##### Table of Contents





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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 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

33-0811062(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)10307 Pacific Center Court, San Diego, CA(Address of principal executive
    offices)

92121(Zip Code)   (858) 882-6000
 (Registrants telephone
    number, including area code)
  Not Applicable
 (Former name, former address and
    former fiscal year, if changed since last report)
  þ o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
  þ o




---



##### 





LEAP
    WIRELESS INTERNATIONAL, INC.
  QUARTERLY
    REPORT ON
    FORM 10-Q
    For the Quarter Ended June 30, 2008
  TABLE OF
    CONTENTS
   
 PagePART I  FINANCIAL
    INFORMATIONItem 1.


Financial Statements


1Item 2.


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


35Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


59Item 4.


Controls and Procedures


59Item 4T.


Controls and Procedures


61PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


62Item 1A.


Risk Factors


65Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


84Item 3.


Defaults Upon Senior Securities


84Item 4.


Submission of Matters to a Vote of Security
    Holders


84Item 5.


Other Information


84Item 6.


Exhibits


85EXHIBIT 10.1EXHIBIT 10.2EXHIBIT 10.3EXHIBIT 10.4EXHIBIT 10.5EXHIBIT 10.6EXHIBIT 10.7EXHIBIT 10.8EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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##### Table of Contents



PART I



FINANCIAL
    INFORMATION  Item 1.
    Financial
    Statements.  LEAP
    WIRELESS INTERNATIONAL, INC.
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
    (In thousands, except share amounts)
  June 30,


December 31,2008


2007(Unaudited)AssetsCash and cash equivalents

$
646,165


$
433,337Short-term investments


288,202



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


4,474



15,550Inventories


100,609



65,208Other current assets


49,739



38,099Total current assets


1,089,189



731,427Property and equipment, net


1,541,923



1,316,657Wireless licenses


1,880,383



1,866,353Goodwill


432,731



425,782Other intangible assets, net


36,133



46,102Other assets


76,211



46,677Total assets

$
5,056,570


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

$
289,989


$
225,735Current maturities of long-term debt


12,000



10,500Other current liabilities


127,246



114,808Total current liabilities


429,235



351,043Long-term debt


2,573,136



2,033,902Deferred tax liabilities


204,293



182,835Other long-term liabilities


93,450



90,172Total liabilities


3,300,114



2,657,952Minority interests


53,412



50,724Commitments and contingencies (Note 8)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, 69,210,929 and 68,674,435 shares
    issued and outstanding at June 30, 2008 and
    December 31, 2007, respectively


7



7Additional paid-in capital


1,832,068



1,808,689Accumulated deficit


(119,912
)


(75,699
)Accumulated other comprehensive loss


(9,119
)


(8,675
)Total stockholders equity


1,703,044



1,724,322Total liabilities and stockholders equity

$
5,056,570


$
4,432,998    1




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited and in thousands, except per share data)
  Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007Revenues:Service revenues

$
417,143


$
347,253


$
816,072


$
668,944Equipment revenues


57,715



50,661



127,170



122,395Total revenues


474,858



397,914



943,242



791,339Operating expenses:Cost of service (exclusive of items shown separately below)


(118,857
)


(90,559
)


(230,027
)


(180,999
)Cost of equipment


(105,127
)


(90,818
)


(219,348
)


(213,483
)Selling and marketing


(74,276
)


(47,011
)


(132,376
)


(95,780
)General and administrative


(77,233
)


(66,407
)


(153,140
)


(131,641
)Depreciation and amortization


(86,167
)


(72,415
)


(168,806
)


(141,215
)Total operating expenses


(461,660
)


(367,210
)


(903,697
)


(763,118
)Gain on sale or disposal of assets


1,252







961



940Operating income


14,450



30,704



40,506



29,161Minority interests in consolidated subsidiaries


(1,865
)


673



(2,688
)


2,252Equity in net loss of investee


(295
)






(1,357
)


Interest income


2,586



7,134



7,367



12,419Interest expense


(30,401
)


(27,090
)


(63,758
)


(53,586
)Other expense, net


(307
)






(4,343
)


(637
)Income (loss) before income taxes


(15,832
)


11,421



(24,273
)


(10,391
)Income tax expense


(10,237
)


(1,783
)


(19,940
)


(4,195
)Net income (loss)

$
(26,069
)

$
9,638


$
(44,213
)

$
(14,586
)Earnings (loss) per share:Basic

$
(0.38
)

$
0.14


$
(0.65
)

$
(0.22
)Diluted

$
(0.38
)

$
0.14


$
(0.65
)

$
(0.22
)Shares used in per share calculations:Basic


67,991



67,124



67,963



66,998Diluted


67,991



68,800



67,963



66,998    2




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited and in thousands)
  Six Months EndedJune 30,2008


2007Operating activities:Net cash provided by operating activities

$
181,590


$
108,795Investing activities:Acquisition of business, net of cash acquired


(31,322
)


Purchases of property and equipment


(338,287
)


(239,413
)Change in prepayments for purchases of property and equipment


(5,644
)


11,187Purchases of and deposits for wireless licenses and spectrum
    clearing costs


(72,713
)


(2,361
)Return of deposit for wireless licenses


70,000



Proceeds from sale of wireless licenses and operating assets






9,500Purchases of investments


(297,784
)


(380,743
)Sales and maturities of investments


186,446



91,360Purchase of minority interest






(4,706
)Purchase of membership units


(1,033
)


(13,182
)Changes in restricted cash, cash equivalents and short-term
    investments, net


(1,309
)


834Net cash used in investing activities


(491,646
)


(527,524
)Financing activities:Proceeds from long-term debt


535,750



370,480Principal payments on capital lease obligations


(7,969
)


Repayment of long-term debt


(5,000
)


(4,500
)Payment of debt issuance costs


(6,443
)


