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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934



(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------

For The Fiscal Year Ended December 31, 2004.



OR

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



Commission File Number: 000-22003



US UNWIRED INC.

(Exact name of registrant as specified in its charter)

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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Louisiana                                                      |  | 72-1457316                             
|(State or other jurisdiction of incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                               |  | 70601                                  
|                                                               |  | (Zip code)                             

901 Lakeshore Drive

Lake Charles, Louisiana 70601

(Address of principal executive offices)



(337) 436-9000

(Registrants telephone number, including area code)



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Securities registered pursuant to Section 12(b) of the Act: None.



Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

(Title of Each Class)



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 and 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ̈



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



The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing
sales price on the OTC Bulletin Board on June 30, 2004, the last business day of the registrants most recently completed second fiscal quarter, was approximately $386,264,374. (For purposes of determination of the foregoing amount, only our
directors, executive officers and 10% shareholders have been deemed affiliates).



There were 163,761,093 shares of common stock, $0.01 par value per share, outstanding at March 1, 2005.



DOCUMENTS INCORPORATED BY REFERENCE



1. Portions of the US Unwired Inc. Proxy Statement of Registrant for its 2004 annual meeting of shareholders.



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US UNWIRED INC.



ANNUAL REPORT ON FORM
10-K



TABLE OF CONTENTS



|           |  |                                                                                                |  |     
|---------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                |  | Page
|           |  | PART I                                                                                         |  |     
|ITEM 1.    |  | Business                                                                                       |  | 3   
|ITEM 2.    |  | Properties                                                                                     |  | 32  
|ITEM 3.    |  | Legal Proceedings                                                                              |  | 32  
|ITEM 4.    |  | Submission of Matters to a Vote of Security Holders                                            |  | 34  
|           |  |                                                                                               
|           |  | PART II                                                                                        |  |     
|ITEM 5.    |  | Market For Registrants Common Equity And Related Stockholder Matters                          |  | 34  
|ITEM 5A.   |  | Changes in Securities                                                                          |  | 34  
|ITEM 6.    |  | Selected Financial Data                                                                        |  | 35  
|ITEM 7.    |  | Managements Discussion And Analysis Of Financial Condition And Results Of Operations          |  | 36  
|ITEM 7A.   |  | Quantitative And Qualitative Disclosures About Market Risk                                     |  | 50  
|ITEM 8.    |  | Financial Statements and Supplementary Data                                                    |  | 51  
|ITEM 9.    |  | Changes In And Disagreements With Accountants On Accounting And Financial Disclosure           |  | 51  
|ITEM 9A.   |  | Controls and Procedures                                                                        |  | 51  
|           |  |                                                                                               
|           |  | PART III                                                                                       |  |     
|ITEM 10.   |  | Directors And Executive Officers Of The Registrant                                             |  | 54  
|ITEM 11.   |  | Executive Compensation                                                                         |  | 55  
|ITEM 12.   |  | Security Ownership Of Certain Beneficial Owners And Management and Related Stockholder Matters |  | 55  
|ITEM 13.   |  | Certain Relationships And Related Transactions                                                 |  | 55  
|ITEM 14.   |  | Principal Accounting Fees and Services                                                         |  | 55  
|           |  |                                                                                               
|           |  | PART IV                                                                                        |  |     
|ITEM 15.   |  | Exhibits, Financial Statements, Schedules, and Reports On Form 8-K                             |  | 56  
|           | 
|Signatures |  | 63                                                                                            





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Cautionary Note Regarding Forward-Looking Statements



This report contains forward-looking statements, which are statements about
future business strategy, operations and capabilities, construction plans, construction schedules, 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 risk factors 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; (iii) our ability to expand our Sprint network or to upgrade the Sprint network to accommodate new technologies; (iv) limited operating history in the PCS market and the possibility
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) changes in labor, equipment and capital costs; (xiv) any inability to comply with the
indentures that govern our senior notes or credit agreements; (xv) changes in management; and, (xvi) 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. For a discussion of some of the factors discussed above as well as additional factors, see RISK FACTORS
contained in this document.



PART I



ITEM 1.
Business



General



We are principally engaged in the ownership and operation of wireless
communications. We are a network partner of Sprint and have the exclusive right to provide wireless services under the Sprint brand names within our service area.



Recent Developments



On February 10, 2005, we divested our relationship in IWO Holdings, Inc. (IWO). The information in Item 1. Business of this filing excludes
the operations of IWO. Due to the uncertainty of this divestiture at December 31, 2004, our audited consolidated financial statements and all other Items in this filing include the operations of IWO on a consolidated basis.



Our service area consists of portions of Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, Oklahoma, Tennessee and Texas. At December 31, 2004, we were providing wireless service to approximately 469,500 subscribers.



Our Affiliation with Sprint



Sprint adopted a strategy to extend its 100% digital, 100% PCS network by entering into agreements with independent wireless companies such as us, which
we refer to as affiliates, to construct and manage Sprint markets and market Sprint services. Through these affiliations, Sprint services are available in key cities contiguous to current and future Sprint markets.



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Under our agreements with Sprint, we market Sprint products and services in our service area using
licenses that Sprint acquired from the FCC in 1994 and 1996. We are the only provider of Sprint products and services in our service area. Some key points about these agreements are:



| |  |  | Each agreement lasts up to 50 years with an initial period of 20 years and three successive 10-year renewal periods.
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Each agreement requires revenue sharing of 8% to Sprint and 92% to US Unwired, except that we retain 100% of the revenues from certain non-US Unwired Sprint subscribers traveling in
our service area, merchandise sales and other revenues as defined in the Sprint Management Agreement.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If we terminate or breach the agreements, we may be required to sell our PCS business and network to Sprint or to purchase a portion of the Sprint licenses from Sprint.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If Sprint terminates or breaches the agreements, we may be able to sell our PCS business and network to Sprint or to purchase the Sprint licenses from Sprint.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, through services agreements, we pay
Sprint service fees for certain back office functions such as customer service and billing performed by Sprint for us. We pay service fees to Sprint for a portion of our new subscribers activations as well recurring monthly fees for
services performed for existing subscribers.



We also purchase
other goods and services, such as handsets, from Sprint where Sprint has contracted with third party vendors. Sprint has entered into agreements with national retailers that sell handsets and service to new subscribers in our markets. Sprint pays
these national retailers a new subscriber commission and provides handsets to them below cost, which we refer to as a handset subsidy. For new subscribers added in our markets by these national retailers, Sprint passes the costs of commissions and
handset subsidies to us.



We believe that our service area is
important to the Sprint network. To date, Sprint has made considerable investments in the licenses covering our service area.



Our Service Area



Our Sprint service area includes all or portions of 48 markets spanning over 179,000 square miles with a population of approximately 11.3 million people
in portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas as a network partner of Sprint. The number of residents in our service area does not represent the number of Sprint subscribers that we expect
to have in our service area.



Services and Features



We offer Sprint products and services in our service area. Our products and
services are designed to mirror those of Sprint and to be a part of the Sprint nationwide network. Sprint subscribers in our service area may use Sprint services throughout our markets and seamlessly throughout the Sprint network.



We support Sprints newest technology, PCS Vision, throughout our service area. PCS Vision allows subscribers that purchase handsets with the
appropriate features the ability to access the Internet, receive and send email, download pictures and sounds, and take digital pictures either with a built-in or attachable camera.



We offer Code Division Multiple Access (CDMA) handsets which can offer up to 7 days of standby time and up to 5.5 hours of
talk time. Many of these models are dual-mode handsets that allow subscribers to make and receive calls on both PCS and cellular frequency bands. All handsets are equipped with preprogrammed features and are sold under the Sprint brand name.



We provide roaming service to both Sprint subscribers that are
traveling through our service area as well as certain non-Sprint subscribers traveling through our service area. Sprint and other affiliates provide a similar service to our subscribers traveling outside of our market area. Roaming allows a person
to make a phone call outside the service area where they purchased the service.



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Marketing Strategy



We benefit from the recognizable Sprint brand names and logos and from Sprints technological developments. We enhance the national effort with local
marketing managers and coordinators who develop strategies specifically tailored to our local markets. They assist the sales force in driving traffic to the stores through promotions, contests and community relations programs and assist the outside
sales force in targeting business sales.



Pricing



We use the Sprint pricing strategy to offer our
subscribers a menu of service plans typically structured with monthly recurring charges, large local calling areas, bundles of minutes and options and features such as voicemail, enhanced caller identification, call waiting, three-way calling and
PCS Vision web. In order to meet the competitive needs of our specific local markets, we occasionally alter Sprints pricing plans. In addition, we offer a pre-paid service called Chat Pak in certain markets where we believe that it will
provide a competitive advantage.



Advertising



We capitalize on the Sprint name and reputation to
attract subscribers. We benefit from Sprints national advertising campaign at no additional cost. Sprint also runs numerous promotional campaigns that provide subscribers with benefits such as additional features at the same rate or free
ancillary services. We direct our media and promotional efforts at the community level by advertising Sprints products and services through radio, print, outdoor, billing inserts, direct mail and promotional displays in our retail stores.



Sponsorships



Sprint sponsors numerous national and regional events. These sponsorships
provide Sprint with brand name and product awareness. Our regional marketing teams sponsor local events, teams and projects to increase consumer awareness of the Sprint brand in the local community and to provide occasions to develop positive
community relationships in our markets.



Sales and Distribution



We target a broad range of consumer and business markets
through a sales and distribution plan. We use traditional sales channels, like our retail stores, mass merchandisers and other national retail outlets, independent agents and an outside sales force. We also use lower-cost methods like direct
marketing and a corporate website.



Retail stores



At December 31, 2004, we had 37 retail outlets and
kiosks in our service area. Our retail outlets are located in principal retail districts in each market, designed in accordance with Sprint specifications and branded as Sprint stores. We use our stores for the distribution and sale of our handsets
and services. Sales representatives in these outlets receive in-depth training that allows them to explain our service in an informed manner. We believe that these representatives foster effective and enduring customer relationships.



Mass merchandisers and outlets



We target subscribers through our mass-market retail outlets through Sprint
negotiated distribution agreements with national and regional mass merchandisers and consumer electronic retailers, including Radio Shack, Wal-Mart, Best Buy and Office Depot and, at December 31, 2004, had a presence in 360 national retail
locations in our area.



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Independent agents



We have a contracted network of independent agents that creates additional opportunities for local distribution. Most of
these businesses are family-owned consumer electronics dealers and wireless telecommunication retailers. At December 31, 2004, we had approximately 168 independent agents under contract in our service area.



Other Sprint initiatives



We participate in Sprints national accounts program, which targets
Fortune 1000 companies. This allows us to take advantage of Sprints inbound telemarketing sales program and Sprints internet site that allows subscribers in our service area who purchase products and services over the Sprint internet
site to become subscribers of our PCS network.



Resellers



Effective July 2002, we agreed to participate in a
reseller program in our service area through Sprint as part of the partnership between Sprint and Virgin Mobile USA, LLC, or Virgin Mobile. The agreement allows Virgin Mobile to sell prepaid wireless services and pay us for use of our network on a
per minute basis. Virgin Mobile targets the 15- to 30-year-old consumer market to purchase pay-as-you-go wireless communications services while eliminating the responsibilities of monthly bills and credit requirements.



Suppliers and Equipment Vendors



We do not manufacture any of the handsets that we use in our operations. We
purchase our handsets directly from Sprint and our accessories from certain other third party vendors. No single manufacturer has accounted for more than 10% of our sales in the current reporting period or in the past three years.



Competition



We face significant competition in our service area from a number of competitors. There are four other national mobile
telephony operators that offer service in at least some portion of our service areaVerizon, Cingular, Nextel and T-Mobile. In addition, there are many local and regional carriers that offer PCS and cellular services in our service area.
According to the FCCs Ninth Annual Commercial Mobile Radio Services (CMRS) Competition Report, released September 28, 2004, . . . 97% of the total U.S. population lives in counties with access to three or more
different operators offering mobile telephone service.



In December 2004, Sprint announced its intention to merge with Nextel. We currently compete with Nextel in our service area. We are uncertain at this time of the impact of this merger on market competition.



Wireless local number portability (WLNP) was introduced in a
portion of our markets in November 2003 and the balance of our markets in May 2004. WLNP allows customers to retain existing telephone numbers when switching from one carrier to another. The introduction of WLNP in all of our markets has resulted in
higher customer turnover and increased operating costs.



In
order to attract new subscribers, we have offered discounts on handsets and service plans that include more minutes and/or more anytime minutes and other enhancements such as complimentary periods of free data usage. Based upon increased
competition, we anticipate that market prices for two-way wireless services will continue to decline in the future. We compete to attract and retain subscribers principally on the basis of services and features, the size and location of our service
areas, network coverage and reliability, customer care and pricing. Our ability to compete successfully depends, in part, on our ability to anticipate and respond to various competitive factors affecting the industry, including new services that may
be introduced, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies by competitors.



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We believe that our ability to compete effectively with other wireless providers will depend on:



| |  |  | the continued expansion and improvement of the Sprint network, the Sprint customer care system and telephone handset options and feature availability.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the continued success of CDMA technology in providing better call quality and clarity than other systems; and
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | our competitive pricing with various options suiting individual subscribers calling needs.
| | - |  | ------------------------------------------------------------------------------------------



The main wireless technologies used in the United States are: Code Division Multiple Access, or CDMA and Global System
Mobile Communications, or GSM.



Sprint has chosen CDMA
technology, which we believe offers significant advantages in the marketplace.



CDMA offers superior call quality and clarity. CDMA also offers the highest capacity of the three standards. This means that more simultaneous calls can be handled on a CDMA network than on equivalent TDMA or GSM
networks. CDMA also offers a high level of security, giving subscribers confidence that their calls remain private. CDMA offers many advanced features such as short text messaging, Internet access, call waiting, call forwarding and three-way
calling. Several providers in the United States, including Sprint and Verizon Wireless, use CDMA technology.



GSM is the most widely adopted standard around the world. It originated in Europe, where it continues to be the dominant standard. It has been widely
deployed for over ten years, which means that economies of scale for network and handset equipment have been achieved. This has lowered the cost of purchasing the equipment for a GSM system. GSM also offers increased call security and advanced
features like those available on a CDMA network. T-Mobile and Cingular use GSM technology.



We do not currently face significant competition from resellers and believe our relationship with Virgin Mobile complements our other distribution channels. We expect to continue to be subject to the FCC rule that
requires cellular and PCS licensees to permit the resale of carrier service.



Network Operations



We have completed the
initial network build out plan for our service area. The Sprint Management Agreement requires us to provide network coverage to 65% of the resident population in our service area.



For a discussion of recent developments in 2004 including our operating results, liquidity and relationship with Sprint,
please refer to Recent Developments in Item 7. Managements Discussion and Analysis of Financial Condition And Results of Operations.



We are continuing to expand our service by selectively upgrading network equipment and adding cell sites in only certain markets that we believe will help
us provide increased subscriber growth or enhanced coverage that we believe will reduce subscriber churn.



Cell sites



Our preference is to selectively add cell sites through co-location, which is leasing available space on a tower owned by another company. When we
co-locate, we generally have lower construction costs, and it is likely that any zoning difficulties have been resolved. As of December 31, 2004, we had 1,224 PCS cell sites, of which approximately 99% were co-locations and 1% was owned with network
coverage for approximately 8.1 million residents out of approximately 11.3 million total residents. The number of people in our service area does not represent the number of Sprint subscribers that we expect to have in our service area.



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Microwave relocation



Fixed microwave operators previously used the frequencies that are now allocated for PCS licenses. The FCC has established
procedures for PCS licensees to relocate these existing microwave paths, generally at the PCS licensees expense. We have paid our share of those reported cost for relocation that have been triggered by our current site build out. We do not
expect any substantial relocation cost for additional planned build out of sites.



Switching centers



We lease property for five switching centers in Louisiana, Georgia, Mississippi and Alabama. Each switching center serves several purposes, including subscriber validation, call routing, managing call hand off and managing access to
landlines and access to Sprint national platforms.



Interconnection



We connect our digital
network to the landline telephone system through interconnection agreements with local exchange carriers. Through our agreements with Sprint, we benefit from the interconnection agreements that Sprint negotiates.



Network monitoring systems



We use Sprints Network Operations Control to provide monitoring and
maintenance of our entire network, including the constant monitoring for blocked or dropped calls, call clarity and signs of tampering, cloning or fraud, the recording of network traffic statistics and the overseeing of customer usage, data
collected at switch facilities and billing.



Government Regulation



The FCC and other federal, state and local regulatory
agencies regulate our PCS system.



Licensing of PCS
systems



A broadband PCS system operates under a
service area license granted by the FCC for a particular market. These licenses operate on one of six frequency blocks allocated for broadband PCS service. Narrowband PCS is for non-voice applications such as paging and data service and is
separately licensed. The FCC awards all PCS licenses by auction.



All PCS licenses have a 10-year term and must be renewed at the end of this term. The FCC generally will renew a PCS license if the licensee provided substantial service during the past license term and substantially complied with
applicable law. The FCC may revoke a license for material violations of FCC rules. All PCS licensees must satisfy coverage requirements. Failure to meet the coverage requirements may result in forfeiture of the license by the licensee.



For up to five years after a PCS license is granted, the licensee must
share spectrum with existing licensees that operate fixed microwave systems within its license area. To operate our PCS systems efficiently and with adequate population coverage, we must relocate many of these existing licensees. The FCC has adopted
a transition plan to relocate microwave operators and a cost-sharing plan for relocation that benefits more than one PCS licensee. These plans expire on April 4, 2005.



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Other regulatory requirements



The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of private mobile radio service or of commercial mobile radio service (CMRS), which includes PCS and cellular service. The FCC does not regulate CMRS or private mobile radio service rates. However,
CMRS providers are common carriers and are required under the Communications Act to offer their services to the public without unreasonable discrimination.



The FCC imposes additional regulatory requirements on all CMRS, operators, which include PCS and cellular systems as well as some specialized mobile radio
systems. These requirements may change. Some of the current requirements include:



| |  |  | Roaming. CMRS carriers must provide service to all subscribers of a compatible CMRS service in another geographic region.
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | Number portability. CMRS carriers are required to allow their subscribers to take their phone numbers with them if they change to a competitive service and must be able to
deliver calls to carried numbers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Enhanced 911. CMRS carriers must transmit 911 calls from any qualified handset without credit check or validation, must provide 911 service to individuals with speech or
hearing disabilities, and must provide the approximate location of the 911 caller.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Wiretaps. CMRS carriers must provide law enforcement personnel with sufficient capacity to enable wiretaps on the CMRS network.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Customer information. The FCC has rules that protect the customer against the use of customer proprietary information for marketing purposes.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interconnection. All telecommunications carriers, including CMRS carriers, must interconnect directly or indirectly with other telecommunications carriers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Universal service and other fees. The FCC imposes universal service support fees on telecommunications carriers, including CMRS carriers. The FCC imposes additional fees for
telecommunications relay service, number portability and the cost of FCC regulation.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tower Construction, Marking and Lighting. The FCC and FAA regulate the location, height, and marking of proposed towers.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



Transfers and assignments of PCS licenses



The FCC must approve the assignment or transfer of control of a license for
a PCS system. In addition, the FCC requires licensees who transfer control of a PCS license within the first three years of their license term to disclose the total consideration received for the transfer. FCC approval is not required for the sale
of an interest that does not transfer control of a license unless it involves non-controlling equity that exceeds fifty percent. Any acquisition or sale of a PCS interest may also require the prior approval of the Federal Trade Commission, the
Department of Justice and state or local regulatory authorities.



State and Local Regulation



State
governments can regulate other terms and conditions of wireless service. Several states have imposed, or have proposed legislation that will impose, various consumer protection regulations on the wireless industry. States also may impose their own
universal service support fees on wireless carriers, similar to the requirements that have been established by the FCC. At the local level, wireless facilities typically are subject to zoning and land use regulation, although the Communications Act
preempts both state and local governments from categorically prohibiting the construction of wireless facilities in any community or unreasonably discriminating against a carrier. Numerous state and local jurisdictions have considered imposing
conditions on a drivers use of wireless technology while operating a motor vehicle, and a few have done so.



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Foreign ownership



Under existing law, no more than 20% of an FCC licensees capital stock may be owned, directly or indirectly, or voted
by non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. If an FCC licensee is controlled by another entity, up to 25% of that entitys capital stock may be owned or voted by
non-US citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. Additional indirect foreign ownership is permissible if such is deemed to be in the public interest. In addition, in
response to the World Trade Organization (WTO) Basic Telecommunications Agreement, the FCC has relaxed its policy concerning whether indirect foreign ownership of common carrier licenses serve the public interest. The FCC now presumes
that ownership by entities holding the citizenship of countries that are WTO members serves the public interest. However, ownership by entities from countries that are not WTO members continues to be subject to the effective competitive
opportunities (ECO) test established by the FCC. The ECO test considers whether effective competitive opportunities exist for U.S. investment in the foreign investors home market for the analogous radio-based service.



Additional spectrum



From time to time, the FCC conducts auctions of additional spectrum. We have
no way of knowing whether the new spectrum in our service area will be used to compete with our systems.



Intellectual Property



The Sprint® and Sprint® brand names and logos are registered service trademarks owned by Sprint. We have license agreements with Sprint that allow us to use, without payment and only in our service area, the Sprint design logo and diamond
symbol and other Sprint service marks, like PCS Vision. We can use some of Sprints licensed trademarks on some wireless telephone handsets. The license agreements have many restrictions on our use of their licensed marks. We are the only person entitled to market
Sprint products and services in our service area, except for the Sprint national marketing programs.



Employees



As of March
1, 2005, we had approximately 660 employees. No union represents our employees. We believe that we have good relations with our employees.



Seasonality



Like the wireless communications industry in general, our subscribers increase in the fourth quarter due to the holiday season. A greater number of phones
sold at holiday promotional prices increases our losses on merchandise sales. Our sales and marketing expenses increase also with holiday promotional activities. We generally have the most use and revenue per subscriber in the summer because of an
increase in revenues from fees charged to non-US Unwired, non-Sprint subscribers who use our network while traveling in our service area. We believe that the increased traffic in our service area comes from people traveling during summer vacation.
We expect these trends to continue based on historical operating results.



RISK FACTORS



Introduction



In this section, unless the context indicates
otherwise, we, our and us refer collectively to US Unwired and all of our subsidiaries.



In some cases an extremely brief overview introduces each of the subsections below. We think the overview captures the gist of the subsection, but it is
not a substitute for reading the entire subsection.



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General considerations:



Investors should be aware that our business is subject to factors such as the following, some of which are beyond our
control:



| |  |  | quarterly variations in our operating results;
| | - |  | ----------------------------------------------



| |  |  | operating results that vary from the expectations of securities analysts and investors;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our liquidity that may impact our ability to repay our debts;
| | - |  | ------------------------------------------------------------------------



| |  |  | possible increases in subscriber turnover;
| | - |  | ------------------------------------------



| |  |  | changes in our relationship and that of other Sprint affiliates with Sprint;
| | - |  | ----------------------------------------------------------------------------



| |  |  | announcements by Sprint or Sprint affiliates concerning developments or changes in its business, financial condition or results of operations, or in its expectations as to future
financial performance;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Sprint / Nextel merger referred to elsewhere herein;
| | - |  | --------------------------------------------------------



| |  |  | potential defaults in debt covenants and/or obligations by Sprint or Sprint affiliates, which may result in a perception that we are unable to comply with our own debt obligations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | announcements of technological innovations or new products and services by Sprint or our competitors;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | changes in results of operations, market valuations and investor perceptions of Sprint, Sprint affiliates or of other companies in the telecommunications industry in general and the
wireless industry in particular, including our competitors;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | departures of key personnel;
| | - |  | ----------------------------



| |  |  | changes in laws and regulations;
| | - |  | --------------------------------



| |  |  | significant claims or lawsuits;
| | - |  | -------------------------------



| |  |  | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | general economic and competitive conditions.
| | - |  | --------------------------------------------



We rely on Sprint for a substantial amount of our financial information. If that information is not accurate, the investment community could lose
confidence in us.



Under our agreements with Sprint, Sprint
performs our billing, manages our accounts receivable and provides a substantial amount of financial data about our accounts. We use that information to calculate our financial results and to prepare our financial statements. If we later find errors
in that information, we may be required to restate our financial statements. If that occurs with respect to us or any other Sprint affiliate, investors and securities analysts may lose confidence in us. In fact, we and Sprint have discovered billing
and other errors or inaccuracies that have been material to us. If we are required to make adjustments to our financial statements as a result of these inaccuracies that could negatively affect the investment communitys perception of us. For
more information about these inaccuracies, please see the section of these Risk Factors entitled Risks Particular to Our Relationship with Sprint.



Risks Related to Our Business, Strategy and Operations



Overview of this subsection:



We have yet to operate profitably or achieve consistent positive cash flow. If that doesnt change, we will not have
enough cash to run our business. Revenues we receive from travelers in our territories will likely not meet our expectations.



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We have not yet operated our business profitably or achieved consistent positive cash flow.



We may incur operating losses while we expand our networks
and build our customer base. Our ultimate profitability will depend upon many factors, including our ability to market our services successfully and operate our networks efficiently, in addition to numerous other factors that are described in this
Risk Factors section. If we fail to achieve at least consistent positive cash flow within a reasonable period of time, we may not be able to service our debt and an investment in our securities may not have much value.



If our business strategies are not implemented or are unsuccessful, our
business could be adversely affected.



Our current
strategies seek to (1) limit capital expenditures to required technical upgrades and add cell site coverage only in areas that are expected to produce positive cash returns, (2) reduce the number of our employees and our corporate overhead and close
retail outlets that do not meet minimum internal rates of return, (3) evaluate, and in certain cases renegotiate, certain expenses, (4) reduce customer turnover or churn rate and improve customer service and credit quality, (5) improve our
relationship with Sprint, and (6) increase our market share among higher credit quality customers and initiate pre-payment and deposit programs for certain high credit risk subscribers. We have implemented all of these strategies, except for
improving our relationship with Sprint, but it is still too early to determine whether these strategies will have any positive or negative long-term effect on our business. In particular:



| |  |  | Because technology in our business continually evolves, we may be required to spend significant amounts of money on capital expenditures or risk obsolescence.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may lose customers if they are not satisfied with our coverage.
| | - |  | ------------------------------------------------------------------



| |  |  | Our reduced workforce may not be sufficient and our service may suffer because of it.
| | - |  | -------------------------------------------------------------------------------------



| |  |  | We may not be able to improve our cost structure because we cannot control the outcome of negotiations with counter-parties, including Sprint.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our relationship with Sprint could deteriorate further as a result of the lawsuits we have filed against Sprint and that Sprint has filed against us.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may not be able to reduce customer churn.
| | - |  | --------------------------------------------



| |  |  | We may not be able to improve customer quality without restricting overall subscriber growth.
| | - |  | ---------------------------------------------------------------------------------------------



We may not receive as much Sprint net travel, or roaming, revenue as we anticipated.



We are paid a fee from Sprint for every minute that a Sprint subscriber based
outside of our markets uses the Sprint network in our markets. Similarly, we pay a fee to Sprint for every minute that a Sprint subscriber based in our markets uses the Sprint network outside our markets. Sprint subscribers from our markets may
spend more time in other Sprint coverage areas than we anticipate, and Sprint subscribers from outside our markets may spend less time in our markets or may use our services less than we anticipate. As a result, we may receive less Sprint travel
revenue than we anticipate or we may have to pay more Sprint travel fees than the travel revenue we collect.



