness, accuracy and sufficiency of financial and otherdata and information received from Sprint;

 

•                                          theability of Sprint to provide back office, customer care and other services;

 

•                                          thepotential impact of wireless local number portability;

 

•                                          anticipatedfuture net losses;

 

•                                          UbiquiTel’sdebt level;

 

•                                          adequacyof bad debt and other reserves;

 

•                                          themarketability, liquidity and price volatility of UbiquiTel’s common stock;

 

•                                          UbiquiTel’sability to manage anticipated growth and rapid expansion;

 

•                                          changesin population;

 

•                                          changesor advances in technology; and

 

•                                          generaleconomic and business conditions.

 

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These and otherapplicable risks are described under the caption “Business3⁄4RiskFactors” and elsewhere in UbiquiTel’s and Operating Company’s Joint AnnualReport on Form 10-K for the fiscal year ended December 31, 2003 filed with theSecurities and Exchange Commission, and under the caption “Liquidity andCapital Resources—Factors That May Affect Operating Results and Liquidity” andelsewhere in this Item 2. We assume no obligation to publicly update or reviseany forward-looking statement made in this report, whether as a result of newinformation, future events, changes in assumptions or otherwise, after the dateof this report.  All written or oralforward-looking statements attributable to us are expressly qualified in theirentirety by these cautionary statements.

 

**Use ofCertain Terms**

 

In the secondquarter of 2003, we initiated a reseller program with Virgin Mobile USA in ourmarkets, under which Virgin Mobile began reselling wireless services to itscustomers on a pre-paid basis using our network in our markets. We also marketVirgin Mobile pre-paid services through our retail stores. In the third quarterof 2003, Sprint announced that it had entered into a reseller agreement withQwest Communications. This agreement allows Qwest to provide wireless voice anddata services to new and existing customers in Qwest’s service areas usingSprint PCS’ network and the networks of PCS affiliates of Sprint who overlapwith Qwest’s service areas, including portions of our markets in Washington,Idaho and Utah. We anticipate receiving incremental wholesale revenue fromQwest subscribers in those portions of Qwest’s service areas that overlap withour service areas who transition to our network beginning in the first half of2004 and from Qwest subscribers who travel into our markets. As ofMarch 31, 2004, we had approximately 35,200 reseller subscribers. In this“Item 2. Management’s Discussion and Analysis of Financial Condition andResults of Operations,” unless the context indicates otherwise, all referencesto “subscribers” or “customers” and other operating metrics mean subscribers orcustomers excluding resellers.

 

### **Overview**

### ** **

UbiquiTel Inc. and Subsidiaries (“UbiquiTel” or the “Company”) wasformed for the purpose of becoming the exclusive provider of Sprint PersonalCommunications Services (“PCS”) in certain defined midsize markets in thewestern and midwestern United States.

 

In October 1998, UbiquiTel L.L.C., whose sole member was TheWalter Group, entered into a management agreement with Sprint PCS for theexclusive rights to market Sprint’s 100% digital, 100% PCS products andservices to the residents in the Reno/Tahoe, Nevada market. UbiquiTel L.L.C.had no financial transactions from its inception (August 24, 1998) toSeptember 29, 1999. On September 29, 1999, UbiquiTel Inc.(formerly, UbiquiTel Holdings, Inc.) was incorporated in Delaware. InNovember 1999, UbiquiTel L.L.C. assigned all of its material contractsincluding the rights to the Sprint PCS agreements to UbiquiTel Inc. OnNovember 9, 1999, UbiquiTel Operating Company (“Operating Company”) wasformed to serve as the operating company for UbiquiTel Inc. Also, onMarch 17, 2000, UbiquiTel Leasing Company was formed to serve as theleasing company for UbiquiTel Inc. UbiquiTel Inc. assigned the SprintPCS agreements to Operating Company following its formation. On December 28,1999, we amended our management agreement with Sprint PCS to expand our marketsto include northern California, Spokane/Montana, southern Idaho/Utah/Nevada andsouthern Indiana/Kentucky, which together with Reno/Tahoe, containapproximately 7.7 million residents. On February 21, 2001, inconnection with our acquisition of VIA Wireless LLC, we amended our managementagreement with Sprint PCS to expand our markets effective at the closing inAugust 2001 to include 3.4 million additional residents from the sixVIA Wireless BTAs including Bakersfield, Fresno, Merced, Modesto, Stockton andVisalia, California (also collectively referred to as the central valley ofCalifornia market). On August 13, 2001, upon the closing of the mergeragreement, VIA Wireless became a wholly owned subsidiary of Operating Companyand was later merged into Operating Company in June 2003. On July 31,2003, we amended our management agreement with Sprint PCS to eliminate theobligation to build out the state of Montana, thereby reducing our licensedresident population in our markets to approximately 10.0 million.

 

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As of March 31,2004, we had approximately 349,100 subscribers excluding resellers andapproximately 35,200 reseller subscribers, for a total subscriber base ofapproximately 384,300. As of March 31, 2004, our network covered approximately7.9 million residents which represented approximately 79% of the licensedpopulation in our markets.

 

From our inception onSeptember 29, 1999 through March 31, 2004, we have incurred losses ofapproximately $290.3 million. We expect to continue to incur net lossesthrough at least 2005. We generated positive cash flow from operatingactivities of approximately $14.5 million for the year ended December 31,2003. For the three months ended March 31, 2004, we generated approximately$9.2 million of positive cash flow from operating activities. As of March31, 2004, we had approximately $56.9 million of cash, cash equivalents andrestricted cash, and working capital of approximately $47.4 million. Webelieve our cash, cash equivalents and net cash provided by operatingactivities will be sufficient to fund capital expenditures and service our debtrequirements through March 31, 2005 and into the foreseeable future.

 

**SprintAgreements**

 

As a PCS affiliate of Sprint, we do not own thelicenses to operate our network and instead pay Sprint PCS for the use of itslicenses. Under our management agreement with Sprint PCS and for the periodfrom our inception through October 31, 2003, Sprint PCS was entitled toreceive 8.0% of collected revenue from Sprint PCS subscribers based in ourmarkets and fees from wireless service providers other than Sprint PCS whentheir subscribers roam into our network. Effective November 1, 2003 and inaccordance with the terms of the addendum to the management agreement describedbelow, Sprint is entitled to receive 8.0% of billed revenue less current periodbad debts from Sprint PCS subscribers based in our markets and fees fromwireless service providers other than Sprint PCS when their subscribers roaminto our network. We are entitled to 100% of revenues collected from the saleof handsets and accessories from our stores and on roaming revenues receivedwhen Sprint PCS customers from a different territory make a wireless call onour PCS network and outbound non-Sprint PCS roaming billed to subscribers basedin our markets. We are responsible for building, owning and managing theportion of the PCS network located in our markets under the Sprint brand name.Our results of operations are dependent on Sprint PCS’ network and, to a lesserextent, on the networks of other PCS affiliates of Sprint.

 

As a PCS affiliate ofSprint, we purchase a full suite of support services from Sprint PCS. We haveaccess to these services during the term of our management agreement unlessSprint PCS provides us at least nine months’ advance notice of its intention toterminate any particular significant service. If Sprint PCS terminates service,our operations may be interrupted or restricted.

 

In November 2003, weentered into an addendum with Sprint PCS that modified several provisions ofthe management and services agreements that govern our relationship with SprintPCS. A summary of the key provisions in the addendum are noted below.

 

Sprint PCS consolidatedseveral support services relating to billing, customer care, collections,network operations control center monitoring, national platforminterconnectivity, voice mail, directory assistance, operator services androaming clearinghouse services into one back office service referred to asSprint CCPU service. We have agreed to continue to purchase the Sprint CCPUservice from Sprint PCS for the period November 2003 throughDecember 2006 and pay a monthly rate of $7.70 per subscriber. We expectthis reduction in Sprint CCPU services to provide an approximate 15% reductionfrom our 2003 cost structure. Beginning in 2007, the monthly rate for the nextthree years for Sprint CCPU service will be based on a to-be-determinedpercentage of Sprint PCS’ reported cash cost per user (“CCPU”). If we andSprint PCS cannot agree to a new rate for any future three year period beyond2006, we have the option to continue to purchase the Sprint CCPU service andhave an arbitrator determine the new rate or self provision or procure thoseservices elsewhere.