(1,319
)Proceeds from issuance of common stock, net


6,546



7,588Net cash provided by financing activities


522,884



372,249Net increase (decrease) in cash and cash equivalents


212,828



(46,480
)Cash and cash equivalents at beginning of period


433,337



372,812Cash and cash equivalents at end of period

$
646,165


$
326,332Supplementary disclosure of cash flow information:Cash paid for interest

$
89,568


$
72,295Cash paid for income taxes

$
1,906


$
341    3




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##### Table of Contents



LEAP
    WIRELESS INTERNATIONAL, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)
  Note 1.
    The
    Company  ®
    Note 2.
    Basis of
    Presentation and Significant Accounting Policies  Basis
    of Presentation
  Form 10-Q
    Revenues
   4




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##### Table of Contents



No. 00-21, (EITF 00-21) EITF 00-21, EITF 00-21
      and/or
    Costs
    and Expenses
    Cost of Service.
  Cost of Equipment.
  Selling and Marketing.
  General and Administrative.
 5




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##### Table of Contents



Cash
    and Cash Equivalents
    Short-Term
    Investments
      Fair
    Value of Financial Instruments
    Property
    and Equipment
   6




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##### Table of Contents



DepreciableLifeNetwork equipment:Switches


10Switch power equipment


15Cell site equipment, and site acquisitions and 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
    Wireless
    Licenses
    and/or
 7




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##### Table of Contents



Derivative
    Instruments and Hedging Activities
          Investments
    in Other Entities
   8




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##### Table of Contents



Concentrations
      Share-Based
    Compensation
      Three Months


Six MonthsEnded June 30,


Ended June 30,2008


2007


2008


2007Cost of service

$
614


$
466


$
1,517


$
1,145Selling and marketing expenses


1,179



560



2,534



1,561General and administrative expenses


5,541



4,869



12,985



11,933Share-based compensation expense

$
7,334


$
5,895


$
17,036


$
14,639Share-based compensation expense per share:Basic

$
0.11


$
0.09


$
0.25


$
0.22Diluted

$
0.11


$
0.09


$
0.25


$
0.22   Income
    Taxes
   9




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##### Table of Contents



No. 90-7, (SOP 90-7),
    Comprehensive
    Income (Loss)
    Three Months


Six MonthsEnded June 30,


Ended June 30,2008


2007


2008


2007Net income (loss)

$
(26,069
)

$
9,638


$
(44,213
)

$
(14,586
)Other comprehensive income (loss):Net unrealized holding gains (losses) on investments, net of tax


715



16



806



(11
)Unrealized gains (losses) on interest rate swaps


5,642



130



(1,250
)


(1,064
)Comprehensive income (loss)

$
(19,712
)

$
9,784


$
(44,657
)

$
(15,661
)  10




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##### Table of Contents



June 30,


December 31,2008


2007Net unrealized holding losses on investments, net of tax

$
(651
)

$
(1,457
)Unrealized losses on interest rate swaps


(8,468
)


(7,218
)Accumulated other comprehensive loss

$
(9,119
)

$
(8,675
)   Recent
    Accounting Pronouncements
         11




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##### Table of Contents



Note 3.
    Supplementary
    Balance Sheet Information (in thousands):  June 30,


December 31,2008


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

$
20,431


$
21,158Prepaid expenses


28,349



16,076Other


959



865$
49,739


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

$
1,717,189


$
1,421,648Computer equipment and other


204,673



184,224Construction-in-progress


379,351



341,7422,301,213



1,947,614Accumulated depreciation


(759,290
)


(630,957
)$
1,541,923


$
1,316,657Accounts payable and accrued liabilities:Trade accounts payable

$
173,752


$
109,781Accrued payroll and related benefits


41,450



41,048Other accrued liabilities


74,787



74,906$
289,989


$
225,735Other current liabilities:Deferred service revenue(3)

$
52,035


$
45,387Deferred equipment revenue(4)


15,270



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


26,414



20,903Accrued interest


18,186



18,508Other


15,341



15,395$
127,246


$
114,808     (1)
    
    Accounts receivable consists primarily of amounts billed to
    third-party dealers for handsets and accessories.(2)
    
    As of June 30, 2008 and December 31, 2007,
    approximately $52.9 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 $9.6 million and $5.6 million as
    of June 30, 2008 and December 31, 2007, respectively.(3)
    
    Deferred service revenue consists primarily of cash received
    from customers in advance of their service period.(4)
    
    Deferred equipment revenue relates to handsets and accessories
    sold to third-party dealers.  Note 4.
    Basic and
    Diluted Earnings (Loss) Per Share   12




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##### Table of Contents



Note 5.
    Fair
    Value of Financial Instruments    Level 1

Quoted prices in active markets for identical assets or
    liabilities. The Company does not have Level 1 assets or
    liabilities as of June 30, 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 include its cash
    equivalents, its short-term investments in obligations of the
    U.S. government and investment grade fixed-income securities
    that are guaranteed by U.S. government agencies, 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
    assets include certain of its short-term investments in
    asset-backed commercial paper.     At Fair Value as of June 30, 2008Level 1


Level 2


Level 3


Total(In thousands)Assets:Cash equivalents

$



$
213,162


$



$
213,162Short-term investments






279,870



9,933



289,803Total

$



$
493,032


$
9,933


$
502,965Liabilities:Interest rate swaps

$



$
7,802


$



$
7,802Total

$



$
7,802


$



$
7,802  13




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##### Table of Contents



Beginning balance, December 31, 2007

$
16,200Total gains (losses) (realized/unrealized):Included in earnings

$
(4,925
)Included in other comprehensive income (loss)


933Purchases, issuances and settlements


(2,275
)Transfers in (out) of Level 3


Ending balance, June 30, 2008

$
9,933     Cash
    Equivalents and Short-Term Investments
      Interest
    Rate Swaps
    Long-Term
    Debt
   14




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##### Table of Contents



Note 6.
    Long-Term
    Debt    June 30,


December 31,2008


2007Term loans under senior secured credit facilities

$
921,500


$
926,500Unamortized deferred lender fees


(5,064
)


