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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 OR
|- | --------------------------------------------------------------------------------------------------------------------------------------------



| ̈ | 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     333-39746



IWO HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



|Delaware                                                       |  | 14-1818487                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|901 Lakeshore Drive Lake Charles, LA     |  | 70601     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip code)



(337) 436-9000

(Registrants telephone number, including area code)



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



Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x     No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x    No ̈



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|                             |  |                                                                                       |  | Page
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|Part IFinancial Information |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Financial Statements                                                                  |  |     
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Balance Sheets                                                 |  | 3   
|                             |  | Condensed Consolidated Statements of Operations                                       |  | 4   
|                             |  | Condensed Consolidated Statements of Cash Flows                                       |  | 5   
|                             |  | Notes to Condensed Consolidated Financial Statements                                  |  | 6   
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 18  
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                               |  | 28  
|                             | 
|Part IIOther Information    |  |                                                                                      
|                             |  |                                                                                      
|Item 3.                      |  | Defaults in Senior Securities                                                         |  | 29  
|                             |  |                                                                                      
|Item 5.                      |  | Other Information                                                                     |  | 29  
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                      |  | 29  
|                             |  |                                                                                      
|Signatures                   |  |                                                                                       |  | 29  



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Part I    Financial Information

Item 1.    Financial Statements



IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                                                |  | September 30,2003 |          |   | December 31,2002 |  
|------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ---------------- | -
|                                                                                |  | (Unaudited)       |          |   | (Note 1)         |  
|Assets                                                                          |  |                   |          |   |                  |  
|Current assets:                                                                 |  |                   |          |   |                  |  
|Cash and cash equivalents                                                       |  | $                 | 27,636   |   |                  | $
|Restricted cash and US Treasury securities at amortized cost  held to maturity |  |                   | 19,294   |   |                  |  
|Subscriber receivables, net                                                     |  |                   | 12,436   |   |                  |  
|Inventory                                                                       |  |                   | 1,459    |   |                  |  
|Prepaid expenses and other assets                                               |  |                   | 7,107    |   |                  |  
|Receivables from related parties                                                |  |                   | 195      |   |                  |  
|                                                                                |  |                   |          |   |                  |  
|Total current assets                                                            |  |                   | 68,127   |   |                  |  
|                                                                                |  |                  
|Property and equipment, net                                                     |  |                   | 169,767  |   |                  |  
|Restricted cash                                                                 |  |                   |         |   |                  |  
|Intangible assets, net                                                          |  |                   | 33,111   |   |                  |  
|Note receivable                                                                 |  |                   | 177      |   |                  |  
|Other assets                                                                    |  |                   | 16,772   |   |                  |  
|                                                                                |  |                   |          |   |                  |  
|Total assets                                                                    |  | $                 | 287,954  |   |                  | $
|                                                                                |  |                   |          |   |                  |  
|Liabilities and Stockholders deficit                                           |  |                   |          |   |                  |  
|Current liabilities:                                                            |  |                   |          |   |                  |  
|Accounts payable                                                                |  | $                 | 11,333   |   |                  | $
|Accrued expenses                                                                |  |                   | 32,078   |   |                  |  
|Current maturities of long-term obligations in default                          |  |                   | 351,309  |   |                  |  
|                                                                                |  |                   |          |   |                  |  
|Total current liabilities                                                       |  |                   | 394,720  |   |                  |  
|                                                                                |  |                  
|Long term obligations in default                                                |  |                   |         |   |                  |  
|Other                                                                           |  |                   | 468      |   |                  |  
|                                                                                |  |                  
|Stockholders deficit:                                                          |  |                   |          |   |                  |  
|Common stock                                                                    |  |                   | 1        |   |                  |  
|Additional paid in capital                                                      |  |                   | 446,449  |   |                  |  
|Retained deficit                                                                |  |                   | (553,684 | ) |                  |  
|                                                                                |  |                   |          |   |                  |  
|Total stockholders deficit                                                     |  |                   | (107,234 | ) |                  |  
|                                                                                |  |                   |          |   |                  |  
|Total liabilities and stockholders deficit                                     |  | $                 | 287,954  |   |                  | $
|                                                                                |  |                   |          |   |                  |  



See accompanying notes
to condensed consolidated financial statements



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IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)



|                               |  | Three month periods                |         |   | Nine month periods                 |  
|------------------------------ |  | ---------------------------------- | ------- | - | ---------------------------------- | -
|                               |  | Three monthsendedSeptember 30,2003 |         |   | Three monthsendedSeptember 30,2002 |  
|Revenues:                      |  |                                    |         |   |                                    |  
|Subscriber                     |  | $                                  | 34,042  |   |                                    | $
|Roaming                        |  |                                    | 10,257  |   |                                    |  
|Merchandise sales              |  |                                    | 1,750   |   |                                    |  
|Other revenue                  |  |                                    | 120     |   |                                    |  
|                               |  |                                    |         |   |                                    |  
|Total revenue                  |  |                                    | 46,169  |   |                                    |  
|Expense:                       |  |                                    |         |   |                                    |  
|Cost of service                |  |                                    | 17,788  |   |                                    |  
|Merchandise cost of sales      |  |                                    | 3,284   |   |                                    |  
|General and administrative     |  |                                    | 10,960  |   |                                    |  
|Sales and marketing            |  |                                    | 7,149   |   |                                    |  
|Depreciation and amortization  |  |                                    | 13,786  |   |                                    |  
|Asset abandonment charge       |  |                                    |        |   |                                    |  
|                               |  |                                    |         |   |                                    |  
|Total operating expense        |  |                                    | 52,967  |   |                                    |  
|                               |  |                                    |         |   |                                    |  
|Operating loss                 |  |                                    | (6,798  | ) |                                    |  
|Other expense:                 |  |                                    |         |   |                                    |  
|Interest expense, net          |  |                                    | (10,820 | ) |                                    |  
|                               |  |                                    |         |   |                                    |  
|Loss before income tax benefit |  |                                    | (17,618 | ) |                                    |  
|Income tax benefit             |  |                                    |        |   |                                    |  
|                               |  |                                    |         |   |                                    |  
|Net loss                       |  | $                                  | (17,618 | ) |                                    | $
|                               |  |                                    |         |   |                                    |  



See accompanying notes
to condensed consolidated financial statements



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IWO HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)



|                                                      |  | For the nine monthsended September 30, 2003 |         |   | January 1, 2002through March 31, 2002 |   |         | April 1, 2002through September 30, 2002 | 
|----------------------------------------------------- |  | ------------------------------------------- | ------- | - | ------------------------------------- | - | ------- | --------------------------------------- | 
|Cash flows from operating activities                  |  |                                             |         |   |                                       |   |         |                                         | 
|Net cash used in operating activities                 |  | $                                           | (18,070 | ) |                                       | $ | (14,868 | )                                       | 
|                                                      |  |                                             |        
|Cash flows from investing activities                  |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Release of restricted cash and US Treasury securities |  |                                             | 21,924  |   |                                       |   | 10,717  |                                         | 
|Proceeds on maturities of marketable securities       |  |                                             |        |   |                                       |   | 6,000   |                                         | 
|Purchases of property and equipment                   |  |                                             | (11,226 | ) |                                       |   | (29,144 | )                                       | 
|                                                      |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Net cash provided by (used in) investing activities   |  |                                             | 10,698  |   |                                       |   | (12,427 | )                                       | 
|                                                      |  |                                             |        
|Cash flows from financing activities                  |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Proceeds from long-term debt                          |  |                                             |        |   |                                       |   | 40,000  |                                         | 
|Principal payments of long-term debt                  |  |                                             |        |   |                                       |   | (15,000 | )                                       | 
|Other financing activities                            |  |                                             |        |   |                                       |   |        |                                         | 
|                                                      |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Net cash provided by financing activities             |  |                                             |        |   |                                       |   | 25,000  |                                         | 
|                                                      |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Net change in cash and cash equivalents               |  |                                             | (7,372  | ) |                                       |   | (2,295  | )                                       | 
|                                                      |  |                                             |        
|Cash and cash equivalents at beginning of period      |  |                                             | 35,008  |   |                                       |   | 3,394   |                                         | 
|                                                      |  |                                             |         |   |                                       |   |         |                                         | 
|                                                      |  |                                             |        
|Cash and cash equivalents at end of period            |  | $                                           | 27,636  |   |                                       | $ | 1,099   |                                         | 
|                                                      |  |                                             |         |   |                                       |   |         |                                         | 



See accompanying notes
to condensed consolidated financial statements



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IWO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2003

(Unaudited)



|1. | Basis of Presentation
|-- | ---------------------



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and
nine-month periods ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.



The condensed consolidated balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The condensed consolidated financial statements contained herein should be read in conjunction with the
financial statements and notes included in the Form 10-K for IWO Holdings, Inc. for the year ended December 31, 2002, filed on March 31, 2003 with the Securities and Exchange Commission.



