##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)




| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| | þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2006


OR




| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.

For the transition period from

to
.


Commission File Number 0-29752


Leap Wireless International, Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 33-0811062                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|10307 Pacific Center Court, San Diego, CA                          |  | 92121                                   
|(Address of principal executive offices)                           |  | (Zip Code)                              

(858) 882-6000


(Registrants telephone number, including area code)


Not applicable


(Former name, former address and former fiscal year, if
changed since last reported)


þ o


12b-2


þ o o


12b-2 o þ


þ o












---



##### 










LEAP WIRELESS INTERNATIONAL, INC.


QUARTERLY REPORT ON
FORM 10-Q


For the Quarter Ended June 30, 2006


TABLE OF CONTENTS


|                                   |  |                                                                                           |  |      |    |  |  | 
|---------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|                                   |  |                                                                                           |  | Page |   
|                                   |  |                                                                                           |  |      |   
|PART I  FINANCIAL
    INFORMATION
|Item 1.                            |  | Financial Statements                                                                      |  |      | 1  | 
|Item 2.                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |      | 19 | 
|Item 3.                            |  | Quantitative and Qualitative Disclosures
    About Market Risk                            |  |      | 33 | 
|Item 4.                            |  | Controls and Procedures                                                                   |  |      | 33 | 
|                                  
|PART II  OTHER
    INFORMATION   
|Item 1.                            |  | Legal Proceedings                                                                         |  |      | 36 | 
|Item 1A.                           |  | Risk Factors                                                                              |  |      | 36 | 
|Item 2.                            |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                           |  |      | 50 | 
|Item 3.                            |  | Defaults Upon Senior Securities                                                           |  |      | 50 | 
|Item 4.                            |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 50 | 
|Item 5.                            |  | Other Information                                                                         |  |      | 51 | 
|Item 6.                            |  | Exhibits                                                                                  |  |      | 51 | 
|EXHIBIT 10.15                     
|EXHIBIT 31.1                      
|EXHIBIT 31.2                      
|EXHIBIT 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, |  
|                                                             |                                                                                                                                                                                          | 2006                                       |         |           | 2005         |  
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             |                                                                                                                                                                                          | (Unaudited)                                |         |           |             
|Assets                                                       |                                                                                                                                                                                          |                                            |         |           |              |   |         |          
|Cash and cash equivalents                                    |                                                                                                                                                                                          | $                                          | 553,038 |           |              | $ | 293,073 |          
|Short-term investments                                       |                                                                                                                                                                                          |                                            | 57,382  |           |              |   | 90,981  |          
|Restricted cash, cash equivalents and short-term investments |                                                                                                                                                                                          |                                            | 9,758   |           |              |   | 13,759  |          
|Inventories                                                  |                                                                                                                                                                                          |                                            | 63,820  |           |              |   | 37,320  |          
|Other current assets                                         |                                                                                                                                                                                          |                                            | 40,545  |           |              |   | 29,237  |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             | Total current assets                                                                                                                                                                     |                                            |         | 724,543   |              |   |         | 464,370   |          
|Property and equipment, net                                  |                                                                                                                                                                                          |                                            | 780,852 |           |              |   | 621,946 |          
|Wireless licenses                                            |                                                                                                                                                                                          |                                            | 795,046 |           |              |   | 821,288 |          
|Assets held for sale (Note 7)                                |                                                                                                                                                                                          |                                            | 38,658  |           |              |   | 15,145  |          
|Goodwill                                                     |                                                                                                                                                                                          |                                            | 431,896 |           |              |   | 431,896 |          
|Other intangible assets, net                                 |                                                                                                                                                                                          |                                            | 96,690  |           |              |   | 113,554 |          
|Other assets                                                 |                                                                                                                                                                                          |                                            | 35,852  |           |              |   | 38,119  |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             | Total assets                                                                                                                                                                             |                                            | $       | 2,903,537 |              |   | $       | 2,506,318 |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                            
|Liabilities and Stockholders Equity                         |                                                                                                                                                                                          |                                            |         |           |              |   |         |          
|Accounts payable and accrued liabilities                     |                                                                                                                                                                                          | $                                          | 210,274 |           |              | $ | 167,770 |          
|Current maturities of long-term debt (Note 4)                |                                                                                                                                                                                          |                                            | 9,000   |           |              |   | 6,111   |          
|Other current liabilities                                    |                                                                                                                                                                                          |                                            | 53,007  |           |              |   | 49,627  |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             | Total current liabilities                                                                                                                                                                |                                            |         | 272,281   |              |   |         | 223,508   |          
|Long-term debt (Note 4)                                      |                                                                                                                                                                                          |                                            | 891,000 |           |              |   | 588,333 |          
|Deferred tax liabilities                                     |                                                                                                                                                                                          |                                            | 141,935 |           |              |   | 141,935 |          
|Other long-term liabilities                                  |                                                                                                                                                                                          |                                            | 41,837  |           |              |   | 36,424  |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             | Total liabilities                                                                                                                                                                        |                                            |         | 1,347,053 |              |   |         | 990,200   |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|Minority interest                                            |                                                                                                                                                                                          |                                            | 4,151   |           |              |   | 1,761   |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|Commitments and contingencies (Notes 4 and 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, 61,256,800 and 61,202,806 shares
    issued and outstanding at June 30, 2006 and
    December 31, 2005, respectively |                                            |         | 6         |              |   |         | 6         |          
|                                                             | Additional paid-in capital                                                                                                                                                               |                                            |         | 1,500,154 |              |   |         | 1,490,638 |          
|                                                             | Retained earnings                                                                                                                                                                        |                                            |         | 46,809    |              |   |         | 21,575    |          
|                                                             | Accumulated other comprehensive income                                                                                                                                                   |                                            |         | 5,364     |              |   |         | 2,138     |          
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             |                                                                                                                                                                                          | Total stockholders equity                 |         |           | 1,552,333    |   |         |           | 1,514,357 | 
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  
|                                                             |                                                                                                                                                                                          | Total liabilities and stockholders equity |         | $         | 2,903,537    |   |         | $         | 2,506,318 | 
|                                                             |                                                                                                                                                                                          |                                            |         |           |              |  



1



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)


(In thousands, except per share data)


