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UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      FORM 10-K
      (Mark
    One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to
    .   Commission file number 0-29752
 LEAP WIRELESS INTERNATIONAL,
    INC.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware(State or Other Jurisdiction of
    Incorporation or Organization)10307 Pacific Center Court, San Diego, CA(Address of Principal Executive
    Offices)

33-0811062(I.R.S. Employer Identification
    No.)92121(Zip
    Code)   (858) 882-6000
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class
    Common Stock, $.0001 par value

Name of Each Exchange on Which Registered
    The NASDAQ Stock Market, LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None.
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  þ o
  o o
  Rule 12b-2 o þ
    þ o




---



##### 





LEAP
    WIRELESS INTERNATIONAL, INC.
    ANNUAL REPORT ON
    FORM 10-K
    For the Year Ended December 31, 2008
    TABLE OF CONTENTS
  PagePART IItem 1.


Business

2Item 1A.


Risk Factors

20Item 1B.


Unresolved Staff Comments

38Item 2.


Properties

38Item 3.


Legal Proceedings

38Item 4.


Submission of Matters to a Vote of Security
    Holders

41PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

42Item 6.


Selected Financial Data

43Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations

45Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk

76Item 8.


Financial Statements and Supplementary Data

78Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

127Item 9A.


Controls and Procedures

127Item 9A(T).


Controls and Procedures

129Item 9B.


Other Information

129PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance

130Item 11.


Executive Compensation

130Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

130Item 13.


Certain Relationships and Related Transactions,
    and Director Independence

131Item 14.


Principal Accounting Fees and Services

131PART IVItem 15.


Exhibits, Financial Statement Schedules

132EX-2.1EX-2.2EX-2.3EX-10.3EX-10.7.3EX-10.15EX-10.15.1EX-10.15.2EX-21EX-23EX-31.1EX-31.2EX-32   i




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PART I    Cautionary
    Statement Regarding Forward-Looking Statements
    
    our ability to attract and retain customers in an extremely
    competitive marketplace;
    the duration and severity of the current recession in the United
    States and changes in economic conditions, including interest
    rates, consumer credit conditions, consumer debt levels,
    consumer confidence, unemployment rates, energy costs and other
    macro-economic factors that could adversely affect the demand
    for the services we provide;
    the impact of competitors initiatives;
    our ability to successfully implement product offerings and
    execute effectively on our planned coverage expansion, launches
    of markets we acquired in the Federal Communications
    Commissions, or FCCs, auction for Advanced Wireless
    Services, or Auction #66, expansion of our Cricket
    Broadband service and other activities;
    our ability to obtain roaming services from other carriers at
    cost-effective rates;
    our ability to maintain effective internal control over
    financial reporting;
    delays in our market expansion plans, including delays resulting
    from any difficulties in funding such expansion through our
    existing cash, cash generated from operations or additional
    capital, or delays by existing U.S. government and other
    private sector wireless operations in clearing the Advanced
    Wireless Services, or AWS, spectrum, some of which users are
    permitted to continue using the spectrum for several years;
    our ability to attract, motivate and retain an experienced
    workforce;
    our ability to comply with the covenants in our senior secured
    credit facilities, indentures and any future credit agreement,
    indenture or similar instrument;
    failure of our network or information technology systems to
    perform according to expectations; and
    other factors detailed in Part I 
    Item 1A. Risk Factors below.   1




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Item 1.
    Business  Overview
  ®
      Cricket
    Business Overview
  Cricket
    Service
       2




---



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tm
         3




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Cricket
    Business Strategy
  
    Target Underserved Customer Segments.  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.
    Maintain Industry Leading Cost Structure.  Our
    networks and business model are designed to provide wireless
    services to our customers at a significantly lower cost than
    many of our competitors. As we continue to build out new
    markets, we expect to continue to spread our fixed costs over a
    growing customer base. We seek to maintain low customer
    acquisition costs through focused sales and marketing
    initiatives and cost-effective distribution strategies.
    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. For example, during the last two
    years, we introduced our new Cricket Broadband and Cricket PAYGo
    services, added unlimited mobile web access to our product
    portfolio and introduced new higher-priced, higher-value rate
    plans that allow unlimited calling from any Cricket calling
    area. With the completion of our deployment of
    CDMA2000®

    1xEV-DO, or EvDO, technology across all of our existing and new
    markets, we are able to offer an expanded array of services to
    our customers, including high-demand wireless data services such
    as mobile content and high quality music downloads. We believe
    these and other enhanced data offerings will be attractive to
    many of our existing customers and will enhance our appeal to
    new data-centric customers. We expect to continue to develop our
    voice and data product and service offerings in 2009 and beyond.
    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. Since our target customer base is
    diversified geographically, ethnically and demographically, we
    have decentralized our marketing programs to support local
    customization and better target our advertising expenses. We are
    in the process of redesigning and re-merchandizing our stores
    and introducing a new sales process aimed at improving our
    customers experience. We have also established our premier
    dealer program which features third party retail locations with
    the look and feel of company-owned stores, and we are in the
    process of enabling our premier dealers and other indirect
    dealers to provide greater customer support services. In
    addition, we have increased our use of sales via the internet
    and telephone, which continue to deliver a growing number of new
    customers. We expect these changes will enhance the customer
    experience and improve customer satisfaction.
    Enhance Established Existing Markets and Develop Strategic
    Roaming Partnerships.We continue to expand our
    network coverage and capacity in many of our existing
    established markets by deploying additional cell sites, thereby
    allowing us to offer our customers a larger, higher-quality
    local calling area. During 2008, we deployed approximately 400
    new cell sites in our established existing markets, thereby
    adding approximately 2.8 million POPs to our network
    footprint in these markets. We currently plan to deploy up to an
    additional 600 cell sites in our existing markets by the end of
    2010. In addition, we have significantly expanded the size of
    the network footprint available to our customers with the
    introduction of our Premium Extended Coverage program, which
    gives our customers the advantage of the largest unlimited
    roaming coverage area of any low cost, unlimited carrier. Under
    this program, we have established strategic roaming partnerships
    with 14 wireless carriers to provide our customers with
    unlimited usage in areas stretching from New York to California
    and from Wisconsin to Texas. The service is currently available
    to all of our Cricket Wireless customers; it is included at no
    additional charge in our premium rate plans and is available
    with all other rate plans for an additional monthly fee.
    Customers can also continue to purchase roaming minutes through
    our Cricket Flex
    Bucket®

    service, which allows our customers to pre-purchase roaming
    services.
    Develop Market Clusters and Expand Into Attractive Strategic
    Markets.We continue to seek additional
    opportunities to develop and enhance our market clusters and
    expand into new geographic markets by acquiring spectrum and
    related assets from third parties, by participating in new
    partnerships or joint 4




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ventures or by participating in FCC spectrum auctions. In 2008,
    we and Denali Operations launched new markets in Oklahoma City,
    southern Texas, Las Vegas, St. Louis and the greater
    Milwaukee area covering approximately 11 million additional
    POPs. We and Denali Operations intend to launch markets covering
    approximately 25 million additional POPs by the middle of
    2009 (which includes the Chicago market launched by Denali
    Operations in February 2009).  Cricket
    Business Operations
  Products
    and Services
  Cricket Wireless Service Plans.
  tm tm
    Cricket Wireless Plan Upgrades. and/or
  Handsets.
   5




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Cricket Broadband Service.
  Cricket PAYGo Service.
  Customer
    Care and Billing
  Customer Care.
  Billing and Support Systems.
  Sales
    and Distribution
  easy-to-understand
   6




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www.mycricket.com e-commerce
  Network
    and Operations
               7




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and/or
  Arrangements
    with LCW Wireless
        Limited Liability Company Agreement.
    30-day
   8




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Management Agreement. mark-up
  Arrangements
    with Denali
      Limited Liability Company Agreement.
    Senior Secured Credit Agreement. sub-facility sub-facility sub-facility. sub-facility sub-facility.
 9




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Management Agreement.
  Competition
  voice-over-internet-protocol,
    and/or
  T-Mobile T-Mobile
 10




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and/or
      Chapter 11
    Proceedings Under the Bankruptcy Code
    pay-in-kind pay-in-kind
  Government
    Regulation
   11




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Licensing
    of our Wireless Service Systems
    PCS Licenses.
  and/or
  10-year
  AWS Licenses.
  15-year and/or
  and/or
 12




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Designated Entities. C-Block F-Block C-Block F-Block
  de facto
 13




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and/or
  Foreign Ownership. non-U.S. citizens non-U.S. citizens
  Transfer and Assignment.
  case-by-case
    FCC
    Regulation Generally
  market-by-market
 14




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back-up back-up
 15




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back-up back-up
  truth-in-billing;
  State,
    Local and Other Regulation
      three-year
   16




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Privacy
    Intellectual
    Property
      Availability
    of Public Reports
  Form 10-K, Form 10-Q, Form 8-K, www.leapwireless.com www.sec.gov 1-800-SEC-0330.
  Financial
    Information Concerning Segments and Geographical
    Information
    Employees
    Seasonality
    Inflation
   17




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Executive
    Officers of the Registrant
  Name

Age

Position with the CompanyS. Douglas Hutcheson


52


Chief Executive Officer, President and DirectorAlbin F. Moschner


56


Chief Operating OfficerWalter Z. Berger


53


Executive Vice President and Chief Financial OfficerGlenn T. Umetsu


59


Executive Vice President and Chief Technical OfficerWilliam D. Ingram


51


Senior Vice President, StrategyRobert J. Irving, Jr.


53


Senior Vice President, General Counsel and SecretaryJeffrey E. Nachbor


44


Senior Vice President, Financial Operations and Chief Accounting
    OfficerLeonard C. Stephens


52


Senior Vice President, Human Resources   S. Douglas Hutcheson
  Albin F. Moschner
  Walter Z. Berger
  Glenn T. Umetsu
 18




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William D. Ingram
  Robert J. Irving, Jr.
  Jeffrey E. Nachbor
  Leonard C. Stephens 14-year
 19




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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.
  quarter-by-quarter
  General
    Economic Conditions May Adversely Affect Our Business, Financial
    Performance or Ability to Obtain Debt or Equity Financing On
    Reasonable Terms or at All.
     20




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If We
    Experience Low Rates of Customer Acquisition or High Rates of
    Customer Turnover, Our Ability to Become Profitable Will
    Decrease.
    We Have
    Made Significant Investment, and Will Continue to Invest, in
    Joint Ventures That We Do Not Control.
     21




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We Face
    Increasing Competition Which Could Have a Material Adverse
    Effect on Demand for the Cricket Service.
      and/or
  T-Mobile T-Mobile
  and/or
   22




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We May Be
    Unable to Obtain the Roaming Services We Need From Other
    Carriers to Remain Competitive.
        We
    Restated Certain of Our Prior Consolidated Financial Statements,
    Which Has Led to Additional Risks and Uncertainties, Including
    Shareholder Litigation.
  Form 10-K,
   23




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and/or
  Our
    Business and Stock Price May Be Adversely Affected If Our
    Internal Controls Are Not Effective.
          Our
    Primary Business Strategy May Not Succeed in the Long
    Term.
   24




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We Expect
    to Incur Substantial Costs in Connection With the Build-Out of
    Our New Markets, and Any Delays or Cost Increases in the
    Build-Out of Our New Markets Could Adversely Affect Our
    Business.
    and/or
      If We Are
    Unable to Manage Our Planned Growth, Our Operations Could Be
    Adversely Impacted.
   25




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Our
    Significant Indebtedness Could Adversely Affect Our Financial
    Health and Prevent Us From Fulfilling Our Obligations.
  and/or
    
    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, network
    build-out and other activities, including 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
    expose us to higher interest expense in the event of increases
    in interest rates because indebtedness under our Credit
    Agreement bears interest at a variable rate.    Despite
    Current Indebtedness Levels, We May Incur Additional
    Indebtedness. This Could Further Increase the Risks Associated
    With Our Leverage.
     26




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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.
    We May Be
    Unable to Refinance Our Indebtedness.
    Covenants
    in Our Credit Agreement and Indentures and Other Credit
    Agreements or Indentures That We May Enter Into in the Future
    May Limit Our Ability to Operate Our Business.
    
    incur additional indebtedness;
    create liens or other encumbrances;
    place limitations on distributions from restricted subsidiaries;
    pay dividends, make investments, prepay subordinated
    indebtedness or make other restricted payments;
    issue or sell capital stock of restricted subsidiaries;
    issue guarantees;
    sell or otherwise dispose of all or substantially all of our
    assets;
    enter into transactions with affiliates; and
    make acquisitions or merge or consolidate with another entity.   27




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##### Table of Contents



Form 10-Q Form 10-K,
  Rises in
    Interest Rates Could Adversely Affect Our Financial
    Condition.
    A
    Significant Portion of Our Assets Consists of Goodwill and Other
    Intangible Assets.
   28




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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.
   29




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We Rely
    Heavily on Third Parties to Provide Specialized Services; a
    Failure by Such Parties to Provide the Agreed Upon Products or
    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.
   30




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We May
    Not Be Successful in Protecting and Enforcing Our Intellectual
    Property Rights.
        We and
    Our Suppliers May Be Subject to Claims of Infringement Regarding
    Telecommunications Technologies That Are Protected By Patents
    and Other Intellectual Property Rights.
     31




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Regulation
    by Government Agencies May Increase Our Costs of Providing
    Service or Require Us to Change Our Services.
      non-U.S. citizens non-U.S. citizens
   32




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If Call
    Volume or Wireless Broadband Usage Exceeds Our Expectations, Our
    Costs of Providing Service Could Increase, Which Could Have a
    Material Adverse Effect on Our Operating Expenses.
      We May Be
    Unable to Acquire Additional Spectrum in the Future at a
    Reasonable Cost or on a Timely Basis.
    Our
    Wireless Licenses are Subject to Renewal and May Be Revoked in
    the Event that We Violate Applicable Laws.
  10-year 15-year
 33




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Future
    Declines in the Fair Value of Our Wireless Licenses Could Result
    in Future Impairment Charges.
      