Recent Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities-An Interpretation of Accounting Research
Bulletin (ARB) No. 51 (FIN 46). This interpretation clarifies how to identify variable interest entities and how a company should assess its interests in a variable interest entity to decide whether to consolidate the entity. FIN
46 applies to variable interest entities created after January 31, 2003, in which a company obtains an interest after that date. Also, FIN 46 applies in the first fiscal quarter or interim period beginning after December 15, 2003, to variable
interest entities in which a company holds a variable interest that it acquired before February 1, 2003. The adoption of the initial recognition and measurement provisions of this interpretation did not have a material effect on the Companys
financial position, results of operations or cash flows. The Company is currently analyzing the impact this interpretation will have on its consolidated results of operations and its financial position, with respect to entities acquired before
February 1, 2003.



In November 2002, the FASB issued FASB
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation expands the disclosures to be made by a guarantor about its
obligations under certain guarantees and requires that, at the inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements are effective
immediately. As disclosed in Note 5 to the Consolidated Financial Statements, Independent Wireless One Corporation has fully and unconditionally guaranteed the Companys obligations under the IWO 14% senior notes. The initial recognition and
measurement provisions of this interpretation are effective for guarantees issued or modified after December 31, 2002. The adoption of the initial recognition and measurement provisions of this interpretation did not have a material effect on the
Companys financial position, results of operations or cash flows.



In May 2003, the Emerging Issues Task Force (EITF) modified its previous consensus to EITF 00-21 to clarify the scope of Issue 00-21 and its interaction with other authoritative literature. As permitted
under the modified consensus, the Company adopted this modified consensus effective July 1, 2003 for all revenue arrangements entered into subsequent to June 30, 2003. EITF 00-21 addresses the determination of whether an arrangement involving more
than one deliverable contains more than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting. In applying this guidance, separate contracts with the same party, entered into at or
near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. The Company has reviewed EITF 00-21 and determined that the sale of handsets and
future service under contract should be accounted for as separate units under EITF 00-21. As a result, the



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total consideration under these arrangements, including any related activation fees, is allocated between
these separate units based on their relative fair values.



|2. | Description of the Organization
|-- | -------------------------------



IWO Holdings, Inc. (the Company or IWO) is a wholly owned subsidiary of US Unwired Inc. (US Unwired) and is
principally engaged in the ownership and operation of wireless personal communications systems (PCS) in the northeastern region of the United States.



Certain reclassifications have been made to the financial statements for periods prior to the April 1, 2002 acquisition by
US Unwired in order to conform the presentation to the nine-month period ended September 30, 2003.



|3. | Liquidity
|-- | ---------



The Company has been unable to develop a business plan that provides sufficient cash to fund operations, debt service and capital requirements in 2003. The Company is in discussions with its banking group to arrive at
an acceptable restructuring to preserve IWO liquidity but cannot state with certainty that an acceptable plan will be forthcoming. If an acceptable restructuring plan is not agreed upon by Company and the IWO banking group, the Company will soon be
forced to seek protection under bankruptcy for IWO.



As of
September 30, 2003, the Company had $27.6 million in cash and cash equivalents and $19.3 million in restricted cash; and indebtedness that consisted of $213.2 million related to its senior bank credit facility and $138.1 million related to its
senior notes for a total of $351.3 million. A portion of the original proceeds of the senior notes offering was set aside as restricted cash to make the first six scheduled interest payments on the senior notes through January 2004. Repayment of the
senior bank credit facility commences in March 2004.



Since
March 2003, the Company has failed to make $7.5 million in interest payments on its $240 million senior bank credit facility and was not in compliance with its restrictive covenants under the senior bank credit facility at September 30, 2003. As a
result of the Companys failure to make scheduled interest payments and the covenant violations, the Company was in default of its senior bank credit facility at September 30, 2003 and the holders of the senior bank credit facility have denied
the Company access to the remaining $25.2 million of availability. As a result, the Company has classified all outstanding indebtedness of both the senior bank credit facility and the senior notes as a current liability.



As a result of liquidity challenges, the Company has made the decision to
reduce capital expenditures for network expansion and abandon the construction of cell sites that do not provide a sufficient level of enhanced coverage. The Company recorded an asset abandonment charge of $12.4 million during the nine-month period
ended September 30, 2003 for the cell sites and the related property leases of these abandoned cell sites. Included in this asset abandonment charge are cell sites that the Company is required to construct to meet the build out requirements under
its Sprint management agreement. Failure to complete the build out of the service area will place the Company in violation of its Sprint management agreement. As a result, Sprint PCS could declare the Company in default and take action up to and
including termination of its Sprint management agreement. At September 30, 2003, the Companys construction in progress included $4.9 million primarily related to cell sites that IWO plans to complete and management estimates that completion of
these cell sites will require approximately $8.5 million in additional costs to complete construction and place these sites in operation. The Company anticipates that only a portion of these sites will be completed in 2003.



Due to restrictions in the US Unwired debt instruments, US Unwired cannot
provide any capital or other financial support to the Company. Further, the Companys creditors, lenders and note holders cannot place any liens or encumbrances on the assets of US Unwired. Since the holders of the senior bank credit facility
have placed the Company in default, US Unwireds relationship with the Company may change and several alternatives exist ranging from US Unwired working for the holders of the senior bank credit facility and the holders of the senior notes as a
manager of the Companys territory, possibly subject to the approval by Sprint PCS, to no involvement with the Company at all.



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Considering the Companys default of the loan agreements as discussed above, there is substantial
doubt about the Companys ability to continue as a going concern.



The Companys Business Strategy



The Company has
undertaken several initiatives designed to improve liquidity and reduce losses for 2003.



The Company has:



| |  | focused on attracting customers that are in good credit standing
| | - | ----------------------------------------------------------------



| |  | reinstated a deposit requirement for higher credit risk subscribers and will request not to participate in any Sprint PCS programs where the Companys analysis indicates
adversely impacted levels of customer turnover or unsatisfactory economic returns.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | restructured sales employees programs to pay higher commissions on subscribers with better credit ratings.
| | - | -----------------------------------------------------------------------------------------------------------



| |  | revised the local agent commission structure. The Company pays higher commissions for subscribers with good credit ratings. The Company has cancelled and continues to cancel
agreements with local agents that continue to target higher credit risk subscribers or provide low economic value.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | introduced a pre-pay program that requires advance payment for minutes of use. The Company believes that this program offers higher credit risk subscribers a less stressful
environment in which to subscribe to the Companys service by providing an opportunity to better manage their expenditures for the service provided and limits the Companys bad debt exposure.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | supplemented Sprint PCSs customer service function with its own staff that focuses on subscriber retention.
| | - | ------------------------------------------------------------------------------------------------------------



| |  | limited its capital expenditures to: (1) capacity and required technical upgrades of existing equipment, and (2) only adding additional cell site coverage in areas that the Company
expects will produce positive cash returns as a result of either new subscriber growth or decreases in subscriber turnover.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | undertaken a corporate wide evaluation of expenses. This includes the consolidation of functions, divesting of unused and under utilized facilities, renegotiation of vendor
contracts, extension of vendor payment terms and other cost cutting measures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | evaluated and continues to evaluate its markets and reduce sales staffing levels and close retail outlets that do not meet its minimum internal rates of returns.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | continued to work with Sprint PCS to improve the detail, timeliness and accuracy of information processed by Sprint PCS on the Companys behalf.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



While the Company believes that these initiatives will have a positive impact
on operating results, the Company cannot state with certainty that these initiatives will result in its ability to sustain operations or liquidity beyond or even to the end of 2003, given the information as discussed above.



|4. | Details of Certain Balance Sheet Accounts
|-- | -----------------------------------------



Major categories of property and equipment consisted of the following:



|                                     |  | September 30,2003 |         | December 31,2002
|------------------------------------ |  | ----------------- | ------- | ----------------
|                                     |  | (In thousands)   
|Land                                 |  | $                 | 168     |                 
|Buildings and leasehold improvements |  |                   | 9,361   |                 
|Facilities and equipment             |  |                   | 183,537 |                 
|Furniture, fixtures and vehicles     |  |                   | 5,684   |                 
|Construction in progress             |  |                   | 4,949   |                 
|                                     |  |                   |         |                 
|                                     |  |                   | 203,699 |                 
|Less: accumulated depreciation       |  |                   | 33,932  |                 
|                                     |  |                   |         |                 
|                                     |  | $                 | 169,767 |                 
|                                     |  |                   |         |                 



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Intangibles assets consisted of the following:



|                               |  | September 30, 2003 |        | December 31,2002
|------------------------------ |  | ------------------ | ------ | ----------------
|                               |  | (In thousands)    
|Sprint affiliation agreement   |  | $                  | 19,766 |                 
|Subscriber base                |  |                    | 57,500 |                 
|                               |  |                    |        |                 
|                               |  |                    | 77,266 |                 
|Less: accumulated amortization |  |                    | 44,155 |                 
|                               |  |                    |        |                 
|Intangible assets, net         |  | $                  | 33,111 |                 
|                               |  |                    |        |                 



|5. | Long-Term Obligations
|-- | ---------------------



Long-term obligations consisted of the following:



|                                                    |  | September 30, 2003 |         | December 31,2002
|--------------------------------------------------- |  | ------------------ | ------- | ----------------
|                                                    |  | (In thousands)    
|Senior bank credit facility, in default             |  | $                  | 213,184 |                 
|Senior subordinated discount notes                  |  |                    | 138,125 |                 
|                                                    |  |                    |         |                 
|Long-term obligations                               |  |                    | 351,309 |                 
|Less: current maturities, in default                |  |                    | 351,309 |                 
|                                                    |  |                    |         |                 
|Long-term obligations, excluding current maturities |  | $                  |        |                 
|                                                    |  |                    |         |                 



The Company is an
unrestricted subsidiary of US Unwired. As a result, funds available under the Companys senior bank credit facility can only be used by the Company to finance the operations of the Company, and funds available under US Unwireds senior
bank credit facility can only be used by US Unwired to finance operations of US Unwired.