 

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Sprint PCS consolidatedseveral services relating to subscriber activations, credit verification andhandset logistics into one service referred to as Sprint CPGA service. We haveagreed to continue to purchase the Sprint CPGA service from Sprint PCS for theperiod November 2003 through December 2006 at a monthly rate of 5.2%of Sprint PCS’ most recently published cost per gross addition (“CPGA”).Beginning in 2007, the monthly percentage rate for the next three years forSprint CPGA service will be based on a to-be-determined percentage of SprintPCS’ reported CPGA. If we and Sprint PCS cannot agree to a new rate for anyfuture three year period beyond 2006, we have the option to continue topurchase the Sprint CPGA service and have an arbitrator determine the new rateor self provision or procure those services elsewhere.

 

We earn travel revenueswhen a Sprint PCS subscriber outside our markets travels onto our network.Similarly, we pay Sprint PCS when our subscribers use the Sprint PCS nationwidenetwork outside our markets. The Sprint PCS travel rate will continue to be$0.058 per minute of use plus the actual long distance charges incurred throughDecember 2006. Beginning in 2007, the Sprint PCS travel rate will changeannually to equal 90% of Sprint PCS’ retail yield from the prior year. SprintPCS’ retail yield is defined as Sprint PCS’ average revenue per user for voice servicesdivided by the average minutes of use per month per user. We also earn travelrevenues when a Sprint PCS subscriber outside our markets uses PCS Vision dataservices on our network and we pay Sprint PCS when our subscribers use suchservices on the Sprint PCS nationwide network outside our markets. This roamingactivity is settled on a per kilobit basis, and was set at $0.0020 per kilobitof use through 2006 under the addendum to our management agreement. Beginningin 2007, the rate will be calculated based upon a predetermined formulaspecified in the management agreement.

 

We earn reseller revenuewhen a reseller subscriber uses our PCS network in our markets. The resellerrate will be $0.058 per minute of use from November 2003 throughDecember 2006. Beginning in 2007, the Sprint PCS reseller rate will changeannually to equal 90% of Sprint PCS’ retail yield from the prior year. SprintPCS’ retail yield is defined as Sprint PCS’ average revenue per user for voiceservices divided by the average minutes of use per month per user.

 

We have the right to beoffered through December 2006 any future changes that Sprint PCS may offerto another Sprint PCS affiliate of similar size (defined as having at least3.0 million covered POPs). If exercised, we must accept all changes to themanagement and services agreements of the other affiliate.

 

Under certain conditions, we are provided protectiverights to decline to implement future program requirement changes that could beimposed by Sprint PCS and adversely affect our business. A program requirementchange can generally alter certain operating parameters of our business tocoincide with changes that are being made by Sprint PCS nationally and couldaffect our revenues, expenses and/or capital expenditures.

 

**CriticalAccounting Policies and Estimates**

 

We rely on the use ofestimates and make assumptions that impact our financial condition and results.These estimates and assumptions are based on historical results and trends aswell as our forecasts as to how these might change in the future. Some of themost critical accounting policies that might materially impact our resultsinclude:

 

***Revenue Recognition:***

 

We recognize revenueswhen services have been rendered or products have been delivered, the price tothe buyer is fixed and determinable, and collectibility is reasonably assured.We account for rebates, discounts and other sales incentives as a reduction torevenue. Service revenues include subscriber revenues, reseller revenues,Sprint PCS travel revenues and non-Sprint PCS roaming revenues. Equipmentrevenues include sales of handsets and accessories. Subscriber revenues consistof monthly recurring service charges for voice and third generation data (“3Gdata”) services and monthly non-recurring charges for local, long distance,travel and roaming airtime usage

 

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and 3G data usage inexcess of the pre-subscribed usage plan received from our subscribers,cancellation and late fee revenues and surcharges, less reductions for billingadjustments and credits. Our revenue recognition policies are consistent withthe guidance in Emerging Issues Task Force (“EITF”) Issue No. 00-21,“Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF00-21”), and Staff Accounting Bulletin No. 104, “Revenue Recognition.”

 

We recognize servicerevenue from our subscribers as they use the service. We pro-rate accessrevenue over the billing period and record airtime usage in excess of thepre-subscribed usage plan. Our subscribers pay an activation fee to us whenthey initiate service. Prior to the adoption of EITF 00-21 on July 1,2003, we deferred all activation fee revenue and direct customer activationcosts on a straight-line basis over the average life of our subscribers, whichwas estimated to be 30 months. Direct customer activation costs in excessof activation fee revenue were recognized immediately. For the three monthsended March 31, 2004 and 2003, we recognized approximately $1.3 million and$1.1 million, respectively, of activation fee revenue. We have deferredapproximately $5.6 million and $5.9 million of activation fee revenueand related costs as of March 31, 2004 and December 31, 2003, respectively, tofuture periods. We have determined that the sale of wireless services throughour direct sales channels with an accompanying handset constitutes a revenuearrangement with multiple deliverables. Upon adoption of EITF 00-21, wediscontinued deferring non-refundable, up-front activation fees and associated costsfor our direct sales channels. Additionally, direct sales channel activationfees are now included in equipment revenues rather than service revenues in theconsolidated statement of operations to the extent that the aggregateactivation fee and handset proceeds received from a subscriber do not exceedthe fair value of the handset sold. Approximately $0.6 million ofactivation fees were included in equipment revenues during the three monthsended March 31, 2004.

 

We record Sprint PCStravel revenue on a per minute rate for voice services and on a per kilobitrate for data services when Sprint PCS subscribers based outside our marketsuse our network. We record non-Sprint PCS roaming revenue when non-Sprint PCSsubscribers use our network. We record reseller revenue when resellersubscribers use our network.

 

Equipment revenueconsists of proceeds from sales of handsets and accessories which are recordedat the time of sale. Revenues from sales of handsets and accessories representa separate earnings process from service revenues because sales of handsets andaccessories do not require customers to subscribe to wireless services.Beginning July 1, 2003, equipment revenue also includes an allocation ofthe arrangement consideration from activation revenue received as part ofrevenue arrangements with multiple deliverables.

 

We participate in the Sprint national and regionaldistribution programs in which national retailers such as RadioShack, Best Buyand Costco sell Sprint PCS products and services. In order to facilitate thesale of Sprint PCS products and services, national retailers purchase wirelesshandsets from Sprint for resale and receive compensation from Sprint for SprintPCS products and services sold. For industry competitive reasons, Sprint subsidizesthe price of these handsets by selling the handsets at a price below cost.Under our Sprint PCS agreements, when a national retailer sells a handsetpurchased from Sprint to a subscriber in our markets, we are obligated toreimburse Sprint for the handset subsidy. We do not receive any revenues fromsales of handsets and accessories by national retailers. For a new subscriberactivation and a handset upgrade to an existing subscriber, we include thesehandset subsidy charges in cost of products sold in the consolidated statementsof operations.

 

***Revenue and Cost Data Provided by Sprint:***

 

We place substantial reliance on the timeliness,accuracy and sufficiency of certain revenue, accounts receivable and cost dataprovided by Sprint which we use in the preparation of our financial statementsand financial disclosures. The data provided by Sprint is the primary sourcefor our recognition of service revenue and a significant portion of our sellingand marketing and cost of service and operations expenses. At times, we havebeen

 

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invoiced by Sprint forcharges that we believed to be contractually incorrect. We review all chargesfrom Sprint and dispute charges if appropriate based upon our interpretation ofour agreements with Sprint PCS. When Sprint does not timely notify us ofcharges that we have incurred or when we are invoiced for charges that webelieve to be incorrect, we record estimates primarily based on our historicaltrends and our estimate of the amount which we believe we will remit to Sprintafter the disputed item or items have been settled.