    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 sale prices in FCC
    auctions.      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.
  and/or and/or
  We May
    Incur Higher Than Anticipated Intercarrier Compensation
    Costs.
   34




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If We
    Experience High Rates of Credit Card, Subscription or Dealer
    Fraud, Our Ability to Generate Cash Flow Will
    Decrease.
    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 or those of our competitors;
    announcements of technological innovations, new services or
    service enhancements, strategic alliances or significant
    agreements by us or by our competitors;
    entry of new competitors into our markets;
    significant developments with respect to intellectual property,
    securities or related litigation;
    announcements of and bidding in auctions for new spectrum;
    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
    Leap common stock;
    any default under our Credit Agreement or any of the indentures
    governing our senior notes and convertible senior notes because
    of a covenant breach or otherwise; and
    market conditions in our industry and the economy as a whole.   35




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We May
    Elect to Raise Additional Equity Capital Which May Dilute
    Existing Stockholders.
  and/or and/or
  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 Common Stock.
         36




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Our
    Directors and Affiliated Entities Have Substantial Influence
    over Our Affairs, and Our Ownership Is Highly Concentrated.
    Sales of a Significant Number of Shares by Large Stockholders
    May Adversely Affect the Market Price of Leap Common
    Stock.
    Form S-1 Form S-3
  Provisions
    in Our Amended and Restated Certificate of Incorporation and
    Bylaws, under Delaware Law, or in Our Credit Agreement and
    Indentures Might Discourage, Delay or Prevent a Change in 
    Control of Our Company or Changes in Our Management and,
    Therefore, Depress the Trading Price of Leap 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.   37




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties            Item 3.
    Legal
    Proceedings     38




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##### Table of Contents



and/or
  Patent
    Litigation
  Freedom
    Wireless
  ®
  Electronic
    Data Systems
    EMSAT
    Advanced Geo-Location Technology
  and/or and/or
  American
    Wireless Group
   39




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##### Table of Contents



and/or
  and/or
    Securities
    and Derivative Litigation
  and/or
  Rule 10b-5, class-wide
 40




---



##### Table of Contents



and/or
  Department
    of Justice Inquiry
    Other
    Litigation
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   41




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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
      High($)


Low($)Calendar Year  2007First Quarter


68.24



58.00Second Quarter


87.46



66.84Third Quarter


98.33



54.47Fourth Quarter


83.74



32.01Calendar Year  2008First Quarter


49.76



36.24Second Quarter


61.09



43.17Third Quarter


48.85



35.73Fourth Quarter


39.16



15.46     Dividends
   42




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Item 6.
    Selected
    Financial Data (in thousands, except per share
    data)    PredecessorSuccessor Company


CompanyFive Months


Seven MonthsEnded


EndedYear Ended December 31,


December 31,


July 31,2008


2007


2006


2005


2004


2004Statement of Operations Data:Revenues

$
1,958,862


$
1,630,803


$
1,167,187


$
957,771


$
350,847


$
492,756Operating income (loss)


46,700



60,262



23,725



71,002



12,729



(34,412
)Income (loss) before reorganization items, income taxes and
    cumulative effect of change in accounting principle


(109,192
)


(38,561
)


(15,703
)


52,300



(2,170
)


(38,900
)Reorganization items, net






















962,444Income tax expense


(38,631
)


(37,366
)


(9,277
)


(21,615
)


(3,930
)


(4,166
)Income (loss) before cumulative effect of change in accounting
    principle


(147,823
)


(75,927
)


(24,980
)


30,685



(6,100
)


919,378Cumulative effect of change in accounting principle










623











Net income (loss)

$
(147,823
)

$
(75,927
)

$
(24,357
)

$
30,685


$
(6,100
)

$
919,378Basic earnings (loss) per share:Income (loss) before cumulative effect of change in accounting
    principle

$
(2.17
)

$
(1.13
)

$
(0.41
)

$
0.51


$
(0.10
)

$
15.68Cumulative effect of change in accounting principle










0.01











Basic earnings (loss) per share(1)

$
(2.17
)

$
(1.13
)

$
(0.40
)

$
0.51


$
(0.10
)

$
15.68Diluted earnings (loss) per share:Income (loss) before cumulative effect of change in accounting
    principle

$
(2.17
)

$
(1.13
)

$
(0.41
)

$
0.50


$
(0.10
)

$
15.68Cumulative effect of change in accounting principle










0.01











Diluted earnings (loss) per share(1)

$
(2.17
)

$
(1.13
)

$
(0.40
)

$
0.50


$
(0.10
)

$
15.68Shares used in per share calculations:(1)Basic


68,021



67,100



61,645



60,135



60,000



58,623Diluted


68,021



67,100



61,645



61,003



60,000



58,623   43




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##### Table of Contents



December 31,2008


2007


2006


2005


2004Balance Sheet Data:Cash and cash equivalents

$
357,708


$
433,337


$
372,812


$
293,073


$
141,141Short-term investments


238,143



179,233



66,400



90,981



113,083Working capital


278,576



380,384



185,191



245,366



150,868Restricted cash, cash equivalents and short-term investments


4,780



15,550



13,581



13,759



31,427Total assets


5,052,857



4,432,998



4,084,947



2,499,946



2,213,312Capital leases


11,399



61,538











Long-term debt


2,566,025



2,033,902



1,676,500



588,333



371,355Total stockholders equity


1,621,871



1,724,322



1,771,793



1,517,601



1,472,347     (1)
    
    Refer to Notes 2 and 5 to the consolidated financial
    statements included in Item 8. Financial Statements
    and Supplementary Data of this report for an explanation
    of the calculation of basic and diluted earnings (loss) per
    share. 44




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
  Company
    Overview
  ®
         45




---



##### Table of Contents



tm
        end-of-period
 46




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Principles
    of Consolidation
   47




---



##### Table of Contents



Revenues
  month-to-month
  No. 00-21, EITF 00-21, EITF 00-21, EITF 00-21
      and/or
   48




---



##### Table of Contents



Depreciation
    and Amortization
    DepreciableLifeNetwork equipment:Switches


10Switch power equipment


15Cell site equipment and site improvements


7Towers


15Antennae


5Computer hardware and software


3-5Furniture, fixtures, retail and office equipment


3-7     Short-Term
    Investments
    available-for-sale available-for-sale other-than-temporary,
  Wireless
    Licenses
    and/or
 49




---



##### Table of Contents



Goodwill
    and Other Intangible Assets
    Impairment
    of Long-Lived Assets
    Impairment
    of Indefinite-Lived Intangible Assets
          Share-Based
    Compensation
     50




---



##### Table of Contents



Income
    Taxes
          Subscriber
    Recognition and Disconnect Policies
   51




---



##### Table of Contents



Results
    of Operations
  Operating
    Items
    Year Ended


% of 2008


Year Ended


% of 2007


Change fromDecember 31,


Service


December 31,


Service


Prior Year2008


Revenues


2007


Revenues


Dollars


PercentRevenues:Service revenues

$
1,709,101






$
1,395,667






$
313,434



22.5
%Equipment revenues


249,761







235,136







14,625



6.2
%Total revenues


1,958,862







1,630,803







328,059



20.1
%Operating expenses:Cost of service (exclusive of items shown separately below)


488,298



28.6
%


384,128



27.5
%


104,170



27.1
%Cost of equipment


465,422



27.2
%


405,997



29.1
%


59,425



14.6
%Selling and marketing


294,917



17.3
%


206,213



14.8
%


88,704



43.0
%General and administrative


331,691



19.4
%


271,536



19.5
%


60,155



22.2
%Depreciation and amortization


331,448



19.4
%


302,201



21.7
%


29,247



9.7
%Impairment of assets


177



0.0
%


1,368



0.1
%


(1,191
)


(87.1
)%Total operating expenses


1,911,953



111.9
%


1,571,443



112.6
%


340,510



21.7
%Gain (loss) on sale or disposal of assets


(209
)


0.0
%


902



0.1
%


(1,111
)


(123.2
)%Operating income

$
46,700



2.7
%

$
60,262



4.3
%

$
(13,562
)


(22.5
)%   52




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##### Table of Contents



Year Ended


% of 2007


Year Ended


% of 2006


Change fromDecember 31,


Service


December 31,


Service


Prior Year2007


Revenues


2006


Revenues


Dollars


PercentRevenues:Service revenues

$
1,395,667






$
956,365






$
439,302



45.9
%Equipment revenues


235,136







210,822







24,314



11.5
%Total revenues


1,630,803







1,167,187







463,616



39.7
%Operating expenses:Cost of service (exclusive of items shown separately below)


384,128



27.5
%


264,162



27.6
%


119,966



45.4
%Cost of equipment


405,997



29.1
%


310,834



32.5
%


95,163



30.6
%Selling and marketing


206,213



14.8
%


159,257



16.7
%


46,956



29.5
%General and administrative


271,536



19.5
%


196,604



20.6
%


74,932



38.1
%Depreciation and amortization


302,201



21.7
%


226,747



23.7
%


75,454



33.3
%Impairment of assets


1,368



0.1
%


7,912



0.8
%


(6,544
)


(82.7
)%Total operating expenses


1,571,443



112.6
%


1,165,516



121.9
%


405,927



34.8
%Gain on sale or disposal of assets


902



0.1
%


22,054



2.3
%


(21,152
)


(95.9
)%Operating income

$
60,262



4.3
%

$
23,725



2.5
%

$
36,537



154.0
%     Year Ended December 31,2008


2007


2006Gross customer additions


2,487,579



1,974,504



1,455,810Net customer additions(1)


942,304



633,693



592,237Weighted-average number of customers


3,272,347



2,589,312



1,861,477Total customers, end of period


3,844,660



2,863,519



2,229,826     (1)
    
    Net customer additions for the year ended December 31, 2008
    reflect the operations of Cricket markets and exclude changes in
    customers that occurred during the nine months ended
    September 30, 2008 in the Hargray Wireless markets in South
    Carolina and Georgia that we acquired in April 2008. We
    completed the upgrade of the Hargray Wireless networks and
    introduced Cricket service in these markets in October 2008.
    Commencing with the fourth quarter of 2008, our net customer
    additions include customers in the former Hargray Wireless
    markets.  Service
    Revenues
   53




---



##### Table of Contents



add-on
  Equipment
    Revenues
      Cost of
    Service
  add-on
  add-on
  Cost of
    Equipment
   54




---



##### Table of Contents



Selling
    and Marketing Expenses
      General
    and Administrative Expenses
      Depreciation
    and Amortization
     55




---



##### Table of Contents



Impairment
    Charges
    Gains
    (Losses) on Sale or Disposal of Assets
    Non-Operating
    Items
    Year Ended December 31,2008


2007


ChangeMinority interests in consolidated subsidiaries

$
(4,874
)

$
1,817


$
(6,691
)Equity in net loss of investee


(298
)


(2,309
)


2,011Interest income


14,571



28,939



(14,368
)Interest expense


(158,259
)


(121,231
)


(37,028
)Other expense, net


(7,032
)


(6,039
)


(993
)Income tax expense


(38,631
)


(37,366
)


(1,265
)   Year Ended December 31,2007


2006


ChangeMinority interests in consolidated subsidiaries

$
1,817


$
1,493


$
324Equity in net loss of investee


(2,309
)






(2,309
)Interest income


28,939



23,063



5,876Interest expense


(121,231
)


