##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K


FOR ANNUAL AND TRANSITION REPORTS


PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


|                                            |  |                                                                                                 
|------------------------------------------- |  | ------------------------------------------------------------------------------------------------
|(Mark One)                                  |  |                                                                                                 
|þ                                           |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934        
|                                           
|For the fiscal year ended December 31, 2005
|                                           
|OR                                         
|                                           
|o                                           |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE
    SECURITIES EXCHANGE ACT OF 1934
|                                           
|                                            |  | For the transition period
    from           to           .                                     

Commission file number 0-29752


LEAP WIRELESS INTERNATIONAL, INC.


(Exact Name of Registrant as Specified in its Charter)


|                                          |                                                                    |            |                                     
|----------------------------------------- | ------------------------------------------------------------------ | ---------- | ------------------------------------
|Delaware                                  |                                                                    | 33-0811062
|                                          | (State or Other Jurisdiction of Incorporation or
    Organization) |            | (I.R.S. Employer Identification No.)
|10307 Pacific Center Court, San Diego, CA |                                                                    | 92121     
|(Address of Principal Executive Offices)  |                                                                    | (Zip Code)

(858) 882-6000


(Registrants Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the
Act:


None.


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, $.0001 par value


(Title of Class)


o þ


o þ


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S-K 10-K 10-K. o


12b-2


|                         |  |                    |  |                       
|------------------------ |  | ------------------ |  | ----------------------
|Large accelerated filerþ |  | Accelerated filero |  | Non-accelerated filero

12b-2 o þ




þ o














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##### Table of Contents



EXPLANATORY NOTE


10-K 10-Q 10-K




10-Q




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##### 










LEAP WIRELESS INTERNATIONAL, INC.


ANNUAL REPORT ON
FORM 10-K


For the Year Ended December 31, 2005


TABLE OF CONTENTS


|                |  |                                                                                                                      |  |      |    |  |  | 
|--------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|                |  |                                                                                                                      |  | Page |   
|                |  |                                                                                                                      |  |      |   
|PART I         
|Item 1.         |  | Business                                                                                                             |  |      | 1  | 
|Item 1A.        |  | Risk Factors                                                                                                         |  |      | 20 | 
|Item 1B.        |  | Unresolved Staff Comments                                                                                            |  |      | 31 | 
|Item 2.         |  | Properties                                                                                                           |  |      | 31 | 
|Item 3.         |  | Legal Proceedings                                                                                                    |  |      | 31 | 
|Item 4.         |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | 32 | 
|PART II        
|Item 5.         |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | 33 | 
|Item 6.         |  | Selected Financial Data                                                                                              |  |      | 35 | 
|Item 7.         |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operation                             |  |      | 37 | 
|Item 7A.        |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |  |      | 57 | 
|Item 8.         |  | Financial Statements and Supplementary
    Data                                                                      |  |      | 58 | 
|Item 9.         |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | 93 | 
|Item 9A.        |  | Controls and Procedures                                                                                              |  |      | 93 | 
|Item 9B.        |  | Other Information                                                                                                    |  |      | 96 | 
|PART III       
|Item 10.        |  | Directors and Executive Officers of the
    Registrant                                                               |  |      | 96 | 
|Item 11.        |  | Executive Compensation                                                                                               |  |      | 96 | 
|Item 12.        |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |      | 96 | 
|Item 13.        |  | Certain Relationships and Related
    Transactions                                                                   |  |      | 96 | 
|Item 14.        |  | Principal Accounting Fees and Services                                                                               |  |      | 96 | 
|PART IV        
|Item 15.        |  | Exhibits, Financial Statement Schedules                                                                              |  |      | 97 | 
|EXHIBIT 10.3.9 
|EXHIBIT 10.4.4 
|EXHIBIT 10.9.3 
|EXHIBIT 10.9.4 
|EXHIBIT 10.9.7 
|EXHIBIT 10.9.11
|EXHIBIT 10.9.14
|EXHIBIT 10.9.15
|EXHIBIT 10.10.2
|EXHIBIT 10.11.7
|EXHIBIT 10.14.1
|EXHIBIT 21     
|EXHIBIT 23     
|EXHIBIT 31.1   
|EXHIBIT 31.2   
|EXHIBIT 32     



i



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##### Table of Contents






PART I




Forward-Looking Statements; Cautionary Statement






| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | our ability to attract and retain customers in an extremely
    competitive marketplace;        
|
| |  | changes in economic conditions that could adversely affect the
    market for wireless services;
|
| |  | the impact of competitors initiatives;                                                         
|
| |  | our ability to successfully implement product offerings and
    execute market expansion plans; 
|
| |  | our ability to comply with the covenants in our senior secured
    credit facilities;           
|
| |  | our ability to attract, motivate and retain an experienced
    workforce;                       
|
| |  | failure of our network systems to perform according to
    expectations; and                    
|
| |  | other factors detailed in Item 1A. Risk Factors
    below.                                    








|        |         
|------- | --------
|Item 1. | Business

® tm




1



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Cricket Business Overview


Cricket Service






tm




2



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##### Table of Contents





Cricket Business Strategy




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Target Underserved Customer Segments in Our Markets. Our
    services are targeted primarily toward market segments
    underserved by traditional communications companies. On average,
    our customers tend to be younger and have lower incomes than the
    customers of other wireless carriers. Moreover, our customer
    base also reflects a greater percentage of ethnic minorities
    than those of the national carriers. We believe these
    underserved market segments are among the fastest growing
    population segments in the U.S. With wireless penetration
    in the U.S. estimated at approximately 70% as of
    December 31, 2005, the majority of existing wireless
    customers subscribe to post-pay services that require credit
    approval and a contractual commitment from the subscriber for a
    period of one year or greater. We believe that customers who
    require a significantly larger amount of voice usage than
    average, who are price-sensitive or who prefer not to enter into
    fixed-term contracts represent a large portion of the remaining
    growth potential in the U.S. wireless market.                                                                                                                                               
|
| |  | Continue to Develop and Evolve Products and Services. We
    continue to develop and evolve our product and service offerings
    to better meet the needs of our target customer segments. In
    September 2005 we launched our first per-minute prepaid service,
    Jump Mobile, to bring Crickets attractive value
    proposition to customers who prefer active control over their
    wireless usage and to better target the urban youth market. With
    our deployment of 1xEV-DO technology, we believe we will be able
    to offer an expanded array of services to our customers,
    including high-demand wireless data services such as mobile
    content, location-based services and high-quality music
    downloads at speeds of up to 2.4 Megabits per second. We believe
    these enhanced data offerings will be attractive to many of our
    existing customers and will enhance our appeal to new
    data-centric customers. In addition, during the last two years,
    we have also added BREW-based enhancements, instant text
    messaging, multimedia (picture) messaging and a roaming
    option to our product portfolio.                                                                                                                                               
|
| |  | Build Our Brand and Strengthen Our Distribution. We are
    focused on building our brand awareness in our markets and
    improving the productivity of our distribution system. In April
    2005 we introduced a new marketing and advertising approach that
    reinforces the value differentiation of the Cricket brand. In
    addition, since our target customer base is diversified
    geographically, ethnically and demographically, we have
    decentralized our marketing programs to support local
    customization while optimizing our advertising expenses. We have
    also redesigned and re-merchandized our stores and introduced a
    new sales process aimed at improving both the customer
    experience and our revenue per user. In addition, we have
    initiated a new premier dealer program, under which dealers sell
    Cricket products, usually exclusively, in stores that look and
    function similar to our company-owned stores. In an effort to
    drive more traffic to our dealers and to enhance the customer
    experience, in 2006 we plan to enable our premier dealers and
    other indirect dealers to provide greater customer support
    services and to serve as customer payment locations. We expect
    these changes will allow for a stronger

3



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | relationship between our dealers and customers, while reducing
    service traffic in our direct stores and call center.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Enhance Market Clusters and Expand Into Attractive Strategic
    Markets. We currently intend to seek additional
    opportunities to enhance our current market clusters and expand
    into new geographic markets, by acquiring spectrum in FCC
    auctions, such as the upcoming auction allocated for
    Advanced Wireless Services, or in the spectrum
    aftermarket, or by participating in partnerships or joint
    ventures. Our selection criteria for new markets are based on
    the ability of a market to enhance an existing market cluster or
    on the ability of the proposed new market or market cluster to
    enable Cricket to offer service on a cost-competitive basis. By
    building or enhancing market clusters, we are able to increase
    the size of our unlimited local calling area for our customers,
    while leveraging our existing network investments to improve our
    economic returns. Examples of our market-cluster strategy
    include the Fresno, California market we recently launched to
    complement the Visalia and Modesto, California markets in our
    Central Valley cluster and the Oregon cluster we intend to
    create by contributing our Salem and Eugene, Oregon markets to a
    new joint venture, LCW Wireless, which owns a license for
    Portland, Oregon. Examples of our strategic market expansion
    include the five licenses in central Texas, including Houston,
    Austin and San Antonio, and the San Diego, California
    license that we and ANB 1 License acquired in Auction #58,
    all of which meet our internally developed criteria concerning
    customer demographics and population density which we believe
    will enable us to offer Cricket service on a cost-competitive
    basis in those markets.

Cricket Business Operations


Products and Services


Cricket Service Plans.


|                      |  |                 |    |  |                              |                                                                 
|--------------------- |  | --------------- | -- |  | ---------------------------- | ----------------------------------------------------------------
|Primary Cricket Plans |  | Monthly Rate(a) |    |  | Additional Features Included
|                      |  |                 |    |  |                             
|Unlimited Access      |  | $               | 45 |  |                              |  Unlimited U.S. domestic long distance(b)                      
|                      |  |                 |    |  |                              |  Unlimited text, multimedia (picture) and instant
    messaging
|                      |  |                 |    |  |                              |  Voicemail, caller ID and call waiting                         
|                     
|Unlimited Plus        |  | $               | 40 |  |                              |  Unlimited U.S. domestic long distance(b)                      
|Unlimited Classic     |  | $               | 35 |  |                              |                                                                 






|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Before taxes and other service fees, which include
    E-911 fees,
    USF fees, regulatory recovery fees, optional
    insurance fees and optional paper bill fees.
|   
|(b) |  | Excludes Alaska.                                                                                                                                                        

Cricket Plan Upgrades.




| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | International calls to Canada and/or Mexico on a prepaid basis
    for $5 for 100 minutes, $15 for 300 minutes, and $25 for 550
    minutes;

4



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| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cricket Flex
    Buckettm
    service, which allows our customers with Cricket
    Clickstm
    enabled phones to purchase applications, including customized
    ringtones, wallpapers, photos, greeting cards, games and news
    and entertainment message deliveries, on a prepaid basis (in
    increments of $5);
|
| |  | Travel Time (roaming) service, which allows our customers
    to use their Cricket phones outside of their Cricket service
    areas on a prepaid basis for up to 30 minutes for $5 (and
    $0.59 per minute for additional minutes);                                                                                 
|
| |  | Voicemail, caller ID and call waiting for $5 per month
    (included in our Unlimited Access service plan); and                                                                                                                                                                                                        
|
| |  | Unlimited text, multimedia (picture) and instant messaging
    for $5 per month (included in our Unlimited Access service
    plan).                                                                                                                                                                                   

Handsets.


Handset Replacement.


Jump Mobile.


Customer Care and Billing


Customer Care.


Billing and Support Systems.




| |                       
| | ----------------------
| | Sales and Distribution





5



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www.mycricket.com e-commerce,






| |                       
| | ----------------------
| | Network and Operations

state-of






6



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Chapter 11 Proceedings Under the Bankruptcy Code




pay-in pay-in


7



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Wireless Licenses






| |        
| | -------
| | Cricket

|                                                          |                  |            |           |            |     |  |         |       |  |  |     |  | 
|--------------------------------------------------------- | ---------------- | ---------- | --------- | ---------- | --- |  | ------- | ----- |  |  | --- |  | 
|                                                          |                  |            |           | Total      |     |  | Channel |      
|Market                                                    |                  | Population |           |            | MHz |  |         | Block | 
|                                                          |                  |            |           |            |     |  |         |       | 
|Houston, TX                                               |                  |            | 5,693,661 |            |     |  | 10      |       |  |  | C   | 
|Phoenix, AZ(1)                                            |                  |            | 4,055,495 |            |     |  | 10      |       |  |  | C   | 
|San Diego, CA                                             |                  |            | 3,026,854 |            |     |  | 10      |       |  |  | C   | 
|Denver/ Boulder, CO(1)                                    |                  |            | 2,948,779 |            |     |  | 10      |       |  |  | F   | 
|Pittsburgh/ Butler/ Uniontown/ Washington/ Latrobe, PA(1) |                  |            | 2,437,336 |            |     |  | 10      |       |  |  | E   | 
|Charlotte/ Gastonia, NC(1)                                |                  |            | 2,302,773 |            |     |  | 10      |       |  |  | F   | 
|Kansas City, MO                                           |                  |            | 2,169,252 |            |     |  | 10      |       |  |  | C   | 
|Nashville/ Murfreesboro, TN(1)                            |                  |            | 1,889,365 |            |     |  | 15      |       |  |  | C   | 
|Salt Lake City/ Ogden, UT(1)                              |                  |            | 1,741,912 |            |     |  | 15      |       |  |  | C   | 
|Memphis, TN(1)                                            |                  |            | 1,608,980 |            |     |  | 15      |       |  |  | C   | 
|Greensboro/ Winston-Salem/ High Point, NC(1)              |                  |            | 1,528,564 |            |     |  | 10      |       |  |  | F   | 
|Dayton/ Springfield, OH(1)                                |                  |            | 1,218,322 |            |     |  | 10      |       |  |  | F   | 
|Buffalo, NY(1),(2)                                        |                  |            | 1,195,157 |            |     |  | 10      |       |  |  | E   | 
|Knoxville, TN(1)                                          |                  |            | 1,185,948 |            |     |  | 15      |       |  |  | C   | 
|Grand Rapids, MI                                          |                  |            | 1,140,950 |            |     |  | 10      |       |  |  | D   | 
|Omaha, NE(1)                                              |                  |            | 1,032,469 |            |     |  | 10      |       |  |  | F   | 
|Fresno, CA(1)                                             |                  |            | 1,020,480 |            |     |  | 30      |       |  |  | C   | 
|Little Rock, AR(1)                                        |                  |            | 998,263   |            |     |  | 15      |       |  |  | C   | 
|Tulsa, OK(1)                                              |                  |            | 988,686   |            |     |  | 15      |       |  |  | C   | 
|Tucson, AZ(1)                                             |                  |            | 941,615   |            |     |  | 15      |       |  |  | C   | 
|Albuquerque, NM(1)                                        |                  |            | 897,787   |            |     |  | 15      |       |  |  | C   | 
|Toledo, OH(1),(3)                                         |                  |            | 789,506   |            |     |  | 15      |       |  |  | C   | 
|Syracuse, NY(1)                                           |                  |            | 788,466   |            |     |  | 15      |       |  |  | C   | 
|Spokane, WA(1)                                            |                  |            | 786,557   |            |     |  | 15      |       |  |  | C   | 
|Ft. Wayne, IN                                             |                  |            | 736,670   |            |     |  | 10      |       |  |  | E   | 
|Macon, GA(1)                                              |                  |            | 694,451   |            |     |  | 30      |       |  |  | C   | 
|Wichita, KS(1)                                            |                  |            | 673,043   |            |     |  | 15      |       |  |  | C   | 
|Boise, ID(1)                                              |                  |            | 664,341   |            |     |  | 30      |       |  |  | C   | 
|Reno, NV(1)                                               |                  |            | 661,047   |            |     |  | 10      |       |  |  | C   | 
|Saginaw-Bay City, MI                                      |                  |            | 641,102   |            |     |  | 10      |       |  |  | D   | 
|Chattanooga, TN(1)                                        |                  |            | 589,905   |            |     |  | 15      |       |  |  | C   | 
|Modesto, CA(1)                                            |                  |            | 574,191   |            |     |  | 15      |       |  |  | C   | 
|Salem/ Corvallis, OR(1),(4)                               |                  |            | 564,062   |            |     |  | 20      |       |  |  | C   | 
|Visalia, CA(1)                                            |                  |            | 548,177   |            |     |  | 15      |       |  |  | C   | 
|Lakeland, FL                                              |                  |            | 531,706   |            |     |  | 10      |       |  |  | F   | 
|Evansville, IN                                            |                  |            | 527,827   |            |     |  | 10      |       |  |  | F   | 
|Lansing, MI                                               |                  |            | 526,606   |            |     |  | 10      |       |  |  | D   | 
|Appleton-Oshkosh, WI                                      |                  |            | 475,841   |            |     |  | 10      |       |  |  | E   | 
|Peoria, IL                                                |                  |            | 458,653   |            |     |  | 15      |       |  |  | C   | 
|Provo, UT(1)                                              |                  |            | 434,151   |            |     |  | 15      |       |  |  | C   | 
|Fayetteville, AR(1)                                       |                  |            | 379,468   |            |     |  | 20      |       |  |  | C   | 
|Temple, TX                                                |                  |            | 378,197   |            |     |  | 10      |       |  |  | C   | 
|Columbus, GA(1)                                           |                  |            | 373,094   |            |     |  | 15      |       |  |  | C   | 
|Lincoln, NE(1)                                            |                  |            | 365,642   |            |     |  | 15      |       |  |  | C   | 
|Albany, GA                                                |                  |            | 364,149   |            |     |  | 15      |       |  |  | C   | 
|Hickory, NC                                               |                  |            | 355,795   |            |     |  | 10      |       |  |  | F   | 
|Fort Smith, AR(1)                                         |                  |            | 339,088   |            |     |  | 20      |       |  |  | C   | 
|Eugene, OR(1),(4)                                         |                  |            | 336,803   |            |     |  | 10      |       |  |  | C   | 
|La Crosse, WI, Winona, MN                                 |                  |            | 325,933   |            |     |  | 10      |       |  |  | D   | 
|Pueblo, CO(1)                                             |                  |            | 325,794   |            |     |  | 20      |       |  |  | C   | 
|Fargo, ND                                                 |                  |            | 320,715   |            |     |  | 15      |       |  |  | C   | 
|Utica, NY                                                 |                  |            | 297,672   |            |     |  | 10      |       |  |  | F   | 
|Ft. Collins, CO(1)                                        |                  |            | 273,954   |            |     |  | 10      |       |  |  | F   | 
|Clarksville, TN(1)                                        |                  |            | 273,730   |            |     |  | 15      |       |  |  | C   | 
|Merced, CA(1)                                             |                  |            | 260,066   |            |     |  | 15      |       |  |  | C   | 
|Santa Fe, NM(1)                                           |                  |            | 234,691   |            |     |  | 15      |       |  |  | C   | 
|Muskegon, MI                                              |                  |            | 232,822   |            |     |  | 10      |       |  |  | D   | 
|Greeley, CO(1)                                            |                  |            | 229,860   |            |     |  | 10      |       |  |  | F   | 
|Johnstown, PA                                             |                  |            | 226,326   |            |     |  | 10      |       |  |  | C   | 
|Stevens Point, Marshfield, Wisconsin Rapids, WI           |                  |            | 218,663   |            |     |  | 20      |       |  |  | D,E | 
|Grand Forks, ND                                           |                  |            | 194,679   |            |     |  | 15      |       |  |  | C   | 
|Jonesboro, AR(1)                                          |                  |            | 186,556   |            |     |  | 10      |       |  |  | C   | 
|Lufkin, TX                                                |                  |            | 167,326   |            |     |  | 10      |       |  |  | C   | 
|Owensboro, KY                                             |                  |            | 166,891   |            |     |  | 10      |       |  |  | F   | 
|Pine Buff, AR(1)                                          |                  |            | 149,995   |            |     |  | 20      |       |  |  | C   | 
|Hot Springs, AR(1)                                        |                  |            | 144,727   |            |     |  | 15      |       |  |  | C   | 
|Gallup, NM                                                |                  |            | 139,910   |            |     |  | 15      |       |  |  | C   | 
|Sandusky, OH(1),(3)                                       |                  |            | 138,340   |            |     |  | 15      |       |  |  | C   | 
|Steubenville, OH-Weirton, WV(1)                           |                  |            | 126,335   |            |     |  | 10      |       |  |  | C   | 
|Eagle Pass, TX                                            |                  |            | 124,186   |            |     |  | 15      |       |  |  | C   | 
|Lewiston, ID                                              |                  |            | 123,933   |            |     |  | 15      |       |  |  | C   | 
|Marion, OH                                                |                  |            | 101,577   |            |     |  | 10      |       |  |  | C   | 
|Roswell, NM                                               |                  |            | 81,947    |            |     |  | 15      |       |  |  | C   | 
|Blytheville, AR                                           |                  |            | 66,293    |            |     |  | 15      |       |  |  | C   | 
|Coffeyville, KS                                           |                  |            | 59,053    |            |     |  | 15      |       |  |  | C   | 
|Nogales, AZ                                               |                  |            | 41,728    |            |     |  | 20      |       |  |  | C   | 
|                                                          |                  |            |           |            |     |  |         |       | 
|                                                          | Subtotal Cricket |            |           | 59,814,888 |     |  |         |       |  |  |     |  | 
|                                                          |                  |            |           |            |     |  |         |       | 



| |              
| | -------------
| | ANB 1 License

|                        |                                 |            |           |            |     |  |         |       |  |  |   |   | 
|----------------------- | ------------------------------- | ---------- | --------- | ---------- | --- |  | ------- | ----- |  |  | - | - | 
|                        |                                 |            |           | Total      |     |  | Channel |      
|Market                  |                                 | Population |           |            | MHz |  |         | Block | 
|                        |                                 |            |           |            |     |  |         |       | 
|Cincinnati, OH          |                                 |            | 2,243,257 |            |     |  | 10      |       |  |  | C |  
|San Antonio, TX         |                                 |            | 2,047,158 |            |     |  | 10      |       |  |  | C |  
|Louisville, KY          |                                 |            | 1,548,162 |            |     |  | 10      |       |  |  | C |  
|Austin, TX              |                                 |            | 1,536,178 |            |     |  | 10      |       |  |  | C |  
|Lexington, KY           |                                 |            | 972,910   |            |     |  | 10      |       |  |  | C |  
|El Paso, TX(1)          |                                 |            | 795,224   |            |     |  | 10      |       |  |  | C |  
|Colorado Springs, CO(1) |                                 |            | 589,731   |            |     |  | 10      |       |  |  | C |  
|Las Cruces, NM(1)       |                                 |            | 263,039   |            |     |  | 10      |       |  |  | C |  
|Bryan, TX               |                                 |            | 203,606   |            |     |  | 10      |       |  |  | C |  
|                        |                                 |            |           |            |     |  |         |       | 
|                        | Subtotal ANB 1 License          |            |           | 10,199,265 |     |  |         | 10    |  |  |   | C | 
|                        |                                 |            |           |            |     |  |         |       | 
|                        | Total Cricket and ANB 1 License |            |           | 70,014,153 |     |  |         | 10    |  |  |   | C | 
|                        |                                 |            |           |            |     |  |         |       | 




|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Designates wireless licenses or portions of wireless licenses in
    markets where Cricket service is offered.                                                                                                                  
|   
|(2) | Designates a wireless license which we have agreed, subject to
    certain conditions, to exchange for a wireless license covering
    the same market area with the same amount of MHz, but in a
    different frequency block.