Under our agreements with Sprint, we believe that Sprint can change the fee, called a travel rate, within certain limitations, that we receive and pay for
each Sprint travel minute. Sprint has reduced the reciprocal travel rate from $.041 per minute in 2004 to $.033 per minute in 2005, which followed reductions in 2003. We have notified Sprint that we believe these particular reductions are not in
accordance with our agreements with Sprint, and we have included these reductions among our claims in our lawsuit against Sprint that is discussed in more detail below under the caption Risks Particular to Our Relationship with Sprint.
However, our recourse against Sprint for these reductions may be limited. Currently the revenues we receive for subscribers of Sprint and its other network partners using our networks exceed the expenses that we pay for our subscribers using their



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networks. The change in the reciprocal travel rate has, however, materially decreased our revenues, expenses and our net travel position, which is the
difference between travel revenue and travel expense, and also materially decreased our cash flow from operations.



If we do not successfully manage our operations and expected growth, our operating performance may be adversely impacted.



Our ability to achieve and sustain operating profitability will depend upon
many factors, including our ability to effectively market Sprint services and manage customer turnover rates in our markets. To be successful, we will require continued development, construction, testing, deployment and operation of our networks.
These activities are expected to place demands on our managerial, operational and financial resources.



Failure to timely expand our networks, or to obtain the equipment needed for completion on a timely basis, may result in a decrease in the number of
expected new subscribers and adversely affect our results of operations.



We have completed the network build-outs required by our agreements with Sprint. Nevertheless, we may decide from time to time to build-out additional portions of our markets to increase the population that is covered
by our Sprint service or we may acquire additional territory to be built out by acquiring additional markets from Sprint or by acquiring other Sprint network partners that have not completed their build-out requirements.



In order to expand our network, we must lease or otherwise retain rights to a
sufficient number of radio communications and network control sites, complete the purchase and installation of equipment, construct the physical infrastructure and test the network. We must also meet all requirements of our agreements with Sprint
and all FCC requirements. Regulatory changes, engineering design changes and required technological upgrades could affect the number and location of our towers as well as our ability to obtain sufficient rights to meet our network expansion goals.
Any failure to expand our network on a timely basis may limit our network capacity and/or reduce the number of our expected new subscribers, either of which could adversely affect our results of operations and financial condition.



The foregoing expansion, as well as maintenance, capacity enhancements and
coverage improvements, could require additional capital expenditures that we may not be able to fund. Additional funds could be required for a variety of reasons, including unanticipated expenses or operating losses. We may face significant
limitations on our ability to obtain additional funds. Even if those funds are available, we may not be able to obtain them on a timely basis, or on terms acceptable to us or within limitations permitted by our debt agreements. Failure to obtain
additional funds, should the need for them develop, would result in the delay or abandonment of our development and expansion plans.



We may not be able to obtain the communications equipment that we need to expand our network.



From time to time, there is considerable demand for the communications
equipment that we need to expand or complete our networks, and manufacturers of this equipment could have substantial backlogs of orders. Competitors who purchase large quantities of communications equipment may receive priority in the delivery of
this equipment. If we cannot get this equipment, we may fail to expand or construct our networks timely.



We obtain most of our network equipment from two suppliers. This equipment is not interchangeable, and we would be materially adversely affected if we
could not obtain this network equipment timely or at all.



Our networks are either Lucent network, meaning that the network equipment is supplied by Lucent, or Nortel network, meaning that the network equipment is supplied by Nortel. If additional equipment is needed for expansion or repair of a
network, it must come from Lucent, if the network is a Lucent network, or Nortel, if the network is a Nortel network, for compatibility with our existing network equipment. If either of these suppliers should cease or delay supplying its equipment,
we would be prevented or delayed in expanding or repairing the affected network.



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Any inability to expand our networks, or to keep them repaired, could have a material adverse effect on
us.



Our territory has limited amounts of licensed spectrum,
which may adversely affect the quality of our service and our results of operations.



We own five licenses for 10 MHz of spectrum. Sprint has licenses for 10 to 30 MHz of spectrum in all of our territories, which we have an agreement to use. In the future, as the number of subscribers in our
territories increases, this limited amount of licensed spectrum may not be able to accommodate increases in call volume, may lead to increased dropped or blocked calls and may limit our ability to offer enhanced services, all of which could result
in increased customer turnover and adversely affect our results of operations and financial condition.



If we lose the right to install equipment on wireless towers or are unable to renew expiring leases for wireless towers on favorable terms or at all,
our business and results of operations could be adversely impacted and we may not comply with our agreements with Sprint.



Substantially all of our cell sites are installed on leased tower facilities that are shared with one or more other wireless service providers. A large
portion of these leased tower sites are owned by a few tower companies. If a master agreement with one of these tower companies were to terminate, or if one of these tower companies were unable to support use of its tower sites by us, we would have
to find new sites or may be required to rebuild the affected portion of our networks. In addition, the concentration of our cell sites with a few tower companies could adversely affect our results of operations and financial condition if we are
unable to renew our expiring leases with these tower companies on favorable terms or at all. If any of the tower leasing companies that we do business with should experience severe financial difficulties, or file for bankruptcy protection, our
ability to use our towers could be adversely affected. That, in turn, would aversely affect our revenues and financial condition if a material number of towers were involved and may result in non-compliance with our Sprint agreements.



The loss of the officers and skilled employees upon whom we depend to
operate our business or the inability to attract additional personnel for our growth could adversely affect the combined companys results of operations.



Our business is managed by a small number of executive officers. We believe that our future success will depend in part on
our continued ability to retain these executive officers and to attract and retain highly qualified technical and management personnel for the combined company. We may not be successful in retaining key personnel or in attracting and retaining other
highly qualified technical and management personnel. We do not maintain policies of life insurance on our key executives. In addition, we granted stock options as a method of attracting and retaining employees, to motivate performance and to align
the interests of management with those of our stockholders. Due to the decline in the trading price of our common stock since our initial public offering, a substantial number of the stock options held by our employees have an exercise price that is
higher than the current trading price of our common stock, and therefore these stock options may not be effective in helping us to retain valuable employees.



Class action and derivative lawsuits have been filed against us and/or certain of our executive officers and directors, which may require us to pay
substantial damage awards.



In 2004 a federal class action
lawsuit was filed, on behalf of all purchasers of our common stock between May 23, 2000 and August 13, 2002 (the class period), against us and three of our executive officers. This suit alleges that we and the other named defendants
issued false and misleading statements to the investing public during the class period regarding our financial condition, which resulted in the artificial inflation of the price of our common stock during the class period. More specifically, the
plaintiffs in this case allege that the defendants knowingly or recklessly failed to disclose and/or misrepresented that: (1) we were increasing our subscriber base by signing up high credit risk customers; (2) accounting changes implemented by us
were done in order to conceal our declining revenues; (3) we had been experiencing high involuntary disconnections related to our high



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credit risk customers; (4) we experienced lower subscription growth as a result of our policy that required credit-challenged customers to pay substantial
deposits upon initiation of services; and (5) we were engaged in a significant dispute with Sprint regarding our business relationship with that entity.



Also in 2004 a federal shareholder derivative action lawsuit was filed against certain of our executive officers and directors and against us as a nominal
defendant. This suit, with which the class action lawsuit described above was consolidated, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, gross
mismanagement, waste of corporate assets, and unjust enrichment during the period between May 23, 2000 and August 13, 2002. More specifically, the plaintiffs in this case allege that: (1) our increasing revenues and profits from 2000 through 2002
were not the result of increased subscribers, but rather were the result of a scheme to artificially inflate the price of our common stock; (2) the defendants deliberately, repeatedly and systematically failed to exercise independent or effective
judgment and oversight of our business and executives; (3) the defendants participated in and/or approved of such misconduct to obtain financial and social benefits for themselves, to enrich and further the personal and business interests of all of
the defendants, and to allow many of the defendants to maintain their positions of control over us so that they would not be sued for wrongdoing; and (4) while disseminating this false information, certain of our officers and directors sold over $13
million of their personally held stock.



Also in 2004 a state
shareholder derivative action lawsuit was filed against certain of our executive officers and directors and against us as a nominal defendant. This suit alleges that certain of our executive officers and directors committed violations of state law,
including breaches of fiduciary duty, abuse of control, and insider selling and misappropriation of information during the period between May 23, 2000 and August 13, 2002, which have caused substantial losses and other damages to us. The plaintiffs
in this case make essentially the same allegations as the plaintiffs in the federal class action and derivative lawsuits described above.



We are vigorously defending these three lawsuits, but it is too soon to make any meaningful predictions as to their outcomes. However, should any of the
plaintiffs in any of these lawsuits prevail, we may be required to pay substantial damages awards to the extent such awards exceed or are not covered by our insurance. Furthermore, we may be obligated to reimburse certain of our executive officers
and directors for the expenses they have incurred and continue to incur as a result of these lawsuits to the extent such expenses exceed or are not covered by our insurance.



Expanding our territory may have a material adverse effect on our business and reduce the market value of our securities.



As part of our continuing operating strategy, we may
expand our territory through the grant of additional markets from Sprint or through acquisitions of other Sprint network partners or other entities and/or assets associated with Sprint. These transactions may require the approval of Sprint and
commonly involve a number of risks, including the:



| |  |  | difficulty of integrating acquired operations and personnel;
| | - |  | ------------------------------------------------------------



| |  |  | diversion of managements attention;
| | - |  | ------------------------------------



| |  |  | disruption of ongoing business;
| | - |  | -------------------------------



| |  |  | impact on our cash and available credit lines for use in financing future growth and working capital needs;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | inability to retain key personnel;
| | - |  | ----------------------------------



| |  |  | inability to successfully incorporate acquired assets and rights into our service offerings;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | inability to maintain uniform standards, controls, procedures and policies; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | impairment of relationships with employees, subscribers or vendors.
| | - |  | -------------------------------------------------------------------



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Failure to overcome these risks or any other problems encountered in these transactions could have a
material adverse effect on our business. In connection with these transactions, we may issue additional equity securities, and we may, subject to any necessary approval of existing creditors, incur additional debt or incur significant amortization
expenses related to certain intangible assets connected with a newly acquired Sprint agreement or a newly acquired subscriber base.



We may be exposed to potential liabilities in our role as manager of IWO.



On February 10, 2005, the United States Bankruptcy Court approved a Plan of Reorganization of our former wholly owned
subsidiary, IWO Holdings, Inc. (IWO), pursuant to which all of our equity ownership of IWO was eliminated and shares of IWO were issued to its existing creditors. We received no consideration in that transaction. However, we are required
to manage IWOs operations until June 10, 2005. It is possible that we will be exposed to certain potential liabilities in our role as manager of IWO during this period.



Our service area could be threatened by bad weather, including hurricanes, which could cause interruptions in service
resulting in increased expenses and reduced operating results.



Much of our service area is on or near the Gulf of Mexico and could be damaged by bad weather, such as hurricanes and excessive rain. We may face service interruptions for indefinite periods if a major hurricane strikes one or more of our
service areas, resulting in increased expenses and reduced operating results.



Unauthorized use of our networks could disrupt our business.



We will likely incur costs associated with the unauthorized use of our networks, including administrative and capital costs associated with detecting,
monitoring and reducing the incidence of fraud. Fraud impacts interconnection costs, capacity costs, administrative costs, fraud prevention costs and payments to other carriers for unbillable fraudulent roaming.



Our completed build-out does not cover all of our territories, which could
make it difficult to maintain profitable customer bases.



As of December 31, 2004, we covered approximately 72% of the resident population in our territory, but our build-out does not cover all our service area. The coverage may not adequately serve the needs of the potential subscribers in the
territory or attract enough subscribers to operate our business successfully. To correct this potential problem, we may have to cover a greater percentage of our territory than anticipated, which we may not have the financial resources to complete
or may be unable to do profitably.



Sales of wireless
products and services in our territory by resellers could reduce our number of subscribers and our margins.



We allow companies, called resellers, to sell wireless products and services in our territories. Our networks provide the wireless services that are sold
by the resellers in our territories. We receive income from the resellers that we consider to be a fair return for this use of our networks. One of the resellers is 50% owned by Sprint.



Sales of wireless products and services in our territory by the reseller that is 50% owned by Sprint have had a positive
impact on our operating margins and cash flow, but we cannot guarantee that this will continue in the future. Through a three-year agreement that expires in mid-2005, we allow this reseller to sell wireless products and services in our territories.
The past practice has been for Sprint and this reseller to determine the amount that we receive on a per minute basis for use of our network. We cannot guarantee that this per minute rate will be continue to positively impact our operating margins
and cash flow, nor can we guarantee that we will renew our contract in mid-2005.



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Risks Related to Our Financing and Indebtedness



Overview of this subsection:



We have a substantial amount of debt. Furthermore, due to the liens on
substantially all of our assets and the pledges of stock of our existing and future subsidiaries as collateral for our debt, debt holders may control our assets in the event of a default.



Our ability to make payments on our debt will depend upon future operating performance, which is subject to general economic
and competitive conditions and to financial, business and other factors, many of which we cannot control. If the cash flow from operating activities is insufficient, we may continue to take actions such as delaying or reducing capital expenditures,
further attempting to restructure or refinance our debt, or selling assets or operations, or we may seek additional equity capital. Any or all of these actions may not be sufficient to allow us to service our debt obligations or may adversely affect
our results of operations. Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. The indenture governing our debt limits our ability to take several of these actions, and limits our ability to
borrow more money. Our failure to generate sufficient funds to pay our debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of our stock or other securities or result in debt
holders controlling our assets.



If we need additional
financing that we cannot obtain, we may have to change our network construction plans and modify our business plans.



We expect to make significant capital expenditures to expand our networks. Actual expenditures may differ significantly from estimates. We would have to
obtain additional financing to fund our network expansion plans if:



| |  |  | existing sources of capital are unavailable or insufficient;
| | - |  | ------------------------------------------------------------



| |  |  | We significantly depart from or change our business plan;
| | - |  | ---------------------------------------------------------



| |  |  | We experience unexpected delays or cost overruns in the expansion of our network, including changes to the schedule or scope of the network expansion;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in technology or governmental regulations create unanticipated costs; or
| | - |  | --------------------------------------------------------------------------------



| |  |  | We acquire additional licenses or Sprint grants us more service areas to build out and manage.
| | - |  | ----------------------------------------------------------------------------------------------



We cannot predict whether any additional financing will be available to us or on what terms such financing would be
available. If we need additional financing that we cannot obtain, we will have to change our plans for the remainder of our network, which would adversely affect our expected future results of operations.



Our indebtedness places restrictions on us that will limit our operating
flexibility and ability to engage in some transactions.



The indentures governing debt impose material operating and financial restrictions on us. These restrictions may limit our ability to engage in some transactions, including the following:



| |  |  | completing designated types of mergers or consolidations;
| | - |  | ---------------------------------------------------------



| |  |  | creating liens;
| | - |  | ---------------



| |  |  | paying dividends or other distributions to our stockholders;
| | - |  | ------------------------------------------------------------



| |  |  | making investments;
| | - |  | -------------------



| |  |  | selling assets;
| | - |  | ---------------



| |  |  | repurchasing our common stock or debt instruments;
| | - |  | --------------------------------------------------



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| |  |  | changing lines of business;
| | - |  | ---------------------------



| |  |  | borrowing additional money; and
| | - |  | -------------------------------



| |  |  | entering into transactions with affiliates.
| | - |  | -------------------------------------------



These restrictions could also limit our ability to obtain financing by borrowing money or issuing common stock, to refinance or pay principal or interest
on outstanding debt, to consummate acquisitions for cash or debt or to react to changes in our operating environment. Moreover, these restrictions could cause us to be at a competitive disadvantage to competitors who do not have similar
restrictions.



If specified events of default occur under
our indentures, all amounts owed under our indentures may become due immediately.



If specified events of default occur under our indentures, all amounts owed under these indentures may be declared due and payable immediately. We cannot assure you that we will have sufficient funds at the time of
any such event of default to satisfy this obligation or that restrictions in our credit facilities would allow us to do so.



Risks Particular to Our Relationship with Sprint



Overview of this subsection:



We depend heavily on Sprint. It performs our billing, designs and advertises the products and services we sell, and provides our customer service, in
addition to a wide variety of other services, including network design, research and development. If Sprint does not succeed, it is highly unlikely that we will succeed. We have little influence with Sprint under our agreements with it. We have
recently sued and been countersued by Sprint.



The
termination of our affiliation with Sprint or Sprints failure to perform its obligations under the Sprint agreements would materially change the manner in which we conduct our business.



We own few of the FCC licenses that we operate and, instead, operate under
the FCC licenses of Sprint that are applicable to our territory. Other than performing our contractual obligations under the agreements between us, Sprint is not obligated to provide us with any support in connection with our business or otherwise.
Our ability to offer Sprint products and operate a wireless network is almost entirely dependent on our Sprint agreements remaining in effect and not being terminated. These agreements:



| |  |  | give us the right to use the Sprint® and Sprint PCS® brand names and logos and related rights. If we lose these rights, our operations will be impaired.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | impose strict requirements on the construction of our network.
| | - |  | --------------------------------------------------------------



| |  |  | may be terminated also if any of Sprints FCC licenses are lost or jeopardized, or if we become insolvent.
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | give Sprint a substantial amount of influence and control over the conduct of our business. Sprint may make decisions that adversely affect us, like introducing costly new products
that fail in the marketplace or setting the prices for its national plans at levels that may not be economically sufficient for our business.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if terminated by Sprint because of a breach by us, may require us to sell our operating assets to Sprint. This sale may take place for a price equal to 72% of our
Entire Business Value, as such term is defined in our management agreement with Sprint, subject to the valuation criteria and procedures described under Certain of Our Agreements with Sprint. The provisions of our agreement
that allow Sprint to purchase our operating assets at a discount to our Entire Business Value may limit our ability to sell our business, reduce the value a buyer would be willing to pay for our business and limit our
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | ability to obtain new investment or support from any source. If we were to file for bankruptcy protection, the agreement would provide Sprint with various
remedies, including purchase rights at a discount to our Entire Business Value, though we cannot predict if or to what extent such remedies would be enforceable. In addition, we may be very reluctant to reject the agreement under Section
365 of the federal Bankruptcy Code because our ability to conduct our business without it would be severely restricted. If Sprint were to file for bankruptcy, Sprint may be able to reject the agreement under Section 365. In addition, the
agreement would provide us various remedies, including purchase and put rights, though we cannot predict if or to what extent our remedies would be enforceable. In any event, a bankruptcy by Sprint could severely restrict our ability to conduct our
business for the reasons set forth above. For additional information concerning the remedies available under the management agreement, see Certain of Our Agreements with Sprint.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | are not perpetual. If Sprint decides not to renew the agreements at the expiration of the 20-year initial term or any 10-year renewal term, we would no longer be a part of the
Sprint network. Moreover, each of these agreements can be terminated at any time for breach of any material term.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | permit Sprint to terminate them for breach of any of their material terms. These terms include operational, technical and network requirements that are extremely technical and
detailed and apply to each retail store, cell site and switch site. Many of these operational and network requirements can be changed by Sprint with little notice. As a result, we may not always be in compliance with all requirements of the Sprint
agreements. Sprint conducts periodic audits of compliance with various aspects of its program guidelines and identifies issues it believes need to be addressed. There may be substantial costs associated with remedying any non-compliance, and such
costs may adversely affect our operating results and cash flow.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Sprint may make business decisions that are not in our best interest, which may adversely affect our relationship with subscribers in our territory, increase our expenses, and/or decrease our revenues.



Sprint, under the Sprint agreements, has a substantial
amount of influence and control over the conduct of our business. Conflicts between us and Sprint have arisen and, if Sprint owes us no duties except as set forth in the agreements, those conflicts may not be resolved in our favor. Accordingly,
Sprint has made and may continue to make decisions that adversely affect our business, such as the following:



| |  |  | Sprint could price its national plans based on its own objectives and could set price levels or other terms that may not be economically sufficient for our business. Sprint could
also develop products and services, or establish credit policies that adversely affect our business. Further, Sprint could make decisions that could adversely affect the Sprint® and Sprint PCS® brand names, products or services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint could raise the costs it charges us to perform back office services for us or otherwise seek to increase what we pay Sprint, or it could reduce levels of services it provides
us.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint may elect, with little or no notification, to upgrade or convert its financial reporting, billing or inventory software or change third party service organizations that can
adversely affect our ability to determine or report our operating results, to adversely affect our ability to obtain handsets or to adversely affect our subscriber relationships.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint has sought to charge us for certain services that we believe are already provided for under our agreements with Sprint and, therefore, for which we should not be charged. For
example, Sprint has sought to charge us more as a result of launching the new third generation, or 3G, technology called one times radio transmission technology, or 1xRTT.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint prohibits us from selling non-Sprint approved equipment.
| | - |  | ---------------------------------------------------------------



| |  |  | Sprint has made it very expensive for us to migrate in-house or to other vendors services that they currently perform.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



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| |  |  | Sprint has negotiated and continues to negotiate its fee structure with other Sprint affiliates and, if we do not enter into negotiations with Sprint, it may increase the fees it
charges to us. Moreover, Sprint has not decreased the 2005 travel rate for Sprint affiliates that have agreed to negotiate with it. We have had no discussions with Sprint as it relates to the affiliate agreements with us.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint may, and previously has, introduced programs without adequate controls or limitations. Fraudulent activities have occurred in the past due to inadequate controls or
limitations imposed by Sprint. If other types of fraud become widespread, it could have a material adverse impact on our results of operations and financial condition.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint could keep us from developing our own promotional plans that we may determine to be necessary to attract new subscribers or from selling equipment selected by us.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint could, subject to limitations under our Sprint agreements, alter its network and technical requirements or request that we build out additional areas within our territories,
which could result in increased equipment and build-out costs.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint could decide to no longer perform its obligations under our Sprint agreements, which would severely restrict our ability to conduct business.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint may not meet the requirements of Sarbanes-Oxley Act Section 404, and implementing SEC regulations, which may result in the disclosure of a significant discrepancy in our
internal controls relative to information we receive from Sprint.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Decisions such as those referred to above could adversely affect our relationships with subscribers by changing products, services and price plans to which those subscribers had become accustomed.



We deal with Sprint daily on a variety of issues. Sometimes we disagree with
Sprint or oppose what Sprint would like us to do or require us to pay, and we have numerous disputes with Sprint that we have as yet been unable to resolve, many of which we have described elsewhere in these Risk Factors. This occurs particularly
when Sprint tells us we must adopt business methods or pricing plans that we think will hurt our business. Our disputes with Sprint, including our lawsuit against Sprint that is described below, could adversely affect our relationship with Sprint.
Because we rely so heavily on our relationship with Sprint, any deterioration of that relationship or of Sprints desire to cooperate with us could adversely affect our business. In addition, Sprints level of control and influence over us
would make it difficult for us to sell our business to anyone other than Sprint.



In the future, we may approach Sprint and seek to modify our agreements with Sprint and take other actions consistent with such objective. However, we have sued Sprint, bringing several claims, including claims under
our agreements with Sprint that we believe we have against Sprint. In light of this suit, we have not yet determined whether we will approach Sprint and seek to modify our agreements or take other such actions. If we do approach Sprint, we can
provide no assurance that any such modifications will be made.



If Sprint decides to terminate its contracts with national retailers to whom we sell our products, our sales would be materially and adversely impacted.



We rely on Sprint to negotiate contracts with national retailers such as Best Buy and RadioShack to whom we sell our
products. We are not permitted under our agreements with Sprint to enter into contracts with those retailers directly, unless Sprint allows us to do so. Our sales through national retailers who have contracted with Sprint account for almost 27% of
our total sales. If Sprint decides to terminate its contracts with such vendors and refuses to allow us to deal with them directly, our revenues would be materially adversely affected.



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Sprints reintegration of its wireless business into its wireline operations could disrupt the
services it provides to us.



If the proposed Sprint /
Nextel merger is completed, we believe that Sprint will spin-off its wireline business. Should this spin-off occur, we are unsure of how such separation would impact Sprint. It may be disruptive to Sprints internal controls and procedures and,
subsequently, have an adverse impact on us.



However, if the
proposed Sprint / Nextel merger is not completed, Sprint apparently intends to reintegrate its wireless business into its wireline operations and will realign its internal resources. Instead of aligning its resources according to business segments,
Sprint will focus on two distinct consumer typesbusinesses and individuals. The elimination of a separate division within Sprint that is focused specifically on wireless services could result in a disruption in the services Sprint provides to
us, which could adversely affect our subscribers and lead to increased churn.



Our dependence on Sprint may adversely affect our ability to predict our results of operations.



Our dependence on Sprint injects a great degree of uncertainty into our business and financial planning. Inaccuracies in data provided by Sprint could
understate our expenses or overstate our revenues, result in out-of-period adjustments or lead us to make bad business decisions that may materially adversely affect our financial results. Furthermore, if material internal control weaknesses exist
at Sprint, we may not be able to provide timely and accurate information.



A significant portion of Cost of Service expenses and Roaming revenues in our financial statements relates to charges from Sprint. In addition, because Sprint provides billing and collection
services for us, it collects cash from our subscribers on our behalf and remits that cash to us. As a result, we rely on Sprint to provide accurate, timely and sufficient data and information to properly record our revenues, expenses and accounts
receivables that underlie a substantial portion of our periodic financial statements and other financial disclosures.



We and Sprint have discovered billing and other errors or inaccuracies that could be material to us. We have disputed invoices that Sprint has sent us in
the amount of $35.1 million as of December 31, 2004. If we are required in the future to make additional adjustments or charges as a result of errors or inaccuracies in data provided to us by Sprint, such adjustments or charges may have a material
adverse affect on our financial results in the period that the adjustments or charges are made and on our ability to make fully informed business decisions.



The inability of Sprint to maintain high quality back office services or our inability to use Sprints back office services and third party
vendors back office systems could lead to customer dissatisfaction, increase the loss of subscribers or otherwise increase our costs or adversely affect our businesses.



We rely on Sprints internal support systems, including customer care, billing and other back office support. Our
operations could be disrupted if Sprint is unable to maintain and expand its internal support systems in a high quality manner, or to efficiently outsource those services and systems through third party vendors. We expect the rapid expansion of
Sprints business and the consolidation of back office services by Sprint to continue to pose a significant challenge to its internal support systems. Additionally, Sprint has relied on third party vendors for a significant number of important
functions and components of its internal support systems and may continue to rely on these vendors in the future. We depend on Sprints willingness to offer and provide back office services effectively and at competitive costs. Our agreements
with Sprint provide that, upon nine months prior written notice, Sprint may elect to terminate any of these services. The inability of Sprint to maintain high quality back office services, or to provide us with adequate notification of its
inability to continue to provide those services or our inability to use Sprints back office services and third party vendors back office systems could lead to customer dissatisfaction, increase the loss of subscribers or otherwise
disrupt our business and increase our costs. Additionally, we are dependent on Sprint to assist us in transferring our back office services



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from Sprint to a third party if we choose to do that, and any failure by Sprint to cooperate in this effort, such as by making a transfer cost prohibitive,
could have an adverse effect on us.



If Sprint does not
complete the construction of its nationwide wireless network, we may not be able to attract and retain subscribers.



Sprint and its affiliates currently intend to cover a significant portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands
by creating a nationwide wireless network through Sprints own construction efforts and those of its network partners like us. Sprint and its affiliates are still constructing the nationwide network and do not yet offer wireless services,
either on Sprints own network or through its roaming agreements, everywhere in the United States.



If one of our subscribers travels in an area where a Sprint or compatible system is not yet operational, the customer would not be able to make a call on
that areas system unless he or she has a telephone handset that can make calls on both systems. Generally, these handsets are more costly. Moreover, the Sprint network does not allow for calls to be transferred without interruption between the
Sprint network and another wireless network. This means that a customer must end a call in progress and initiate a new call when entering an area not served by the Sprint network. The quality of the service provided by another network may not be
equal to that of the Sprint network, and our subscribers may not be able to use some of the advanced features of our network. This could result in customer dissatisfaction and loss of subscribers.