(61,334
)


(59,897
)Other expense, net


(6,039
)


(2,650
)


(3,389
)Income tax expense


(37,366
)


(9,277
)


(28,089
)   Minority
    Interests in Consolidated Subsidiaries
    Equity in
    Net Loss of Investee
   56




---



##### Table of Contents



Interest
    Income
      Interest
    Expense
      Other
    Expense, Net
  other-than-temporary
    Income
    Tax Expense
     57




---



##### Table of Contents



Quarterly
    Financial Data (Unaudited)
    Three Months EndedMarch 31,


June 30,


September 30,


December 31,2008


2008


2008


2008Revenues

$
468,384


$
474,858


$
496,697


$
518,923Operating income


26,056



14,450



2,391



3,803Net loss


(18,144
)


(26,069
)


(48,788
)


(54,822
)Basic loss per share


(0.27
)


(0.38
)


(0.72
)


(0.81
)Diluted loss per share


(0.27
)


(0.38
)


(0.72
)


(0.81
)   58




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##### Table of Contents



Three Months EndedMarch 31,


June 30,


September 30,


December 31,2007


2007


2007


2007Revenues

$
393,425


$
397,914


$
409,656


$
429,808Operating income (loss)


(1,543
)


30,704



9,393



21,708Net income (loss)


(24,224
)


9,638



(43,289
)


(18,052
)Basic earnings (loss) per share


(0.36
)


0.14



(0.64
)


(0.27
)Diluted earnings (loss) per share


(0.36
)


0.14



(0.64
)


(0.27
)   Quarterly
    Results of Operations Data (Unaudited)
    Three Months EndedMarch 31,


June 30,


September 30,


December 31,2008


2008


2008


2008Revenues:Service revenues

$
398,929


$
417,143


$
434,523


$
458,506Equipment revenues


69,455



57,715



62,174



60,417Total revenues


468,384



474,858



496,697



518,923Operating expenses:Cost of service (exclusive of items shown separately below)


(111,170
)


(118,857
)


(129,708
)


(128,563
)Cost of equipment


(114,221
)


(105,127
)


(113,057
)


(133,017
)Selling and marketing


(58,100
)


(74,276
)


(77,407
)


(85,134
)General and administrative


(75,907
)


(77,233
)


(87,522
)


(91,029
)Depreciation and amortization


(82,639
)


(86,167
)


(86,033
)


(76,609
)Impairment of assets










(177
)


Total operating expenses


(442,037
)


(461,660
)


(493,904
)


(514,352
)Gain (loss) on sale or disposal of assets


(291
)


1,252



(402
)


(768
)Operating income


26,056



14,450



2,391



3,803Minority interests in consolidated subsidiaries


(823
)


(1,865
)


(1,266
)


(920
)Equity in net income (loss) of investee


(1,062
)


(295
)


230



829Interest income


4,781



2,586



4,072



3,132Interest expense


(33,357
)


(30,401
)


(45,352
)


(49,149
)Other income (expense), net


(4,036
)


(307
)


1,161



(3,850
)Loss before income taxes


(8,441
)


(15,832
)


(38,764
)


(46,155
)Income tax expense


(9,703
)


(10,237
)


(10,024
)


(8,667
)Net loss

$
(18,144
)

$
(26,069
)

$
(48,788
)

$
(54,822
)   Performance
    Measures
   59




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##### Table of Contents



Regulation S-K
       60




---



##### Table of Contents



pay-in-advance
    Three Months Ended


Year EndedMarch 31,


June 30,


September 30,


December 31,


December 31,2008


2008


2008


2008


2008ARPU

$
44.98


$
43.97


$
42.95


$
42.44


$
43.52CPGA

$
159


$
205


$
201


$
182


$
186CCU

$
21.73


$
21.01


$
21.50


$
20.55


$
21.18Churn(1)


3.6
%


3.8
%


4.2
%


3.8
%


4.0
%     (1)
    
    Churn for the three months ended June 30, 2008 and
    September 30, 2008 reflects the operations of Cricket
    markets and excludes customers in the Hargray Wireless markets
    in South Carolina and Georgia that we acquired in April 2008. We
    completed the upgrade of the Hargray Wireless networks and
    introduced Cricket service in these markets in October 2008, and
    churn for the three months ended December 31, 2008 includes
    customers in the former Hargray Wireless markets.  Reconciliation
    of Non-GAAP Financial Measures
  Regulation S-K
 61




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##### Table of Contents



Three Months Ended


Year EndedMarch 31,


June 30,


September 30,


December 31,


December 31,2008


2008


2008


2008


2008Selling and marketing expense

$
58,100


$
74,276


$
77,407


$
85,134


$
294,917Less share-based compensation expense included in selling and
    marketing expense


(1,356
)


(1,179
)


(871
)


(1,174
)


(4,580
)Plus cost of equipment


114,221



105,127



113,057



133,017



465,422Less equipment revenue


(69,455
)


(57,715
)


(62,174
)


(60,417
)


(249,761
)Less net loss on equipment transactions unrelated to initial
    customer acquisition


(14,020
)


(9,389
)


(7,880
)


(10,885
)


(42,174
)Total costs used in the calculation of CPGA

$
87,490


$
111,120


$
119,539


$
145,675


$
463,824Gross customer additions


550,520



542,005



593,619



801,436



2,487,579CPGA

$
159


$
205


$
201


$
182


$
186     Three Months Ended


Year EndedMarch 31,


June 30,


September 30,


December 31,


December 31,2008


2008


2008


2008


2008Cost of service

$
111,170


$
118,857


$
129,708


$
128,563


$
488,298Plus general and administrative expense


75,907



77,233



87,522



91,029



331,691Less share-based compensation expense included in cost of
    service and general and administrative expense


(8,346
)


(6,155
)


(7,595
)


(8,539
)


(30,635
)Plus net loss on equipment transactions unrelated to initial
    customer acquisition


14,020



9,389



7,880



10,885



42,174Total costs used in the calculation of CCU

$
192,751


$
199,324


$
217,515


$
221,938


$
831,528Weighted-average number of customers


2,956,477



3,162,028



3,371,932



3,600,393



3,272,347CCU

$
21.73


$
21.01


$
21.50


$
20.55


$
21.18  62




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##### Table of Contents



Liquidity
    and Capital Resources
  Overview
           63




---



##### Table of Contents



64




---



##### Table of Contents



Cash
    Flows
    Year Ended December 31,2008


2007


2006Net cash provided by operating activities

$
350,646


$
316,181


$
289,871Net cash used in investing activities


(909,978
)


(622,728
)


(1,550,624
)Net cash provided by financing activities


483,703



367,072



1,340,492   Operating
    Activities
        Investing
    Activities
    
    During the year ended December 31, 2008, we purchased
    Hargray Communications Groups wireless subsidiary, Hargray
    Wireless, for $31.2 million, including acquisition-related
    costs of $0.7 million. 65




---



##### Table of Contents




    During the year ended December 31, 2008, we and our
    consolidated joint ventures purchased $795.7 million of
    property and equipment for the build-out of our new markets and
    the expansion and improvement of our existing markets.
    During the year ended December 31, 2008, we made investment
    purchases of $598.0 million, offset by sales or maturities
    of investments of $532.5 million.    
    During January 2007, we completed the sale of three wireless
    licenses that we were not using to offer commercial service for
    an aggregate sales price of $9.5 million.
    During March 2007, Cricket acquired the remaining 25% of the
    membership interests in Alaska Native Broadband 1, LLC, or
    ANB 1, for $4.7 million, following our joint venture
    partners exercise of its option to sell its entire 25%
    controlling interest in ANB 1 to Cricket.
    During the year ended December 31, 2007, we purchased
    approximately 20% of the outstanding membership units of a
    regional wireless service provider for an aggregate purchase
    price of $19.0 million.
    During the year ended December 31, 2007, we made investment
    purchases of $642.5 million from proceeds received from the
    issuances of our unsecured senior notes due 2014, offset by
    sales or maturities of investments of $531.0 million.
    During the year ended December 31, 2007, we and our
    consolidated joint ventures purchased $504.8 million of
    property and equipment for the build-out of our new markets and
    the expansion and improvement of our existing markets.    
    During July and October 2006, we paid to the FCC
    $710.2 million for the purchase of 99 licenses acquired in
    Auction #66, and Denali License paid $274.1 million as
    a deposit for a license it subsequently purchased in
    Auction #66.
    During November 2006, we purchased 13 wireless licenses in North
    Carolina and South Carolina for an aggregate purchase price of
    $31.8 million.
    During the year ended December 31, 2006, we, a subsidiary
    of ANB 1 and LCW Operations made over $590 million in
    purchases of property and equipment for the build-out of new
    markets.  Financing
    Activities
    
    During the year ended December 31, 2008, we issued
    $300 million of unsecured senior notes, which resulted in
    net proceeds of $293.3 million, and $250 million of
    convertible senior notes, which resulted in net proceeds of
    $242.5 million. These note issuances were offset by
    payments of $9.0 million on our $895.5 million senior
    secured term loan and a payment of $1.5 million on LCW
    Operations $40 million senior secured term loans.
    These note issuances were further offset by the payment of
    $7.7 million in debt issuance costs.
    During the year ended December 31, 2008, we made payments
    of $41.8 million on our capital lease obligations, a large
    portion of which related to our acquisition of the VeriSign
    billing system software.
    During the year ended December 31, 2008, we issued common
    stock upon the exercise of stock options held by our employees
    and upon employee purchases of common stock under our Employee
    Stock Purchase Plan, resulting in aggregate net proceeds of
    $7.9 million. 66




---



##### Table of Contents




    During the year ended December 31, 2007, we made payments
    of $5.2 million on our capital lease obligations relating
    to software licenses.
    During the year ended December 31, 2007, we issued an
    additional $350 million of unsecured senior notes due 2014
    at an issue price of 106% of the principal amount, which
    resulted in gross proceeds of $371 million, offset by
    payments of $9.0 million on our $895.5 million senior
    secured term loan.
    During the year ended December 31, 2007, we issued common
    stock upon the exercise of stock options held by our employees
    and upon employee purchases of common stock under our Employee
    Stock Purchase Plan, resulting in aggregate net proceeds of
    $9.7 million.    
    In June 2006, we replaced our previous $710 million senior
    secured credit facility with a new amended and restated senior
    secured credit facility consisting of a $900 million term
    loan and a $200 million revolving credit facility. The
    replacement term loan generated net proceeds of approximately
    $307 million, after repayment of the principal balances of
    the old term loan and prior to the payment of fees and expenses.
    See  Senior Secured Credit
    Facilities  Cricket Communications below.
    In October 2006, we physically settled 6,440,000 shares of
    Leap common stock pursuant to our forward sale agreements and
    received aggregate cash proceeds of $260 million (before
    expenses) from such physical settlements.
    In October 2006, we borrowed $570 million under our
    $850 million unsecured bridge loan facility to finance a
    portion of the remaining amounts owed by us and Denali License
    to the FCC for Auction #66 licenses.
    In October 2006, we issued $750 million of
    9.375% senior notes due 2014, and we used a portion of the
    approximately $739 million of cash proceeds (after
    commissions and before expenses) from the sale to repay our
    outstanding obligations, including accrued interest, under our
    bridge loan facility. Upon repayment of our outstanding
    indebtedness, the bridge loan facility was terminated. See
     Senior Notes below.
    In October 2006, LCW Operations entered into a senior secured
    credit agreement consisting of two term loans for
    $40 million in the aggregate. The loans bear interest at
    LIBOR plus the applicable margin ranging from 2.70% to 6.33% and
    must be repaid in varying quarterly installments beginning in
    2008, with the final payment due in 2011. The loans are
    non-recourse to Leap, Cricket and their other subsidiaries. See
     Senior Secured Credit Facilities 
    LCW Operations below.  Senior
    Secured Credit Facilities
  Cricket
    Communications
     67




---



##### Table of Contents



68




---



##### Table of Contents



LCW
    Operations
    Senior
    Notes
  Senior
    Notes Due 2014
       69




---



##### Table of Contents



90-day 90-day
  Convertible
    Senior Notes Due 2014
     70




---



##### Table of Contents



90-day
  Senior
    Notes Due 2015
   71




---



##### Table of Contents



90-day 90-day
 72




---



##### Table of Contents



Fair
    Value of Financial Instruments
      other-than-temporary
    System
    Equipment Purchase Agreements
  and/or
 73




---



##### Table of Contents



Capital
    Expenditures and Other Asset Acquisitions and
    Dispositions
  Capital
    Expenditures and Build-Out Plans
        Acquisitions
    and Dispositions
         74