 

***Valuation of Accounts Receivable and Inventories:***

 

**Reservefor Doubtful Accounts**—Estimates are used in determining ourallowance for bad debt and are based both on our historical collectionexperience, current trends and credit policy and on a percentage of ouraccounts receivables by aging category. In determining these percentages, welook at historical write-offs of our receivables and our history is limited. Wealso look at current trends in the credit quality of our customer base andchanges in the credit policies. Under the Sprint PCS service plans, customerswho do not meet certain credit criteria can nevertheless select any planoffered subject to an account spending limit, or ASL, to control creditexposure. Account spending limits range from $125 to $250 depending on thecredit quality of the customer. Sub-prime subscribers are required to make adeposit ranging from $125 to $250 that can be credited against future billings.If these estimates are insufficient for any reason, our operating income andavailable cash would be reduced.

 

**Reservefor Obsolete/Excess Inventory**—We record a reserve forobsolete or excess handset and accessories inventory for models and accessoriesthat are no longer manufactured, for defective models and accessories that havebeen returned by customers and for second generation handsets and accessories.If the estimate of obsolete inventory is understated, our operating incomewould be reduced.

 

***Long-Lived Assets and Goodwill:***

 

Statement ofFinancial Accounting Standards (“SFAS”) No. 144, “Accounting for theImpairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), requiresthat long-lived assets be reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability is assessed based on the future cash flows expectedto result from the use of the asset and its eventual disposition. If the sum ofthe undiscounted cash flows is less than the carrying value of the asset, animpairment loss is recognized. Any impairment loss, if indicated, is measuredas the amount by which the carrying amount of the asset exceeds the fair valueof the asset. SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFASNo. 142”), requires that goodwill and certain intangible assets resultingfrom business combinations be reviewed for recoverability, and that annualtests for impairment of goodwill and intangible assets that have indefiniteuseful lives be performed. SFAS No. 142 also requires interim tests whenan event has occurred that more likely than not has reduced the fair value ofsuch assets. We assess on an annual basis the fair values of the reporting unithousing the goodwill and intangibles and, when necessary, assess on an annualbasis for any impairment. Any write-offs would result in a charge to earningsand a reduction in equity in the period taken. As of October 31, 2003, wecompleted our annual impairment review and determined that no impairment chargewas required. Managementdoes not believe that any significant changes have occurred since this reviewand accordingly no write-offs have been made in the subsequent period.Management will continue to monitor any triggering events and performre-evaluations, as necessary.

 

Purchase price accounting requires extensive use ofaccounting estimates and judgments to allocate the purchase price to the fairmarket value of the assets and liabilities purchased. In our recording of thepurchase of VIA Wireless LLC, we engaged a nationally recognized valuationexpert to assist us in determining the fair value of these assets andliabilities. Intangible assets are amortized over their respective useful life.If there were a reduction in useful lives, our operating income would bereduced. VIA Wireless’ Sprint PCS management agreement is being amortized overits estimated useful life of 18 years from the date of acquisition onAugust 13, 2001.

 

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***Income Taxes:***

 

As part of the process ofpreparing our consolidated financial statements, we are required to estimateour taxes in each of the jurisdictions of operation. This process involvesmanagement estimating the actual current tax expense together with assessingtemporary differences resulting from differing treatment of items for tax andaccounting purposes in accordance with the provisions of SFAS No. 109,“Accounting for Income Taxes.” These differences result in deferred tax assetsand liabilities, which are included within the consolidated balance sheets. Wethen must assess the likelihood that the deferred tax assets will be recoveredfrom future taxable income and, to the extent recovery is not likely, we mustestablish a valuation allowance. Future taxable income depends on the abilityto generate income in excess of allowable deductions. To the extent weestablish a valuation allowance or increase this allowance in a period, anexpense is recorded within the tax provision in the consolidated statement ofoperations. Significant management judgment is required in determining ourprovision for income taxes, deferred tax assets and liabilities and anyvaluation allowance recorded against net deferred tax assets. In the event thatactual results differ from these estimates or we adjust these estimates infuture periods, we may need to establish a valuation allowance that couldmaterially impact our financial condition and results of operations.

 

**Resultsof Operations**

 

We provide certainfinancial measures that are calculated in accordance with accounting principlesgenerally accepted in the United States (GAAP) and adjustments to GAAP(non-GAAP) to assess our financial performance.  In addition, we use certain non-financial terms that are notmeasures of financial performance under GAAP. Terms such as customer additions and churn are terms used in thewireless communications industry.  Thenon-GAAP financial measures of average revenue per user, cash cost per user andcost per gross addition reflect standard measures of liquidity, profitabilityor performance.  The non-financial termsand the non-GAAP measures reflect wireless communications industry conventionsand are commonly used by the investment community for comparabilitypurposes.  The non-GAAP measuresincluded in this report are reconciled below in “—Liquidity and CapitalResources—Reconciliation of non-GAAP financial measures.”

 

### ***Analysis of the three months ended March 31, 2004 comparedto the three months ended March 31, 2003***

### ** **

***Customer Net Additions***

 

As of March 31, 2004, weprovided personal communications services to approximately 349,100 customerscompared to approximately 274,200 customers as of March 31, 2003.  During the three months ended March 31,2004, we added 21,400 net new subscribers compared to 17,200 net newsubscribers additions for the three months ended March 31, 2003.  The increase was primarily attributable tolower churn and an increase in the sub-prime credit class gross addition mix of3%. We have modified our service plan offerings to sub-prime credit classcustomers which is expected to slow net subscriber additions to be morecomparable to the levels experienced in 2003.

 

# ***Churn***

# ** **

Churn is themonthly rate of customer turnover expressed as the percentage of customers ofthe beginning customer base that both voluntarily and involuntarilydiscontinued service during the period. Churn is computed by dividing the number of customers that discontinuedservice during the month, net of 30 day returns, by the beginning customer basefor the period.  Churn for the threemonths ended March 31, 2004 was approximately 3.1% compared to approximately3.4% for the three months ended March 31, 2003.  The decrease in churn was primarily the result of the improvementin the credit quality of the overall customer base resulting in less servicebeing discontinued involuntarily. At March 31, 2004, the overall mix ofour customer base was 74% prime, 20% sub-prime with deposits and 6% sub-primewithout deposits. At March 31, 2003, the overall mix of our customer base was72%

 

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prime, 18% sub-prime with deposits and 10% sub-primewithout deposits. We expect involuntary churn to continue to decline at a slowerrate with continued improvement in the quality of our customer base. However,voluntary churn is expected to increase due to the availability of wirelessnumber portability in all of our markets starting in May 2004.

 

***Average Revenue Per User (ARPU)***

 

Average revenue per user(ARPU) summarizes the average monthly service revenue per customer, excludingwholesale revenue. ARPU is computed by dividing subscriber revenue by theaverage subscribers for the period. During the three months ended March 31,2004 and 2003, our ARPU was approximately $56 and $54, respectively. Theincrease in ARPU primarily resulted from increases in monthly recurring accesscharges and third generation services (3G) revenues. This increase was offsetprimarily by a reduction in overage charge revenues attributable to a highermix of customers on larger anytime minutes rate plans.

 

***Cash Cost Per User (CCPU)***

 

Cash cost per usersummarizes the average monthly cash costs to provide digital wireless mobilitycommunications services per customer. CCPU is computed by dividing the sum of cost of service and operationsand general and administrative expenses by the average subscribers for theperiod.  During the three months endedMarch 31, 2004 and 2003, our CCPU was approximately $43 and $46, respectively.The decrease in CCPU primarily resulted from lower network operating expense ona per subscriber basis. The decrease in network operating expense reflects thecontinuing benefits of scale resulting from the increase in the subscriber baseand the reduction in costs resulting from the change to a fixed monthly rate of$7.70 per subscriber for Sprint CCPU service. We expect CCPU to remain stableas future net additions enable us to spread fixed charges over a largersubscriber base, slightly offset by higher minutes of use by our customersusing the Sprint PCS network outside of our markets.

 

***Cost Per Gross Addition (CPGA)***

 

Cost per gross addition(CPGA) summarizes the average cost to acquire new customers during the period.CPGA is computed by adding the income statement components of selling andmarketing and the cost of products sold, and reducing that amount by theequipment revenue recorded. The net result of these components is then dividedby the gross customers acquired during the period. CPGA was approximately $425for the three months ended March 31, 2004 compared to approximately $432 forthe three months ended March 31, 2003. The decrease in CPGA reflects thecontinuing benefits of scale and the increase in gross additions. We believethat CPGA may increase in the near-term if we do not maintain the same level ofgross additions.