Sprint has entered into management agreements similar to ours with companies
in other markets under its nationwide wireless build-out strategy. Our results of operations are dependent on Sprints national network and, to a lesser extent, on the networks of Sprints other network partners. Sprints network may
not provide nationwide coverage to the same extent as its competitors, which could adversely affect our ability to attract and retain subscribers.



If Sprint does not succeed, our business may not succeed.



If Sprint has a significant disruption to its business plan or network, fails to operate its business in an efficient manner, or suffers a weakening of
its market share or brand name, our operations and profitability would likely be impaired. Sprint currently intends to cover a significant portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands by creating a
nationwide wireless network through its own construction efforts and those of its network partners. Sprint is still constructing its nationwide network and does not offer wireless services, either on its own network or through its roaming
agreements, in every city in the United States. Sprints network may not provide nationwide coverage to the same extent as its competitors, which would adversely affect our ability to attract and retain customers.



If Sprint should have significant financial problems, including bankruptcy,
our business would suffer material adverse consequences that could include termination or revision of our Sprint agreements.



If Sprint or other Sprint network partners have financial difficulties, the Sprint network could be disrupted.



Sprints national network is a combination of networks. The large
metropolitan areas are owned and operated by Sprint, and the areas in between them are owned and operated by Sprint network partners, all of whom are independent companies such as we are. We believe that most, if not all, of these companies have
incurred substantial debt to pay the large cost of building out their networks. If these companies have financial difficulties, the Sprint network could be disrupted in those companies territories, which could adversely affect our ability to
attract and retain customers.



Certain provisions of the
Sprint agreements may diminish our value and restrict the sale of our business.



Under some circumstances and without further stockholder approval, Sprint may purchase our operating assets at a discount to our Entire Business Value. In addition, Sprint must approve any change of
control of ownership and must consent to any assignment of our Sprint agreements.



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Sprint also has a right of first refusal if we decide to sell certain operating assets to a third party.
We are also subject to a number of restrictions on the transfer of businesses. These restrictions and other restrictions contained in the Sprint agreements could adversely affect the value of our common stock and other securities, may limit our
ability to sell our business, may reduce the value a buyer would be willing to pay for our business and may reduce our Entire Business Value.



We may have difficulty in obtaining an adequate supply of certain handsets from Sprint, which could adversely affect our results of operations.



We depend on our relationship with Sprint to obtain
handsets at a competitive cost. Sprint orders handsets from various manufacturers. We could have difficulty obtaining specific types of handsets at a competitive cost and in a timely manner if:



| |  |  | Sprint does not adequately project the need for handsets for itself, its Sprint network partners and its other third party distribution channels, particularly in transition to new
technologies such as 3G;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint gives preference to other distribution channels;
| | - |  | -------------------------------------------------------



| |  |  | we do not adequately project our need for handsets;
| | - |  | ---------------------------------------------------



| |  |  | Sprint modifies its handset logistics and delivery plan in a manner that restricts or delays our access to handsets; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | there is an adverse development in the relationship between Sprint and its suppliers or vendors.
| | - |  | ------------------------------------------------------------------------------------------------



The occurrence of any of the foregoing could disrupt our customer service and/or result in a decrease in our subscribers,
which could adversely affect our results of operations.



We use
our relationship with Sprint to obtain, sometimes at favorable prices, handsets and the equipment for the construction or expansion and operation of our networks. Any disruption in our relationship with Sprint could make it much more difficult for
us to obtain this equipment.



Non-renewal or revocation by
the FCC of our licenses or the Sprint licenses we use would significantly harm our business.



FCC licenses are subject to renewal and revocation by the FCC. Sprints licenses in our territory will begin to expire in 2005 but may be renewed for
additional ten-year terms. There may be opposition to renewal of these licenses upon their expiration, and the licenses may not be renewed. The FCC has adopted specific standards to apply to license renewals. Any failure by Sprint or us to comply
with these standards could cause revocation or forfeiture of the licenses for its territories. If any of the licenses of Sprint that we are using should be lost, we would be severely restricted in our ability to conduct our business.



If Sprint does not maintain control over its licensed spectrum, the Sprint
agreements may be terminated, which would result in our inability to provide wireless service.



The FCC requires that license holders like Sprint and us maintain control of their licensed spectrum and not delegate control to third-party operators or
managers. Although the Sprint agreements with us reflect an arrangement that the parties believe meets the FCC requirements for licensee control of licensed spectrum, we cannot assure you that the FCC will agree. If the FCC were to determine that
the Sprint agreements need to be modified to increase the level of licensee control, we have agreed with Sprint to use best efforts to modify the Sprint agreements to comply with applicable law. If we cannot agree with Sprint to modify the Sprint
agreements, the agreements may be terminated. If the Sprint agreements are terminated, we would no longer be a part of the Sprint network and we would be severely restricted in our ability to conduct business.



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We have limited rights if Sprint fails to perform its obligations to us under our agreements with
Sprint. Should that occur, the consequences to us could be severe.



On December 15, 2004, Sprint and Nextel Communications, Inc. announced that they had entered into a definitive agreement to merge Nextel into Sprint (the Merger). Nextel, directly and through its affiliate, Nextel Partners, is a
provider of digital wireless communications services in our service area. Nextel Partners is a separate publicly traded company and is not a party to the Merger.



Under our agreements with Sprint, we have certain exclusive rights within our service area to offer wireless communications.
We believe, based on currently available information that Sprint will be in violation of this exclusivity provision at some point following completion of the Merger. Accordingly, we and Sprint have begun a series of discussions relating, among other
things, to the impact of the Merger, the treatment of Nextel assets and customers within our service area, and the future of our relationship with Sprint.



Our agreements with Sprint provide for specific remedies if Sprint materially violates them. We are in the process of studying the possible impact on our
value and our business of any such remedies or whether any such remedies would be more or less favorable to us and our shareholders than the existing or any renegotiated arrangements with Sprint. We are also studying remedies available to us outside
the agreements.



We plan to attempt to work with Sprint to
reach mutually agreeable arrangements with respect to these matters. However, there can be no assurances that we will be able to reach such arrangements, or as to their terms or the likely impact on us of any such arrangements. There can also be no
assurance that any remedies available to us will be sufficient to protect our business or value. If we fail to reach satisfactory arrangements or our remedies prove insufficient, we may suffer material adverse consequences.



Furthermore, if Sprint fails to perform any of its other obligations to us
under our agreements with Sprint, the consequences to us could be severe and our rights against Sprint could be limited.



Sprint has notified us of charges and fees that it intends to pass on to us. We believe these charges and fees are material, and if Sprint is entitled
to collect them, they could materially and adversely affect out results of operations and financial condition.



Sprint has presented us with a number of charges and fees, including:



| |  |  | New development costs and fees to upgrade Sprints systems to cover new third generation technology services, such as one time radio transmission technology or 1xRTT, offered
to our subscribers. In addition, Sprint has begun billing us for back office services related to new technology that we believe are provided for under our existing arrangements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fees for services that Sprint provides on our behalf, such as voice mail, operator services, second generation wireless web services, text messaging and voice command dialing, and
fees for the information technology that supports Sprint services such as these. We believe these charges and fees are already included in our management fee.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fees for the maintenance of switches in the Sprint network that we own. We have disputed the manner in which Sprint allocates those fees among its affiliates and Sprint.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Sprint invoked certain dispute resolution
provisions of our agreements with respect to several ongoing disputes between our companies. This process required senior management officials of each company to attempt to resolve the disputes, and if a dispute was not resolved, the parties were
free to proceed with litigation or, in certain specified cases, to arbitration. We also invoked certain dispute resolution provisions under the agreements.



The disputes were not resolved pursuant to the dispute resolution process, and therefore we filed a lawsuit against Sprint related to disputes that had
been subject to the resolution process and to other disputes between



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Sprint and us that are not within the scope of the dispute resolution process. Sprint has sued us for recovery of approximately $30.4 million of fees and
other charges that we have disputed, according to the latest court filings made by Sprint. The dispute resolution process under our agreements with Sprint has been terminated pending the outcome of our lawsuits.



The total amount of charges and fees we have disputed at December 31, 2004 is
$35.1 million, up from the approximately $30.4 million reflected in the latest court filings made by Sprint. We believe that these charges and fees are material, and if Sprint is entitled to collect them, they could have a material adverse effect on
our results of operations or financial condition or both.



We rely on the use of the Sprint brand name and logo to market our services, and a loss of use of this brand and logo or a decrease in the attractiveness of this brand and logo to potential customers would significantly impair our
ability to market our products.



The Sprint brand and logo
is highly recognizable. If we lose our rights to use the Sprint brand and logo under our trademark and service mark license agreements, we would lose the advantages associated with marketing efforts conducted by Sprint. If we lose the rights to use
this brand and logo or the value of the brand and logo decreases, it is highly unlikely that customers would recognize our brand, and we would have to spend significantly more money on advertising to create brand recognition.



Our 2003 lawsuit against Sprint may cause Sprint to retaliate against us.
The lawsuit and the counterclaim filed by Sprint against us may also cause further deterioration in our relationship with Sprint.



On July 11, 2003, we filed suit in federal court in Louisiana against Sprint. Our suit currently alleges, among other things, that:



| |  |  | Sprint has violated the Racketeer Influenced and Corrupt Organizations Act,
| | - |  | ---------------------------------------------------------------------------



| |  |  | Sprints goal is to acquire us at a substantial discount by driving us to the brink of financial ruin,
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Sprint has committed fraud and extortion against us,
| | - |  | ----------------------------------------------------



| |  |  | Sprint has used certain of our assets without our consent and without properly compensating us,
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Sprint has improperly charged fees to us and misappropriated revenues, discounts and rebates that belong to us, and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | Sprint has violated certain provisions of our Sprint management agreement.
| | - |  | --------------------------------------------------------------------------



Sprint filed a counterclaim against us alleging that we have refused to pay Sprint certain fees and charges we are obligated to pay under our agreements
with Sprint, amounting to approximately $30.4 million according to the latest court filings made by Sprint.



We had a tense relationship with Sprint before we filed lawsuits against one another. Our allegations may cause further deterioration in that
relationship, with the adverse effects that are described above.



Risks Particular to Our Industry



Overview of this subsection:



We face
significant competition in our service areas from a number of competitors. The result is that prices of wireless services have dropped. Providers are offering larger bundles of minutes at lower prices and this has resulted in a decrease in airtime
revenue, which is the price a customer pays for using the service in excess of allotted minutes. In addition, other factors affecting our industry are changing rapidly. If we cannot effectively meet the challenges of these conditions, we probably
will not succeed. Activists are seeking new laws that would



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restrict use of telephones by drivers, our placement of the towers that carry our transmissions and disposal of wireless phones. Such laws could adversely
impact our business.



Our business may suffer because
subscribers frequently disconnect their service in the wireless industry. The rate at which these disconnections occur, or churn, may be even higher in the future.



The wireless industry in general and Sprint in particular have experienced a high rate of subscribers who disconnect their
service. This rate is referred to as churn. Factors that tend to contribute to higher churn include:



| |  |  | inability of subscribers to pay;
| | - |  | --------------------------------



| |  |  | generous handset return policies, which make it easier to cancel an account;
| | - |  | ----------------------------------------------------------------------------



| |  |  | intense competition in our industry;
| | - |  | ------------------------------------



| |  |  | performance and coverage of networks;
| | - |  | -------------------------------------



| |  |  | ineffective customer service;
| | - |  | -----------------------------



| |  |  | increase in prices;
| | - |  | -------------------



| |  |  | performance and reliability of handsets; and
| | - |  | --------------------------------------------



| |  |  | changes in our products and services.
| | - |  | -------------------------------------



A high rate of subscriber churn could harm our competitive position and our results of operations. We subsidize some of the costs of handsets for our new
subscribers, pay commissions for new accounts and incur expenses to advertise and maintain a distribution network. When we experience a high rate of churn, we may not receive sufficient revenue to offset these costs. Sprint may elect to offer
additional programs that may attract high credit risk subscribers.



Sprint and we face intense competition that may reduce its and our market share and harm its and our financial performance.



There is intense competition in the telecommunications industry. We believe that the traditional dividing lines between long distance, local, wireless and
Internet services are increasingly becoming blurred. Through mergers, joint ventures and various service bundling strategies, major providers, including Sprint, are striving to provide integrated solutions both within and across all geographical
markets.



We expect competition to intensify as a result of
consolidation within our industry and the rapid development of new technologies, products and services. We cannot predict which of many possible future technologies, products or services will be important to maintain our competitive position or what
expenditures will be required to develop and provide these technologies, products or services. Sprints and our ability to compete successfully will depend on marketing, sales and service delivery and on Sprints and our ability to
anticipate and respond to various competitive factors affecting the industry, including new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions, and discount pricing strategies by competitors. To
the extent Sprint and we do not keep pace with technological advances or fail to respond timely to changes in competitive factors in our industry, we could lose market share or experience a decline in revenue and net income.



Many of our competitors have been operating for a number of years and serve a
substantial subscriber base. In January 2003, the FCC rule imposing limits on the amount of spectrum that can be held by one provider in a specific market was lifted. Competition may continue to increase to the extent that there are mergers or other
combinations involving our competitors or licenses are transferred from smaller stand-alone operators to larger, better capitalized and more experienced wireless communications operators. These wireless communications operators may be able to offer
subscribers network features or products not offered by us. The actions of these



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wireless communications operators could negatively affect our customer churn, ability to attract new subscribers, average revenue per user and operating
costs per customer.



We rely on Sprints agreements with
competitors to provide automatic roaming capability to our subscribers in many of the areas of the United States not covered by the network operated by Sprint and its network partners, like us. Certain of Sprints competitors may be able to
offer coverage in areas not served by Sprints and our wireless network or may be able to offer roaming rates that are lower than those offered by Sprint. Certain competitors have sought to modify the FCCs rules to reduce access to their
networks for automatic roaming in certain areas. We could incur additional costs to enable our customers to roam, or our customers could be unable to roam, in those markets where cellular operators do not make their networks available for roaming or
roaming is not technically feasible.



Many wireless providers
have been upgrading their systems and provide advanced and digital services to compete with Sprints services. Many of these wireless providers require their subscribers to enter into long-term contracts, which may make it more difficult for
Sprint to attract subscribers away from these wireless providers.



Significant competition in the wireless communications services has resulted in us and our competitors offering lower prices and may result in our competitors offering new or better products and services. These factors could prevent us
from operating profitably or reduce our profitability.



Competition in the wireless communications industry is intense. Our major competitors include such wireless companies as Verizon, T-Mobile, Cingular, Nextel and Alltel. Our ability to compete will depend, in part, on our ability to
anticipate and respond to various competitive factors affecting the telecommunications industry, including new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies
by our competitors. We anticipate that competition will continue to cause the market prices for two-way wireless products and services to decline in the future. In order to attract new subscribers, we have offered steeper discounts on handsets and
more generous service plans that may include more minutes and other enhancements such as complimentary periods of free data usage. Offering larger bundles of minutes at lower prices has resulted in a decrease in airtime revenue, which is the price a
customer pays for using the service in excess of allotted minutes.



Our dependence on Sprint to develop competitive products and services and the requirement that we obtain Sprints consent to sell local pricing plans and equipment that Sprint has not approved may limit our ability to keep pace with
competitors on the introduction of new products, services and equipment. Many of these competitors are larger than us, may have entered the wireless communications services market before we did, possess greater resources and more extensive coverage
areas, may offer lower rates, and may market other services, such as landline telephone service, cable television and Internet access, with their wireless communications services. In addition, we may be at a competitive disadvantage since we may
have more debt than some of our competitors.



Furthermore,
there has been a recent trend in the wireless communications industry towards consolidation of wireless service providers through joint ventures, reorganizations and acquisitions. We expect this consolidation to lead to larger competitors over time.
We may be unable to compete successfully with larger companies that have substantially greater resources or that offer more services than we do.



We believe that our ability to compete effectively with other wireless providers will depend on:



| |  |  | the continued expansion and improvement of the Sprint network, customer care system and telephone handset options.
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the continued success of CDMA technology in providing better call quality and clarity than other systems.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | our competitive pricing with various options suiting individual subscribers calling needs.
| | - |  | -------------------------------------------------------------------------------------------



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Alternative technologies and current uncertainties in the wireless market may reduce demand for
wireless services.



Wireless service providers in the
United States use one of two technological standards. Even though these two standards share basic characteristics, they are not compatible or interchangeable with each other. We and Sprint use the standard known as CDMA. If the other standard
becomes preferred in the industry, we may be at a competitive disadvantage. If Sprint changes its standard, we will need to change ours as well, which will be costly and time consuming. If we cannot change the standard, we may not be able to compete
with other systems.



The wireless communications industry is
experiencing significant technological change, as evidenced by the increasing pace of digital upgrades in existing analog wireless systems, satellite coverage, evolving industry standards, ongoing improvements in the capacity and quality of digital
technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. Technological advances and industry changes could cause the technology used on our networks to become obsolete. Sprint may
not be able to respond to such changes and implement new technology on a timely basis, or at an acceptable cost.



If Sprint is unable to keep pace with these technological changes or changes in the wireless communications market based on industry consolidation, the
effects of new regulations flowing from the Telecommunications Act of 1996, the uncertainty of future government regulation and the technology used on our networks, or our business strategy may become obsolete. In addition, some wireless carriers,
including Sprint and us, have implemented an upgrade to their digital systems known as one times radio transmission technology, or 1xRTT, which is also broadly known as a third generation technology throughout the industry. Some carriers are
upgrading their digital systems to implement what is known as 1X EvDO, another 3G data technology that is more advanced than 1xRTT. 3G technology promises high-speed, always-on Internet connectivity and high-quality video and audio. We cannot assure
you that we or Sprint can implement 3G technology successfully or on a cost-effective basis.



In addition, other technologies may decrease demand for our services. For example, other service providers have announced plans to sell and market an IEEE 802.11 standard, which we refer to as Wi-Fi, enabled handset.
Such a handset would permit subscribers to communicate using voice and data services with their handset using voice over internet protocol, or VoIP, technology in any area equipped with a wireless internet connection, or hot spot, potentially
bypassing our network. The number of hot spots in the United States is growing rapidly, with some major cities and urban areas being covered entirely. The availability of VoIP or another alternative technology to our subscribers could greatly reduce
the usage of our network, which would have an adverse effect on our financial condition and results of operations.



Regulation by government and taxing agencies may increase our costs of providing service or require us to change our services, either of which could
impair our financial performance.



Our operations and the
operations of Sprint are subject to varying degrees of regulation by the FCC, the Federal Trade Commission, the Federal Aviation Administration, the Environmental Protection Agency, the Occupational Safety and Health Administration and state and
local regulatory agencies and legislative bodies. Adverse decisions or regulations of these regulators could negatively impact operations and costs of doing business. For example, changes in tax laws or the interpretation of existing tax laws by
state and local authorities could subject us to increased income, sales, gross receipts or other tax costs or require that we alter the structure of our current relationship with Sprint. In addition:



| |  |  | The loss of certain of our FCC licenses, or any of Sprints FCC licenses in our service area, may impair our business and operating results.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The FCC may revoke or refuse to renew any of such licenses at any time for cause. Cause could be a failure to comply with terms of the licenses or applicable FCC rules. We cannot
ensure that these licenses will not be revoked or will be renewed when they expire.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | The FCC has authority to review our conduct with Sprint under our Sprint agreements to ensure that our conduct complies with all applicable FCC rules and decisions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may need to acquire additional licenses, which will require approval of regulatory authorities. These regulatory authorities may not grant approval in a timely manner, if at all.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All FCC licenses, including our own licenses and Sprints licenses, are subject to the FCCs build-out regulations. These regulations require license holders to offer
specified levels of service to the population in their service areas within set time periods. If neither we nor Sprint meets these requirements, the FCC could take back the portions of the service area that are not being served, impose fines or even
revoke the related licenses.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The FCC has allocated additional spectrum that can be used to compete with us and may continue to offer additional spectrum for new carriers, or release unlicensed spectrum to the
public, either of which could increase the competition we face.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Although the Telecommunications Act of 1934, as amended, preempts state and local regulation of market entry or the rates charged by a commercial mobile radio service, or CMRS,
provider, states are permitted to regulate other terms and conditions of mobile service, such as billing practices and other consumer-related issues. Several states have commenced proceedings to implement consumer protection and service
quality regulations that would impose substantial incremental costs across the industry. The location and construction of radio towers and antennas are also subject to a variety of state and local zoning, land use and regulatory requirements. The
time needed to obtain zoning approvals for the construction of additional wireless facilities varies from market to market and state to state.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



An increase in the amount of our foreign ownership could cause us to lose our FCC licenses or restructure our ownership.



Ownership of our stock by non-U.S. citizens is subject to limitations under
the Communications Act of 1934 and FCC regulations. In the absence of FCC consent, not more than 25% of our stock may be owned or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives, or by a foreign
corporation. We believe the level of foreign ownership in our common stock to be approximately 25%. Because our common stock is publicly traded, the level of foreign ownership may fluctuate.



The FCC has granted us the authority to permit our foreign ownership to
exceed 25%, subject to specific limitations. If we exceed the permitted levels or do not comply with the applicable limitations, we may have to restructure our ownership to come within the permitted ownership limit, or else we may lose our FCC
licenses. In that case, our articles of incorporation permit us to force foreign shareholders to sell their shares to us, whether they wish to do so or not, so as to reduce the foreign ownership of us to slightly lower than permitted levels.



Use of handsets may pose health risks, which could result
in the reduced use of wireless services or liability for personal injury claims.



Some media reports and some studies have suggested that certain radio frequency emissions from wireless handsets may be linked to various health problems, including cancer, and may interfere with various electronic
medical devices, including hearing aids and pacemakers. Concerns over radio frequency emissions may discourage use of wireless handsets or expose us to potential litigation. Any resulting decrease in demand for wireless services, or costs of
litigation and damage awards, could impair our ability to achieve and sustain profitability.



We may be subject to potential litigation relating to the use of wireless communications while driving. In addition, several state and local governments are considering, or have adopted, legislation that restricts
the use of wireless handsets by drivers.



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Some studies have indicated that some aspects of using wireless communications while driving may impair
drivers attention in certain circumstances, making accidents more likely. These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries, or to new restrictions or regulations on wireless
communications use, any of which also could have material adverse effects on our results of operations.



A number of U.S. state and local governments are considering or have enacted legislation that would restrict or prohibit the use of a wireless handset
while driving a vehicle or, alternatively, require the use of a hands-free telephone. Legislation of this sort, if it continues to be enacted, would likely require wireless service providers to provide hands-free enhanced services, such as voice
activated dialing and hands-free speaker phones and headsets, to sustain revenue from subscribers who make calls while on the road. Moreover, studies have found that driver distraction can occur regardless of whether hand-held or hands-free handsets
are used, and that phone conversations create much higher levels of driver distraction than listening to the radio or even driving under the influence of alcohol. If legislation is adopted in our service areas banning all phone use while driving,
our revenues could be even more significantly impacted.



Environmental groups have asked the FCC to halt the building of towers used for transmission of wireless signals.



Environmental groups claim that towers used for transmission of wireless signals kill migratory birds. They have petitioned the FCC to study how many
birds die from flying into towers, and have asked the FCC to halt tower construction until the study is completed. In February 2003, environmental groups filed suit against the FCC to force it to protect migratory birds from communication towers. On
May 1, 2003, the FCC announced that it would launch a study of this issue but the lawsuit has since been dismissed. If we cannot build new towers, we may not be able to expand our networks.



Some environmental groups believe that the disposal of wireless phones
could pose a threat to public health. If new regulations governing wireless phone disposal are passed, or if our industry does not develop an efficient disposal or recycling program, our operating costs could increase.



An environmental research group has argued that the disposal of used wireless
phones could pose a threat to public health because the phones contain small amounts of toxic chemicals that may leak into the soil and water supply when they are deposited in landfills. If new and burdensome regulations governing the disposal of
wireless phones are passed in the states covered by our network, or if the wireless industry cannot develop a cost-effective disposal or recycling program for wireless phones, our operating costs could increase.



General Risks Currently Affecting our Business



Overview of this subsection:



Our business has recently been challenged by a number of adverse factors. If
our assumptions in our business model are impacted by adverse factors as discussed below, it is likely that our business will suffer.



Although we have improved our leverage position, we still have a business being adversely affected by our increased competition, our relationship with
Sprint, general economic conditions, and other factors. If these factors continue or deteriorate, it is likely that we will not have enough cash to operate our business. Our liquidity is dependent upon a number of factors. Should actual results
differ from the assumptions underlying our business model, our liquidity position could be adversely affected. We could be required to raise additional capital that may or may not be available on terms acceptable to us, if at all. This could have a
material adverse effect on our ability to achieve our intended business objectives.



Our business has been adversely affected by the following factors:



| |  |  | Our leveraged capital structure.
| | - |  | --------------------------------



| |  |  | A highly competitive marketplace.
| | - |  | ---------------------------------



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| |  |  | General economic conditions in our markets.
| | - |  | -------------------------------------------



| |  |  | Our relationship with Sprint.
| | - |  | -----------------------------



In addition, there are other factors that could contribute to poor business conditions for us. These include:



| |  |  | Uncertainty as to whether our expected level of capital expenditures will be sufficient to support our networks.
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Uncertainty about charges that Sprint is seeking to impose on us, as described above.
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Uncertainly as to our future relationship with Sprint as a result of outstanding litigation.
| | - |  | --------------------------------------------------------------------------------------------



Based upon existing assumptions underlying our business model, we believe that we will have sufficient cash to fund our
operations, debt service and capital requirements. Our funding status is dependent upon a number of factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user,
customer churn and cost per gross addition. Should actual results differ from the underlying business model assumptions, our liquidity position could be adversely affected. We could be required to raise additional capital that may or may not be
available on terms acceptable to us, if at all. This could have a material adverse effect on our ability to achieve our intended business objectives.



A recession in the United States involving significantly lowered spending could negatively affect our results of operations.



Our primary customer base is individual consumers and our accounts receivable
represent unsecured credit. If the economic downturn that the United States and our territories recently experienced does not continue to improve and spending by individual consumers drops significantly, our business would be negatively affected.



A weak economy may have hurt the ability of our existing
subscribers to pay us on time, which may force us to terminate their service. Furthermore, there is also uncertainty as to the extent of customer demand as well as the extent to which airtime and monthly recurring charges may decline. If all of the
foregoing events reoccur, our financial and operational performance may suffer.



Our customers are using more minutes of use than they have in past. Accommodating this additional call volume could cause our operating costs and capital expenditures to increase.



Our customers are increasingly expending more minutes of use. In order to
accommodate this additional call volume from our existing customers as well as to meet the demand created by new customers, we may be required to purchase additional equipment to increase our network capacity. This would cause our operating costs
and the long-term capital expenditures needed to maintain our network to increase. Given our liquidity situation discussed above, there can be no assurance that we will have or will be able to acquire the funds needed to increase our network
capacity.



Risks Related to Anti-Takeover Provisions



Overview of this subsection:



Our anti-takeover provisions may permit our board of directors to turn down
a proposal that our stockholders would like us to accept.



Anti-takeover provisions in our charter and by-laws will make it difficult for anyone other than Sprint to acquire us without approval of our board of directors.



Our board of directors has implemented various anti-takeover provisions. These anti-takeover provisions, and others,
including a poison pill that our board of directors may adopt hereafter, may discourage offers to



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acquire us and may permit our board of directors to choose not to entertain offers to purchase us, even offers that are at a substantial premium to the
market price of our stock. Our stockholders may therefore be deprived of opportunities to profit from a sale of control.



ITEM 2. Properties



We own an
11-story, 115,300 square foot office building in Lake Charles, Louisiana that is used as our corporate headquarters.