|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |         |          |  
|---------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------------------- | ------ | ------- | ---------------- | - | ------ | ------- | -------- | - | ------- | -------- | -------- | - | ------- | ------- | -------- | -
|                                                     |                                                             | Three Months Ended                                                |        |         | Six Months Ended |  
|                                                     |                                                             | June 30,                                                          |        |         | June 30,         |  
|                                                     |                                                             |                                                                   |        |         |                  |  
|                                                     |                                                             | 2006                                                              |        |         | 2005             |   |        | 2006    |          |   | 2005    |         
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Revenues:                                            |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |        
|                                                     | Service revenues                                            |                                                                   | $      | 230,786 |                  |   | $      | 189,704 |          |   | $       | 446,626  |          |   | $       | 375,685 |         
|                                                     | Equipment revenues                                          |                                                                   |        | 37,068  |                  |   |        | 37,125  |          |   |         | 87,916   |          |   |         | 79,514  |         
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     |                                                             | Total revenues                                                    |        |         | 267,854          |   |        |         | 226,829  |   |         |          | 534,542  |   |         |         | 455,199  |  
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Operating expenses:                                  |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |        
|                                                     | Cost of service (exclusive of items shown separately below) |                                                                   |        | (60,255 | )                |   |        | (49,608 | )        |   |         | (115,459 | )        |   |         | (99,805 | )       
|                                                     | Cost of equipment                                           |                                                                   |        | (52,081 | )                |   |        | (42,799 | )        |   |         | (110,967 | )        |   |         | (91,977 | )       
|                                                     | Selling and marketing                                       |                                                                   |        | (35,942 | )                |   |        | (24,810 | )        |   |         | (65,044  | )        |   |         | (47,805 | )       
|                                                     | General and administrative                                  |                                                                   |        | (46,576 | )                |   |        | (42,423 | )        |   |         | (96,158  | )        |   |         | (78,458 | )       
|                                                     | Depreciation and amortization                               |                                                                   |        | (53,337 | )                |   |        | (47,281 | )        |   |         | (107,373 | )        |   |         | (95,385 | )       
|                                                     | Impairment of indefinite-lived intangible assets            |                                                                   |        | (3,211  | )                |   |        | (11,354 | )        |   |         | (3,211   | )        |   |         | (11,354 | )       
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     |                                                             | Total operating expenses                                          |        |         | (251,402         | ) |        |         | (218,275 | ) |         |          | (498,212 | ) |         |         | (424,784 | )
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     | Operating income                                            |                                                                   |        | 16,452  |                  |   |        | 8,554   |          |   |         | 36,330   |          |   |         | 30,415  |         
|Minority interest in loss of consolidated subsidiary |                                                             |                                                                   | (134   | )       |                  |   |       |         |          |   | (209    | )        |          |   |        |        
|Interest income                                      |                                                             |                                                                   | 5,533  |         |                  |   | 1,176  |         |          |   | 9,727   |          |          |   | 3,079   |        
|Interest expense                                     |                                                             |                                                                   | (8,423 | )       |                  |   | (7,566 | )       |          |   | (15,854 | )        |          |   | (16,689 | )      
|Other income (expense), net                          |                                                             |                                                                   | (5,918 | )       |                  |   | (39    | )       |          |   | (5,383  | )        |          |   | (1,325  | )      
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Income before income taxes                           |                                                             |                                                                   | 7,510  |         |                  |   | 2,125  |         |          |   | 24,611  |          |          |   | 15,480  |        
|Income taxes                                         |                                                             |                                                                   |       |         |                  |   | (1,022 | )       |          |   |        |          |          |   | (6,861  | )      
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     |                                                             | Income before cumulative effect of change in accounting principle |        |         | 7,510            |   |        |         | 1,103    |   |         |          | 24,611   |   |         |         | 8,619    |  
|Cumulative effect of change in accounting principle  |                                                             |                                                                   |       |         |                  |   |       |         |          |   | 623     |          |          |   |        |        
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     |                                                             | Net income                                                        |        | $       | 7,510            |   |        | $       | 1,103    |   |         | $        | 25,234   |   |         | $       | 8,619    |  
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Basic net income per share:                          |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |        
|                                                     |                                                             | Income before cumulative effect of change in accounting principle |        | $       | 0.12             |   |        | $       | 0.02     |   |         | $        | 0.41     |   |         | $       | 0.14     |  
|                                                     |                                                             | Cumulative effect of change in accounting principle               |        |         |                 |   |        |         |         |   |         |          | 0.01     |   |         |         |         |  
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Basic net income per share                           |                                                             | $                                                                 | 0.12   |         |                  | $ | 0.02   |         |          | $ | 0.42    |          |          | $ | 0.14    |        
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Diluted net income per share:                        |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |        
|                                                     |                                                             | Income before cumulative effect of change in accounting principle |        | $       | 0.12             |   |        | $       | 0.02     |   |         | $        | 0.40     |   |         | $       | 0.14     |  
|                                                     |                                                             | Cumulative effect of change in accounting principle               |        |         |                 |   |        |         |         |   |         |          | 0.01     |   |         |         |         |  
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Diluted net income per share                         |                                                             | $                                                                 | 0.12   |         |                  | $ | 0.02   |         |          | $ | 0.41    |          |          | $ | 0.14    |        
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|Shares used in per share calculations:               |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |          |          |   |         |        
|                                                     | Basic                                                       |                                                                   |        | 60,282  |                  |   |        | 60,030  |          |   |         | 60,282   |          |   |         | 60,015  |         
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         
|                                                     | Diluted                                                     |                                                                   |        | 61,757  |                  |   |        | 60,242  |          |   |         | 61,651   |          |   |         | 60,234  |         
|                                                     |                                                             |                                                                   |        |         |                  |   |        |         |          |   |         |         



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


(In thousands)


|                                                     |                                                                   |                                           |         |          |          |   |         |          |          |  
|---------------------------------------------------- | ----------------------------------------------------------------- | ----------------------------------------- | ------- | -------- | -------- | - | ------- | -------- | -------- | -
|                                                     |                                                                   | Six Months Ended                          |        
|                                                     |                                                                   | June 30,                                  |        
|                                                     |                                                                   |                                           |        
|                                                     |                                                                   | 2006                                      |         |          | 2005     |  
|                                                     |                                                                   |                                           |         |          |          |  
|Operating activities:                                |                                                                   |                                           |         |          |          |   |         |         
|                                                     |                                                                   | Net cash provided by operating activities |         | $        | 101,781  |   |         | $        | 108,536  |  
|                                                     |                                                                   |                                           |         |          |          |  
|Investing activities:                                |                                                                   |                                           |         |          |          |   |         |         
|                                                     | Purchases of property and equipment                               |                                           |         | (187,004 | )        |   |         | (45,498  | )       
|                                                     | Change in prepayments for purchases of property and equipment     |                                           |         | 5,683    |          |   |         |         |         
|                                                     | Purchases of and deposits for wireless licenses                   |                                           |         | (532     | )        |   |         | (239,168 | )       
|                                                     | Purchases of investments                                          |                                           |         | (88,535  | )        |   |         | (103,057 | )       
|                                                     | Sales and maturities of investments                               |                                           |         | 123,657  |          |   |         | 142,296  |         
|                                                     | Restricted cash, cash equivalents and short-term investments, net |                                           |         | (101     | )        |   |         | 326      |         
|                                                     |                                                                   |                                           |         |          |          |  
|                                                     |                                                                   | Net cash used in investing activities     |         |          | (146,832 | ) |         |          | (245,101 | )
|                                                     |                                                                   |                                           |         |          |          |  
|Financing activities:                                |                                                                   |                                           |         |          |          |   |         |         
|                                                     | Proceeds from long-term debt                                      |                                           |         | 900,000  |          |   |         | 500,000  |         
|                                                     | Repayment of long-term debt                                       |                                           |         | (594,444 | )        |   |         | (415,229 | )       
|                                                     | Minority interest                                                 |                                           |         | 2,222    |          |   |         |         |         
|                                                     | Proceeds from issuance of common stock                            |                                           |         | 725      |          |   |         |         |         
|                                                     | Payment of debt issuance costs                                    |                                           |         | (3,268   | )        |   |         | (6,951   | )       
|                                                     | Payment of fees related to forward equity sale                    |                                           |         | (219     | )        |   |         |         |         
|                                                     |                                                                   |                                           |         |          |          |  
|                                                     |                                                                   | Net cash provided by financing activities |         |          | 305,016  |   |         |          | 77,820   |  
|                                                     |                                                                   |                                           |         |          |          |  
|Net increase (decrease) in cash and cash equivalents |                                                                   |                                           | 259,965 |          |          |   | (58,745 | )       
|Cash and cash equivalents at beginning of period     |                                                                   |                                           | 293,073 |          |          |   | 141,141 |         
|                                                     |                                                                   |                                           |         |          |          |  
|Cash and cash equivalents at end of period           |                                                                   | $                                         | 553,038 |          |          | $ | 82,396  |         
|                                                     |                                                                   |                                           |         |          |          |  
|Supplementary disclosure of cash flow information:   |                                                                   |                                           |         |          |          |   |         |         
|                                                     |                                                                   | Cash paid for interest                    |         | $        | 23,641   |   |         | $        | 35,072   |  
|                                                     |                                                                   | Cash paid for income taxes                |         | $        | 218      |   |         | $        | 228      |  



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##### Table of Contents



LEAP WIRELESS INTERNATIONAL, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)




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

® tm






|        |                                                          
|------- | ---------------------------------------------------------
|Note 2. | Basis of Presentation and Significant Accounting Policies

Basis of Presentation


10-Q 10-K




Revenues and Cost of Revenues


month-to


4



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##### Table of Contents









Costs and Expenses




Cost of Service.