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|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Designates wireless licenses or portions of wireless licenses
    used in commercial operations that, subject to certain
    conditions, we have agreed to sell to a third party along with
    associated network assets and subscribers. Upon completion of
    the sale, Cricket will no longer offer service in these
    designated markets.
|   
|(4) | Designates wireless licenses used in commercial operations that,
    subject to certain conditions, we have agreed to contribute,
    along with associated network assets and subscribers, to LCW
    Wireless.                                                                                                                                 

Arrangements with Alaska Native Broadband








Limited Liability Company Agreement.






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Senior Secured Credit Agreement.


Management Agreement. mark-up


Arrangements with LCW Wireless








Agreements to Obtain Equity Interests in LCW Wireless.


10



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Limited Liability Company Agreement.




30-day


Management Agreement. mark-up


Competition


T-Mobile, e-mail


11



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12



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Government Regulation




Licensing of PCS Systems






13



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10-year


non-U.S. non-U.S.




PCS Construction Requirements.


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Transfer and Assignment of PCS Licenses.






FCC Regulation








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truth-in


State, Local and Other Regulation








Privacy




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Intellectual Property








Availability of Public Reports


10-K, 10-Q, 8-K, 1-800-SEC-0330.


Financial Information Concerning Segments and Geographical
Information




Employees




Seasonality




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Inflation




Executive Officers of the Registrant


S. Douglas Hutcheson,


Albin F. Moschner, ,


Glenn T. Umetsu,


David B. Davis,


Robert J. Irving, Jr.


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Leonard C. Stephens, , 14-year


Linda K. Wokoun,


Dean M. Luvisa,


Grant A. Burton,


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Item 1A.Risk
Factors


Risks Related to Our Business and Industry


We Have Experienced Net Losses, and We May Not Be Profitable
in the Future.




We May Not Be Successful in Increasing Our Customer Base
Which Would Negatively Affect Our Business Plans and Financial
Outlook.




If We Experience High Rates of Customer Turnover or Credit
Card Subscription or Dealer Fraud, Our Ability to Become
Profitable Will Decrease.






We Have Made Significant Investment, and Will Continue to
Invest, in Joint Ventures and Designated Entities, including ANB
1 and LCW Wireless, That We Do Not Control.




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We Face Increasing Competition Which Could Have a Material
Adverse Effect on Demand for the Cricket Service.










We Have Identified Material Weaknesses in Our Internal
Control Over Financial Reporting, and Our Business and Stock
Price May Be Adversely Affected If We Do Not Remediate All of
These Material Weaknesses, or If We Have Other Material
Weaknesses in Our Internal Control Over Financial Reporting.




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Our Internal Control Over Financial Reporting Was Not
Effective as of December 31, 2005, and Our Business May Be
Adversely Affected if We Are Not Able to Implement Effective
Control Over Financial Reporting.


10-K


Our Primary Business Strategy May Not Succeed in the Long
Term.




We Expect to Incur Substantial Costs in Connection with the
Build-Out of Our New Markets, and any Delays in the Build-Out of
Our New Markets Could Adversely Affect Our Business.




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If We Are Unable to Manage Our Planned Growth, Our Operations
Could Be Adversely Impacted.




The Wireless Industry is Experiencing Rapid Technological
Change, and We May Lose Customers if We Fail to Keep Up with
These Changes.






The Loss of Key Personnel and Difficulty Attracting and
Retaining Qualified Personnel Could Harm Our Business.






Risks Associated with Wireless Handsets Could Pose Product
Liability, Health and Safety Risks That Could Adversely Affect
Our Business.




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We Rely Heavily on Third Parties to Provide Specialized
Services; a Failure by Such Parties to Provide the Agreed
Services Could Materially Adversely Affect Our Business, Results
of Operations and Financial Condition.




System Failures Could Result in Higher Churn, Reduced Revenue
and Increased Costs, and Could Harm Our Reputation.




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We May Not be Successful in Protecting and Enforcing Our
Intellectual Property Rights.






We May Be Subject to Claims of Infringement Regarding
Telecommunications Technologies That Are Protected by Patents
and Other Intellectual Property Rights.






Regulation by Government Agencies May Increase Our Costs of
Providing Service or Require Us to Change Our Services.






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If Call Volume under Our Cricket Flat Price Plans Exceeds Our
Expectations, Our Costs of Providing Service Could Increase,
Which Could Have a Material Adverse Effect on Our Competitive
Position.




We May Be Unable to Acquire Additional Spectrum in the Future
at a Reasonable Cost or on a Timely Basis.




Future Declines in the Fair Value of Our Wireless Licenses
Could Result in Future Impairment Charges.


90-7, 90-7,






| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidation in the wireless industry allows or requires
    carriers to sell significant portions of their wireless spectrum
    holdings;                          
|
| |  | a sudden large sale of spectrum by one or more wireless
    providers occurs; or                                                                                      
|
| |  | market prices decline as a result of the bidding activity in
    upcoming FCC auctions, including the upcoming auction allocated
    for Advanced Wireless Services.



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Declines in Our Operating Performance Could Ultimately Result
in an Impairment of Our Indefinite-Lived Assets, Including
Goodwill, or Our Long-Lived Assets, Including Property and
Equipment.




We May Incur Higher Than Anticipated Intercarrier
Compensation Costs.






Because Our Consolidated Financial Statements Reflect
Fresh-Start Reporting Adjustments Made upon Our Emergence from
Bankruptcy, Financial Information in Our Current and Future
Financial Statements Will Not Be Comparable to Our Financial
Information for Periods Prior to Our Emergence from
Bankruptcy.




Our Indebtedness Could Adversely Affect Our Financial
Health.




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | make it more difficult for us to satisfy our debt obligations;                                                                                                                                                                                                                                                                                                                                                                
|
| |  | increase our vulnerability to general adverse economic and
    industry conditions;                                                                                                                                                                                                                                                                                                                                           
|
| |  | impair our ability to obtain additional financing in the future
    for working capital needs, capital expenditures, building out
    our network, acquisitions and general corporate purposes;                                                                                                                                                                                                                               
|
| |  | require us to dedicate a substantial portion of our cash flows
    from operations to the payment of principal and interest on our
    indebtedness, thereby reducing the availability of our cash
    flows to fund working capital needs, capital expenditures,
    acquisitions and other general corporate purposes;                                                                                                      
|
| |  | limit our flexibility in planning for, or reacting to, changes
    in our business and the industry in which we operate;                                                                                                                                                                                                                                                                                                      
|
| |  | place us at a disadvantage compared to our competitors that have
    less indebtedness; and                                                                                                                                                                                                                                                                                                                                   
|
| |  | subject us to higher interest expense in the event of increases
    in interest rates because our indebtedness under our secured
    credit facility bears interest at a variable rate. For a
    description of our secured credit facility, see
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Liquidity and Capital Resources  Secured Credit
    Facility.

Despite Current Indebtedness Levels, We May Still Be Able to
Incur Substantially More Indebtedness. This Could Further
Increase the Risks Associated with Our Leverage.




To Service Our Indebtedness and Fund Our Working Capital
and Capital Expenditures, We Will Require a Significant Amount
of Cash. Our Ability to Generate Cash Depends on Many Factors
Beyond Our Control.




Covenants in Our Secured Credit Agreement May Limit Our
Ability to Operate Our Business.




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10-K 10-Q


Rises in Interest Rates Could Adversely Affect our Financial
Condition.




Risks Related to Ownership of Our Common Stock


Our Stock Price May Be Volatile, and You May Lose All or Some
of Your Investment.






| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | variations in our operating results;                                                                                                                                
|
| |  | announcements of technological innovations, new services or
    service enhancements, strategic alliances or significant
    agreements by us or by our competitors;
|
| |  | recruitment or departure of key personnel;                                                                                                                          
|
| |  | changes in the estimates of our operating results or changes in
    recommendations by any securities analysts that elect to follow
    our common stock; and       



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | market conditions in our industry and the economy as a whole.

The 17,198,252 Shares of Leap Common Stock Registered
for Resale By Our Shelf Registration Statement on
Form S-1 May
Adversely Affect The Market Price of Leaps Common
Stock.


S-1,


Your Ownership Interest in Leap Will Be Diluted Upon
Issuance of Shares We Have Reserved for Future Issuances, and
Future Issuances or Sales of Such Shares May Adversely Affect
The Market Price of Leaps Common Stock.




29



---



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pro rata




Our Directors and Affiliated Entities Have Substantial
Influence over Our Affairs.




Provisions in Our Amended and Restated Certificate of
Incorporation and Bylaws or Delaware Law Might Discourage, Delay
or Prevent a Change in Control of Our Company or Changes in Our
Management and, Therefore, Depress The Trading Price of Our
Common Stock.






| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | require super-majority voting to amend some provisions in our
    amended and restated certificate of incorporation and bylaws;                                                       
|
| |  | authorize the issuance of blank check preferred
    stock that our board of directors could issue to increase the
    number of outstanding shares to discourage a takeover attempt;
|
| |  | prohibit stockholder action by written consent, and require that
    all stockholder actions be taken at a meeting of our
    stockholders;                                           
|
| |  | provide that the board of directors is expressly authorized to
    make, alter or repeal our bylaws; and                                                                              
|
| |  | establish advance notice requirements for nominations for
    elections to our board or for proposing matters that can be
    acted upon by stockholders at stockholder meetings.     



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Item 1B.     Unresolved
Staff Comments









|        |           
|------- | ----------
|Item 2. | Properties














|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Outstanding Bankruptcy Claims.


Securities Litigation.


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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Price of and Dividends on the Registrants Common
Equity and Related Stockholder Matters






Over-the


|                     |                                         |         |  |       |        |  |  |       | 
|-------------------- | --------------------------------------- | ------- |  | ----- | ------ |  |  | ----- | 
|                     |                                         | High($) |  |       | Low($) | 
|                     |                                         |         |  |       |        | 
|Old Common Stock     |                                         |         |  |       |        |  |  |      
|Calendar Year  2004 |                                         |         |  |       |        |  |  |      
|                     | First Quarter                           |         |  | 0.06  |        |  |  | 0.03  | 
|                     | Second Quarter                          |         |  | 0.04  |        |  |  | 0.01  | 
|                     | Third Quarter through August 15, 2004   |         |  | 0.02  |        |  |  | 0.01  | 
|New Common Stock     |                                         |         |  |       |        |  |  |      
|                     | Third Quarter beginning August 16, 2004 |         |  | 27.80 |        |  |  | 19.75 | 
|                     | Fourth Quarter                          |         |  | 28.10 |        |  |  | 19.00 | 
|Calendar Year  2005 |                                         |         |  |       |        |  |  |      
|                     | First Quarter                           |         |  | 29.87 |        |  |  | 25.01 | 
|                     | Second Quarter                          |         |  | 28.90 |        |  |  | 23.00 | 
|                     | Third Quarter                           |         |  | 37.47 |        |  |  | 25.87 | 
|                     | Fourth Quarter                          |         |  | 39.45 |        |  |  | 31.15 | 



Dividends




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Securities Authorized For Issuance Under Equity Compensation
Plans




|                                                              |       |                            |           |                  |                   |   |       |                                |  |  |           |           | 
|------------------------------------------------------------- | ----- | -------------------------- | --------- | ---------------- | ----------------- | - | ----- | ------------------------------ |  |  | --------- | --------- | 
|                                                              |       |                            |           | Weighted-average |                   |   |      
|                                                              |       | Number of securities to be |           |                  | exercise price of |   |       | Number of securities           | 
|                                                              |       | Issued upon exercise of    |           |                  | outstanding       |   |       | remaining available for future | 
|                                                              |       | outstanding options,       |           |                  | options, warrants |   |       | issuance under equity          | 
|Plan Category                                                 |       | warrants and rights        |           |                  | and rights        |   |       | compensation plans             | 
|                                                              |       |                            |           |                  |                   |   |       |                                | 
|Equity compensation plans approved by security holders(1)     |       |                            |          |                  |                   | $ |      |                                |  |  | 791,970   |          
|Equity compensation plans not approved by security holders(2) |       |                            | 1,891,984 | (3)              |                   | $ | 26.50 |                                |  |  | 1,739,017 | (4)      
|                                                              |       |                            |           |                  |                   |   |       |                                | 
|                                                              | Total |                            |           | 1,891,984        |                   |   | $     | 26.50                          |  |  |           | 2,530,987 | 
|                                                              |       |                            |           |                  |                   |   |       |                                | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of shares reserved for issuance under the Leap Wireless
    International, Inc. Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | Consists of shares reserved for issuance under the Leap Wireless
    International, Inc. 2004 Stock Option, Restricted Stock and
    Deferred Stock Unit Plan (the 2004 Plan) adopted by
    the compensation committee of our board of directors on
    December 30, 2004 as contemplated by our confirmed plan of
    reorganization. The material features of the 2004 Plan are
    described in Item 11-Executive Compensation
    contained in Part III of this report.
|   
|(3) | Includes 948,292 shares of restricted stock issued under
    the 2004 Plan which are subject to release upon vesting of the
    shares.                                                                                                                                                                                                                                                                                                                                         
|   
|(4) | Includes 25,777 shares of restricted stock issued under the
    2004 Plan which are pending repurchase by Leap as a result of
    termination of employment by employees.                                                                                                                                                                                                                                                                                                       

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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL DATA


(In thousands, except per share data)




|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |          |          |  
|-------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------ | ------- | ----------- | ------------------- | - | ------------ | -------- | -------- | - | ----------------------- | -------- | -------- | ---- | -------- | -------- | ---------- | - | -------- | -------- | ---------- | - | -------- | -------- | -------- | -
|                                                                                                                                 |                                                             | Successor Company        |         |             | Predecessor Company |  
|                                                                                                                                 |                                                             |                          |         |             |                     |  
|                                                                                                                                 |                                                             |                          |         | Five Months |                     |   | Seven Months |          |          |  
|                                                                                                                                 |                                                             | Year Ended               |         |             | Ended               |   |              | Ended    |          |   | Year Ended December 31, |         
|                                                                                                                                 |                                                             | December 31,             |         |             | December 31,        |   |              | July 31, |          |   |                         |         
|                                                                                                                                 |                                                             | 2005                     |         |             | 2004                |   |              | 2004     |          |   | 2003                    |          |          | 2002 |          |          | 2001       |  
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 |                                                             | (As Restated)            |         |             |                     |   |              |          |         
|Statement of Operations Data:                                                                                                    |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |         
|Revenues:                                                                                                                        |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |         
|                                                                                                                                 | Service revenues                                            |                          | $       | 763,680     |                     |   | $            | 285,647  |          |   | $                       | 398,451  |          |      | $        | 643,566  |            |   | $        | 567,694  |            |   | $        | 215,917  |         
|                                                                                                                                 | Equipment revenues                                          |                          |         | 150,983     |                     |   |              | 58,713   |          |   |                         | 83,196   |          |      |          | 107,730  |            |   |          | 50,781   |            |   |          | 39,247   |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 |                                                             | Total revenues           |         |             | 914,663             |   |              |          | 344,360  |   |                         |          | 481,647  |      |          |          | 751,296    |   |          |          | 618,475    |   |          |          | 255,164  |  
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|Operating expenses:                                                                                                              |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |         
|                                                                                                                                 | Cost of service (exclusive of items shown separately below) |                          |         | (200,430    | )                   |   |              | (79,148  | )        |   |                         | (113,988 | )        |      |          | (199,987 | )          |   |          | (181,404 | )          |   |          | (94,510  | )       
|                                                                                                                                 | Cost of equipment                                           |                          |         | (192,205    | )                   |   |              | (82,402  | )        |   |                         | (97,160  | )        |      |          | (172,235 | )          |   |          | (252,344 | )          |   |          | (202,355 | )       
|                                                                                                                                 | Selling and marketing                                       |                          |         | (100,042    | )                   |   |              | (39,938  | )        |   |                         | (51,997  | )        |      |          | (86,223  | )          |   |          | (122,092 | )          |   |          | (115,222 | )       
|                                                                                                                                 | General and administrative                                  |                          |         | (159,249    | )                   |   |              | (57,110  | )        |   |                         | (81,514  | )        |      |          | (162,378 | )          |   |          | (185,915 | )          |   |          | (152,051 | )       
|                                                                                                                                 | Depreciation and amortization                               |                          |         | (195,462    | )                   |   |              | (75,324  | )        |   |                         | (178,120 | )        |      |          | (300,243 | )          |   |          | (287,942 | )          |   |          | (119,177 | )       
|                                                                                                                                 | Impairment of indefinite-lived intangible assets            |                          |         | (12,043     | )                   |   |              |         |          |   |                         |         |          |      |          | (171,140 | )          |   |          | (26,919  | )          |   |          |         |         
|                                                                                                                                 | Loss on disposal of property and equipment                  |                          |         |            |                     |   |              |         |          |   |                         |         |          |      |          | (24,054  | )          |   |          | (16,323  | )          |   |          |         |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 |                                                             | Total operating expenses |         |             | (859,431            | ) |              |          | (333,922 | ) |                         |          | (522,779 | )    |          |          | (1,116,260 | ) |          |          | (1,072,939 | ) |          |          | (683,315 | )
|Gain on sale of wireless licenses and operating assets                                                                           |                                                             |                          | 14,587  |             |                     |   |             |          |          |   | 532                     |          |          |      | 4,589    |          |            |   | 364      |          |            |   | 143,633  |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 | Operating income (loss)                                     |                          |         | 69,819      |                     |   |              | 10,438   |          |   |                         | (40,600  | )        |      |          | (360,375 | )          |   |          | (454,100 | )          |   |          | (284,518 | )       
|Equity in net loss of and write-down of investments in and loans
    receivable from unconsolidated wireless operating companies |                                                             |                          |        |             |                     |   |             |          |          |   |                        |          |          |      |         |          |            |   |         |          |            |   | (54,000  | )       
|Minority interest in loss of consolidated subsidiary                                                                             |                                                             |                          | (31     | )           |                     |   |             |          |          |   |                        |          |          |      |         |          |            |   |         |          |            |   |         |         
|Interest income                                                                                                                  |                                                             |                          | 9,957   |             |                     |   | 1,812        |          |          |   |                        |          |          |      | 779      |          |            |   | 6,345    |          |            |   | 26,424   |         
|Interest expense                                                                                                                 |                                                             |                          | (30,051 | )           |                     |   | (16,594      | )        |          |   | (4,195                  | )        |          |      | (83,371  | )        |            |   | (229,740 | )        |            |   | (178,067 | )       
|Foreign currency transaction losses, net                                                                                         |                                                             |                          |        |             |                     |   |             |          |          |   |                        |          |          |      |         |          |            |   |         |          |            |   | (1,257   | )       
|Gain on sale of unconsolidated wireless operating company                                                                        |                                                             |                          |        |             |                     |   |             |          |          |   |                        |          |          |      |         |          |            |   | 39,518   |          |            |   |         |         
|Other income (expense), net                                                                                                      |                                                             |                          | 1,423   |             |                     |   | (117         | )        |          |   | (293                    | )        |          |      | (176     | )        |            |   | (3,001   | )        |            |   | 8,443    |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 | Income (loss) before reorganization items and income taxes  |                          |         | 51,117      |                     |   |              | (4,461   | )        |   |                         | (45,088  | )        |      |          | (443,143 | )          |   |          | (640,978 | )          |   |          | (482,975 | )       
|Reorganization items, net                                                                                                        |                                                             |                          |        |             |                     |   |             |          |          |   | 962,444                 |          |          |      | (146,242 | )        |            |   |         |          |            |   |         |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 | Income (loss) before income taxes                           |                          |         | 51,117      |                     |   |              | (4,461   | )        |   |                         | 917,356  |          |      |          | (589,385 | )          |   |          | (640,978 | )          |   |          | (482,975 | )       
|Income taxes                                                                                                                     |                                                             |                          | (21,151 | )           |                     |   | (3,930       | )        |          |   | (4,166                  | )        |          |      | (8,052   | )        |            |   | (23,821  | )        |            |   | (322     | )       
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 |                                                             | Net income (loss)        |         | $           | 29,966              |   |              | $        | (8,391   | ) |                         | $        | 913,190  |      |          | $        | (597,437   | ) |          | $        | (664,799   | ) |          | $        | (483,297 | )
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|Net income (loss) per share:                                                                                                     |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |         
|                                                                                                                                 | Basic net income (loss) per share(1)                        |                          | $       | 0.50        |                     |   | $            | (0.14    | )        |   | $                       | 15.58    |          |      | $        | (10.19   | )          |   | $        | (14.91   | )          |   | $        | (14.27   | )       
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 | Diluted net income (loss) per share(1)                      |                          | $       | 0.49        |                     |   | $            | (0.14    | )        |   | $                       | 15.58    |          |      | $        | (10.19   | )          |   | $        | (14.91   | )          |   | $        | (14.27   | )       
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|Shares used in per share calculations(1):                                                                                        |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |   |          |          |            |   |          |         
|                                                                                                                                 | Basic                                                       |                          |         | 60,135      |                     |   |              | 60,000   |          |   |                         | 58,623   |          |      |          | 58,604   |            |   |          | 44,591   |            |   |          | 33,861   |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  
|                                                                                                                                 | Diluted                                                     |                          |         | 61,003      |                     |   |              | 60,000   |          |   |                         | 58,623   |          |      |          | 58,604   |            |   |          | 44,591   |            |   |          | 33,861   |         
|                                                                                                                                 |                                                             |                          |         |             |                     |   |              |          |          |   |                         |          |          |      |          |          |            |  

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|                                                             |  |                    |           |  |                     |   |           |      |  |   |            |   |  |      |            |   |  |   |           | 
|------------------------------------------------------------ |  | ------------------ | --------- |  | ------------------- | - | --------- | ---- |  | - | ---------- | - |  | ---- | ---------- | - |  | - | --------- | 
|                                                             |  | As of December 31, |          
|                                                             |  |                    |          
|                                                             |  | Successor Company  |           |  | Predecessor Company |  
|                                                             |  |                    |           |  |                     |  
|                                                             |  | 2005               |           |  | 2004                |   |           | 2003 |  |   | 2002       |   |  | 2001 |           
|                                                             |  |                    |           |  |                     |   |           |      |  |   |            |   |  |      |           
|                                                             |  | (As Restated)      |           |  |                     |   |          
|Balance Sheet Data:                                          |  |                    |           |  |                     |   |           |      |  |   |            |   |  |      |            |   |  |   |           | 
|Cash and cash equivalents                                    |  | $                  | 293,073   |  |                     | $ | 141,141   |      |  | $ | 84,070     |   |  | $    | 100,860    |   |  | $ | 242,979   | 
|Working capital (deficit)(2)                                 |  |                    | 240,862   |  |                     |   | 145,762   |      |  |   | (2,254,809 | ) |  |      | (2,144,420 | ) |  |   | 189,507   | 
|Restricted cash, cash equivalents and short-term investments |  |                    | 13,759    |  |                     |   | 31,427    |      |  |   | 55,954     |   |  |      | 25,922     |   |  |   | 40,755    | 
|Total assets                                                 |  |                    | 2,506,318 |  |                     |   | 2,220,887 |      |  |   | 1,756,843  |   |  |      | 2,163,702  |   |  |   | 2,450,895 | 
|Long-term debt(2)                                            |  |                    | 588,333   |  |                     |   | 371,355   |      |  |   |           |   |  |      |           |   |  |   | 1,676,845 | 
|Total stockholders equity (deficit)                         |  |                    | 1,514,357 |  |                     |   | 1,470,056 |      |  |   | (893,356   | ) |  |      | (296,786   | ) |  |   | 358,440   | 






|    |                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Refer to Notes 3 and 6 to the consolidated financial
    statements included in Item 8 of this report for an
    explanation of the calculation of basic and diluted net income
    (loss) per common share.                                                                            
|   
|(2) | We have presented the principal and interest balances related to
    our outstanding debt obligations as current liabilities in the
    consolidated balance sheets as of December 31, 2003 and
    2002, as a result of the then existing defaults under the
    underlying agreements.