---



##### Table of Contents



Contractual
    Obligations
    2009


2010-2011


2012-2013


Thereafter


TotalLong-term debt(1)

$
14,377


$
55,936


$
855,658


$
1,653,054


$
2,579,025Capital leases(2)


2,466



4,932



4,932



3,992



16,322Operating leases


188,563



370,470



364,198



647,804



1,571,035Purchase obligations(3)


375,963



160,275



9,277



5,147



550,662Contractual interest(4)


211,060



418,242



359,486



150,128



1,138,916Total

$
792,429


$
1,009,855


$
1,593,551


$
2,460,125


$
5,855,960     (1)
    
    Amounts shown for Crickets long-term debt include
    principal only. Interest on the debt, calculated at the current
    interest rate, is stated separately.(2)
    
    Amounts shown for the Companys capital leases include
    principal and interest.(3)
    
    Purchase obligations are defined as agreements to purchase goods
    or services that are enforceable and legally binding on us and
    that specify all significant terms including (a) fixed or
    minimum quantities to be purchased, (b) fixed, minimum or
    variable price provisions, and (c) the approximate timing
    of the transaction.(4)
    
    Contractual interest is based on the current interest rates in
    effect at December 31, 2008, after giving effect to our
    interest rate swaps, for debt outstanding as of that date.    sub-facility sub-facility sub-facility sub-facility.
    Off-Balance
    Sheet Arrangements
   75




---



##### Table of Contents



Recent
    Accounting Pronouncements
          Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest Rate Risk.
 76




---



##### Table of Contents



Hedging Policy.
 77




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    Internal Control  Integrated Framework
           78




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, except share data)
  December 31,2008


2007AssetsCash and cash equivalents

$
357,708


$
433,337Short-term investments


238,143



179,233Restricted cash, cash equivalents and short-term investments


4,780



15,550Inventories


126,293



65,208Other current assets


51,948



38,099Total current assets


778,872



731,427Property and equipment, net


1,842,718



1,316,657Wireless licenses


1,841,798



1,866,353Assets held for sale


45,569



Goodwill


430,101



425,782Other intangible assets, net


29,854



46,102Other assets


83,945



46,677Total assets

$
5,052,857


$
4,432,998Liabilities and Stockholders EquityAccounts payable and accrued liabilities

$
325,294


$
225,735Current maturities of long-term debt


13,000



10,500Other current liabilities


162,002



114,808Total current liabilities


500,296



351,043Long-term debt


2,566,025



2,033,902Deferred tax liabilities


223,387



182,835Other long-term liabilities


84,350



90,172Total liabilities


3,374,058



2,657,952Minority interests


56,928



50,724Commitments and contingencies (Note 14)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; 69,515,526 and 68,674,435 shares
    issued and outstanding at December 31, 2008 and 2007,
    respectively


7



7Additional paid-in capital


1,851,308



1,808,689Accumulated deficit


(223,522
)


(75,699
)Accumulated other comprehensive loss


(5,922
)


(8,675
)Total stockholders equity


1,621,871



1,724,322Total liabilities and stockholders equity

$
5,052,857


$
4,432,998    79




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, except per share data)
  Year Ended December 31,2008


2007


2006Revenues:Service revenues

$
1,709,101


$
1,395,667


$
956,365Equipment revenues


249,761



235,136



210,822Total revenues


1,958,862



1,630,803



1,167,187Operating expenses:Cost of service (exclusive of items shown separately below)


(488,298
)


(384,128
)


(264,162
)Cost of equipment


(465,422
)


(405,997
)


(310,834
)Selling and marketing


(294,917
)


(206,213
)


(159,257
)General and administrative


(331,691
)


(271,536
)


(196,604
)Depreciation and amortization


(331,448
)


(302,201
)


(226,747
)Impairment of assets


(177
)


(1,368
)


(7,912
)Total operating expenses


(1,911,953
)


(1,571,443
)


(1,165,516
)Gain (loss) on sale or disposal of assets


(209
)


902



22,054Operating income


46,700



60,262



23,725Minority interests in consolidated subsidiaries


(4,874
)


1,817



1,493Equity in net loss of investee


(298
)


(2,309
)


Interest income


14,571



28,939



23,063Interest expense


(158,259
)


(121,231
)


(61,334
)Other expense, net


(7,032
)


(6,039
)


(2,650
)Loss before income taxes and cumulative effect of change in
    accounting principle


(109,192
)


(38,561
)


(15,703
)Income tax expense


(38,631
)


(37,366
)


(9,277
)Loss before cumulative effect of change in accounting principle


(147,823
)


(75,927
)


(24,980
)Cumulative effect of change in accounting principle










623Net loss

$
(147,823
)

$
(75,927
)

$
(24,357
)Basic earnings (loss) per share:Income (loss) before cumulative effect of change in accounting
    principle

$
(2.17
)

$
(1.13
)

$
(0.41
)Cumulative effect of change in accounting principle










0.01Basic earnings (loss) per share

$
(2.17
)

$
(1.13
)

$
(0.40
)Diluted earnings (loss) per share:Income (loss) before cumulative effect of change in accounting
    principle

$
(2.17
)

$
(1.13
)

$
(0.41
)Cumulative effect of change in accounting principle










0.01Diluted earnings (loss) per share

$
(2.17
)

$
(1.13
)

$
(0.40
)Shares used in per share calculations:Basic


68,021



67,100



61,645Diluted


68,021



67,100



61,645    80




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands)
  Year Ended December 31,2008


2007


2006Operating activities:Net loss

$
(147,823
)

$
(75,927
)

$
(24,357
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Share-based compensation expense


35,215



29,339



19,725Depreciation and amortization


331,448



302,201



226,747Accretion of asset retirement obligations


1,153



1,666



1,617Non-cash interest items, net


13,057



(4,425
)


(266
)Loss on extinguishment of debt






669



6,897Deferred income tax expense


35,971



36,084



8,831Impairment of assets


177



1,368



7,912Impairment of short-term investments


7,538



5,440



(Gain) loss on sale or disposal of assets


209



(902
)


(22,054
)Gain on extinguishment of asset retirement obligations






(6,089
)


Minority interest activity


4,781



(1,817
)


(1,493
)Equity in net loss of investee


298



2,309



Cumulative effect of change in accounting principle










(623
)Changes in assets and liabilities:Inventories


(60,899
)


24,977



(52,898
)Other assets


(20,759
)


31,164



(26,912
)Accounts payable and accrued liabilities


75,344



(53,310
)


95,502Other liabilities


74,936



23,434



51,243Net cash provided by operating activities


350,646



316,181



289,871Investing activities:Acquisition of a business, net of cash acquired


(31,217
)






Purchases of property and equipment


(795,678
)


(504,770
)


(591,295
)Change in prepayments for purchases of property and equipment


(5,876
)


12,831



(3,846
)Purchases of and deposits for wireless licenses and spectrum
    clearing costs


(78,451
)


(5,292
)


(1,018,832
)Return of deposit for wireless licenses


70,000







Proceeds from sale of wireless licenses and operating assets






9,500



40,372Purchases of investments


(598,015
)


(642,513
)


(150,488
)Sales and maturities of investments


532,468



530,956



177,932Purchase of minority interest






(4,706
)


Purchase of membership units


(1,033
)


(18,955
)


Changes in restricted cash, cash equivalents and short-term
    investments, net


(2,176
)


221



(4,467
)Net cash used in investing activities


(909,978
)


(622,728
)


(1,550,624
)Financing activities:Proceeds from long-term debt


535,750



370,480



2,260,000Principal payments on capital lease obligations


(41,774
)


(5,213
)


Repayment of long-term debt


(10,500
)


(9,000
)


(1,168,944
)Payment of debt issuance costs


(7,658
)


(7,765
)


(22,864
)Minority interest contributions






8,880



12,402Proceeds from issuance of common stock, net


7,885



9,690



1,119Proceeds from physical settlement of forward equity sale










260,036Payment of fees related to forward equity sale










(1,257
)Net cash provided by financing activities


483,703



367,072



1,340,492Net increase (decrease) in cash and cash equivalents


(75,629
)


60,525



79,739Cash and cash equivalents at beginning of period


433,337



372,812



293,073Cash and cash equivalents at end of period

$
357,708


$
433,337


$
372,812    81




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 (In
    thousands, except share data)
  Retained


OtherAdditional


Unearned


Earnings


ComprehensiveCommon Stock


Paid-In


Share-Based


(Accumulated


IncomeShares


Amount


Capital


Compensation


Deficit)


(Loss)


TotalBalance at December 31, 2005


61,202,806



6



1,511,814



(20,942
)


24,585



2,138



1,517,601Components of comprehensive loss:Net loss


















(24,357
)






(24,357
)Net unrealized holding gains on investments






















4



4Unrealized losses on derivative instruments






















(356
)


(356
)Comprehensive loss


























(24,709
)Cumulative effect of change in accounting principle










(623
)














(623
)Reclassification of unearned share-based compensation related to
    the adoption of SFAS 123(R)










(20,942
)


20,942











Issuance of common stock under forward sale agreements


6,440,000



1



258,679















258,680Share-based compensation expense










19,725















19,725Issuance of common stock under share-based compensation plans,
    net of repurchases


249,706







1,119















1,119Balance at December 31, 2006


67,892,512



7



1,769,772







228



1,786



1,771,793Components of comprehensive loss:Net loss


















(75,927
)






(75,927
)Net unrealized holding losses on investments






















(70
)


(70
)Unrealized losses on derivative instruments






















(10,391
)


(10,391
)Comprehensive loss


























(86,388
)Share-based compensation expense










29,227















29,227Issuance of common stock under share-based compensation plans,
    net of repurchases


781,923







9,690















9,690Balance at December 31, 2007


68,674,435



7



1,808,689







(75,699
)


(8,675
)


1,724,322Components of comprehensive loss:Net loss


















(147,823
)






(147,823
)Net unrealized holding gains on investments






















473



473Unrealized losses on derivative instruments






















(1,471
)


(1,471
)Deferred tax effect of swaplet amortization on derivative
    instruments and unrealized holding gains on investments






















(1,697
)


(1,697
)Swaplet amortization on derivative instruments






















5,448



5,448Comprehensive loss


























(145,070
)Share-based compensation expense










34,734















34,734Issuance of common stock under share-based compensation plans,
    net of repurchases


841,091







7,885















7,885Balance at December 31, 2008


69,515,526


$
7


$
1,851,308


$



$
(223,522
)

$
(5,922
)

$
1,621,871    82




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    The
    Company  ®
    Note 2.
    Basis of
    Presentation and Significant Accounting Policies  Basis
    of Presentation
      Revenues
  month-to-month
  No. 00-21, (EITF 00-21),
 83




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 00-21, EITF 00-21
      and/or
    E-911
  Costs and
    Expenses
    Cost of Service.
  Cost of Equipment.
  Selling and Marketing.
 84




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  General and Administrative.
  Cash
    and Cash Equivalents
    Short-Term
    Investments
    available-for-sale available-for-sale other-than-temporary,
  Restricted
    Cash, Cash Equivalents and Short-Term Investments
    Fair
    Value of Financial Instruments
   85




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  first-in,
  Property
    and Equipment
      DepreciableLifeNetwork equipment:Switches


10Switch power equipment


15Cell site equipment and site improvements


7Towers


15Antennae


5Computer hardware and software


3-5Furniture, fixtures, retail and office equipment


3-7   construction-in-progress construction-in-progress construction-in-progress
  No. 98-1, (SOP 98-1),
   86




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Wireless
    Licenses
    and/or
  Goodwill
    and Other Intangible Assets
    Impairment
    of Long-Lived Assets
   87




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Impairment
    of Indefinite-Lived Intangible Assets
          Derivative
    Instruments and Hedging Activities
     88




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Investments
    in Other Entities
    other-than-temporary other-than-temporary,
  Concentrations
     89




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Operating
    Leases
    Asset
    Retirement Obligations
      Year Ended December 31,2008


2007Asset retirement obligations, beginning of year

$
15,813


$
20,489Liabilities incurred


3,079



1,602Liabilities settled(1)


(3,048
)


(7,944
)Accretion expense


1,153



1,666Asset retirement obligations, end of year

$
16,997


$
15,813     (1)
    
    The Company negotiated amendments to agreements that reduced its
    liability for the removal of equipment on certain of its cell
    sites at the end of the lease term, resulting in a reduction to
    its liability of $3.0 million and $7.9 million in 2008
    and 2007, respectively.  Debt
    Issuance Costs
   90




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Advertising
    Costs
    Share-Based
    Compensation
    Income
    Taxes
           91




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Basic
    and Diluted Earnings (Loss) Per Share
    Recent
    Accounting Pronouncements
     92