Cost of Equipment. lower-of


Selling and Marketing.


General and Administrative.


Property and Equipment




5



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##### Table of Contents







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

construction-in construction-in 13-1, construction-in




Impairment of Long-Lived Assets




Wireless Licenses




6



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##### Table of Contents



Goodwill and Other Intangible Assets




Impairment of Indefinite-Lived Intangible Assets






Basic and Diluted Earnings Per Share






|                                                                                |                             |                |        |     |                |  |        |      |  |  |        |     |  |  |        |     | 
|------------------------------------------------------------------------------- | --------------------------- | -------------- | ------ | --- | -------------- |  | ------ | ---- |  |  | ------ | --- |  |  | ------ | --- | 
|                                                                                |                             | Three Months   |        |     | Six Months     | 
|                                                                                |                             | Ended June 30, |        |     | Ended June 30, | 
|                                                                                |                             |                |        |     |                | 
|                                                                                |                             | 2006           |        |     | 2005           |  |        | 2006 |  |  | 2005   |    
|                                                                                |                             |                |        |     |                |  |        |      |  |  |        |    
|Weighted-average shares outstanding  basic net income
    per share            |                             |                | 60,282 |     |                |  | 60,030 |      |  |  | 60,282 |     |  |  | 60,015 |    
|Effect of dilutive securities:                                                  |                             |                |        |     |                |  |        |      |  |  |        |     |  |  |        |    
|                                                                                | Non-qualified stock options |                |        | 176 |                |  |        |     |  |  |        | 96  |  |  |        |    | 
|                                                                                | Restricted stock awards     |                |        | 926 |                |  |        | 1    |  |  |        | 913 |  |  |        |    | 
|                                                                                | Warrants                    |                |        | 373 |                |  |        | 211  |  |  |        | 360 |  |  |        | 219 | 
|                                                                                |                             |                |        |     |                |  |        |      |  |  |        |    
|Adjusted weighted-average shares outstanding  diluted
    net income per share |                             |                | 61,757 |     |                |  | 60,242 |      |  |  | 61,651 |     |  |  | 60,234 |    
|                                                                                |                             |                |        |     |                |  |        |      |  |  |        |    

7



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##### Table of Contents





Comprehensive Income




|                                                                 |                      |                |       |       |                |   |       |      |  |   |        |        |  |   |       |       | 
|---------------------------------------------------------------- | -------------------- | -------------- | ----- | ----- | -------------- | - | ----- | ---- |  | - | ------ | ------ |  | - | ----- | ----- | 
|                                                                 |                      | Three Months   |       |       | Six Months     |  
|                                                                 |                      | Ended June 30, |       |       | Ended June 30, |  
|                                                                 |                      |                |       |       |                |  
|                                                                 |                      | 2006           |       |       | 2005           |   |       | 2006 |  |   | 2005   |       
|                                                                 |                      |                |       |       |                |   |       |      |  |   |        |       
|Net income                                                       |                      | $              | 7,510 |       |                | $ | 1,103 |      |  | $ | 25,234 |        |  | $ | 8,619 |      
|Other comprehensive income:                                      |                      |                |       |       |                |   |       |      |  |   |        |        |  |   |       |      
|Net unrealized holding gains (losses) on investments, net of tax |                      |                | (25   | )     |                |   | 8     |      |  |   | (42    | )      |  |   | (38   | )    
|Unrealized gains (losses) on interest rate swaps, net of tax     |                      |                | 1,119 |       |                |   | (794  | )    |  |   | 3,268  |        |  |   | (794  | )    
|                                                                 |                      |                |       |       |                |   |       |      |  |   |        |       
|                                                                 | Comprehensive income |                | $     | 8,604 |                |   | $     | 317  |  |   | $      | 28,460 |  |   | $     | 7,787 | 
|                                                                 |                      |                |       |       |                |   |       |      |  |   |        |       



|                                                         |  |             |       |   |              |   |       |  
|-------------------------------------------------------- |  | ----------- | ----- | - | ------------ | - | ----- | -
|                                                         |  | June 30,    |       |   | December 31, |  
|                                                         |  | 2006        |       |   | 2005         |  
|                                                         |  |             |       |   |              |  
|                                                         |  | (Unaudited) |       |   |             
|Net unrealized holding losses on investments, net of tax |  | $           | (50   | ) |              | $ | (8    | )
|Unrealized gains on interest rate swaps, net of tax      |  |             | 5,414 |   |              |   | 2,146 |  
|                                                         |  |             |       |   |              |  
|Accumulated other comprehensive income                   |  | $           | 5,364 |   |              | $ | 2,138 |  
|                                                         |  |             |       |   |              |  

Share-Based Payments








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Share-Based Compensation Information under SFAS 123R






|                         |  |               |      |   |               |  |      |  
|------------------------ |  | ------------- | ---- | - | ------------- |  | ---- | -
|                         |  | Three Months  |      |   | Six Months    | 
|                         |  | Ended         |      |   | Ended         | 
|                         |  | June 30, 2006 |      |   | June 30, 2006 | 
|                         |  |               |      |   |               | 
|Expected volatility      |  |               | 47   | % |               |  | 48   | %
|Expected term (in years) |  |               | 6.5  |   |               |  | 6.5  |  
|Risk-free interest rate  |  |               | 5.02 | % |               |  | 4.74 | %
|Expected dividend yield  |  |               |     |   |               |  |     |  





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|                                                |                                              |               |       |       |               |   |       |       | 
|----------------------------------------------- | -------------------------------------------- | ------------- | ----- | ----- | ------------- | - | ----- | ----- | 
|                                                |                                              | Three Months  |       |       | Six Months    |  
|                                                |                                              | Ended         |       |       | Ended         |  
|                                                |                                              | June 30, 2006 |       |       | June 30, 2006 |  
|                                                |                                              |               |       |       |               |  
|Cost of service                                 |                                              | $             | 261   |       |               | $ | 519   |      
|Selling and marketing expenses                  |                                              |               | 473   |       |               |   | 800   |      
|General and administrative expenses             |                                              |               | 3,954 |       |               |   | 8,095 |      
|                                                |                                              |               |       |       |               |  
|                                                | Share-based compensation expense before tax  |               |       | 4,688 |               |   |       | 9,414 | 
|Related income tax benefit                      |                                              |               |      |       |               |   |      |      
|                                                |                                              |               |       |       |               |  
|                                                | Share-based compensation expense, net of tax |               | $     | 4,688 |               |   | $     | 9,414 | 
|                                                |                                              |               |       |       |               |  
|Net share-based compensation expense per share: |                                              |               |       |       |               |   |       |      
|                                                | Basic                                        |               | $     | 0.08  |               |   | $     | 0.16  | 
|                                                |                                              |               |       |       |               |  
|                                                | Diluted                                      |               | $     | 0.08  |               |   | $     | 0.15  | 
|                                                |                                              |               |       |       |               |  





|                                    |                                  |               |       |       | 
|----------------------------------- | -------------------------------- | ------------- | ----- | ----- | 
|                                    |                                  | Three and     |      
|                                    |                                  | Six Months    |      
|                                    |                                  | Ended         |      
|                                    |                                  | June 30, 2005 |      
|                                    |                                  |               |      
|Cost of service                     |                                  | $             | 797   |      
|Selling and marketing expenses      |                                  |               | 693   |      
|General and administrative expenses |                                  |               | 5,639 |      
|                                    |                                  |               |      
|                                    | Share-based compensation expense |               | $     | 7,129 | 
|                                    |                                  |               |      