 

***Revenues***

 

•                  *SubscriberRevenue*.  Subscriber revenueduring the three months ended March 31, 2004 and 2003 was approximately $56.6million and $43.1 million, respectively. Subscriber revenue consists of monthlyrecurring service charges for voice and 3G data usage and monthly non-recurringcharges for local, long distance, travel and roaming airtime usage and 3G datausage in excess of the pre-subscribed usage plan amount received from oursubscribers, cancellation and late fee revenues and surcharges, less reductionsfor billing adjustments and billing corrections. Our customers’ charges aredependent on their rate plans, based on the number of minutes and 3G data usageincluded in their plans. These plans generally reflect the terms of nationalplans offered by Sprint PCS. The increase in subscriber revenue was primarilyattributable to the increases in our subscriber base and monthly recurringcharges for access and 3G data.

 

•                  *Reseller Revenue*.  Reseller revenue is generated when areseller subscriber uses our PCS network. During the second quarter of 2003, weinitiated the reseller program with Virgin Mobile. Reseller revenue was

 

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approximately$1.0 million and $0 for the three months ended March 31, 2004 and2003, respectively. In the future, we anticipate receiving additionalincremental revenue from Qwest for customers who use our network under theQwest reseller agreement that Sprint announced in the third quarter of 2003.

 

•                  *Sprint PCSTravel Revenue*.  Travelrevenue is generated on a per minute rate or on a per kilobit rate when aSprint PCS subscriber based outside our markets uses our network. An additionallong distance rate per minute is generated when that customer initiates a callfrom our network to call outside the local calling area. During 2003 and thefirst quarter of 2004, the travel rate per minute was $0.058. The average longdistance rate per minute decreased from approximately $0.015 per minute duringthe three months ended March 31, 2003 to approximately $0.011 per minute duringthe three months ended March 31, 2004.

 

During the three months ended March 31, 2004, ournetwork captured approximately 211.7 million system travel minutes withapproximately 61% of those minutes generating long distance charges whichresulted in approximately $13.8 million in travel revenue. During thethree months ended March 31, 2003, our network captured approximately143.8 million system travel minutes with approximately 65% of those minutesgenerating long distance charges which resulted in approximately$10.1 million in travel revenue. 3G data usage by Sprint PCS subscribersbased outside our markets increased from approximately 126.8 million kilobytes,or approximately $0.2 million in travel revenues, during the three months endedMarch 31, 2003 to approximately 718.1 million kilobytes, or approximately $1.4million in travel revenues, during the three months ended March 31, 2004. Theincrease in Sprint PCS travel revenue was primarily due to the increase intravel and long distance minutes of use and 3G data usage. We expect the annualgrowth rate for travel minutes and kilobytes to remain fairly constant throughout2004.

 

•                  *Non-SprintPCS Roaming Revenue*. Non-Sprint PCS roaming revenue is generated when a non-Sprint PCSsubscriber uses our network. We earned approximately $4.7 million in non-SprintPCS roaming revenue during the three months ended March 31, 2004 compared toapproximately $2.9 million during the three months ended March 31, 2003.  Non-Sprint PCS roaming minutes increasedfrom 19.6 million during the three months ended March 31, 2003 to 36.7 millionduring the three months ended March 31, 2004. The increase in roaming minutesrepresented a $2.5 million increase in revenue, and the decrease in the averagenon-Sprint PCS roaming revenue rate we receive from other carriers representeda $0.7 million reduction of roaming revenue. We expect non-Sprint PCS roamingrevenue growth rates to slow in the near to medium term.

 

•                  *EquipmentRevenue*.  Equipment revenueis generated from the sale of handsets and accessories and is recorded at thetime of sale. We record and retain 100% of the revenue from the sale ofhandsets and accessories, net of rebates, discounts and other sales incentives,as equipment revenue.  The amountsrecorded during the three months ended March 31, 2004 and 2003 from equipmentrevenue totaled approximately $3.9 million and $2.2 million, respectively. Theincrease was primarily due to an increase in gross additions and the allocationof approximately $0.6 million of activation revenue to equipment revenuebased on relative fair values in accordance with EITF 00-21, which we adopted onJuly 1, 2003.

 

***Cost of Service and Operations***

 

•                  *NetworkOperations Expenses*.  Networkoperations expenses include radio communications site lease costs, utilities,network control maintenance, network control site leases, engineeringpersonnel, transport facilities and interconnect charges, and totaledapproximately $15.6 million during the three months ended March 31,2004 compared to approximately $14.6 million during the three months endedMarch 31, 2003. For the three months ended March 31, 2003, we reclassifiedcertain network operations expenses to operating expenses to conform withcurrent year presentation, due to the changes in costs resulting from theamendment to our Sprint agreements in the fourth quarter of 2003. The increasewas primarily due to an increase in radio communications site rent from anincrease in the number of leased radio communications sites from March

 

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31, 2003 to March 31, 2004, including co-locationrents for the lease of space on towers sold in the fourth quarter of 2003.

 

•                  *Sprint PCS Travel Expense*.  We pay Sprint PCS travel fees on a perminute rate or on a per kilobit rate when our customers use the Sprint PCSnetwork outside our markets and we incur additional long distance fees when ourcustomers call long distance originating in a Sprint PCS or PCS affiliate ofSprint territory. During the three months ended March 31, 2004, ourcustomers generated approximately 139.1 million travel minutes withapproximately 62% of those minutes generating long distance charges whichresulted in approximately $9.0 million in travel fees. During the threemonths ended March 31, 2003, our customers generated approximately83.7 million travel minutes with approximately 65% of those minutesgenerating long distance charges which resulted in approximately$6.0 million in travel fees. 3G data usage by our customers outside ourmarkets increased from approximately 80.1 million kilobytes, or approximately$0.1 million in travel fees, during the three months ended March 31, 2003, toapproximately 493.8 million kilobytes, or approximately $1.0 million in travelfees, during the three months ended March 31, 2004. The increase in travelexpense was attributable to the increase in our subscriber base and the overallminutes of use per subscriber.

 

•                  *Non-Sprint PCS Roaming Expense*. We payroaming fees to other wireless providers when our customers use their network.During the three months ended March 31, 2004, our customers generatedapproximately 2.5 million roaming minutes resulting in approximately$0.4 million in roaming fees. During the three months ended March 31,2003, our customers generated approximately 1.7 million roaming minutesresulting in approximately $0.5 million in roaming fees. The decrease inroaming expense was attributable to a decrease in the average non-Sprint PCSroaming revenue rate paid to other carriers partially offset by an increase inminutes.

 

•                  *Bad Debt Expense.*  Bad debt expense during the three monthsended March 31, 2004 and 2003 was approximately $0.8 million and approximately$1.1 million, respectively. The decrease in bad debt expense was primarilyattributable to the improvement in the credit quality of our customer base andlower customer write-offs.

 

•                  *OperatingExpenses. *Operating expensesduring the three months ended March 31, 2004 and 2003 were approximately $7.4million and $7.1 million, respectively. Operating expenses included fees wepaid to Sprint PCS for the use of its support services, including billing andcollections services and customer care. As noted above under network operationsexpenses, certain expenses were reclassified from network operations expensesto operating expenses for the three months ended March 31, 2003. The increasein operating expenses was primarily attributable to the increase in oursubscriber base, offset by savings related to the amendments to the Sprintagreements effective in November 2003.

 

***Cost of Products Sold***

 

**The costof products sold includes the costs of handsets and accessories and totaledapproximately $9.2 million and $9.3 million during the three months ended March31, 2004 and 2003, respectively. **The cost of handsets generally exceeds the salesprice because we subsidize the cost of handsets to subscribers, consistent withindustry practice. Handset subsidies onunits sold by third parties totaled approximately $2.8 million and $3.9 millionfor the three months ended March 31, 2004 and 2003, respectively.