Since March 2003, the Company has failed to make $7.5 million in interest payments on its $240 million senior bank credit facility and was not in compliance with its restrictive covenants under its senior bank credit
facility at September 30, 2003. As a result of the failure to make scheduled interest payments and the covenant violations, the Company was in default of its senior bank credit facility at September 30, 2003 and the holders of the senior bank credit
facility have denied the Company access to the remaining $25.2 million of availability. As a result of this and those issues as discussed in Note 3 above, the Company has classified all outstanding indebtedness of both the senior bank credit
facility and the senior notes as a current liability.



Senior
Bank Credit Facility$240 million



Effective December
2000, Independent Wireless One Corporation, a wholly owned subsidiary of the Company, entered into amended and restated secured bank credit facility (senior bank credit facility) under which it may borrow up to $240 million in the
aggregate consisting of up to $70 million in revolving loans and $170 million in term loans. The senior bank credit facility matures in 2008. The term loans are due to be repaid in quarterly installments beginning in March 2004 and the reducing
revolver matures in March 2008. All loans under the senior bank credit facility, effective with the date of the default, bear interest at a rate of 4.25-4.75 percent above the agent banks prime rate. The senior bank credit facility is
collateralized by all of the assets of the Company and its subsidiaries.



Senior Notes14%



In
February 2001, the Company issued 160,000 units, each consisting of $1,000 principal amount of 14% Senior Notes (senior notes) due January 15, 2011 and one warrant to purchase 12.50025 shares of the Companys class C common stock at
an exercise price of $7.00 per share. As a result of US Unwireds acquisition of the Company in April 2002, this warrant was converted to a US Unwired warrant to purchase 12.96401 shares of the US Unwireds common stock at $6.75 per share.
Interest is payable semi-annually on January 15 and July 15 of each year. Independent Wireless One Corporation, a wholly owned subsidiary of the Company, is the sole guarantor of the senior notes. All of the Companys restricted subsidiaries
formed or acquired after the issuance of the senior notes that guarantee the Companys senior bank credit facility will also be required to guarantee the senior notes.



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The senior notes are not guaranteed by Independent Wireless One Realty Corporation, a wholly owned
subsidiary of the Company. Effective April 1, 2002, with the acquisition by US Unwired, the Companys senior notes were revalued to a fair value of $136.0 million. The discount is being accreted over the remaining life of the notes using the
effective interest method.



A portion of the original proceeds
of the senior notes were used to purchase a portfolio of U.S. government securities which will generate sufficient proceeds to make the first six scheduled interest payments on the senior notes through January 2004. The account holding the
investment securities and all of the securities and other items contained in the account have been pledged to the trustee for the benefit of the holders of the senior notes.



|6. | Commitments and Contingencies
|-- | -----------------------------



The PCS licenses that the Company operates for Sprint PCS are subject to a requirement that the Company construct network facilities that offer coverage
to 25% of the population or have substantial service in each of its Basic Trading Areas (BTAs) within five years from the grant of the licenses. As of September 30, 2003, management believes that Sprint PCS has met the requirements
necessary for the licenses that the Company operates for Sprint PCS under its Sprint PCS management agreements.



The Company uses Sprint PCS to process all post-pay PCS subscriber billings including monthly recurring charges, airtime and other charges such as
interconnect fees. The Company pays various fees to Sprint PCS for new subscribers as well as recurring monthly fees for services performed for existing customers including billing and management of customer accounts. Sprint PCSs billing for
these services is based upon an estimate of the actual costs incurred by Sprint PCS to provide such services. At the end of each calendar year, Sprint PCS compares its actual costs to provide such services to remittances by the Company for estimated
billings and either refunds overpayments or bills for costs in excess of the payments made. Based upon information as provided by Sprint PCS, the Company believes it has adequately provided for the above-mentioned costs in the accompanying
consolidated financial statements. Additionally, Sprint PCS has contracted with national retailers that sell handsets and service to new PCS subscribers in the Companys markets. Sprint PCS pays these national retailers a new subscriber
commission and provides handsets to such retailers below cost. Sprint PCS passes these costs of commissions and the handset subsidies to the Company.



The Company periodically reviews all charges from Sprint PCS and from time to time, the Company may dispute certain of these charges. As of September 30,
2003, the Company had disputed approximately $6.2 of charges to IWO. Based upon the information provided to the Company by Sprint PCS to date, the Company believes the accompanying condensed consolidated balance sheet adequately reflects its
obligation that may be due to Sprint PCS for these charges.



On July 11, 2003, US Unwired and two of its subsidiaries, Louisiana Unwired, LLC and Texas Unwired, filed suit in the U.S. District Court for the Western District of Louisiana, against Sprint Corporation, Sprint Spectrum, L.P., Wireless,
L.P. and Sprintcom, Inc. (collectively, Sprint). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud, arising out of Sprints conduct in its dealings with the
plaintiff companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in Louisiana. On September 25, 2003, US Unwired and its two subsidiaries filed an amended
complaint to include contractual claims. The Company is not a plaintiff in this suit. On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants seeking dismissal of US Unwireds First Amended Complaint and
filing a counter-claim for approximately $13.3 million related primarily to contractual disputes as discussed above. The Company is not a defendant in this suit. On October 21, 2003, Sprint filed a Defendants Partial Motion for Judgment on the
Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed Defendants Motion to Strike Plaintiffs Jury Demand from the First Amended Complaint.



On October 10, 2003, Sprint PCS remitted to the Company a $0.9 million
settlement primarily related to uncollected regulatory fees charged to subscribers. The Company had previously recognized this amount as bad debts expense and will record a benefit in the fourth quarter of 2003.



10



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##### Table of Contents

|7. | Income Taxes
|-- | ------------



The Companys effective income tax rate for the interim periods presented is based on managements estimate of the Companys effective tax rate for the applicable year and differs from the federal
statutory income tax rate primarily due to nondeductible permanent differences, state income taxes and changes in the valuation allowance for deferred tax assets. The Companys income or loss for tax purposes is included in the income tax
return of the parent. However, the Companys income tax provision is computed on a separate basis.



|8. | Condensed Consolidating Financial Information
|-- | ---------------------------------------------



Independent Wireless One Leased Realty Corporation (the Non-Guarantor), a 100% wholly owned subsidiary of Independent Wireless One
Corporation, is precluded from guaranteeing the debt of IWO Holdings, Inc. based on current agreements in effect. Independent Wireless One Corporation is not restricted from serving as a guarantor of the IWO Holdings, Inc. debt.



Independent Wireless One Leased Realty Corporation holds all of the cell site
leases and certain leases related to the retail stores. Operating expenses are comprised of rent expense from these leases. Independent Wireless One Leased Realty Corporation has charged Independent Wireless One Corporation a fee equal to its rent
expense for use of its leased cell sites, office and retail space.



The information which follows presents the condensed consolidating balance sheet as of September 30, 2003 and December 31, 2002 and the condensed consolidating statements of operations and cash flows for the three and nine-month periods
ended September 30, 2003 and 2002 of (a) the Parent Company, IWO Holdings, Inc., (b) the Guarantor, Independent Wireless One Corporation, and (c) the Non-Guarantor, Independent Wireless One Leased Realty Corporation, and
includes consolidating entries and the Company on a consolidated basis.