(1,898
)Senior notes


1,400,000



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


18,700



19,800Convertible senior notes


250,000



2,585,136



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


(12,000
)


(10,500
)$
2,573,136


$
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;
    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 15




---



##### Table of Contents



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).             16




---



##### Table of Contents



LCW
    Operations
    Senior
    Notes
  Senior
    Notes Due 2014
     17




---



##### Table of Contents



90-day 90-day
  Convertible
    Senior Notes Due 2014
   18




---



##### Table of Contents



90-day st
  Senior
    Notes Due 2015
   19




---



##### Table of Contents



90-day 90-day
 20




---



##### Table of Contents



Note 7.
    Significant
    Acquisitions and Dispositions      ValueTotal purchase price

$
31,780Tangible net assets acquired

$
7,277Finite-lived intangible assets acquired


7,512Indefinite-lived intangible assets acquired


10,042Goodwill


6,949Total assets acquired

$
31,780         Note 8.
    Commitments
    and Contingencies  Patent
    Litigation
   21




---



##### Table of Contents



22




---



##### Table of Contents



American
    Wireless Group
  and/or
 23




---



##### Table of Contents



and/or
    Securities
    Litigation
  and/or
   24




---



##### Table of Contents



Rule 10b-5, class-wide
    Other
    Litigation
    Spectrum
    Clearing Obligations
  and/or
  FCC
    Hurricane Katrina Order
  back-up
 25




---



##### Table of Contents



System
    Equipment Purchase Agreements
  and/or
  Outstanding
    Letters of Credit and Surety Bonds
      Note 9.
    Guarantor
    Financial Information       26




---



##### Table of Contents



Condensed
    Consolidating Balance Sheet as of June 30, 2008 (unaudited
    and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedAssetsCash and cash equivalents

$
20


$
610,551


$
134


$
35,460


$



$
646,165Short-term investments






278,269







9,933







288,202Restricted cash, cash equivalents and short-term investments


1,603



2,831







40







4,474Inventories






99,197



457



955







100,609Other current assets






45,671



2,509



1,559







49,739Total current assets


1,623



1,036,519



3,100



47,947







1,089,189Property and equipment, net


10



1,385,336



13,110



147,875



(4,408
)


1,541,923Investments in and advances to affiliates and consolidated
    subsidiaries


1,950,416



1,925,179



113,627



10,118



(3,999,340
)


Wireless licenses






18,533



1,533,615



328,235







1,880,383Assets held for sale






















Goodwill






428,499



4,232











432,731Other intangible assets, net






29,216



6,895



22







36,133Other assets


8,888



65,187







2,136







76,211Total assets

$
1,960,937


$
4,888,469


$
1,674,579


$
536,333


$
(4,003,748
)

$
5,056,570Liabilities and Stockholders EquityAccounts payable and accrued liabilities

$
359


$
259,983


$



$
29,647


$



$
289,989Current maturities of long-term debt






9,000







3,000







12,000Intercompany payables


7,534



366,649



11,537



7,909



(393,629
)


Other current liabilities






122,066



1,498



3,682







127,246Total current liabilities


7,893



757,698



13,035



44,238



(393,629
)


429,235Long-term debt


250,000



2,286,636







392,453



(355,953
)


2,573,136Deferred tax liabilities






23,930



180,363











204,293Other long-term liabilities






89,437



859



3,154







93,450Total liabilities


257,893



3,157,701



194,257



439,845



(749,582
)


3,300,114Minority interests






23,256











30,156



53,412Membership units subject to repurchase














39,813



(39,813
)


Stockholders equity


1,703,044



1,707,512



1,480,322



56,675



(3,244,509
)


1,703,044Total liabilities and stockholders equity

$
1,960,937


$
4,888,469


$
1,674,579


$
536,333


$
(4,003,748
)

$
5,056,570  27




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##### Table of Contents



Condensed
    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  28




---



##### Table of Contents



Condensed
    Consolidating Statement of Operations for the Three Months Ended
    June 30, 2008 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
399,335


$
5,304


$
12,523


$
(19
)

$
417,143Equipment revenues






56,547



172



996







57,715Other revenues










17,761







(17,761
)


Total revenues






455,882



23,237



13,519



(17,780
)


474,858Operating expenses:Cost of service (exclusive of items shown separately below)






(124,970
)


(2,879
)


(8,679
)


17,671



(118,857
)Cost of equipment






(101,779
)


(1,046
)


(2,302
)






(105,127
)Selling and marketing






(69,917
)


(366
)


(3,993
)






(74,276
)General and administrative


(1,422
)


(68,521
)


(827
)


(6,572
)


109



(77,233
)Depreciation and amortization


(8
)


(83,192
)


(875
)


(2,092
)






(86,167
)Total operating expenses


(1,430
)


(448,379
)


(5,993
)


(23,638
)


17,780



(461,660
)Gain (loss) on sale or disposal of assets






(22
)


1,274











1,252Operating income (loss)


(1,430
)


7,481



18,518



(10,119
)






14,450Minority interests in consolidated subsidiaries






(1,730
)










(135
)


(1,865
)Equity in net loss of consolidated subsidiaries


(25,134
)


(4,749
)










29,883



Equity in net loss of investee






(295
)














(295
)Interest income


409



13,525







58



(11,406
)


2,586Interest expense


(206
)


(35,236
)


(1
)


(8,411
)


13,453



(30,401
)Other income (expense), net


292



(599
)














(307
)Income (loss) before income taxes


(26,069
)


(21,603
)


18,517



(18,472
)


31,795



(15,832
)Income tax expense






(3,534
)


(6,703
)










(10,237
)Net income (loss)

$
(26,069
)

$
(25,137
)

$
11,814


$
(18,472
)

$
31,795


$
(26,069
)  29




---



##### Table of Contents



Condensed
    Consolidating Statement of Operations for the Six Months Ended
    June 30, 2008 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
786,233


$
5,304


$
24,554


$
(19
)