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION


AND RESULTS OF OPERATIONS




Overview


Restatement of Previously Reported Audited Annual and
Unaudited Interim Consolidated Financial Information.


Our Business.




debtor-in


37



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Critical Accounting Policies and Estimates






Principles of Consolidation




Revenues and Cost of Revenues


month-to


38



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Wireless Licenses




Goodwill and Other Intangible Assets




Impairment of Long-Lived Assets




Impairment of Indefinite-Lived Intangible Assets




39



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Income Taxes


90-7,


Subscriber Recognition and Disconnect Policies






Seasonality




Costs and Expenses




Cost of Service.


40



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Cost of Equipment. lower-of


Selling and Marketing.


General and Administrative Expenses.


Depreciation and Amortization.


|                                                    |                                                             |             |     |    | 
|--------------------------------------------------- | ----------------------------------------------------------- | ----------- | --- | -- | 
|                                                    |                                                             | Depreciable |    
|                                                    |                                                             | Life        |    
|                                                    |                                                             |             |    
|Network equipment:                                  |                                                             |             |     |   
|                                                    | Switches                                                    |             |     | 10 | 
|                                                    | Switch power equipment                                      |             |     | 15 | 
|                                                    | Cell site equipment, and site acquisitions and improvements |             |     | 7  | 
|                                                    | Towers                                                      |             |     | 15 | 
|                                                    | Antennae                                                    |             |     | 3  | 
|Computer hardware and software                      |                                                             |             | 3-5 |   
|Furniture, fixtures and retail and office equipment |                                                             |             | 3-7 |   



Stock-based Compensation.


Results of Operations




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| |                      
| | ---------------------
| | Financial Performance



|                                                       |                                                             |                          |                   |          |          |        |         |          |          |         |          |          |            |          |  
|------------------------------------------------------ | ----------------------------------------------------------- | ------------------------ | ----------------- | -------- | -------- | ------ | ------- | -------- | -------- | ------- | -------- | -------- | ---------- | -------- | -
|                                                       |                                                             | Year Ended December 31,  |                  
|                                                       |                                                             |                          |                  
|                                                       |                                                             | 2005                     |                   |          | 2004     |        |         | 2003     |         
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       |                                                             | (As Restated)            |                  
|Revenues:                                              |                                                             |                          |                   |          |          |        |         |          |          |         |          |         
|                                                       | Service revenues                                            |                          | $                 | 763,680  |          |        | $       | 684,098  |          |         | $        | 643,566  |           
|                                                       | Equipment revenues                                          |                          |                   | 150,983  |          |        |         | 141,909  |          |         |          | 107,730  |           
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       |                                                             | Total revenues           |                   |          | 914,663  |        |         |          | 826,007  |         |          |          | 751,296    |         
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|Operating expenses:                                    |                                                             |                          |                   |          |          |        |         |          |          |         |          |         
|                                                       | Cost of service (exclusive of items shown separately below) |                          |                   | (200,430 | )        |        |         | (193,136 | )        |         |          | (199,987 | )         
|                                                       | Cost of equipment                                           |                          |                   | (192,205 | )        |        |         | (179,562 | )        |         |          | (172,235 | )         
|                                                       | Selling and marketing                                       |                          |                   | (100,042 | )        |        |         | (91,935  | )        |         |          | (86,223  | )         
|                                                       | General and administrative                                  |                          |                   | (159,249 | )        |        |         | (138,624 | )        |         |          | (162,378 | )         
|                                                       | Depreciation and amortization                               |                          |                   | (195,462 | )        |        |         | (253,444 | )        |         |          | (300,243 | )         
|                                                       | Impairment of indefinite-lived intangible assets            |                          |                   | (12,043  | )        |        |         |         |          |         |          | (171,140 | )         
|                                                       | Loss on disposal of property and equipment                  |                          |                   |         |          |        |         |         |          |         |          | (24,054  | )         
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       |                                                             | Total operating expenses |                   |          | (859,431 | )      |         |          | (856,701 | )       |          |          | (1,116,260 | )       
|Gain on sale of wireless licenses and operating assets |                                                             |                          | 14,587            |          |          |        | 532     |          |          |         | 4,589    |         
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       | Operating income (loss)                                     |                          |                   | 69,819   |          |        |         | (30,162  | )        |         |          | (360,375 | )         
|Minority interest in loss of consolidated subsidiary   |                                                             |                          | (31               | )        |          |        |        |          |          |         |         |         
|Interest income                                        |                                                             |                          | 9,957             |          |          |        | 1,812   |          |          |         | 779      |         
|Interest expense                                       |                                                             |                          | (30,051           | )        |          |        | (20,789 | )        |          |         | (83,371  | )       
|Other income (expense), net                            |                                                             |                          | 1,423             |          |          |        | (410    | )        |          |         | (176     | )       
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       | Income (loss) before reorganization items and income taxes  |                          |                   | 51,117   |          |        |         | (49,549  | )        |         |          | (443,143 | )         
|Reorganization items, net                              |                                                             |                          |                  |          |          |        | 962,444 |          |          |         | (146,242 | )       
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       | Income (loss) before income taxes                           |                          |                   | 51,117   |          |        |         | 912,895  |          |         |          | (589,385 | )         
|Income taxes                                           |                                                             |                          | (21,151           | )        |          |        | (8,096  | )        |          |         | (8,052   | )       
|                                                       |                                                             |                          |                   |          |          |        |         |          |         
|                                                       |                                                             |                          | Net income (loss) |          | $        | 29,966 |         |          | $        | 904,799 |          |          | $          | (597,437 | )
|                                                       |                                                             |                          |                   |          |          |        |         |          |         

Year Ended December 31, 2005 Compared to Year Ended
December 31, 2004




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90-7.


90-7 pay-in pay-in








44



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pay-in


Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003




00-21,


00-21






45



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90-7 pay-in






46



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Summary of Quarterly Results of Operations




|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |         |          |   |        |         |          |  
|------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------ | ------ | ------- | ------------- | - | ------ | ------------- | -------- | - | ------------ | ------- | -------- | - | ------ | ------- | -------- | -
|                                                              |                                                             | Three Months Ended       |       
|                                                              |                                                             |                          |       
|                                                              |                                                             | March 31,                |        |         | June 30,      |   |        | September 30, |          |   | December 31, |        
|                                                              |                                                             | 2005                     |        |         | 2005          |   |        | 2005          |          |   | 2005         |        
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              |                                                             | (As Restated)            |        |         | (As Restated) |   |        | (As Restated) |          |   |             
|Revenues:                                                     |                                                             |                          |        |         |               |   |        |               |          |   |              |         |          |   |        |        
|                                                              | Service revenues                                            |                          | $      | 185,981 |               |   | $      | 189,704       |          |   | $            | 193,675 |          |   | $      | 194,320 |         
|                                                              | Equipment revenues                                          |                          |        | 42,389  |               |   |        | 37,125        |          |   |              | 36,852  |          |   |        | 34,617  |         
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              |                                                             | Total revenues           |        |         | 228,370       |   |        |               | 226,829  |   |              |         | 230,527  |   |        |         | 228,937  |  
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|Operating expenses:                                           |                                                             |                          |        |         |               |   |        |               |          |   |              |         |          |   |        |        
|                                                              | Cost of service (exclusive of items shown separately below) |                          |        | (50,197 | )             |   |        | (49,608       | )        |   |              | (50,304 | )        |   |        | (50,321 | )       
|                                                              | Cost of equipment                                           |                          |        | (49,178 | )             |   |        | (42,799       | )        |   |              | (49,576 | )        |   |        | (50,652 | )       
|                                                              | Selling and marketing                                       |                          |        | (22,995 | )             |   |        | (24,810       | )        |   |              | (25,535 | )        |   |        | (26,702 | )       
|                                                              | General and administrative                                  |                          |        | (36,035 | )             |   |        | (42,423       | )        |   |              | (41,306 | )        |   |        | (39,485 | )       
|                                                              | Depreciation and amortization                               |                          |        | (48,104 | )             |   |        | (47,281       | )        |   |              | (49,076 | )        |   |        | (51,001 | )       
|                                                              | Impairment of indefinite-lived intangible assets            |                          |        |        |               |   |        | (11,354       | )        |   |              | (689    | )        |   |        |        |         
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              |                                                             | Total operating expenses |        |         | (206,509      | ) |        |               | (218,275 | ) |              |         | (216,486 | ) |        |         | (218,161 | )
|Gain (loss) on sale of wireless licenses and operating assets |                                                             |                          |       |         |               |   |       |               |          |   | 14,593       |         |          |   | (6     | )      
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              | Operating income (loss)                                     |                          |        | 21,861  |               |   |        | 8,554         |          |   |              | 28,634  |          |   |        | 10,770  |         
|Minority interest in loss of consolidated subsidiary          |                                                             |                          |       |         |               |   |       |               |          |   |             |         |          |   | (31    | )      
|Interest income                                               |                                                             |                          | 1,903  |         |               |   | 1,176  |               |          |   | 2,991        |         |          |   | 3,887  |        
|Interest expense                                              |                                                             |                          | (9,123 | )       |               |   | (7,566 | )             |          |   | (6,679       | )       |          |   | (6,683 | )      
|Other income (expense), net                                   |                                                             |                          | (1,286 | )       |               |   | (39    | )             |          |   | 2,352        |         |          |   | 396    |        
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              | Income before income taxes                                  |                          |        | 13,355  |               |   |        | 2,125         |          |   |              | 27,298  |          |   |        | 8,339   |         
|Income taxes                                                  |                                                             |                          | (5,839 | )       |               |   | (1,022 | )             |          |   | (10,901      | )       |          |   | (3,389 | )      
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        
|                                                              |                                                             | Net income               |        | $       | 7,516         |   |        | $             | 1,103    |   |              | $       | 16,397   |   |        | $       | 4,950    |  
|                                                              |                                                             |                          |        |         |               |   |        |               |          |   |              |        

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|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |         |         |          |         |         |        |          |  
|------------------------------------------------------ | ----------------------------------------------------------- | ------------------------------------------------- | ------------------------ | ------- | -------- | ------------- | ------ | ------------- | ------------- | -------- | ------------ | ------- | ------- | -------- | ------- | ------- | ------ | -------- | -
|                                                       |                                                             | Three Months Ended                                |                         
|                                                       |                                                             |                                                   |                         
|                                                       |                                                             | March 31,                                         |                          |         | June 30, |               |        | September 30, |               |          | December 31, |        
|                                                       |                                                             | 2004                                              |                          |         | 2004     |               |        | 2004          |               |          | 2004         |        
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             |                                                   |                          |         |          | (As Restated) |        |               | (As Restated) |         
|Revenues:                                              |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |         |         |          |         |        
|                                                       | Service revenues                                            |                                                   | $                        | 169,051 |          |               | $      | 172,025       |               |          | $            | 170,386 |         |          | $       | 172,636 |       
|                                                       | Equipment revenues                                          |                                                   |                          | 37,771  |          |               |        | 33,676        |               |          |              | 36,521  |         |          |         | 33,941  |       
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             |                                                   | Total revenues           |         |          | 206,822       |        |               |               | 205,701  |              |         |         | 206,907  |         |         |        | 206,577  |  
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|Operating expenses:                                    |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |         |         |          |         |        
|                                                       | Cost of service (exclusive of items shown separately below) |                                                   |                          | (48,000 | )        |               |        | (47,827       | )             |          |              | (51,034 | )       |          |         | (46,275 | )     
|                                                       | Cost of equipment                                           |                                                   |                          | (43,755 | )        |               |        | (40,635       | )             |          |              | (44,153 | )       |          |         | (51,019 | )     
|                                                       | Selling and marketing                                       |                                                   |                          | (23,253 | )        |               |        | (21,939       | )             |          |              | (23,574 | )       |          |         | (23,169 | )     
|                                                       | General and administrative                                  |                                                   |                          | (38,610 | )        |               |        | (33,922       | )             |          |              | (30,689 | )       |          |         | (35,403 | )     
|                                                       | Depreciation and amortization                               |                                                   |                          | (75,461 | )        |               |        | (76,386       | )             |          |              | (55,820 | )       |          |         | (45,777 | )     
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             |                                                   | Total operating expenses |         |          | (229,079      | )      |               |               | (220,709 | )            |         |         | (205,270 | )       |         |        | (201,643 | )
|Gain on sale of wireless licenses and operating assets |                                                             |                                                   |                         |         |          |               |       |               |               |          | 532          |         |         |          |        |        
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       | Operating income (loss)                                     |                                                   |                          | (22,257 | )        |               |        | (15,008       | )             |          |              | 2,169   |         |          |         | 4,934   |       
|Interest income                                        |                                                             |                                                   |                         |         |          |               |       |               |               |          | 608          |         |         |          | 1,204   |        
|Interest expense                                       |                                                             |                                                   | (1,823                   | )       |          |               | (1,908 | )             |               |          | (6,009       | )       |         |          | (11,049 | )      
|Other income (expense), net                            |                                                             |                                                   | 19                       |         |          |               | (615   | )             |               |          | 458          |         |         |          | (272    | )      
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             | Loss before reorganization items and income taxes |                          |         | (24,061  | )             |        |               | (17,531       | )        |              |         | (2,774  | )        |         |         | (5,183 | )       
|Reorganization items, net                              |                                                             |                                                   | (2,025                   | )       |          |               | 1,313  |               |               |          | 963,156      |         |         |          |        |        
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             | Income (loss) before income taxes                 |                          |         | (26,086  | )             |        |               | (16,218       | )        |              |         | 960,382 |          |         |         | (5,183 | )       
|Income taxes                                           |                                                             |                                                   | (1,944                   | )       |          |               | (1,927 | )             |               |          | (2,851       | )       |         |          | (1,374  | )      
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        
|                                                       |                                                             |                                                   | Net income (loss)        |         | $        | (28,030       | )      |               | $             | (18,145  | )            |         | $       | 957,531  |         |         | $      | (6,557   | )
|                                                       |                                                             |                                                   |                          |         |          |               |        |               |               |          |              |        

Performance Measures


S-K


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|      |  |                    |       |   |            |   |       |               |  |   |              |   |  |              |       |   |  |   |       |  
|----- |  | ------------------ | ----- | - | ---------- | - | ----- | ------------- |  | - | ------------ | - |  | ------------ | ----- | - |  | - | ----- | -
|      |  | Three Months Ended |       |   |           
|      |  |                    |       |   | Year Ended |  
|      |  | March 31,          |       |   | June 30,   |   |       | September 30, |  |   | December 31, |   |  | December 31, |      
|      |  | 2005               |       |   | 2005       |   |       | 2005          |  |   | 2005         |   |  | 2005         |      
|      |  |                    |       |   |            |   |       |               |  |   |              |   |  |              |      
|ARPU  |  | $                  | 39.03 |   |            | $ | 39.24 |               |  | $ | 40.22        |   |  | $            | 39.74 |   |  | $ | 39.56 |  
|CPGA  |  | $                  | 128   |   |            | $ | 138   |               |  | $ | 142          |   |  | $            | 158   |   |  | $ | 142   |  
|CCU   |  | $                  | 18.94 |   |            | $ | 18.43 |               |  | $ | 19.52        |   |  | $            | 18.67 |   |  | $ | 18.89 |  
|Churn |  |                    | 3.3   | % |            |   | 3.9   | %             |  |   | 4.4          | % |  |              | 4.1   | % |  |   | 3.9   | %

Reconciliation of Non-GAAP Financial Measures


S-K




|                              |                                                                                       |                                             |         |         |            |   |         |               |        |   |              |         |        |              |         |         |        |   |         |          |         | 
|----------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | ------- | ---------- | - | ------- | ------------- | ------ | - | ------------ | ------- | ------ | ------------ | ------- | ------- | ------ | - | ------- | -------- | ------- | 
|                              |                                                                                       | Three Months Ended                          |         |         |           
|                              |                                                                                       |                                             |         |         | Year Ended |  
|                              |                                                                                       | March 31,                                   |         |         | June 30,   |   |         | September 30, |        |   | December 31, |         |        | December 31, |        
|                              |                                                                                       | 2005                                        |         |         | 2005       |   |         | 2005          |        |   | 2005         |         |        | 2005         |        
|                              |                                                                                       |                                             |         |         |            |   |         |               |        |   |              |         |        |              |        
|Selling and marketing expense |                                                                                       | $                                           | 22,995  |         |            | $ | 24,810  |               |        | $ | 25,535       |         |        | $            | 26,702  |         |        | $ | 100,042 |         
|                              | Less stock-based compensation expense included in selling and
    marketing expense   |                                             |         |        |            |   |         | (693          | )      |   |              | (203    | )      |              |         | (125    | )      |   |         | (1,021   | )      
|                              | Plus cost of equipment                                                                |                                             |         | 49,178  |            |   |         | 42,799        |        |   |              | 49,576  |        |              |         | 50,652  |        |   |         | 192,205  |        
|                              | Less equipment revenue                                                                |                                             |         | (42,389 | )          |   |         | (37,125       | )      |   |              | (36,852 | )      |              |         | (34,617 | )      |   |         | (150,983 | )      
|                              | Less net loss on equipment transactions unrelated to initial
    customer acquisition |                                             |         | (4,012  | )          |   |         | (3,484        | )      |   |              | (4,917  | )      |              |         | (3,775  | )      |   |         | (16,188  | )      
|                              |                                                                                       |                                             |         |         |            |   |         |               |        |   |              |         |        |              |        
|                              |                                                                                       | Total costs used in the calculation of CPGA |         | $       | 25,772     |   |         | $             | 26,307 |   |              | $       | 33,139 |              |         | $       | 38,837 |   |         | $        | 124,055 | 
|Gross customer additions      |                                                                                       |                                             | 201,467 |         |            |   | 191,288 |               |        |   | 233,699      |         |        |              | 245,817 |         |        |   | 872,271 |         
|                              |                                                                                       |                                             |         |         |            |   |         |               |        |   |              |         |        |              |        
|CPGA                          |                                                                                       | $                                           | 128     |         |            | $ | 138     |               |        | $ | 142          |         |        | $            | 158     |         |        | $ | 142     |         
|                              |                                                                                       |                                             |         |         |            |   |         |               |        |   |              |         |        |              |        

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|                                     |                                                                                                              |                                            |           |        |            |   |           |               |        |   |              |        |        |              |           |        |        |   |           |         |         | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | --------- | ------ | ---------- | - | --------- | ------------- | ------ | - | ------------ | ------ | ------ | ------------ | --------- | ------ | ------ | - | --------- | ------- | ------- | 
|                                     |                                                                                                              | Three Months Ended                         |           |        |           
|                                     |                                                                                                              |                                            |           |        | Year Ended |  
|                                     |                                                                                                              | March 31,                                  |           |        | June 30,   |   |           | September 30, |        |   | December 31, |        |        | December 31, |          
|                                     |                                                                                                              | 2005                                       |           |        | 2005       |   |           | 2005          |        |   | 2005         |        |        | 2005         |          
|                                     |                                                                                                              |                                            |           |        |            |   |           |               |        |   |              |        |        |              |          
|Cost of service                      |                                                                                                              | $                                          | 50,197    |        |            | $ | 49,608    |               |        | $ | 50,304       |        |        | $            | 50,321    |        |        | $ | 200,430   |        
|                                     | Plus general and administrative expense                                                                      |                                            |           | 36,035 |            |   |           | 42,423        |        |   |              | 41,306 |        |              |           | 39,485 |        |   |           | 159,249 |        
|                                     | Less stock-based compensation expense included in cost of
    service and general and administrative expense |                                            |           |       |            |   |           | (6,436        | )      |   |              | (2,518 | )      |              |           | (2,270 | )      |   |           | (11,224 | )      
|                                     | Plus net loss on equipment transactions unrelated to initial
    customer acquisition                        |                                            |           | 4,012  |            |   |           | 3,484         |        |   |              | 4,917  |        |              |           | 3,775  |        |   |           | 16,188  |        
|                                     |                                                                                                              |                                            |           |        |            |   |           |               |        |   |              |        |        |              |          
|                                     |                                                                                                              | Total costs used in the calculation of CCU |           | $      | 90,244     |   |           | $             | 89,079 |   |              | $      | 94,009 |              |           | $      | 91,311 |   |           | $       | 364,643 | 
|Weighted-average number of customers |                                                                                                              |                                            | 1,588,372 |        |            |   | 1,611,524 |               |        |   | 1,605,222    |        |        |              | 1,630,011 |        |        |   | 1,608,782 |        
|                                     |                                                                                                              |                                            |           |        |            |   |           |               |        |   |              |        |        |              |          
|CCU                                  |                                                                                                              | $                                          | 18.94     |        |            | $ | 18.43     |               |        | $ | 19.52        |        |        | $            | 18.67     |        |        | $ | 18.89     |        
|                                     |                                                                                                              |                                            |           |        |            |   |           |               |        |   |              |        |        |              |          

Liquidity and Capital Resources






Operating Activities




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pay-in




Investing Activities






Financing Activities


pay-in




Secured Credit Facility






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Capital Expenditures and Other Asset Acquisitions and
Dispositions


Capital Expenditures.