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Pro Forma Information under SFAS 123 for Periods Prior
to Fiscal 2006




|                                     |                                                                  |               |       |        |               |   |       |         |  
|------------------------------------ | ---------------------------------------------------------------- | ------------- | ----- | ------ | ------------- | - | ----- | ------- | -
|                                     |                                                                  | Three Months  |       |        | Six Months    |  
|                                     |                                                                  | Ended         |       |        | Ended         |  
|                                     |                                                                  | June 30, 2005 |       |        | June 30, 2005 |  
|                                     |                                                                  |               |       |        |               |  
|As reported net income               |                                                                  | $             | 1,103 |        |               | $ | 8,619 |        
|                                     | Add back share-based compensation expense included in net income |               |       | 7,129  |               |   |       | 7,129   |  
|                                     | Less pro forma compensation expense, net of tax                  |               |       | (8,514 | )             |   |       | (10,040 | )
|                                     |                                                                  |               |       |        |               |  
|Pro forma net income (loss)          |                                                                  | $             | (282  | )      |               | $ | 5,708 |        
|                                     |                                                                  |               |       |        |               |  
|Basic net income (loss) per share:   |                                                                  |               |       |        |               |   |       |        
|                                     | As reported                                                      |               | $     | 0.02   |               |   | $     | 0.14    |  
|                                     |                                                                  |               |       |        |               |  
|                                     | Pro forma                                                        |               | $     | 0.00   |               |   | $     | 0.10    |  
|                                     |                                                                  |               |       |        |               |  
|Diluted net income (loss) per share: |                                                                  |               |       |        |               |   |       |        
|                                     | As reported                                                      |               | $     | 0.02   |               |   | $     | 0.14    |  
|                                     |                                                                  |               |       |        |               |  
|                                     | Pro forma                                                        |               | $     | 0.00   |               |   | $     | 0.09    |  
|                                     |                                                                  |               |       |        |               |  





|                         |  |               |      |   |               |  |      |  
|------------------------ |  | ------------- | ---- | - | ------------- |  | ---- | -
|                         |  | Three Months  |      |   | Six Months    | 
|                         |  | Ended         |      |   | Ended         | 
|                         |  | June 30, 2005 |      |   | June 30, 2005 | 
|                         |  |               |      |   |               | 
|Expected volatility      |  |               | 87   | % |               |  | 87   | %
|Expected term (in years) |  |               | 5.8  |   |               |  | 5.5  |  
|Risk-free interest rate  |  |               | 3.65 | % |               |  | 3.54 | %
|Expected dividend yield  |  |               |     |   |               |  |     |  

Recent Accounting Pronouncements




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|        |                                                        
|------- | -------------------------------------------------------
|Note 3. | Supplementary Balance Sheet Information (in thousands):

|                                          |                                                     |             |           |          |              |   |         |          |  
|----------------------------------------- | --------------------------------------------------- | ----------- | --------- | -------- | ------------ | - | ------- | -------- | -
|                                          |                                                     | June 30,    |           |          | December 31, |  
|                                          |                                                     | 2006        |           |          | 2005         |  
|                                          |                                                     |             |           |          |              |  
|                                          |                                                     | (Unaudited) |           |          |             
|Property and equipment, net:              |                                                     |             |           |          |              |   |         |         
|                                          | Network equipment                                   |             | $         | 819,045  |              |   | $       | 654,993  |  
|                                          | Computer equipment and other                        |             |           | 55,825   |              |   |         | 38,778   |  
|                                          | Construction-in-progress                            |             |           | 199,170  |              |   |         | 134,929  |  
|                                          |                                                     |             |           |          |              |  
|                                          |                                                     |             | 1,074,040 |          |              |   | 828,700 |         
|                                          | Accumulated depreciation                            |             |           | (293,188 | )            |   |         | (206,754 | )
|                                          |                                                     |             |           |          |              |  
|                                          |                                                     | $           | 780,852   |          |              | $ | 621,946 |         
|                                          |                                                     |             |           |          |              |  
|Accounts payable and accrued liabilities: |                                                     |             |           |          |              |   |         |         
|                                          | Trade accounts payable                              |             | $         | 146,501  |              |   | $       | 117,140  |  
|                                          | Accrued payroll and related benefits                |             |           | 17,939   |              |   |         | 13,185   |  
|                                          | Other accrued liabilities                           |             |           | 45,834   |              |   |         | 37,445   |  
|                                          |                                                     |             |           |          |              |  
|                                          |                                                     | $           | 210,274   |          |              | $ | 167,770 |         
|                                          |                                                     |             |           |          |              |  
|Other current liabilities:                |                                                     |             |           |          |              |   |         |         
|                                          | Accrued property taxes                              |             | $         | 7,871    |              |   | $       | 6,536    |  
|                                          | Sales, telecommunications and other tax liabilities |             |           | 12,437   |              |   |         | 15,745   |  
|                                          | Deferred revenues                                   |             |           | 27,210   |              |   |         | 21,391   |  
|                                          | Other                                               |             |           | 5,489    |              |   |         | 5,955    |  
|                                          |                                                     |             |           |          |              |  
|                                          |                                                     | $           | 53,007    |          |              | $ | 49,627  |         
|                                          |                                                     |             |           |          |              |  



|        |               
|------- | --------------
|Note 4. | Long-Term Debt







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|        |             
|------- | ------------
|Note 5. | Income Taxes





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year-to




|        |                             
|------- | ----------------------------
|Note 6. | Employee Stock Benefit Plans

Stock Option Plan






|                                 |                   |                |       |          |           |   |           |             |  |                |                 |  |  |   |        |  | 
|-------------------------------- | ----------------- | -------------- | ----- | -------- | --------- | - | --------- | ----------- |  | -------------- | --------------- |  |  | - | ------ |  | 
|                                 |                   |                |       | Weighted |           |   | Weighted  |             |  |               
|                                 |                   |                |       | Average  |           |   | Average   |             |  |               
|                                 |                   |                |       | Exercise |           |   | Remaining |             |  |               
|                                 |                   | Number of      |       |          | Price Per |   |           | Contractual |  |                | Aggregate       | 
|                                 |                   | Shares         |       |          | Share     |   |           | Term        |  |                | Intrinsic Value | 
|                                 |                   |                |       |          |           |   |           |             |  |                |                 | 
|                                 |                   | (In thousands) |       |          |           |   | (Years)   |             |  | (In thousands) |                
|Outstanding at December 31, 2005 |                   |                | 1,892 |          |           | $ | 28.94     |             |  |                |                 |  |  |   |        | 
|                                 | Options granted   |                |       | 408      |           |   |           | 42.78       |  |                |                 |  |  |   |        |  | 
|                                 | Options forfeited |                |       | (70      | )         |   |           | 30.23       |  |                |                 |  |  |   |        |  | 
|                                 | Options exercised |                |       |         |           |   |           |            |  |                |                 |  |  |   |        |  | 
|                                 |                   |                |       |          |           |   |           |             |  |                |                 | 
|Outstanding at June 30, 2006     |                   |                | 2,230 |          |           | $ | 31.44     |             |  |                | 9.02            |  |  | $ | 33,811 | 
|                                 |                   |                |       |          |           |   |           |             |  |                |                 | 
|Exercisable at June 30, 2006     |                   |                | 76    |          |           | $ | 26.50     |             |  |                | 8.70            |  |  | $ | 1,535  | 
|                                 |                   |                |       |          |           |   |           |             |  |                |                 | 



|                               |                  |                |     |            |            |   |       |       | 
|------------------------------ | ---------------- | -------------- | --- | ---------- | ---------- | - | ----- | ----- | 
|                               |                  |                |     | Weighted   |           
|                               |                  |                |     | Average    |           
|                               |                  |                |     | Grant Date |           
|                               |                  | Number of      |     |            | Fair Value |  
|                               |                  | Shares         |     |            | Per Share  |  
|                               |                  |                |     |            |            |  
|                               |                  | (In thousands) |     |            |           
|Nonvested at December 31, 2005 |                  |                | 895 |            |            | $ | 28.56 |      
|                               | Shares granted   |                |     | 79         |            |   |       | 43.25 | 
|                               | Shares forfeited |                |     | (31        | )          |   |       | 28.41 | 
|                               | Shares vested    |                |     |           |            |   |       |      | 
|                               |                  |                |     |            |            |  
|Nonvested at June 30, 2006     |                  |                | 943 |            |            | $ | 29.80 |      
|                               |                  |                |     |            |            |  