We lease space for all of our switching centers. We lease all of our other retail outlets, kiosk floor space and sales and operations offices. As of
December 31, 2004, we had 1,224 PCS cell sites, of which approximately 99% were co-locations and 1% was owned.



ITEM 3. Legal Proceedings



On
January 4, 2005, our wholly-owned subsidiary, IWO Holdings, Inc. (IWO) and each of its subsidiaries (collectively, the Debtors) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the
Bankruptcy Court) seeking relief under the provisions of chapter 11 of title 11 of the United States Code (the Bankruptcy Code) (such case, the Chapter 11 Case). The Debtors continued to operate the businesses as
debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In connection with the Chapter 11 Case, the Debtors also filed with the
Bankruptcy Court on January 4, 2005 a proposed pre-packaged plan of reorganization, under which (i) the Debtors would pay in full the outstanding IWO senior credit agreement debt, (ii) IWOs outstanding Senior Notes would be
exchanged for all of the new common stock of IWO, (iii) all other general unsecured claims of IWO would be unimpaired and paid in full, and (iv) the existing common stock of IWO, all of which is owned by US Unwired, would be cancelled. On February
9, 2005, the Bankruptcy Court entered an order confirming IWOs pre-packaged chapter 11 joint plan of reorganization (the Plan). Effective with the cancellation of the existing common stock of IWO on February 10, 2005, we ceased to
have an equity interest in IWO, and none of our directors and officers are directors or officers of the newly formed company.



On July 11, 2003, US Unwired and two of its subsidiaries (collectively, US Unwired) sued Sprint Corporation and certain of its affiliates
(collectively, Sprint) in the United States District Court for the Western District of Louisiana. The suit, as amended, alleges violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, breach of fiduciary
duty, breach of contract, and fraud arising out of Sprints conduct in its dealings with US Unwired. US Unwired also seeks appointment of a receiver or fiscal agent over property and assets controlled by Sprint. US Unwired seeks monetary
damages on its contractual claims totaling $35.1 million at December 31, 2004, and further monetary damages in connection with its RICO, breach of fiduciary duty, and fraud claims. Sprint filed its answer and a counterclaim, which, as amended,
alleges that US Unwired owes Sprint approximately $30.4 million based on alleged contractual claims, according to the last court filings made by Sprint, and this alleged amount owed by US Unwired has increased since Sprints last court filings.
On August 27, 2004, the Court appointed Robert S. Cohen, CPA, of Crowe Chizek & Company, LLP, as the special master to consider and make findings upon issues that arise out of the accuracy of the accounting for revenues Sprint passes on to US
Unwired and the fees Sprint charges US Unwired. The special master will report proposed findings of fact to the Court. The Court has set a jury trial date for May 9, 2005. US Unwired does not believe that a negative outcome on Sprints
counterclaim will have a material adverse effect on US Unwired.



On August 12, 2004, a federal class action lawsuit was filed by Clodile Romero, Jr., individually and on behalf of all purchasers of our common stock between May 23, 2000 and August 13, 2002 (the Class Period), against us and
three of our executive officers. This suit, which was filed in the United States District Court for the Eastern District of Louisiana, alleges that we and the other named defendants issued false and misleading statements to the investing public
during the Class Period regarding our financial condition, which resulted in the



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artificial inflation of the price of our common stock during the Class Period. More specifically, the plaintiffs in this case allege that the defendants
knowingly or recklessly failed to disclose and/or misrepresented that: (1) we were increasing our subscriber base by signing up high credit risk customers; (2) accounting changes implemented by us were done in order to conceal our declining
revenues; (3) we had been experiencing high involuntary disconnections related to our high credit risk customers; (4) we experienced lower subscription growth as a result of our policy that required credit-challenged customers to pay substantial
deposits upon initiation of services; and (5) we were engaged in a significant dispute with Sprint regarding our business relationship with that entity. The plaintiffs in this case seek: (A) compensatory damages against all defendants for all
damages alleged to have been sustained as a result of the defendants alleged wrongdoing; (B) an award to the plaintiffs for their reasonable costs and expenses incurred in this action; and (C) other relief customarily sought in a class action
lawsuit.



On August 25, 2004, a federal shareholder
derivative action lawsuit was filed by Don Feyler, derivatively on behalf of us, against certain of our executive officers and directors, and against us as a nominal defendant. This suit, which was filed in the United States District Court for the
Eastern District of Louisiana and with which the class action lawsuit described above was consolidated on December 6, 2004, alleges that certain of our executive officers and directors committed violations of state law, including breaches of
fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. More
specifically, the plaintiffs in this case allege that: (1) our increasing revenues and profits from 2000 through 2002 were not the result of increased PCS subscribers, but rather were the result of a scheme to artificially inflate the price of our
common stock; (2) the defendants deliberately, repeatedly and systematically failed to exercise independent or effective judgment and oversight of our business and executives; (3) the defendants participated in and/or approved of such misconduct to
obtain financial and social benefits for themselves, to enrich and further the personal and business interests of all of the defendants, and to allow many of the defendants to maintain their positions of control over us so that they would not be
sued for wrongdoing; and (4) while disseminating this false information, certain of our officers and directors sold over $13 million of their personally held stock. The plaintiffs in this case seek: (A) judgment against the individual defendants and
in favor of us for the amount of damages alleged to have been sustained by us as a result of the individual defendants alleged breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment;
(B) equitable and/or injunctive relief, including attaching, impounding, imposing a constructive trust on or otherwise restricting the proceeds of the individual defendants trading activities or their other assets so as to assure that the
plaintiff, on behalf of us, has an effective remedy; (C) an award to us of restitution from the individual defendants and ordering disgorgement of all alleged profits, benefits and other compensation obtained by the individual defendants; (D) an
award to the plaintiff for the costs and disbursements of this action; and (E) other relief customarily sought in a shareholder derivative action lawsuit.



On October 21, 2004, a state shareholder derivative action lawsuit was filed by Stephen Morris, derivatively on behalf of us, against certain of our
executive officers and directors, and against us as a nominal defendant. This suit, which was filed in the 14thJudicial District Court for the Parish of Calcasieu in the State of Louisiana, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, and insider
selling and misappropriation of information during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. The plaintiffs in this case make essentially the same allegations as the
plaintiffs in the federal class action and derivative lawsuits described above. The plaintiffs in this case seek: (A) all damages allegedly sustained by us as a result of the alleged breaches of fiduciary duty and abuse of control; (B) all equitable
and/or injunctive relief permitted by law; (C) restitution and disgorgement of alleged profits; (D) attorneys fees and costs; and (E) other relief customarily sought in a shareholder derivative action lawsuit.



We are vigorously defending these class action and derivative lawsuits, but
it is too soon to make any meaningful predictions as to their outcomes.



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##### Table of Contents

ITEM 4. Submission of Matters to a Vote of Security Holders



None



PART II



ITEM 5. Market for Registrants Common Equity and Related Stockholder Matters



Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and is now quoted on the OTC Bulletin Board. Before that, our common
stock was traded on the Nasdaq National Market under the symbol UNWR since May 23, 2000 and before that date, there was no public market for our common stock. The following table sets forth, the periods indicated, the range of high and low sales
prices for our common stock as reported on the OTC Bulletin Board and Nasdaq:



|                             |  |                             |      |     |   |     
|---------------------------- |  | --------------------------- | ---- | --- | - | ----
|                             |  | Price Range of Common Stock
|                             |  | High                        |      | Low
|Year Ended December 31, 2004 |  |                             |      |     |   |     
|Fourth Quarter               |  | $                           | 4.80 |     | $ | 2.51
|Third Quarter                |  | $                           | 2.95 |     | $ | 1.92
|Second Quarter               |  | $                           | 3.15 |     | $ | 1.81
|First Quarter                |  | $                           | 2.03 |     | $ | 0.98
|                             |  |                            
|Year Ended December 31, 2003 |  |                             |      |     |   |     
|Fourth Quarter               |  | $                           | 1.15 |     | $ | 0.65
|Third Quarter                |  | $                           | 1.68 |     | $ | 0.36
|Second Quarter               |  | $                           | 0.65 |     | $ | 0.15
|First Quarter                |  | $                           | 0.55 |     | $ | 0.08



On January 31, 2005
there were 323 holders of record of our common stock.



We have
not declared or paid any cash dividends on our common stock or any other of our securities. We do not expect to pay cash dividends on our capital stock in the foreseeable future. We currently intend to retain our future earnings, if any, to fund the
development and growth of our business. Our future decisions concerning the payment of dividends on our common stock will depend upon our results of operations, financial condition and capital expenditure plans, as well as such other factors as the
board of directors, in its sole discretion, may consider relevant. In addition, our existing indebtedness restricts, and we anticipate our future indebtedness may restrict, our ability to pay dividends.



|                                                            |  |                                                                                               |  |                                                                               |      |                                                                                                                                             |          
|----------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Equity Compensation Plan Information                       
|Plan Category                                               |  | (a) Number of securities to beissued upon exercise ofoutstanding options,warrants, and rights |  | (b) Weighted average exerciseprice of outstanding options,warrants and rights |      | (c ) Number of securitiesremaining available for futureissuance under equitycompensation plans (excludingsecurities reflected in column(a))
|Equity compensation plans approved by security shareholders |  | 10,007,198                                                                                    |  | $                                                                             | 3.39 |                                                                                                                                             | 1,625,973
|                                                            |  |                                                                                               |  |                                                                               |      |                                                                                                                                             |          



ITEM 5A. Changes in Securities



From May 26, 2004 to June 4, 2004, US Unwired exchanged 34.5 million shares of its common stock for $75.0 million face amount of its US Unwired 133/8% senior subordinated discount notes. Exemption for such transaction is claimed pursuant to Section 3(a)(9) of the Securities Act of 1933.



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ITEM 6. Selected Financial Data



The following selected financial data are derived from the consolidated financial statements of US Unwired Inc. and subsidiaries. It includes the data of IWO that as of February 10, 2005 is no longer a subsidiary of ours. The data should be
read in conjunction with the consolidated financial statements, related notes and other financial information included herein.



|                                                         |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  
|-------------------------------------------------------- |  | ---------------------------------------- | -------- | - | ---------- | - | -------- | ---------- |  | - | ---------- | - |  | ---------- | -------- | - |  | - | ------- | -
|                                                         |  | Years Ended December 31,                 |         
|                                                         |  | 2004                                     |          |   | 2003(1)    |   |          | 2002(1)(2) |  |   | 2001(1)    |   |  | 2000(1)    |         
|                                                         |  |                                          |          |   | (Restated) |   |          | (Restated) |  |   | (Restated) |   |  | (Restated) |         
|                                                         |  | (In thousands except for per share data) |         
|Statement of Operations Data:                            |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  
|Revenue                                                  |  | $                                        | 594,838  |   |            | $ | 535,751  |            |  | $ | 511,564    |   |  | $          | 230,220  |   |  | $ | 80,254  |  
|Cost of service and merchandise sold                     |  |                                          | 369,568  |   |            |   | 355,325  |            |  |   | 386,478    |   |  |            | 164,121  |   |  |   | 68,904  |  
|Other operating expense (3)                              |  |                                          | 223,978  |   |            |   | 255,973  |            |  |   | 248,006    |   |  |            | 152,259  |   |  |   | 92,783  |  
|Impairment of goodwill (4)                               |  |                                          |         |   |            |   |         |            |  |   | 214,191    |   |  |            |         |   |  |   |        |  
|Impairment of intangible assets (4)                      |  |                                          |         |   |            |   |         |            |  |   | 188,330    |   |  |            |         |   |  |   |        |  
|                                                         |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  
|Operating income (loss)                                  |  | $                                        | 1,292    |   |            | $ | (75,547  | )          |  | $ | (525,441   | ) |  | $          | (86,160  | ) |  | $ | (81,433 | )
|                                                         |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  
|Loss from continuing operations                          |  | $                                        | (149,577 | ) |            | $ | (162,908 | )          |  | $ | (596,639   | ) |  | $          | (110,527 | ) |  | $ | (81,132 | )
|                                                         |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  
|Loss from continuing operations per diluted common share |  | $                                        | (1.00    | ) |            | $ | (1.27    | )          |  | $ | (5.05      | ) |  | $          | (1.33    | ) |  | $ | (1.16   | )
|                                                         |  |                                          |          |   |            |   |          |            |  |   |            |   |  |            |          |   |  |   |         |  



|                                            |  |                    |          |   |            |   |          |            |  |   |            |   |            |   |         |  |   |        
|------------------------------------------- |  | ------------------ | -------- | - | ---------- | - | -------- | ---------- |  | - | ---------- | - | ---------- | - | ------- |  | - | -------
|                                            |  | As of December 31,
|                                            |  | 2004               |          |   | 2003(1)    |   |          | 2002(1)(2) |  |   | 2001(1)    |   | 2000(1)   
|                                            |  |                    |          |   | (Restated) |   |          | (Restated) |  |   | (Restated) |   | (Restated)
|                                            |  | (In thousands)    
|Balance Sheet Data:                         |  |                    |          |   |            |   |          |            |  |   |            |   |            |   |         |  |   |        
|Cash and cash equivalents                   |  | $                  | 114,253  |   |            | $ | 97,193   |            |  | $ | 61,985     |   |            | $ | 100,589 |  | $ | 15,136 
|Marketable securities                       |  |                    |         |   |            |   |         |            |  |   |           |   |            |   |        |  |   | 165,438
|Property and equipment, net                 |  |                    | 356,172  |   |            |   | 410,541  |            |  |   | 476,300    |   |            |   | 248,017 |  |   | 203,815
|Total assets                                |  |                    | 639,788  |   |            |   | 717,351  |            |  |   | 830,784    |   |            |   | 474,311 |  |   | 456,895
|Long-term debt including current maturities |  |                    | 720,116  |   |            |   | 797,587  |            |  |   | 767,220    |   |            |   | 339,368 |  |   | 305,533
|Total liabilities                           |  |                    | 918,727  |   |            |   | 960,520  |            |  |   | 910,873    |   |            |   | 438,695 |  |   | 357,775
|Stockholders equity (deficit)              |  |                    | (278,939 | ) |            |   | (243,169 | )          |  |   | (80,191    | ) |            |   | 35,573  |  |   | 98,571 

---

|(1) | As discussed in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation and in Note 1 to the Consolidated Financial Statements, certain
restatements were made to amounts reported as cost of service, sales and marketing and general and administrative in our historical consolidated financial statements through September 30, 2004. The restatements increased our total operating expense
by approximately $3.4 million, $5.9 million, $2.6 million and $1.1 million for the years ended December 31, 2003, 2002, 2001 and 2000, respectively. Total liabilities and stockholders equity as of December 31, 2003, 2002, 2001 and 2000 have
also been restated to reflect the impact of such adjustments. Total liabilities increased by approximately $12.4 million, $9.3 million, $3.8 million and $1.4 million, respectively. Our accumulated deficit increased by approximately $13.4 million,
$10.0 million, $4.1 million and $1.5 million as of December 31, 2003, 2002, 2001 and 2000, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On March 8, 2002, we acquired 100% of the ownership interests of Georgia PCS for approximately $84.5 million and on April 1, 2002, we acquired 100% of the ownership interest in IWO
for approximately $446.0 million. Our operating results include the operating results of Georgia PCS since the date of acquisition, March 8, 2002 and the operating results of IWO from date of acquisition, April 1, 2002.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Other operating expense includes an IWO asset abandonment charge of $12.1 million for the cell sites and the related property leases of these abandoned cell sites.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | In 2002, we recognized a $402.5 million impairment of goodwill and intangible assets as a result of our impairment testing of IWO in compliance with SFAS No. 142, Goodwill and
Other Intangible Assets and SFAS No. 144, Accounting for the Disposal of Long-Lived Assets. For a detailed discussion on this topic, refer to Goodwill and Intangible Asset in our accompanying Consolidated Financial Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ITEM 7. Managements Discussion and Analysis of Financial Condition And Results of Operations



The following discussion should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Report
and with the Risk Factors. The discussion contains forward-looking statements that involve risks and uncertainties. For a detailed discussion on this topic, refer to our opening comments at the beginning of this Form 10-K.



Restatement of Prior Years



We recently reviewed our accounting practices with respect to operating
leases with escalation provisions. As a result of this review and in consultation with the audit committee of our board of directors and our independent registered public accounting firm, Ernst & Young LLP, we determined that it was appropriate
to restate our historical consolidated financial statements through September 30, 2004 (see Note 16 to the Consolidated Financial Statements for restated quarterly financial results of operations). Historically, when accounting for operating leases
with escalation provisions, we recorded lease expense at the current rate specified in the lease. We re-evaluated our position and determined that our operating lease expense should be recognized on a straight line-basis over the term of the lease
(as defined in Statement of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases, as amended), which is consistent with the depreciable lives of our assets associated with the leased property. The adjustments,
as discussed below, relate solely to the accounting treatment, and do not affect our historical or future cash flows or the timing of payments under the related leases.



As a result of these restatements, certain previously recorded amounts to our historical consolidated statements of
operations have been adjusted as follows (in thousands, except for earnings per share):



|                                                                                       |  |                      |           |   |             |   |        |             |  |   |           |  
|-------------------------------------------------------------------------------------- |  | -------------------- | --------- | - | ----------- | - | ------ | ----------- |  | - | --------- | -
|Year ended December 31, 2003                                                           |  | AsOriginallyReported |           |   | Adjustments |   |        | As Restated | 
|Cost of service                                                                        |  | $                    | 306,223   |   |             | $ | 2,735  |             |  | $ | 308,958   |  
|General and administrative                                                             |  |                      | 31,378    |   |             |   | 67     |             |  |   | 31,445    |  
|Sales and marketing                                                                    |  |                      | 90,211    |   |             |   | 311    |             |  |   | 90,522    |  
|Depreciation and amortization                                                          |  |                      | 119,188   |   |             |   | 335    |             |  |   | 119,523   |  
|Total operating expense                                                                |  |                      | 607,850   |   |             |   | 3,448  |             |  |   | 611,298   |  
|Operating loss                                                                         |  |                      | (72,099   | ) |             |   | (3,448 | )           |  |   | (75,547   | )
|Loss from continuing operations before income taxes and equity in income of affiliates |  |                      | (162,902  | ) |             |   | (3,448 | )           |  |   | (166,350  | )
|Loss from continuing operations before equity in income of affiliates                  |  |                      | (162,371  | ) |             |   | (3,448 | )           |  |   | (165,819  | )
|Loss from continuing operations                                                        |  |                      | (159,460  | ) |             |   | (3,448 | )           |  |   | (162,908  | )
|Net loss                                                                               |  |                      | (156,954  | ) |             |   | (3,448 | )           |  |   | (160,402  | )
|Basic and diluted (loss) earnings per common share:                                    |  |                      |           |   |             |   |        |             |  |   |           |  
|Continuing operations                                                                  |  | $                    | (1.24     | ) |             | $ | (0.03  | )           |  | $ | (1.27     | )
|Net loss per common share                                                              |  | $                    | (1.22     | ) |             | $ | (0.03  | )           |  | $ | (1.25     | )
|                                                                                       |  |                      |          
|Year ended December 31, 2002                                                           |  | AsOriginallyReported |           |   | Adjustments |   |        | As Restated | 
|Cost of service                                                                        |  | $                    | 345,623   |   |             | $ | 4,749  |             |  | $ | 350,372   |  
|General and administrative                                                             |  |                      | 25,403    |   |             |   | 125    |             |  |   | 25,528    |  
|Sales and marketing                                                                    |  |                      | 108,575   |   |             |   | 597    |             |  |   | 109,172   |  
|Depreciation and amortization                                                          |  |                      | 108,539   |   |             |   | 418    |             |  |   | 108,957   |  
|Total operating expense                                                                |  |                      | 1,031,116 |   |             |   | 5,889  |             |  |   | 1,037,005 |  
|Operating loss                                                                         |  |                      | (519,552  | ) |             |   | (5,889 | )           |  |   | (525,441  | )
|Loss from continuing operations before income taxes and equity in income of affiliates |  |                      | (590,880  | ) |             |   | (5,889 | )           |  |   | (596,769  | )
|Loss from continuing operations before equity in income of affiliates                  |  |                      | (590,099  | ) |             |   | (5,889 | )           |  |   | (595,988  | )
|Loss from continuing operations                                                        |  |                      | (590,750  | ) |             |   | (5,889 | )           |  |   | (596,639  | )
|Net loss                                                                               |  |                      | (582,478  | ) |             |   | (5,889 | )           |  |   | (588,367  | )
|Basic and diluted (loss) earnings per common share:                                    |  |                      |           |   |             |   |        |             |  |   |           |  
|Continuing operations                                                                  |  | $                    | (5.00     | ) |             | $ | (0.05  | )           |  | $ | (5.05     | )
|Net loss per common share                                                              |  | $                    | (4.93     | ) |             | $ | (0.05  | )           |  | $ | (4.98     | )



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The cumulative impact of the adjustments for all years prior to the year ended December 31, 2002 was
approximately $4.1 million and was recorded as an adjustment to our accumulated deficit in stockholders equity as of December 31, 2001.



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 and
the historical experience of other Sprint 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 Processing



We rely on Sprint 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 and Sprint 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, 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 auditors engaged by Sprint that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.



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. Our evaluation of the adequacy of these amounts includes our own historical experience and discussions with Sprint and other Sprint affiliates.



Revenue Recognition



We earn revenue by providing access to and usage of our network and sales of merchandise. 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. Travel revenue is generated on a per minute basis when a Sprint subscriber outside of our markets uses our service when traveling through our markets. Foreign roaming revenue is generated when a
non-Sprint customer



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uses our service when traveling through our markets. We recognize roaming revenue through an agreement that allows a reseller to sell prepaid wireless
services in its markets. Revenues are recognized when amounts are considered to be earned under the respective service plans and collection of such amounts is considered probable.

Sprint retains 8% of collected service revenues from subscribers based in our service area, foreign roaming and for revenue generated under our reseller
agreement. The amount of affiliation fees retained by Sprint is recorded as a Cost of service expense. Revenues derived from the sale of handsets and accessories by us and from certain roaming services (outbound roaming and roaming revenues from
Sprint and its PCS network partner subscribers) are not subject to the 8% affiliation fee from Sprint.



Revenues from the sales of merchandise, primarily wireless handsets and accessories, represent a separate earnings process and are recognized at the time
of the customer purchase. These revenues and related costs are included in merchandise sales and cost of sales, respectively. We reduce recorded revenue for rebates and discounts given to subscribers on wireless handsets sales in accordance with
Emerging Issues Task Force (EITF) Issue No. 01-9 Accounting for Consideration Given by a Vendor to a Subscriber (Including a Reseller of the Vendors Products).



We recognize revenues from activation fees in accordance with EITF No. 00-21.
In May 2003, the 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, we 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. We believe 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 total consideration
under these arrangements, including any related activation fees, is allocated between these separate units based on their relative fair values.



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 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 historical trending to make our estimates. If the collections on late fees are less
than that recognized, additional allowances may be required.



Inventory and Inventory Reserves



Inventory consists of wireless telephones and related accessories and is carried at cost. Cost is determined by the moving weighted average method, which approximates first-in, first-out.



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.



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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 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. We periodically and annually evaluate the adequacy of our accruals through analysis of
historical information and discussions with Sprint. 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 SFAS No. 142, Goodwill and Other Intangible Assets. The impairment analysis requires numerous subjective assumptions and estimates to determine fair value of the respective reporting units as required by
SFAS No. 142. Depending on level of sales, our liquidity and other factors, we may be required to recognize impairment charges in the future.



Lease Transactions



We have entered into leases on towers owned by others to co-locate our cell sites. We have also entered into leases for properties related to our retail
outlets, owned towers, certain office space and a portion of our network switching stations. Our accounting for an operating lease transaction as of the leases inception involves judgments in determining the number of lease renewals to be
included in the lease term, in addition to the initial non-cancelable term, used to recognize rent expense on a straight-line basis. This judgment considers various factors that we would consider at the time of opting to renew such leases,
particularly whether any non-renewal could result in economic detriment to us or the foregoing of an economic benefit available to us. Additionally, the lease term can impact the determination of the period over which the depreciable assets
associated with operating leases are depreciated.



If a lease
with a lease term containing one or more renewal periods is not renewed after the initial term has expired, then the carrying values of deferred rent resulting from straight-line recognition of rent expense and any lease related assets reflected in
the consolidated balance sheet would be written off and reflected in our results of operations in the period such non-renewal has occurred.



Overview



We are principally engaged in the ownership and operation of wireless communications. We are a network partner of Sprint and have the exclusive right to
provide wireless services under the Sprint brand names within our service area. Our service area consists of portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.



Recent Developments



In February 2004, we consummated the sale of our cellular operations, which included certain cellular towers, for $21.5
million and recognized a gain of $16.3 million that has been recorded as a gain on the disposal of discontinued operations. In March 2004, we sold 81 cellular and PCS cell site towers for $9.8 million. Concurrent with the sale, we entered into
operating leases for a portion of the antenna space on the sold towers from the buyer for an initial term of 10 years, renewable at our option for three additional five-year terms at an initial rental of $1.4 million per year, increasing each year
by 4% of the previous years rental. We recorded a deferred gain of approximately $1.8 million that will be recognized ratably over the initial 10-year term of the operating lease. Also during the three-month period ended March 31, 2004, we
divested of other non-core assets



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including certain PCS licenses and a minority interest in an unconsolidated affiliate for $10.3 million and recorded a loss of $0.4 million. We used $11.0
million of the $41.6 million in proceeds to partially repay the US Unwired senior bank credit facility. The accompanying consolidated financial statements reflect our cellular operations as a discontinued operation.



During May and June 2004, we executed a series of transactions to refinance
US Unwireds debt that included:



| |  |  | issuing $360 million of US Unwired senior secured notes (as further described in Note 9 to the consolidated financial statements)
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | purchasing for $247.4 million approximately $235.8 million aggregate face value of US Unwired 133/8% senior subordinated discount notes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issuing approximately 34.5 million shares of US Unwired common stock in exchange for approximately $75.0 million aggregate face value of US Unwired 133/8% senior subordinated discount notes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | paying in full our $55.4 million outstanding balance and terminating the US Unwired senior credit facility; and
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | retiring debt of approximately $3.7 million related to a promissory note and vendor financing.
| | - |  | ----------------------------------------------------------------------------------------------



On August 30, 2004, we purchased for $51.1 million approximately $48.0 million aggregate face value of US Unwired 133/8% senior subordinated discount notes. We recorded a $4.5 million loss on extinguishment of US Unwired debt related
to this transaction.



On November 1, 2004, we retired
the remaining outstanding US Unwired 133/8% senior subordinated discount notes by purchasing $41.1 million
aggregate face value for $43.9 million.



On December 31,
2004, we sold, based upon an independent appraisal, our 50% ownership interest in a subsidiary for $30,000 to a related party and recorded a loss of $1.2 million resulting from the sale. The subsidiary held LMDS licenses in Texas, Arkansas, Illinois
and Louisiana.



In December 2004, a series of actions were
initiated that resulted in the reorganization of IWO. Effective with the consummation of the IWO reorganization on February 9, 2005 and the cancellation of the existing common stock of IWO on February 10, 2005, we ceased to have an equity interest
in IWO.



In connection with the consummation of the IWO
reorganization plan, IWO terminated its management agreement with US Unwired, dated April 1, 2004, as amended on January 3, 2005 (the management agreement). The termination of the management agreement is subject to a four-month
transition period during which US Unwired will continue to provide transitional management and restructuring services to IWO as defined in the management agreement.



Due to the uncertainty as of December 31, 2004 of the IWO reorganization plan being completed, the accompanying audited
consolidated financial statements do not reflect the effects of the IWO reorganization, and all discussions herein, unless otherwise stated, include IWO information consolidated with US Unwired.