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Auction #58 Properties and Build-Out.






Other Acquisitions and Dispositions.








debtor-in


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Certain Contractual Obligations, Commitments and
Contingencies




|                                         |       |       |         |                         |      |   |        |        |  |   |        |        |  |      |        |        |      |   |        |            |  |   |         |         |  |   |         |         | 
|---------------------------------------- | ----- | ----- | ------- | ----------------------- | ---- | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------ | ------ | ---- | - | ------ | ---------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                         |       |       |         | Year Ended December 31, |      |   |       
|                                         |       |       |         |                         |      |   |       
|                                         |       | Total |         |                         | 2006 |   |        | 2007   |  |   | 2008   |        |  | 2009 |        |        | 2010 |   |        | Thereafter | 
|                                         |       |       |         |                         |      |   |        |        |  |   |        |        |  |      |        |        |      |   |        |            | 
|Long-term debt(1)                        |       | $     | 594,444 |                         |      | $ | 6,111  |        |  | $ | 6,111  |        |  | $    | 6,111  |        |      | $ | 6,111  |            |  | $ | 570,000 |         |  | $ |        |        
|Contractual interest(2)                  |       |       | 186,897 |                         |      |   | 40,562 |        |  |   | 40,545 |        |  |      | 40,527 |        |      |   | 40,219 |            |  |   | 25,044  |         |  |   |        |        
|Origination fees for ANB 1 investment(3) |       |       | 4,700   |                         |      |   | 2,000  |        |  |   | 1,000  |        |  |      | 1,000  |        |      |   | 700    |            |  |   |        |         |  |   |        |        
|Operating leases                         |       |       | 310,701 |                         |      |   | 48,381 |        |  |   | 35,628 |        |  |      | 33,291 |        |      |   | 31,231 |            |  |   | 30,033  |         |  |   | 132,137 |        
|                                         |       |       |         |                         |      |   |        |        |  |   |        |        |  |      |        |        |      |   |        |            | 
|                                         | Total |       | $       | 1,096,742               |      |   | $      | 97,054 |  |   | $      | 83,284 |  |      | $      | 80,929 |      |   | $      | 78,261     |  |   | $       | 625,077 |  |   | $       | 132,137 | 
|                                         |       |       |         |                         |      |   |        |        |  |   |        |        |  |      |        |        |      |   |        |            | 






|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts shown for Crickets term loans include principal
    only. Interest on the term loans, calculated at the current
    interest rate, is stated separately.
|   
|(2) | Contractual interest is based on the current interest rates in
    effect at December 31, 2005 for debt outstanding as of that
    date.                         
|   
|(3) | Reflects contractual obligation based on an amendment executed
    on January 9, 2006.                                                                           







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Off-Balance Sheet Arrangements




Recent Accounting Pronouncements


13-1,








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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

Interest Rate Risk:




Hedging Policy:


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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated Financial Statements








Internal Control Over Financial Reporting


Internal Control  Integrated Framework




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company did not maintain a sufficient complement of
    personnel with the appropriate skills, training and
    Company-specific experience to identify and address the
    application of generally accepted accounting principles in
    complex or non-routine transactions. Specifically, the Company
    has experienced staff turnover, and as a result, has experienced
    a lack of knowledge transfer to new employees within its
    accounting, financial reporting and tax functions. In addition,
    the Company does not have a full-time director of its tax
    function. This control deficiency contributed to the material
    weakness described below. Additionally, this control deficiency
    could result in a misstatement of accounts and disclosures that
    would result in a material misstatement to the Companys
    interim or annual consolidated financial statements that would
    not be prevented or detected. Accordingly, management has
    determined that this control deficiency constitutes a material
    weakness.                                                                                                                                                                                                                                
|
| |  | The Company did not maintain effective controls over its
    accounting for income taxes. Specifically, the Company did not
    have adequate controls designed and in place to ensure the
    completeness and accuracy of the deferred income tax provision
    and the related deferred tax assets and liabilities and the
    related goodwill in conformity with generally accepted
    accounting principles. This control deficiency resulted in the
    restatement of the Companys consolidated financial
    statements for the five months ended December 31, 2004 and
    the consolidated financial statements for the two months ended
    September 30, 2004 and the quarters ended March 31,
    2005, June 30, 2005, and September 30, 2005, as well
    as audit adjustments to the 2005 annual consolidated financial
    statements. Additionally, this control deficiency could result
    in a misstatement of income tax expense, deferred tax assets and
    liabilities and the related goodwill that would result in a
    material misstatement to the Companys interim or annual
    consolidated financial statements that would not be prevented or
    detected. Accordingly, management has determined that this
    control deficiency constitutes a material weakness.



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Internal Control  Integrated Framework Internal Control  Integrated Framework








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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














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LEAP WIRELESS INTERNATIONAL, INC.


CONSOLIDATED BALANCE SHEETS


(In thousands, except share data)


|                                                             |                                                                                                                                                                                 |                                            |         |               |              |   |         |           |           | 
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------- | ------------ | - | ------- | --------- | --------- | 
|                                                             |                                                                                                                                                                                 | Successor Company                          |        
|                                                             |                                                                                                                                                                                 |                                            |        
|                                                             |                                                                                                                                                                                 | December 31,                               |         |               | December 31, |  
|                                                             |                                                                                                                                                                                 | 2005                                       |         |               | 2004         |  
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 |                                            |         | (As Restated) |             
|                                                             |                                                                                                                                                                                 |                                            |         | (See Note 3)  |             
|Assets                                                       |                                                                                                                                                                                 |                                            |         |               |              |   |         |          
|Cash and cash equivalents                                    |                                                                                                                                                                                 | $                                          | 293,073 |               |              | $ | 141,141 |          
|Short-term investments                                       |                                                                                                                                                                                 |                                            | 90,981  |               |              |   | 113,083 |          
|Restricted cash, cash equivalents and short-term investments |                                                                                                                                                                                 |                                            | 13,759  |               |              |   | 31,427  |          
|Inventories                                                  |                                                                                                                                                                                 |                                            | 37,320  |               |              |   | 25,816  |          
|Other current assets                                         |                                                                                                                                                                                 |                                            | 29,237  |               |              |   | 37,531  |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total current assets                       |         |               | 464,370      |   |         |           | 348,998   | 
|Property and equipment, net                                  |                                                                                                                                                                                 |                                            | 621,946 |               |              |   | 575,486 |          
|Wireless licenses                                            |                                                                                                                                                                                 |                                            | 821,288 |               |              |   | 652,653 |          
|Assets held for sale (Note 11)                               |                                                                                                                                                                                 |                                            | 15,145  |               |              |   |        |          
|Goodwill                                                     |                                                                                                                                                                                 |                                            | 431,896 |               |              |   | 457,637 |          
|Other intangible assets, net                                 |                                                                                                                                                                                 |                                            | 113,554 |               |              |   | 151,461 |          
|Deposits for wireless licenses                               |                                                                                                                                                                                 |                                            |        |               |              |   | 24,750  |          
|Other assets                                                 |                                                                                                                                                                                 |                                            | 38,119  |               |              |   | 9,902   |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total assets                               |         | $             | 2,506,318    |   |         | $         | 2,220,887 | 
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                            
|Liabilities and Stockholders Equity                         |                                                                                                                                                                                 |                                            |         |               |              |   |         |          
|Accounts payable and accrued liabilities                     |                                                                                                                                                                                 | $                                          | 167,770 |               |              | $ | 91,093  |          
|Current maturities of long-term debt (Note 7)                |                                                                                                                                                                                 |                                            | 6,111   |               |              |   | 40,373  |          
|Other current liabilities                                    |                                                                                                                                                                                 |                                            | 49,627  |               |              |   | 71,770  |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total current liabilities                  |         |               | 223,508      |   |         |           | 203,236   | 
|Long-term debt (Note 7)                                      |                                                                                                                                                                                 |                                            | 588,333 |               |              |   | 371,355 |          
|Other long-term liabilities                                  |                                                                                                                                                                                 |                                            | 178,359 |               |              |   | 176,240 |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total liabilities                          |         |               | 990,200      |   |         |           | 750,831   | 
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|Minority interest                                            |                                                                                                                                                                                 |                                            | 1,761   |               |              |   |        |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|Commitments and contingencies (Note 13)                      |                                                                                                                                                                                 |                                            |         |               |              |   |         |          
|Stockholders equity:                                        |                                                                                                                                                                                 |                                            |         |               |              |   |         |          
|                                                             | Preferred stock  authorized 10,000,000 shares,
    $.0001 par value; no shares issued and outstanding                                                                          |                                            |         |              |              |   |         |          |          
|                                                             | Common stock  authorized 160,000,000 shares,
    $.0001 par value; 61,202,806 and 60,000,000 shares
    issued and outstanding at December 31, 2005 and 2004,
    respectively |                                            |         | 6             |              |   |         | 6         |          
|                                                             | Additional paid-in capital                                                                                                                                                      |                                            |         | 1,511,580     |              |   |         | 1,478,392 |          
|                                                             | Unearned stock-based compensation                                                                                                                                               |                                            |         | (20,942       | )            |   |         |          |          
|                                                             | Retained earnings (accumulated deficit)                                                                                                                                         |                                            |         | 21,575        |              |   |         | (8,391    | )        
|                                                             | Accumulated other comprehensive income                                                                                                                                          |                                            |         | 2,138         |              |   |         | 49        |          
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total stockholders equity                 |         |               | 1,514,357    |   |         |           | 1,470,056 | 
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  
|                                                             |                                                                                                                                                                                 | Total liabilities and stockholders equity |         | $             | 2,506,318    |   |         | $         | 2,220,887 | 
|                                                             |                                                                                                                                                                                 |                                            |         |               |              |  



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LEAP WIRELESS INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |          |          |   |          |          |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------ | ------- | ------------- | ------------------- | - | ------------ | -------- | -------- | - | ------------ | -------- | -------- | - | -------- | -------- | ---------- | -
|                                                                                                                                                                                |                                                             | Successor Company        |         |               | Predecessor Company |  
|                                                                                                                                                                                |                                                             |                          |         |               |                     |  
|                                                                                                                                                                                |                                                             |                          |         | Five Months   |                     |   | Seven Months |          |          |  
|                                                                                                                                                                                |                                                             | Year Ended               |         |               | Ended               |   |              | Ended    |          |   | Year Ended   |         
|                                                                                                                                                                                |                                                             | December 31,             |         |               | December 31,        |   |              | July 31, |          |   | December 31, |         
|                                                                                                                                                                                |                                                             | 2005                     |         |               | 2004                |   |              | 2004     |          |   | 2003         |         
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                |                                                             |                          |         | (As Restated) |                     |   |              |          |         
|                                                                                                                                                                                |                                                             |                          |         | (See Note 3)  |                     |   |              |          |         
|Revenues:                                                                                                                                                                       |                                                             |                          |         |               |                     |   |              |          |          |   |              |          |          |   |          |         
|                                                                                                                                                                                | Service revenues                                            |                          | $       | 763,680       |                     |   | $            | 285,647  |          |   | $            | 398,451  |          |   | $        | 643,566  |           
|                                                                                                                                                                                | Equipment revenues                                          |                          |         | 150,983       |                     |   |              | 58,713   |          |   |              | 83,196   |          |   |          | 107,730  |           
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                |                                                             | Total revenues           |         |               | 914,663             |   |              |          | 344,360  |   |              |          | 481,647  |   |          |          | 751,296    |  
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|Operating expenses:                                                                                                                                                             |                                                             |                          |         |               |                     |   |              |          |          |   |              |          |          |   |          |         
|                                                                                                                                                                                | Cost of service (exclusive of items shown separately below) |                          |         | (200,430      | )                   |   |              | (79,148  | )        |   |              | (113,988 | )        |   |          | (199,987 | )         
|                                                                                                                                                                                | Cost of equipment                                           |                          |         | (192,205      | )                   |   |              | (82,402  | )        |   |              | (97,160  | )        |   |          | (172,235 | )         
|                                                                                                                                                                                | Selling and marketing                                       |                          |         | (100,042      | )                   |   |              | (39,938  | )        |   |              | (51,997  | )        |   |          | (86,223  | )         
|                                                                                                                                                                                | General and administrative                                  |                          |         | (159,249      | )                   |   |              | (57,110  | )        |   |              | (81,514  | )        |   |          | (162,378 | )         
|                                                                                                                                                                                | Depreciation and amortization                               |                          |         | (195,462      | )                   |   |              | (75,324  | )        |   |              | (178,120 | )        |   |          | (300,243 | )         
|                                                                                                                                                                                | Impairment of indefinite-lived intangible assets            |                          |         | (12,043       | )                   |   |              |         |          |   |              |         |          |   |          | (171,140 | )         
|                                                                                                                                                                                | Loss on disposal of property and equipment                  |                          |         |              |                     |   |              |         |          |   |              |         |          |   |          | (24,054  | )         
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                |                                                             | Total operating expenses |         |               | (859,431            | ) |              |          | (333,922 | ) |              |          | (522,779 | ) |          |          | (1,116,260 | )
|Gain on sale of wireless licenses and operating assets                                                                                                                          |                                                             |                          | 14,587  |               |                     |   |             |          |          |   | 532          |          |          |   | 4,589    |         
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                | Operating income (loss)                                     |                          |         | 69,819        |                     |   |              | 10,438   |          |   |              | (40,600  | )        |   |          | (360,375 | )         
|Minority interest in loss of consolidated subsidiary                                                                                                                            |                                                             |                          | (31     | )             |                     |   |             |          |          |   |             |          |          |   |         |         
|Interest income                                                                                                                                                                 |                                                             |                          | 9,957   |               |                     |   | 1,812        |          |          |   |             |          |          |   | 779      |         
|Interest expense (contractual interest expense was
    $156.3 million for the seven months ended July 31,
    2004 and $257.5 million for the year ended
    December 31, 2003) |                                                             |                          | (30,051 | )             |                     |   | (16,594      | )        |          |   | (4,195       | )        |          |   | (83,371  | )       
|Other income (expense), net                                                                                                                                                     |                                                             |                          | 1,423   |               |                     |   | (117         | )        |          |   | (293         | )        |          |   | (176     | )       
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                | Income (loss) before reorganization items and income taxes  |                          |         | 51,117        |                     |   |              | (4,461   | )        |   |              | (45,088  | )        |   |          | (443,143 | )         
|Reorganization items, net                                                                                                                                                       |                                                             |                          |        |               |                     |   |             |          |          |   | 962,444      |          |          |   | (146,242 | )       
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                | Income (loss) before income taxes                           |                          |         | 51,117        |                     |   |              | (4,461   | )        |   |              | 917,356  |          |   |          | (589,385 | )         
|Income taxes                                                                                                                                                                    |                                                             |                          | (21,151 | )             |                     |   | (3,930       | )        |          |   | (4,166       | )        |          |   | (8,052   | )       
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                |                                                             | Net income (loss)        |         | $             | 29,966              |   |              | $        | (8,391   | ) |              | $        | 913,190  |   |          | $        | (597,437   | )
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|Net income (loss) per share:                                                                                                                                                    |                                                             |                          |         |               |                     |   |              |          |          |   |              |          |          |   |          |         
|                                                                                                                                                                                | Basic                                                       |                          | $       | 0.50          |                     |   | $            | (0.14    | )        |   | $            | 15.58    |          |   | $        | (10.19   | )         
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                | Diluted                                                     |                          | $       | 0.49          |                     |   | $            | (0.14    | )        |   | $            | 15.58    |          |   | $        | (10.19   | )         
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|Shares used in per share calculations:                                                                                                                                          |                                                             |                          |         |               |                     |   |              |          |          |   |              |          |          |   |          |         
|                                                                                                                                                                                | Basic                                                       |                          |         | 60,135        |                     |   |              | 60,000   |          |   |              | 58,623   |          |   |          | 58,604   |           
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         
|                                                                                                                                                                                | Diluted                                                     |                          |         | 61,003        |                     |   |              | 60,000   |          |   |              | 58,623   |          |   |          | 58,604   |           
|                                                                                                                                                                                |                                                             |                          |         |               |                     |   |              |          |          |   |              |         



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LEAP WIRELESS INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |          |          |         |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------- | ------------- | ------------------- | -------- | ------------ | -------- | ------ | ------- | ------------ | ------- | -------- | ------- | ------- | -------- | -------- | ------- | -
|                                                     |                                                                                              | Successor Company                                                              |                                                     |               | Predecessor Company |         
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |         
|                                                     |                                                                                              |                                                                                |                                                     | Five Months   |                     |          | Seven Months |          |        |        
|                                                     |                                                                                              | Year Ended                                                                     |                                                     |               | Ended               |          |              | Ended    |        |         | Year Ended   |        
|                                                     |                                                                                              | December 31,                                                                   |                                                     |               | December 31,        |          |              | July 31, |        |         | December 31, |        
|                                                     |                                                                                              | 2005                                                                           |                                                     |               | 2004                |          |              | 2004     |        |         | 2003         |        
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|                                                     |                                                                                              |                                                                                |                                                     | (As Restated) |                     |          |              |          |       
|                                                     |                                                                                              |                                                                                |                                                     | (See Note 3)  |                     |          |              |          |       
|Operating activities:                                |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |         
|                                                     | Net income (loss)                                                                            |                                                                                | $                                                   | 29,966        |                     |          | $            | (8,391   | )      |         | $            | 913,190 |          |         | $       | (597,437 | )       
|                                                     | Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                                                                |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |          |         
|                                                     |                                                                                              | Non-cash stock-based compensation expense                                      |                                                     |               | 12,245              |          |              |          |       |         |              |         |         |         |         |          | 243      |        
|                                                     |                                                                                              | Depreciation and amortization                                                  |                                                     |               | 195,462             |          |              |          | 75,324 |         |              |         | 178,120  |         |         |          | 300,243  |        
|                                                     |                                                                                              | Reorganization items, net                                                      |                                                     |               |                    |          |              |          |       |         |              |         | (962,444 | )       |         |          | 146,242  |        
|                                                     |                                                                                              | Deferred income tax expense                                                    |                                                     |               | 21,088              |          |              |          | 3,823  |         |              |         | 3,370    |         |         |          | 7,713    |        
|                                                     |                                                                                              | Impairment of indefinite-lived intangible assets                               |                                                     |               | 12,043              |          |              |          |       |         |              |         |         |         |         |          | 171,140  |        
|                                                     |                                                                                              | Loss on disposal of property and equipment                                     |                                                     |               |                    |          |              |          |       |         |              |         |         |         |         |          | 24,054   |        
|                                                     |                                                                                              | Gain on sale of wireless licenses and operating assets                         |                                                     |               | (14,587             | )        |              |          |       |         |              |         | (532     | )       |         |          | (4,589   | )      
|                                                     |                                                                                              | Other                                                                          |                                                     |               | 1,815               |          |              |          |       |         |              |         | (805     | )       |         |          | 166      |        
|                                                     |                                                                                              | Changes in assets and liabilities:                                             |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |          |          |        
|                                                     |                                                                                              |                                                                                | Inventories                                         |               |                     | (11,504  | )            |          |        | 8,923   |              |         |          | (17,059 | )       |          |          | 12,723  |  
|                                                     |                                                                                              |                                                                                | Other assets                                        |               |                     | 3,570    |              |          |        | (21,132 | )            |         |          | (5,343  | )       |          |          | (5,910  | )
|                                                     |                                                                                              |                                                                                | Accounts payable and accrued liabilities            |               |                     | 57,101   |              |          |        | (4,421  | )            |         |          | 4,761   |         |          |          | 24,575  |  
|                                                     |                                                                                              |                                                                                | Other liabilities                                   |               |                     | 1,081    |              |          |        | 15,626  |              |         |          | 12,861  |         |          |          | 80,399  |  
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|                                                     |                                                                                              | Net cash provided by operating activities before reorganization
    activities |                                                     |               | 308,280             |          |              |          | 69,752 |         |              |         | 126,119  |         |         |          | 159,562  |        
|                                                     |                                                                                              | Net cash used for reorganization activities                                    |                                                     |               |                    |          |              |          |       |         |              |         | (5,496   | )       |         |          | (115,129 | )      
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|                                                     |                                                                                              |                                                                                | Net cash provided by operating activities           |               |                     | 308,280  |              |          |        | 69,752  |              |         |          | 120,623 |         |          |          | 44,433  |  
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|Investing activities:                                |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |         
|                                                     | Purchases of property and equipment                                                          |                                                                                |                                                     | (208,808      | )                   |          |              | (49,043  | )      |         |              | (34,456 | )        |         |         | (37,488  | )       
|                                                     | Prepayments for purchases of property and equipment                                          |                                                                                |                                                     | (9,828        | )                   |          |              | 5,102    |        |         |              | 1,215   |          |         |         | (7,183   | )       
|                                                     | Purchases of wireless licenses                                                               |                                                                                |                                                     | (243,960      | )                   |          |              |         |        |         |              |        |          |         |         |         |         
|                                                     | Proceeds from sale of wireless licenses and operating assets                                 |                                                                                |                                                     | 108,800       |                     |          |              |         |        |         |              | 2,000   |          |         |         | 4,722    |         
|                                                     | Purchases of investments                                                                     |                                                                                |                                                     | (307,021      | )                   |          |              | (47,368  | )      |         |              | (87,201 | )        |         |         | (134,245 | )       
|                                                     | Sales and maturities of investments                                                          |                                                                                |                                                     | 329,043       |                     |          |              | 32,494   |        |         |              | 58,333  |          |         |         | 144,188  |         
|                                                     | Restricted cash, cash equivalents and investments, net                                       |                                                                                |                                                     | (338          | )                   |          |              | 12,537   |        |         |              | 9,810   |          |         |         | (26,525  | )       
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|                                                     |                                                                                              |                                                                                | Net cash used in investing activities               |               |                     | (332,112 | )            |          |        | (46,278 | )            |         |          | (50,299 | )       |          |          | (56,531 | )
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|Financing activities:                                |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |         |          |         |         |         
|                                                     | Proceeds from long-term debt                                                                 |                                                                                |                                                     | 600,000       |                     |          |              |         |        |         |              |        |          |         |         |         |         
|                                                     | Repayment of long-term debt                                                                  |                                                                                |                                                     | (418,285      | )                   |          |              | (36,727  | )      |         |              |        |          |         |         | (4,742   | )       
|                                                     | Issuance of common stock, net                                                                |                                                                                |                                                     |              |                     |          |              |         |        |         |              |        |          |         |         | 50       |         
|                                                     | Minority interest                                                                            |                                                                                |                                                     | 1,000         |                     |          |              |         |        |         |              |        |          |         |         |         |         
|                                                     | Payment of debt issuance costs                                                               |                                                                                |                                                     | (6,951        | )                   |          |              |         |        |         |              |        |          |         |         |         |         
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|                                                     |                                                                                              |                                                                                | Net cash provided by (used in) financing activities |               |                     | 175,764  |              |          |        | (36,727 | )            |         |          |        |         |          |          | (4,692  | )
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|Net increase (decrease) in cash and cash equivalents |                                                                                              |                                                                                | 151,932                                             |               |                     |          | (13,253      | )        |        |         | 70,324       |         |          |         | (16,790 | )       
|Cash and cash equivalents at beginning of period     |                                                                                              |                                                                                | 141,141                                             |               |                     |          | 154,394      |          |        |         | 84,070       |         |          |         | 100,860 |         
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        
|Cash and cash equivalents at end of period           |                                                                                              | $                                                                              | 293,073                                             |               |                     | $        | 141,141      |          |        | $       | 154,394      |         |          | $       | 84,070  |         
|                                                     |                                                                                              |                                                                                |                                                     |               |                     |          |              |          |        |         |              |        