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|                  |  |                |    |          |           |   |                |           |          |  |           |  |  |   |       | 
|----------------- |  | -------------- | -- | -------- | --------- | - | -------------- | --------- | -------- |  | --------- |  |  | - | ----- | 
|                  |  | Exercisable    |    |          | Total     |  
|                  |  |                |    |          |           |  
|                  |  |                |    | Weighted |           |   |                |           | Weighted | 
|                  |  |                |    | Average  |           |   |                |           | Average  | 
|                  |  |                |    | Exercise |           |   |                |           | Exercise | 
|                  |  | Number of      |    |          | Price Per |   |                | Number of |          |  | Price Per | 
|Exercise Prices   |  | Shares         |    |          | Share     |   |                | Shares    |          |  | Share     | 
|                  |  |                |    |          |           |   |                |           |          |  |           | 
|                  |  | (In thousands) |    |          |           |   | (In thousands) |           |          | 
|Less than $35.00  |  |                | 76 |          |           | $ | 26.50          |           |          |  | 1,804     |  |  | $ | 28.81 | 
|Above $35.00      |  |                |   |          |           |   |               |           |          |  | 426       |  |  |   | 42.58 | 
|                  |  |                |    |          |           |   |                |           |          |  |           | 
|Total outstanding |  |                | 76 |          |           | $ | 26.50          |           |          |  | 2,230     |  |  | $ | 31.44 | 
|                  |  |                |    |          |           |   |                |           |          |  |           | 

Employee Stock Purchase Plan






|        |                                          
|------- | -----------------------------------------
|Note 7. | Significant Acquisitions and Dispositions

debtor-in






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|        |                              
|------- | -----------------------------
|Note 8. | Commitments and Contingencies



Improved Method for Providing
Wireless Communication Services and Network and System for
Delivering of Same System and Method for Providing Wireless
Communication Services,


16



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Improved Operations Method for
Providing Wireless Communication Services and Network and System
for Delivering Same








17



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|                        |       |   |         |         | 
|----------------------- | ----- | - | ------- | ------- | 
|Year Ended December 31: |       |   |         |        
|Remainder of 2006       |       | $ | 33,922  |        
|2007                    |       |   | 61,517  |        
|2008                    |       |   | 59,764  |        
|2009                    |       |   | 58,357  |        
|2010                    |       |   | 57,799  |        
|Thereafter              |       |   | 291,460 |        
|                        |       |   |        
|                        | Total |   | $       | 562,819 | 
|                        |       |   |        

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|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.

As used in this report, the terms we,
our, ours, and us refer to
Leap Wireless International, Inc., a Delaware corporation, and
its wholly owned subsidiaries, unless the context suggests
otherwise. Leap refers to Leap Wireless
International, Inc., and Cricket refers to Cricket
Communications, Inc. Unless otherwise specified, information
relating to population and potential customers, or POPs, is
based on 2006 population estimates provided by Claritas Inc.


10-K






| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to attract and retain customers in an extremely
    competitive marketplace;                                                                  
|
| |  | changes in economic conditions that could adversely affect the
    market for wireless services;                                                          
|
| |  | the impact of competitors initiatives;                                                                                                                   
|
| |  | our ability to successfully implement product offerings and
    execute market expansion plans;                                                           
|
| |  | our ability to attract, motivate and retain an experienced
    workforce;                                                                                 
|
| |  | our ability to comply with the covenants in our senior secured
    credit facilities 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.                                                                                    



Overview


Our Business. ® tm


19



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tm






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2005, we acquired four wireless licenses in the FCCs
    Auction #58 covering 11.3 million POPs and ANB 1
    License acquired nine licenses covering 10.2 million POPs.                                                                                                                                                                                                                                                                                    
|
| |  | In August 2005, we launched service in our newly acquired
    Fresno, California market to form a cluster with our existing
    Modesto and Visalia, California markets, which doubled our
    Central Valley network footprint to 2.4 million POPs.                                                                                                                                                                                                            
|
| |  | In March 2006, we entered into an agreement with a
    debtor-in-possession
    for the purchase of 13 wireless licenses in North Carolina and
    South Carolina for an aggregate purchase price of
    $31.8 million. Completion of this transaction is subject to
    customary closing conditions, including FCC approval and the
    receipt of an FCC order agreeing to extend certain build-out
    requirements with respect to certain of the licenses.
|
| |  | In July 2006, we acquired a 72% non-controlling membership
    interest in LCW Wireless, which holds a license for the
    Portland, Oregon market and to which we contributed, among other
    things, our existing Eugene and Salem, Oregon markets to create
    a new Oregon cluster of licenses covering 3.2 million POPs.                                                                                                                                 
|
| |  | In August 2006, we exchanged our wireless license in Grand
    Rapids, Michigan for a wireless license in Rochester, New York
    to form a new market cluster with our existing Buffalo and
    Syracuse markets in upstate New York. These three licenses cover
    3.1 million POPs.                                                                                                                                                                         
|
| |  | We, ANB 1 License and LCW Wireless have launched 11 markets in
    2006, and we currently expect to launch additional markets by
    the end of 2006.                                                                                                                                                                                                                                                                                                           



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Results of Operations




|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |       |      |  
|------------------- | ------------------------------------------------ | --------------------------- | ------ | ----------- | -------- |  | --- | ---- | --------- | - | -------- | ---------- | ------- | ------- | --- | ---- | ------- | - | ----- | ------ | ------ |  | ---- | ----- | ---- | -
|                    |                                                  | Three Months Ended June 30, |       
|                    |                                                  |                             |       
|                    |                                                  |                             |        | Change from |         
|                    |                                                  |                             |        | % of 2006   |          |  |     |      | % of 2005 |   |          | Prior Year |        
|                    |                                                  |                             |        | Service     |          |  |     |      | Service   |   |          |            |        
|                    |                                                  | 2006                        |        |             | Revenues |  |     | 2005 |           |   | Revenues |            |         | Dollars |     |      | Percent |  
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Revenues:           |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |      
|                    | Service revenues                                 |                             | $      | 230,786     |          |  |     |      |           |   | $        | 189,704    |         |         |     |      |         |   | $     | 41,082 |        |  |      | 21.7  | %   
|                    | Equipment revenues                               |                             |        | 37,068      |          |  |     |      |           |   |          | 37,125     |         |         |     |      |         |   |       | (57    | )      |  |      | (0.2  | )%  
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|                    |                                                  | Total revenues              |        |             | 267,854  |  |     |      |           |   |          |            | 226,829 |         |     |      |         |   |       |        | 41,025 |  |      |       | 18.1 | %
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Operating expenses: |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |      
|                    | Cost of service                                  |                             |        | 60,255      |          |  |     | 26.1 | %         |   |          | 49,608     |         |         |     | 26.2 | %       |   |       | 10,647 |        |  |      | 21.5  | %   
|                    | Cost of equipment                                |                             |        | 52,081      |          |  |     | 22.6 | %         |   |          | 42,799     |         |         |     | 22.6 | %       |   |       | 9,282  |        |  |      | 21.7  | %   
|                    | Selling and marketing                            |                             |        | 35,942      |          |  |     | 15.6 | %         |   |          | 24,810     |         |         |     | 13.1 | %       |   |       | 11,132 |        |  |      | 44.9  | %   
|                    | General and administrative                       |                             |        | 46,576      |          |  |     | 20.2 | %         |   |          | 42,423     |         |         |     | 22.4 | %       |   |       | 4,153  |        |  |      | 9.8   | %   
|                    | Depreciation and amortization                    |                             |        | 53,337      |          |  |     | 23.1 | %         |   |          | 47,281     |         |         |     | 24.9 | %       |   |       | 6,056  |        |  |      | 12.8  | %   
|                    | Impairment of indefinite-lived intangible assets |                             |        | 3,211       |          |  |     | 1.4  | %         |   |          | 11,354     |         |         |     | 6.0  | %       |   |       | (8,143 | )      |  |      | (71.7 | )%  
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|                    |                                                  | Total operating expenses    |        |             | 251,402  |  |     |      | 108.9     | % |          |            | 218,275 |         |     |      | 115.1   | % |       |        | 33,127 |  |      |       | 15.2 | %
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Operating income    |                                                  | $                           | 16,452 |             |          |  | 7.1 | %    |           | $ | 8,554    |            |         |         | 4.5 | %    |         | $ | 7,898 |        |        |  | 92.3 | %    
|                    |                                                  |                             |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  