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 3.
    Fair
    Value of Financial Instruments    Level 1
    Quoted prices in active markets for identical assets or
    liabilities. The Company did not have Level 1 assets or
    liabilities as of December 31, 2008.Level 2
    Observable inputs other than Level 1 prices, such as quoted
    prices for similar assets or liabilities, quoted prices in
    markets that are not active or other inputs that are observable
    or can be corroborated by observable market data for
    substantially the full term of the assets or liabilities. The
    Companys Level 2 assets and liabilities as of
    December 31, 2008 included its cash equivalents, its
    short-term investments in obligations of the
    U.S. government, a majority of its short-term investments
    in commercial paper and its interest rate swaps.Level 3
    Unobservable inputs that are supported by little or no market
    activity and that are significant to the fair value of the
    assets or liabilities. Such assets and liabilities may have
    values determined using pricing models, discounted cash flow
    methodologies, or similar techniques, and include instruments
    for which the determination of fair value requires significant
    management judgment or estimation. The Companys
    Level 3 asset as of December 31, 2008 comprised its
    short-term investment in asset-backed commercial paper. 93




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At Fair Value as of December 31, 2008Level 1


Level 2


Level 3


TotalAssets:Cash equivalents

$



$
175,280


$



$
175,280Short-term investments






236,893



1,250



238,143Total

$



$
412,173


$
1,250


$
413,423Liabilities:Interest rate swaps

$



$
(11,045
)

$



$
(11,045
)Total

$



$
(11,045
)

$



$
(11,045
)     Level 3Beginning balance, December 31, 2007

$
16,200Total losses (realized/unrealized):Included in net loss

$
(7,613
)Included in comprehensive loss


Settlements


(7,337
)Transfers in (out) of Level 3


Ending balance, December 31, 2008

$
1,250     Cash
    Equivalents and Short-Term Investments
  available-for-sale.
   94




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary
  Available-for-sale
  As of December 31, 2008Unrealized


UnrealizedCost


Gain


Loss


Fair ValueCommercial paper

$
50,899


$
16


$



$
50,915Asset-backed commercial paper


1,250











1,250U.S. government or government agency securities


185,597



381







185,978$
237,746


$
397


$



$
238,143   As of December 31, 2007Unrealized


UnrealizedCost


Gain


Loss


Fair ValueCommercial paper

$
69,333


$



$
(135
)

$
69,198Asset-backed commercial paper


26,962











26,962U.S. government or government agency securities


52,972



103



(2
)


53,073Auction rate securities


30,000











30,000$
179,267


$
103


$
(137
)

$
179,233   Interest
    Rate Swaps
    Long-Term
    Debt
   95




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4.
    Supplementary
    Financial Information  Supplementary
    Balance Sheet Information (in thousands):
  As of December 31,2008


2007Other current assets:Accounts receivable, net(1)

$
31,177


$
21,158Prepaid expenses


19,367



16,076Other


1,404



865$
51,948


$
38,099Property and equipment, net:(2)Network equipment

$
1,911,173


$
1,421,648Computer equipment and other


264,692



184,224Construction-in-progress


574,773



341,7422,750,638



1,947,614Accumulated depreciation


(907,920
)


(630,957
)$
1,842,718


$
1,316,657Other intangible assets, net:Customer relationships

$
7,347


$
124,715Trademarks


37,000



37,00044,347



161,715Accumulated amortization customer relationships(3)


(2,820
)


(106,583
)Accumulated amortization trademarks(3)


(11,673
)


(9,030
)$
29,854


$
46,102Accounts payable and accrued liabilities:Trade accounts payable

$
201,843


$
109,781Accrued payroll and related benefits


50,462



41,048Other accrued liabilities


72,989



74,906$
325,294


$
225,735Other current liabilities:Deferred service revenue(4)

$
62,998


$
45,387Deferred equipment revenue(5)


20,614



14,615Accrued sales, telecommunications, property and other taxes
    payable


32,799



20,903Accrued interest


38,500



18,508Other


7,091



15,395$
162,002


$
114,808     (1)
    
    Accounts receivable consists primarily of amounts billed to
    third-party dealers for handsets and accessories net of an
    allowance for doubtful accounts. 96




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    As of December 31, 2008 and 2007, approximately
    $8.7 million and $49.5 million, respectively, of gross
    assets were held by the Company under capital lease
    arrangements. Accumulated amortization relating to these assets
    totaled $3.2 million and $5.6 million as of
    December 31, 2008 and 2007, respectively.(3)
    
    Amortization expense for other intangible assets for the years
    ended December 31, 2008, 2007 and 2006 was
    $23.6 million, $33.7 million and $33.7 million,
    respectively. Estimated amortization expense for intangible
    assets for 2009 is $5.3 million, for 2010 is
    $4.1 million, for 2011 is $3.0 million, for 2012 is
    $2.7 million, for 2013 is $2.7 million and is
    $12.1 million thereafter.(4)
    
    Deferred service revenue consists primarily of cash received
    from customers in advance of their service period.(5)
    
    Deferred equipment revenue relates to handsets sold to
    third-party dealers.  Supplementary
    Cash Flow Information (in thousands):
  December 31,2008

2007

2006Supplementary disclosure of cash flow information:Cash paid for interest

$
178,880


$
161,280


$
61,360Cash paid for income taxes

$
1,914


$
506


$
1,034Supplementary disclosure of non-cash investing activities:Contribution of wireless licenses

$



$
25,130


$
16,100Supplementary disclosure of non-cash financing activities:Assets acquired through capital lease arrangements

$



$
40,799


$
   Note 5.
    Basic and
    Diluted Earnings (Loss) Per Share    December 31,2008


2007


2006Basic weighted-average shares outstanding


68,021



67,100



61,645Effect of dilutive common share equivalents:Non-qualified stock options










Restricted stock awards










Warrants










Convertible senior notes










Diluted weighted-average shares outstanding


68,021



67,100



61,645    97




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6.
    Long-Term
    Debt    As of December 31,2008


2007Term loans under senior secured credit facilities

$
916,000


$
926,500Unamortized deferred lender fees


(4,527
)


(1,898
)Senior notes


1,400,000



1,100,000Unamortized premium on $350 million senior notes due 2014


17,552



19,800Convertible senior notes


250,000



2,579,025



2,044,402Current maturities of long-term debt


(13,000
)


(10,500
)$
2,566,025


$
2,033,902   Senior
    Secured Credit Facilities
  Cricket
    Communications
        
    increase the size of the permitted unsecured debt basket under
    the Credit Agreement from $1.2 billion to
    $1.65 billion plus $1.00 for every $1.00 of cash proceeds
    from the issuance of new common equity by Leap, up to
    $200 million in the aggregate;
    increase the add-back to consolidated earnings before interest,
    taxes, depreciation and amortization (EBITDA) for
    operating losses in new markets from $75 million to
    $100 million, and extend the period in which such add-back
    applies until December 31, 2011. For purposes of
    calculating the consolidated fixed charge coverage ratio under
    the Credit Agreement, an additional $125 million in new
    market operating losses can be added back to consolidated EBITDA
    through December 31, 2009;
    exclude up to $125 million of capital expenditures made in
    connection with the expansion of network coverage, capability
    and capacity in markets in existence as of December 31,
    2007 from the consolidated fixed charge coverage ratio
    calculation through December 31, 2009;
    increase the baskets under the Credit Agreement for capital
    lease and purchase money security interests from
    $150 million to $250 million;
    increase the baskets under the Credit Agreement for letters of
    credit from $15 million to $30 million;
    exclude qualified preferred stock from the definition of
    indebtedness under the Credit Agreement and make certain other
    amendments to facilitate the issuance by Leap of qualified
    preferred stock; 98




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    establish that, if Cricket enters into an incremental facility
    for term loans or a revolving credit facility with an effective
    interest rate or weighted average yield (taking into account
    factors such as any interest rate floor, call protection,
    original issue discount and lender fees) that is higher than the
    then-existing interest rate for the existing term loans or
    revolving credit facility, as applicable, under the Credit
    Agreement, then the interest rate for the existing term loans or
    revolving credit facility, as applicable, shall be increased to
    match the effective interest rate or weighted average yield of
    such incremental facility;
    cap any new incremental facilities under the Credit Agreement at
    $400 million in the aggregate;
    increase the applicable rate spread on the term loans and
    revolving credit facility under the Credit Agreement by
    50 basis points, and set a floor on the LIBOR under the
    Credit Agreement of 3.0% per annum; and
    include a prepayment (or repayment) premium on the term loans of
    2.0% on any principal amount prepaid (or repaid) prior to the
    first anniversary of the date of the amendment and 1.0% on any
    principal amount prepaid (or repaid) on or after the first
    anniversary but prior to the second anniversary of the date of
    amendment (other than prepayments in respect of extraordinary
    receipts).         99




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    LCW
    Operations
    Senior
    Notes
  Senior
    Notes Due 2014
     100




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        90-day 90-day
  Convertible
    Senior Notes Due 2014
   101




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        90-day
 102




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Senior
    Notes Due 2015
        90-day 90-day
 103




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31:2009

$
14,3772010


18,5982011


37,3382012


429,6192013


426,039Thereafter


1,653,054Total

$
2,579,025   Note 7.
    Income
    Taxes    December 31,2008


2007


2006Current provision:Federal

$



$
(422
)

$
422State


2,660



1,704



212,660



1,282



443Deferred provision:Federal


32,107



39,044



7,389State


3,864



(2,960
)


1,44535,971



36,084



8,834$
38,631


$
37,366


$
9,277  104




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007


2006Amounts computed at statutory federal rate

$
(38,217
)

$
(13,496
)

$
(5,335
)Non-deductible expenses


2,473



2,910



421State income tax expense (benefit), net of federal income tax
    impact


5,574



(816
)


(425
)Net tax expense related to joint venture


2,066



2,645



1,751Change in valuation allowance


66,735



46,123



12,865$
38,631


$
37,366


$
9,277     As of December 31,2008


2007Deferred tax assets:Net operating loss carryforwards

$
390,463


$
276,361Wireless licenses


17,913



17,950Capital loss carryforwards


1,621



4,200Reserves and allowances


13,002



16,024Share-based compensation


16,685



14,190Deferred charges


35,254



20,112Investments and deferred tax on unrealized losses


19,158



6,105Other


12,831



8,560Gross deferred tax assets


506,927



363,502Deferred tax liabilities:Intangible assets


(10,012
)


(17,727
)Property and equipment


(80,437
)


(58,967
)Net deferred tax assets


416,478



286,808Valuation allowance


(414,030
)


(284,301
)Other deferred tax liabilities:Wireless licenses


(205,474
)


(172,492
)Goodwill


(11,093
)


(8,688
)Investment in joint venture


(8,450
)


(6,225
)Net deferred tax liabilities

$
(222,569
)

$
(184,898
)  105




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31,2008


2007Current deferred tax assets (included in other current assets)

$
818


$
Current deferred tax liabilities (included in other current
    liabilities)

$



$
(2,063
)Long-term deferred tax liabilities


(223,387
)


(182,835
)$
(222,569
)

$
(184,898
)       SOP 90-7,
  Note 8.
    Stockholders
    Equity  Forward
    Sale Agreements
    Warrants
   106




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 9.
    Share-Based
    Compensation    Stock
    Options
    As of December 31,2008

2007Expected volatility


51
%


47
%Expected term (in years)


6.0



6.3Risk-free interest rate


2.80
%


4.30
%Expected dividend yield






    107




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-


Weighted-Average


AverageExercise


RemainingNumber of


Price per


Contractual


AggregateShares


Share


Term


Intrinsic Value(In years)Options outstanding at December 31, 2006


3,070


$
37.55Options exercisable at December 31, 2006


76


$
26.50Options granted


956


$
67.11Options forfeited


(374
)


51.08Options exercised


(278
)


29.33Options outstanding at December 31, 2007


3,374


$
45.12



8.28


$
28,419Options exercisable at December 31, 2007


270


$
38.71



7.85


$
3,370Options granted


1,392


$
43.61Options forfeited


(129
)


48.75Options exercised


(229
)


27.03Options outstanding at December 31, 2008


4,408


$
45.48



8.04


$
679Options exercisable at December 31, 2008


1,004


$
34.44



6.61


$
213         Restricted
    Stock
   108




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageGrant DateNumber of


Fair ValueShares


Per ShareRestricted stock awards outstanding at December 31, 2006


1,118


$
34.50Shares issued


529



56.86Shares forfeited


(74
)


50.48Shares vested


(168
)


29.24Restricted stock awards outstanding at December 31, 2007


1,405



42.70Shares issued


593



43.13Shares forfeited


(49
)


50.94Shares vested


(572
)