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LEAP WIRELESS INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIT)


(In thousands, except share data)


|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |            |          |  
|------------------------------------------------------------ | ------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------- | --------- | ----------- | - | - | ----------- | -- | - | ------------ | ----------- | ---------- | ------------- | ------- | ------- | ------ | - | ---------- | ----- | --------- | - | ------ | - | ----- | - | --------- | ----- | ---------- | -------- | -
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              | Accumulated |            |               |        
|                                                             |                                                               |                                                                            |                                  |           |             |   |   | Retained    |    |   | Other        |             |            |              
|                                                             |                                                               | Common Stock                                                               |                                  |           | Additional  |   |   | Unearned    |    |   | Earnings     |             |            | Comprehensive |         |         |       
|                                                             |                                                               |                                                                            |                                  |           | Paid-In     |   |   | Stock-Based |    |   | (Accumulated |             |            | Income        |         |         |       
|                                                             |                                                               | Shares                                                                     |                                  |           | Amount      |   |   | Capital     |    |   | Compensation |             |            | Deficit)      |         |         | (Loss) |   |            | Total |          
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|Predecessor Company balance at December 31, 2002             |                                                               |                                                                            | 58,704,189                       |           |             | $ | 6 |             |    | $ | 1,156,379    |             |            | $             | (986    | )       |        | $ | (1,450,994 | )     |           | $ | (1,191 | ) |       | $ | (296,786  | )    
|                                                             | Components of comprehensive loss:                             |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |           
|                                                             |                                                               | Net loss                                                                   |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       | (597,437  | ) |        |   |      |   |           |       | (597,437   | )       
|                                                             |                                                               | Net unrealized holding gains on investments                                |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       |          |   |        |   | 271   |   |           |       | 271        |         
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             |                                                               |                                                                            | Comprehensive loss               |           |             |  |   |             |    |  |              |             |            |              |         |         |        |  |            |       |           |  |        |   |       |  |           |       |            | (597,166 | )
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             | Issuance of common stock under stock-based compensation plans |                                                                            |                                  | 35        |             |   |   |            |    |   |              | 353         |            |               |         |        |        |   |            |      |           |   |        |  |       |   |           | 353   |           
|                                                             | Unearned stock-based compensation                             |                                                                            |                                  |          |             |   |   |            |    |   |              | (322        | )          |               |         | 322     |        |   |            |      |           |   |        |  |       |   |           |      |           
|                                                             | Amortization of stock-based compensation                      |                                                                            |                                  |          |             |   |   |            |    |   |              |            |            |               |         | 243     |        |   |            |      |           |   |        |  |       |   |           | 243   |           
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|Predecessor Company balance at December 31, 2003             |                                                               |                                                                            | 58,704,224                       |           |             |   | 6 |             |    |   | 1,156,410    |             |            |               | (421    | )       |        |   | (2,048,431 | )     |           |   | (920   | ) |       |   | (893,356  | )    
|                                                             | Components of comprehensive income:                           |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |           
|                                                             |                                                               | Net income                                                                 |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       | 913,190   |   |        |   |      |   |           |       | 913,190    |         
|                                                             |                                                               | Net unrealized holding gains on investments                                |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       |          |   |        |   | 47    |   |           |       | 47         |         
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             |                                                               |                                                                            | Comprehensive income             |           |             |  |   |             |    |  |              |             |            |              |         |         |        |  |            |       |           |  |        |   |       |  |           |       |            | 913,237  |  
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             | Issuance of common stock under stock-based compensation plans |                                                                            |                                  |          |             |   |   |            |    |   |              | 31          |            |               |         |        |        |   |            |      |           |   |        |  |       |   |           | 31    |           
|                                                             | Unearned stock-based compensation                             |                                                                            |                                  |          |             |   |   |            |    |   |              | (1,205      | )          |               |         | 1,205   |        |   |            |      |           |   |        |  |       |   |           |      |           
|                                                             | Amortization of stock-based compensation                      |                                                                            |                                  |          |             |   |   |            |    |   |              |            |            |               |         | (837    | )      |   |            |      |           |   |        |  |       |   |           | (837  | )         
|                                                             | Application of fresh-start reporting:                         |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |           
|                                                             |                                                               | Elimination of Predecessor Company common stock                            |                                  |           | (58,704,224 | ) |   |             | (6 | ) |              |             | (1,155,236 | )             |         |         | 53     |   |            |       |          |   |        |   | 873   |   |           |       | (1,154,316 | )       
|                                                             |                                                               | Issuance of Successor Company common stock and fresh-start
    adjustments |                                  |           | 60,000,000  |   |   |             | 6  |   |              |             | 1,478,392  |               |         |         |       |   |            |       | 1,135,241 |   |        |   |      |   |           |       | 2,613,639  |         
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|Successor Company balance at
    August 1, 2004              |                                                               |                                                                            | 60,000,000                       |           |             |   | 6 |             |    |   | 1,478,392    |             |            |               |        |         |        |   |           |       |           |   |       |   |       |   | 1,478,398 |      
|                                                             | Components of comprehensive loss:                             |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |           
|                                                             |                                                               | Net loss (as restated)                                                     |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       | (8,391    | ) |        |   |      |   |           |       | (8,391     | )       
|                                                             |                                                               | Net unrealized holding gains on investments (as restated)                  |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       |          |   |        |   | 49    |   |           |       | 49         |         
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             |                                                               |                                                                            | Comprehensive loss (as restated) |           |             |  |   |             |    |  |              |             |            |              |         |         |        |  |            |       |           |  |        |   |       |  |           |       |            | (8,342   | )
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|Successor Company balance at December 31, 2004 (as restated) |                                                               |                                                                            | 60,000,000                       |           |             |   | 6 |             |    |   | 1,478,392    |             |            |               |        |         |        |   | (8,391     | )     |           |   | 49     |   |       |   | 1,470,056 |      
|                                                             | Components of comprehensive income:                           |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |           |   |        |   |       |   |           |       |           
|                                                             |                                                               | Net income                                                                 |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       | 29,966    |   |        |   |      |   |           |       | 29,966     |         
|                                                             |                                                               | Net unrealized holding losses on investments                               |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       |          |   |        |   | (57   | ) |           |       | (57        | )       
|                                                             |                                                               | Unrealized gains on derivative instruments                                 |                                  |           |            |   |   |             |   |   |              |             |           |               |         |         |       |   |            |       |          |   |        |   | 2,146 |   |           |       | 2,146      |         
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             |                                                               |                                                                            | Comprehensive income             |           |             |  |   |             |    |  |              |             |            |              |         |         |        |  |            |       |           |  |        |   |       |  |           |       |            | 32,055   |  
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|                                                             | Issuance of common stock under stock-based compensation plans |                                                                            |                                  | 1,202,806 |             |   |   |            |    |   |              | 6,871       |            |               |         |        |        |   |            |      |           |   |        |  |       |   |           | 6,871 |           
|                                                             | Unearned stock-based compensation                             |                                                                            |                                  |          |             |   |   |            |    |   |              | 26,317      |            |               |         | (26,317 | )      |   |            |      |           |   |        |  |       |   |           |      |           
|                                                             | Amortization of stock-based compensation                      |                                                                            |                                  |          |             |   |   |            |    |   |              |            |            |               |         | 5,375   |        |   |            |      |           |   |        |  |       |   |           | 5,375 |           
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          
|Successor Company balance at December 31, 2005               |                                                               |                                                                            | 61,202,806                       |           |             | $ | 6 |             |    | $ | 1,511,580    |             |            | $             | (20,942 | )       |        | $ | 21,575     |       |           | $ | 2,138  |   |       | $ | 1,514,357 |      
|                                                             |                                                               |                                                                            |                                  |           |             |   |   |             |    |   |              |             |            |               |         |         |        |   |            |       |          



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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(In thousands, except share data)




|        |                                   
|------- | ----------------------------------
|Note 1. | The Company and Nature of Business

® tm




|        |                                         
|------- | ----------------------------------------
|Note 2. | Reorganization and Fresh-Start Reporting

pay-in


90-7,


90-7


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---



##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




90-7,






|        |                                           
|------- | ------------------------------------------
|Note 3. | Summary of Significant Accounting Policies

Restatement of Previously Reported Audited Consolidated
and Unaudited Interim Financial Information






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The tax bases of several wireless licenses were inaccurately
    compiled by the Company during its adoption of fresh-start
    reporting as of July 31, 2004, which had the effect in the
    aggregate of understating wireless license deferred tax
    liabilities and overstating wireless license deferred tax
    assets. In addition, the misstatement of the tax bases of
    operating licenses with deferred tax liabilities had the net
    effect of overstating deferred income tax expense in the periods
    subsequent to July 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The Company incorrectly accounted for tax-deductible goodwill
    upon the adoption of fresh-start reporting as of July 31,
    2004, which had the effect of understating deferred tax
    liabilities and understating deferred income tax expense in the
    periods subsequent to July 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | In connection with the adoption of fresh-start reporting as of
    July 31, 2004, the Company adopted the practice of netting
    deferred tax assets associated with wireless licenses against
    deferred tax liabilities associated with wireless licenses and,
    as a result, did not record valuation allowances on its wireless
    license deferred tax assets. However, because the Companys
    wireless licenses have indefinite useful lives, the deferred tax
    liabilities related to the licenses will not reverse until some
    indefinite future period when a license is either sold or
    written down due to impairment. As a result, the wireless
    license deferred tax liabilities may not be used to support the
    realization of the wireless license deferred tax assets and,
    thus, may not be used to offset the wireless license deferred
    tax assets. Accordingly, the Company has now determined that the
    netting of deferred tax assets associated with wireless licenses
    against deferred tax liabilities associated with wireless
    licenses was not appropriate. Instead, valuation allowances
    should have been recorded on the wireless license deferred tax
    assets.

67



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company incorrectly accounted for the release of valuation
    allowances on deferred tax assets recorded in fresh-start
    reporting. The Company previously concluded that there had been
    no release of fresh-start valuation allowances during the five
    months ended December 31, 2004 and the nine months ended
    September 30, 2005. However, the reversal of deferred tax
    assets recorded in fresh-start reporting resulted in a release
    of the related fresh-start valuation allowances. As restated,
    the release of fresh-start valuation allowances is recorded as a
    reduction of goodwill and resulted in deferred income tax
    expense for the five months ended December 31, 2004 and the nine
    months ended September 30, 2005.



|                                 |  |                     |         |  |            |   |         |             |  |   |         | 
|-------------------------------- |  | ------------------- | ------- |  | ---------- | - | ------- | ----------- |  | - | ------- | 
|                                 |  | As of July 31, 2004 |        
|                                 |  |                     |        
|                                 |  | Previously          |         |  |           
|                                 |  | Reported            |         |  | Adjustment |   |         | As Restated | 
|                                 |  |                     |         |  |            |   |         |             | 
|Consolidated Balance Sheet Data: |  |                     |         |  |            |   |         |             |  |   |         | 
|Other current assets             |  | $                   | 33,394  |  |            | $ | 2,903   |             |  | $ | 36,297  | 
|Goodwill                         |  | $                   | 329,619 |  |            | $ | 128,649 |             |  | $ | 458,268 | 
|Other long-term liabilities      |  | $                   | 23,577  |  |            | $ | 131,552 |             |  | $ | 155,129 | 

|                                           |  |                                    |         |   |             |   |         |             |  |   |         |  
|------------------------------------------ |  | ---------------------------------- | ------- | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                           |  | As of and For the Two Months Ended |        
|                                           |  | September 30, 2004                 |        
|                                           |  |                                    |        
|                                           |  | Previously                         |         |   |            
|                                           |  | Reported                           |         |   | Adjustment  |   |         | As Restated | 
|                                           |  |                                    |         |   |             |   |         |             | 
|                                           |  | (Unaudited)                        |         |   | (Unaudited) |   |         | (Unaudited) | 
|Consolidated Balance Sheet Data:           |  |                                    |         |   |             |   |         |             |  |   |         |  
|Other current assets                       |  | $                                  | 33,656  |   |             | $ | 2,903   |             |  | $ | 36,559  |  
|Goodwill                                   |  | $                                  | 328,820 |   |             | $ | 128,225 |             |  | $ | 457,045 |  
|Other current liabilities                  |  | $                                  | 67,271  |   |             | $ | (159    | )           |  | $ | 67,112  |  
|Other long-term liabilities                |  | $                                  | 31,194  |   |             | $ | 131,139 |             |  | $ | 162,333 |  
|Accumulated deficit                        |  | $                                  | (1,982  | ) |             | $ | 148     |             |  | $ | (1,834  | )
|Consolidated Statement of Operations Data: |  |                                    |         |   |             |   |         |             |  |   |         |  
|Income tax expense                         |  | $                                  | 2,704   |   |             | $ | (148    | )           |  | $ | 2,556   |  
|Net loss                                   |  | $                                  | (1,982  | ) |             | $ | 148     |             |  | $ | (1,834  | )
|Comprehensive loss                         |  | $                                  | (2,092  | ) |             | $ | 148     |             |  | $ | (1,944  | )
|Basic and diluted net loss per share       |  | $                                  | (0.03   | ) |             | $ | 0.00    |             |  | $ | (0.03   | )

68



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                           |  |                                      |             |   |            |   |            |             |  |   |            |  
|------------------------------------------ |  | ------------------------------------ | ----------- | - | ---------- | - | ---------- | ----------- |  | - | ---------- | -
|                                           |  | As of and For the Three Months Ended |            
|                                           |  | December 31, 2004                    |            
|                                           |  |                                      |            
|                                           |  | Previously                           |             |   |           
|                                           |  | Reported                             |             |   | Adjustment |   |            | As Restated | 
|                                           |  |                                      |             |   |            |   |            |             | 
|Consolidated Balance Sheet Data:           |  |                                      |             |   |            |   |            |             |  |   |            |  
|Other current assets                       |  | $                                    | 35,144      |   |            | $ | 2,387      |             |  | $ | 37,531     |  
|Goodwill                                   |  | $                                    | 329,619     |   |            | $ | 128,018    |             |  | $ | 457,637    |  
|Other current liabilities                  |  | $                                    | 71,965      |   |            | $ | (195       | )           |  | $ | 71,770     |  
|Other long-term liabilities                |  | $                                    | 45,846      |   |            | $ | 130,394    |             |  | $ | 176,240    |  
|Accumulated deficit                        |  | $                                    | (8,629      | ) |            | $ | 238        |             |  | $ | (8,391     | )
|Accumulated other comprehensive income     |  | $                                    | 81          |   |            | $ | (32        | )           |  | $ | 49         |  
|Consolidated Statement of Operations Data: |  |                                      | (Unaudited) |   |            |   | (Unaudited | )           |  |   | (Unaudited | )
|Income tax expense                         |  | $                                    | 1,464       |   |            | $ | (90        | )           |  | $ | 1,374      |  
|Net loss                                   |  | $                                    | (6,647      | ) |            | $ | 90         |             |  | $ | (6,557     | )
|Comprehensive loss                         |  | $                                    | (6,456      | ) |            | $ | 58         |             |  | $ | (6,398     | )
|Basic and diluted net loss per share       |  | $                                    | (0.11       | ) |            | $ | 0.00       |             |  | $ | (0.11      | )

|                                           |  |                                     |         |   |            |   |         |             |  |   |         |  
|------------------------------------------ |  | ----------------------------------- | ------- | - | ---------- | - | ------- | ----------- |  | - | ------- | -
|                                           |  | As of and For the Five Months Ended |        
|                                           |  | December 31, 2004                   |        
|                                           |  |                                     |        
|                                           |  | Previously                          |         |   |           
|                                           |  | Reported                            |         |   | Adjustment |   |         | As Restated | 
|                                           |  |                                     |         |   |            |   |         |             | 
|Consolidated Balance Sheet Data:           |  |                                     |         |   |            |   |         |             |  |   |         |  
|Other current assets                       |  | $                                   | 35,144  |   |            | $ | 2,387   |             |  | $ | 37,531  |  
|Goodwill                                   |  | $                                   | 329,619 |   |            | $ | 128,018 |             |  | $ | 457,637 |  
|Other current liabilities                  |  | $                                   | 71,965  |   |            | $ | (195    | )           |  | $ | 71,770  |  
|Other long-term liabilities                |  | $                                   | 45,846  |   |            | $ | 130,394 |             |  | $ | 176,240 |  
|Accumulated deficit                        |  | $                                   | (8,629  | ) |            | $ | 238     |             |  | $ | (8,391  | )
|Accumulated other comprehensive income     |  | $                                   | 81      |   |            | $ | (32     | )           |  | $ | 49      |  
|Consolidated Statement of Operations Data: |  |                                     |         |   |            |   |         |             |  |   |         |  
|Income tax expense                         |  | $                                   | 4,168   |   |            | $ | (238    | )           |  | $ | 3,930   |  
|Net loss                                   |  | $                                   | (8,629  | ) |            | $ | 238     |             |  | $ | (8,391  | )
|Comprehensive loss                         |  | $                                   | (8,548  | ) |            | $ | 206     |             |  | $ | (8,342  | )
|Basic and diluted net loss per share       |  | $                                   | (0.14   | ) |            | $ | 0.00    |             |  | $ | (0.14   | )