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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
(GAAP). When we use these terms, they may not be comparable to similar terms used by other wireless telecommunications companies.



|                                         |  |                                 |         |   |                          |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|---------------------------------------- |  | ------------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                         |  | Three Months Ended December 31, |         |   | Years Ended December 31, |  
|                                         |  | 2004                            |         |   | 2003                     |   |         | 2002 |  |   | 2004    |   |  | 2003 |         |   | 2002 |  
|Subscribers                              |  |                                 |         |   |                          |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|Gross Additions                          |  |                                 | 99,867  |   |                          |   | 88,107  |      |  |   | 95,160  |   |  |      | 364,116 |   |      |   | 316,100 |   |  |   | 337,391 |  
|Net Additions                            |  |                                 | 26,729  |   |                          |   | 22,089  |      |  |   | 19,881  |   |  |      | 93,382  |   |      |   | 59,246  |   |  |   | 73,799  |  
|Total Customers                          |  |                                 | 706,942 |   |                          |   | 617,813 |      |  |   | 561,162 |   |  |      | 706,942 |   |      |   | 617,813 |   |  |   | 561,162 |  
|Churn                                    |  |                                 | 3.2     | % |                          |   | 3.4     | %    |  |   | 4.3     | % |  |      | 3.1     | % |      |   | 3.4     | % |  |   | 4.2     | %
|                                         |  |                                 |         |   |                          |  
|Virgin Subscribers (in our service area) |  |                                 | 189,930 |   |                          |   | 88,219  |      |  |   |        |   |  |      | 189,930 |   |      |   | 88,219  |   |  |   |        |  
|                                         |  |                                 |         |   |                          |  
|Average Revenue Per User, Monthly        |  |                                 |         |   |                          |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|Including Roaming                        |  | $                               | 70.17   |   |                          | $ | 71.96   |      |  | $ | 84.56   |   |  | $    | 71.30   |   |      | $ | 72.27   |   |  | $ | 85.17   |  
|Without Roaming                          |  | $                               | 53.19   |   |                          | $ | 52.33   |      |  | $ | 53.97   |   |  | $    | 54.23   |   |      | $ | 54.06   |   |  | $ | 54.67   |  
|                                         |  |                                 |         |   |                          |  
|Cost Per Gross Addition                  |  | $                               | 359     |   |                          | $ | 391     |      |  | $ | 392     |   |  | $    | 332     |   |      | $ | 358     |   |  | $ | 375     |  
|                                         |  |                                 |         |   |                          |  
|Average Monthly MOUs Per Subscriber      |  |                                 |         |   |                          |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|Home                                     |  |                                 | 717     |   |                          |   | 590     |      |  |   | 471     |   |  |      | 680     |   |      |   | 568     |   |  |   | 462     |  
|Roaming Off Our Network                  |  |                                 | 210     |   |                          |   | 192     |      |  |   | 147     |   |  |      | 218     |   |      |   | 179     |   |  |   | 136     |  
|                                         |  |                                 |         |   |                          |  
|System MOUs (Millions)                   |  |                                 |         |   |                          |   |         |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|Subscriber                               |  |                                 | 1,492   |   |                          |   | 1,074   |      |  |   | 775     |   |  |      | 5,385   |   |      |   | 4,012   |   |  |   | 2,664   |  
|Roaming                                  |  |                                 | 641     |   |                          |   | 512     |      |  |   | 330     |   |  |      | 2,492   |   |      |   | 1,771   |   |  |   | 1,094   |  
|                                         |  |                                 |         |   |                          |  
|Licensed POPs (Millions)                 |  |                                 | 17.6    |   |                          |   | 17.6    |      |  |   | 17.6    |   |  |      | 17.6    |   |      |   | 17.6    |   |  |   | 17.6    |  
|                                         |  |                                 |         |   |                          |  
|Covered POPs (Millions)                  |  |                                 | 12.9    |   |                          |   | 12.8    |      |  |   | 12.6    |   |  |      | 12.9    |   |      |   | 12.8    |   |  |   | 12.6    |  
|Towers (Owned and Leased)                |  |                                 | 1,945   |   |                          |   | 1,878   |      |  |   | 1,796   |   |  |      | 1,945   |   |      |   | 1,878   |   |  |   | 1,796   |  



Subscribers



We refer to our customers as subscribers.
Gross additions refer to the total number of new subscribers added during the period. Net additions 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
increased for 2004 as compared to 2003 primarily as a result of our continuing marketing efforts to attract new subscribers, the increase in the number of people that we cover in our service area and our additional cell site coverage. The number of
net additions increased for 2004 as compared to 2003 primarily as a result of a higher number of gross additions that was partially offset by lower churn.



The number of gross and net additions decreased for 2003 as compared to 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 certain credit challenged subscribers.



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; and, (iii) adding back those



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customers that reactivate their service, by our overall average customers for the reporting period; and dividing the result by the number of months in the
period. Churn decreased for 2004 as compared to 2003 and for 2003 as compared to 2002 primarily as a result of a continuing improvement in the credit quality of our subscriber base.



Reseller Subscribers



We participate in a reseller program in our service area through Sprint as part of the partnership between Sprint and Virgin Mobile USA, LLC
(Virgin). The agreement allows Virgin to sell prepaid wireless services and pay us for use of our network on a per minute basis. The number of Virgin subscribers increased each year primarily as a result of marketing and sales efforts.



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



Effective January 1, 2004, Sprint reduced the reciprocal travel rate to $0.041 per minute in 2004 from $0.058 per minute in 2003. For 2004, the reduction in the travel rate has resulted in a decrease to our revenues of approximately $38.0
million, a reduction to our expenses of approximately $32.2 million and a reduction to our cash flow of approximately $5.8 million. Effective January 1, 2003, Sprint reduced the reciprocal travel rate for US Unwired from $0.20 per minute in 2002 to
$0.058 per minute in 2003 and for Texas Unwired and Georgia PCS Management Inc. (Georgia PCS), both subsidiaries of LA Unwired, and IWO from $0.10 per minute in 2002 to $0.058 per minute in 2003. For 2003, the reduction in the travel
rate resulted in a decrease to our revenues of approximately $133.4 million, a reduction to our expenses of approximately $107.4 million and a reduction to our cash flow of approximately $26.0 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 2004 as compared to 2003 was
primarily as a result of an increase in data usage that was partially offset by more competitive plans that offer more generous allotment of minutes. The decrease in ARPU including roaming for 2004 as compared to 2003 was primarily as a result of
the reduction in the reciprocal travel rate as discussed above that was partially offset by an increase in data usage.



The decrease in ARPU excluding roaming for 2003 as compared to 2002 was primarily as a result of more competitive plans that offer more generous allotment
of minutes partially offset by an increase in data revenues. The decrease in ARPU including roaming for 2003 as compared to 2002 was primarily as a result of the reduction in the reciprocal travel rate as discussed above that was partially offset by
an increase in data usage.



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Cost per Gross Addition



Cost per gross addition (CPGA) summarizes the average cost to acquire new customers during the reporting period.
CPGA is computed by adding sales and marketing expenses and merchandise cost of sales and reducing the amount by the revenue from merchandise sales. The net amount is divided by the number of total new subscriber gross additions for the period. The
decrease in CPGA for 2004 as compared to 2003 and for 2003 as compared to 2002 was primarily as a result of an overall decrease in our selling and marketing 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 of minutes 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 system usage for our
subscribers as well as other Sprint, Sprint affiliates and non-Sprint subscribers using our system in order to assess network capacity. Our overall system minutes are increasing primarily as a result of increases in subscribers and increases in
minutes allotted to subscriber plans.



Resident Population/
Service Area



Our service area comprises a population
(Licensed POPs) of approximately 17.6 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 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.



Results of Operations



2004 compared to 2003



Revenues



|                   |  |                          |         |      |   |        
|------------------ |  | ------------------------ | ------- | ---- | - | -------
|                   |  | Years Ended December 31,
|                   |  | 2004                     |         | 2003
|                   |  | (In thousands)          
|Subscriber revenue |  | $                        | 429,648 |      | $ | 381,558
|Roaming revenue    |  |                          | 135,300 |      |   | 128,553
|Merchandise sales  |  |                          | 28,081  |      |   | 23,224 
|Other revenue.     |  |                          | 1,809   |      |   | 2,416  
|                   |  |                          |         |      |   |        
|Total revenue.     |  | $                        | 594,838 |      | $ | 535,751
|                   |  |                          |         |      |   |        



Subscriber revenue



Total subscriber revenues was $429.6 million for 2004 as
compared to $381.6 million for 2003, representing an increase of $48.0 million and was primarily the result of an increase in basic service and airtime revenue of $34.9 million related to the increase in our subscriber base and a $13.1 million
increase in data usage as more subscribers use this service.



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Roaming revenue



Roaming revenue was $135.3 million for 2004 as compared to $128.6 million for 2003, representing an increase of $6.7 million
and was primarily as a result of a $5.1 million increase in Sprint and Sprint affiliate subscribers traveling through our service area and $1.6 million increase related to other network usage that included resellers. We continue to add cell sites in
locations that we believe will enhance service and increase our roaming revenue.



Merchandise sales



Merchandise sales were $28.1 million for 2004 as compared to $23.2 million for 2003, representing an increase of $4.9 million. The increase is primarily the result of an increase in initial 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. We face significant competition in our marketplace and typically sell handsets below cost to new
subscribers in order to remain competitive in the market place through steep discounts and instant rebates.



Other revenue



Other revenue was $1.8 million for 2004 as compared to $2.4 million for 2003, representing a decrease of $0.6 million that was primarily attributable to a
decrease in co-location revenue as a result of selling towers where other carriers were renting space from us.



Operating Expense



|                              |  |                          |         |      |   |        
|----------------------------- |  | ------------------------ | ------- | ---- | - | -------
|                              |  | Years Ended December 31,
|                              |  | 2004                     |         | 2003
|                              |  | (In thousands)          
|Cost of service               |  | $                        | 312,872 |      | $ | 308,958
|Merchandise cost of sales     |  |                          | 56,696  |      |   | 46,367 
|General and administrative    |  |                          | 35,706  |      |   | 31,445 
|Sales and marketing           |  |                          | 92,362  |      |   | 90,522 
|Non-cash stock compensation   |  |                          | 375     |      |   | 2,404  
|Depreciation and amortization |  |                          | 95,535  |      |   | 119,523
|IWO asset abandonment charge  |  |                          |        |      |   | 12,079 
|                              |  |                          |         |      |   |        
|Total operating expense       |  | $                        | 593,546 |      | $ | 611,298
|                              |  |                          |         |      |   |        



Cost of service



Cost of service was $312.9 million for 2004 as compared
to $309.0 million for 2003, representing an increase of $3.9 million that was primarily the result of a $2.1 million increase in lease expense primarily related to new cell site leases, a $4.4 million increase in Sprint franchise fees related to
higher volume and a $3.4 million increase related to our subscribers traveling on Sprint and non-Sprint networks. This was partially offset by a $3.2 million decrease in handset upgrades, a $1.8 million decrease in bad debts as a result of our
efforts to target subscribers in good credit standing and a $1.0 million decrease in circuit expenses that was primarily related to recoveries of reciprocal compensation and rate negotiations.



Merchandise cost of sales



Merchandise cost of sales was $56.7 million for 2004 as compared to $46.4
million for 2003, representing an increase of $10.3 million that was primarily the result of an increase in 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.



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General and administrative expense



General and administrative expense was $35.7 million for 2004 as compared to $31.4 million for 2003, representing an
increase of $4.3 million that was primarily as a result of a $2.5 million increase in professional fees related to our restructuring of IWO and our Sprint lawsuit (see Item 3 Legal Proceedings) and a $2.0 million increase in other taxes that
primarily related to a tax refund received in 2003. This was partially offset by a $0.2 million decrease in repairs and maintenance.



Sales and marketing expense



Sales and marketing expense was $92.4 million for 2004 as compared to $90.5 million for 2003, representing an increase of $1.9 million that was primarily
as a result of an increase in agent commissions and handset subsidies of $7.7 million and a $1.3 million increase other sales and marketing expenses that was partially offset by a decrease of $4.9 million in advertising, a $1.8 million decrease in
sales wages, taxes and benefits and a $0.4 million decrease in telephone expenses.



Non-cash stock compensation



Non-cash compensation was $0.4 million for 2004 as compared to $2.4 million for 2003, representing a decrease of $2.0 million that is primarily the result of a portion of our outstanding options being fully amortized. The non-cash stock
compensation consists of compensation expense related to the granting of certain stock options of our stock in July 1999 and January 2000 with exercise prices less than the market value of our stock at the date of the grant and the impact of the
stock options granted in connection with the IWO acquisition. The non-cash stock compensation expense is generally being amortized over a four-year period representing the vesting periods of the options.



Depreciation and amortization expense



Depreciation and amortization expense was $95.5 million for 2004 as compared
to $119.5 million for 2003, representing a decrease of $24.0 million that was primarily as a result of fully amortizing the IWO subscriber base established as a result of our April 1, 2002 IWO acquisition.



Other Income/(Expense)



|                              |  |                          |          |   |      |   |         |  
|----------------------------- |  | ------------------------ | -------- | - | ---- | - | ------- | -
|                              |  | Years Ended December 31, |         
|                              |  | 2004                     |          |   | 2003 |  
|                              |  | (In thousands)           |         
|Interest expense              |  | $                        | (88,859  | ) |      | $ | (92,455 | )
|Interest income               |  |                          | 1,958    |   |      |   | 1,640   |  
|Gain (loss) on sale of assets |  |                          | (1,841   | ) |      |   | 12      |  
|Loss on debt extinguishment   |  |                          | (62,342  | ) |      |   |        |  
|                              |  |                          |          |   |      |   |         |  
|Total other expense           |  | $                        | (151,084 | ) |      | $ | (90,803 | )
|                              |  |                          |          |   |      |   |         |  



Interest expense was
$88.9 million for 2004 as compared to $92.5 million for 2003, representing a decrease of $3.6 million. The decrease in interest expense was primarily as a result of our lower interest rates as a result of restructuring our US Unwired debt that was
partially offset by our increase in interest expense related to our IWO debt.



Interest income was $2.0 million for 2004 as compared to $1.6 million for 2003, representing an increase of $0.4 million. The increase was primarily due to more cash and cash equivalents available for investment.



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In 2004, we sold various non-core assets including PCS licenses, towers, minority interests in
unconsolidated affiliates and vehicles for approximately $21.4 million and recognized a $1.8 million loss on these transactions in the current period and a deferred gain of $2.3 million.



In 2004, we completed a new debt offering for US Unwired that consisted of $360.0 million of new US Unwired senior secured
notes. We used the proceeds along with existing cash and shares of our common stock to retire our US Unwired senior secured credit facility and our existing US Unwired notes. We recorded a loss on debt extinguishment of $62.3 million related to
these transactions, which are detailed in Note 3 to the audited consolidated financial statements.



Discontinued operations



In February 2004, we consummated the sale of our cellular operations, which included certain cellular towers, for $21.5 million and recognized a gain of
$16.3 million that has been recorded as a gain on the disposal of discontinued operations. We recognized income from discontinued operations of $0.3 and $2.5 million in 2004 and 2003, respectively, related to these cellular operations.



2003 compared to 2002



Revenue



|                   |  |                          |         |      |   |        
|------------------ |  | ------------------------ | ------- | ---- | - | -------
|                   |  | Years Ended December 31,
|                   |  | 2003                     |         | 2002
|                   |  | (In thousands)          
|Subscriber revenue |  | $                        | 381,558 |      | $ | 315,256
|Roaming revenue    |  |                          | 128,553 |      |   | 175,929
|Merchandise sales  |  |                          | 23,224  |      |   | 17,915 
|Other revenue      |  |                          | 2,416   |      |   | 2,464  
|                   |  |                          |         |      |   |        
|Total revenue      |  | $                        | 535,751 |      | $ | 511,564
|                   |  |                          |         |      |   |        



Subscriber revenue



Total subscriber revenue was $381.6 million for 2003 as
compared to $315.3 million for 2002, representing an increase of $66.3 million and was primarily the result of an increase in subscribers as discussed above and our IWO acquisition in April 2002.



Roaming revenue



Roaming revenue was $128.6 million for 2003 as compared to $175.9 million
for 2002, representing a decrease of $47.3 million and was primarily as a result of our April 1, 2002 acquisition of IWO that added $7.1 million in roaming revenue, an increase of $67.6 million related to a higher volume of PCS subscribers traveling
through our service area, an increase of $11.4 million related to non-Sprint subscribers traveling through our service area including $1.7 million generated by reseller usage offset by a decrease of $133.4 million related to our decrease in the
reciprocal roaming rate as discussed in Subscriber and Roaming Revenue above. We provided service in 68 PCS markets at December 31, 2003 and December 31, 2002. We continue to add cell sites in locations that we believe will enhance service and
increase roaming revenue.



Merchandise sales



Merchandise sales were $23.2 million for 2003 as compared to $17.9
million for 2002, representing an increase of $5.3 million and related to subscriber additions. The increase is primarily as a result of our IWO



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acquisition, no longer discounting handset sales to local agents and our July 1, 2003 adoption of EITF 00-21 as discussed in Revenue Recognition 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. We face significant competition in our marketplace and typically sell handsets below
cost to new subscribers in order to remain competitive in the market place through steep discounts and instant rebates.



Other revenue



Other revenue was $2.4 million for 2003 as compared to $2.5 million for 2002, representing a decrease of $0.1 million and was primarily attributable to a
decrease in access fee revenues.



Operating Expense



|                                |  |                          |         |      |   |          
|------------------------------- |  | ------------------------ | ------- | ---- | - | ---------
|                                |  | Years Ended December 31,
|                                |  | 2003                     |         | 2002
|                                |  | (In thousands)          
|Cost of service                 |  | $                        | 308,958 |      | $ | 350,372  
|Merchandise cost of sales       |  |                          | 46,367  |      |   | 36,106   
|General and administrative      |  |                          | 31,445  |      |   | 25,528   
|Sales and marketing             |  |                          | 90,522  |      |   | 109,172  
|Non-cash stock compensation     |  |                          | 2,404   |      |   | 4,349    
|Depreciation and amortization   |  |                          | 119,523 |      |   | 108,957  
|IWO asset abandonment charge    |  |                          | 12,079  |      |   |         
|Impairment of goodwill          |  |                          |        |      |   | 214,191  
|Impairment of intangible assets |  |                          |        |      |   | 188,330  
|                                |  |                          |         |      |   |          
|Total operating expense.        |  | $                        | 611,298 |      | $ | 1,037,005
|                                |  |                          |         |      |   |          



Cost of service



Cost of service was $309.0 million for 2003 as compared
to $350.4 million for 2002, representing a decrease of $41.4 million that was primarily the result of a $46.4 million decrease in roaming expense, a $19.4 million decrease in bad debt expense primarily as a result of a reduction in credit challenged
subscribers and a $2.1 decrease in lease expense offset by our April 1, 2002 acquisition of IWO that added $26.5 million in Cost of service. The overall decrease in roaming expense was primarily as a result of an increase of $61.8 million related to
a higher volume of our subscribers traveling through other Sprint service areas offset by a decrease of $107.4 million related to our decrease in the reciprocal roaming revenue rate as discussed in Subscriber and Roaming Revenue above and a decrease
of $0.8 million related to our subscribers using non-Sprint service areas and Sprint affiliate service areas.



Merchandise cost of sales



Merchandise cost of sales was $46.4 million for 2003 as compared to $36.1 million for 2002, representing an increase of $10.3 million that was primarily
the result of our April 1, 2002 acquisition of IWO that added $4.5 million and $7.8 million that related to a combination of non-discounted sales to independent agents and adoption of EITF 00-21 offset by lower sales and higher discounts in our
retail sales channels. 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 expense



General and administrative expense was $31.4 million for 2003 as compared to $25.5 million for 2002, representing an
increase of $5.9 million that was primarily as a result of our April 1, 2002 acquisition of IWO that added $1.9 million of general and administrative expense, a one-time charge of $3.5 million in professional



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fees related to an unsuccessful debt exchange offer, $2.8 million related to the IWO restructuring and $1.5 million related to the Sprint lawsuit and other
legal matters offset by a $2.4 million decrease in wages, taxes, benefits and other general and administrative cost that we believe resulted from reductions associated with our integration efforts and other cost saving initiatives and a $1.3 million
refund on Universal Service Fees.



Sales and marketing
expense



Sales and marketing expense was $90.5 million for
2003 as compared to $109.2 million for 2002, representing a decrease of $18.7 million that was primarily as a result of our April 1, 2002 acquisition of IWO that added $8.9 million of selling and marketing expense offset by decreases in advertising
of $11.9 million, agent commissions and handset subsidies of $12.2 million and decreases in other sales and marketing expenses of $2.5 million.



Non-cash stock compensation



Non-cash compensation was $2.4 million for 2003 as compared to $4.3 million for 2002, representing a decrease of $1.9 million that is primarily the result
of a portion of our outstanding options being fully amortized in 2003. The non-cash stock compensation consists of compensation expense related to the granting of certain stock options of our stock in July 1999 and January 2000 with exercise prices
less than the market value of our stock at the date of the grant and the impact of the stock options granted in connection with the IWO acquisition. The non-cash stock compensation expense is generally being amortized over a four-year period
representing the vesting periods of the options.



Depreciation and amortization expense



Depreciation and amortization expense was $119.5 million for 2003 as compared to $109.0 million for 2002, representing an increase of $10.5 million that was primarily as a result of a our April 1, 2002 acquisition of IWO that added $5.9
million of depreciation and $7.5 million of amortization expense related to the Sprint management agreement and subscriber base and a $7.3 million increase in depreciation expense offset by a reduction of $10.0 million in amortization expense
related to the IWO impairment. Property and equipment increased to $645.7 million at December 31, 2003 from $630.7 million at December 31, 2002, and intangible assets were unchanged at $117.1 million at December 31, 2003 and December 31, 2002
following a fourth quarter 2002 asset impairment charge of $188.3 million as discussed below.



Impairment of Goodwill and Intangible Assets



In 2002, we recorded impairment charges totaling $402.5 million for the impairment of goodwill and an intangible asset that resulted from the acquisition of IWO. For a further discussion, see Note 4 to the audited
consolidated financial statements.



Other
Income/(Expense)



|                                   |  |                          |         |   |      |   |         |  
|---------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                   |  | Years Ended December 31, |        
|                                   |  | 2003                     |         |   | 2002 |  
|                                   |  | (In thousands)           |        
|Interest expense                   |  | $                        | (92,455 | ) |      | $ | (74,197 | )
|Interest income                    |  |                          | 1,640   |   |      |   | 2,866   |  
|Gain on the sale of assets/markets |  |                          | 12      |   |      |   | 3       |  
|                                   |  |                          |         |   |      |   |         |  
|Total other expense                |  | $                        | (90,803 | ) |      | $ | (71,328 | )
|                                   |  |                          |         |   |      |   |         |  



Interest expense was
$92.5 million for 2003 as compared to $74.2 million for 2002, representing an increase of $18.3 million. The increase in interest expense was primarily as a result of our increase in outstanding debt.



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Our outstanding debt, including current maturities, was $797.6 million at December 31, 2003 as compared to $767.2 million at December 31, 2002. All loans
under the IWO 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.



Interest income was $1.6 million for 2003 as compared to $2.9 million for 2002, representing a decrease of $1.3 million. The
decrease was primarily due to less cash and cash equivalents available for investment.



Cash Flows



Operating Activities. Cash provided by operating activities was $63.3 million in 2004. This primarily consisted of a net loss of $133.0 million, a $16.3 million gain on the disposal of discontinued operations that was offset by $95.7
million in depreciation and amortization, a $62.3 million loss on our US Unwired debt restructuring, $18.1 million increase in working capital, $26.9 million in debt discount accretion, $7.6 million in the amortization of debt issuance costs and a
$1.8 million loss on the sales of assets. Cash provided by operations was $60.6 million for 2003 and cash used in operations was $23.4 million for 2002.



Investing Activities. Cash provided by investing activities was $28.2 million for 2004. This primarily consisted of $43.3 million in proceeds from
the sale of assets, $19.3 million in proceeds from the release of restricted cash and $1.2 million in miscellaneous other investing activities that was partially offset by $35.5 million in purchases of property and equipment. Net cash used in
investing activities was $8.0 million in 2003 and $97.3 million in 2002.



Financing Activities. Cash used in financing activities was $74.5 million in 2004. This primarily consisted of $422.6 million in principal payments on long-term debt and $12.6 million in debt issuance costs
that was partially offset by $360.2 million in proceeds from long-term debt. Net cash used in financing activities was $17.4 million in 2003 and net cash provided by financing activities was $82.0 million in 2002.



Liquidity and Capital Resources (excluding the operations of IWO)



As of December 31, 2004, we had $80.4 million in cash
and cash equivalents and $364.8 million in indebtedness.



We
periodically review all charges from Sprint and from time to time, may dispute certain of these charges. As of December 31, 2004, we had disputed approximately $35.1 million of charges to us. Based upon the information provided to us by Sprint to
date, we believe the accompanying condensed consolidated balance sheet adequately reflects our obligation that may be due to Sprint for these charges. However, should these disputes be settled in a manner unsatisfactory to us, our cash flow would be
adversely impacted to the extent of the unfavorable settlement.



Based on operating forecasts, we believe that we will have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. However, our liquidity is dependent upon a number of factors influencing
forecasts of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (ARPU), customer turnover or churn and cost per gross addition (CPGA) as discussed and
defined above.



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Contractual Obligations (excluding the operations of IWO)



Our future contractual obligations related to long-term debt, capital lease
obligations, and non-cancelable operating leases at December 31, 2004 were as follows:



|                                                                           |  |                        |         |                |   |          |  |          |        |              |   |        |  |   |        
|-------------------------------------------------------------------------- |  | ---------------------- | ------- | -------------- | - | -------- |  | -------- | ------ | ------------ | - | ------ |  | - | -------
|                                                                           |  | Payments due by period
|                                                                           |  | Total                  |         | Lessthan 1Year |   | 1-3Years |  | 4-5Years |        | After 5Years
|                                                                           |  | (In thousands)        
|US Unwired Inc. first priority senior secured floating rate notes due 2010 |  | $                      | 125,000 |                | $ |         |  | $        |       |              | $ |       |  | $ | 125,000
|US Unwired Inc., 10% second priority senior secured notes due 2012         |  |                        | 235,000 |                |   |         |  |          |       |              |   |       |  |   | 235,000
|Capital leases                                                             |  |                        | 8,071   |                |   | 792      |  |          | 2,376  |              |   | 1,621  |  |   | 3,282  
|Operating leases                                                           |  |                        | 174,552 |                |   | 26,665   |  |          | 83,011 |              |   | 46,214 |  |   | 18,662 
|                                                                           |  |                        |         |                |   |          |  |          |        |              |   |        |  |   |        
|Total US Unwired Inc.                                                      |  | $                      | 542,623 |                | $ | 27,457   |  | $        | 85,387 |              | $ | 47,835 |  | $ | 381,944
|                                                                           |  |                        |         |                |   |          |  |          |        |              |   |        |  |   |        



Inflation



We believe that inflation has not impaired, and will not impair, our results
of operations.



ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk



Quantitative and Qualitative Disclosure about Market Risk



We do not engage in derivatives or other financial instruments for trading, speculative or hedging purposes, though we may do so from time to time if such
instruments are available to us on acceptable terms and prevailing market conditions are accommodating. We have been subject to some interest rate risk on our senior secured borrowings and could be subject to interest rate risk on any future
floating rate financing.



Our primary interest rate risk
exposures relate to (i) the interest rate on long-term borrowings; (ii) our ability to refinance our debt at maturity at market rates; and (iii) the impact of interest rate movements on our ability to meet interest expense requirements and financial
covenants under our debt instruments.