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|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |       |      |  
|------------------- | ------------------------------------------------ | ------------------------- | ------ | ----------- | -------- |  | --- | ---- | --------- | - | -------- | ---------- | ------- | ------- | --- | ---- | ------- | - | ----- | ------ | ------ |  | ---- | ----- | ---- | -
|                    |                                                  | Six Months Ended June 30, |       
|                    |                                                  |                           |       
|                    |                                                  |                           |        | Change from |         
|                    |                                                  |                           |        | % of 2006   |          |  |     |      | % of 2005 |   |          | Prior Year |        
|                    |                                                  |                           |        | Service     |          |  |     |      | Service   |   |          |            |        
|                    |                                                  | 2006                      |        |             | Revenues |  |     | 2005 |           |   | Revenues |            |         | Dollars |     |      | Percent |  
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Revenues:           |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |      
|                    | Service revenues                                 |                           | $      | 446,626     |          |  |     |      |           |   | $        | 375,685    |         |         |     |      |         |   | $     | 70,941 |        |  |      | 18.9  | %   
|                    | Equipment revenues                               |                           |        | 87,916      |          |  |     |      |           |   |          | 79,514     |         |         |     |      |         |   |       | 8,402  |        |  |      | 10.6  | %   
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|                    |                                                  | Total revenues            |        |             | 534,542  |  |     |      |           |   |          |            | 455,199 |         |     |      |         |   |       |        | 79,343 |  |      |       | 17.4 | %
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Operating expenses: |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |   |       |        |        |  |      |      
|                    | Cost of service                                  |                           |        | 115,459     |          |  |     | 25.9 | %         |   |          | 99,805     |         |         |     | 26.6 | %       |   |       | 15,654 |        |  |      | 15.7  | %   
|                    | Cost of equipment                                |                           |        | 110,967     |          |  |     | 24.8 | %         |   |          | 91,977     |         |         |     | 24.5 | %       |   |       | 18,990 |        |  |      | 20.6  | %   
|                    | Selling and marketing                            |                           |        | 65,044      |          |  |     | 14.6 | %         |   |          | 47,805     |         |         |     | 12.7 | %       |   |       | 17,239 |        |  |      | 36.1  | %   
|                    | General and administrative                       |                           |        | 96,158      |          |  |     | 21.5 | %         |   |          | 78,458     |         |         |     | 20.9 | %       |   |       | 17,700 |        |  |      | 22.6  | %   
|                    | Depreciation and amortization                    |                           |        | 107,373     |          |  |     | 24.0 | %         |   |          | 95,385     |         |         |     | 25.4 | %       |   |       | 11,988 |        |  |      | 12.6  | %   
|                    | Impairment of indefinite-lived intangible assets |                           |        | 3,211       |          |  |     | 0.7  | %         |   |          | 11,354     |         |         |     | 3.0  | %       |   |       | (8,143 | )      |  |      | (71.7 | )%  
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|                    |                                                  | Total operating expenses  |        |             | 498,212  |  |     |      | 111.6     | % |          |            | 424,784 |         |     |      | 113.1   | % |       |        | 73,428 |  |      |       | 17.3 | %
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  
|Operating income    |                                                  | $                         | 36,330 |             |          |  | 8.1 | %    |           | $ | 30,415   |            |         |         | 8.1 | %    |         | $ | 5,915 |        |        |  | 19.4 | %    
|                    |                                                  |                           |        |             |          |  |     |      |           |   |          |            |         |         |     |      |         |  



|                                    |                                      |      |  |           |      |        |  |           |  |  |         |         |  |  |  |         |  
|----------------------------------- | ------------------------------------ | ---- |  | --------- | ---- | ------ |  | --------- |  |  | ------- | ------- |  |  |  | ------- | -
|                                    |                                      |      |  |           |      | Change | 
|                                    |                                      |      |  |           |      |        | 
|                                    |                                      | 2006 |  |           | 2005 |        |  | Amount    |  |  | Percent |        
|                                    |                                      |      |  |           |      |        |  |           |  |  |         |        
|For the Three Months Ended June 30: |                                      |      |  |           |      |        |  |           |  |  |         |         |  |  |  |        
|                                    | Gross customer additions             |      |  | 253,033   |      |        |  | 191,288   |  |  |         | 61,745  |  |  |  | 32.3    | %
|                                    | Net customer additions               |      |  | 57,683    |      |        |  | 2,736     |  |  |         | 54,947  |  |  |  | 2,008.3 | %
|                                    | Weighted average number of customers |      |  | 1,790,232 |      |        |  | 1,611,524 |  |  |         | 178,708 |  |  |  | 11.1    | %
|As of June 30:                      |                                      |      |  |           |      |        |  |           |  |  |         |         |  |  |  |        
|                                    | Total customers                      |      |  | 1,836,390 |      |        |  | 1,617,941 |  |  |         | 218,449 |  |  |  | 13.5    | %

|                                  |                                      |      |  |           |      |        |  |           |  |  |         |         |  |  |  |       |  
|--------------------------------- | ------------------------------------ | ---- |  | --------- | ---- | ------ |  | --------- |  |  | ------- | ------- |  |  |  | ----- | -
|                                  |                                      |      |  |           |      | Change | 
|                                  |                                      |      |  |           |      |        | 
|                                  |                                      | 2006 |  |           | 2005 |        |  | Amount    |  |  | Percent |        
|                                  |                                      |      |  |           |      |        |  |           |  |  |         |        
|For the Six Months Ended June 30: |                                      |      |  |           |      |        |  |           |  |  |         |         |  |  |  |      
|                                  | Gross customer additions             |      |  | 531,403   |      |        |  | 392,755   |  |  |         | 138,648 |  |  |  | 35.3  | %
|                                  | Net customer additions               |      |  | 168,092   |      |        |  | 48,311    |  |  |         | 119,781 |  |  |  | 247.9 | %
|                                  | Weighted average number of customers |      |  | 1,754,290 |      |        |  | 1,599,948 |  |  |         | 154,342 |  |  |  | 9.6   | %

Operating Items


Three Months Ended June 30, 2006 Compared to Three
Months Ended June 30, 2005








22



---



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Six Months Ended June 30, 2006 Compared to Six Months
Ended June 30, 2005