11



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##### Table of Contents

Condensed Consolidating Balance Sheet



|                                                                              |  | September 30, 2003       |         
|----------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                              |  | IWOHoldings,Inc.(Parent) |         
|                                                                              |  | (in thousands)           |         
|ASSETS                                                                        |  |                          |         
|Current assets:                                                               |  |                          |         
|Cash and cash equivalents                                                     |  | $                        |        
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |                          | 11,234  
|Subscriber receivables, net                                                   |  |                          |        
|Intercompany receivable (payable)                                             |  |                          | 160,000 
|Inventory                                                                     |  |                          |        
|Prepaid expenses and other assets                                             |  |                          |        
|                                                                              |  |                          |         
|Total current assets                                                          |  |                          | 171,234 
|Investment in subsidiary                                                      |  |                          | (135,676
|Property and equipment, net                                                   |  |                          |        
|Intangible assets, net                                                        |  |                          |        
|Note receivable                                                               |  |                          |        
|Other assets                                                                  |  |                          |        
|                                                                              |  |                          |         
|Total assets                                                                  |  | $                        | 35,558  
|                                                                              |  |                          |         
|                                                                              |  |                          |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                         |  |                          |         
|Current liabilities:                                                          |  |                          |         
|Accounts payable                                                              |  | $                        |        
|Accrued expenses                                                              |  |                          | 4,667   
|Current maturities of long-term obligations                                   |  |                          | 138,125 
|                                                                              |  |                          |         
|Total current liabilities                                                     |  |                          | 142,792 
|Long-term obligations                                                         |  |                          |        
|Other                                                                         |  |                          |        
|                                                                              |  |                          |         
|Stockholders deficit:                                                        |  |                          |         
|Common stock                                                                  |  |                          | 1       
|Additional paid in capital                                                    |  |                          | 446,449 
|Retained deficit                                                              |  |                          | (553,684
|                                                                              |  |                          |         
|Total stockholders equity (deficit)                                          |  |                          | (107,234
|                                                                              |  |                          |         
|Total liabilities and stockholders equity (deficit)                          |  | $                        | 35,558  
|                                                                              |  |                          |         



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Condensed Consolidating Balance Sheet



|                                                                              |  | December 31, 2002        |         
|----------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                              |  | IWOHoldings,Inc.(Parent) |         
|                                                                              |  | (in thousands)           |         
|ASSETS                                                                        |  |                          |         
|Current assets:                                                               |  |                          |         
|Cash and cash equivalents                                                     |  | $                        |        
|Restricted cash and US Treasury securities at amortized costheld to maturity |  |                          | 33,218  
|Subscriber receivables, net                                                   |  |                          |        
|Intercompany receivable (payable)                                             |  |                          | 160,000 
|Inventory                                                                     |  |                          |        
|Prepaid expenses and other assets                                             |  |                          |        
|                                                                              |  |                          |         
|Total current assets                                                          |  |                          | 193,218 
|Restricted cash                                                               |  |                          |        
|Investment in subsidiary                                                      |  |                          | (80,975 
|Property and equipment, net                                                   |  |                          |        
|Intangible assets, net                                                        |  |                          |        
|Note receivable                                                               |  |                          |        
|Other assets                                                                  |  |                          |        
|                                                                              |  |                          |         
|Total assets                                                                  |  | $                        | 112,243 
|                                                                              |  |                          |         
|                                                                              |  |                          |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                         |  |                          |         
|Current liabilities:                                                          |  |                          |         
|Accounts payable                                                              |  | $                        |        
|Accrued expenses                                                              |  |                          | 10,267  
|                                                                              |  |                          |         
|Total current liabilities                                                     |  |                          | 10,267  
|Long-term debt                                                                |  |                          | 137,023 
|Other                                                                         |  |                          |        
|Stockholders deficit:                                                        |  |                          |         
|Common stock                                                                  |  |                          | 1       
|Additional paid in capital                                                    |  |                          | 446,449 
|Retained deficit                                                              |  |                          | (481,497
|                                                                              |  |                          |         
|Total stockholders equity (deficit)                                          |  |                          | (35,047 
|                                                                              |  |                          |         
|Total liabilities and stockholders equity (deficit)                          |  | $                        | 112,243 
|                                                                              |  |                          |         



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##### Table of Contents

Condensed Consolidating Statement of Operations



|                                              |  | Three-month period ended September 30, 2003 |        
|--------------------------------------------- |  | ------------------------------------------- | -------
|                                              |  | IWOHoldings,Inc.(Parent)                    |        
|                                              |  | (in thousands)                              |        
|Revenues                                      |  | $                                           |       
|Operating expenses                            |  |                                             |       
|                                              |  |                                             |        
|Operating loss                                |  |                                             |       
|Other expense, net                            |  |                                             | (5,900 
|Equity in losses of wholly-owned subsidiaries |  |                                             | (11,718
|                                              |  |                                             |        
|Net loss                                      |  | $                                           | (17,618
|                                              |  |                                             |        



Condensed Consolidating Statement of
Operations



|                                              |  | Three-month period ended September 30, 2002 |        
|--------------------------------------------- |  | ------------------------------------------- | -------
|                                              |  | IWOHoldings,Inc.(Parent)                    |        
|                                              |  | (in thousands)                              |        
|Revenues                                      |  | $                                           |       
|Operating expenses                            |  |                                             |       
|                                              |  |                                             |        
|Operating loss                                |  |                                             |       
|Other expense, net                            |  |                                             | (5,699 
|Equity in losses of wholly-owned subsidiaries |  |                                             | (20,800
|                                              |  |                                             |        
|Net loss before income benefit                |  |                                             | (26,499
|Income tax benefit                            |  |                                             |       
|                                              |  |                                             |        
|Net loss                                      |  | $                                           | (26,499
|                                              |  |                                             |        



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##### Table of Contents

Condensed Consolidating Statement of Operations



|                                              |  | Nine-month period ended September 30, 2003 |        
|--------------------------------------------- |  | ------------------------------------------ | -------
|                                              |  | IWOHoldings,Inc.(Parent)                   |        
|                                              |  | (in thousands)                             |        
|Revenues                                      |  | $                                          |       
|Operating expenses                            |  |                                            |       
|                                              |  |                                            |        
|Operating loss                                |  |                                            |       
|Other expense, net                            |  |                                            | (17,486
|Equity in losses of wholly-owned subsidiaries |  |                                            | (54,702
|                                              |  |                                            |        
|Net loss                                      |  | $                                          | (72,188
|                                              |  |                                            |        



Condensed Consolidating Statement of
Operations



|                                   |  | January 1, 2002 through March 31, 2002 |        
|---------------------------------- |  | -------------------------------------- | -------
|                                   |  | IWOHoldings,Inc.(Parent)               |        
|                                   |  | (in thousands)                         |        
|Revenues                           |  | $                                      |       
|Operating expenses                 |  |                                        |       
|                                   |  |                                        |        
|Operating loss                     |  |                                        |       
|Other expense, net                 |  |                                        | (4,613 
|Equity in losses of subsidiaries   |  |                                        | (22,223
|                                   |  |                                        |        
|Net loss before income tax benefit |  |                                        | (26,836
|Income tax benefit                 |  |                                        |       
|                                   |  |                                        |        
|Net loss                           |  | $                                      | (26,836
|                                   |  |                                        |        



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##### Table of Contents

Condensed Consolidating Statement of Operations



|                                   |  | April 1, 2002 through September 30, 2002 |        
|---------------------------------- |  | ---------------------------------------- | -------
|                                   |  | IWOHoldings,Inc.(Parent)                 |        
|                                   |  | (in thousands)                           |        
|Revenues                           |  | $                                        |       
|Operating expenses                 |  |                                          |       
|                                   |  |                                          |        
|Operating loss                     |  |                                          |       
|Other expense, net                 |  |                                          | (11,382
|Equity in losses of subsidiaries   |  |                                          | (38,234
|                                   |  |                                          |        
|Net loss before income tax benefit |  |                                          | (49,616
|Income tax benefit                 |  |                                          |       
|                                   |  |                                          |        
|Net loss                           |  | $                                        | (49,616
|                                   |  |                                          |        



Condensed Consolidating Statement of
Cash Flows



|                                                        |  | Nine-month period ended September 30, 2003 |        
|------------------------------------------------------- |  | ------------------------------------------ | -------
|                                                        |  | IWOHoldings,Inc.(Parent)                   |        
|                                                        |  | (in thousands)                             |        
|Cash flows from operating activities:                   |  |                                            |        
|Net cash provided by (used in) operating activities     |  | $                                          | (21,924
|                                                        |  |                                            |        
|Cash flows from investing activities:                   |  |                                            |        
|Release of restricted cash and U.S. Treasury securities |  |                                            | 21,924 
|Payments for the purchase of equipment                  |  |                                            |       
|Maturities of marketable securities                     |  |                                            |       
|                                                        |  |                                            |        
|Net cash provided by (used in) investing activities     |  |                                            | 21,924 
|                                                        |  |                                            |        
|Cash flows from financing activities:                   |  |                                            |        
|Proceeds from long-term debt                            |  |                                            |       
|Proceeds from promissory notes                          |  |                                            |       
|                                                        |  |                                            |        
|Net cash provided by (used in) financing activities     |  |                                            |       
|                                                        |  |                                            |        
|Net change in cash and cash equivalents                 |  |                                            |       
|Cash and cash equivalents at beginning of period        |  |                                            |       
|                                                        |  |                                            |        
|Cash and cash equivalents at end of period              |  | $                                          |       
|                                                        |  |                                            |        