69



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                           |  |                                      |         |  |             |   |         |             |  |   |         |  
|------------------------------------------ |  | ------------------------------------ | ------- |  | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                           |  | As of and For the Three Months Ended |        
|                                           |  | March 31, 2005                       |        
|                                           |  |                                      |        
|                                           |  | Previously                           |         |  |            
|                                           |  | Reported                             |         |  | Adjustment  |   |         | As Restated | 
|                                           |  |                                      |         |  |             |   |         |             | 
|                                           |  | (Unaudited)                          |         |  | (Unaudited) |   |         | (Unaudited) | 
|Consolidated Balance Sheet Data:           |  |                                      |         |  |             |   |         |             |  |   |         |  
|Other current assets                       |  | $                                    | 34,275  |  |             | $ | 2,387   |             |  | $ | 36,662  |  
|Goodwill                                   |  | $                                    | 329,619 |  |             | $ | 124,337 |             |  | $ | 453,956 |  
|Other current liabilities                  |  | $                                    | 70,753  |  |             | $ | (242    | )           |  | $ | 70,511  |  
|Other long-term liabilities                |  | $                                    | 28,951  |  |             | $ | 131,861 |             |  | $ | 160,812 |  
|Retained earnings (accumulated deficit)    |  | $                                    | 4,017   |  |             | $ | (4,892  | )           |  | $ | (875    | )
|Accumulated other comprehensive income     |  | $                                    | 6       |  |             | $ | (3      | )           |  | $ | 3       |  
|Consolidated Statement of Operations Data: |  |                                      |         |  |             |   |         |             |  |   |         |  
|Income tax expense                         |  | $                                    | 709     |  |             | $ | 5,130   |             |  | $ | 5,839   |  
|Net income                                 |  | $                                    | 12,646  |  |             | $ | (5,130  | )           |  | $ | 7,516   |  
|Comprehensive income                       |  | $                                    | 12,652  |  |             | $ | (5,182  | )           |  | $ | 7,470   |  
|Basic net income per share                 |  | $                                    | 0.21    |  |             | $ | (0.08   | )           |  | $ | 0.13    |  
|Diluted net income per share               |  | $                                    | 0.21    |  |             | $ | (0.09   | )           |  | $ | 0.12    |  

|                                           |  |                                      |         |   |             |   |         |             |  |   |         |  
|------------------------------------------ |  | ------------------------------------ | ------- | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                           |  | As of and For the Three Months Ended |        
|                                           |  | June 30, 2005                        |        
|                                           |  |                                      |        
|                                           |  | Previously                           |         |   |            
|                                           |  | Reported                             |         |   | Adjustment  |   |         | As Restated | 
|                                           |  |                                      |         |   |             |   |         |             | 
|                                           |  | (Unaudited)                          |         |   | (Unaudited) |   |         | (Unaudited) | 
|Consolidated Balance Sheet Data:           |  |                                      |         |   |             |   |         |             |  |   |         |  
|Other current assets                       |  | $                                    | 27,678  |   |             | $ | 2,387   |             |  | $ | 30,065  |  
|Goodwill                                   |  | $                                    | 329,619 |   |             | $ | 119,819 |             |  | $ | 449,438 |  
|Other current liabilities                  |  | $                                    | 65,272  |   |             | $ | (481    | )           |  | $ | 64,791  |  
|Other long-term liabilities                |  | $                                    | 39,128  |   |             | $ | 128,500 |             |  | $ | 167,628 |  
|Retained earnings                          |  | $                                    | 6,546   |   |             | $ | (6,318  | )           |  | $ | 228     |  
|Accumulated other comprehensive loss       |  | $                                    | (1,288  | ) |             | $ | 505     |             |  | $ | (783    | )
|Consolidated Statement of Operations Data: |  |                                      |         |   |             |   |         |             |  |   |         |  
|Income tax expense (benefit)               |  | $                                    | (404    | ) |             | $ | 1,426   |             |  | $ | 1,022   |  
|Net income                                 |  | $                                    | 2,529   |   |             | $ | (1,426  | )           |  | $ | 1,103   |  
|Comprehensive income                       |  | $                                    | 1,235   |   |             | $ | (918    | )           |  | $ | 317     |  
|Basic and diluted net income per share     |  | $                                    | 0.04    |   |             | $ | (0.02   | )           |  | $ | 0.02    |  

70



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                              |  |                                      |         |   |             |   |         |             |  |   |         | 
|--------------------------------------------- |  | ------------------------------------ | ------- | - | ----------- | - | ------- | ----------- |  | - | ------- | 
|                                              |  | As of and For the Three Months Ended |        
|                                              |  | September 30, 2005                   |        
|                                              |  |                                      |        
|                                              |  | Previously                           |         |   |            
|                                              |  | Reported                             |         |   | Adjustment  |   |         | As Restated | 
|                                              |  |                                      |         |   |             |   |         |             | 
|                                              |  | (Unaudited)                          |         |   | (Unaudited) |   |         | (Unaudited) | 
|Consolidated Balance Sheet Data:              |  |                                      |         |   |             |   |         |             |  |   |         | 
|Other current assets                          |  | $                                    | 26,282  |   |             | $ | 2,387   |             |  | $ | 28,669  | 
|Goodwill                                      |  | $                                    | 329,619 |   |             | $ | 107,763 |             |  | $ | 437,382 | 
|Other current liabilities                     |  | $                                    | 59,513  |   |             | $ | (447    | )           |  | $ | 59,066  | 
|Other long-term liabilities                   |  | $                                    | 83,286  |   |             | $ | 93,819  |             |  | $ | 177,105 | 
|Retained earnings (accumulated deficit)       |  | $                                    | (1,016  | ) |             | $ | 17,641  |             |  | $ | 16,625  | 
|Accumulated other comprehensive income        |  | $                                    | 2,207   |   |             | $ | (863    | )           |  | $ | 1,344   | 
|Consolidated Statement of Operations Data:    |  |                                      |         |   |             |   |         |             |  |   |         | 
|Income tax expense                            |  | $                                    | 34,860  |   |             | $ | (23,959 | )           |  | $ | 10,901  | 
|Net income (loss)                             |  | $                                    | (7,562  | ) |             | $ | 23,959  |             |  | $ | 16,397  | 
|Comprehensive income (loss)                   |  | $                                    | (4,148  | ) |             | $ | 22,672  |             |  | $ | 18,524  | 
|Basic and diluted net income (loss) per share |  | $                                    | (0.13   | ) |             | $ | 0.40    |             |  | $ | 0.27    | 

Basis of Presentation


46-R,






Revenues and Cost of Revenues




71



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Cash and Cash Equivalents




Short-Term Investments






Restricted Cash, Cash Equivalents and Short-Term Investments




72



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Inventories

first-in,




| |                       
| | ----------------------
| | Property and Equipment





|                                                 |                                                             |                  |     |    | 
|------------------------------------------------ | ----------------------------------------------------------- | ---------------- | --- | -- | 
|                                                 |                                                             | Depreciable Life |    
|                                                 |                                                             |                  |    
|Network equipment:                               |                                                             |                  |     |   
|                                                 | Switches                                                    |                  |     | 10 | 
|                                                 | Switch power equipment                                      |                  |     | 15 | 
|                                                 | Cell site equipment, and site acquisitions and improvements |                  |     | 7  | 
|                                                 | Towers                                                      |                  |     | 15 | 
|                                                 | Antennae                                                    |                  |     | 3  | 
|Computer hardware and software                   |                                                             |                  | 3-5 |   
|Furniture, fixtures, retail and office equipment |                                                             |                  | 3-7 |   









| |                  
| | -----------------
| | Wireless Licenses



73



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Goodwill and Other Intangible Assets




Impairment of Long-Lived Assets




Impairment of Indefinite-Lived Intangible Assets






Derivative Instruments and Hedging Activities






74



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Operating Leases




Asset Retirement Obligations




Debt Discounts and Debt Issuance Costs




Advertising and Promotion Costs




Costs and Expenses




Cost of Service.


75



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Cost of Equipment. lower-of


Selling and Marketing.


General and Administrative Expenses.


Stock-based Compensation


30-day




76



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |       |   |   |          |         |  
|------------------------------------ | ------------------------------------------------------------------------------------- | ----------------- | ------ | ------------- | ------------------- | - | ------------ | -------- | - | - | ------------ | ----- | - | - | -------- | ------- | -
|                                     |                                                                                       | Successor Company |        |               | Predecessor Company |  
|                                     |                                                                                       |                   |        |               |                     |  
|                                     |                                                                                       |                   |        | Five Months   |                     |   | Seven Months |          |   |  
|                                     |                                                                                       | Year Ended        |        |               | Ended               |   |              | Ended    |   |   | Year Ended   |      
|                                     |                                                                                       | December 31,      |        |               | December 31,        |   |              | July 31, |   |   | December 31, |      
|                                     |                                                                                       | 2005              |        |               | 2004                |   |              | 2004     |   |   | 2003         |      
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|                                     |                                                                                       |                   |        | (As Restated) |                     |   |              |          |  
|As reported net income (loss)        |                                                                                       | $                 | 29,966 |               |                     | $ | (8,391       | )        |   | $ | 913,190      |       |   | $ | (597,437 | )      
|                                     | Add back stock-based compensation expense (benefit) included in
    net income (loss) |                   |        | 12,245        |                     |   |              |         |   |   |              | (837  | ) |   |          | 243     |  
|                                     | Less net pro forma compensation (expense) benefit                                     |                   |        | (20,085       | )                   |   |              |         |   |   |              | 6,209 |   |   |          | (10,805 | )
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|Pro forma net income (loss)          |                                                                                       | $                 | 22,126 |               |                     | $ | (8,391       | )        |   | $ | 918,562      |       |   | $ | (607,999 | )      
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|Basic net income (loss) per share:   |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |       |   |   |          |        
|                                     | As reported                                                                           |                   | $      | 0.50          |                     |   | $            | (0.14    | ) |   | $            | 15.58 |   |   | $        | (10.19  | )
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|                                     | Pro forma                                                                             |                   | $      | 0.37          |                     |   | $            | (0.14    | ) |   | $            | 15.67 |   |   | $        | (10.37  | )
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|Diluted net income (loss) per share: |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |       |   |   |          |        
|                                     | As reported                                                                           |                   | $      | 0.49          |                     |   | $            | (0.14    | ) |   | $            | 15.58 |   |   | $        | (10.19  | )
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      
|                                     | Pro forma                                                                             |                   | $      | 0.36          |                     |   | $            | (0.14    | ) |   | $            | 15.67 |   |   | $        | (10.37  | )
|                                     |                                                                                       |                   |        |               |                     |   |              |          |   |   |              |      



|                                              |                                     |                                        |   |        |        | 
|--------------------------------------------- | ----------------------------------- | -------------------------------------- | - | ------ | ------ | 
|                                              |                                     | Year Ended                            
|                                              |                                     | December 31,                          
|                                              |                                     | 2005                                  
|                                              |                                     |                                       
|Stock-based compensation expense included in: |                                     |                                        |   |       
|                                              | Cost of service                     |                                        | $ | 1,204  |       
|                                              | Selling and marketing expenses      |                                        |   | 1,021  |       
|                                              | General and administrative expenses |                                        |   | 10,020 |       
|                                              |                                     |                                        |   |       
|                                              |                                     | Total stock-based compensation expense |   | $      | 12,245 | 
|                                              |                                     |                                        |   |       



|                         |  |              |      |  
|------------------------ |  | ------------ | ---- | -
|                         |  | Year Ended  
|                         |  | December 31,
|                         |  | 2005        
|                         |  |             
|Risk-free interest rate  |  |              | 3.68 | %
|Expected dividend yield  |  |              |     |  
|Expected volatility      |  |              | 86   | %
|Expected life (in years) |  |              | 5.8  |  

77



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Income Taxes


90-7,


Basic and Diluted Net Income (Loss) Per Share




Reorganization Items






|                                                                                                    |                                 |                     |         |         |              |   |          |          |  
|--------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------- | ------- | ------- | ------------ | - | -------- | -------- | -
|                                                                                                    |                                 | Predecessor Company |        
|                                                                                                    |                                 |                     |        
|                                                                                                    |                                 | Seven Months        |         |         | Year Ended   |  
|                                                                                                    |                                 | Ended               |         |         | December 31, |  
|                                                                                                    |                                 | July 31, 2004       |         |         | 2003         |  
|                                                                                                    |                                 |                     |         |         |              |  
|Professional fees                                                                                   |                                 | $                   | (5,005  | )       |              | $ | (12,073  | )       
|Gain on settlement of liabilities                                                                   |                                 |                     | 2,500   |         |              |   | 36,954   |         
|Adjustment of liabilities to allowed amounts                                                        |                                 |                     | (360    | )       |              |   | (174,063 | )       
|Post-petition interest income                                                                       |                                 |                     | 1,436   |         |              |   | 2,940    |         
|Net gain on discharge of liabilities and the net effect of
    application of fresh-start reporting |                                 |                     | 963,873 |         |              |   |         |         
|                                                                                                    |                                 |                     |         |         |              |  
|                                                                                                    | Total reorganization items, net |                     | $       | 962,444 |              |   | $        | (146,242 | )
|                                                                                                    |                                 |                     |         |         |              |  

Recent Accounting Pronouncements


13-1,


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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










79



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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                      
|------- | ---------------------
|Note 4. | Financial Instruments

Short-Term Investments




|                                                |  |      |         |            |      |   |            |      |  |   |            |   |  |   |         | 
|----------------------------------------------- |  | ---- | ------- | ---------- | ---- | - | ---------- | ---- |  | - | ---------- | - |  | - | ------- | 
|                                                |  |      |         | Unrealized |      |   | Unrealized |      |  |  
|Successor Company                               |  | Cost |         |            | Gain |   |            | Loss |  |   | Fair Value |  
|                                                |  |      |         |            |      |   |            |      |  |   |            |  
|2005                                            |  |      |         |            |      |   |            |      |  |   |            |   |  |   |         | 
|Commercial paper                                |  | $    | 49,884  |            |      | $ |           |      |  | $ | (2         | ) |  | $ | 49,882  | 
|U.S. government or government agency securities |  |      | 40,857  |            |      |   | 3          |      |  |   | (11        | ) |  |   | 40,849  | 
|Other                                           |  |      | 250     |            |      |   |           |      |  |   |           |   |  |   | 250     | 
|                                                |  |      |         |            |      |   |            |      |  |   |            |  
|                                                |  | $    | 90,991  |            |      | $ | 3          |      |  | $ | (13        | ) |  | $ | 90,981  | 
|                                                |  |      |         |            |      |   |            |      |  |   |            |  
|2004                                            |  |      |         |            |      |   |            |      |  |   |            |   |  |   |         | 
|Mutual funds                                    |  | $    | 2,944   |            |      | $ | 89         |      |  | $ |           |   |  | $ | 3,033   | 
|U.S. government or government agency securities |  |      | 110,063 |            |      |   |           |      |  |   | (13        | ) |  |   | 110,050 | 
|                                                |  |      |         |            |      |   |            |      |  |   |            |  
|                                                |  | $    | 113,007 |            |      | $ | 89         |      |  | $ | (13        | ) |  | $ | 113,083 | 
|                                                |  |      |         |            |      |   |            |      |  |   |            |  

Fair Value of Financial Instruments




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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                                    
|------- | -----------------------------------
|Note 5. | Supplementary Financial Information

Supplementary Balance Sheet Information:


|                                          |                                                           |                   |         |               |              |   |         |         |  
|----------------------------------------- | --------------------------------------------------------- | ----------------- | ------- | ------------- | ------------ | - | ------- | ------- | -
|                                          |                                                           | Successor Company |        
|                                          |                                                           |                   |        
|                                          |                                                           | December 31,      |         |               | December 31, |  
|                                          |                                                           | 2005              |         |               | 2004         |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           |                   |         | (As Restated) |             
|Property and equipment, net:              |                                                           |                   |         |               |              |   |         |        
|                                          | Network equipment                                         |                   | $       | 654,993       |              |   | $       | 599,598 |  
|                                          | Computer equipment and other                              |                   |         | 38,778        |              |   |         | 26,285  |  
|                                          | Construction-in-progress                                  |                   |         | 134,929       |              |   |         | 10,517  |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           |                   | 828,700 |               |              |   | 636,400 |        
|                                          | Accumulated depreciation                                  |                   |         | (206,754      | )            |   |         | (60,914 | )
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           | $                 | 621,946 |               |              | $ | 575,486 |        
|                                          |                                                           |                   |         |               |              |  
|Accounts payable and accrued liabilities: |                                                           |                   |         |               |              |   |         |        
|                                          | Trade accounts payable                                    |                   | $       | 117,140       |              |   | $       | 35,184  |  
|                                          | Accrued payroll and related benefits                      |                   |         | 13,185        |              |   |         | 13,579  |  
|                                          | Other accrued liabilities                                 |                   |         | 37,445        |              |   |         | 42,330  |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           | $                 | 167,770 |               |              | $ | 91,093  |        
|                                          |                                                           |                   |         |               |              |  
|Other current liabilities:                |                                                           |                   |         |               |              |   |         |        
|                                          | Accrued property taxes                                    |                   | $       | 6,536         |              |   | $       | 21,440  |  
|                                          | Accrued sales, telecommunications and other taxes payable |                   |         | 15,745        |              |   |         | 28,225  |  
|                                          | Deferred revenue                                          |                   |         | 21,391        |              |   |         | 18,145  |  
|                                          | Other                                                     |                   |         | 5,955         |              |   |         | 3,960   |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           | $                 | 49,627  |               |              | $ | 71,770  |        
|                                          |                                                           |                   |         |               |              |  
|Other long-term liabilities:              |                                                           |                   |         |               |              |   |         |        
|                                          | Deferred tax liabilities                                  |                   | $       | 141,935       |              |   | $       | 145,673 |  
|                                          | Other                                                     |                   |         | 36,424        |              |   |         | 30,567  |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           | $                 | 178,359 |               |              | $ | 176,240 |        
|                                          |                                                           |                   |         |               |              |  
|Other intangible assets, net:             |                                                           |                   |         |               |              |   |         |        
|                                          | Customer relationships                                    |                   | $       | 124,715       |              |   | $       | 129,000 |  
|                                          | Trademarks                                                |                   |         | 37,000        |              |   |         | 37,000  |  
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           |                   | 161,715 |               |              |   | 166,000 |        
|                                          | Accumulated amortization customer relationships           |                   |         | (44,417       | )            |   |         | (13,438 | )
|                                          | Accumulated amortization trademarks                       |                   |         | (3,744        | )            |   |         | (1,101  | )
|                                          |                                                           |                   |         |               |              |  
|                                          |                                                           | $                 | 113,554 |               |              | $ | 151,461 |        
|                                          |                                                           |                   |         |               |              |  



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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Supplementary Cash Flow Information:


|                                                                             |                                                        |                                                                   |   |        |                     |  |   |              |   |  |              |    |        |   |   |        |         |  
|---------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------------------------- | - | ------ | ------------------- |  | - | ------------ | - |  | ------------ | -- | ------ | - | - | ------ | ------- | -
|                                                                             |                                                        | Successor Company                                                 |   |        | Predecessor Company | 
|                                                                             |                                                        |                                                                   |   |        |                     | 
|                                                                             |                                                        | Year                                                              |   |        | Five Months         |  |   | Seven Months |   |  | Year         |   
|                                                                             |                                                        | Ended                                                             |   |        | Ended               |  |   | Ended        |   |  | Ended        |   
|                                                                             |                                                        | December 31,                                                      |   |        | December 31,        |  |   | July 31,     |   |  | December 31, |   
|                                                                             |                                                        | 2005                                                              |   |        | 2004                |  |   | 2004         |   |  | 2003         |   
|                                                                             |                                                        |                                                                   |   |        |                     |  |   |              |   |  |              |   
|Supplementary disclosure of cash flow information:                           |                                                        |                                                                   |   |        |                     |  |   |              |   |  |              |    |        |   |   |       
|                                                                             | Cash paid for interest                                 |                                                                   | $ | 55,653 |                     |  | $ | 8,227        |   |  | $            |   |        |   | $ | 18,168 |        
|                                                                             | Cash paid for income taxes                             |                                                                   |   | 305    |                     |  |   | 240          |   |  |              | 76 |        |   |   | 372    |        
|                                                                             | Cash provided by (paid for) reorganization activities: |                                                                   |   |        |                     |  |   |              |   |  |              |    |        |   |   |        |        
|                                                                             |                                                        | Payments to Leap Creditor Trust                                   |   |        |                    |  |   |              |  |  |              |    | (990   | ) |   |        | (67,800 | )
|                                                                             |                                                        | Payments for professional fees                                    |   |        |                    |  |   |              |  |  |              |    | (7,975 | ) |   |        | (9,864  | )
|                                                                             |                                                        | Cure payments, net                                                |   |        |                    |  |   |              |  |  |              |    | 1,984  |   |   |        | (40,405 | )
|                                                                             |                                                        | Interest income                                                   |   |        |                    |  |   |              |  |  |              |    | 1,485  |   |   |        | 2,940   |  
|Supplementary disclosure of non-cash investing and financing
    activities: |                                                        |                                                                   |   |        |                     |  |   |              |   |  |              |    |        |   |   |       
|                                                                             |                                                        | Issuance of restricted stock awards under stock compensation plan |   | $      | 26,317              |  |   | $            |  |  |              | $  |       |   |   | $      |        |  



|        |                   
|------- | ------------------
|Note 6. | Earnings Per Share



|                                                                              |                             |                   |        |     |                     |  |        |              |  |  |              |   |  |  |        |   | 
|----------------------------------------------------------------------------- | --------------------------- | ----------------- | ------ | --- | ------------------- |  | ------ | ------------ |  |  | ------------ | - |  |  | ------ | - | 
|                                                                              |                             | Successor Company |        |     | Predecessor Company | 
|                                                                              |                             |                   |        |     |                     | 
|                                                                              |                             | Year              |        |     | Five Months         |  |        | Seven Months |  |  | Year         |  
|                                                                              |                             | Ended             |        |     | Ended               |  |        | Ended        |  |  | Ended        |  
|                                                                              |                             | December 31,      |        |     | December 31,        |  |        | July 31,     |  |  | December 31, |  
|                                                                              |                             | 2005              |        |     | 2004                |  |        | 2004         |  |  | 2003         |  
|                                                                              |                             |                   |        |     |                     |  |        |              |  |  |              |  
|Weighted average shares outstanding  basic earnings
    per share            |                             |                   | 60,135 |     |                     |  | 60,000 |              |  |  | 58,623       |   |  |  | 58,604 |  
|Effect of dilutive securities:                                                |                             |                   |        |     |                     |  |        |              |  |  |              |   |  |  |        |  
|                                                                              | Non-qualified stock options |                   |        | 130 |                     |  |        |             |  |  |              |  |  |  |        |  | 
|                                                                              | Restricted stock awards     |                   |        | 472 |                     |  |        |             |  |  |              |  |  |  |        |  | 
|                                                                              | Warrants                    |                   |        | 266 |                     |  |        |             |  |  |              |  |  |  |        |  | 
|                                                                              |                             |                   |        |     |                     |  |        |              |  |  |              |  
|Adjusted weighted average shares outstanding  diluted
    earnings per share |                             |                   | 61,003 |     |                     |  | 60,000 |              |  |  | 58,623       |   |  |  | 58,604 |  
|                                                                              |                             |                   |        |     |                     |  |        |              |  |  |              |  