$
816,072Equipment revenues






124,897



172



2,101







127,170Other revenues










34,932







(34,932
)


Total revenues






911,130



40,408



26,655



(34,951
)


943,242Operating expenses:Cost of service (exclusive of items shown separately below)






(247,929
)


(2,879
)


(13,963
)


34,744



(230,027
)Cost of equipment






(213,190
)


(1,046
)


(5,112
)






(219,348
)Selling and marketing






(125,331
)


(366
)


(6,679
)






(132,376
)General and administrative


(2,821
)


(139,707
)


(1,074
)


(9,745
)


207



(153,140
)Depreciation and amortization


(19
)


(163,675
)


(875
)


(4,237
)






(168,806
)Total operating expenses


(2,840
)


(889,832
)


(6,240
)


(39,736
)


34,951



(903,697
)Gain (loss) on sale or disposal of assets






(313
)


1,274











961Operating income (loss)


(2,840
)


20,985



35,442



(13,081
)






40,506Minority interests in consolidated subsidiaries






(2,726
)










38



(2,688
)Equity in net loss of consolidated subsidiaries


(41,950
)


(5,457
)










47,407



Equity in net loss of investee






(1,357
)














(1,357
)Interest income


416



27,768







1,156



(21,973
)


7,367Interest expense


(206
)


(69,685
)


(1
)


(16,561
)


22,695



(63,758
)Other income (expense), net


367



(4,710
)














(4,343
)Income (loss) before income taxes


(44,213
)


(35,182
)


35,441



(28,486
)


48,167



(24,273
)Income tax expense






(6,771
)


(13,169
)










(19,940
)Net income (loss)

$
(44,213
)

$
(41,953
)

$
22,272


$
(28,486
)

$
48,167


$
(44,213
)  30




---



##### Table of Contents



Condensed
    Consolidating Statement of Operations for the Three Months Ended
    June 30, 2007 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
303,719


$
35,280


$
8,254


$



$
347,253Equipment revenues






59,978



3,108



1,280



(13,705
)


50,661Other revenues






13



13,593







(13,606
)


Total revenues






363,710



51,981



9,534



(27,311
)


397,914Operating expenses:Cost of service (exclusive of items shown separately below)






(87,749
)


(12,809
)


(3,594
)


13,593



(90,559
)Cost of equipment






(89,546
)


(11,595
)


(3,382
)


13,705



(90,818
)Selling and marketing






(37,970
)


(6,805
)


(2,236
)






(47,011
)General and administrative


(492
)


(55,084
)


(9,178
)


(1,666
)


13



(66,407
)Depreciation and amortization


(23
)


(64,259
)


(5,984
)


(2,149
)






(72,415
)Total operating expenses


(515
)


(334,608
)


(46,371
)


(13,027
)


27,311



(367,210
)Operating income (loss)


(515
)


29,102



5,610



(3,493
)






30,704Minority interests in consolidated subsidiaries






(369
)










1,042



673Equity in net income (loss) of consolidated subsidiaries


10,143



(20,006
)










9,863



Interest income


10



24,575



174



203



(17,828
)


7,134Interest expense






(26,696
)


(9,247
)


(8,387
)


17,240



(27,090
)Income (loss) before income taxes


9,638



6,606



(3,463
)


(11,677
)


10,317



11,421Income tax (expense) benefit






3,537



(5,320
)










(1,783
)Net income (loss)

$
9,638


$
10,143


$
(8,783
)

$
(11,677
)

$
10,317


$
9,638  31




---



##### Table of Contents



Condensed
    Consolidating Statement of Operations for the Six Months Ended
    June 30, 2007 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedRevenues:Service revenues

$



$
591,664


$
63,466


$
13,814


$



$
668,944Equipment revenues






139,425



7,620



2,776



(27,426
)


122,395Other revenues






26



26,621







(26,647
)


Total revenues






731,115



97,707



16,590



(54,073
)


791,339Operating expenses:Cost of service (exclusive of items shown separately below)






(175,798
)


(25,155
)


(6,667
)


26,621



(180,999
)Cost of equipment






(210,173
)


(22,492
)


(8,244
)


27,426



(213,483
)Selling and marketing


(8
)


(77,732
)


(13,402
)


(4,638
)






(95,780
)General and administrative


(813
)


(110,113
)


(17,892
)


(2,849
)


26



(131,641
)Depreciation and amortization


(23
)


(125,146
)


(11,990
)


(4,056
)






(141,215
)Total operating expenses


(844
)


(698,962
)


(90,931
)


(26,454
)


54,073



(763,118
)Net gain (loss) on sale of wireless licenses and disposal of
    operating assets






(311
)


1,251











940Operating income (loss)


(844
)


31,842



8,027



(9,864
)






29,161Minority interests in consolidated subsidiaries






(549
)










2,801



2,252Equity in net loss of consolidated subsidiaries


(13,762
)


(44,803
)










58,565



Interest income


20



45,754



350



579



(34,284
)


12,419Interest expense






(52,106
)


(17,578
)


(17,598
)


33,696



(53,586
)Other expense, net






(625
)


(12
)










(637
)Loss before income taxes


(14,586
)


(20,487
)


(9,213
)


(26,883
)


60,778



(10,391
)Income tax (expense) benefit






6,725



(10,920
)










(4,195
)Net loss

$
(14,586
)

$
(13,762
)

$
(20,133
)

$
(26,883
)

$
60,778


$
(14,586
)  32




---



##### Table of Contents



Condensed
    Consolidating Statement of Cash Flows for the Six Months Ended
    June 30, 2008 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


ConsolidatedOperating activities:Net cash provided by operating activities

$
1,007


$
158,494


$
6,366


$
15,723


$



$
181,590Investing activities:Acquisition of business, net of cash acquired






(31,322
)














(31,322
)Purchases of and changes in prepayments for property and
    equipment






(261,831
)


(3,572
)


(78,528
)