28.25Restricted stock awards outstanding at December 31, 2008


1,377


$
48.60     Year Ended December 31,2008

2007

2006Fair value on vesting date of vested restricted stock awards

$
24,104


$
10,525


$
1,519       Employee
    Stock Purchase Plan
    Deferred
    Stock Units
   109




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Allocation
    of Share-Based Compensation Expense
    Year Ended December 31,2008


2007


2006Cost of service

$
3,060


$
2,156


$
1,245Selling and marketing expenses


4,580



3,330



1,970General and administrative expenses


27,575



23,853



16,510Share-based compensation expense

$
35,215


$
29,339


$
19,725Share-based compensation expense per share:Basic

$
0.52


$
0.44


$
0.32Diluted

$
0.52


$
0.44


$
0.32   Effect
    of SFAS 123(R) Adoption
    Note 10.
    Employee
    Savings and Retirement Plan    Note 11.
    Significant
    Acquisitions and Dispositions     110




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ValueFinite-lived intangible assets acquired

$
7,347Indefinite-lived intangible assets acquired


10,042Goodwill


4,319Other net tangible assets acquired (excluding cash acquired)


9,509Total net assets acquired

$
31,217             Note 12.
    Segment
    and Geographic Data   111




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 13.
    Arrangements
    with Variable Interest Entities    Arrangements
    with LCW Wireless
    Limited
    Liability Company Agreement
  30-day
    Management
    Agreement
  mark-up
  Other
    Arrangements
    with Denali
   112




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Limited
    Liability Company Agreement
    Senior
    Secured Credit Agreement
  sub-facility sub-facility sub-facility sub-facility.
  Management
    Agreement.
    Note 14.
    Commitments
    and Contingencies      and/or
 113




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Patent
    Litigation
  Freedom
    Wireless
  ® tm
  Electronic
    Data Systems
    EMSAT
    Advanced Geo-Location Technology
  and/or and/or
  American
    Wireless Group
   114




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
  and/or
    Securities
    and Derivative Litigation
  and/or
  Rule 10b-5,
 115




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  class-wide
  and/or
  Department
    of Justice Inquiry
    Other
    Litigation
    Indemnification
    Agreements
    Spectrum
    Clearing Obligations
  and/or
 116




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    System
    Equipment Purchase Agreements
  and/or
  Capital
    and Operating Leases
    Capital


OperatingYears Ended December 31:

Leases


Leases2009

$
2,466


$
188,5632010


2,466



187,5722011


2,466



182,8982012


2,466



182,2852013


2,466



181,913Thereafter


3,992



647,804Total minimum lease payments

$
16,322


$
1,571,035Less amount representing interest


(4,923
)Present value of minimum lease payments

$
11,399   Tower
    Provider Commitments
   117




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Outstanding
    Letters of Credit and Surety Bonds
      Note 15.
    Guarantor
    Financial Information       118




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Balance Sheet as of December 31, 2008 (in
    thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedAssetsCash and cash equivalents

$
27


$
333,119


$



$
24,562


$



$
357,708Short-term investments






236,893







1,250







238,143Restricted cash, cash equivalents and short-term investments


1,611



3,129







40







4,780Inventories






124,719







1,574







126,293Other current assets


83



50,915







2,062



(1,112
)


51,948Total current assets


1,721



748,775







29,488



(1,112
)


778,872Property and equipment, net


2



1,594,502







256,370



(8,156
)


1,842,718Investments in and advances to affiliates and consolidated
    subsidiaries


1,875,391



2,078,276



19,133



9,227



(3,982,027
)


Wireless licenses






19,957



1,489,564



332,277







1,841,798Assets held for sale










45,569











45,569Goodwill






430,101















430,101Other intangible assets, net






29,854















29,854Other assets


8,043



72,434







3,468







83,945Total assets

$
1,885,157


$
4,973,899


$
1,554,266


$
630,830


$
(3,991,295
)

$
5,052,857Liabilities and Stockholders EquityAccounts payable and accrued liabilities

$
20


$
297,461


$



$
27,813


$



$
325,294Current maturities of long-term debt






9,000







4,000







13,000Intercompany payables


9,615



277,327



7,440



23,687



(318,069
)


Other current liabilities


3,651



153,081







6,382



(1,112
)


162,002Total current liabilities


13,286



736,869



7,440



61,882



(319,181
)


500,296Long-term debt


250,000



2,281,525







524,007



(489,507
)


2,566,025Deferred tax liabilities






223,387















223,387Other long-term liabilities






78,861







5,489







84,350Total liabilities


263,286



3,320,642



7,440



591,378



(808,688
)


3,374,058Minority interests






26,833











30,095



56,928Membership units subject to repurchase














43,269



(43,269
)


Stockholders equity


1,621,871



1,626,424



1,546,826



(3,817
)


(3,169,433
)


1,621,871Total liabilities and stockholders equity

$
1,885,157


$
4,973,899


$
1,554,266


$
630,830


$
(3,991,295
)

$
5,052,857  119




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Balance Sheet as of December 31, 2007 (in
    thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedAssetsCash and cash equivalents

$
62


$
399,153


$



$
34,122


$



$
433,337Short-term investments






163,258







15,975







179,233Restricted cash, cash equivalents and short-term investments


7,671



7,504







375







15,550Inventories






64,583







625







65,208Other current assets


102



37,201







796







38,099Total current assets


7,835



671,699







51,893







731,427Property and equipment, net


30



1,254,856







66,901



(5,130
)


1,316,657Investments in and advances to affiliates and consolidated
    subsidiaries


1,728,602



1,903,009



173,922



5,325



(3,810,858
)


Wireless licenses






18,533



1,519,638



328,182







1,866,353Goodwill






425,782















425,782Other intangible assets, net






45,948







154







46,102Deposits for wireless licenses






















Other assets


41



44,464







2,172







46,677Total assets

$
1,736,508


$
4,364,291


$
1,693,560


$
454,627


$
(3,815,988
)

$
4,432,998Liabilities and Stockholders EquityAccounts payable and accrued liabilities

$
6,459


$
210,707


$
7


$
8,562


$



$
225,735Current maturities of long-term debt






9,000







1,500







10,500Intercompany payables


5,727



179,248



726



2,986



(188,687
)


Other current liabilities






112,626







2,182







114,808Total current liabilities


12,186



511,581



733



15,230



(188,687
)


351,043Long-term debt






1,995,402







311,052



(272,552
)


2,033,902Deferred tax liabilities






19,606



163,229











182,835Other long-term liabilities






88,570







1,602







90,172Total liabilities


12,186



2,615,159



163,962



327,884



(461,239
)


2,657,952Minority interests






20,530











30,194



50,724Membership units subject to repurchase














37,879



(37,879
)


Stockholders equity


1,724,322



1,728,602



1,529,598



88,864



(3,347,064
)


1,724,322Total liabilities and stockholders equity

$
1,736,508


$
4,364,291


$
1,693,560


$
454,627


$
(3,815,988
)

$
4,432,998  120




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Operations for the Year Ended December 31,
    2008 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
1,658,293


$



$
50,808


$



$
1,709,101Equipment revenues






245,403







4,358







249,761Other revenues






66



72,509







(72,575
)


Total revenues






1,903,762



72,509



55,166



(72,575
)


1,958,862Operating expenses:Cost of service (exclusive of items shown separately below)






(519,226
)






(41,213
)


72,141



(488,298
)Cost of equipment






(454,620
)






(10,802
)






(465,422
)Selling and marketing






(271,261
)






(23,656
)






(294,917
)General and administrative


(4,387
)


(301,096
)


(905
)


(25,737
)


434



(331,691
)Depreciation and amortization


(27
)


(322,529
)






(8,892
)






(331,448
)Impairment of assets










(177
)










(177
)Total operating expenses


(4,414
)


(1,868,732
)


(1,082
)


(110,300
)


72,575



(1,911,953
)Gain (loss) on sale or disposal of assets






(1,483
)


1,274











(209
)Operating income (loss)


(4,414
)


33,547



72,701



(55,134
)






46,700Minority interests in consolidated subsidiaries






(4,880
)










6



(4,874
)Equity in net loss of consolidated subsidiaries


(149,961
)


(45,626
)










195,587



Equity in net loss of investee






(298
)














(298
)Interest income


12,549



62,456







2,512



(62,946
)


14,571Interest expense


(6,364
)


(176,908
)






(34,230
)


59,243



(158,259
)Other income (expense), net


367



(7,399
)














(7,032
)Income (loss) before income taxes


(147,823
)


(139,108
)


72,701



(86,852
)


191,890



(109,192
)Income tax expense






(10,853
)


(27,778
)










(38,631
)Net income (loss)

$
(147,823
)

$
(149,961
)

$
44,923


$
(86,852
)

$
191,890


$
(147,823
)  121




---



##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Operations for the Year Ended December 31,
    2007 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
1,360,801


$



$
34,866


$



$
1,395,667Equipment revenues






230,457







4,679







235,136Other revenues






38



54,424







(54,462
)


Total revenues






1,591,296



54,424



39,545



(54,462
)


1,630,803Operating expenses:Cost of service (exclusive of items shown separately below)






(424,022
)






(14,494
)


54,388



(384,128
)Cost of equipment






(392,062
)






(13,935
)






(405,997
)Selling and marketing


(8
)


(196,803
)






(9,402
)






(206,213
)General and administrative


(4,979
)


(259,325
)


(132
)


(7,174
)


74



(271,536
)Depreciation and amortization


(65
)


(293,621
)






(8,515
)






(302,201
)Impairment of assets






(383
)


(985
)










(1,368
)Total operating expenses


(5,052
)


(1,566,216
)


(1,117
)


(53,520
)


54,462



(1,571,443
)Gain (loss) on sale or disposal of assets






(349
)


1,251











902Operating income (loss)


(5,052
)


24,731



54,558



(13,975
)






60,262Minority interests in consolidated subsidiaries






(2,067
)










3,884



1,817Equity in net loss of consolidated subsidiaries


(70,838
)


(7,708
)










78,546



Equity in net loss of investee






(2,309
)














(2,309
)Interest income


38



63,024







985



(35,108
)


28,939Interest expense






(119,734
)






(34,296
)


32,799



(121,231
)Other expense, net


(75
)


(5,933
)






(31
)






(6,039
)Income (loss) before income taxes


(75,927
)


(49,996
)


54,558



(47,317
)


80,121



(38,561
)Income tax expense






(20,842
)


(16,524
)










(37,366
)Net income (loss)

$
(75,927
)

$
(70,838
)

$
38,034


$
(47,317
)

$
80,121


$
(75,927
)  122




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Operations for the Year Ended December 31,
    2006 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
952,921


$



$
3,444


$



$
956,365Equipment revenues






210,123







1,474



(775
)


210,822Other revenues






364



39,943







(40,307
)


Total revenues






1,163,408



39,943



4,918



(41,082
)


1,167,187Operating expenses:Cost of service (exclusive of items shown separately below)






(300,949
)






(3,156
)


39,943



(264,162
)Cost of equipment






(309,223
)






(2,386
)


775



(310,834
)Selling and marketing






(155,615
)






(3,642
)






(159,257
)General and administrative


(7,178
)


(186,931
)


(937
)


(1,922
)


364



(196,604
)Depreciation and amortization


(100
)


(223,576
)






(3,071
)






(226,747
)Impairment of assets










(7,912
)










(7,912
)Total operating expenses


(7,278
)


(1,176,294
)


(8,849
)


(14,177
)


41,082



(1,165,516
)Gain on sale or disposal of assets






21,300



754











22,054Operating income (loss)


(7,278
)


8,414



31,848



(9,259
)






23,725Minority interests in consolidated subsidiaries






(695
)










2,188



1,493Equity in net income (loss) of consolidated subsidiaries


(19,116
)


4,869











14,247



Interest income


37



30,317







664



(7,955
)


23,063Interest expense






(61,219
)






(8,070
)


7,955



(61,334
)Other income (expense), net


2,000



(4,650
)














(2,650
)Income (loss) before income taxes and cumulative effect of
    change in accounting principle


(24,357
)


(22,964
)


31,848



(16,665
)


16,435



(15,703
)Income tax (expense) benefit






3,225



(12,502
)










(9,277
)Income (loss) before cumulative effect of change in accounting
    principle


(24,357
)


(19,739
)


19,346



(16,665
)


16,435



(24,980
)Cumulative effect of change in accounting principle






623















623Net income (loss)

$
(24,357
)

$
(19,116
)

$
19,346


$
(16,665
)

$
16,435


$
(24,357
)  123




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Cash Flows for the Year Ended December 31,
    2008 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedOperating activities:Net cash provided by (used in) operating activities

$
1,033


$
349,796


$
5,780


$
(5,885
)

$
(78
)