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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |     
|------- | ----
|Note 7. | Debt

Credit Agreement












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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Senior Secured Pay-In-Kind Notes Issued Under Plan of
Reorganization


pay-in


US Government Financing




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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |             
|------- | ------------
|Note 8. | Income Taxes



|                    |         |                   |        |               |                     |   |              |          |  |   |              |       |  |   |       |       | 
|------------------- | ------- | ----------------- | ------ | ------------- | ------------------- | - | ------------ | -------- |  | - | ------------ | ----- |  | - | ----- | ----- | 
|                    |         | Successor Company |        |               | Predecessor Company |  
|                    |         |                   |        |               |                     |  
|                    |         |                   |        | Five Months   |                     |   | Seven Months |          |  |  
|                    |         | Year Ended        |        |               | Ended               |   |              | Ended    |  |   | Year Ended   |      
|                    |         | December 31,      |        |               | December 31,        |   |              | July 31, |  |   | December 31, |      
|                    |         | 2005              |        |               | 2004                |   |              | 2004     |  |   | 2003         |      
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      
|                    |         |                   |        | (As Restated) |                     |   |              |          | 
|Current provision:  |         |                   |        |               |                     |   |              |          |  |   |              |       |  |   |       |      
|                    | Federal |                   | $      |              |                     |   | $            |         |  |   | $            |      |  |   | $     |      | 
|                    | State   |                   |        | 63            |                     |   |              | 107      |  |   |              | 13    |  |   |       | 337   | 
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      
|                    |         |                   | 63     |               |                     |   | 107          |          |  |   | 13           |       |  |   | 337   |      
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      
|Deferred provision: |         |                   |        |               |                     |   |              |          |  |   |              |       |  |   |       |      
|                    | Federal |                   |        | 17,571        |                     |   |              | 3,186    |  |   |              | 3,725 |  |   |       | 6,920 | 
|                    | State   |                   |        | 3,517         |                     |   |              | 637      |  |   |              | 428   |  |   |       | 795   | 
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      
|                    |         |                   | 21,088 |               |                     |   | 3,823        |          |  |   | 4,153        |       |  |   | 7,715 |      
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      
|                    |         | $                 | 21,151 |               |                     | $ | 3,930        |          |  | $ | 4,166        |       |  | $ | 8,052 |      
|                    |         |                   |        |               |                     |   |              |          |  |   |              |      



|                                                              |  |              |        |               |              |   |              |          |  |   |              |   |  |   |          |  
|------------------------------------------------------------- |  | ------------ | ------ | ------------- | ------------ | - | ------------ | -------- |  | - | ------------ | - |  | - | -------- | -
|                                                              |  |              |        | Five Months   |              |   | Seven Months |          |  |  
|                                                              |  | Year Ended   |        |               | Ended        |   |              | Ended    |  |   | Year Ended   |  
|                                                              |  | December 31, |        |               | December 31, |   |              | July 31, |  |   | December 31, |  
|                                                              |  | 2005         |        |               | 2004         |   |              | 2004     |  |   | 2003         |  
|                                                              |  |              |        |               |              |   |              |          |  |   |              |  
|                                                              |  |              |        | (As Restated) |              |   |              |          | 
|Amounts computed at statutory federal rate                    |  | $            | 17,891 |               |              | $ | (1,561       | )        |  | $ | 321,075      |   |  | $ | (206,285 | )
|State income tax, net of federal benefit                      |  |              | 2,285  |               |              |   | 171          |          |  |   | 287          |   |  |   | 736      |  
|Non-deductible expenses                                       |  |              | 929    |               |              |   | 2,096        |          |  |   | 175          |   |  |   | 7,050    |  
|Amortization of wireless licenses and tax-deductible goodwill |  |              |       |               |              |   | 3,224        |          |  |   |             |   |  |   |         |  
|Gain on reorganization and adoption of fresh-start reporting  |  |              |       |               |              |   |             |          |  |   | (337,422     | ) |  |   |         |  
|Other                                                         |  |              | 46     |               |              |   |             |          |  |   |             |   |  |   | 15,134   |  
|Change in valuation allowance                                 |  |              |       |               |              |   |             |          |  |   | 20,051       |   |  |   | 191,417  |  
|                                                              |  |              |        |               |              |   |              |          |  |   |              |  
|                                                              |  | $            | 21,151 |               |              | $ | 3,930        |          |  | $ | 4,166        |   |  | $ | 8,052    |  
|                                                              |  |              |        |               |              |   |              |          |  |   |              |  

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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |                                  |                   |          |               |              |   |          |          |  
|------------------------------- | -------------------------------- | ----------------- | -------- | ------------- | ------------ | - | -------- | -------- | -
|                                |                                  | Successor Company |         
|                                |                                  |                   |         
|                                |                                  | December 31,      |          |               | December 31, |  
|                                |                                  | 2005              |          |               | 2004         |  
|                                |                                  |                   |          |               |              |  
|                                |                                  |                   |          | (As Restated) |             
|Deferred tax assets:            |                                  |                   |          |               |              |   |          |         
|                                | Net operating loss carryforwards |                   | $        | 174,802       |              |   | $        | 155,189  |  
|                                | Wireless licenses                |                   |          | 59,639        |              |   |          | 97,946   |  
|                                | Capital loss carryforwards       |                   |          | 14,141        |              |   |          |         |  
|                                | Stock-based compensation         |                   |          | 2,110         |              |   |          |         |  
|                                | Reserves and allowances          |                   |          | 10,027        |              |   |          | 9,951    |  
|                                | Property and equipment           |                   |          | 3,476         |              |   |          | 20,959   |  
|                                | Debt premium                     |                   |          |              |              |   |          | 18,995   |  
|                                | Deferred revenues and charges    |                   |          |              |              |   |          | 2,229    |  
|                                | Other                            |                   |          | 3,750         |              |   |          | 1,966    |  
|                                |                                  |                   |          |               |              |  
|Gross deferred tax assets       |                                  |                   | 267,945  |               |              |   | 307,235  |         
|Deferred tax liabilities:       |                                  |                   |          |               |              |   |          |         
|                                | Intangible assets                |                   |          | (45,171       | )            |   |          | (59,449  | )
|                                | Deferred tax on unrealized gains |                   |          | (1,382        | )            |   |          | (32      | )
|                                | Other                            |                   |          |              |              |   |          | (546     | )
|                                |                                  |                   |          |               |              |  
|Net deferred tax assets         |                                  |                   | 221,392  |               |              |   | 247,208  |         
|Valuation allowance             |                                  |                   | (221,392 | )             |              |   | (247,208 | )       
|Other deferred tax liabilities: |                                  |                   |          |               |              |   |          |         
|                                | Wireless licenses                |                   |          | (136,364      | )            |   |          | (142,221 | )
|                                | Goodwill                         |                   |          | (3,616        | )            |   |          | (1,064   | )
|                                |                                  |                   |          |               |              |  
|Net deferred tax liability      |                                  | $                 | (139,980 | )             |              | $ | (143,285 | )       
|                                |                                  |                   |          |               |              |  



|                                                                               |  |                   |          |               |              |   |          |  
|------------------------------------------------------------------------------ |  | ----------------- | -------- | ------------- | ------------ | - | -------- | -
|                                                                               |  | Successor Company |         
|                                                                               |  |                   |         
|                                                                               |  | December 31,      |          |               | December 31, |  
|                                                                               |  | 2005              |          |               | 2004         |  
|                                                                               |  |                   |          |               |              |  
|                                                                               |  |                   |          | (As Restated) |             
|Current deferred tax assets (included in other current assets)                 |  | $                 | 1,955    |               |              | $ | 2,388    |  
|Long-term deferred tax liability (included in other long-term
    liabilities) |  |                   | (141,935 | )             |              |   | (145,673 | )
|                                                                               |  |                   |          |               |              |  
|                                                                               |  | $                 | (139,980 | )             |              | $ | (143,285 | )
|                                                                               |  |                   |          |               |              |  





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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




90-7,






|        |                     
|------- | --------------------
|Note 9. | Stockholders Equity





|         |                                           
|-------- | ------------------------------------------
|Note 10. | Stock-Based Compensation and Benefit Plans



| |                                     
| | ------------------------------------
| | Employee Savings and Retirement Plan





| |                                    
| | -----------------------------------
| | Successor Company Stock Option Plan





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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                  |                   |                     |       |          |                |   |             |                |  |   |       |       | 
|----------------- | ----------------- | ------------------- | ----- | -------- | -------------- | - | ----------- | -------------- |  | - | ----- | ----- | 
|                  |                   | Options Outstanding |      
|                  |                   |                     |      
|                  |                   |                     |       | Weighted |               
|                  |                   | Number of           |       |          | Exercise Price |   |             | Average        | 
|                  |                   | Shares              |       |          | Range          |   |             | Exercise Price | 
|                  |                   |                     |       |          |                |   |             |                | 
|December 31, 2004 |                   |                     |      |          |                | $ |            |                |  | $ |      |      
|                  | Options granted   |                     |       | 2,251    |                |   |             | 26.35-37.74    |  |   |       | 28.68 | 
|                  | Options forfeited |                     |       | (359     | )              |   |             | 26.55-34.89    |  |   |       | 27.31 | 
|                  | Options exercised |                     |       |         |                |   |             |               |  |   |       |      | 
|                  |                   |                     |       |          |                |   |             |                | 
|December 31, 2005 |                   |                     | 1,892 |          |                | $ | 26.35-37.74 |                |  | $ | 28.94 |      
|                  |                   |                     |       |          |                |   |             |                | 



Successor Company Employee Stock Purchase Plan




Predecessor Company Stock Option and Other Benefit
Plans








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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                                          
|-------- | -----------------------------------------
|Note 11. | Significant Acquisitions and Dispositions















|         |                            
|-------- | ---------------------------
|Note 12. | Segment and Geographic Data



89



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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 13. | Commitments and Contingencies









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LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                        |       |   |         |         | 
|----------------------- | ----- | - | ------- | ------- | 
|Year Ended December 31: |       |   |         |        
|2006                    |       | $ | 48,381  |        
|2007                    |       |   | 35,628  |        
|2008                    |       |   | 33,291  |        
|2009                    |       |   | 31,231  |        
|2010                    |       |   | 30,033  |        
|Thereafter              |       |   | 132,137 |        
|                        |       |   |        
|                        | Total |   | $       | 310,701 | 
|                        |       |   |        



|         |                  
|-------- | -----------------
|Note 14. | Subsequent Events

debtor-in


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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                     
|-------- | ------------------------------------
|Note 15. | Quarterly Financial Data (Unaudited)



|                             |  |                              |         |  |                  |   |         |                  |  |   |         |  |  |   |         | 
|---------------------------- |  | ---------------------------- | ------- |  | ---------------- | - | ------- | ---------------- |  | - | ------- |  |  | - | ------- | 
|                             |  | Year Ended December 31, 2005 |        
|                             |  |                              |        
|                             |  | Successor Company            |        
|                             |  |                              |        
|                             |  | Q1                           |         |  | Q2               |   |         | Q3               |  |   | Q4      | 
|                             |  |                              |         |  |                  |   |         |                  |  |   |         | 
|                             |  | (As Restated)(1)             |         |  | (As Restated)(1) |   |         | (As Restated)(1) |  |   |        
|Revenues                     |  | $                            | 228,370 |  |                  | $ | 226,829 |                  |  | $ | 230,527 |  |  | $ | 228,937 | 
|Operating income(2)(3)       |  |                              | 21,861  |  |                  |   | 8,554   |                  |  |   | 28,634  |  |  |   | 10,770  | 
|Net income(2)(3)             |  |                              | 7,516   |  |                  |   | 1,103   |                  |  |   | 16,397  |  |  |   | 4,950   | 
|Basic net income per share   |  |                              | 0.13    |  |                  |   | 0.02    |                  |  |   | 0.27    |  |  |   | 0.08    | 
|Diluted net income per share |  |                              | 0.12    |  |                  |   | 0.02    |                  |  |   | 0.27    |  |  |   | 0.08    | 

|                                              |  |                              |         |   |                   |   |         |                  |  |   |                  |   |  |              |         |   |  |   |         |  
|--------------------------------------------- |  | ---------------------------- | ------- | - | ----------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                              |  | Year Ended December 31, 2004 |        
|                                              |  |                              |        
|                                              |  | Predecessor Company          |         |   | Successor Company |  
|                                              |  |                              |         |   |                   |  
|                                              |  | Three Months                 |         |   | Three Months      |   |         | One Month        |  |   | Two Months       |   |  | Three Months |        
|                                              |  | Ended                        |         |   | Ended             |   |         | Ended            |  |   | Ended            |   |  | Ended        |        
|                                              |  | March 31,                    |         |   | June 30,          |   |         | July 31,         |  |   | September 30,    |   |  | December 31, |        
|                                              |  |                              |         |   |                   |   |         |                  |  |   |                  |   |  |              |        
|                                              |  |                              |         |   |                   |   |         | (As Restated)(1) |  |   | (As Restated)(1) |  
|Revenues                                      |  | $                            | 206,822 |   |                   | $ | 205,701 |                  |  | $ | 69,124           |   |  | $            | 137,783 |   |  | $ | 206,577 |  
|Operating income (loss)                       |  |                              | (22,257 | ) |                   |   | (15,008 | )                |  |   | (3,335           | ) |  |              | 5,504   |   |  |   | 4,934   |  
|Net income (loss)(4)                          |  |                              | (28,030 | ) |                   |   | (18,145 | )                |  |   | 959,365          |   |  |              | (1,834  | ) |  |   | (6,557  | )
|Basic and diluted net income (loss) per share |  |                              | (0.48   | ) |                   |   | (0.31   | )                |  |   | 16.36            |   |  |              | (0.03   | ) |  |   | (0.11   | )






|    |                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These amounts differ from those previously reported as they have
    been restated. See Note 3.                                                                                                                                                                      
|   
|(2) | During the three months ended June 30, 2005, the Company
    recognized an impairment charge of $11.4 million to reduce
    the carrying values of non-operating wireless licenses in
    Anchorage, Alaska and Duluth, Minnesota to their estimated fair
    values.
|   
|(3) | During the three months ended September 30, 2005, the
    Company recognized a gain of $14.6 million from the sale of
    wireless licenses and Michigan operating assets.                                                                                           
|   
|(4) | During the one month ended July 31, 2004, the Company
    recorded a net reorganization gain of $963.2 million
    relating to the net gain on discharge of liabilities and net
    effect from the application of fresh-start reporting.                            

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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



|    |                                                 
|--- | ------------------------------------------------
|(a) | Evaluation of Disclosure Controls and Procedures



13a-15(b), 10-K, 13a-15(e)






|    |                                                                     
|--- | --------------------------------------------------------------------
|(b) | Managements Report on Internal Control over Financial
    Reporting

13a-15(f)




| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Pertain to the maintenance of records that in reasonable
    detail accurately and fairly reflect the transactions and
    dispositions of the Companys assets;

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| |                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. Provide reasonable assurance that transactions are
    recorded as necessary to permit preparation of financial
    statements in accordance with generally accepted accounting
    principles, and that receipts and expenditures are being made
    only in accordance with authorization of the Companys
    management and directors; and
|
| | 3. Provide reasonable assurance regarding prevention or
    timely detection of unauthorized acquisition, use or disposition
    of the Companys assets that could have a material effect
    on the financial statements.                                                                                                                      



Internal Control-Integrated
Framework






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. The Company did not maintain a sufficient complement of
    personnel with the appropriate skills, training and
    Company-specific experience to identify and address the
    application of generally accepted accounting principles in
    complex or non-routine transactions. Specifically, the Company
    has experienced staff turnover, and as a result, has experienced
    a lack of knowledge transfer to new employees within its
    accounting, financial reporting and tax functions. In addition,
    the Company does not have a full-time director of its tax
    function. This control deficiency contributed to the material
    weakness described below. Additionally, this control deficiency
    could result in a misstatement of accounts and disclosures that
    would result in a material misstatement to the Companys
    interim or annual consolidated financial statements that would
    not be prevented or detected. Accordingly, management has
    determined that this control deficiency constitutes a material
    weakness.                                                                                                                                                                                                                               
|
| | 2. The Company did not maintain effective controls over its
    accounting for income taxes. Specifically, the Company did not
    have adequate controls designed and in place to ensure the
    completeness and accuracy of the deferred income tax provision
    and the related deferred tax assets and liabilities and the
    related goodwill in conformity with generally accepted
    accounting principles. This control deficiency resulted in the
    restatement of the Companys consolidated financial
    statements for the five months ended December 31, 2004 and
    the consolidated financial statements for the two months ended
    September 30, 2004 and the quarters ended March 31,
    2005, June 30, 2005 and September 30, 2005, as well as
    audit adjustments to the 2005 annual consolidated financial
    statements. Additionally, this control deficiency could result
    in a misstatement of income tax expense, deferred tax assets and
    liabilities and the related goodwill that would result in a
    material misstatement to the Companys interim or annual
    consolidated financial statements that would not be prevented or
    detected. Accordingly, management has determined that this
    control deficiency constitutes a material weakness.

Internal Control-Integrated Framework




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|    |                                     
|--- | ------------------------------------
|(c) | Managements Remediation Initiatives







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company hired a new vice president, chief accounting officer
    in May 2005. This individual is a certified public accountant
    with over 19 years of experience as an accounting
    professional, including over 14 years of Big Four public
    accounting experience. He possesses a strong background in
    technical accounting and the application of generally accepted
    accounting principles.
|
| |  | The Company has hired a number of key accounting personnel since
    February 2005 that are appropriately qualified and experienced
    to identify and apply technical accounting literature, including
    several new directors and managers.                                                                                                                                                                  

10-K 10-Q






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company has initiated a search for a qualified full-time tax
    department leader and continues to make this a priority. The
    Company has been actively recruiting for this position for
    several months, but has experienced difficulty in finding
    qualified applicants. Nevertheless, the Company is striving to
    fill the position as soon as possible.                                                                                                                                                                                                    
|
| |  | As part of its 2005 annual income tax provision, the Company
    improved its internal control over income tax accounting to
    establish detailed procedures for the preparation and review of
    the income tax provision, including review by the Companys
    chief accounting officer.                                                                                                                                                                                                                                                                                  
|
| |  | The Company used experienced qualified consultants to assist
    management in interpreting and applying income tax accounting
    literature and preparing the Companys 2005 annual income
    tax provision, and will continue to use such consultants in the
    future to obtain access to as much income tax accounting
    expertise as it needs. The Company recognizes, however, that a
    full-time tax department leader with appropriate tax accounting
    expertise is important for the Company to maintain effective
    internal controls on an ongoing basis.
|
| |  | As a result of the remediation initiatives described above, the
    Company identified certain of the errors that gave rise to the
    restatements of the consolidated financial statements for
    deferred income taxes.                                                                                                                                                                                                                                                                                                                                                     





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10-Q




|    |                                                     
|--- | ----------------------------------------------------
|(d) | Changes in Internal Control over Financial Reporting






Item 9B.     Other
Information







PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

(a) Financial Statements and Financial Statement
Schedules




| |                                        
| | ---------------------------------------
| | Documents filed as part of this report:
|
| | 1. Financial Statements:               



| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The financial statements of Leap listed below are set forth in
    Item 8 of this report for the year ended December 31,
    2005                                                                                             
|
| | Reports of Independent Registered Public Accounting Firm                                                                                                                                                                      
|
| | Consolidated Balance Sheets at December 31, 2005 and 2004
    (as restated)                                                                                                                                                   
|
| | Consolidated Statements of Operations for the year ended
    December 31, 2005, the five months ended December 31,
    2004 (as restated), the seven months ended July 31, 2004
    and the year ended December 31, 2003      
|
| | Consolidated Statements of Cash Flows for the year ended
    December 31, 2005, the five months ended December 31,
    2004 (as restated), the seven months ended July 31, 2004
    and the year ended December 31, 2003      
|
| | Consolidated Statements of Stockholders Equity (Deficit)
    for the year ended December 31, 2005, the five months ended
    December 31, 2004, the seven months ended July 31,
    2004 and the year ended December 31, 2003
|
| | Notes to the Consolidated Financial Statements                                                                                                                                                                                



| |                                  
| | ---------------------------------
| | 2. Financial Statement Schedules:



| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All other schedules are omitted because they are not applicable
    or the required information is shown in the consolidated
    financial statements or notes thereto.



| |     |         
| | --- | --------
| | (b) | Exhibits

EXHIBIT INDEX


|        |          |             |  |                                                                                                                                                                                                                                                
|------- | -------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |            
|Number  |          | Description
|        |          |            
|        | 2.1(1)   |             |  | Fifth Amended Joint Plan of Reorganization dated as of
    July 30, 2003, as modified to reflect all technical
    amendments subsequently approved by the Bankruptcy Court.                                                                   
|        | 2.2(2)   |             |  | Disclosure Statement Accompanying Fifth Amended Joint Plan of
    Reorganization dated as of July 30, 2003.                                                                                                                                    
|        | 2.3(3)   |             |  | Order Confirming Debtors Fifth Amended Joint Plan of
    Reorganization dated as of July 30, 2003.                                                                                                                                            
|        | 3.1(4)   |             |  | Amended and Restated Certificate of Incorporation of Leap
    Wireless International, Inc.                                                                                                                                                     
|        | 3.2(4)   |             |  | Amended and Restated Bylaws of Leap Wireless International, Inc.                                                                                                                                                                               
|        | 4.1(5)   |             |  | Form of Common Stock Certificate.                                                                                                                                                                                                              
|        | 4.2(4)   |             |  | Registration Rights Agreement dated as of August 16, 2004,
    by and among Leap Wireless International Inc., MHR Institutional
    Partners II LP, MHR Institutional Partners IIA LP and
    Highland Capital Management, L.P.                
|        | 4.2.1(6) |             |  | Amendment No. 1 to Registration Rights Agreement dated as
    of June 7, 2005 by and among Leap Wireless International,
    Inc., MHR Institutional Partners II LP, MHR Institutional
    Partners IIA LP and Highland Capital Management, L.P.
|        | 10.1(7)# |             |  | Form of Indemnity Agreement to be entered into by and between
    Leap Wireless International, Inc. and its directors and officers.                                                                                                            