(343,931
)Return of deposits for wireless licenses






70,000















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






(70,000
)


(2,660
)


(53
)






(72,713
)Purchases of investments






(297,784
)














(297,784
)Sales and maturities of investments






184,729







1,717







186,446Investments in and advances to affiliates and consolidated
    subsidiaries


(6,546
)














6,546



Purchase of membership units






(1,033
)














(1,033
)Other






(1,654
)






345







(1,309
)Net cash used in investing activities


(6,546
)


(408,895
)


(6,232
)


(76,519
)


6,546



(491,646
)Financing activities:Proceeds from long-term debt


242,500



535,750







62,634



(305,134
)


535,750Issuance of related party debt


(242,500
)


(62,634
)










305,134



Principal payments on capital lease obligations






(7,969
)














(7,969
)Repayment of long-term debt






(4,500
)






(500
)






(5,000
)Payment of debt issuance costs


(1,049
)


(5,394
)














(6,443
)Capital contributions, net


6,546



6,546











(6,546
)


6,546Net cash provided by financing activities


5,497



461,799







62,134



(6,546
)


522,884Net increase (decrease) in cash and cash equivalents


(42
)


211,398



134



1,338







212,828Cash and cash equivalents at beginning of period


62



399,153







34,122







433,337Cash and cash equivalents at end of period

$
20


$
610,551


$
134


$
35,460


$



$
646,165  33




---



##### Table of Contents



Condensed
    Consolidating Statement of Cash Flows for the Six Months Ended
    June 30, 2007 (unaudited and in thousands):
  ConsolidatingGuarantor











andParent


Issuing


Guarantor


Non-Guarantor


EliminatingCompany


Subsidiary


Subsidiaries


Subsidiaries


Adjustments


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

$
(1,159
)

$
134,143


$
(4,514
)

$
(19,675
)

$



$
108,795Investing activities:Purchases of and changes in prepayments for property and
    equipment






(208,425
)


(7,770
)


(12,031
)






(228,226
)Purchases of and deposits for wireless licenses






(890
)


(1,663
)


192







(2,361
)Proceeds from sale of wireless licenses










9,500











9,500Purchases of investments






(380,743
)














(380,743
)Sales and maturities of investments






91,360















91,360Investments in and advances to affiliates and consolidated
    subsidiaries


(7,588
)


(4,706
)










7,588



(4,706
)Purchase of membership units






(13,182
)














(13,182
)Other


980



(2
)


(144
)










834Net cash used in investing activities


(6,608
)


(516,588
)


(77
)


(11,839
)


7,588



(527,524
)Financing activities:Proceeds from long-term debt






370,480



15,000



4,000



(19,000
)


370,480Issuance of related party debt






(19,000
)










19,000



Repayment of long-term debt






(4,500
)














(4,500
)Payment of debt issuance costs






(1,310
)






(9
)






(1,319
)Capital contributions, net


7,588



7,588











(7,588
)


7,588Net cash provided by financing activities


7,588



353,258



15,000



3,991



(7,588
)


372,249Net increase (decrease) in cash and cash equivalents


(179
)


(29,187
)


10,409



(27,523
)






(46,480
)Cash and cash equivalents at beginning of period


206



316,398



12,842



43,366







372,812Cash and cash equivalents at end of period

$
27


$
287,211


$
23,251


$
15,843


$



$
326,332  34




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  As used in this report, unless the context suggests
    otherwise, the terms we, our,
    ours, and us refer to Leap Wireless
    International, Inc., or Leap, and its subsidiaries, including
    Cricket Communications, Inc., or Cricket. Leap, Cricket and
    their subsidiaries are sometimes collectively referred to herein
    as the Company. Unless otherwise specified,
    information relating to population and potential customers, or
    POPs, is based on 2008 population estimates provided by Claritas
    Inc.
  Form 10-K
  Cautionary
    Statement Regarding Forward-Looking Statements
    
    our ability to attract and retain customers in an extremely
    competitive marketplace;
    changes in economic conditions, including interest rates,
    consumer credit conditions, unemployment 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 mobile broadband
    product offering and other strategic 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 II 
    Item 1A. Risk Factors below.   35




---



##### Table of Contents



Overview
  Company
    Overview
  ®
      and/or
   36




---



##### Table of Contents



®
    and/or
     37




---



##### Table of Contents



38




---



##### Table of Contents



Results
    of Operations
  Operating
    Items
    Three Months Ended June 30,% of 2008





% of 2007


Change fromService





Service


Prior Year2008


Revenues


2007


Revenues


Dollars


PercentRevenues:Service revenues

$
417,143






$
347,253






$
69,890



20.1
%Equipment revenues


57,715







50,661







7,054



13.9
%Total revenues


474,858







397,914







76,944



19.3
%Operating expenses:Cost of service


118,857



28.5
%


90,559



26.1
%


28,298



31.2
%Cost of equipment


105,127



25.2
%


90,818



26.2
%


14,309



15.8
%Selling and marketing


74,276



17.8
%


47,011



13.5
%


27,265



58.0
%General and administrative


77,233



18.5
%


66,407



19.1
%


10,826



16.3
%Depreciation and amortization


86,167



20.7
%


72,415



20.9
%


13,752



19.0
%Total operating expenses


461,660



110.7
%


367,210



105.7
%


94,450



25.7
%Gain on sale or disposal of assets


1,252



0.3
%






0.0
%


1,252



100.0
%Operating income

$
14,450



3.5
%

$
30,704



8.8
%

$
(16,254
)