Our fixed rate debt
consists of the accreted carrying value of the IWO 14% Senior Notes due January 15, 2011 ($140.3 million at December 31, 2004) and the US Unwired 10% Second Priority Senior Secured Notes due June 15, 2012 ($233.5 million at December 31, 2004).



Our variable rate debt consists of borrowings made under the
US Unwired $125 million aggregate principal amount First Priority Senior Secured Floating Rate Notes (2010 Notes) due June 15, 2010 (issued June 15, 2004) and the IWO senior secured credit facility ($215.0 million at December 31, 2004).
The US Unwired 2010 Notes bear interest at a floating rate equal to the London Interbank Offered Rate (LIBOR) plus 4.25% per year. LIBOR is assumed to equal 2.49%. The IWO senior secured credit facility, which is in default as of
December 31, 2004, bears interest at a default rate of 4.25-4.75 percent above the agent banks prime rate. For 2004, the weighted average interest rate under US Unwired 2010 Notes was 6.0% and under the IWO senior secured credit facility was
8.3%.



A one percent increase (decrease) in the variable
interest rate would result in a $3.4 million increase (decrease) in the related interest expense on an average annual basis based upon borrowings outstanding at December 31, 2004.



The amounts discussed above for the IWO Senior Notes and the IWO senior secured credit facility are classified as current in
the accompanying condensed balance sheets as a result of the events of default as



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discussed in the Recent Developments section of our Managements Discussion and Analysis of Financial Condition and Results of Operations.



ITEM 8. Financial Statements



Our
financial statements are listed under Item 15(a) of this annual report and are filed as part of this report on the pages indicated.



ITEM 9. Changes In And Disagreements With Accountants on Accounting And Financial Disclosure



None.



Item 9A. Controls and Procedures



Disclosure Controls and ProceduresThe Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports under the Securities Exchange Act of
1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management, including
the Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Companys are designed to do, and management necessarily
was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



In connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2004, 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 (as defined in Rule 13a-15(e) under the Exchange Act). In
performing this evaluation, management reviewed the Companys lease accounting and leasehold depreciation practices partially in light of the recent attention and focus on such practices by restaurant and retail companies. As a result of this
review, the Company concluded that its previously established lease accounting and leasehold depreciation practices were not appropriate and determined that the Companys annual rent and depreciation expense over the last several years had been
understated. Accordingly, as described below, the Company determined to restate certain of its previously issued financial statements to reflect the correction in the Companys lease accounting and leasehold depreciation practices. Based on
that evaluation, the Companys CEO and CFO concluded that, solely due to the Companys restatement due to lease accounting and leasehold depreciation practices, as described above, the Companys disclosure controls and procedures were
not effective as of December 31, 2004.



Managements
Annual Report on Internal Control over Financial ReportingManagement of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The
Companys internal control system is designed to provide reasonable assurance to the Companys management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



Management has assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2004. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission in Internal ControlIntegrated Framework.



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In performing this assessment, management reviewed the Companys lease accounting and leasehold
depreciation practices partially in light of the recent attention and focus on such practices by restaurant and retail companies. As a result of this review, management concluded that the Companys controls over the selection and monitoring of
appropriate assumptions and factors affecting lease accounting and leasehold depreciation practices were insufficient, and, as a result, management determined that the Companys annual rent and depreciation expense over the last several years
had been understated. The insufficient controls resulted in the restatement of the Companys consolidated financial statements for quarters ended September 30, 2004, June 30, 2004 and March 31, 2004 and for the years ended December 31, 2003 and
2002.



Management evaluated the impact of this restatement on
the Companys assessment of its system of internal control and has concluded that the insufficient controls that resulted in the incorrect lease accounting and leasehold depreciation practices represented a material weakness. Solely as a result
of this material weakness in the Companys internal control over financial reporting, management has concluded that, as of December 31, 2004, the Companys internal control over financial reporting was not effective based on the criteria
set forth by the COSO of the Treadway Commission in Internal ControlIntegrated Framework. No other material weaknesses were identified by management in performing their assessment and reaching their conclusion.



The Companys independent registered public accounting firm, Ernst &
Young LLP, has issued an attestation report on managements assessment of the Companys internal control over financial reporting. This report appears below.



Remediation Steps to Address Material WeaknessTo remediate the material weakness in the Companys internal
control over financial reporting, subsequent to year end the Company has implemented additional review procedures over the selection and monitoring of appropriate assumptions and factors affecting lease accounting and leasehold depreciation
accounting practices.



Change in Internal Control Over
Financial ReportingThere were no changes in the Companys internal control over financial reporting that occurred during the Companys last fiscal quarter that have materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors

US Unwired Inc.



We have audited managements assessment, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting,
that US Unwired Inc. did not maintain effective internal control over financial reporting as of December 31, 2004, because of the effect of the Companys material weakness relating to the selection and monitoring of appropriate assumptions and
factors affecting lease accounting and leasehold depreciation practices, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).
The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.



A companys
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statement will not be prevented or detected. The following material weakness has been identified and included in
managements assessment: In its assessment as of December 31, 2004, management identified as a material weakness the Companys insufficient controls over the selection and monitoring of appropriate assumptions and factors affecting lease
accounting and leasehold deprecation practices, and as a result, US Unwired Inc. concluded the Companys previously reported rent expense and depreciation expense had been understated. The insufficient controls resulted in the restatement of
the Companys consolidated financial statements for quarters ended September 30, 2004, June 30, 2004 and March 31, 2004 and for the years ended December 31, 2003 and 2002. This material weakness was considered in determining the nature, timing,
and extent of audit tests applied in our audit of the 2004 consolidated financial statements, and this report does not affect our report dated March 11, 2005 on those consolidated financial statements.



In our opinion, managements assessment that US Unwired Inc. did not
maintain effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based the COSO control criteria. Also, in our opinion, because of the effect of the material weakness described above
on the achievement of the objectives of the control criteria, US Unwired Inc. has not maintained effective internal control over financial reporting as of December 31, 2004, based on the COSO control criteria.



/s/ Ernst & Young LLP



Houston, Texas

March 11, 2005



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PART III



ITEM 10. Directors And Executive Officers Of The Registrant



The following table presents information with respect to our executive officers:



|                        |  |     |  |                                                
|----------------------- |  | --- |  | -----------------------------------------------
|Name                    |  | Age |  | Position                                       
|William L. Henning, Jr. |  | 51  |  | Chairman of the Board of Directors             
|Robert W. Piper         |  | 46  |  | President, Chief Executive Officer and Director
|Jerry E. Vaughn         |  | 59  |  | Chief Financial Officer                        
|Thomas G. Henning       |  | 45  |  | Secretary and General Counsel and Director     
|Michael D. Bennett      |  | 40  |  | Senior Vice President Sales and Distribution   
|Paul Clifton            |  | 50  |  | Chief Technical Officer                        



William L. Henning,
Jr. is Chairman of our Board of Directors and has been a director of US Unwired or our predecessor company since 1998. From 1988 to 2000, he was our Chief Executive Officer.



Robert W. Piper has been our President since 1995 and was named Chief Executive Officer in 2000. He served as our Chief
Operating Officer from 1995 to 2000.



Jerry E. Vaughn has
served as our Chief Financial Officer since June 1999.



Thomas
G. Henning has been General Counsel and Secretary since 1994.



Michael D. Bennett served as Vice President and Chief Operating Officer from August 2001 to April 2002 and currently serves as Senior Vice President Sales and Distribution. He served as our Vice President-Southern Sales and Operations from
April 2002 to December 2002 and was Vice President and General Manager of Wireless Operations from his date of hire in January 2000 until his promotion in August 2001. He has 16 years of telecommunications experience and during the balance of the
last five years held various positions with PrimeCo, a telecommunication company, including area director and sales and marketing director in Jacksonville, Florida, and director of strategy and planning in Dallas, Texas. He has also worked in
various management positions with two other telecommunication companies, U.S. Intelco Networks in Olympia, Washington and CenturyTel, Inc. in Monroe, Louisiana.



Paul J. Clifton has served as our Vice President and Chief Technical Officer since November 2001. He was Vice President of Research and Development
since 1998. From 1994 to 1998, he was our Vice President for Engineering and Technical Services. From his hire in 1988 to 1994, he served us in various capacities such as manager of network systems and traffic manager.



Code of Ethics



We have adopted a code of ethics that applies to our President and Chief
Executive Officer (principal executive officer), Chief Financial Officer (principal financial officer) and Controller (Principal Accounting Officer). This code of ethics, which is entitled Standards of Business, is posted at our website,
www.usunwired.com. We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, a the address, and location
previously specified.



Our Board of Directors has determined
that Thomas J. Sullivan, Chairman of the Audit Committee, meets the definition of Audit Committee Financial Expert within the meaning of that term as defined by the SEC, and that he is otherwise independent within the meaning of
applicable rules of the NASDAQ National Market System.



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Item 11. Executive Compensation



The section Executive Compensation of the proxy statement is incorporated herein by reference.



Item 12. Security Ownership Of Certain Beneficial Owners And Management



The section Stock Ownership of Directors and Officers and Stock Ownership of Certain Beneficial Owners of the proxy statement is incorporated herein by
reference.



Item 13. Certain Relationships And Related Transactions



The section Certain Transactions of the proxy statement is incorporated herein by reference.



Item 14. Principal Accounting Fees and Services



The section Principal Accounting Fees and Services of the proxy statement is incorporated herein by reference.



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PART IV



Item 15. Exhibits, Financial
Statements, Schedules, And Reports on Form 8-K



a.
Financial Statements



Listed in the Index to Consolidated
Financial Statements provided in response to Item 8 hereof (see page F-1 for Index).



b. Financial Statement schedule



Listed in the Index to Financial Statements provide in response to Item 8 hereof (see page F-1 for Index).



All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore have been omitted.



c. Reports on Form 8-K



On
November 4, 2004, we filed a Current Report on Form 8-K containing a press release announcing the Companys earnings for the fiscal quarter ended September 30, 2004.



On January 4, 2005, we filed a Current Report on Form 8-K containing information regarding IWOs plan of reorganization
including the filing of voluntary petitions seeking relief under the provisions of a Chapter 11 bankruptcy and amendments to the management agreement between US Unwired and IWO.



On February 10, 2005, we filed a Current Report on Form 8-K containing a press release announcing the Companys
preliminary earnings for the fiscal quarter and year ended December 31, 2004.



On March 3, 2005, we filed a Current Report on Form 8-K containing information that the United States Bankruptcy Court approved a Plan of Reorganization of our wholly-owned subsidiary IWO Holdings, Inc.
(IWO), pursuant to which all of the equity ownership of IWO by us was eliminated and shares of IWO were issued to its existing creditors. We further announced that we intended to restate our historical consolidated financial statements
through September 30, 2004 due to a reevaluation of our position related to accounting for operating leases.



d. Exhibits



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Sequent PageNo.
|3.1            |  | Third Restated Articles of Incorporation of US Unwired, Inc. (Incorporated by reference to Exhibit 3.1 of Form 10-Q filed by the Registrant on May 9, 2002).                                                                                                                                                                                                                                                                                                                                         |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.2            |  | By-Laws of US Unwired Inc. as amended on April 29, 2003. (Incorporated by reference to Exhibit 4.i.a. filed with the registrants Quarterly Report on Form 10-Q filed by the Registrant on
November 13, 2003).                                                                                                                                                                                                                                                                                       |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.1            |  | Indenture, dated as of September 16, 2004, between US Unwired Inc., the Guarantors listed therein and U.S. Bank National Association, as trustee for the 10% Second Priority Senior Secured
Notes due 2012. (Incorporated by reference to Exhibit 4.20 to the Registration Statement on Form S-4 filed by US Unwired Inc., Louisiana Unwired, LLC, Unwired Telecom Corp., Texas Unwired, Georgia PCS Management, L.L.C., and Georgia PCS Leasing, LLC
on July 9, 2004, Registration No. 333-117284.) |  |                



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Sequent PageNo.
|4.2            |  | Indenture, dated as of September 16, 2004, between US Unwired Inc., the Guarantors listed therein and U.S. Bank National Association, as trustee for the First Priority Senior Secured Floating
Rate Notes due 2010. (Incorporated by reference to Exhibit 4.21 to the Registration Statement on Form S-4 filed by US Unwired Inc., Louisiana Unwired, LLC, Unwired Telecom Corp., Texas Unwired, Georgia PCS Management, L.L.C., and Georgia PCS
Leasing, LLC on July 9, 2004, Registration No. 333-117284.)                                                                                                                                                                                                                                                                                                                                                    |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.3            |  | Intercreditor Agreement, dated as of September 16, 2004, between U.S. Bank National Association, as trustee for the 2010 Noteholders referred to therein, U.S. Bank National Association, as
trustee for the 2012 Noteholders referred to therein, U.S. Bank National Association, as collateral agent pursuant to the 2010 Indenture and the 2012 Indenture referred to therein, US Unwired, Inc., the Subsidiary Guarantors referred to therein, the
Loan Parties referred to therein, and the Secured Parties and Secured Party Representatives referred to therein. (Incorporated by reference to Exhibit 4.22 to the Registration Statement on Form S-4 filed by US Unwired Inc., Louisiana Unwired, LLC,
Unwired Telecom Corp., Texas Unwired, Georgia PCS Management, L.L.C., and Georgia PCS Leasing, LLC on July 9, 2004, Registration No. 333-117284.) |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.5            |  | Intellectual Property Security Agreement, dated as of September 16, 2004, between US Unwired, Inc., the Subsidiary Guarantors referred to therein, and U.S. Bank National Association, as
collateral agent for the Secured Parties referred to therein. (Incorporated by reference to Exhibit 4.24 to the Registration Statement on Form S-4 filed by US Unwired Inc., Louisiana Unwired, LLC, Unwired Telecom Corp., Texas Unwired, Georgia PCS
Management, L.L.C., and Georgia PCS Leasing, LLC on July 9, 2004, Registration No. 333-117284.)                                                                                                                                                                                                                                                                                                                 |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.6            |  | Multiple Indebtedness Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by US Unwired Inc. in favor of U.S. Bank National Association, in its capacity as
collateral agent, dated September 15, 2004. (Incorporated by reference to Exhibit 4.26 to the Registration Statement on Form S-4 filed by US Unwired Inc., Louisiana Unwired, LLC, Unwired Telecom Corp., Texas Unwired, Georgia PCS Management, L.L.C.,
and Georgia PCS Leasing, LLC on July 9, 2004, Registration No. 333-117284.)                                                                                                                                                                                                                                                                                                                                     |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.7            |  | Possessory Security Agreement dated July 14, 2004 by US Unwired Inc. in favor of Whitney National Bank. (Incorporated by reference to Exhibit 4.14 to its Form 10-Q of US Unwired Inc.
filed November 2, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.8            |  | Registration Rights Agreement dated as of October 29, 1999 between US Unwired Inc. and The 1818 Fund, LP. (Incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-4,
Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on December 7, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.9            |  | First Amendment to Registration Rights Agreement dated as of February 15, 2000 by and among US Unwired Inc., The 1818 Fund III, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income
Trust II, L.P., TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity Fund IIB, LLC, TCW Shared Opportunity Fund III, L.P., TCW/Crescent Mezzanine Trust II, TCW/Crescent Mezzanine Partners II, L.P. and Brown University Third Century Fund
(Incorporated by reference to Exhibit 10.19 to Amendment No. 2 to the Registration Statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on
February 23, 2000).                                                                                                                                        |  |                



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Sequent PageNo.
|4.10           |  | Second Amendment to Registration Rights Agreement dated as of June 9, 2000 by and among US Unwired Inc., The 1818 Fund III, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust
II, L.P., TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity Fund IIB, LLC, TCW Shared Opportunity Fund III, L.P., TCW/Crescent Mezzanine Trust II, TCW/Crescent Mezzanine Partners II, L.P. and Brown University Third Century
Fund.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.11           |  | Shareholders Agreement dated as of October 29, 1999 by and among US Unwired Inc., The 1818 Fund III, L.P. and the shareholders of US Unwired Inc. who are signatories thereto. (Incorporated by
reference to Exhibit 10.8 to the Registration Statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on December 7, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.12           |  | First Amendment to Shareholders Agreement dated as of February 15, 2000 by and among US Unwired Inc., The 1818 Fund III, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II,
L.P., TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity Fund IIB, LLC, TCW Shared Opportunity Fund III, L.P., TCW/Crescent Mezzanine Trust II, TCW/Crescent Mezzanine Partners II, L.P. and Brown University Third Century Fund. (Incorporated
by reference to Exhibit 10.18 to Amendment No. 2 to the Registration Statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on February 23,
2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.13           |  | Second Amendment to Shareholders Agreement dated as of May 16, 2000 among US Unwired Inc., The 1818 Fund III, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P.,
TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity Fund IIB, LLC, TCW Shared Opportunity Fund III, L.P., TCW/Crescent Mezzanine Trust II, TCW/Crescent Mezzanine Partners II, L.P. and Brown University Third Century Fund, and the
shareholders of US Unwired Inc. named therein. (Incorporated by reference to Exhibit 10.29 to Post-Effective Amendment No. 1 to the Registration Statement on Form S-1, Registration Nos. 333-33964 filed by US Unwired Inc. on May 18,
2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.14           |  | Registration Rights Agreement, dated April 1, 2002, by and among the Registrant, and Investcorp IWO Limited Partnership, Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited,
Noble Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline Limited, Zinnia Limited, Investcorp Investment Equity Limited, Alloway Limited, Carrigan Limited, Frankfort Limited, Paugus Limited, Wireless International Limited, Wireless
Equity Limited, Wireless Holdings Limited, Wireless Investments Limited, IWO Equity Limited, IWO Investments Limited, Cellular Equity Limited, Mobile Holdings Limited, Wireless IIP Limited, Equity IWO Limited, New IWO Equity Limited, New Wireless
IIP Limited, New Equity IWO Limited, Odyssey Investment Partners Fund, LP, Odyssey Coinvestors, LLC, Paribas North America Inc., TCW/Crescent Mezzanine Trust II, TCW/Crescent Mezzanine Partners II, LP, TCW/Crescent Leveraged Income Trust, LP,
TCW/Crescent Leveraged Income Trust II, LP, TCW/Crescent Leveraged Income Trust IV, LP, Solon Kandel, J.K. Hage III, Steven Nielsen, Delhi PCS Inc., Dry Brook Holdings LLC, MTC North Inc., Newport PCS Inc., Finger Lakes Technologies Group Inc.,
Adirondack Capital LLC, Cerberus Investments LP, Charles Lane, William L. Henning, Sr., Lena B. Henning, William L. Henning, Jr., John A. Henning, and Thomas G. Henning. (Incorporated by reference to Exhibit 4(i)(e) filed with the
Registrants Quarterly Report on Form 10-Q on August 13, 2002). |  |                



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Sequent PageNo.
|4.15           |  | Agreement and Plan of Merger, dated as of February 8, 2002 by and among US Unwired Inc., Saints Sub, LLC and Georgia PCS Management, LLC. (Incorporated by reference to Exhibit 2.1 filed with
US Unwired Inc.s Amendment to Current Report on Form 8-K filed on March 22, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.16           |  | Warrant Agreement dated as of February 2, 2001 by and among IWO Holdings, Inc., a Delaware corporation and Firstar Bank, N.A. as warrant agent (Incorporated by reference to Exhibit 10.20
filed with the registration statement on Form S-4, filed by IWO Holdings, Inc. and Independent Wireless One Corporation on April 13, 2001, Registration no. 333-58902).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.17           |  | Warrant Registration Rights Agreement, dated as of February 2, 2001, among IWO Holdings, Inc. and Credit Suisse First Boston Corporation (acting through an affiliate, Donaldson, Lufkin &
Jenrette Securities Corporation), Chase Securities Inc., BNP Paribas Securities Corp. and UBS Warburg LLC as representatives of the initial purchasers of IWO Holdings, Inc.s senior notes and warrants. (Incorporated by reference to Exhibit 4.19
of the Form 10-K filed by US Unwired Inc. on March 31, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.18           |  | Form of Standstill Agreement, dated as of December 19, 2001, by and among the Registrant and Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble Limited, Outrigger
Limited, Quill Limited, Radial Limited, Shoreline Limited, Zinnia Limited, Investcorp Investment Equity Limited, Investcorp IWO Limited Partnership, Alloway Limited, Carrigan Limited, Frankfort Limited, Paugus Limited, Wireless International
Limited, Wireless Equity Limited, Wireless Holdings Limited, Wireless Investments Limited, IWO Equity Limited, IWO Investments Limited, Cellular Equity Limited, Mobile Holdings Limited, Wireless IIP Limited, Equity IWO Limited, New IWO Equity
Limited, New Wireless IIP Limited, and New Equity IWO Limited. (Incorporated by reference to Exhibit 10.6 filed with the Registration Statement on Form S-4 filed by the Registrant on February 1, 2002, registration no. 333-81928.). |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.1           |  | Sprint Management Agreement dated February 8, 1999 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired LLC, including Sprint Trademark and Service Mark License
Agreement and Sprint Spectrum Trademark and Service Mark License Agreement. (Incorporated by reference to Amendment No. 3 to the Registration statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired
Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on March 1, 2000).                                                                                                                                                                                                                                                                                                                                                                                                      |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.2           |  | Addendum I to Sprint Management Agreement dated February 8, 1999 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired (Incorporated by reference to Exhibit 10.4
of the Registration statement on S-4/A, Registration Nos. 333-9271, 333-92271-01, and 33392271-02, filed by US Unwired Inc. on March 1, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.3           |  | Addendum II to Sprint Management Agreement dated February 8, 1999 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired (Incorporated by reference to Exhibit
10.4 of the Registration statement on S-4/A, Registration Nos. 333-9271, 333-92271-01, and 33392271-02, filed by US Unwired Inc. on March 1, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.4           |  | Addendum III to Sprint Management Agreement dated February 8, 1999 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired (Confidential treatment requested
pursuant to Rule 406 under the Securities Act).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Sequent PageNo.
|10.5           |  | Sprint Management Agreement dated June 8, 1998 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired LLC, including Sprint Trademark and Service Mark License
Agreement and Sprint Spectrum Trademark and Service Mark License Agreement. (Incorporated by reference to Amendment No. 3 to the Registration statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired
Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on March 1, 2000).  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.6           |  | Addendum II             , III and IV to Sprint Management Agreement dated June 8, 1998 among Wirelessco, L.P., Sprint Spectrum
L.P., SprintCom, Inc. and Louisiana Unwired LLC (Incorporated by reference to Exhibit 10.5 of the Registration statement on S-4/A, Registration Nos. 333-9271, 333-92271-01, and 33392271-02, filed by US Unwired Inc. on March 1, 2000).                                                                                                                                                    |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.7           |  | Addendum V to Sprint Management Agreement dated June 8, 1998 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired (Incorporated by reference to Exhibit 10.15 of
the Form 10-K filed by US Unwired Inc. on March 26, 2001).                                                                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.8           |  | Sprint Management Agreement dated as of January 7, 2000 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Texas Unwired, including Sprint Trademark and Service Mark License
Agreement and Sprint Spectrum Trademark and Service Mark License Agreement. (Incorporated by reference to Amendment No. 3 to the Registration statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired
Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on March 1, 2000). |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.9           |  | Addendum I to Sprint Management Agreement dated as of January 7, 2000 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Texas Unwired (Incorporated by reference to Exhibit
10.20 of the Registration statement on S-4/A, Registration Nos. 333-9271, 333-92271-01, and 33392271-02, filed by US Unwired Inc. on March 1, 2000).                                                                                                                                                                            |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.10          |  | Addendum II to Sprint Management Agreement dated January 7, 2000 among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Texas Unwired, L.P. (Incorporated by reference to Exhibit
10.15 of the Form 10-K filed by US Unwired Inc. on March 26, 2001).                                                                                                                                                                                                                                                            |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.11          |  | Amended and Restated Consent and Agreement dated as of March 8, 2002 between Sprint Spectrum L.P., SprintCom, Inc., Sprint Communications Company, L.P., Wirelessco, L.P. and CoBank, ACB.
(Incorporated by reference to Exhibit 10.11 of the Form 10-K filed by US Unwired Inc. on March 31, 2002).                                                                                                                                                                                                                        |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.12          |  | Consent and Agreement, dated as of December 17, 1999, between Sprint Spectrum L.P., Sprint Communications Company, L.P., WirelessCo, L.P. and The Chase Manhattan Bank, as administrative
agent. (Incorporated by reference to Exhibit 10.13 of the Form 10-K filed by US Unwired Inc. on March 31, 2002).                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.13          |  | Sprint Management Agreement, dated as of June 8, 1998 among Georgia PCS Management LLC, Sprint Spectrum L.P. and SprintCom, Inc., including Sprint Trademark and Service Mark License
Agreement, Sprint Spectrum Trademark and Service Mark License Agreement and Sprint Services Agreement. (Incorporated by reference to Exhibit 10.14 of the Form 10-K filed by US Unwired Inc. on March 31, 2002).                                                                                                                      |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.14          |  | Addendum II to Sprint Management Agreement dated October 10, 2000 among Georgia PCS Management LLC, Sprint Spectrum L.P. and SprintCom, Inc. (Incorporated by reference to Exhibit 10.15 of the
Form 10-K filed by US Unwired Inc. on March 31, 2002).                                                                                                                                                                                                                                                                      |  |                



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |                
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                               |  | Sequent PageNo.
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.15          |  | Amended and Restated US Unwired Inc. 1999 Equity Incentive Plan. (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                                     |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.16          |  | Employment contract between US Unwired Inc. and William L. Henning, Jr. (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                              |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.17          |  | Employment contract between US Unwired Inc. and Robert W. Piper (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                                      |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.18          |  | Employment contract between US Unwired Inc. and Thomas G. Henning (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                                    |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.19          |  | Employment contract between US Unwired Inc. and Jerry E. Vaughn (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                                      |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.20          |  | Employment Agreement between US Unwired Inc. and Michael D. Bennett (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.21          |  | Amendment to Employee Agreement between US Unwired Inc. and Michael D. Bennett (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26, 2001).                                                                                                                                                                                                                                       |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.22          |  | Second Amendment to Employee Agreement between US Unwired Inc. and Michael D. Bennett. (Incorporated by reference to Exhibit 10.30 of the Form 10-K filed by US Unwired Inc. on March 31,
2002).                                                                                                                                                                                                          |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.23          |  | U.S. Unwired, Inc. Key Employee Retention Plan dated April 1, 2003. (Incorporated by reference to Exhibit 10.24 of the Form 10-K of US Unwired Inc. filed March 2, 2004.)                                                                                                                                                                                                                                 |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.24          |  | Management and Construction Agreement dated as of January 1, 1999 by and Between US Unwired Inc. and Louisiana Unwired LLC. (Incorporated by reference to Amendment No. 2 to the Registration
statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on February 23, 2000).                        |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.25          |  | Billing Agreement dated as of May 13, 1998 by and between Unibill Inc. and Louisiana Unwired LLC. (Incorporated by reference to Amendment No. 2 to the Registration statement on Form S-4,
Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on February 23, 2000).                                                  |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.26          |  | Billing Agreement dated as of May 13, 1998 by and between Unibill Inc. and Unwired Telecom Corporation. (Incorporated by reference to Form 10-K of US Unwired Inc. filed on March 26,
2001).                                                                                                                                                                                                              |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.27          |  | Office lease dated October 1, 2000 between US Unwired Inc. and Xspedius Holding Corp. (Incorporated by reference to Exhibit 10.36 of the Form 10-K filed by US Unwired Inc. on March 31,
2002).                                                                                                                                                                                                           |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|10.28          |  | Cameron Communications Service Agreement dated September 10, 1999, between Cameron Communications Corporation and US Unwired Inc. (Incorporated by reference to Exhibit 10.15 to Amendment No.
2 to the Registration Statement on Form S-4, Registration Nos. 333-92271, 333-92271-01 and 333-92271-02, filed by US Unwired Inc., Louisiana Unwired, LLC and Unwired Telecom Corp. on February 23, 2000). |  |                



61



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##### Table of Contents

|               |  |                                                                                                                                                                                                                                                                                                                                                                                     |  |                
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                         |  | Sequent PageNo.
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|10.29          |  | Office and warehouse lease dated January 16, 2004 between US Unwired Inc. and UniBill, L.L.C. (Incorporated by reference to Exhibit 10.28 to Registration Statement on Form S-4 filed by US
Unwired Inc., Louisiana Unwired, LLC, Unwired Telecom Corp., Texas Unwired, Georgia PCS Management, L.L.C., and Georgia PCS Leasing, LLC on July 9, 2004, Registration No. 333-117284.) |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|21.1           |  | Subsidiaries of US Unwired Inc.                                                                                                                                                                                                                                                                                                                                                     |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|23.1           |  | Consent of Ernst & Young LLP.                                                                                                                                                                                                                                                                                                                                                       |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|31.1           |  | Certification by President and Chief Executive Officer.                                                                                                                                                                                                                                                                                                                             |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|31.2           |  | Certification by Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                           |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|32.1           |  | Section 1350 certification by President and Chief Executive Officer.                                                                                                                                                                                                                                                                                                                |  |                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                    
|32.2           |  | Section 1350 certification by Chief Financial Officer.                                                                                                                                                                                                                                                                                                                              |  |                





62



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SIGNATURES



Pursuant to the
requirements of Section 13 or 15(d) 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, on March 11, 2005.