** **

***Selling and Marketing***

 

**Sellingand marketing expenses relate to our distribution channels, salesrepresentatives, sales support personnel, retail stores, advertising programsand commissions.  We incurred**selling and marketingexpenses of

** **

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** **

**approximately$17.0 million and $12.1 million during the three months ended March 31, 2004and 2003, respectively. **The increase in selling and marketing expenses wasprimarily attributable to the increases in gross additions and the number ofcustomer handset upgrades.

** **

***General and Administrative***

 

Weincurred general and administrative expenses (excluding non-cash compensationexpenses) totaling approximately $9.2 million and $7.5 million during the threemonths ended March 31, 2004 and 2003, respectively. General and administrativeexpenses included approximately $4.9 million and $3.6 million of management feeexpense paid to Sprint PCS during the three months ended March 31, 2004 and2003, respectively. The increase in general and administrative expenseswas primarily due to the increase in management fee expense resulting from theincrease in our subscriber base.

 

***Non-Cash Compensation for General and Administrative Matters***

 

During the threemonths ended March 31, 2004 and 2003, non-cash compensation for general andadministrative matters totaled $0 and approximately $0.1 million,respectively.  We apply the provisionsof Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued toEmployees,” and related interpretations in accounting for our equity incentiveplan.  Unearned stock optioncompensation was previously recorded for the difference between the exerciseprice and the fair market value of our stock at the date of grant and wasrecognized as non-cash stock option compensation expense in the period in whichthe related services were rendered.

 

***Depreciation, Amortization and Accretion***

 

Depreciation,amortization and accretion expense for the three months ended March 31, 2004and 2003 totaled approximately $12.9 million and $13.0 million,respectively.  We depreciate ourproperty and equipment using the straight-line method over four to 10years.  A building acquired as part ofthe VIA Wireless acquisition is being depreciated using the straight-linemethod over 30 years. Amortization of intangible assets with finite usefullives is over 20 months to 18 years. Accretion expense increases the asset retirement obligation associatedwith our tower leases, switch site and retail and administrative locations toits present value. The decrease in depreciation, amortization and accretionexpense was primarily due to an approximate $2.8 million decrease inamortization expense attributable to the VIA Wireless subscriber base, whichwas fully amortized as of March 31, 2003, partially offset by the impact ofaccelerated depreciation of our existing minicell base stations resulting fromour reduction of their estimated useful lives during the fourth quarter of 2003totaling $2.3 million and increases in depreciation expense primarilyresulting from network equipment additions during the first quarter of 2004. Weexpect accelerated depreciation expense of approximately $5.0 million and $0.7million for the years ended December 31, 2004 and 2005, respectively, relatedto the reductions of the estimated useful lives of certain minicell basestations.

 

***Interest Income***

 

For the three months ended March 31, 2004 and 2003,interest income was approximately $0.1 million and $0.2 million,respectively.  The interest income wasgenerated from cash, cash equivalents and restricted cash balances.  The decrease in interest income wasprimarily due to lower interest rates during the three months ended March 31,2004 than during the three months ended March 31, 2003.

 

***Interest Expense***

 

Interest expense totaled approximately $8.4 million and$10.1 million during the three months ended March 31, 2004 and 2003,respectively. Interest is accrued on our notes on a per annum basis at thestated interest rate.

 

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Interest on our seniorsecured credit facility during the three months ended March 31, 2003 wasaccrued at the London interbank offered rate, based on contracts ranging from30 to 180 days. The decrease in interest expense was primarily due to loweraverage debt levels and the reduction in interest expense resulting fromadjusting the carrying value of the 14% senior discount notes to the totalfuture cash payment amount under the accounting for the February 2003 privateplacement exchange transaction discussed below under “Gain on Debt Retirements.”Refinancing the outstanding borrowings under our senior secured credit facilityin the first quarter of 2004 with longer term higher fixed rate notes willresult in higher interest expense for the remainder of 2004 as compared to2003.

 

Interest expense also included the amortized amount ofdeferred financing fees relating to our senior secured credit facility andvarious note offerings, prior to any retirements of such debt.

 

***Gain on Debt Retirements***

 

During the first quarterof 2004, Operating Company issued $270.0 million in aggregate principal amountof 9.875% senior notes due March 1, 2011 (the “9.875% Senior Notes”), in atransaction exempt from the registration requirements of the Securities Act of1933, as amended. The 9.875% Senior Notes were issued at a discount andgenerated approximately $265.3 million in proceeds. The proceeds were usedto repay and terminate Operating Company’s senior secured credit facility,including the repayment of $230.0 million in outstanding borrowings plus accruedinterest and termination of its unused $47.7 million revolving line ofcredit, to redeem all of its outstanding 14% Series B senior discountnotes due 2008 (“14% Series B Senior Notes”) ($14.5 million outstandingprincipal amount) for approximately $12.5 million, and to purchase$16.7 million principal amount of its outstanding 14% senior discountnotes due 2010 (“14% Senior Notes”) for approximately $15.9 million. Therepayments of the senior secured credit facility and the 14% Series B SeniorNotes and the purchase of the 14% Senior Notes resulted in a net gain on debtretirements of approximately $1.1 million, consisting of a loss on the purchaseof the 14% Senior Notes of approximately $1.6 million, the write-off ofdeferred financing fees related to the senior secured credit facility and the14% Series B Senior Notes of approximately $7.7 million, the write-off ofunamortized debt discount for detachable warrants associated with the 14%Series B Senior Notes of approximately $3.6 million and costs ofapproximately $0.1 million related to the termination of the senior securedcredit facility, net of a gain of approximately $14.1 million recognized on thereduction in carrying value of the future cash payments associated with thepurchased 14% Senior Notes.

 

During the first quarterof 2003, Operating Company consummated a private placement exchange ofapproximately $48.2 million aggregate principal amount of its 14% SeniorNotes and approximately $9.6 million in cash for approximately$192.7 million aggregate principal amount of its outstanding 14% seniorsubordinated discount notes due 2010 (“14% Subordinated Notes”). Additionally,Operating Company consummated a related financing, in a private placementoffering, of approximately $12.8 million aggregate principal amount of 14%Series B Senior Notes in which we received cash proceeds of approximately$9.6 million to fund the cash portion of the exchange. Under thefinancing, UbiquiTel issued detachable warrants to purchase up to approximately9.6 million shares of its common stock at an exercise price of $0.01 pershare. We followed the provisions of SFAS No. 15, “Accounting by Debtorsand Creditors for Troubled Debt Restructurings,” and EITF Issue No. 02-04,“Determining Whether a Debtor’s Modification or Exchange of Debt Instruments IsWithin the Scope of FASB Statement No. 15,” in recording the privateplacement exchange transaction in the first quarter of 2003. These provisionsrequire that the carrying value of the 14% Senior Notes be recorded at thetotal future cash payments (principal and interest) specified by the 14% SeniorNotes; therefore, the 14% Senior Notes were classified on our balance sheet aslong-term liabilities and were valued at approximately $81.9 million as ofthe transaction date. As a result, no interest expense related to the 14%Senior Notes will be recognized in future periods. In the first quarter of2003, we recognized a gain of approximately $39.0 million as a result ofthe private placement exchange.

 

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***Income Taxes***

 

For the three months ended March 31, 2004 and 2003, werecognized an income tax expense of $72,000 and an income tax benefit of$33,000, respectively. Income tax expense for the three months ended March 31,2004 is comprised primarily of deferred income taxes that resulted from anexpected income tax deduction for amortization of goodwill, which is notamortizable to expense for financial reporting purposes.

 

***Net Income (Loss)***

 

For the threemonths ended March 31, 2004, our net loss was approximately $8.6 million andfor the three months ended March 31, 2003, our net income was approximately$16.2 million. We recognized gains on debt retirements of approximately $1.1million and $39.0 million for the three months ended March 31, 2004 and 2003,respectively.

 

**Liquidityand Capital Resources**

 

From inception throughDecember 31, 2002, we principally relied on the proceeds from equity anddebt financings, and to a lesser extent revenues, as our primary sources of capital.In 2003, we generated approximately $14.5 million of cash flow fromoperating activities.  In the threemonths ended March 31, 2004, we generated approximately $9.2 million ofcash flow from operating activities.