$
350,646Investing activities:Acquisition of business, net of cash acquired






(31,217
)














(31,217
)Purchases of and changes in prepayments for property and
    equipment






(622,008
)






(179,546
)






(801,554
)Return of deposits for wireless licenses






70,000















70,000Purchases of and deposits for wireless licenses and spectrum
    clearing costs






(70,000
)


(5,780
)


(2,671
)






(78,451
)Purchases of investments






(598,015
)














(598,015
)Sales and maturities of investments






521,168







11,300







532,468Investments in and advances to affiliates and consolidated
    subsidiaries


(7,885
)














7,885



Purchase of membership units






(1,033
)














(1,033
)Other


(19
)


(2,502
)






345







(2,176
)Net cash used in investing activities


(7,904
)


(733,607
)


(5,780
)


(170,572
)


7,885



(909,978
)Financing activities:Proceeds from long-term debt


242,500



535,750







168,475



(410,975
)


535,750Issuance of related party debt


(242,500
)


(168,475
)










410,975



Principal payments on capital lease obligations






(41,774
)














(41,774
)Repayment of long-term debt






(9,000
)






(1,500
)






(10,500
)Payment of debt issuance costs


(1,049
)


(6,609
)














(7,658
)Capital contributions, net


7,885



7,885











(7,885
)


7,885Minority interest distribution














(78
)


78



Net cash provided by financing activities


6,836



317,777







166,897



(7,807
)


483,703Net decrease in cash and cash equivalents


(35
)


(66,034
)






(9,560
)






(75,629
)Cash and cash equivalents at beginning of period


62



399,153







34,122







433,337Cash and cash equivalents at end of period

$
27


$
333,119


$



$
24,562


$



$
357,708  124




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Cash Flows for the Year Ended December 31,
    2007 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedOperating activities:Net cash provided by (used in) operating activities

$
(1,166
)

$
316,746


$
(3,756
)

$
(16,168
)

$
20,525


$
316,181Investing activities:Purchases of and changes in prepayments for property and
    equipment






(463,389
)






(28,550
)






(491,939
)Purchases of and deposits for wireless licenses and spectrum
    clearing costs










(5,744
)


452







(5,292
)Proceeds from sale of wireless licenses and operating assets










9,500











9,500Purchases of investments






(642,513
)














(642,513
)Sales and maturities of investments






530,956















530,956Investments in and advances to affiliates and consolidated
    subsidiaries


(9,690
)


(4,706
)










9,690



(4,706
)Purchase of membership units






(18,955
)














(18,955
)Other


1,022



(426
)






(375
)






221Net cash provided by (used in) investing activities


(8,668
)


(599,033
)


3,756



(28,473
)


9,690



(622,728
)Financing activities:Principal payments on capital lease obligation






(5,213
)














(5,213
)Proceeds from long-term debt






370,480







6,000



(6,000
)


370,480Issuance of related party debt






(6,000
)










6,000



Repayment of long-term debt






(9,000
)














(9,000
)Payment of debt issuance costs






(7,757
)






(8
)






(7,765
)Capital contributions, net


9,690



9,690







29,405



(30,215
)


18,570Proceeds from issuance of common stock, net






















Net cash provided by financing activities


9,690



352,200







35,397



(30,215
)


367,072Net increase (decrease) in cash and cash equivalents


(144
)


69,913







(9,244
)






60,525Cash and cash equivalents at beginning of period


206



329,240







43,366







372,812Cash and cash equivalents at end of period

$
62


$
399,153


$



$
34,122


$



$
433,337  125




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidating
    Statement of Cash Flows for the Year Ended December 31,
    2006 (in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedOperating activities:Net cash provided by operating activities

$
6,933


$
269,947


$



$
12,991


$



$
289,871Investing activities:Purchases of and changes in prepayments for property and
    equipment






(567,518
)






(27,623
)






(595,141
)Purchases of and deposits for wireless licenses










(743,688
)


(275,144
)






(1,018,832
)Proceeds from sale of wireless licenses and operating assets






6,887



33,485











40,372Purchases of investments






(150,488
)














(150,488
)Sales and maturities of investments






177,932















177,932Investments in and advances to affiliates and consolidated
    subsidiaries


(259,898
)


(777,291
)










1,037,189



Changes in restricted cash, cash equivalents and short-term
    investments, net


(6,773
)


1,571







735







(4,467
)Net cash used in investing activities


(266,671
)


(1,308,907
)


(710,203
)


(302,032
)


1,037,189



(1,550,624
)Financing activities:Proceeds from long-term debt






2,220,000







263,378



(223,378
)


2,260,000Issuance of related party debt






(223,378
)










223,378



Repayment of long-term debt






(1,168,944
)














(1,168,944
)Capital contributions, net


259,898



268,783



710,203



70,605



(1,037,189
)


272,300Payment of debt issuance costs






(21,288
)






(1,576
)






(22,864
)Net cash provided by financing activities


259,898



1,075,173



710,203



332,407



(1,037,189
)


1,340,492Net increase in cash and cash equivalents


160



36,213







43,366







79,739Cash and cash equivalents at beginning of period


46



293,027















293,073Cash and cash equivalents at end of period

$
206


$
329,240


$



$
43,366


$



$
372,812  126




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##### Table of Contents



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
  Disclosure
    Controls and Procedures
    Rule 13a-15(b), Form 10-K, Rule 13a-15(e)
  Remediation
    of Previous Material Weakness
    
    There were deficiencies in our internal controls over the
    existence, completeness and accuracy of revenues, cost of
    revenues and deferred revenues. Specifically, the design of
    controls over the preparation and review of the account
    reconciliations and analysis of revenues, cost of revenues and
    deferred revenues did not detect the errors in revenues, cost of
    revenues and deferred revenues. A contributing factor was the
    ineffective operation of our user acceptance testing (i.e.,
    ineffective testing) of changes made to our revenue and billing
    systems in connection with the introduction or modification of
    service offerings. This material weakness resulted in the
    accounting errors which caused us to restate our consolidated
    financial statements as of and for the years ended
    December 31, 2006 and 2005 (including interim periods
    therein), for the period from August 1, 2004 to
    December 31, 2004 and for the period from January 1,
    2004 to July 31, 2004, and our condensed consolidated
    financial statements as of and for the quarterly periods ended
    June 30, 2007 and March 31, 2007. In addition, this
    material weakness resulted in an adjustment recorded in the
    three months ended December 31, 2007, which we determined
    was not material to our previously reported 2006 annual or 2007
    interim periods.    
    We performed a detailed review of our billing and revenue
    systems and processes for recording revenue that resulted in new
    and enhanced internal controls. We redesigned account
    reconciliations and implemented analyses surrounding our revenue
    recording processes which are designed to detect any material
    errors in the completeness and accuracy of the underlying data.
    We designed and implemented automated enhancements to our
    billing and revenue systems to reduce the need for manual
    processes and estimates and thereby streamline the processes for
    ensuring revenue is recorded only when payment is received and
    services are provided. 127




---



##### Table of Contents




    We further improved our user acceptance testing related to
    system changes by ensuring the user acceptance testing
    encompasses a complete population of scenarios of possible
    customer activity. We also enhanced user acceptance testing by
    identifying and implementing additional improvements to our
    testing processes and procedures and by centralizing management
    responsibility and oversight over user acceptance testing which
    has improved the consistency and transparency of the process.
    We created a number of new positions within our accounting
    department in the areas of revenue accounting and assurance and
    we have filled those positions with individuals with the
    appropriate skills, training and experience, including five
    individuals who are certified public accountants. These new
    positions include:  
    an assistant controller with responsibility for all aspects of
    revenue, equipment revenue, inventory, cash and revenue
    assurance;
    a director of revenue assurance and a director of inventory to
    strengthen senior review and management of those
    departments; and
    additional financial, business and functional analysts to review
    and analyze revenues and to design and validate user testing
    acceptance for new or modified service offerings.  
    We also filled vacancies, replaced departing employees and
    created and filled new positions within the other areas of our
    accounting department with personnel with significant skills,
    training and experience across all accounting functions,
    including revenue accounting and assurance. These new personnel
    include:  
    a new executive vice president and chief financial officer with
    more than thirty years of finance, accounting and operational
    experience with large, publicly-held companies in multiple
    industries;
    a new senior vice president and chief accounting officer with
    more than twenty years of finance, accounting and operational
    experience with large, publicly-held companies in multiple
    industries, who is responsible for financial planning and
    analysis, accounting and financial management; and
    a significant number of new employees in the accounting
    department, many of whom have public accounting work experience
    and are either certified public accountants or in the process of
    obtaining certification.  
    We have conducted and will continue to conduct training of our
    accounting and finance personnel with respect to our significant
    accounting policies and procedures, including in the areas of
    revenue accounting and assurance.    (b) Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f).
   128




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##### Table of Contents



Internal Control 
    Integrated Framework Internal
    Control  Integrated Framework
    (c) Changes
    in Internal Control over Financial Reporting
    Item 9A(T).
    Controls
    and Procedures    Item 9B.
    Other
    Information   129




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  www.leapwireless.com.
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Equity
    Compensation Plan Information
    Weighted-averageNumber of securities to be

exercise price of

Number of securitiesissued upon exercise of

outstanding

remaining available for futureoutstanding options,

options, warrants

issuance under equityPlan Category

warrants and rights

and rights

compensation plansEquity compensation plans approved by security holders


4,408,210
(1)(2)

$
45.48



1,630,698
(3)Equity compensation plans not approved by security holders










Total


4,408,210


$
45.48



1,630,698     (1)
    
    Represents shares reserved for issuance under 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) and as amended on March 8, 2007. Stock
    options granted prior to May 17, 2007 were granted prior to
    the approval of the 2004 Plan by Leap stockholders. The material
    features of the 2004 Plan are described in our Definitive Proxy
    Statement dated April 6, 2007, as filed with the SEC on
    such date, which description is incorporated herein by reference.(2)
    
    Excludes 1,377,278 shares of restricted stock issued under
    the 2004 Plan which are subject to release upon vesting of the
    shares.(3)
    
    Consists of 665,067 shares reserved for issuance under the
    Leap Wireless International, Inc. Employee Stock Purchase Plan
    and 965,631 shares reserved for issuance under the 2004
    Plan.   130




---



##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   131




---



##### Table of Contents



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  (a) Financial
    Statements and Financial Statement Schedules
  Documents
    filed as part of this report:
  1.
    Financial Statements:
                2.
    Financial Statement Schedules:
    (b) Exhibits
  EXHIBIT INDEX
  ExhibitNumber

Description2
.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*

Disclosure Statement Accompanying Fifth Amended Joint Plan of
    Reorganization dated as of July 30, 2003.2
.3*

Order Confirming Debtors Fifth Amended Joint Plan of
    Reorganization dated as of July 30, 2003.3
.1(1)

Amended and Restated Certificate of Incorporation of Leap
    Wireless International, Inc.3
.2(1)

Amended and Restated Bylaws of Leap Wireless International, Inc.4
.1(2)

Form of Common Stock Certificate.4
.2(1)

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(3)

First Amendment 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.4
.3(4)

Indenture, dated as of October 23, 2006, by and among
    Cricket Communications, Inc., the Initial Guarantors (as defined
    therein) and Wells Fargo Bank, N.A., as trustee.4
.3.1(4)

Form of 9.375% Senior Note of Cricket Communications, Inc.
    due 2014 (attached as Exhibit A to the Indenture filed as
    Exhibit 4.3.1 hereto). 132




---



##### Table of Contents



ExhibitNumber

Description4
.3.2(5)

Third Supplemental Indenture, dated as of April 30, 2007,
    among Cricket Communications, Inc., Wells Fargo Bank, N.A., as
    trustee, Leap Wireless International, Inc. and the other
    guarantors under the Indenture.4
.4(4)

Registration Rights Agreement, dated as of October 23,
    2006, by and among Cricket Communications, Inc., the Guarantors
    (as defined therein), Citigroup Global Markets Inc. and Goldman,
    Sachs & Co., as representatives of the Initial
    Purchasers named therein.4
.5(6)

Registration Rights Agreement, dated as of June 6, 2007, by
    and among Cricket Communications, Inc., the Guarantors (as
    defined therein), Citigroup Global Markets Inc. and Goldman,
    Sachs & Co., as representatives of the Initial
    Purchasers named therein.4
.6(7)

Indenture, dated as of June 25, 2008, between Cricket
    Communications, Inc., the Guarantors and Wells Fargo Bank, N.A.,
    as trustee.4
.6.1(7)

Form of 10% Senior Note of Cricket Communications, Inc. due
    2015 (attached as Exhibit A to the Indenture filed as
    Exhibit 4.6 hereto).4
.7(7)