(52.9
)%   Six Months Ended June 30,% of 2008





% of 2007


Change fromService





Service


Prior Year2008


Revenues


2007


Revenues


Dollars


PercentRevenues:Service revenues

$
816,072






$
668,944






$
147,128



22.0
%Equipment revenues


127,170







122,395







4,775



3.9
%Total revenues


943,242







791,339







151,903



19.2
%Operating expenses:Cost of service


230,027



28.2
%


180,999



27.1
%


49,028



27.1
%Cost of equipment


219,348



26.9
%


213,483



31.9
%


5,865



2.7
%Selling and marketing


132,376



16.2
%


95,780



14.3
%


36,596



38.2
%General and administrative


153,140



18.8
%


131,641



19.7
%


21,499



16.3
%Depreciation and amortization


168,806



20.7
%


141,215



21.1
%


27,591



19.5
%Total operating expenses


903,697



110.7
%


763,118



114.1
%


140,579



18.4
%Gain on sale or disposal of assets


961



0.1
%


940



0.1
%


21



2.2
%Operating income

$
40,506



5.0
%

$
29,161



4.4
%

$
11,345



38.9
%  39




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##### Table of Contents



ChangeFor the Three Months Ended June 30:

2008


2007


Amount


PercentGross customer additions


542,005



462,434



79,571



17.2
%Net customer additions(1)


171,171



126,791



44,380



35.0
%Weighted-average number of customers


3,162,028



2,586,900



575,128



22.2
%   ChangeFor the Six Months Ended June 30:

2008


2007


Amount


PercentGross customer additions


1,092,525



1,027,489



65,036



6.3
%Net customer additions(1)


401,233



445,137



(43,904
)


(9.9
)%Weighted average number of customers


3,059,252



2,490,030



569,222



22.9
%As of June 30:Total customers


3,305,251



2,674,963



630,288



23.6
%     (1)
    
    Net customer additions for the three and six months ended
    June 30, 2008 reflect the operations of Cricket markets and
    exclude customers in Hargray Wireless markets we acquired on
    April 1, 2008 in South Carolina and Georgia. We are
    currently upgrading the Hargray Wireless network we acquired in
    South Carolina and Georgia. Until we have completed the upgrades
    and introduced Cricket service in these markets, our net
    customer additions will not include customers in the Hargray
    Wireless markets.  Three
    and Six Months Ended June 30, 2008 Compared to Three and
    Six Months Ended June 30, 2007
  Service
    Revenues
      Equipment
    Revenues
     40




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##### Table of Contents



Cost of
    Service
  lower-cost
  lower-cost
  Cost of
    Equipment
      Selling
    and Marketing Expenses
     41




---



##### Table of Contents



General
    and Administrative Expenses
      Depreciation
    and Amortization
      Non-Operating
    Items
    Three Months Ended June 30,2008


2007


ChangeMinority interests in consolidated subsidiaries

$
(1,865
)

$
673


$
(2,538
)Equity in net loss of investee


(295
)






(295
)Interest income


2,586



7,134



(4,548
)Interest expense


(30,401
)


(27,090
)


(3,311
)Other expense, net


(307
)






(307
)Income tax expense


(10,237
)


(1,783
)


(8,454
)   Six Months Ended June 30,2008


2007


ChangeMinority interests in consolidated subsidiaries

$
(2,688
)

$
2,252


$
(4,940
)Equity in net loss of investee


(1,357
)






(1,357
)Interest income


7,367



12,419



(5,052
)Interest expense


(63,758
)


(53,586
)


(10,172
)Other expense, net


(4,343
)


(637
)


(3,706
)Income tax expense


(19,940
)


(4,195
)


(15,745
)  42




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##### Table of Contents



Three
    and Six Months Ended June 30, 2008 Compared to Three and
    Six Months Ended June 30, 2007
  Minority
    Interests in Consolidated Subsidiaries
    Equity in
    Net Loss of Investee
    Interest
    Income
      Interest
    Expense
      Other
    Expense, Net
   43




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##### Table of Contents



Income
    Tax Expense
          No. 90-7,
 44




---



##### Table of Contents



Performance
    Measures
  Regulation S-K
       45




---



##### Table of Contents



pay-in-advance
    Three Months EndedJune 30,2008


2007ARPU

$
43.97


$
44.75CPGA

$
205


$
182CCU

$
21.01


$
19.87Churn(1)


3.8
%


4.3
%     (1)
    Churn for the three months ended June 30, 2008 reflects the
    operations of Cricket markets for the period and excludes
    customers in Hargray Wireless markets we acquired on
    April 1, 2008 in South Carolina and Georgia. We are
    currently upgrading the Hargray Wireless networks we acquired in
    South Carolina and Georgia. Until we have completed the upgrades
    and introduced Cricket service in these markets, our churn
    metrics will not include customers in the Hargray Wireless
    markets.  Reconciliation
    of Non-GAAP Financial Measures
  Regulation S-K
 46




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##### Table of Contents



Three Months Ended June 30,2008


2007Selling and marketing expense

$
74,276


$
47,011Less share-based compensation expense included in selling and
    marketing expense


(1,179
)


(560
)Plus cost of equipment


105,127



90,818Less equipment revenue


(57,715
)


(50,661
)Less net loss on equipment transactions unrelated to initial
    customer acquisition


(9,389
)


(2,591
)Total costs used in the calculation of CPGA

$
111,120


$
84,017Gross customer additions


542,005



462,434CPGA

$
205


$
182     Three Months EndedJune 30,2008


2007Cost of service

$
118,857


$
90,559Plus general and administrative expense


77,233



66,407Less share-based compensation expense included in cost of
    service and general and administrative expense


(6,155
)


(5,335
)Plus net loss on equipment transactions unrelated to initial
    customer acquisition


9,389



2,591Total costs used in the calculation of CCU

$
199,324


$
154,222Weighted-average number of customers


3,162,028



2,586,900CCU

$
21.01


$
19.87   Liquidity
    and Capital Resources
  Overview
   47




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and/or and/or
     48




---



##### Table of Contents



Cash
    Flows
  Operating
    Activities
    Investing
    Activities
    
    During the six months ended June 30, 2008, we purchased
    Hargray Communications Groups wireless subsidiary, Hargray
    Wireless, LLC, or Hargray Wireless, for approximately
    $31.8 million.
    During the six months ended June 30, 2008, we made
    investment purchases of $297.8 million, offset by sales or
    maturities of investments of $186.4 million.
    During the six months ended June 30, 2008, we and our
    consolidated joint ventures purchased $338.3 million of
    property and equipment for the build-out of our new markets and
    the expansion and improvement of our existing markets. 49