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##### Table of Contents

Condensed Consolidating Statement of Cash Flows



|                                                        |  | January 1, 2002 through March 31, 2002 |        
|------------------------------------------------------- |  | -------------------------------------- | -------
|                                                        |  | IWOHoldings,Inc.(Parent)               |        
|                                                        |  | (in thousands)                         |        
|Cash flows from operating activities:                   |  |                                        |        
|Net cash provided by (used in) operating activities     |  | $                                      | (10,717
|                                                        |  |                                        |        
|Cash flows from investing activities:                   |  |                                        |        
|Release of restricted cash and U.S. Treasury securities |  |                                        | 10,717 
|Payments for the purchase of equipment                  |  |                                        |       
|Maturities of marketable securities                     |  |                                        |       
|                                                        |  |                                        |        
|Net cash provided by (used in) investing activities     |  |                                        | 10,717 
|                                                        |  |                                        |        
|Cash flows from financing activities:                   |  |                                        |        
|Proceeds from long-term debt                            |  |                                        |       
|Principal payments of long-term debt                    |  |                                        |       
|                                                        |  |                                        |        
|Net cash provided by (used in) financing activities     |  |                                        |       
|                                                        |  |                                        |        
|Net change in cash and cash equivalents                 |  |                                        |       
|Cash and cash equivalents at beginning of period        |  |                                        |       
|                                                        |  |                                        |        
|Cash and cash equivalents at end of period              |  | $                                      |       
|                                                        |  |                                        |        



Condensed Consolidating Statement of
Cash Flows



|                                                        |  | April 1, 2002 through September 30, 2002 |        
|------------------------------------------------------- |  | ---------------------------------------- | -------
|                                                        |  | IWOHoldings,Inc. (Parent)                |        
|                                                        |  | (in thousands)                           |        
|Cash flows from operating activities:                   |  |                                          |        
|Net cash provided by (used in) operating activities     |  | $                                        | (10,682
|                                                        |  |                                          |        
|Cash flows from investing activities:                   |  |                                          |        
|Release of restricted cash and U.S. Treasury securities |  |                                          | 10,682 
|Payments for the purchase of equipment                  |  |                                          |       
|Maturities of marketable securities                     |  |                                          |       
|                                                        |  |                                          |        
|Net cash provided by (used in) investing activities     |  |                                          | 10,682 
|                                                        |  |                                          |        
|Cash flows from financing activities:                   |  |                                          |        
|Proceeds from long-term debt                            |  |                                          |       
|Proceeds from promissory notes                          |  |                                          |       
|                                                        |  |                                          |        
|Net cash provided by (used in) financing activities     |  |                                          |       
|                                                        |  |                                          |        
|Net change cash and cash equivalents                    |  |                                          |       
|Cash and cash equivalents at beginning of period        |  |                                          |       
|                                                        |  |                                          |        
|Cash and cash equivalents at end of period              |  | $                                        |       
|                                                        |  |                                          |        



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



This report contains forward-looking statements, which are statements about future business strategy, operations and capabilities, construction plan, construction
schedule, financial projections, plans and objectives of management, expected actions of third parties and other matters. Forward-looking statements often include words like believes, belief, expects, plans, anticipates, intends, projects,
estimates, may, might, would or similar words. Forward-looking statements speak only as of the date of this report. They involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. In
addition to the investment considerations described elsewhere, specific factors that might cause such a difference include, but are not limited to (i) our ability to finance future growth opportunities; (ii) our dependence on Sprint PCS; (iii) our
ability to expand our Sprint PCS network or to upgrade the Sprint PCS network to accommodate new technologies; (iv) limited operating history in the PCS market and anticipation of future losses; (v) potential fluctuations in operating results; (vi)
changes or advances in technology; (vii) changes in law or government regulation; (viii) competition in the industry and markets in which we operate; (ix) future acquisitions; (x) our ability to attract and retain skilled personnel; (xi) our
dependence on contractor and consultant services, network implementation and information technology support; (xii) our potential inability to expand the services and related products we provide in the event of substantial increases in demand in
excess of supply for network and handset equipment and related services and products; (xiii) the availability at acceptable terms of sufficient funds to pay for our business plans; (xiv) changes in labor, equipment and capital costs; (xv) any
inability to comply with the indentures that govern our senior notes or credit agreements; (xvi) changes in management; and (xvii) general economic and business conditions.



You should not rely too heavily on any forward-looking statement. We cannot assure you that our forward-looking statements will prove to be
correct. We have no obligation to update or revise publicly any forward-looking statement based on new information, future events or otherwise. This discussion should be read in conjunction with our financial statements included in this report and
with the financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K for IWO Holdings, Inc. for the year ended December 31, 2002, filed on March 31, 2003 with the Securities
and Exchange Commission (SEC).



Critical Accounting Policies and
Estimates



Our discussion and analysis of our financial condition and results
of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts,
activation fee revenues and related expense, determination of fair value of separate units for the application of EITF 00-21, revenue recognition of contract cancellation and late fees, inventory reserves, intangible assets and contingencies. We
base our estimates on our historical experience, the historical experience of Sprint PCS and the historical experience of other Sprint PCS affiliates and various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.



We believe the following critical accounting policies affect our significant
judgments and estimates used in the preparation of our consolidated financial statements.



Reliance on Sprint PCS Processing



We
rely on Sprint PCS for much of our financial reporting information including: revenues; commissions paid to national retailers; fees paid for customer care and billing; roaming revenue and roaming expense on the Sprint PCS and Sprint PCS affiliate
network; and, the maintenance of accounts receivable, including cash collections and the write off of customer balances that are not collectible and the accuracy of our accounts receivable balance. Where uncertainty exists regarding revenues, we do
not record these revenues until substantive information has been provided to ensure that such revenues have been earned. Based upon the timing of the information received from Sprint PCS, we make certain assumptions that the information is accurate
and that it is consistent with historical trends. We also rely upon the evaluation of internal controls as performed by Sprint PCSs external auditors that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



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##### Table of Contents

Bad Debt Expense



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of subscribers to make payments. If the financial conditions of our
subscribers deteriorate, resulting in the subscribers inability to make payments, additional allowances will be required.



We estimate our allowance by examining the components of our revenue. We establish a general reserve of all accounts receivable that are estimated to be uncollectible. In
addition, we do not recognize 100% of our late fees or cancellation fees as revenue because of high uncertainty of the collectibility of these amounts. Reserves for these amounts are recorded to our allowance for doubtful accounts. Our evaluation of
the adequacy of these amounts includes our own historical experience and discussions with Sprint PCS and other Sprint PCS affiliates.



Revenue Recognition



We recognize only a portion of contract cancellation fees billed to subscribers that disconnect service prior to fulfilling the contractual length of service, as there is significant uncertainty that all contract
cancellation fees that are billed will be collected. We have very limited information at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on contract
cancellation fees are less than that recognized, additional allowances may be required.



We recognize only a portion of late fees billed to subscribers that fail to pay their bills within the required payment period, as there is no assurance that all late fees that are billed will be collected. We have very limited information
at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.



For sales channels other than our retail outlets, we defer revenues collected for activation
fees over the estimated life of the subscriber relationship, which we believe to be 15-24 months, based upon our historical trends of average customer lives and discussions with Sprint PCS. For these same sales channels, we also defer an activation
expense in an amount equal to the activation fee revenue and amortize this expense in an amount equal to the activation fee revenue over the life of the subscriber relationship. If the estimated life of the subscriber relationship increases or
decreases, the amounts of deferred revenue and deferred expense will be adjusted over the revised estimated life of the subscriber relationship. For our retail sales channels, the sale of handsets and future service under contract are accounted for
as separate units under EITF 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated between these separate units based upon their relative fair values. The determination of fair
values for these separate units can vary depending upon market conditions.



Inventory Reserves



We review our inventory semi-annually and
write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected by management, additional inventory write-downs may be necessary.



Accrued Commissions



We accrue commissions and other costs related to national retailers based upon their sales to new subscribers. The national retailers receive both a commission and, because the handset is typically sold below cost, a
reimbursement for the difference between the sales price and the cost. We base our accruals on information provided by Sprint PCS on subscriber additions and recognize that there are typically timing differences between the point of subscriber
activation and the time that we are invoiced for commissions by Sprint PCS. We periodically and annually evaluate the adequacy of our accruals through analysis of historical information and discussions with Sprint PCS. Depending on the level of
sales and other factors, our estimates of the amounts accrued for commissions and other costs owed to such retailers may require modification of our previous estimates.



Goodwill and Intangible Assets Impairment Analysis



We perform impairment tests of goodwill and indefinite lived assets as required by Statements of Financial Accounting Standards No. 141,
Business Combinations, and No. 142, Goodwill and Other Intangible Assets. The impairment analysis requires numerous subjective assumptions and estimates to determine fair value of the



19



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##### Table of Contents

respective reporting units as required by FAS No. 142. Depending on level of sales, our liquidity and other factors, we
may be required to recognize impairment charges in the future.



Overview



IWO Holdings, Inc. (IWO) is a wholly owned subsidiary of US
Unwired Inc. (US Unwired).



Through our subsidiary, Independent
Wireless One Corporation, we provide wireless personal communication services, commonly referred to as PCS, to an area containing 6.3 million residents in the northeastern United States. Our territory extends from suburban New York City (Orange and
Sullivan Counties) north to the Canadian border and reaches from the eastern suburbs of Rochester to Syracuse, Ithaca, Binghamton and Elmira in central New York State (and extending into a small portion of north central Pennsylvania), east to
include all of Vermont and New Hampshire (except Nashua, New Hampshire) and a portion of western Massachusetts. We are a network partner of Sprint PCS, the personal communications services group of Sprint Corporation. Sprint PCS, directly and
through affiliates like us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide digital PCS services under the Sprint® and Sprint PCS® brand names in our service area.