Registration Rights Agreement, dated as of June 25, 2008,
    between Cricket Communications, Inc., the Guarantors and
    Goldman, Sachs & Co. and Morgan Stanley &
    Co. Incorporated, as representatives of the Initial Purchasers.4
.8(8)

Indenture, dated as of June 25, 2008, between Leap Wireless
    International and Wells Fargo Bank, N.A., as trustee.4
.8.1(8)

Form of 4.50% Convertible Senior Notes of Leap Wireless
    International, Inc. due 2014 (attached as Exhibit A to the
    Indenture filed as Exhibit 4.8 hereto).4
.9(8)

Registration Rights Agreement, dated as of June 25, 2008,
    between Leap Wireless International, Inc. and Goldman,
    Sachs & Co. and Morgan Stanley & Co.
    Incorporated, as representatives of the Initial Purchasers.10
.1(9)

System Equipment Purchase Agreement, dated as of June 11,
    2007, by and among Cricket Communications, Inc., Alaska Native
    Broadband 1 License LLC and Nortel Networks Inc.10
.2(9)

System Equipment Purchase Agreement, dated as of June 14,
    2007, by and among Cricket Communications, Inc., Alaska Native
    Broadband 1 License LLC and Lucent Technologies, Inc.10
.3*

Amended and Restated System Equipment Purchase Agreement, dated
    as of May 24, 2007, by and between Cricket Communications,
    Inc. and Futurewei Technologies, Inc.10
.4(10)

Amended and Restated Credit Agreement, dated June 16, 2006,
    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
.4.1(11)

Amendment No. 1 to Amended and Restated Credit Agreement,
    dated March 15, 2007, by and among Cricket Communications,
    Inc., Leap Wireless International, Inc., the lenders party
    thereto and Bank of America, N.A., as administrative agent.10
.4.2(11)

Consent dated March 15, 2007 by Leap Wireless
    International, Inc. and the subsidiary guarantors party thereto.10
.4.3(12)

Amendment No. 2 to Amended and Restated Credit Agreement,
    dated November 20, 2007, by and among Cricket
    Communications, Inc., Leap Wireless International, Inc., the
    lenders party thereto and Bank of America, N.A., as
    administrative agent.10
.4.4(12)

Consent dated November 20, 2007 by Leap Wireless
    International, Inc. and the subsidiary guarantors party thereto.10
.4.5(13)

Amendment No. 3 to Amended and Restated Credit Agreement,
    dated June 18, 2008, by and among Cricket Communications,
    Inc., Leap Wireless International, Inc., the lenders party
    thereto and Bank of America, N.A., as administrative agent.10
.4.6(13)

Consent dated June 18, 2008, by Leap Wireless
    International, Inc. and the subsidiary guarantors party thereto. 133




---



##### Table of Contents



ExhibitNumber

Description10
.4.7(10)

Amended and Restated Security Agreement, dated June 16,
    2006, made by Cricket Communications, Inc., Leap Wireless
    International, Inc., and the Subsidiary Guarantors to Bank of
    America, N.A., as collateral agent.10
.4.8(14)

Letter Amendment to the Amended and Restated Security Agreement
    dated as of June 16, 2006 by and among Cricket
    Communications, Inc., Leap Wireless International, Inc. and Bank
    of America, N.A., as administrative agent, dated
    October 16, 2006.10
.4.9(10)

Amended and Restated Parent Guaranty, dated June 16, 2006,
    made by Leap Wireless International, Inc. in favor of the
    secured parties under the Credit Agreement.10
.4.10(10)

Amended and Restated Subsidiary Guaranty, dated June 16,
    2006, made by the Subsidiary Guarantors of the secured parties
    under the Credit Agreement.10
.5(15)

Credit Agreement, dated as of July 13, 2006, by and among
    Cricket Communications, Inc., Denali Spectrum License, LLC and
    Denali Spectrum, LLC.10
.5.1(14)

Amendment No. 1 to Credit Agreement by and among Cricket
    Communications, Inc., Denali Spectrum License, LLC and Denali
    Spectrum, LLC, dated as of September 28, 2006, between
    Cricket Communications, Inc., Denali Spectrum License, LLC and
    Denali Spectrum, LLC.10
.5.2(16)

Amendment No. 2 to Credit Agreement by and among Cricket
    Communications, Inc., Denali Spectrum License, LLC and Denali
    Spectrum, LLC, dated as of April 16, 2007, between Cricket
    Communications, Inc., Denali Spectrum License, LLC and Denali
    Spectrum, LLC.10
.5.3(17)

Amendment No. 3 to Credit Agreement by and among Cricket
    Communications, Inc., Denali Spectrum License, LLC, Denali
    Spectrum, LLC, Denali Spectrum Operations, LLC and Denali
    Spectrum License Sub, LLC dated as of March 6, 2008.10
.5.4.(18)

Letter of Credit and Reimbursement Agreement by and between
    Cricket Communications, Inc. and Denali Spectrum Operations,
    LLC, dated as of February 21, 2008.10
.6(19)#

Form of Indemnity Agreement to be entered into by and between
    Leap Wireless International, Inc. and its directors and officers.10
.7(2)#

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
.7.1(20)#

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
.7.2(21)#

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
.7.3*#

Third Amendment to Amended and Restated Executive Employment
    Agreement among Leap Wireless International, Inc., Cricket
    Communications, Inc., and S. Douglas Hutcheson, effective as of
    December 31, 2008.10
.8(18)#

Form of Executive Vice President and Senior Vice President
    Amended and Restated Severance Benefits Agreement.10
.9(2)#

Employment Offer Letter dated January 31, 2005, between
    Cricket Communications, Inc. and Albin F. Moschner.10
.11(13)#

Employment Offer Letter dated April 7, 2008, between
    Cricket Communications, Inc. and Jeffrey E. Nachbor.10
.12(13)#

Employment Offer Letter dated June 2, 2008, between Cricket
    Communications, Inc. and Walter Z. Berger.10
.13(22)#

Leap Wireless International, Inc. 2004 Stock Option Restricted
    Stock and Deferred Stock Unit Plan. 134




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##### Table of Contents



ExhibitNumber

Description10
.13.1(16)#

First Amendment to the Leap Wireless International, Inc. 2004
    Stock Option, Restricted Stock and Deferred Stock Unit Plan.10
.13.2(9)#

Second Amendment to the Leap Wireless International, Inc. 2004
    Stock Option, Restricted Stock and Deferred Stock Unit Plan.10
.13.3(20)#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (February 2008 Vesting).10
.13.4(20)#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Five-Year Vesting) entered into prior to
    October 26, 2005.10
.13.5(21)#

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
.13.6(21)#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Five-Year Vesting) entered into on or after
    October 26, 2005.10
.13.7(23)#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Four-Year Time Based Vesting).10
.13.8(13)#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Revised May 2008).10
.13.9(21)#

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
.13.10(13)#

Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement, effective as of June 23, 2008, between Leap
    Wireless International, Inc. and Walter Z. Berger.10
.13.11(20)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (February 2008 Vesting).10
.13.12(20)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Five-Year Vesting) entered into prior to
    October 26, 2005.10
.13.13(21)#

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
.13.14(21)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Five-Year Vesting) entered into on or after
    October 26, 2005.10
.13.15(23)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Four-Year Time Based Vesting).10
.13.16(13)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Revised May 2008).10
.13.17(21)#

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
.13.18(13)#

Restricted Stock Award Grant Notice and Restricted Stock Award
    Agreement, effective as of June 23, 2008, between Leap
    Wireless International, Inc. and Walter Z. Berger.10
.13.19(22)#

Form of Deferred Stock Unit Award Grant Notice and Deferred
    Stock Unit Award Agreement.10
.13.20(2)#

Form of Non-Employee Director Stock Option Grant Notice and
    Non-Qualified Stock Option Agreement.10
.13.21(24)#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (for Non-Employee Directors).10
.14(25)#

Leap Wireless International, Inc. Executive Incentive Bonus Plan.10
.15*#

2009 Employment Inducement Equity Incentive Plan of Leap
    Wireless International, Inc.10
.15.1*#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Four-Year Time Based Vesting) granted under the 2009
    Employment Inducement Equity Incentive Plan of Leap Wireless
    International, Inc. 135




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##### Table of Contents



ExhibitNumber

Description10
.15.2*#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Four-Year Time Based Vesting) granted under the
    2009 Employment Inducement Equity Incentive Plan of Leap
    Wireless International, Inc.21
*

Subsidiaries of Leap Wireless International, Inc.23
*

Consent of Independent Registered Public Accounting Firm.31
.1*

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2*

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
**

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.     *
    
    Filed herewith.**
    
    This certification is being furnished solely to accompany this
    report pursuant to U.S.C. § 1350, and is not being filed
    for purposes of Section 18 of the Securities Exchange Act
    of 1934, as amended, and is not to be incorporated by reference
    into any filing 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,
    dated August 16, 2004, filed with the SEC on
    August 20, 2004, and incorporated herein by reference.(2)
    
    Filed as an exhibit to Leaps Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004, filed with the
    SEC on May 16, 2005, and incorporated herein by reference.(3)
    
    Filed as an exhibit to Leaps Registration Statement on
    Form S-1
    (File
    No. 333-126246),
    filed with the SEC on June 30, 2005, and incorporated
    herein by reference.(4)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated October 18, 2006, filed with the SEC on
    October 24, 2006, and incorporated herein by reference.(5)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated April 30, 2007, filed with the SEC on May 4,
    2007, and incorporated herein by reference.(6)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated June 1, 2007, filed with the SEC on June 6,
    2007, and incorporated herein by reference.(7)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated June 25, 2008, filed with the SEC on June 30,
    2008, and incorporated herein by reference.(8)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated June 25, 2008, filed with the SEC on June 30,
    2008, and incorporated herein by reference.(9)
    
    Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended June 30, 2007, filed with the
    SEC on August 9, 2007, and incorporated herein by reference.(10)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated June 16, 2006, filed with the SEC on June 19,
    2006, and incorporated herein by reference.(11)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated March 15, 2007, filed with the SEC on March 21,
    2007, and incorporated herein by reference.(12)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated November 20, 2007, filed with the SEC on
    November 23, 2007, and incorporated herein by reference. 136




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##### Table of Contents



(13)
    
    Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended June 30, 2008, filed with the
    SEC on August 7, 2008.(14)
    
    Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2006, filed with
    the SEC on November 9, 2006, and incorporated herein by
    reference.(15)
    
    Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended June 30, 2006, filed with the
    SEC on August 8, 2006, and incorporated herein by reference.(16)
    
    Filed as an exhibit to Leaps Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2007, filed with the
    SEC on May 10, 2007, and incorporated herein by reference.(17)
    
    Filed as an exhibit to Leaps Registration Statement on
    Form S-4
    (File
    No. 333-149937),
    filed with the SEC on March 28, 2008, and incorporated
    herein by reference.(18)
    
    Filed as an exhibit to Leaps Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007, filed with the
    SEC on February 29, 2008, and incorporated herein by
    reference.(19)
    
    Filed as an exhibit to Leaps Registration Statement on
    Form 10, as amended (File
    No. 0-29752),
    filed with the SEC on August 21, 1998 and incorporated
    herein by reference.(20)
    
    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.(21)
    
    Filed as an exhibit to Leaps Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005, filed with the
    SEC on March 27, 2006, and incorporated herein by reference.(22)
    
    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.(23)
    
    Filed as an exhibit to Leaps Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2006, filed with the
    SEC on March 1, 2007, and incorporated herein by reference.(24)
    
    Filed as an exhibit to Leaps Current Report on
    Form 8-K,
    dated May 18, 2006, filed with the SEC on June 6,
    2006, and incorporated herein by reference.(25)
    
    Filed as Appendix B to Leaps Definitive Proxy
    Statement filed with the SEC on April 6, 2007, and
    incorporated herein by reference. 137




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##### Table of Contents



SIGNATURES
       By:
    /s/  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)

February 27, 2009/s/  Walter
    Z. BergerWalter
    Z. Berger

Executive Vice President and Chief Financial Officer (Principal
    Financial Officer)

February 27, 2009/s/  Jeffrey
    E. NachborJeffrey
    E. Nachbor

Senior Vice President and Chief Accounting Officer (Principal
    Accounting Officer)

February 27, 2009/s/  John
    D. Harkey, Jr.John
    D. Harkey, Jr.

Director

February 27, 2009/s/  Robert
    V. LaPentaRobert
    V. LaPenta

Director

February 27, 2009/s/  Mark
    H. Rachesky, M.D.Mark
    H. Rachesky, M.D.

Chairman of the Board and Director

February 27, 2009/s/  Michael
    B. TargoffMichael
    B. Targoff

Director

February 27, 2009  138