 

Completion of our PCSnetwork has required substantial capital. Capital expenditures for the threemonths ended March 31, 2004 totaled approximately $5.9 million.Although we have essentially completed our network coverage build-out, ourbusiness could require additional capital expenditures of up to approximately$20 to $25 million annually for maintenance, capacity enhancements andcoverage improvements.

 

On February 23, 2004,Operating Company issued $270.0 million in aggregate principal amount of the9.875% Senior Notes at a discount and generated approximately$265.3 million in proceeds. UbiquiTel has fully and unconditionallyguaranteed Operating Company’s obligations under the 9.875% Senior Notes. Theproceeds were used to repay and terminate Operating Company’s senior secured creditfacility, including the repayment of $230.0 million in outstandingborrowings plus accrued interest and termination of its unused$47.7 million revolving line of credit, to redeem all of its outstanding14% Series B Senior Notes ($14.5 million outstanding principalamount) for approximately $12.5 million and to purchase $16.7 millionprincipal amount of its outstanding 14% Senior Notes for approximately$15.9 million. Under the indenture governing the 9.875% Senior Notes,Operating Company is permitted to issue additional notes from time to time.

 

The 14% SubordinatedNotes, the 14% Senior Notes and the 9.875% Senior Notes will require cashpayments of interest of $0, $0 and approximately $13.8 in 2004, respectively,approximately $7.0 million, $2.2 million and $26.7 million in 2005,respectively, and approximately $14.1 million, $4.4 million and $26.7million in 2006, respectively. We presently are in compliance with allcovenants associated with the 14% Subordinated Notes, 14% Senior Notes and9.875% Senior Notes. We may from time to time purchase outstanding 14%Subordinated Notes, 14% Senior Notes and 9.875% Senior Notes in the openmarket, in privately negotiated transactions or otherwise in accordance withour debt agreements and applicable law.

 

As of March 31, 2004, wehad approximately $56.9 million in cash, cash equivalents and restrictedcash, and working capital of approximately $47.4 million. Managementexpects cash and cash equivalents, combined with cash flow from operatingactivities, to be sufficient to meet capital expenditures needs and servicedebt requirements through March 31, 2005 and into the foreseeable future.

 

While management does notanticipate the need to raise additional capital to meet our operating orcapital

 

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expenditure requirementsin the foreseeable future, our funding status is dependent on a number offactors influencing projections of operating cash flows, including thoserelated to gross new customer additions, customer turnover, revenues, marketingcosts, bad debt expense and roaming and reseller revenue. Management believesour financial position will be sufficient to meet the cash requirements of thebusiness including capital expenditures, any operating losses, cash interestand working capital needs. Should actual results differ significantly fromthese assumptions, our liquidity position could be adversely affected and wecould be in a position that would require us to raise additional capital whichmay not be available or may not be available on acceptable terms.

 

***Contractual Obligations***

 

We are obligated to make future payments under variouscontracts we have entered into, including amounts pursuant to noncancelableoperating lease agreements for office space, retail stores, land for radiocommunications sites, leased space on radio communications sites and officeequipment; capital leases; purchase obligations; the building mortgage andother long-term liabilities; the 14% Subordinated Notes; the 14% Senior Notes;and the 9.875% Senior Notes.  Thefollowing table lists our expected future minimum contractual cash obligationsfor the next five years and in the aggregate as of March 31, 2004 (dollars inthousands):

 
|                                               |   | **Payments due by period ending March 31:** |    |
|----------------------------------------------------|--------|---------------------------------------------|---------|
| **Contractual obligation**                         |   | **Total**                                   |    | **Less than  1 year** |   | **1-3 years** |   | **4-5 years** |   | **After 5 years** |   |
|                                               |   |                                        |    |   |   |   |   |   |   |   |   |
| Operating  leases(1)                               |   | $                                           | 73,201  |   | $ | 17,489 |   | $ | 23,839 |   | $ | 13,125 |   | $ | 18,748 |   |
| Capital  leases                                    |   | 22                                          |    | 22 |   | — |   | — |   | — |   |
| Purchase  obligations(2)                           |   | 11,879                                      |    | 2,335 |   | 9,544 |   | — |   | — |   |
| Building  mortgage and other long-term liabilities |   | 3,402                                       |    | 211 |   | 468 |   | 538 |   | 2,185 |   |
| 14%  subordinated notes(3)                         |   | 100,380                                     |    | — |   | — |   | — |   | 100,380 |   |
| 14%  senior notes(3)                               |   | 31,473                                      |    | — |   | — |   | — |   | 31,473 |   |
| 9.875%  senior notes(3)                            |   | 270,000                                     |    | — |   | — |   | — |   | 270,000 |   |
|                                               |   | $                                           | 490,357 |   | $ | 20,057 |   | $ | 33,851 |   | $ | 13,663 |   | $ | 422,786 |   |

 

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(1)           Does not include payments due underrenewals to the original lease term.

 

(2)                                  OperatingCompany is committed to convert 285 base stations during the years 2004 through2006 at prices fixed in an agreement with a third party.

 

(3)           Total repayments, excluding interestpayments, are based on borrowings outstanding as of March 31, 2004.

 

There areprovisions in each of the indentures governing the 14% Subordinated Notes, 14%Senior Notes  and 9.875% Senior Notesthat provide for an acceleration of repayment upon an event of default, asdefined in the respective agreements.

 

***Analysis of Cash Flows***

 

Net cash providedby operating activities was approximately $9.2 million and $4.1 million for thethree months ended March 31, 2004 and 2003, respectively.  The increase in cash provided by operatingactivities was primarily due to the reduction in operating loss offset byincreases in accounts receivable, inventory and prepaid and other assets.

 

Net cash used in investing activities was approximately $5.9 millionand $4.6 million for the three months ended March 31, 2004 and 2003,respectively.  The increase resultedfrom higher capital expenditures for switch

 

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capacity upgrades and cash payments for the purchase of currentgeneration multi-carrier capable base stations pursuant to our plan to replaceour existing minicell base stations.

 

Net cash used in financing activities for the threemonths ended March 31, 2004 was approximately $7.1 million, consistingprimarily of the reduction in the book cash overdraft of approximately $5.7million, financing costs incurred in connection with our January 2004 amendment to modify certain covenants ofour senior secured credit facility of approximately $0.4 million and capitallease and other long-term debt payments of approximately $0.1 million. Asdiscussed above, the proceeds from the issuance of the 9.875% Senior Notes inFebruary 2004 were used to repay outstanding borrowings plus accrued interestdue under the senior secured credit facility, to redeem outstanding 14%Series B Senior Notes, to purchase a portion of the outstanding 14% SeniorNotes and to pay all financing fees associated with the refinancing. Net cashused in financing activities for the three months ended March 31, 2003 wasapproximately $18.7 million, consisting primarily of a $15.0 million repaymentunder the senior secured credit facility, $3.5 million in financing costsdirectly associated with the issuance of the Series B Notes and thedebt-for-debt exchange offer consummated in February 2003 and $0.2 million ofcapital lease and other long-term debt payments.

 

***Factors That May Affect Operating Results and Liquidity***

 

In addition to therisk factors referred to in the “Forward-Looking Statements” section of thisItem 2, the following risk factors could materially and adversely affect ourfuture operating results and liquidity and could cause actual events to differmaterially from those predicted in forward-looking statements related to ourbusiness.

 

We may not be able tosustain our growth or obtain sufficient revenue to achieve and sustainprofitability. If the current trend of slower net customer growth is more rapidthan we anticipate, it will lower the expected amount of positive cash flowfrom operating activities less capital expenditures, which in turn will have anegative effect on liquidity and capital resources. For the three months endedMarch 31, 2004, approximately $9.2 million of cash flow was provided byoperating activities. Our business projections reflect continuing growth in oursubscriber base and a reduction and eventual elimination of operating losses.If we acquire more new customers than we project, the upfront costs to acquirethose customers (including the handset subsidy, commissions and promotionalexpenses) may result in greater cash used in the near term but provide greatercash flows in later periods. In addition, if there is a slowdown in newsubscriber growth in our markets or the wireless industry generally, we mayacquire fewer new customers, which would result in higher cash provided in thenear term but provide lower cash flows in later periods.