Our statements of operations and cash flows for the nine-month period ended September 30, 2002 are presented as two distinct periods; the
three-month period ended March 31, 2002 that are prior to our acquisition by US Unwired and the six-month period ended September 30, 2002 that are subsequent to the acquisition. Certain reclassifications have been made to our financial statements
for periods prior to the acquisition in order to conform to the post-acquisition presentation.



For discussion purposes, we have combined the three-month period of January 1, 2002 to March 31, 2002 (pre-acquisition period) and the six-month period of April 1, 2002 to September 30, 2002 (post-acquisition period)
for comparison to the nine-month period ended September 30, 2003.



|                               |  | For the three months ended September 30, |         |   | For the nine months ended September 30, |  
|------------------------------ |  | ---------------------------------------- | ------- | - | --------------------------------------- | -
|                               |  | 2003                                     |         |   | 2002                                    |  
|Revenues:                      |  |                                          |         |   |                                         |  
|Subscriber                     |  | $                                        | 34,042  |   |                                         | $
|Roaming                        |  |                                          | 10,257  |   |                                         |  
|Merchandise sales              |  |                                          | 1,750   |   |                                         |  
|Other revenue                  |  |                                          | 120     |   |                                         |  
|                               |  |                                          |         |   |                                         |  
|Total revenue                  |  |                                          | 46,169  |   |                                         |  
|Expense:                       |  |                                          |         |   |                                         |  
|Cost of service                |  |                                          | 17,788  |   |                                         |  
|Merchandise cost of sales      |  |                                          | 3,284   |   |                                         |  
|General and administrative     |  |                                          | 10,960  |   |                                         |  
|Sales and marketing            |  |                                          | 7,149   |   |                                         |  
|Depreciation and amortization  |  |                                          | 13,786  |   |                                         |  
|Asset abandonment charge       |  |                                          |        |   |                                         |  
|                               |  |                                          |         |   |                                         |  
|Total operating expense        |  |                                          | 52,967  |   |                                         |  
|                               |  |                                          |         |   |                                         |  
|Operating loss                 |  |                                          | (6,798  | ) |                                         |  
|Other expense:                 |  |                                          |         |   |                                         |  
|Interest expense, net          |  |                                          | (10,820 | ) |                                         |  
|                               |  |                                          |         |   |                                         |  
|Loss before income tax benefit |  |                                          | (17,618 | ) |                                         |  
|Income tax benefit             |  |                                          |        |   |                                         |  
|                               |  |                                          |         |   |                                         |  
|Net loss                       |  | $                                        | (17,618 | ) |                                         | $
|                               |  |                                          |         |   |                                         |  



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##### Table of Contents

|                                                    |  | For the nine monthsended September 30, |        
|--------------------------------------------------- |  | -------------------------------------- | -------
|                                                    |  | 2003                                   |        
|Cash flows from operating activities                |  |                                        |        
|                                                    |  |                                       
|Net cash used in operating activities               |  | $                                      | (18,070
|                                                    |  |                                       
|Cash flows from investing activities                |  |                                        |        
|                                                    |  |                                       
|Release of restricted and US Treasury securities    |  |                                        | 21,924 
|Payments for the purchase of equipment              |  |                                        | (11,226
|Proceeds on maturities of marketable securities     |  |                                        |       
|                                                    |  |                                        |        
|Net cash provided by (used in) investing activities |  |                                        | 10,698 
|                                                    |  |                                       
|Cash flows from financing activities                |  |                                        |        
|                                                    |  |                                       
|Proceeds from long-term debt                        |  |                                        |       
|Principal payments of long-term debt                |  |                                        |       
|Other financing activities                          |  |                                        |       
|                                                    |  |                                        |        
|Net cash provided by financing activities           |  |                                        |       
|                                                    |  |                                        |        
|Net change in cash and cash equivalents             |  |                                        | (7,372 
|Cash and cash equivalents at beginning of period    |  |                                        | 35,008 
|                                                    |  |                                        |        
|Cash and cash equivalents at end of period          |  | $                                      | 27,636 
|                                                    |  |                                        |        



Liquidity and Capital Resources



For a discussion on Liquidity, refer to Note 3 to our Condensed Consolidated
Financial Statements that is included in this filing and which is incorporated by this reference.



Cash Flows



Net cash used in operating
activities during the nine-month period ended September 30, 2003 was $18.1 million. Net cash provided by investing activities during the nine-month period ended September 30, 2003 was $10.7 million and included $21.9 million in proceeds of
restricted cash offset by $11.2 million for capital expenditures. Net cash provided by financing activities during the nine-month period ended September 30, 2003 was $0.



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##### Table of Contents

Performance Measurements and Metrics



The wireless telecommunications industry uses terms such as subscriber additions, average revenue per user, churn and cost per gross
addition as performance measurements or metrics. None of these terms are measures of financial performance under accounting principles generally accepted in the United States. When we use these terms, they may not be comparable to similar terms used
by other wireless telecommunications companies.



|                                    |  | Three month periodended September 30, |         |   | Nine month periodended September 30, |  
|----------------------------------- |  | ------------------------------------- | ------- | - | ------------------------------------ | -
|                                    |  | 2003                                  |         |   | 2002                                 |  
|Subscribers                         |  |                                       |         |   |                                      |  
|Gross Additions                     |  |                                       | 21,373  |   |                                      |  
|Net Additions                       |  |                                       | 610     |   |                                      |  
|Total Customers                     |  |                                       | 210,897 |   |                                      |  
|Churn                               |  |                                       | 3.0     | % |                                      |  
|                                    |  |                                       |         |  
|Average Revenue Per User, Monthly   |  |                                       |         |   |                                      |  
|Including Roaming                   |  | $                                     | 70.06   |   |                                      | $
|Without Roaming                     |  | $                                     | 53.84   |   |                                      | $
|                                    |  |                                       |         |  
|Cash Cost Per User, Monthly         |  |                                       |         |   |                                      |  
|Including Roaming                   |  | $                                     | 45.46   |   |                                      | $
|Without Roaming                     |  | $                                     | 34.21   |   |                                      | $
|                                    |  |                                       |         |  
|Cost Per Gross Addition             |  | $                                     | 406     |   |                                      | $
|                                    |  |                                       |         |  
|Average Monthly MOUs Per Subscriber |  |                                       |         |   |                                      |  
|Home                                |  |                                       | 480     |   |                                      |  
|Roaming off our Network             |  |                                       | 159     |   |                                      |  
|                                    |  |                                       |         |  
|System MOUs (Millions)              |  |                                       |         |   |                                      |  
|Subscriber                          |  |                                       | 304     |   |                                      |  
|Roaming                             |  |                                       | 147     |   |                                      |  
|                                    |  |                                       |         |  
|Licensed POPs (Millions)            |  |                                       | 6.3     |   |                                      |  
|Covered POPs (Millions)             |  |                                       | 4.7     |   |                                      |  
|Towers (owned and leased)           |  |                                       | 671     |   |                                      |  
|Cum. CapEx Per Covered POP          |  | $                                     | 58.66   |   |                                      | $



Subscribers



We refer to our customers as subscribers. Gross additions refer to the total
number of new subscribers added during the period. Net subscribers refer to the total number of new subscriber additions during the period reduced by any subscribers that have cancelled or terminated their service with us during this same period.



The number of gross additions decreased for the three and nine month periods
ended September 30, 2003 as compared to the three and nine month periods ended September 30, 2002 primarily as a result of our marketing efforts to target customers of good credit quality and the re-institution and increase of deposits for credit
challenged subscribers.



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##### Table of Contents

The number of net additions decreased for the three and nine month periods ended September 30, 2003 as compared to the
three and nine month periods ended September 30, 2002 primarily as a result of a reduction in gross additions that was partially offset by an improvement in subscriber churn, as discussed below.



Churn



Churn is the monthly rate of customer turnover expressed as a percentage of our overall average customers for the reporting period. Customer
turnover includes both customers that elected voluntarily to not continue using our service and customers that were involuntarily terminated from using our service because of non-payment. Churn is calculated by dividing the sum of (i) the number of
customers that discontinue service; (ii) less those customers discontinuing their service within 30 days of their original activation date; (iii) adding back those customers that reactivate their service, by our overall average customers for the
reporting period; and, (iv) dividing by the number of months in the period. The decrease in churn for the three and nine-month periods ended September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily as
a result of a continuing improvement in the credit quality of our subscriber base.



Subscriber and Roaming Revenue



Subscriber revenue consists primarily
of a basic service plan (where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either exceed or are not covered by the basic service plan); long
distance; and charges associated with travel outside our service area.