US Unwired Inc.By:

/S/    JERRY E.
VAUGHNName: Jerry E. Vaughn Title: Chief Financial Officer




Pursuant to the
requirements of the Securities Act of 1934, this report has been signed on behalf of the registrant and in the capacities and on the date indicated:



|                                                                     |  |                                                                              
|-------------------------------------------------------------------- |  | -----------------------------------------------------------------------------
|Signature                                                            |  | Title                                                                        
|                                                                     | 
|/s/    ROBERT W. PIPERRobert W. Piper March 11,
2005                 |  | President, Chief Executive Officer and Director (Principal Executive Officer)
|                                                                     | 
|/s/    JERRY E. VAUGHNJerry E. Vaughn March 11,
2005                 |  | Chief Financial Officer(Principal Financial Officer)                         
|                                                                     | 
|/s/    DONALD LOVERICHDonald Loverich March 11,
2005                 |  | Corporate Controller(Principal Accounting Officer)                           
|                                                                     | 
|/s/    WILLIAM L. HENNING, JR.William L. Henning, Jr. March 11, 2005 |  | Chairman of the Board of Directors                                           
|                                                                     | 
|/s/    THOMAS G. HENNINGThomas G. Henning March 11,
2005             |  | Director                                                                     
|                                                                     | 
|/s/    CHRISTOPHER J. STADLERChristopher J. Stadler March 11,
2005   |  | Director                                                                     
|                                                                     | 
|/s/    LAWRENCE C. TUCKERLawrence C. Tucker March 11,
2005           |  | Director                                                                     
|                                                                     | 
|/s/    HENRY P. HEBERT, JR.Henry P. Hebert, Jr. March 11, 2005       |  | Director                                                                     
|                                                                     | 
|/s/    THOMAS J. SULLIVANThomas J. Sullivan March 11,
2005           |  | Director                                                                     
|                                                                     | 
|/s/    HARLEY M. RUPPERTHarley M. Ruppert March 11,
2005             |  | Director                                                                     



63



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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES



|                                                                            |  |     
|--------------------------------------------------------------------------- |  | ----
|                                                                            |  | Page
|Report of independent registered public accounting firm                     |  | F-2 
|Consolidated balance sheets at December 31, 2004 and 2003                   |  | F-3 
|For each of the three years in the period ended December 31, 2004:          |  |     
|Consolidated statements of operations                                       |  | F-4 
|Consolidated statements of stockholders equity (deficit)                   |  | F-5 
|Consolidated statements of cash flows                                       |  | F-6 
|Notes to consolidated financial statements                                  |  | F-7 
|Schedule for each of the three years in the period ended December 31, 2004: |  |     
|II  Valuation and qualifying accounts and reserves                         |  | S-1 





F-1



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors

US Unwired Inc.



We have audited the accompanying consolidated balance sheets of US Unwired Inc. as of December 31, 2004 and 2003, and the related consolidated statements
of operations, stockholders equity (deficit), and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the index at Item 15(b). These financial
statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.



We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of US Unwired Inc. at December 31, 2004 and 2003, and the consolidated results
of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting. Also, in our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



As discussed in Note 3 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill.



As discussed in Note 1 to the consolidated financial
statements, the Company has restated its financial statements for the years ended December 31, 2003 and 2002.



We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the
Companys internal control over financial reporting as of December 31, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated March 11, 2005 expressed an unqualified opinion on managements assessment of and an adverse opinion on the effectiveness of internal control over financial reporting.



/S/    ERNST & YOUNG LLP



Houston, Texas

March 11,2005





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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)



|                                                                                                    |  |                    |            |   |            |   |          |  
|--------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ---------- | - | -------- | -
|                                                                                                    |  | As of December 31, |           
|                                                                                                    |  | 2004               |            |   | 2003       |  
|                                                                                                    |  |                    |            |   | (Restated) |  
|ASSETS                                                                                              |  |                    |            |   |            |   |          |  
|Current assets:                                                                                     |  |                    |            |   |            |   |          |  
|Cash and cash equivalents                                                                           |  | $                  | 114,253    |   |            | $ | 97,193   |  
|Restricted cash and US Treasury securities at amortized costheld to maturity                       |  |                    | 80         |   |            |   | 19,358   |  
|Subscriber receivables, net of allowance for doubtful accounts of $6,472 and $6,418                 |  |                    | 36,730     |   |            |   | 28,687   |  
|Other receivables                                                                                   |  |                    | 1,582      |   |            |   | 2,625    |  
|Inventory                                                                                           |  |                    | 5,069      |   |            |   | 5,615    |  
|Prepaid expenses                                                                                    |  |                    | 15,625     |   |            |   | 14,833   |  
|Receivables from officers                                                                           |  |                    | 156        |   |            |   | 85       |  
|Receivables from related parties                                                                    |  |                    |           |   |            |   | 647      |  
|Current assets related to discontinued operations                                                   |  |                    |           |   |            |   | 1,049    |  
|                                                                                                    |  |                    |            |   |            |   |          |  
|Total current assets                                                                                |  |                    | 173,495    |   |            |   | 170,092  |  
|                                                                                                    |  |                   
|Property and equipment, net                                                                         |  |                    | 356,172    |   |            |   | 410,541  |  
|Goodwill                                                                                            |  |                    | 46,705     |   |            |   | 46,705   |  
|Intangible assets, net                                                                              |  |                    | 30,424     |   |            |   | 40,785   |  
|Other assets                                                                                        |  |                    | 32,992     |   |            |   | 42,571   |  
|Note receivable from unconsolidated affiliate                                                       |  |                    |           |   |            |   | 1,887    |  
|Non-current assets related to discontinued operations                                               |  |                    |           |   |            |   | 4,770    |  
|                                                                                                    |  |                    |            |   |            |   |          |  
|Total assets                                                                                        |  | $                  | 639,788    |   |            | $ | 717,351  |  
|                                                                                                    |  |                    |            |   |            |   |          |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                               |  |                    |            |   |            |   |          |  
|Current liabilities:                                                                                |  |                    |            |   |            |   |          |  
|Accounts payable                                                                                    |  | $                  | 67,926     |   |            | $ | 41,377   |  
|Accrued expenses                                                                                    |  |                    | 85,275     |   |            |   | 77,137   |  
|Current maturities of long-term debt, including IWO debt in default                                 |  |                    | 355,765    |   |            |   | 362,842  |  
|Current liabilities related to discontinued operations                                              |  |                    |           |   |            |   | 49       |  
|                                                                                                    |  |                    |            |   |            |   |          |  
|Total current liabilities                                                                           |  |                    | 508,966    |   |            |   | 481,405  |  
|Long-term debt, net of current maturities                                                           |  |                    | 364,351    |   |            |   | 434,745  |  
|Other long-term liabilities                                                                         |  |                    | 42,943     |   |            |   | 43,154   |  
|Investments in and advances to unconsolidated affiliates                                            |  |                    | 2,467      |   |            |   | 1,216    |  
|Stockholders deficit:                                                                              |  |                    |            |   |            |   |          |  
|Common stock, $0.01 par value:                                                                      |  |                    |            |   |            |   |          |  
|Authorized 800,000 shares; issued and outstanding 163,679 shares in 2004 and 128,832 shares in 2003 |  |                    | 1,637      |   |            |   | 1,288    |  
|Additional paid-in capital                                                                          |  |                    | 751,576    |   |            |   | 654,899  |  
|Retained deficit                                                                                    |  |                    | (1,032,142 | ) |            |   | (899,167 | )
|Treasury stock                                                                                      |  |                    | (10        | ) |            |   | (10      | )
|Promissory note                                                                                     |  |                    |           |   |            |   | (179     | )
|                                                                                                    |  |                    |            |   |            |   |          |  
|Total stockholders deficit                                                                         |  |                    | (278,939   | ) |            |   | (243,169 | )
|                                                                                                    |  |                    |            |   |            |   |          |  
|Total liabilities and stockholders deficit                                                         |  | $                  | 639,788    |   |            | $ | 717,351  |  
|                                                                                                    |  |                    |            |   |            |   |          |  



See accompanying notes



F-3



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|----------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ---------- | - | -------- | ---------- |  | - | --------- | -
|                                                                                                |  | Years Ended December 31, |         
|                                                                                                |  | 2004                     |          |   | 2003       |   |          | 2002       | 
|                                                                                                |  |                          |          |   | (Restated) |   |          | (Restated) | 
|Revenue:                                                                                        |  |                          |          |   |            |   |          |            |  |   |           |  
|Subscriber                                                                                      |  | $                        | 429,648  |   |            | $ | 381,558  |            |  | $ | 315,256   |  
|Roaming                                                                                         |  |                          | 135,300  |   |            |   | 128,553  |            |  |   | 175,929   |  
|Merchandise sales                                                                               |  |                          | 28,081   |   |            |   | 23,224   |            |  |   | 17,915    |  
|Other revenue                                                                                   |  |                          | 1,809    |   |            |   | 2,416    |            |  |   | 2,464     |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Total revenue                                                                                   |  |                          | 594,838  |   |            |   | 535,751  |            |  |   | 511,564   |  
|Operating expense:                                                                              |  |                          |          |   |            |   |          |            |  |   |           |  
|Cost of service                                                                                 |  |                          | 312,872  |   |            |   | 308,958  |            |  |   | 350,372   |  
|Merchandise cost of sales                                                                       |  |                          | 56,696   |   |            |   | 46,367   |            |  |   | 36,106    |  
|General and administrative                                                                      |  |                          | 35,706   |   |            |   | 31,445   |            |  |   | 25,528    |  
|Sales and marketing                                                                             |  |                          | 92,362   |   |            |   | 90,522   |            |  |   | 109,172   |  
|Non-cash stock compensation                                                                     |  |                          | 375      |   |            |   | 2,404    |            |  |   | 4,349     |  
|Depreciation and amortization                                                                   |  |                          | 95,535   |   |            |   | 119,523  |            |  |   | 108,957   |  
|IWO asset abandonment charge                                                                    |  |                          |         |   |            |   | 12,079   |            |  |   |          |  
|Impairment of goodwill                                                                          |  |                          |         |   |            |   |         |            |  |   | 214,191   |  
|Impairment of intangible assets                                                                 |  |                          |         |   |            |   |         |            |  |   | 188,330   |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Total operating expense                                                                         |  |                          | 593,546  |   |            |   | 611,298  |            |  |   | 1,037,005 |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Operating income (loss)                                                                         |  |                          | 1,292    |   |            |   | (75,547  | )          |  |   | (525,441  | )
|Other income (expense):                                                                         |  |                          |          |   |            |   |          |            |  |   |           |  
|Interest expense                                                                                |  |                          | (88,859  | ) |            |   | (92,455  | )          |  |   | (74,197   | )
|Interest income                                                                                 |  |                          | 1,958    |   |            |   | 1,640    |            |  |   | 2,866     |  
|Gain (loss) on sale of assets                                                                   |  |                          | (1,841   | ) |            |   | 12       |            |  |   | 3         |  
|Loss on extinguishment of debt                                                                  |  |                          | (62,342  | ) |            |   |         |            |  |   |          |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Total other expense                                                                             |  |                          | (151,084 | ) |            |   | (90,803  | )          |  |   | (71,328   | )
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Loss from continuing operations before income taxes and equity in income (losses) of affiliates |  |                          | (149,792 | ) |            |   | (166,350 | )          |  |   | (596,769  | )
|Income tax benefit                                                                              |  |                          |         |   |            |   | (531     | )          |  |   | (781      | )
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Loss from continuing operations before equity in income (losses) of affiliates                  |  |                          | (149,792 | ) |            |   | (165,819 | )          |  |   | (595,988  | )
|Equity in income (losses) of affiliates                                                         |  |                          | 215      |   |            |   | 2,911    |            |  |   | (651      | )
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Loss from continuing operations                                                                 |  |                          | (149,577 | ) |            |   | (162,908 | )          |  |   | (596,639  | )
|Discontinued operations:                                                                        |  |                          |          |   |            |   |          |            |  |   |           |  
|Gain on disposal of discontinued operations                                                     |  |                          | 16,318   |   |            |   |         |            |  |   |          |  
|Income from discontinued operations                                                             |  |                          | 284      |   |            |   | 2,506    |            |  |   | 8,272     |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|                                                                                                |  |                          | 16,602   |   |            |   | 2,506    |            |  |   | 8,272     |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Net loss                                                                                        |  | $                        | (132,975 | ) |            | $ | (160,402 | )          |  | $ | (588,367  | )
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Basic and diluted earnings (loss) per common share:                                             |  |                          |          |   |            |   |          |            |  |   |           |  
|Continuing operations                                                                           |  | $                        | (1.00    | ) |            | $ | (1.27    | )          |  | $ | (5.05     | )
|Discontinued operations                                                                         |  |                          | .11      |   |            |   | .02      |            |  |   | .07       |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Net loss per common share                                                                       |  | $                        | (0.89    | ) |            | $ | (1.25    | )          |  | $ | (4.98     | )
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  
|Weighted average outstanding common shares                                                      |  |                          | 149,398  |   |            |   | 128,832  |            |  |   | 118,194   |  
|                                                                                                |  |                          |          |   |            |   |          |            |  |   |           |  



See accompanying notes





F-4



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

(In thousands)



|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  
|-------------------------------------------------------------------- |  | -------------------- | ----- | -------------------- | - | ---- | -------------------------- |  | - | ---------------- | - |  | --------------- | ---------- | - | ------------- | - | ---- | ----- |  | - | --- | - |  | - | -------- | -
|                                                                     |  | Class A Common Stock |       | Class B Common Stock |   |      | Additional Paid-in Capital |  |   | Retained Deficit |   |  | PromissoryNotes |            |   | TreasuryStock |   |      | Total | 
|Balance at December 31, 2001                                         |  | $                    | 278   |                      | $ | 566  |                            |  | $ | 185,127          |   |  | $               | (146,333   | ) |               | $ |     |       |  | $ |    |   |  | $ | 39,638   |  
|Restatement Adjustment (see Note 1)                                  |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 | (4,065     | ) |               |   |     |       |  |   |    |   |  |   | (4,065   | )
|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  
|Balance at December 31, 2001, as restated                            |  |                      | 278   |                      |   | 566  |                            |  |   | 185,127          |   |  |                 | (150,398   | ) |               |   |     |       |  |   |    |   |  |   | 35,573   |  
|Issuance of common stock in merger with Georgia PCS Management, LLC  |  |                      | 54    |                      |   |     |                            |  |   | 28,337           |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 28,391   |  
|Issuance of common stock in merger with IWO Holdings, Inc.           |  |                      | 389   |                      |   |     |                            |  |   | 389,438          |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 389,827  |  
|Exercise of stock options                                            |  |                      | 1     |                      |   |     |                            |  |   | 281              |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 282      |  
|Stock compensation                                                   |  |                      |      |                      |   |     |                            |  |   | 4,672            |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 4,672    |  
|Stock options and warrants assumed in merger with IWO Holdings, Inc. |  |                      |      |                      |   |     |                            |  |   | 49,410           |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 49,410   |  
|Conversion of class B common stock to class A common stock           |  |                      | 566   |                      |   | (566 | )                          |  |   |                 |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   |         |  
|Promissory notes assumed from the merger with IWO Holdings, Inc.     |  |                      |      |                      |   |     |                            |  |   | 194              |   |  |                 |           |   |               |   | (194 | )     |  |   |    |   |  |   |         |  
|Payment received on promissory notes                                 |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 |           |   |               |   | 20   |       |  |   |    |   |  |   | 20       |  
|Net loss, as restated                                                |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 | (588,367   | ) |               |   |     |       |  |   |    |   |  |   | (588,367 | )
|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  
|Balance at December 31, 2002, as restated                            |  |                      | 1,288 |                      |   |     |                            |  |   | 657,459          |   |  |                 | (738,765   | ) |               |   | (174 | )     |  |   |    |   |  |   | (80,192  | )
|Change in promissory note balance                                    |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 |           |   |               |   | (5   | )     |  |   |    |   |  |   | (5       | )
|Forfeiture of Georgia PCS Management, LLC shares held in escrow      |  |                      |      |                      |   |     |                            |  |   | (5,250           | ) |  |                 |           |   |               |   |     |       |  |   | (10 | ) |  |   | (5,260   | )
|Stock compensation                                                   |  |                      |      |                      |   |     |                            |  |   | 2,690            |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 2,690    |  
|Net loss, as restated                                                |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 | (160,402   | ) |               |   |     |       |  |   |    |   |  |   | (160,402 | )
|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  
|Balance at December 31, 2003, as restated                            |  |                      | 1,288 |                      |   |     |                            |  |   | 654,899          |   |  |                 | (899,167   | ) |               |   | (179 | )     |  |   | (10 | ) |  |   | (243,169 | )
|Exchange of common stock for debt                                    |  |                      | 345   |                      |   |     |                            |  |   | 96,029           |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 96,374   |  
|Exercise of stock options                                            |  |                      | 4     |                      |   |     |                            |  |   | 273              |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 277      |  
|Stock compensation                                                   |  |                      |      |                      |   |     |                            |  |   | 375              |   |  |                 |           |   |               |   |     |       |  |   |    |   |  |   | 375      |  
|Change in promissory note                                            |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 |           |   |               |   | 179  |       |  |   |    |   |  |   | 179      |  
|Net loss                                                             |  |                      |      |                      |   |     |                            |  |   |                 |   |  |                 | (132,975   | ) |               |   |     |       |  |   |    |   |  |   | (132,975 | )
|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  
|Balance at December 31, 2004                                         |  | $                    | 1,637 |                      | $ |     |                            |  | $ | 751,576          |   |  | $               | (1,032,142 | ) |               | $ |     |       |  | $ | (10 | ) |  | $ | (278,939 | )
|                                                                     |  |                      |       |                      |   |      |                            |  |   |                  |   |  |                 |            |   |               |   |      |       |  |   |     |   |  |   |          |  





See accompanying notes





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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ---------- | - | -------- | ---------- |  | - | -------- | -
|                                                                                                         |  | Years Ended December 31, |         
|                                                                                                         |  | 2004                     |          |   | 2003       |   |          | 2002       | 
|                                                                                                         |  |                          |          |   | (Restated) |   |          | (Restated) | 
|Cash flows from operating activities                                                                     |  |                          |          |   |            |   |          |            |  |   |          |  
|Net loss                                                                                                 |  | $                        | (132,975 | ) |            | $ | (160,402 | )          |  | $ | (588,367 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                |  |                          |          |   |            |   |          |            |  |   |          |  
|Depreciation and amortization                                                                            |  |                          | 103,283  |   |            |   | 126,031  |            |  |   | 115,778  |  
|Asset abandonment                                                                                        |  |                          |         |   |            |   | 12,079   |            |  |   |         |  
|Impairment of goodwill                                                                                   |  |                          |         |   |            |   |         |            |  |   | 214,191  |  
|Impairment of intangible assets                                                                          |  |                          |         |   |            |   |         |            |  |   | 188,330  |  
|Accretion of debt discount                                                                               |  |                          | 26,910   |   |            |   | 45,085   |            |  |   | 39,361   |  
|Loss on debt extinguishment                                                                              |  |                          | 62,342   |   |            |   |          |            |  |   |          |  
|(Gain) loss on sale of assets                                                                            |  |                          | 1,841    |   |            |   | (145     | )          |  |   | (35      | )
|Equity in (income) losses of affiliates                                                                  |  |                          | (215     | ) |            |   | (2,911   | )          |  |   | 651      |  
|Gain on disposal of discontinued operations                                                              |  |                          | (16,318  | ) |            |   |          |            |  |   |          |  
|Non-cash stock compensation                                                                              |  |                          | 375      |   |            |   | 2,690    |            |  |   | 4,672    |  
|Discontinued operationsnoncash charges and changes in operating assets and liabilities                  |  |                          |         |   |            |   | 397      |            |  |   |         |  
|Changes in operating assets and liabilities, net of acquisitions, disposals and discontinued operations: |  |                          |          |   |            |   |          |            |  |   |          |  
|Subscriber receivables                                                                                   |  |                          | (7,580   | ) |            |   | 18,224   |            |  |   | (4,305   | )
|Other receivables                                                                                        |  |                          | 927      |   |            |   | (26      | )          |  |   | 8,345    |  
|Inventory                                                                                                |  |                          | 559      |   |            |   | (407     | )          |  |   | 5,485    |  
|Prepaid expenses                                                                                         |  |                          | (2,029   | ) |            |   | (1,970   | )          |  |   | (2,138   | )
|Income tax receivable                                                                                    |  |                          |         |   |            |   |         |            |  |   |         |  
|Receivables/payablesrelated parties                                                                     |  |                          | 621      |   |            |   | 27       |            |  |   | 454      |  
|Other assets                                                                                             |  |                          | 1,945    |   |            |   | (1,009   | )          |  |   | 6,125    |  
|Accounts payable                                                                                         |  |                          | 17,576   |   |            |   | 14,201   |            |  |   | (17,968  | )
|Accrued expenses                                                                                         |  |                          | 8,510    |   |            |   | 9,580    |            |  |   | 5,091    |  
|Deferred liability                                                                                       |  |                          | (2,427   | ) |            |   | (803     | )          |  |   | 980      |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Net cash provided by (used in) operating activities                                                      |  |                          | 63,345   |   |            |   | 60,641   |            |  |   | (23,350  | )
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Cash flows from investing activities                                                                     |  |                          |          |   |            |   |          |            |  |   |          |  
|Purchases of property and equipment                                                                      |  |                          | (35,529  | ) |            |   | (30,486  | )          |  |   | (122,608 | )
|Acquisition of businesses, net of cash acquired                                                          |  |                          |         |   |            |   |         |            |  |   | (61,713  | )
|Proceeds from maturities and sales of marketable securities                                              |  |                          |         |   |            |   |         |            |  |   | 66,967   |  
|Proceeds from sale of assets                                                                             |  |                          | 43,344   |   |            |   | 350      |            |  |   | 10,319   |  
|Distributions from unconsolidated affiliates                                                             |  |                          | 2,451    |   |            |   | 250      |            |  |   | 792      |  
|Investments in unconsolidated affiliates                                                                 |  |                          | (1,298   | ) |            |   |         |            |  |   | (1,491   | )
|Proceeds from release of restricted cash                                                                 |  |                          | 19,279   |   |            |   | 21,859   |            |  |   | 10,449   |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Net cash provided by (used in) investing activities                                                      |  |                          | 28,247   |   |            |   | (8,027   | )          |  |   | (97,285  | )
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Cash flows from financing activities                                                                     |  |                          |          |   |            |   |          |            |  |   |          |  
|Proceeds from long-term debt                                                                             |  |                          | 360,232  |   |            |   |         |            |  |   | 83,184   |  
|Principal payments on long-term debt                                                                     |  |                          | (422,634 | ) |            |   | (14,718  | )          |  |   | (693     | )
|Debt issuance cost                                                                                       |  |                          | (12,568  | ) |            |   | (2,688   | )          |  |   | (762     | )
|Proceeds from exercised options                                                                          |  |                          | 438      |   |            |   |         |            |  |   | 282      |  
|Proceeds from payment on promissory notes                                                                |  |                          |         |   |            |   |         |            |  |   | 20       |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Net cash provided by (used in) financing activities                                                      |  |                          | (74,532  | ) |            |   | (17,406  | )          |  |   | 82,031   |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Net change in cash and cash equivalents                                                                  |  |                          | 17,060   |   |            |   | 35,208   |            |  |   | (38,604  | )
|Cash and cash equivalents at beginning of year                                                           |  |                          | 97,193   |   |            |   | 61,985   |            |  |   | 100,589  |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Cash and cash equivalents at end of year                                                                 |  | $                        | 114,253  |   |            | $ | 97,193   |            |  | $ | 61,985   |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Supplemental cash flow disclosures                                                                       |  |                          |          |   |            |   |          |            |  |   |          |  
|Cash paid for interest                                                                                   |  | $                        | 40,082   |   |            | $ | 33,796   |            |  | $ | 26,162   |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Cash paid for income taxes                                                                               |  |                          |         |   |            |   |         |            |  |   |         |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  
|Non-cash activities                                                                                      |  |                          |          |   |            |   |          |            |  |   |          |  
|Property purchases in accounts payable                                                                   |  | $                        | 3,786    |   |            | $ | 1,207    |            |  | $ | 3,399    |  
|                                                                                                         |  |                          |          |   |            |   |          |            |  |   |          |  



See accompanying notes





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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004



1. Description of Business and Summary of Significant Accounting Policies



Description of Organization



US Unwired Inc. (the Company) is principally engaged in the ownership and
operation of wireless communications. The Company is a network partner of Sprint PCS (Sprint) and has the exclusive right to provide digital PCS services under the Sprint brand names within the Companys service areas. The Company
operates, directly and through its subsidiaries, both a southern group of markets and a northern group of markets. The southern group of markets, which is operated by US Unwired and its subsidiaries other than IWO, which is identified in the next
sentence, comprises portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas. The northern group of markets, which is operated by IWO Holdings, Inc. and its subsidiaries, collectively referred to as IWO,
comprises all or portions of Massachusetts, New Hampshire, New York, Pennsylvania and Vermont.



Consolidation Policy



The consolidated financial statements include the accounts of US Unwired Inc. and its wholly owned subsidiaries including IWO. All significant intercompany balances and transactions are eliminated in consolidation.