23



---



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Non-Operating Items




|                                                     |  |                             |        |   |      |   |        |        |  |   |        |  
|---------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | ------ |  | - | ------ | -
|                                                     |  | Three Months Ended June 30, |       
|                                                     |  |                             |       
|                                                     |  | 2006                        |        |   | 2005 |   |        | Change | 
|                                                     |  |                             |        |   |      |   |        |        | 
|Interest income                                      |  | $                           | 5,533  |   |      | $ | 1,176  |        |  | $ | 4,357  |  
|Interest expense                                     |  |                             | (8,423 | ) |      |   | (7,566 | )      |  |   | (857   | )
|Minority interest in loss of consolidated subsidiary |  |                             | (134   | ) |      |   |       |        |  |   | (134   | )
|Other income (expense), net                          |  |                             | (5,918 | ) |      |   | (39    | )      |  |   | (5,879 | )
|Income taxes                                         |  |                             |       |   |      |   | (1,022 | )      |  |   | 1,022  |  

|                                                     |  |                           |         |   |      |   |         |        |  |   |        |  
|---------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | ------ |  | - | ------ | -
|                                                     |  | Six Months Ended June 30, |        
|                                                     |  |                           |        
|                                                     |  | 2006                      |         |   | 2005 |   |         | Change | 
|                                                     |  |                           |         |   |      |   |         |        | 
|Interest income                                      |  | $                         | 9,727   |   |      | $ | 3,079   |        |  | $ | 6,648  |  
|Interest expense                                     |  |                           | (15,854 | ) |      |   | (16,689 | )      |  |   | 835    |  
|Minority interest in loss of consolidated subsidiary |  |                           | (209    | ) |      |   |        |        |  |   | (209   | )
|Other income (expense), net                          |  |                           | (5,384  | ) |      |   | (1,325  | )      |  |   | (4,059 | )
|Income taxes                                         |  |                           |        |   |      |   | (6,861  | )      |  |   | 6,861  |  

24



---



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Three and Six Months Ended June 30, 2006 Compared to
Three and Six Months Ended June 30, 2005








year-to






25



---



##### Table of Contents



Performance Measures


S-K


weighted-average




weighted-average


26



---



##### Table of Contents









|      |  |                |       |   |      |   |       |  
|----- |  | -------------- | ----- | - | ---- | - | ----- | -
|      |  | Three Months   |      
|      |  | Ended June 30, |      
|      |  |                |      
|      |  | 2006           |       |   | 2005 |  
|      |  |                |       |   |      |  
|ARPU  |  | $              | 42.97 |   |      | $ | 39.24 |  
|CPGA  |  | $              | 198   |   |      | $ | 138   |  
|CCU   |  | $              | 19.18 |   |      | $ | 18.43 |  
|Churn |  |                | 3.6   | % |      |   | 3.9   | %

Reconciliation of Non-GAAP Financial Measures


S-K




|                              |                                                                                       |                                             |         |         |        |   |         |         |        | 
|----------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | ------- | ------ | - | ------- | ------- | ------ | 
|                              |                                                                                       | Three Months Ended                          |        
|                              |                                                                                       | June 30,                                    |        
|                              |                                                                                       |                                             |        
|                              |                                                                                       | 2006                                        |         |         | 2005   |  
|                              |                                                                                       |                                             |         |         |        |  
|Selling and marketing expense |                                                                                       | $                                           | 35,942  |         |        | $ | 24,810  |        
|                              | Less share-based compensation expense included in selling and
    marketing expense   |                                             |         | (473    | )      |   |         | (693    | )     
|                              | Plus cost of equipment                                                                |                                             |         | 52,081  |        |   |         | 42,799  |       
|                              | Less equipment revenue                                                                |                                             |         | (37,068 | )      |   |         | (37,125 | )     
|                              | Less net loss on equipment transactions unrelated to initial
    customer acquisition |                                             |         | (412    | )      |   |         | (3,484  | )     
|                              |                                                                                       |                                             |         |         |        |  
|                              |                                                                                       | Total costs used in the calculation of CPGA |         | $       | 50,070 |   |         | $       | 26,307 | 
|Gross customer additions      |                                                                                       |                                             | 253,033 |         |        |   | 191,288 |        
|                              |                                                                                       |                                             |         |         |        |  
|CPGA                          |                                                                                       | $                                           | 198     |         |        | $ | 138     |        
|                              |                                                                                       |                                             |         |         |        |  

27



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##### Table of Contents





|                                                                                                             |                                            |                    |           |         |      |   |           |        | 
|------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------ | --------- | ------- | ---- | - | --------- | ------ | 
|                                                                                                             |                                            | Three Months Ended |          
|                                                                                                             |                                            | June 30,           |          
|                                                                                                             |                                            |                    |          
|                                                                                                             |                                            | 2006               |           |         | 2005 |  
|                                                                                                             |                                            |                    |           |         |      |  
|Cost of service                                                                                              |                                            | $                  | 60,255    |         |      | $ | 49,608    |       
|Plus general and administrative expense                                                                      |                                            |                    | 46,576    |         |      |   | 42,423    |       
|Less share-based compensation expense included in cost of
    service and general and administrative expense |                                            |                    | (4,215    | )       |      |   | (6,436    | )     
|Plus net loss on equipment transactions unrelated to initial
    customer acquisition                        |                                            |                    | 412       |         |      |   | 3,484     |       
|                                                                                                             |                                            |                    |           |         |      |  
|                                                                                                             | Total costs used in the calculation of CCU |                    | $         | 103,028 |      |   | $         | 89,079 | 
|Weighted-average number of customers                                                                         |                                            |                    | 1,790,232 |         |      |   | 1,611,524 |       
|                                                                                                             |                                            |                    |           |         |      |  
|CCU                                                                                                          |                                            | $                  | 19.18     |         |      | $ | 18.43     |       
|                                                                                                             |                                            |                    |           |         |      |  

Liquidity and Capital Resources


Overview








28



---



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Cash Flows








29



---



##### Table of Contents



Senior Secured Credit Facility












Capital Expenditures and Other Asset Acquisitions and
Dispositions


Capital Expenditures




30



---



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Auction #58 Properties and Build-Out




Arrangements with Denali






31



---



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Significant Acquisitions and Dispositions








debtor-in


Off-Balance Sheet Arrangements




Our Plans for Auction #66




debtor-in




32



---



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|        |                                                                
|------- | ---------------------------------------------------------------
|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




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


33



---



##### Table of Contents







Insufficient Staffing in the Accounting, Financial Reporting
and Tax Functions.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company hired a new vice president, chief accounting officer
    in May 2005. This individual is a certified public accountant
    with over 19 years of experience as an accounting
    professional, including over 14 years of public accounting
    experience with PricewaterhouseCoopers, LLP. He possesses a
    strong background in technical accounting and the application of
    generally accepted accounting principles in complex or
    non-routine transactions.
|
| |  | The Company has hired a number of other key accounting personnel
    since February 2005 that are appropriately qualified and
    experienced to identify and apply technical accounting
    literature, including several new directors and managers.                                                                                                                                                                                                                               
|
| |  | In June 2006, the Company hired a new director of tax to lead
    its tax function. This individual is a certified public
    accountant with over 19 years of experience as a tax
    professional, including over nine years with the tax practices
    of large public accounting firms. He possesses a strong
    background in interpreting and applying income tax accounting
    literature and preparing income tax provisions for public
    companies.                     
|
| |  | The Company has used experienced qualified consultants to assist
    management in addressing the application of generally accepted
    accounting principles in complex or non-routine transactions for
    the quarters ended March 31, 2006 and June 30, 2006
    and the year ended December 31, 2005, and will continue to
    use such consultants in the future, as needed, to supplement its
    existing staff.                                                             

10-Q




Errors in the Accounting for Income Taxes.


34



---



##### Table of Contents









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In June 2006, the Company hired a new director of tax to lead
    its tax function. This individual is a certified public
    accountant with over 19 years of experience as a tax
    professional, including over nine years with the tax practices
    of large public accounting firms. He possesses a strong
    background in interpreting and applying income tax accounting
    literature and preparing income tax provisions for public
    companies.
|
| |  | As part of its 2005 annual income tax provision, the Company
    improved its internal control over income tax accounting to
    establish detailed procedures for the preparation and review of
    the income tax provision, including review by the Companys
    chief accounting officer.                                                                                                                                                                  
|
| |  | The Company used experienced qualified consultants to assist
    management in interpreting and applying income tax accounting
    literature and preparing the Companys income tax provision
    for the quarters ended March 31, 2006 and June 30,
    2006 and the year ended December 31, 2005, and may continue
    to use such consultants in the future to obtain access to as
    much income tax accounting expertise as it needs.                    