Roaming
revenue consists primarily of Sprint PCS travel revenue and foreign roaming revenue. Sprint PCS travel revenue is generated on a per minute basis when a Sprint PCS subscriber outside of our markets uses our service when traveling through our
markets. Sprint PCS travel expense is generated on a per minute basis when our subscribers travel outside our market area and use the Sprint PCS network. Historically, our Sprint PCS travel revenue exceeds our Sprint PCS travel expense. Foreign
roaming revenue is generated when a non-Sprint PCS customer uses our service when traveling through our markets.



Effective January 1, 2003, Sprint PCS reduced the reciprocal travel rate from $0.10 per minute in 2002 to $0.058 per minute in 2003. For the three-month period ended
September 30, 2003, the reduction in the travel rate has resulted in a $5.7 million decrease to our revenues, a $4.3 million decrease to our expenses and a reduction to our cash flow of $1.4 million. For the nine-month period ended September 30,
2003 the reduction in the travel rate has resulted in a $13.0 million decrease to our revenues, an $11.8 million decrease to our expenses and a reduction to our cash flow of $1.2 million.



Average Revenue per User



Average revenue per user (ARPU) is the average monthly service revenue per subscriber and is calculated by dividing total subscriber revenue for the period by
the average number of subscribers during the period. We present ARPU excluding and including roaming revenue. The increase in ARPU excluding roaming for the three-month period ended September 30, 2003 as compared to the three-month period ended
September 30, 2002 was primarily as a result of an E-911 reimbursement as discussed in Subscriber Revenues below that added $1.80. The decrease in ARPU excluding roaming for the nine month period ended September 30, 2003 as compared to the nine
month period ended September 30, 2002 was primarily as a result of the E-911 reimbursement offset by subscriber plans that offer more generous allotment of minutes. The decrease in ARPU including roaming for the three and nine-month periods ended
September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily the result of the reduction in the reciprocal travel rate as discussed above.



Cash Cost per User



Cash cost per user (CCPU) is a measure of the average monthly operating costs to operate the business on a per user basis consisting of subscriber support,
network operations, service delivery, roaming expense, bad debt expense, wireless handset upgrade subsidies (but not commissions) and other general and administrative costs, divided by average subscribers for the period. The decrease in CCPU for the
three and nine-month periods ended September 30, 2003 as compared to the three and nine-month periods ended September 30, 2002 was primarily as a result of reductions in bad debt and reductions in payroll and general overhead expenses as a result of
integration efforts related to the April 1, 2002 acquisition by US Unwired.



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Cost per Gross Addition



Cost per gross addition (CPGA) summarizes the average cost to acquire all customers during the reporting period. CPGA is computed by adding selling and
marketing expenses, cost of equipment and activation costs and reducing the amount by the revenue from handset and accessory sales. The net amount is divided by the number of total new subscribers added for the period. The increase in CPGA for the
three and nine month periods ended September 30, 2003 as compared to the three and nine month periods ended September 30, 2002 was primarily a result of fewer gross additions, despite an overall decrease in the expenses.



Average Monthly Minutes of Use per Subscriber



We calculate average monthly minutes of use (MOUs) per subscriber to provide us with an
indication of the effectiveness of our basic service plans. We calculate average monthly MOUs per subscriber by dividing total subscriber minutes with and without roaming by the average number of our subscribers. Our average subscriber MOUs with and
without roaming are increasing primarily as a result of more generous allotments in our basic service plans.



System Minutes of Use



System minutes of Use
(MOUs) provide an indication of total network (system) usage. We track and evaluate network usage for our subscribers as well as other Sprint PCS, Sprint PCS affiliates and non-Sprint PCS subscribers using our network in
order to assess network capacity. Our overall system minutes are increasing primarily as a result of increases to subscribers and increases in minutes allotted to subscriber plans.



Resident Population/ Service Area



Our service area comprises a population (Licensed POPs) of approximately 6.3 million residents. When we use the term Covered POPs, we refer to
that portion of residents in our service area that have service available as a result of our network build out. The number of people in our service area does not represent the number of Sprint PCS subscribers that we expect to have in our service
area. The increase in Covered POPs is the result of additional cell site towers (towers) that either we have constructed and own or where we have leased space on cell site towers owned by others.



Cumulative Capital Expenditures Per Covered POP



Cumulative Capital Expenditures Per Covered POP (Cum CapEx Per Covered POP) is
calculated by dividing our capital expenditures since inception by our ending Covered POPs.



Three Month Period Ended September 30, 2003 Compared to the Three Month Period Ended September 30, 2002



Revenues



|                    |  | Three-month periodended September 30,
|------------------- |  | -------------------------------------
|                    |  | 2003                                 
|                    |  | (In thousands)                       
|Subscriber revenues |  | $                                    
|Roaming revenues    |  |                                      
|Merchandise sales   |  |                                      
|Other revenues      |  |                                      
|                    |  |                                      
|Total revenues      |  | $                                    
|                    |  |                                      



Subscriber revenues



Total subscriber revenues were $34.0 million for the three-month period ended September 30,
2003 as compared to $29.0 million for the three-month period ended September 30, 2002, representing an increase of $5.0 million and was primarily the result of a one time $0.9 million revenue adjustment form Sprint PCS to recognize an E911 monthly
surcharge that was applied to each of our subscribers bills and an increase in subscribers.



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##### Table of Contents

Roaming revenues



Roaming revenues were $10.3 million for the three-month period ended September 30, 2003 as compared to $11.8 million for the three-month period ended September 30, 2002,
representing a decrease of $1.5 million and was primarily the result of an increase of $4.2 million related to a higher volume of PCS subscribers traveling though our service area offset by a decrease of $5.7 million related to our decrease in the
reciprocal travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise sales



Merchandise sales were $1.8 million for the
three-month period ended September 30, 2003 as compared to $1.9 million for the three-month period ended September 30, 2002, representing a decrease of $.1 million. An increase of $.3 million related to the July 1, 2003 adoption of EITF 00-21 as
discussed in Footnote 1 above was offset by fewer subscriber additions and steeper discounts on handset sales to new subscribers. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of
handsets to remain competitive in the marketplace.



Operating Expenses



|                            |  | Three-month periodended September 30,
|--------------------------- |  | -------------------------------------
|                            |  | 2003                                 
|                            |  | (In thousands)                       
|Cost of service             |  |                                      
|Merchandise cost of sales   |  |                                      
|General & administrative    |  |                                      
|Sales & marketing           |  |                                      
|Depreciation & amortization |  |                                      
|                            |  |                                      
|Total operating expenses    |  | $                                    
|                            |  |                                      



Cost of service



Cost of service was $17.8 million for the three-month period ended September 30, 2003 as
compared to $18.3 million for the three-month period ended September 30, 2002, representing a decrease of $.5 million that consisted primarily of a $1.0 million decrease in roaming expense partially offset by increased repairs and maintenance and
circuit expenses. The overall decrease in roaming expense consisted of an increase of $3.3 million related to a higher volume of our subscribers traveling through other Sprint PCS and Sprint PCS affiliate service area offset by a decrease of $4.3
million related to our decrease in the reciprocal travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise cost of sales



Merchandise cost of sales was $3.3 million for the three-month period ended September 30, 2003 as compared to $2.7 million for the three-month period ended September 30, 2002, representing an increase of $.6 million
that was primarily related to adoption of EITF 00-21 as discussed above. As a result of the adoption of EITF 00-21 effective July 1, 2003, we no longer defer a portion of our handset cost for handsets sold in our retail outlets. The cost of handsets
typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



General and administrative expenses



General and administrative expenses were $11.0 million for the three-month period ended September 30, 2003 as compared to $14.3 million for the three-month period ended
September 30, 2002, representing a decrease of $3.3 million and was primarily related to a $2.2 million decrease in bad debt expense and a $1.0 million decrease in payroll and general overhead expenses as a result of integration efforts related to
the April 1, 2002 acquisition by US Unwired.



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##### Table of Contents

Sales and marketing expenses



Sales and marketing expenses were $7.1 million for the three-month period ended September 30, 2003 as compared to $11.4 million for the three-month period ended September
30, 2002, representing a decrease of $4.3 million and was primarily related to a $2.0 million decrease in advertising expense, a $1.1 million decrease in wages and benefits, a $.2 million decrease in handset subsidies and a $.8 million decrease in
agent commissions.



Depreciation and amortization expense



Depreciation and amortization expense was $13.8 million for the three-month period ended
September 30, 2003 as compared to $15.3 million for the three-month period ended September 30, 2002, representing a decrease of $1.5 million and was primarily due to a $2.7 million decrease in the amortization of intangible assets offset by a $1.2
million increase in depreciation expense. Property and equipment increased to $203.7 million at September 30, 2003 from $184.7 million at September 30, 2002, and intangibles assets decreased to $77.3 million at September 30, 2003 from $272.5 million
at September 30, 2002, principally as a result of a $188.3 million impairment charge recorded in the fourth quarter of 2002.