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##### Table of Contents




    During the six months ended June 30, 2008, we deposited
    $70.0 million with the FCC in connection with our
    participation in Auction #73, all of which was returned to
    us in April 2008.  Financing
    Activities
    
    During the six months ended June 30, 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 $4.5 million on our $895.5 million senior
    secured term loan and a payment of $0.5 million on LCW
    Operations $40 million senior secured term loans.
    These note issuances were further offset by the payment of
    $6.4 million in debt issuance costs.
    During the six months ended June 30, 2008, made payments of
    $8.0 million on our capital lease obligations.
    During the six months ended June 30, 2008, we issued common
    stock upon the exercise of stock options held by our employees,
    resulting in aggregate net proceeds of $6.5 million.  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, or 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;
    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; 50




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##### Table of Contents




    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).           51




---



##### Table of Contents



LCW
    Operations
    Senior
    Notes
  Senior
    Notes Due 2014
   52




---



##### Table of Contents



90-day 90-day
 53




---



##### Table of Contents



Convertible
    Senior Notes Due 2014
        90-day st
 54




---



##### Table of Contents



Senior
    Notes Due 2015
           55




---



##### Table of Contents



90-day 90-day
  Fair
    Value of Financial Instruments
       56




---



##### Table of Contents



System
    Equipment Purchase Agreements
  and/or
  Capital
    Expenditures and Other Asset Acquisitions and
    Dispositions
  Capital
    Expenditures
      Auction
    #66 Properties and Build-Out Plans
   57




---



##### Table of Contents



Other
    Acquisitions and Dispositions
      Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
       58




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##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Interest Rate Risk.
    Hedging Policy.
  Item 4.
    Controls
    and Procedures.  (a)  Evaluation of Disclosure Controls and
    Procedures
    Rule 13a-15(b), Form 10-Q,
 59




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##### Table of Contents



Rule 13a-15(e)
  Form 10-Q
    (b)  Managements Remediation Initiatives
    
    During the fiscal quarter ended December 31, 2007, we
    performed a detailed review of our billing and revenue systems,
    and processes for recording revenue. We also began and continue
    to implement stronger account reconciliations and analyses
    surrounding our revenue recording processes which are designed
    to detect any material errors in the completeness and accuracy
    of the underlying data.
    We are designing and intend to implement 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.
    We intend to further improve 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 have hired and intend to hire additional personnel with the
    appropriate skills, training and experience in the areas of
    revenue accounting and assurance. We have conducted and will
    conduct further training of our accounting and finance personnel
    with respect to our significant accounting policies and
    procedures.    60




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##### Table of Contents



(c)  Changes in Internal Control over Financial
    Reporting
    Item 4T.
    Controls
    and Procedures.   61




---



##### Table of Contents



PART II



OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings.  Form 10-K
  Patent
    Litigation
     62




---



##### Table of Contents



63




---



##### Table of Contents



American
    Wireless Group
  and/or
  and/or
    Securities
    Litigation
   64




---



##### Table of Contents



and/or
  Rule 10b-5, class-wide
    Other
    Litigation
    Item 1A.
    Risk
    Factors.  Form 10-K
  
    the Risk Factor below entitled Our Significant
    Indebtedness Could Adversely Affect Our Financial Health and
    Prevent Us From Fulfilling Our Obligations, which has been
    updated to reflect the issuance of senior notes and convertible
    senior notes in June 2008;
    the Risk Factor below entitled Despite Current
    Indebtedness Levels, We May Incur Substantially More
    Indebtedness. This Could Further Increase the Risks Associated
    with Our Leverage, which has been updated to reflect the
    issuance of senior notes and convertible senior notes in June
    2008;
    the Risk Factor below entitled We May Be Unable to
    Refinance Our Indebtedness, which has been updated to
    reflect the issuance of senior notes and convertible senior
    notes in June 2008;
    the Risk Factor below entitled 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, which has been updated to
    reflect the issuance of senior notes and convertible senior
    notes in June 2008; 65




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##### Table of Contents




    the Risk Factor below entitled The Loss of Key Personnel
    and Difficulty Attracting and Retaining Qualified Personnel
    Could Harm Our Business, which has been updated to reflect
    changes to our senior management team; and
    the Risk Factor below entitled 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 Competitive Position, which has been updated
    to reflect risks related to usage of Cricket Wireless Internet
    Service, our mobile broadband service offering.  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
  Our
    Business Could Be Adversely Affected By General Economic
    Conditions; If We Experience Low Rates of Customer Acquisition
    or High Rates of Customer Turnover, Our Ability to Become
    Profitable Will Decrease.
   66




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##### Table of Contents



We Have
    Made Significant Investment, and Will Continue to Invest, in
    Joint Ventures That We Do Not Control.
      We Face
    Increasing Competition Which Could Have a Material Adverse
    Effect on Demand for the Cricket Service.
      and/or
  T-Mobile
 67




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##### Table of Contents



T-Mobile
  and/or
    Recent
    Disruptions in the Financial Markets Could Affect Our Ability to
    Obtain Debt or Equity Financing On Reasonable Terms (or At All),
    and Have Other Adverse Effects On Us.
    We May Be
    Unable to Obtain the Roaming Services We Need From Other
    Carriers to Remain Competitive.
   68




---



##### Table of Contents



We Have
    Restated Our Prior Consolidated Financial Statements, Which Has
    Led to Additional Risks and Uncertainties, Including Shareholder
    Litigation.
  Form 10-K,
  and/or
 69




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##### Table of Contents



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.
    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.
   70




---



##### Table of Contents



and/or
      If We Are
    Unable to Manage Our Planned Growth, Our Operations Could Be
    Adversely Impacted.
   71