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|        |             |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ----------- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |             |            
|Number  |             | Description
|        |             |            
|        | 10.2(8)    |             |  | System Equipment Purchase Agreement, effective as of
    September 20, 1999, by and between Cricket Communications,
    Inc. and Ericsson Wireless Communications Inc. (including
    exhibits thereto).                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.2.1(9)  |             |  | Amendment #1 to System Equipment Purchase Agreement,
    effective as of November 28, 2000, by and between Cricket
    Communications, Inc. and Ericsson Wireless Communications Inc.
    (including exhibits thereto).                                                                                                                                                                                                                                                                                                                                                             
|        | 10.2.2(9)  |             |  | Form of Amendment to System Equipment Purchase Agreement, by and
    between Cricket Communications, Inc. and Ericsson Wireless
    Communications Inc. (including exhibits thereto).                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.2.3(10)  |             |  | Schedule to Form of Amendment to System Equipment Purchase
    Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10.2.4(10) |             |  | Amendment #6 to System Equipment Purchase Agreement,
    effective as of February 5, 2001, by and between Cricket
    Communications, Inc. and Ericsson Wireless Communications Inc.                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.2.5(11)  |             |  | Amended and Restated Settlement Agreement, entered into as of
    September 29, 2003, by and among Leap Wireless
    International, Inc., Cricket Communications, Inc. and Cricket
    Communications Holdings, Inc., on behalf of themselves and
    certain other related debtors and debtors in possession whose
    cases are being jointly administered with the bankruptcy cases
    of Leap Wireless International, Inc., Cricket and Holdings and
    which are listed on Exhibit A thereto, Cricket
    Performance 3, Inc. and Ericsson Wireless Communications
    Inc.
|        | 10.2.6(12) |             |  | Amendment #11 to System Equipment Purchase Agreement,
    effective as of May 12, 2004, by and between Cricket
    Communications, Inc. and Ericsson Wireless Communications Inc.                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.3(8)    |             |  | Amended and Restated System Equipment Purchase Agreement,
    entered into as of June 30, 2000, by and between Cricket
    Communications, Inc. and Lucent Technologies Inc. (including
    exhibits thereto).                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.3.1(13)  |             |  | Amendment No. 1 to the Amended and Restated System
    Equipment Purchase Agreement by and between Lucent Technologies
    Inc. and Cricket Communications, Inc., entered into as of
    March 22, 2002.                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.3.2(13) |             |  | Amendment No. 2 to the Amended and Restated System
    Equipment Purchase Agreement by and between Lucent Technologies
    Inc. and Cricket Communications, Inc., entered into as of
    March 22, 2002.                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.3.3(14) |             |  | Amendment No. 3 to Amended and Restated System Equipment
    Purchase Agreement by and between Cricket Communications, Inc.
    and Lucent Technologies Inc., effective March 22, 2002.                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.3.4(14) |             |  | Amendment No. 4 to Amended and Restated System Equipment
    Purchase Agreement by and between Cricket Communications, Inc.
    and Lucent Technologies Inc., effective March 22, 2002.                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.3.5(11)  |             |  | Amendment No. 5 to the Amended and Restated System
    Equipment Purchase Agreement by and between Cricket
    Communications, Inc. and Lucent Technologies Inc., executed as
    of September 23, 2003.                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.3.6(15) |             |  | Amendment No. 6 to the Amended and Restated System
    Equipment Purchase Agreement by and between Cricket
    Communications, Inc. and Lucent Technologies Inc., effective as
    of February 4, 2004.                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.3.7(16) |             |  | Amendment No. 7 to the Amended and Restated System
    Equipment Purchase Agreement by and between Cricket
    Communications, Inc. and Lucent Technologies Inc., effective as
    of January 1, 2005.                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.3.8(17) |             |  | Amendment No. 8 to Amended and Restated System Equipment
    Purchase Agreement, effective as of October 1, 2005,
    between Cricket Communications, Inc. and Lucent Technologies Inc.                                                                                                                                                                                                                                                                                                                                                                                             

98



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|        |              |             |  |                                                                                                                                                                                                                              
|------- | ------------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |              |            
|Number  |              | Description
|        |              |            
|        | 10.3.9*     |             |  | Amendment No. 9 to Amended and Restated System Equipment
    Purchase Agreement, effective as of January 11, 2006,
    between Cricket Communications, Inc. and Lucent Technologies Inc.                                     
|        | 10.4(18)    |             |  | Amended and Restated System Equipment Purchase Agreement,
    effective as of December 23, 2002, by and between Cricket
    Communications, Inc. and Nortel Networks Inc. (including
    exhibits thereto).                  
|        | 10.4.1(18)   |             |  | Amendment No. 1 to Amended and Restated System Equipment
    Purchase Agreement, effective as of February 7, 2003, by
    and between Cricket Communications, Inc. and Nortel Networks
    Inc. (including exhibits thereto).
|        | 10.4.2(16)  |             |  | Amendment No. 2 to Amended and Restated System Equipment
    Purchase Agreement, effective as of December 22, 2004, by
    and between Cricket Communications, Inc. and Nortel Networks Inc.                                 
|        | 10.4.3(17)  |             |  | Amendment No. 3 to Amended and Restated System Equipment
    Purchase Agreement, effective as of October 11, 2005, by
    and between Cricket Communications, Inc. and Nortel Networks Inc.                                  
|        | 10.4.4*     |             |  | Amendment No. 4 to Amended and Restated System Equipment
    Purchase Agreement, effective as of December 22, 2005, by
    and between Cricket Communications, Inc. and Nortel Networks Inc.                                 
|        | 10.5(17)#    |             |  | Form of Executive Vice President and Senior Vice President
    Severance Benefits Agreement.                                                                                                                                 
|        | 10.5.1(19)#  |             |  | Severance Benefits Agreement, effective as of January 16,
    2006, between Leap Wireless International, Inc., Cricket
    Communications, Inc. and Dean M. Luvisa.                                                          
|        | 10.6(20)#    |             |  | Resignation Agreement by and among Leap Wireless International,
    Inc., Cricket Communications, Inc. and William M. Freeman, dated
    February 25, 2005.                                                                  
|        | 10.7(21)#    |             |  | Indemnity Agreement, dated as of October 26, 2004, by and
    between Leap Wireless International, Inc. and Manford Leonard.                                                                                                 
|        | 10.8(20)     |             |  | Credit Agreement, dated as of December 22, 2004, among
    Cricket Communications, Inc., Alaska Native Broadband 1 License,
    LLC, and Alaska Native Broadband 1, LLC.                                                     
|        | 10.8.1(20)   |             |  | Amendment, dated January 26, 2005, to the Credit Agreement,
    dated as of December 22, 2004, among Cricket
    Communications, Inc., Alaska Native Broadband 1 License, LLC,
    and Alaska Native Broadband 1, LLC.       
|        | 10.8.2(6)    |             |  | Amendment No. 2, dated June 24, 2005, to the Credit
    Agreement, dated as of December 22, 2004, among Cricket
    Communications, Inc., Alaska Native Broadband 1 License, LLC,
    and Alaska Native Broadband 1, LLC.    
|        | 10.8.3(17)   |             |  | Amendment No. 3, dated August 26, 2005, to the Credit
    Agreement, dated as of December 22, 2004, among Cricket
    Communications, Inc., Alaska Native Broadband 1 License, LLC,
    and Alaska Native Broadband 1, LLC.  
|        | 10.8.4(22)   |             |  | Amendment No. 4, dated January 9, 2006, to the Credit
    Agreement, dated as of December 22, 2004, among Cricket
    Communications, Inc., Alaska Native Broadband 1 License, LLC,
    and Alaska Native Broadband 1, LLC.  
|        | 10.9(23)#    |             |  | Leap Wireless International, Inc. 2004 Stock Option, Restricted
    Stock and Deferred Stock Unit Plan.                                                                                                                      
|        | 10.9.1(24)# |             |  | Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (February 2008 Vesting).                                                                                                                      
|        | 10.9.2(24)# |             |  | Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Five-Year Vesting) entered into prior to
    October 26, 2005.                                                                               
|        | 10.9.3*#     |             |  | Amendment No. 1 to Form of Stock Option Grant Notice and
    Non-Qualified Stock Option Agreement (Five-Year Vesting) entered
    into prior to October 26, 2005.                                                            
|        | 10.9.4*#    |             |  | Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement, effective as of October 26, 2005, Between Leap
    Wireless International, Inc. and Albin F. Moschner.                                               
|        | 10.9.5(24)# |             |  | Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (February 2008 Vesting).                                                                                                                

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|        |              |             |  |                                                                                                                                                                                                                                                                                                      
|------- | ------------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |              |            
|Number  |              | Description
|        |              |            
|        | 10.9.6(24)# |             |  | Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Five-Year Vesting) entered into prior to
    October 26, 2005.                                                                                                                                                 
|        | 10.9.7*#     |             |  | Amendment No. 1 to Form of Restricted Stock Award Grant
    Notice and Restricted Stock Award Agreement (Five-Year Vesting)
    entered into prior to October 26, 2005.                                                                                                                              
|        | 10.9.8(25)#  |             |  | Restricted Stock Award Grant Notice and Restricted Stock Award
    Agreement, dated as of July 8 2005, between Leap Wireless
    International, Inc. and David B. Davis.                                                                                                                             
|        | 10.9.9(25)#  |             |  | Restricted Stock Award Grant Notice and Restricted Stock Award
    Agreement, dated as of July 8 2005, between Leap Wireless
    International, Inc. and Robert J. Irving, Jr.                                                                                                                       
|        | 10.9.10(25)# |             |  | Restricted Stock Award Grant Notice and Restricted Stock Award
    Agreement, dated as of July 8 2005, between Leap Wireless
    International, Inc. and Leonard C. Stephens.                                                                                                                        
|        | 10.9.11*#   |             |  | Restricted Stock Award Grant Notice and Restricted Stock Award
    Agreement, effective as of October 26 2005, between Leap
    Wireless International, Inc. and Albin F. Moschner.                                                                                                                  
|        | 10.9.12(23)# |             |  | Form of Deferred Stock Unit Award Grant Notice and Deferred
    Stock Unit Award Agreement.                                                                                                                                                                                                          
|        | 10.9.13(20)# |             |  | Form of Non-Employee Director Stock Option Grant Notice and
    Non-Qualified Stock Option Agreement.                                                                                                                                                                                                
|        | 10.9.14*#   |             |  | Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Five-Year Vesting) entered into on or after
    October 26, 2005.                                                                                                                                                    
|        | 10.9.15*#   |             |  | Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Five-Year Vesting) entered into on or after
    October 26, 2005.                                                                                                                                              
|        | 10.10(20)#  |             |  | Amended and Restated Executive Employment Agreement among Leap
    Wireless International, Inc., Cricket Communications, Inc., and
    S. Douglas Hutcheson, dated as of January 10, 2005.                                                                                                           
|        | 10.10.1(24)# |             |  | First Amendment to Amended and Restated Executive Employment
    Agreement among Leap Wireless International, Inc., Cricket
    Communications, Inc., and S. Douglas Hutcheson, effective
    as of June 17, 2005.                                                                                   
|        | 10.10.2*#    |             |  | Second Amendment to Amended and Restated Executive Employment
    Agreement among Leap Wireless International, Inc., Cricket
    Communications, Inc., and S. Douglas Hutcheson, effective
    as of February 17, 2006.                                                                              
|        | 10.11(26)    |             |  | Credit Agreement, dated January 10, 2005, by and among
    Cricket Communications, Inc., Leap Wireless International, Inc.,
    the lenders party thereto and Bank of America, N.A., as
    administrative agent and L/ C issuer.                                                                    
|        | 10.11.1(27)  |             |  | Amendment No. 1 to Credit Agreement by and among Cricket
    Communications, Inc., Leap Wireless International, Inc., the
    lenders party thereto and Bank of America, N.A., as
    administrative agent and L/ C issuer, dated as of July 22,
    2005.                                           
|        | 10.11.2(27)  |             |  | Amendment No. 2 to Credit Agreement by and among Cricket
    Communications, Inc., Leap Wireless International, Inc., the
    lenders party thereto and Bank of America, N.A., as
    administrative agent and L/ C issuer, dated as of July 22,
    2005.                                           
|        | 10.11.3(26)  |             |  | Security Agreement, dated January 10, 2005, by and among
    Cricket Communications, Inc., Leap Wireless International, Inc.,
    the Subsidiary Guarantors and Bank of America, N.A., as
    collateral agent.                                                                                      
|        | 10.11.4(26)  |             |  | Parent Guaranty, dated January 10, 2005, made by Leap
    Wireless International, Inc. in favor of the secured parties
    under the Credit Agreement.                                                                                                                                               
|        | 10.11.5(26)  |             |  | Subsidiary Guaranty, dated January 10, 2005, made by the
    Subsidiary Guarantors in favor of the secured parties under the
    Credit Agreement.                                                                                                                                                   
|        | 10.11.6(28)  |             |  | Letter from Cricket Communications, Inc. to the Lenders under
    the Credit Agreement, dated as of January 10, 2005, among
    the Company, Bank of America, N.A., Goldman Sachs Credit
    Partners L.P., Credit Suisse First Boston and the other lenders
    party thereto, dated April 12, 2005.
|        | 10.11.7*     |             |  | Letter Waiver, dated as of March 6, 2006, among Leap
    Wireless International, Inc., Cricket Communications, Inc., Bank
    of America, N.A., and a syndicate of lenders.                                                                                                                          

100



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|        |              |             |  |                                                                                                                                                 
|------- | ------------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |              |            
|Number  |              | Description
|        |              |            
|        | 10.12(20)#   |             |  | Employment Offer Letter dated January 31, 2005, between
    Cricket Communications, Inc. and Albin F. Moschner.                                 
|        | 10.13.1(20)# |             |  | Emergence Bonus Agreement, dated February 17, 2005, between
    Leap Wireless International, Inc. and Glenn T. Umetsu.                          
|        | 10.13.2(20)# |             |  | Emergence Bonus Agreement, dated February 17, 2005, between
    Leap Wireless International, Inc. and David B. Davis.                           
|        | 10.13.3(20)# |             |  | Emergence Bonus Agreement, dated February 17, 2005, between
    Leap Wireless International, Inc. and Leonard C. Stephens.                      
|        | 10.13.4(20)# |             |  | Emergence Bonus Agreement, dated February 17, 2005, between
    Leap Wireless International, Inc. and Robert J. Irving, Jr.                     
|        | 10.14(29)#   |             |  | Employment Offer Letter, dated March 24, 2005, between
    Cricket Communications, Inc., and Grant Burton.                                      
|        | 10.14.1*#    |             |  | Retention Agreement, dated December 5, 2005, between
    Cricket Communications, Inc., and Grant Burton.                                        
|        | 21*          |             |  | Subsidiaries of Leap Wireless International, Inc.                                                                                               
|        | 23*          |             |  | Consent of Independent Registered Public Accounting Firm.                                                                                       
|        | 31.1*        |             |  | Certification of the Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                     
|        | 31.2*        |             |  | Certification of the Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                     
|        | 32**         |             |  | Certifications of the Chief Executive Officer and the Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.






| |   |                
| | - | ---------------
| | * | Filed herewith.



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ** | These certifications are being furnished solely to accompany
    this annual report pursuant to U.S.C. § 1350, and
    are not being filed for purposes of Section 18 of the
    Securities Exchange Act of 1934, as amended, and are not to be
    incorporated by reference into any fling of Leap Wireless
    International, Inc. whether made before or after the date
    hereof, regardless of any general incorporation language in such
    filing.



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Portions of this exhibit (indicated by asterisks) have been
    omitted pursuant to a request for confidential treatment
    pursuant to
    Rule 24b-2 under
    the Securities Exchange Act of 1934.



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| | # | Management contract or compensatory plan or arrangement in which
    one or more executive officers or directors participates.



| |     |                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Filed as an exhibit to Leaps Current Report on
    Form 8-K/ A, dated
    July 30, 2003, filed with the SEC on May 7, 2004, and
    incorporated herein by reference.



|    |                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    July 30, 2003, filed with the SEC on August 11, 2003,
    and incorporated herein by reference.                      
|   
|(3) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    October 22, 2003, filed with the SEC on November 6,
    2003, and incorporated herein by reference.                  
|   
|(4) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    August 16, 2004, filed with the SEC on August 20,
    2004, and incorporated herein by reference.                    
|   
|(5) | Filed as an exhibit to Leaps Annual Report on
    Form 10-K, for the
    year ended 2004, filed with the SEC on May 16, 2005, and
    incorporated herein by reference.                     
|   
|(6) | Filed as an exhibit to Leaps Registration Statement on
    Form S-1 (File
    No. 333-126246),
    as filed with the SEC on June 30, 2005, and incorporated
    herein by reference.        
|   
|(7) | Filed as an exhibit to Leaps Registration Statement on
    Form 10, as amended (File No. 0-29752), as filed with
    the SEC on September 14, 1998 and incorporated herein by
    reference.

101



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##### Table of Contents





|    |                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2000, as filed with the SEC on
    November 14, 2000, and incorporated herein by reference.
|   
|(9) | Filed as an exhibit to Leaps Annual Report on
    Form 10-K for the
    fiscal year ended December 31, 2000, as filed with the SEC
    on March 2, 2001, and incorporated herein by reference.    



|     |                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    quarter ended March 31, 2001, as filed with the SEC on
    May 15, 2001, and incorporated herein by reference.                         
|    
|(11) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended September 30, 2003, as filed with the
    SEC on November 21, 2003, and incorporated herein by
    reference.     
|    
|(12) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended June 30, 2004, as filed with the SEC
    on August 12, 2004, and incorporated herein by reference.                
|    
|(13) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended March 31, 2002, as filed with the SEC
    on May 14, 2002, and incorporated herein by reference.                  
|    
|(14) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended September 30, 2002, as filed with the
    SEC on November 13, 2002, and incorporated herein by
    reference.     
|    
|(15) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended March 31, 2004, as filed with the SEC
    on May 17, 2004, and incorporated herein by reference.                  
|    
|(16) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    December 31, 2004, filed with the SEC on March 28,
    2005, and incorporated herein by reference.                                         
|    
|(17) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2005, as filed with the SEC on
    November 14, 2005, and incorporated herein by reference.                
|    
|(18) | Filed as an exhibit to Leaps Amendment No. 1 to
    Annual Report on
    Form 10-K/ A for
    the year ended December 31, 2002, as filed with the SEC on
    April 16, 2003, and incorporated herein by reference.
|    
|(19) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated as
    of January 16, 2006, filed with the SEC on January 19,
    2006, and incorporated herein by reference.                                  
|    
|(20) | Filed as an exhibit to Leaps Annual Report on
    Form 10-K for the
    fiscal year ended December 31, 2004, as filed with the SEC
    on May 16, 2005, and incorporated herein by reference.                     
|    
|(21) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended September 30, 2004, as filed with the
    SEC on November 22, 2004, and incorporated herein by
    reference.     
|    
|(22) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    January 9, 2006, filed with the SEC on January 12,
    2006, and incorporated herein by reference.                                         
|    
|(23) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    January 5, 2005, filed with the SEC on January 11,
    2005, and incorporated herein by reference.                                         
|    
|(24) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    June 17, 2005, filed with the SEC on June 23, 2005,
    and incorporated herein by reference.                                              
|    
|(25) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    July 8, 2005, filed with the SEC on July 14, 2005, and
    incorporated herein by reference.                                               
|    
|(26) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    January 10, 2005, filed with the SEC on January 14,
    2005, and incorporated herein by reference.                                        
|    
|(27) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    July 22, 2005, filed with the SEC on July 25, 2005,
    and incorporated herein by reference.                                              
|    
|(28) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    April 12, 2005, as filed with the SEC on April 13,
    2005, and incorporated herein by reference.                                         
|    
|(29) | Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q for the
    fiscal quarter ended March 31, 2005, as filed with the SEC
    on June 15, 2005, and incorporated herein by reference.                 

102



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##### Table of Contents



SIGNATURES






| |                                  
| | ---------------------------------
| | LEAP WIRELESS INTERNATIONAL, INC.





| |     |                         
| | --- | ------------------------
| | By: | /s/ S. Douglas Hutcheson

| |                                                
| | -----------------------------------------------
| |                                                
| | S. Douglas Hutcheson,                          
| | Chief Executive Officer, President and Director



|                                                     |  |                                                                                                  |  |               
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                            |  | Title                                                                                            |  | Date          
|                                                     |  |                                                                                                  |  |               
|/s/ S. Douglas
    HutchesonS. Douglas Hutcheson     |  | Chief Executive Officer,
    President and Director
    (Principal Executive Officer)            |  | March 27, 2006
|                                                    
|/s/ Dean M. LuvisaDean M. Luvisa                     |  | Vice President, Finance and
    Acting Chief Financial Officer
    (Principal Financial Officer) |  | March 27, 2006
|                                                    
|/s/ Grant A. BurtonGrant A. Burton                   |  | Vice President, Chief Accounting Officer
    and Controller
    (Principal Accounting Officer)   |  | March 27, 2006
|                                                    
|/s/ James D. DonderoJames D. Dondero                 |  | Director                                                                                         |  | March 27, 2006
|                                                    
|/s/ John D.
    Harkey, Jr.John D. Harkey, Jr.       |  | Director                                                                                         |  | March 27, 2006
|                                                    
|/s/ Robert V. LaPentaRobert V. LaPenta               |  | Director                                                                                         |  | March 27, 2006
|                                                    
|/s/ Mark H.
    Rachesky, M.D.Mark H. Rachesky, M.D. |  | Chairman of the Board and
    Director                                                           |  | March 27, 2006
|                                                    
|/s/ Michael B. TargoffMichael B. Targoff             |  | Director                                                                                         |  | March 27, 2006

103