(b) Changes in Internal Control over Financial
Reporting




35



---



##### Table of Contents






PART II


OTHER INFORMATION







|        |                   
|------- | ------------------
|Item 1. | Legal Proceedings.

10-K




2:06-cv-00240-TJW, Improved Method for Providing Wireless Communication
Services and Network and System for Delivering of Same System
and Method for Producing Wireless Communication
Services,


3-06CV1399-D, Improved Operations Method for
Providing Wireless Communication Services and Network and System
for Delivering Same









|         |              
|-------- | -------------
|Item 1A. | Risk Factors.

10-Q


36



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##### Table of Contents



Build-Out Build-Out


Risks Related to Our Business and Industry


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




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




If We Experience High Rates of Customer Turnover, Our Ability
to Remain Profitable Will Decrease.




37



---



##### 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.






38



---



##### Table of Contents









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






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




39



---



##### Table of Contents



10-K


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




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






40



---



##### Table of Contents







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




Our Indebtedness Could Adversely Affect Our Financial
Health.








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

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




41



---



##### Table of Contents









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




Covenants in Our Secured Credit Agreement and Other Credit
Agreements or Indentures that we may Enter Into in the Future
May Limit Our Ability to Operate Our Business.




10-K 10-Q


42



---



##### Table of Contents



10-K


Rises in Interest Rates Could Adversely Affect our Financial
Condition.




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.




43



---



##### Table of Contents









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




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




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




44



---



##### Table of Contents







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






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






45



---



##### Table of Contents







If Call Volume under Our Cricket and Jump Mobile Services
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.




Our Wireless Licenses are Subject to Renewal and Potential
Revocation in the Event that We Violate Applicable Laws.


10-year


46



---



##### Table of Contents





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


90-7, 90-7,






| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidation in the wireless industry allows or requires
    carriers to sell significant portions of their wireless spectrum
    holdings;
|
| |  | a sudden large sale of spectrum by one or more wireless
    providers occurs; or                                                            
|
| |  | market prices decline as a result of the sales prices in
    upcoming FCC auctions, including Auction #66.                                  



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




We May Incur Higher Than Anticipated Intercarrier
Compensation Costs.




47



---



##### Table of Contents





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




If We Experience High Rates of Credit Card Subscription or
Dealer Fraud, Our Ability to Become Profitable 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;                                                                                                                                
|
| |  | announcements of technological innovations, new services or
    service enhancements, strategic alliances or significant
    agreements by us or by our competitors;
|
| |  | recruitment or departure of key personnel;                                                                                                                          
|
| |  | changes in the estimates of our operating results or changes in
    recommendations by any securities analysts that elect to follow
    Leap common stock; and      
|
| |  | market conditions in our industry and the economy as a whole.                                                                                                       

The 16,860,077 Shares of Leap Common Stock Registered
for Resale By Our Shelf Registration Statement May Adversely
Affect The Market Price of Leaps Common Stock.




48



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##### Table of Contents





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.






10-K


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




49



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##### Table of Contents



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






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








|        |                                                                 
|------- | ----------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds.








|        |                                 
|------- | --------------------------------
|Item 3. | Defaults Upon Senior Securities.








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



|                       |  |     |            |  |          |  |           | 
|---------------------- |  | --- | ---------- |  | -------- |  | --------- | 
|                       |  | For |            |  | Withheld | 
|                       |  |     |            |  |          | 
|James D. Dondero       |  |     | 51,543,422 |  |          |  | 1,498,756 | 
|John D. Harkey, Jr.    |  |     | 52,920,628 |  |          |  | 121,550   | 
|S. Douglas Hutcheson   |  |     | 52,981,524 |  |          |  | 60,654    | 
|Robert V. LaPenta      |  |     | 52,982,433 |  |          |  | 59,745    | 
|Mark H. Rachesky, M.D. |  |     | 51,568,522 |  |          |  | 1,473,656 | 
|Michael B. Targoff     |  |     | 52,000,827 |  |          |  | 1,041,351 | 





|           |  |         |  |        
|---------- |  | ------- |  | -------
|For        |  | Against |  | Abstain
|           |  |         |  |        
|52,977,225 |  | 64,831  |  | 122    



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|        |                   
|------- | ------------------
|Item 5. | Other Information.








|        |          
|------- | ---------
|Item 6. | Exhibits.



| |                   
| | ------------------
| | Index to Exhibits:

|        |       |                        |  |                                                                                                                                                                                                                                                   
|------- | ----- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                       
|Number  |       | Description of Exhibit
|        |       |                       
|        | 10    | .4.5(1)               |  | Amendment No. 5 to Amended and Restated System Equipment
    Purchase Agreement, effective as of May 22, 2006, by and
    between Cricket Communications, Inc. and Nortel Networks, Inc.                                                          
|        | 10    | .8.5(2)                |  | Amendment No. 5, dated April 24, 2006, to the Credit
    Agreement, dated as of December 22, 2004, among Cricket
    Communications, Inc., Alaska Native Broadband 1 License, LLC,
    and Alaska Native Broadband 1, LLC                         
|        | 10    | .9.16#(3)              |  | Form of Restricted Stock Award Grant Notice and Restricted Stock
    Award Agreement (for Non-Employee Directors)                                                                                                                                 
|        | 10    | .11(4)                 |  | 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    | .11.1(4)               |  | 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    | .11.2(4)               |  | 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 (the Secured
    Parties)                                               
|        | 10    | .11.3(4)               |  | Amended and Restated Subsidiary Guaranty, dated June 16,
    2006, made by the Subsidiary Guarantors in favor of the Secured
    Parties                                                                                                          
|        | 10    | .15*                   |  | Credit Agreement, dated as of July 13, 2006, by and among
    Cricket Communications, Inc., Denali Spectrum License, LLC and
    Denali Spectrum, LLC                                                                                             
|        | 10    | .16#(5)                |  | 2006 Cricket Non-Sales Bonus Plan                                                                                                                                                                                                                 
|        | 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*** |                        |  | Certifications of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002                                                                                                           






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|*** | These certifications are being furnished solely to accompany
    this quarterly report pursuant to 18 U.S.C.
    § 1350, and are not being filed for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended, and are not to be incorporated by reference into any
    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 participate.                                                                                                                                                                                                                                                                                                                                       
|   
|(1) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    May 22, 2006, as filed with the SEC on August 1, 2006,
    and incorporated herein by reference.                                                                                                                                                                                                                                                                                            

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|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    April 24, 2006, as filed with the SEC on April 27,
    2006, and incorporated herein by reference.
|   
|(4) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    May 18, 2006, as filed with the SEC on June 6, 2006,
    and incorporated herein by reference.    
|   
|(4) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    June 16, 2006, as filed with the SEC on June 19, 2006,
    and incorporated herein by reference.  
|   
|(5) | Filed as an exhibit to Leaps Current Report on
    Form 8-K, dated
    July 25, 2006, as filed with the SEC on August 2,
    2006, and incorporated herein by reference. 

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SIGNATURES






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

|                     |  |                                                                                                                                                  
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|Date: August 4, 2006 |  | By: /s/ S. Douglas
    HutchesonS.
    Douglas Hutcheson
    Chief Executive Officer and President
    (Principal Executive Officer)             
|                    
|Date: August 4, 2006 |  | By: /s/ Dean M.
    LuvisaDean
    M. Luvisa
    Vice President, Finance and
    Acting Chief Financial Officer
    (Principal Financial Officer)

53