 

We placesubstantial reliance on the timeliness, accuracy and sufficiency of revenue andcost data and information generated by Sprint for the compilation of ourfinancial statements and other financial disclosures, including substantialportions of our revenues, expenses and accounts receivable. As part of ouragreements, we outsource several functions to Sprint including billing,customer care, national network operations support, inventory logisticssupport, long distance transport and national retailer sales support. The dataprovided by Sprint is the primary source for our recognition of service revenueand a significant portion of our selling and marketing and cost of service andoperations expenses. In certain cases, the data is provided at a level ofdetail that is not adequate for us to verify for accuracy back to theoriginating source. We rely on Sprint to have designed adequate internalcontrols with respect to the processes established to provide this data.Because of this reliance, we are dependent on Sprint to periodically evaluatethe effectiveness of these controls and report any significant deficiencies andweaknesses in the design or operation of these controls that could have amaterial impact on our financial statements and disclosures. Sprint provides anannual evaluation of these controls to us by engaging its independent auditorsto provide a “Report on Controls Placed in Operation and Tests of OperatingEffectiveness for Affiliates” under guidance provided in Statement of AuditingStandards No. 70 (“SAS 70”). There can be no assurance that the SAS 70procedures will identify all weaknesses that might be material to us. Althoughwe are not presently aware of any material errors affecting us, errors that arenot reconciled on a timely basis by Sprint could cause us to misstate ourrevenues or expenses and could result in out-of-period adjustments that maymaterially adversely affect our financial

 

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results and could have amaterial adverse effect on our business, financial condition, results ofoperations and cash flows. Additionally, if we or any other PCS affiliate ofSprint find significant errors in information provided by Sprint which causes arestatement of financial statements or otherwise affects us, investors and theinvestment community may lose confidence in us. Should Sprint fail to delivertimely, accurate and sufficient information, this could lead to a greaterdegree of uncertainty in our business and financial planning and may lead toadverse short-term decisions. In addition, the failure of Sprint to remitcurrent or future amounts owing to PCS affiliates of Sprint, including us,could lead to actions on the part of us or other PCS affiliates of Sprint toenforce rights under the Sprint agreements and other remedies available underapplicable law. In July 2003, US Unwired Inc., a PCS affiliate ofSprint, filed suit against Sprint alleging violations of the federalracketeering laws, breach of fiduciary duty and fraud arising out of Sprint’sdealings with the affiliate and its related entities, and in August 2003,Horizon PCS, Inc. and its affiliated entities, a PCS affiliate of Sprint,filed for bankruptcy protection under Chapter 11 of the federal bankruptcy codeand subsequently filed an adversarial action against Sprint alleging similarcauses of action to those made by U.S. Unwired Inc.

 

**The FCC mandated thatwireless carriers provide for wireless local number portability (“WLNP”) byNovember 24, 2003 in certain markets, and by May 24, 2004 in the remainingmarkets. Local number portability allows subscribers to keep their wirelessphone number when switching to a different service provider. We anticipatenumber portability could increase churn, which could lower our revenues. We maybe required to increase subsidies for product upgrades and/or reduce pricing tomatch competitors’ initiatives and retain customers, which could adverselyimpact our revenue and profitability and our liquidity. WLNP had no materialimpact on our results for the year ended December 31, 2003 or the threemonths ended March 31, 2004.**

 

Wemay not be able to access the credit markets for additional capital if theliquidity discussed above is insufficient for the cash needs of our business.We frequently evaluate options for additional financings to supplement ourliquidity position and maintain maximum financial flexibility. However, if theassumptions used in our projections are incorrect, we may be unable to raiseadditional capital.

 

***Reconciliation of non-GAAP financial measures***

 

We utilizecertain financial measures that are not calculated in accordance withaccounting principles generally accepted in the United States, or GAAP, toassess our financial performance. A non-GAAP financial measure is defined as anumerical measure of a company’s financial performance that (a) excludesamounts, or is subject to adjustments that have the effect of excludingamounts, that are included in the comparable measure calculated and presentedin accordance with GAAP in the statement of income or statement of cash flows;or (b) includes amounts, or is subject to adjustments that have the effectof including amounts, that are excluded from the comparable measure socalculated and presented. The non-GAAP financial measures discussed in“—Results of Operations” are average revenue per user (ARPU), cash cost peruser (CCPU) and cost per gross addition (CPGA). Descriptions of these non-GAAPfinancial measures are provided where the particular measures are discussed in“—Results of Operations—Analysis of the three months ended March 31, 2004compared to the three months ended March 31, 2003,” and the following tablesreconcile the non-GAAP financial measures with our unaudited consolidatedfinancial statements presented in accordance with GAAP (excluding subscriberdata).

 
|                             |   | **Three Months Ended March  31,** |       |
|----------------------------------|--------|-----------------------------------|------------|
|                             |   | **2004**                          |       | **2003** |   |
| Average  revenue per user (ARPU) |   |                              | ** ** |   | ** ** |
| Service  revenue                 |   | $                                 | 77,438,000 |   | $ | 56,244,000 |   |
| Less:  Wholesale revenue         |   | (20,867,000                       | )          | (13,173,000 | ) |
| Subscriber  revenue              |   | $                                 | 56,571,000 |   | $ | 43,071,000 |   |
|                             |   |                              |       |   |   |
| Average  subscribers             |   | 338,400                           |       | 264,900 |   |
|                             |   |                              |       |   |   |
| ARPU                             |   | $                                 | 56         |   | $ | 54 |   |

 

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We believeARPU, which calculates the average monthly service revenue per customer,excluding wholesale revenue, is a useful measure to assist in evaluating ourpast and forecasting our future subscriber revenue. In addition, it provides agauge to compare our subscriber revenue to that of other wirelesscommunications providers, although other wireless communications providers mayinclude or exclude certain items from their calculations which may make thecomparison less meaningful.

 
|                                                            |   | **Three Months Ended March  31,** |       |
|-----------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                            |   | **2004**                          |       | **2003** |   |
| Cash cost per  user (CCPU)                                      |   |                              |       |   |   |
| Cost of service  and operations (excluding   depreciation) |   | $                                 | 34,248,000 |   | $ | 29,401,000 |   |
| Add: General and  administrative expenses                       |   | 9,240,000                         |       | 7,474,000 |   |
| Total cash costs                                                |   | $                                 | 43,488,000 |   | $ | 36,875,000 |   |
|                                                            |   |                              |       |   |   |
| Average  subscribers                                            |   | 338,400                           |       | 264,900 |   |
|                                                            |   |                              |       |   |   |
| CCPU                                                            |   | $                                 | 43         |   | $ | 46 |   |

 

We believe CCPU, whichmeasures the average monthly cash costs to provide digital wireless mobilitycommunications services per customer, is a useful measure used to compare ourcash cost of operations per customer to that of other wireless communicationsproviders, although other wireless communications providers may include orexclude certain items from their calculations which may make the comparisonless meaningful.

 
|                            |   | **Three Months Ended March  31,** |       |
|---------------------------------|--------|-----------------------------------|------------|
|                            |   | **2004**                          |       | **2003** |   |
| Cost  per gross addition (CPGA) |   |                              |       |   |   |
| Selling  and marketing          |   | $                                 | 16,977,000 |   | $ | 12,081,000 |   |
| Add:  Cost of products sold     |   | 9,215,000                         |       | 9,301,000 |   |
| Less:  Equipment revenue        |   | (3,872,000                        | )          | (2,239,000 | ) |
| CPGA  costs                     |   | $                                 | 22,320,000 |   | $ | 19,143,000 |   |
|                            |   |                              |       |   |   |
| Gross  additions                |   | 52,500                            |       | 44,300 |   |
|                            |   |                              |       |   |   |
| CPGA                            |   | $                                 | 425        |   | $ | 432 |   |

 

We believe CPGA, whichmeasures the average cost to acquire new customers during the period, is auseful measure used to compare our average cost to acquire a new subscriber tothat of other wireless communication providers, although other wirelesscommunications providers may include or exclude certain items from theircalculations which may make the comparison less meaningful.