Other Income/(Expense)



|                    |  | Three-month periodended September 30, |        
|------------------- |  | ------------------------------------- | -------
|                    |  | 2003                                  |        
|                    |  | (In thousands)                        |        
|Interest expense    |  | $                                     | (10,953
|Interest income     |  |                                       | 164    
|Loss on asset sale  |  |                                       | (31    
|                    |  |                                       |        
|Total other expense |  | $                                     | (10,820
|                    |  |                                       |        



Interest expense was $11.0 million for
the three-month period ended September 30, 2003 as compared to $9.5 million for the three-month period ended September 30, 2002, representing an increase of $1.5 million. Our outstanding debt was $351.3 million at September 30, 2003 as compared to
$336.7 million at September 30, 2002. All loans under the senior bank credit facility, effective with the date of the default as discussed in Note 5 above, bear interest at a rate of 4.25-4.75 percent above the agent banks prime rate.



Interest income was $.2 million for the three-month period ended September 30,
2003 as compared to $.6 million for the three-month period ended September 30, 2002, representing a decrease of $.4 million. The decrease was primarily due to less cash and cash equivalents available for investment and a decrease in interest rates.



Nine Month Period Ended September 30, 2003 Compared to the Nine Month Period
Ended September 30, 2002



Revenues



|                    |  | Nine-month period endedSeptember 30,
|------------------- |  | ------------------------------------
|                    |  | 2003                                
|                    |  | (In thousands)                      
|Subscriber revenues |  | $                                   
|Roaming revenues    |  |                                     
|Merchandise sales   |  |                                     
|Other revenues      |  |                                     
|                    |  |                                     
|Total revenues      |  | $                                   
|                    |  |                                     



Subscriber revenues



Total subscriber revenues were $96.8 million for the nine-month period ended September 30,
2003 as compared to $83.4 million for the nine-month period ended September 30, 2002, representing an increase of $13.4 million and was primarily the result of an increase in subscribers.



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##### Table of Contents

Roaming revenues



Roaming revenues were $25.6 million for the nine-month period ended September 30, 2003 as compared to $27.9 million for the nine-month period ended September 30, 2002,
representing a decrease of $2.3 million and was primarily the result of an increase of $10.7 million related to a higher volume of PCS subscribers traveling though our service area offset by a decrease of $13.0 million related to our decrease in the
reciprocal travel rate as discussed in Subscriber and Roaming Revenue above.



Merchandise sales



Merchandise sales were $5.0 million for the
nine-month period ended September 30, 2003 as compared to $6.5 million for the nine-month period ended September 30, 2002, representing an decrease of $1.5 million and related to fewer subscriber additions and higher discounts offered to new
subscribers. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



Operating Expenses



|                            |  | Nine-month period endedSeptember 30,
|--------------------------- |  | ------------------------------------
|                            |  | 2003                                
|                            |  | (In thousands)                      
|Cost of service             |  | $                                   
|Merchandise cost of sales   |  |                                     
|General & administrative    |  |                                     
|Sales & marketing           |  |                                     
|Depreciation & amortization |  |                                     
|Asset abandonment charge    |  |                                     
|                            |  |                                     
|Total operating expenses    |  | $                                   
|                            |  |                                     



Cost of service



Cost of service was at $52.0 million for the nine-month period ended September 30, 2003 as
compared to $54.7 for the nine-month period ended September 30, 2002, representing a decrease of $2.7 that consisted primarily of a $2.0 million decrease in circuit expense and interconnect usage, a $1.0 million decrease in wages and a $2.5 million
decrease in roaming expense offset by a $1.1 million increase in new cell site lease expenses and escalators of existing leases and a $1.3 million increase in repairs and maintenance. The overall decrease in roaming expense consisted of an increase
of $9.3 million related to a higher volume of our subscribers traveling though other Sprint PCS and Sprint PCS affiliate service area offset by a decrease of $11.8 million related to our decrease in the reciprocal travel rate as discussed in
Subscriber and Roaming Revenue above.



Merchandise cost of sales



Merchandise cost of sales was $8.2 million for the nine-month period ended September 30, 2003
as compared to $10.0 million for the nine-month period ended September 30, 2002, representing a decrease of $1.8 million that was primarily related to fewer subscriber additions and to our to adoption of EITF 00-21 as discussed above. The cost of
handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.



General and administrative expenses



General and administrative expenses were $35.7 million for the nine-month period ended September 30, 2003 as compared to $45.7 million for the nine-month period ended
September 30, 2002, representing a decrease of $10.0 million was primarily related to a $4.3 million decrease in bad debt expense, a $2.0 million decrease in payroll and other general and administrative functions as a result of the acquisition by US
Unwired offset by $3.0 million in professional services related to debt restructuring as discussed in Liquidity above. The nine-month period ended September 30, 2002 also included $7.7 million of merger related expenses.



27



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##### Table of Contents

Sales and marketing expenses



Sales and marketing expenses were $22.3 million for the nine-month period ended September 30, 2003 as compared to $28.6 million for the nine-month period ended September
30, 2002, representing a decrease of $6.3 million and was primarily related to a $2.0 million decrease in advertising expense, a $1.0 million decrease in handset subsidies, a $2.0 million decrease in payroll and a $1.3 million decrease in agent
commissions.



Depreciation and amortization expense



Depreciation and amortization expense was $40.8 million for the nine-month period ended
September 30, 2003 as compared to $35.7 million for the nine-month period ended September 30, 2002, representing an increase of $5.0 million and was primarily due to a $1.2 million increase in the amortization of intangible assets and a $3.8 million
increase in depreciation expense. Property and equipment increased to $203.7 million at September 30, 2003 from $184.7 million at September 30, 2002, and intangibles assets decreased to $77.3 million at September 30, 2003 from $272.5 million at
September 30, 2002, principally as a result of a $188.3 million impairment charge recorded in the fourth quarter of 2002. The nine-month period ended September 30, 2003 reflects nine months of intangible amortization as compared to only six months
of intangible amortization in the six-month period ended June 30, 2002 as the acquisition by US Unwired occurred in April 2002. Asset abandonment



As discussed in Liquidity in Note 3 above, we recorded a $12.4 million write off of construction in progress and related lease expense due to abandoned cell site
construction.



Other Income/(Expense)



|                    |  | Nine-month periodended September 30, |        
|------------------- |  | ------------------------------------ | -------
|                    |  | 2003                                 |        
|                    |  | ( In thousands)                      |        
|Interest expense    |  | $                                    | (29,368
|Interest income     |  |                                      | 708    
|Loss on asset sale  |  |                                      | (31    
|                    |  |                                      |        
|Total other expense |  | $                                    | (28,691
|                    |  |                                      |        



Interest expense was $29.4 million for
the nine-month period ended September 30, 2003 as compared to $26.8 million for the nine-month period ended September 30, 2002, representing an increase of $2.6 million. Our outstanding debt was $351.3 million at September 30, 2003 as compared to
$336.7 million at September 30, 2002. All loans under the senior bank credit facility, effective with the date of the default as discussed in Note 5 above, bear interest at a rate of 4.25-4.75 percent above the agent banks prime rate.



Interest income was $.7 million for the nine-month period ended September 30,
2003 as compared to $2.8 million for the nine-month period ended September 30, 2002, representing a decrease of $2.1 million. The decrease was primarily due to less cash and cash equivalents available for investment and a decrease in interest rates.



Seasonality



Like the wireless communications industry in general, there is an increase in subscriber additions in the fourth quarter due to the holiday
season. A greater number of phones sold at holiday promotional prices causes our losses on merchandise sales to increase. Our sales and marketing expenses increase also with holiday promotional activities. We generally have the weakest demand for
new wireless services during the summer. We expect these trends to continue based on historical operating results.



Item 4. Controls and Procedures



As of September 30,
2003, an evaluation was performed under the supervision and with the participation of the Companys management, including the CEO and CFO, of the effectiveness of the design and operation of the Companys disclosure controls and
procedures. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures were effective as of September 30, 2003. There have been no changes in the
Companys internal control over financial reporting during the fiscal quarter ended September 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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##### Table of Contents

Part II



Item 3. Defaults Upon Senior Securities



Since March
2003, Independent Wireless One Corporation, a wholly owned subsidiary of IWO, has failed to make $7.5 million in interest payments on its amended and restated secured credit facility (the IWO senior bank credit facility) under which it
may borrow up to $240 million in the aggregate consisting of up to $70 million in revolving loans and $170 million in term loans and was not in compliance with its restrictive covenants. As a result of the failure to make scheduled interest payments
and the covenant violations, the Company was in default of the IWO senior bank credit facility at September 30, 2003.



Item 6. Exhibits and Reports on Form 8-K.



a. The
following exhibits are filed as part of this report:



|            | 
|----------- | 
|(3)(i)      | 
|            | 
|(3)(ii)     | 
|            | 
|(4)         | 
|            | 
|(10) (i)(a) | 
|            | 
|(10)(i)(b)  | 
|            | 
|(10)(i)(c)  | 
|            | 
|(31.1)      | 
|            | 
|(31.2)      | 
|            | 
|(32.1)      | 
|            | 
|(32.2)      | 



b. Reports on Form 8-K



None



SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|November 11, 2003 |  |  |  | IWO HOLDINGS, INC.
|----------------- |  |  |  | ------------------
|                  |  |  | 
|                  |  |  |  | By:               
|                  |  |  |  |                   



29