---



##### Table of Contents



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, building out
    our network, acquisitions, strategic activities 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 senior secured
    credit facility bears interest at a variable rate.   72




---



##### Table of Contents



Despite
    Current Indebtedness Levels, We May Incur Substantially More
    Indebtedness. This Could Further Increase the Risks Associated
    With Our Leverage.
      To
    Service Our Indebtedness and Fund Our Working Capital and
    Capital Expenditures, We Will Require a Significant Amount of
    Cash. Our Ability to Generate Cash Depends on Many Factors
    Beyond Our Control.
    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; 73




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##### Table of Contents




    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.        Form 10-Q Form 10-K,
  Rises in
    Interest Rates Could Adversely Affect Our Financial
    Condition.
   74




---



##### Table of Contents



A Large
    Portion of Our Assets Consists of Goodwill and Other Intangible
    Assets.
    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.
     75




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##### Table of Contents



Risks
    Associated With Wireless Handsets Could Pose Product Liability,
    Health and Safety Risks That Could Adversely Affect Our
    Business.
          We Rely
    Heavily on Third Parties to Provide Specialized Services; a
    Failure by Such Parties to Provide the Agreed Upon Services
    Could Materially Adversely Affect Our Business, Results of
    Operations and Financial Condition.
   76




---



##### Table of Contents



System
    Failures Could Result in Higher Churn, Reduced Revenue and
    Increased Costs, and Could Harm Our Reputation.
      We May
    Not Be Successful in Protecting and Enforcing Our Intellectual
    Property Rights.
       77




---



##### Table of Contents



We and
    Our Suppliers May Be Subject to Claims of Infringement Regarding
    Telecommunications Technologies That Are Protected By Patents
    and Other Intellectual Property Rights.
      Regulation
    by Government Agencies May Increase Our Costs of Providing
    Service or Require Us to Change Our Services.
  back-up
   78




---



##### Table of Contents



non-U.S. citizens non-U.S. citizens
    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 Competitive Position.
    We May Be
    Unable to Acquire Additional Spectrum in the Future at a
    Reasonable Cost or on a Timely Basis.
   79




---



##### Table of Contents



Our
    Wireless Licenses are Subject to Renewal and May Be Revoked in
    the Event that We Violate Applicable Laws.
  10-year 15-year
  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.     80




---



##### Table of Contents



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.
      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 our intellectual
    property, securities or related litigation;
    the announcements and bidding of auctions for new spectrum;
    recruitment or departure of key personnel; 81




---



##### Table of Contents




    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.  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s Common Stock.
       82




---



##### Table of Contents



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s Common
    Stock.
      Provisions
    in Our Amended and Restated Certificate of Incorporation and
    Bylaws or Delaware Law, and Provisions in Our Credit Agreement
    and Indenture, Might Discourage, Delay or Prevent a Change in
    Control of Our Company or Changes in Our Management and,
    Therefore, Depress The Trading Price of Our Common
    Stock.
    
    require super-majority voting to amend some provisions in our
    amended and restated certificate of incorporation and bylaws;
    authorize the issuance of blank check preferred
    stock that our board of directors could issue to increase the
    number of outstanding shares to discourage a takeover attempt;
    prohibit stockholder action by written consent, and require that
    all stockholder actions be taken at a meeting of our
    stockholders;
    provide that the board of directors is expressly authorized to
    make, alter or repeal our bylaws; and
    establish advance notice requirements for nominations for
    elections to our board or for proposing matters that can be
    acted upon by stockholders at stockholder meetings.   83




---



##### Table of Contents



Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.  Form 8-K
  Item 3.
    Defaults
    Upon Senior Securities.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.      For


WithheldJohn D. Harkey, Jr.


52,714,883



5,705,089S. Douglas Hutcheson


56,108,520



2,311,452Robert V. LaPenta


52,942,028



5,477,944Mark H. Rachesky, M.D.


50,157,897



8,262,075Michael B. Targoff


45,564,211



12,855,761       For

Against

Abstentions58,231,635

57,958

2,618     Item 5.
    Other
    Information.   84




---



##### Table of Contents



Item 6.
    Exhibits.  Index to Exhibits:
  ExhibitNumber

Description of Exhibit4.1(1)

Indenture, dated as of June 25, 2008, between Leap Wireless
    International and Wells Fargo Bank, N.A., as trustee.4.2(1)

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.4.3(1)

Form of 4.50% Convertible Senior Notes of Leap Wireless
    International, Inc. due 2014 (attached as Exhibit A to the
    Indenture filed as Exhibit 4.1 hereto).4.4(2)

Indenture, dated as of June 25, 2008, between Cricket
    Communications, Inc., the Guarantors and Wells Fargo Bank, N.A.,
    as trustee.4.5(2)

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.4.6(2)

Form of 10% Senior Note of Cricket Communications, Inc. due
    2015 (attached as Exhibit A to the Indenture filed as
    Exhibit 4.4 hereto).10.1*

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.10.2*

Consent dated June 18, 2008, by Leap Wireless
    International, Inc. and the subsidiary guarantors party thereto.10.3*#

Employment Offer Letter dated April 7, 2008, between
    Cricket Communications, Inc. and Jeffrey C. Nachbor.10.4*#

Employment Offer Letter dated June 2, 2008, between Cricket
    Communications, Inc. and Walter Z. Berger.10.5*#

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.10.6*#

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.10.7*#

Form of Stock Option Grant Notice and Non-Qualified Stock Option
    Agreement (Revised May 2008).10.8*#

Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (Revised May 2008).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.     (1)
    
    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.(2)
    
    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.*
    
    Filed herewith.**
    
    This certification is being furnished solely to accompany this
    quarterly report pursuant to 18 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.#
    
    Management contract or compensatory plan or arrangement in which
    one or more executive officers or directors participates. 85




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##### Table of Contents



SIGNATURES
       By:
    /s/  S.
    Douglas Hutcheson        By:
    /s/  Walter
    Z. Berger    86