 

***Inflation***

 

We believe that inflation has not had, and will nothave, a material adverse effect on our results of operations.

 

***Seasonality***

 

Our business is seasonal because the wireless industryis heavily dependent on fourth quarter results.  Among other things, the industry relies on significantly highercustomer additions and handset sales in the fourth quarter as compared to theother three fiscal quarters.  Thefactors contributing to this trend include the increasing use of retaildistribution, which is dependent on year-end holiday shopping, the timing ofnew product and service offerings,

 

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competitive pricingpressures and aggressive marketing and promotions during the holidayseason.  The increased level of activityrequires a greater use of our available financial resources during this period.

 

**Item3.****Quantitative andQualitative Disclosures About Market Risk**

 

Market risk is the potential loss arising from adversechanges in market prices and rates, including interest rates. All of theinterest rates on our notes are fixed. Consequently, we have not entered intoderivatives or other financial instruments for trading, speculative or hedgingpurposes. No principal repayments on our notes are due within the next fiveyears.

 

**Item4.****Controls andProcedures**

 

## **Evaluation ofDisclosure Controls and Procedures**

## ** **

Our management, under thesupervision and with the participation of our Chief Executive Officer and ChiefAccounting Officer, has conducted an evaluation of our “disclosure controls andprocedures” (as defined in the Securities Exchange Act of 1934 (“Exchange Act”)Rules 13a-15(e) or 15d-15 (e)) as of March 31, 2004. Based on that evaluation,our Chief Executive Officer and Chief Accounting Officer concluded that ourdisclosure controls and procedures were effective as of March 31, 2004.

 

We place reliance on Sprintto adequately design its internal controls with respect to the processesestablished to provide financial information and other information to us andthe other PCS affiliates of Sprint.  Toaddress this issue, Sprint engages its independent auditors to perform aperiodic evaluation of these controls and to provide a “Report on ControlsPlaced in Operation and Tests of Operating Effectiveness for Affiliates” underguidance provided in Statement of Auditing Standards No. 70. This report isprovided annually to us.

 

## **Changes inInternal Controls**

## ** **

There was no change in ourinternal control over financial reporting identified in connection with theevaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15that occurred during the three months ended March 31, 2004 that has materiallyaffected, or is reasonably likely to materially affect, our internal controlover financial reporting.

 

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# **PARTII.  OTHER INFORMATION**

# ** **

# **Item 1. LegalProceedings**

# ** **

Neither UbiquiTel nor Operating Company is a party toany pending legal proceedings that either UbiquiTel or Operating Companybelieves would, if adversely determined, individually or in the aggregate, havea material adverse effect on our financial condition or results of operations.

 

**Item 2. Changes in Securities, Use of Proceeds and IssuerPurchases of Equity Securities**

 

None.

 

**Item 3. Defaults Upon Senior Securities**

 

None.

 

**Item 4. Submission of Matters to a Vote of Security Holders**

 

None.

 

**Item 5. Other Information**

 

None.

 

**Item 6.    Exhibits and Reports onForm****8-K**

 

**(a)****                                  Reportson Form 8-K**

 

During the quarter ended March 31, 2004, two reportson Form 8-K were filed and three reports on Form 8-K were furnished: 

 
| **Date**          |   | **Item  Reported On**                                                                                                                                                                                                                                                                                     |
|-------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| February 4, 2004  |   | Item 5. Other Events.  On February 4, 2004, UbiquiTel  Inc. announced that its wholly owned subsidiary, UbiquiTel Operating Company,  intended to offer, in a private placement, up to $250 million in aggregate  principal amount of its senior notes due 2011. (Filed)                             |
|              |   |                                                                                                                                                                                                                                                                                                      |
| February 4, 2004  |   | Item 12. Results of Operations and Financial  Condition. On February 4, 2004,  UbiquiTel Inc. issued a press release announcing preliminary unaudited  selected financial and operating results for the year ended December 31, 2003  and financial and operating guidance for the year 2004. (Furnished) |
|              |   |                                                                                                                                                                                                                                                                                                      |
| February 13, 2004 |   | Item 5. Other Events.  On February 13, 2004,  UbiquiTel Inc. announced that its wholly owned subsidiary, UbiquiTel  Operating Company, priced an offering of up to $270 million in aggregate  principal amount of its senior notes due 2011. (Filed)                                                 |
|              |   |                                                                                                                                                                                                                                                                                                      |
| February 18, 2004 |   | Item 12. Results of Operations and Financial  Condition. On February 18, 2004, UbiquiTel Inc. announced its operating and  financial results for the fourth quarter and full year ended December 31,  2003. (Furnished)                                                                                   |

 

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| **Date**       |   | **Item  Reported On**                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| March 19, 2004 |   | Item 9.  Regulation FD Disclosure. On March 19, 2004, UbiquiTel Inc. announced  that it would participate in the CSFB  Wireless Investment Forum and the 2nd Annual JP Morgan Technology  and Telecom Forum at CTIA 2004 in Atlanta, GA on Monday, March 22, 2004, and  Tuesday, March 23, 2004, respectively, and furnished a presentation that was  to be made by UbiquiTel to analysts and investors and at such forums.  (Furnished) |

 

**(b)****                                  Exhibits:**

 
| **Exhibit No.** |   | **Description**                                                                                                                                                                                                                                                                      |
|-----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1            |   | Purchase Agreement for UbiquiTel Operating Company’s  9 7/8% Senior Notes due 2011 dated February 12, 2004 among UbiquiTel  Operating Company, UbiquiTel Inc., Bear Stearns & Co. Inc., Citigroup Global  Markets Inc. and Banc of America Securities LLC.                  |
|            |   |                                                                                                                                                                                                                                                                                 |
| 10.2            |   | Indenture for UbiquiTel Operating Company’s 9 7/8%  Senior Notes Due 2011 dated as of February 23, 2004 among UbiquiTel Operating  Company, UbiquiTel Inc. and The Bank of New York, as trustee.                                                                                |
|            |   |                                                                                                                                                                                                                                                                                 |
| 10.3            |   | Notation of Guarantee dated as of February 23, 2004  of UbiquiTel Inc.                                                                                                                                                                                                               |
|            |   |                                                                                                                                                                                                                                                                                 |
| 10.4            |   | Registration Rights Agreement for UbiquiTel  Operating Company’s 9 7/8% Senior Notes due 2011 dated as of February 23,  2004 among UbiquiTel Operating Company, UbiquiTel Inc., Bear Stearns &  Co. Inc., Citigroup Global Markets Inc. and Banc of America Securities LLC. |
|            |   |                                                                                                                                                                                                                                                                                 |
| 31.1            |   | Certification Pursuant to Item 601(b)(31) of  Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002.                                                                                                                                                 |
|            |   |                                                                                                                                                                                                                                                                                 |
| 31.2            |   | Certification Pursuant to Item 601(b)(31) of  Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002.                                                                                                                                                 |
|            |   |                                                                                                                                                                                                                                                                                 |
| 32.1            |   | Certification Pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (furnished  pursuant to Item 601(b)(32) of Regulation S-K).                                                                                                 |
|            |   |                                                                                                                                                                                                                                                                                 |
| 32.2            |   | Certification Pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (furnished  pursuant to Item 601(b)(32) of Regulation S-K).                                                                                                 |

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|        | CO-REGISTRANTS:             |
|-------------|-----------------------------|
|        |                        |   |
|        | UBIQUITEL INC.              |
|        | UBIQUITEL OPERATING COMPANY |
|        |                        |   |
|        |                        |   |
|        | By:                         |   /s/ DONALD A. HARRIS |   |
|        |                        | Donald A. Harris |
|        |                        | Chairman of the Board, President |
|        |                        | and Chief Executive Officer |
|        |                        | (Principal Executive Officer) |
|        |                        |   |
|        |                        |   |
|        | By:                         |   /s/ JAMES J. VOLK |   |
|        |                        | James J. Volk |
|        |                        | Chief Financial Officer |
|        |                        | (Principal Financial  and Accounting Officer) |
|        |                        |   |
|        |                        |   |
| May 6, 2004 |                        |   |
|             |                             |  |  |  |

 

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