Restatement of Prior Years



The Company reviewed its accounting practices with respect to lease
transactions. As a result of this review and in consultation with the audit committee of its board of directors and its independent registered public accounting firm, Ernst & Young LLP, the Company determined that it was appropriate to restate
its historical consolidated financial statements through September 30, 2004 (see Note 16 to the Consolidated Financial Statements for restated quarterly financial results of operations). Historically, when accounting for operating leases with
escalation provisions, the Company recorded lease expense at the current rate specified in the lease. The Company re-evaluated its position and determined that its operating lease expense should be recognized on a straight line-basis over the term
of the lease (as defined in Statement of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases, as amended) that is consistent with the depreciable lives of the assets associated with the leased property. The
adjustments, as discussed below, relate solely to the accounting treatment, and do not affect the Companys historical or future cash flows or the timing of payments under the related leases.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



As a result of these restatements, certain previously recorded amounts to the Companys
historical consolidated statements of operations have been adjusted as follows (in thousands, except for earnings per share):



|                                                                                       |  |                      |           |   |             |   |        |             |  |   |           |  
|-------------------------------------------------------------------------------------- |  | -------------------- | --------- | - | ----------- | - | ------ | ----------- |  | - | --------- | -
|Year Ended December 31, 2003                                                           |  | AsOriginallyReported |           |   | Adjustments |   |        | As Restated | 
|Cost of service                                                                        |  | $                    | 306,223   |   |             | $ | 2,735  |             |  | $ | 308,958   |  
|General and administrative                                                             |  |                      | 31,378    |   |             |   | 67     |             |  |   | 31,445    |  
|Sales and marketing                                                                    |  |                      | 90,211    |   |             |   | 311    |             |  |   | 90,522    |  
|Depreciation and amortization                                                          |  |                      | 119,188   |   |             |   | 335    |             |  |   | 119,523   |  
|Total operating expense                                                                |  |                      | 607,850   |   |             |   | 3,448  |             |  |   | 611,298   |  
|Operating loss                                                                         |  |                      | (72,099   | ) |             |   | (3,448 | )           |  |   | (75,547   | )
|Loss from continuing operations before income taxes and equity in income of affiliates |  |                      | (162,902  | ) |             |   | (3,448 | )           |  |   | (166,350  | )
|Loss from continuing operations before equity in income of affiliates                  |  |                      | (162,371  | ) |             |   | (3,448 | )           |  |   | (165,819  | )
|Loss from continuing operations                                                        |  |                      | (159,460  | ) |             |   | (3,448 | )           |  |   | (162,908  | )
|Net loss                                                                               |  |                      | (156,954  | ) |             |   | (3,448 | )           |  |   | (160,402  | )
|Basic and diluted earnings (loss) per common share:                                    |  |                      |           |   |             |   |        |             |  |   |           |  
|Continuing operations                                                                  |  | $                    | (1.24     | ) |             | $ | (0.03  | )           |  | $ | (1.27     | )
|Net loss per common share                                                              |  | $                    | (1.22     | ) |             | $ | (0.03  | )           |  | $ | (1.25     | )
|                                                                                       |  |                      |          
|Year Ended December 31, 2002                                                           |  | AsOriginallyReported |           |   | Adjustments |   |        | As Restated | 
|Cost of service                                                                        |  | $                    | 345,623   |   |             | $ | 4,749  |             |  | $ | 350,372   |  
|General and administrative                                                             |  |                      | 25,403    |   |             |   | 125    |             |  |   | 25,528    |  
|Sales and marketing                                                                    |  |                      | 108,575   |   |             |   | 597    |             |  |   | 109,172   |  
|Depreciation and amortization                                                          |  |                      | 108,539   |   |             |   | 418    |             |  |   | 108,957   |  
|Total operating expense                                                                |  |                      | 1,031,116 |   |             |   | 5,889  |             |  |   | 1,037,005 |  
|Operating loss                                                                         |  |                      | (519,552  | ) |             |   | (5,889 | )           |  |   | (525,441  | )
|Loss from continuing operations before income taxes and equity in income of affiliates |  |                      | (590,880  | ) |             |   | (5,889 | )           |  |   | (596,769  | )
|Loss from continuing operations before equity in income of affiliates                  |  |                      | (590,099  | ) |             |   | (5,889 | )           |  |   | (595,988  | )
|Loss from continuing operations                                                        |  |                      | (590,750  | ) |             |   | (5,889 | )           |  |   | (596,639  | )
|Net loss                                                                               |  |                      | (582,478  | ) |             |   | (5,889 | )           |  |   | (588,367  | )
|Basic and diluted earnings (loss) per common share:                                    |  |                      |           |   |             |   |        |             |  |   |           |  
|Continuing operations                                                                  |  | $                    | (5.00     | ) |             | $ | (0.05  | )           |  | $ | (5.05     | )
|Net loss per common share                                                              |  | $                    | (4.93     | ) |             | $ | (0.05  | )           |  | $ | (4.98     | )



The cumulative impact
of the adjustments for all years prior to the year ended December 31, 2002 was approximately $4.1 million and was recorded as an adjustment to the Companys accumulated deficit in stockholders equity as of December 31, 2001.



Reclassifications



Certain reclassifications have been made to the Companys consolidated
statements of operations as of December 31, 2003 and December 31, 2002 from the amounts that had been previously reported. The reclassifications were made in order to align the classification of certain expenses with other publicly traded Sprint PCS
affiliates and other companies in the PCS telecom industry. These expenses primarily consist of



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Sprint PCS related fees for back office services, bad debt expense, handset upgrades and certain wages, benefits and taxes. For the years ended December 31,
2003 and December 31, 2002, this resulted in a decrease to general and administrative expense of $99.1 million and $116.0 million, respectively, offset by an increase to cost of service of $95.3 million and $110.9, respectively, and an increase to
sales and marketing expense of $3.8 million and $5.1 million, respectively. These reclassifications had no impact on total operating expenses, operating loss or net loss for any of the periods.



Cash Equivalents



The Company considers all highly liquid investments with original maturities of three months or less when purchased to be
cash equivalents.



Inventory



Inventory consists of PCS telephones and related accessories and is carried
at cost. Cost is determined by the moving weighted average method, which approximates the first-in, first-out method.



Property and Equipment



Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets as follows:



|                                            |  |        
|------------------------------------------- |  | -------
|                                            |  | Years  
|Buildings and building improvements         |  | 39     
|Leasehold improvements                      |  | 10     
|Facilities and equipment                    |  | 7 to 10
|Furniture, fixtures, computers and vehicles |  | 3 to 7 



Depreciation expense
was approximately $84.4 million, $81.3 million and $68.2 million for the years ended December 31, 2004, 2003 and 2002, respectively.



The Company leases certain facilities and equipment under capital leases. Assets recorded under capital leases are amortized over the lives of the
respective leases and such amortization is included in depreciation expense. Assets under these obligations totaled $5.4 million (which is net of accumulated amortization of $3.0 million) and $6.1 million (which is net of accumulated amortization of
$2.3 million) at December 31, 2004 and 2003, respectively, and are included in facilities and equipment.



Long Lived Assets



The
Company assesses the impairment of long-lived assets and goodwill in accordance with the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, and No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



are reported at the lower of the carrying amount or fair value less costs to sell. SFAS No. 142 requires annual tests for impairment of goodwill and
intangible assets that have indefinite useful lives and interim tests when an event has occurred that more likely than not has reduced the fair value of such assets.



Licenses



Licenses consist primarily of costs incurred in connection with the Companys acquisition of PCS licenses and systems. These assets are recorded at
cost and amortized using the straight-line method over an estimated useful life of 20 years. Accumulated amortization was approximately $1.9 million and $3.9 million at December 31, 2004 and 2003, respectively.



Deferred Financing Costs



Deferred financing costs include costs incurred in connection with the
issuance of the Companys long-term debt. These costs are amortized over the terms of the related debt using the interest method. Accumulated amortization expense was approximately $8.3 million and $10.2 million at December 31, 2004 and 2003,
respectively.



Investments in Unconsolidated Affiliates



The Companys investments in less than majority-owned affiliated
companies are accounted for using the equity method and equity in earnings (losses) are reported as equity in income (losses) of affiliates in the accompanying statement of operations.



Revenue Recognition



The Company earns revenue by providing access to and usage of its network and sales of merchandise. 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. Travel revenue is generated on a per minute basis when a Sprint PCS subscriber outside of the Companys markets uses the Companys service when traveling through our markets. Foreign
roaming revenue is generated when a non-Sprint PCS customer uses the Companys service when traveling through the Companys markets. The Company recognizes roaming revenue through an agreement that allows a reseller to sell prepaid
wireless services in its markets. Revenues are recognized when amounts are considered to be earned under the respective service plans and collection of such amounts is considered probable.



Sprint retains 8% of collected service revenues from subscribers based in the
Companys service area, foreign roaming and for revenue generated under its reseller agreement. The amount of affiliation fees retained by Sprint PCS is recorded as a cost of services expense. Revenues derived from the sale of handsets and
accessories by the Company and from certain roaming services (outbound roaming and roaming revenues from Sprint PCS and its PCS network partner subscribers) are not subject to the 8% affiliation fee from Sprint PCS.



Revenues from the sales of merchandise, primarily wireless handsets and
accessories, represent a separate earnings process and are recognized at the time of the customer purchase. These revenues and related costs are included in merchandise sales and cost of sales, respectively. The Company reduces recorded revenue for
rebates and discounts given to subscribers on wireless handsets sales in accordance with Emerging Issues Task Force (EITF) Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Subscriber (Including a Reseller of the
Vendors Products).



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The Company recognizes revenues from activation fees in accordance with Emerging Issues Task Force
(EITF) No. 00-21. In May 2003, the 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 believes 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 total consideration under these arrangements, including any related activation fees, is allocated between these separate units based on their relative fair values.



Advertising Costs



Advertising costs are charged to expenses as incurred. For the years ended December 31, 2004, 2003 and 2002, approximately
$16.6 million, $20.5 million, and $28.2 million, respectively, of advertising costs were incurred.



Commissions and Handset Subsidies



Commissions are paid to the Companys sales staff and local and national retailers for new subscribers. The Company also reimburses certain retailers for the difference between the cost of a handset and the sales
price when the handset is sold below cost, referred to as a handset subsidy. Because the new subscriber must meet certain criteria, such as a minimum time period, commissions and handset subsidies may be paid in periods subsequent to the actual date
the subscriber is activated. The Company accrues commissions and handset subsidies payable in future periods.



Income Taxes



The
Company accounts for deferred income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.



Earnings (Loss) per Common Share



Earnings (loss) per common share are calculated by dividing net loss by the
weighted average number of shares outstanding during the year. Stock options of 10.0 million, 8.7 million and 7.5 million for the years ended December 31, 2004, 2003 and 2002, respectively have not been included in the computation of diluted
earnings per share because the Company was in a net loss position and, therefore, the effect would have been antidilutive.



Stock Compensation Arrangements



The Company accounts for its stock compensation arrangements under the provisions of Accounting Principles Board (APB), Accounting for
Stock Issued to Employees.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Had compensation expense for the Companys stock option plan been determined in accordance with
SFAS No. 123, Accounting for Stock Options, the Companys net loss and basic and diluted net loss per share of common stock for each of the three years in the period ended December 31, 2004 would have been:



|                                                                 |  |                          |          |   |      |   |          |      |  |   |          |  
|---------------------------------------------------------------- |  | ------------------------ | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                 |  | Years Ended December 31, |         
|                                                                 |  | 2004                     |          |   | 2003 |   |          | 2002 | 
|Net loss                                                         |  |                          |          |   |      |   |          |      |  |   |          |  
|As reported                                                      |  | $                        | (132,975 | ) |      | $ | (160,402 | )    |  | $ | (588,367 | )
|Add recorded non-cash stock compensation                         |  |                          | 375      |   |      |   | 2,404    |      |  |   | 4,349    |  
|Less non-cash stock compensation in accordance with SFAS No. 123 |  |                          | (2,856   | ) |      |   | (6,649   | )    |  |   | (8,798   | )
|                                                                 |  |                          |          |   |      |   |          |      |  |   |          |  
|Pro forma                                                        |  | $                        | (135,456 | ) |      | $ | (164,647 | )    |  | $ | (592,816 | )
|                                                                 |  |                          |          |   |      |   |          |      |  |   |          |  
|Basic and diluted net loss per share of common stock             |  |                          |          |   |      |   |          |      |  |   |          |  
|As reported                                                      |  | $                        | (0.89    | ) |      | $ | (1.25    | )    |  | $ | (4.98    | )
|                                                                 |  |                          |          |   |      |   |          |      |  |   |          |  
|Pro forma                                                        |  | $                        | (0.91    | ) |      | $ | (1.28    | )    |  | $ | (5.02    | )
|                                                                 |  |                          |          |   |      |   |          |      |  |   |          |  



Use of Estimates



The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Concentrations of Credit Risk



Financial instruments, which potentially expose the Company to
concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and temporary cash investments with high credit quality financial services companies.



Collectibility of subscriber receivables is impacted by economic trends in
each of the Companys markets and the Company has provided an allowance which it believes is adequate to absorb losses from uncollectible amounts. The Company estimates its allowance by examining components of its revenues. The Company
establishes a general reserve for all accounts receivable that are estimated to be uncollectible. The evaluation of the adequacy of these amounts is based on the Companys own historical experience and discussions with Sprint and other Sprint
affiliates. When it is determined that a customer account is uncollectible, the balance is written off against the existing allowance.



Segments



The Company and its subsidiaries have been operated and are evaluated by management as a single operating segment in accordance with the provisions of
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.



New Accounting Pronouncements



On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Stock Options. Statement 123R supersedes APB No. 25, Accounting for Stock Issued to Employees and amends FASB Statement No. 95,
Statement of Cash Flows. The Company intends to adopt FASB 123R on July 1, 2005 and has not yet determined the method by which they will adopt the new standard. The pro forma impact of applying SFAS No. 123 to the audited consolidated
financial statements is disclosed in Significant Accounting Policies, Stock Compensation Arrangements,above.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Liabilities and Equity, which
is effective at the beginning of the first interim period beginning after June 15, 2003. However, certain aspects of SFAS 150 have been deferred. SFAS No. 150 establishes standards for the Companys classification of liabilities in the
financial statements that have characteristics of both liabilities and equity. The adoption of SFAS 150 did not have a material impact on the Companys financial position, results of operations, or cash flows.



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 this interpretation did not have a
material effect on the Companys financial position, results of operations or cash flows.



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 9 to the Consolidated Financial Statements, the US Unwired first priority secured floating rate notes and the second priority senior secured notes are
guaranteed on a senior secured basis by all of US Unwireds existing and future restricted subsidiaries (except IWO), and 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.



2. Liquidity and Recent Developments



US Unwired and IWO have separate debt structures. Under the terms of these debt instruments, funds available under the US Unwired debt can only be used by
US Unwired, and funds available under the IWO debt can only be used by IWO. US Unwired is not obligated for the payment of IWOs debt, and IWO is not obligated for the payment of US Unwireds debt.



US Unwired



In February 2004, the Company consummated the sale of its cellular
operations, which included certain cellular towers, for $21.5 million and recognized a gain of $16.3 million that has been recorded as a gain on the disposal of discontinued operations. In March 2004, the Company sold 81 cellular and PCS cell site
towers for $9.8 million. Concurrent with the sale, the Company entered into operating leases for a portion of the antenna



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



space on the sold towers from the buyer for an initial term of 10 years, renewable at the option of the Company for three additional five-year terms at an
initial rental of $1.4 million per year, increasing each year by 4% of the previous years rental. The Company recorded a deferred gain of approximately $1.8 million that will be recognized ratably over the initial 10-year term of the operating
lease. Also during the three-month period ended March 31, 2004, the Company divested of other non-core assets including certain PCS licenses and a minority interest in an unconsolidated affiliate for $10.3 million and recorded a loss of $0.4
million. The Company used $11.0 million of the $41.6 million in proceeds to partially repay the US Unwired senior bank credit facility. The accompanying consolidated financial statements reflect the Companys cellular operations as a
discontinued operation.



During May and June 2004, the Company
executed a series of transactions to refinance US Unwireds debt that included:



| |  |  | issuing $360 million of US Unwired senior secured notes (as further described in Note 9 to the consolidated financial statements)
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | purchasing for $247.4 million approximately $235.8 million aggregate face value of US Unwired 133/8% senior subordinated discount notes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issuing approximately 34.5 million shares of US Unwired common stock in exchange for approximately $75.0 million aggregate face value of US Unwired 133/8% senior subordinated discount notes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | paying in full its $55.4 million outstanding balance and terminating the US Unwired senior credit facility; and
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | retiring debt of approximately $3.7 million related to a promissory note and vendor financing.
| | - |  | ----------------------------------------------------------------------------------------------



On August 30, 2004, the Company purchased for $51.1 million approximately $48.0 million aggregate face value of US Unwired
133/8% senior subordinated discount notes. The Company recorded a $4.5 million loss on extinguishment of US
Unwired debt related to this transaction.



On November
1, 2004, the Company retired the remaining outstanding US Unwired 133/8% senior subordinated discount notes by
purchasing $41.1 million aggregate face value for $43.9 million.



On December 31, 2004, the Company sold, based upon an independent appraisal, its 50% ownership interest in Command Connect for $30,000 to a related party and recorded a loss of $1.2 million resulting from the sale. Command Connect held LMDS
licenses in Texas, Arkansas, Illinois and Louisiana.



In
December 2004, and as further discussed in the IWO Liquidity section directly below, a series of actions were initiated that resulted in the reorganization of IWO. Effective with the consummation of the IWO reorganization on February 9, 2005 and the
cancellation of the existing common stock of IWO on February 10, 2005, US Unwired ceased to have an equity interest in IWO. Upon cancellation of the Companys common stock and loss of its equity interest in IWO, US Unwired recognized a gain of
approximately $190.0 million, representing US Unwireds net investment in IWO.



IWO



As of December 31,
2004, IWO was in default of the IWO senior credit facility. Since March 2004, IWO has failed to make $13.8 million in principal payments due on the IWO senior credit facility and was not in compliance with the restrictive covenants under the IWO
senior credit facility. In September 2004, one of the



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



holders of the IWO senior credit facility elected to fund $1.8 million, which represented that holders remaining obligation of a draw request made in
2002. The holders of the IWO senior credit facility have denied IWO access to the remaining $23.4 million in availability.



Additionally, IWO has failed to make scheduled semi-annual interest payments on the IWO senior notes due July 15, 2004 and January 15, 2005 and the
holders of the IWO senior notes can place IWO in default of its senior notes.



As a result, at December 31, 2004, the Company classified all outstanding indebtedness of both the IWO senior credit facility and the IWO senior notes as a current liability.



As a result of liquidity challenges, IWO made the decision to reduce capital
expenditures for IWO network expansion and abandon the construction of cell sites that did not provide a sufficient level of enhanced coverage. IWO recorded an asset abandonment charge of $12.1 million for IWO during 2003 for these abandoned cell
sites and their related property leases. Included in this asset abandonment charge were cell sites that IWO was required to construct to meet the build out requirements under the IWO Sprint PCS management agreement. Failure to complete the build out
of the IWO service area will place IWO in violation of its Sprint PCS management agreement. As a result, Sprint PCS could declare IWO in default and take action up to and including termination of the IWO Sprint management agreement. At December 31,
2004, IWOs construction in progress included $6.6 million primarily related to cell sites that IWO planned to complete, and IWO estimates that completion of these cell sites will require approximately $6.0 million in additional costs to
complete construction and place these sites in operation.



In
November 2004, IWO Escrow Company (IWO Escrow) was formed to facilitate the reorganization of IWO and reorganize the ownership and capital structure of IWO. IWO Escrow is a special purpose entity that is neither a subsidiary nor an
affiliate of either US Unwired or IWO.



On November 29, 2004,
IWO entered into a lock up agreement with holders of approximately 68% of the IWO senior notes pursuant to which such holders agreed to vote in favor of and support IWOs proposed financial restructuring plan including among other things, the
filing by the debtors of a chapter 11 case, subject to the terms and conditions contained in the lock up agreement. Following a pre-petition solicitation of votes from the holders of the IWO senior notes, IWO received the votes of the holders of
approximately 89.9% of the IWO senior notes, constituting approximately 99.2% of the IWO senior notes held by those holders voting, in support of the IWO plan of reorganization.



On November 29, 2004, IWO Escrow signed a letter of intent with Sprint PCS, contingent on the consummation of the
reorganization of IWO, under which the parties agreed to amend the IWO affiliation agreement with Sprint PCS. The amendments were retroactively effective to November 1, 2004 and subject to the right of Sprint PCS to terminate the amendments in the
event a reorganization of IWO did not occur.



On December 1,
2004, IWO commenced a solicitation of consents from the IWO creditors to a pre-packaged plan of bankruptcy.



On December 14, 2004, IWO Escrow offered $150 million in Senior Secured Floating Rate Notes due 2012 and $140 million Principal Amount at Maturity 10.75%
Senior Discount Notes due 2015 (new notes). The proceeds from the new notes, approximately $232.7 million, were placed in escrow pending the consummation of the reorganization of IWO and the merger of IWO Escrow and IWO.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



On January 4, 2005, IWO filed voluntary petitions in the United States Bankruptcy Court for the
District of Delaware (Bankruptcy Court) seeking relief under the provision of chapter 11 of title 11 of the United States Code (Bankruptcy Code). Upon filing the petition, IWO continued to operate its businesses as
debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provision of the Bankruptcy Code and the orders of the Bankruptcy Court.



On February 9, 2005, the Bankruptcy Court entered an order confirming IWOs pre-packaged chapter 11 joint plan of
reorganization (the plan). Pursuant to the plan, on February 10, 2005, IWO Escrow was merged into IWO and IWO issued approximately $232.7 million in aggregate proceeds of new notes. IWO repaid in full and terminated its existing $215.0
million senior credit facility, the $160.0 million senior notes were cancelled and exchanged for all of the new common stock of IWO and the existing common stock of IWO, all of which was owned by US Unwired, was cancelled, with no distribution or
payments thereon.



IWO remained a wholly owned subsidiary of US
Unwired until the consummation of the reorganization. Effective with the cancellation of the existing common stock of IWO on February 10, 2005, US Unwired ceased to have an equity interest in IWO and none of the US Unwired directors and officers are
directors or officers of the newly formed company. Effective February 10, 2005, US Unwired will no longer consolidate IWO as a part of its financial statements.



In connection with the consummation of the plan, IWO terminated its management agreement with US Unwired, dated April 1, 2004, as amended on January 3,
2005 (the management agreement). The termination of the management agreement is subject to a four-month transition period during which US Unwired will continue to provide transitional management and restructuring services to IWO as
defined in the management agreement.



Due to the uncertainty as
of December 31, 2004 of this transaction being completed, the accompanying audited consolidated financial statements do not reflect the effects of the IWO reorganization.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



3. Loss on Debt ExtinguishmentUS Unwired



During 2004, the Company executed a series of transactions to refinance the debt of US Unwired. The Company recognized a
loss of $62.3 million related to the payment in full and termination of its US Unwired senior secured credit facility and the retirement of its 133/8% senior subordinated discount notes using the proceeds from the sale of $360 million of US Unwired new senior secured notes, approximately 34.5 million shares of US Unwired common stock and available
cash on hand. IWO was not affected by this transaction. The following table details the transactions:



|                                     |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  
|------------------------------------ |  | ----------------------------------------------- | ------- | - | ----------------------------------------------------- | - | ------ | ------------------------------------ |  | - | ------ | - |  | - | ------- | -
|                                     |  | 133/8% seniorsubordinateddiscount notes retired |         |   | 133/8% seniorsubordinateddiscount notes exchanged
(1) |   |        | Senior securedcredit facilityretired |  |   | Total  |  
|                                     |  | (In thousands)                                  |        
|Purchase or exchange price           |  | $                                               | 342,406 |   |                                                       | $ | 96,373 |                                      |  | $ | 55,411 |   |  | $ | 494,190 |  
|Carrying value of debt:              |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  
|Face value tendered                  |  |                                                 | 325,000 |   |                                                       |   | 75,000 |                                      |  |   | 55,411 |   |  |   | 455,411 |  
|Unamortized discount                 |  |                                                 | (12,090 | ) |                                                       |   | (3,526 | )                                    |  |   |       |   |  |   | (15,616 | )
|Unamortized deferred financing costs |  |                                                 | (5,131  | ) |                                                       |   | (1,201 | )                                    |  |   | (718   | ) |  |   | (7,050  | )
|                                     |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  
|Carrying value                       |  |                                                 | 307,779 |   |                                                       |   | 70,273 |                                      |  |   | 54,693 |   |  |   | 432,745 |  
|                                     |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  
|Loss before expenses                 |  |                                                 | 34,627  |   |                                                       |   | 26,100 |                                      |  |   | 718    |   |  |   | 61,445  |  
|Add transaction expenses             |  |                                                 | 675     |   |                                                       |   | 143    |                                      |  |   | 79     |   |  |   | 897     |  
|                                     |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  
|Loss on debt extinguishment          |  | $                                               | 35,302  |   |                                                       | $ | 26,243 |                                      |  | $ | 797    |   |  | $ | 62,342  |  
|                                     |  |                                                 |         |   |                                                       |   |        |                                      |  |   |        |   |  |   |         |  

---

|(1) | During the period from May 26, 2004 to June 4, 2004, the Company issued approximately 34.5 million shares in exchange for a portion of its US Unwired senior notes. The exchange
price of the US Unwired common stock issued was determined by using the close price of the US Unwired common stock on the day preceding the execution of each exchange agreement multiplied by the agreed upon number of common shares to be exchanged.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



4. Goodwill and Intangible Assets



The Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets, and No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, on January 1, 2002.



The Company completed the first of the required impairment tests of goodwill and indefinite lived assets as of January 1, 2002 and determined that the
adoption of this provision of the new rules had no impact on the Companys financial statements at that time. As a result of the impairment indicators discussed in Note 2 above, the Company performed an impairment test of goodwill in the fourth
quarter of 2002 and in the fourth quarter of 2003. In connection with these impairment tests, the Company also reviewed its long-lived assets for impairment under SFAS No. 144.



The Company determined that US Unwired and IWO are considered to be separate reporting units as each constitutes a separate
business for which discrete financial information is available and management regularly reviews the operating results of each of these businesses. This determination is further supported as each has separate long-term debt instruments, which under
the terms of these, funds available under the US Unwired debt instruments can only be used by US Unwired to finance the operations of US Unwired, and the funds available under the IWO debt instruments can only be used to finance the operations of
IWO.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The Company engaged American Appraisal Associates, an independent national valuation firm
(American Appraisal), to assist with the impairment valuation. As a result of the impairment valuation as of October 31, 2002, management believed that the long-lived assets of US Unwired were not impaired. However, the valuation
analysis determined that both goodwill and a significant portion of IWOs intangible assets were impaired. As a result, IWO recorded a goodwill impairment of approximately $214.2 million and an intangible asset impairment of $188.3 million
associated with IWOs right to provide service under the Sprint management Agreement in the quarter ended December 31, 2002. The Sprint management agreement was originally assigned a value of $215.0 million and was being amortized using the
straight-line method over 218 months. A similar valuation by American Appraisal as of October 31, 2004 and as of October 31, 2003 indicated no additional impairment of goodwill or any of the Companys long-lived assets.



The changes in the carrying amount of goodwill from December 31, 2002 to
December 31, 2004 are as follows (in thousands):



|                                                                |  |   |        |  
|--------------------------------------------------------------- |  | - | ------ | -
|Goodwill as of December 31, 2002                                |  | $ | 51,961 |  
|Forfeiture of Georgia PCS Management, LLC shares held in escrow |  |   | (5,260 | )
|Adjustment to preliminary purchase price allocation             |  |   | 4      |  
|                                                                |  |   |        |  
|Goodwill as of December 31, 2003                                |  |   | 46,705 |  
|Increases (decreases) to goodwill in 2004                       |  |   |       |  
|                                                                |  |   |        |  
|Goodwill as of December 31, 2004                                |  | $ | 46,705 |  
|                                                                |  |   |        |  



The amortization
period, gross carrying amount, impairments, accumulated amortization and net carrying amount of intangible assets are as follows (in thousands):



|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       
|---------------------------------------------------- |  | ---------------------------- |  | ------------------- | ------- | ----------------------- | - | ----------------- |  | - | ------
|                                                     |  | Year Ended December 31, 2004
|                                                     |  | Amortizationperiod           |  | GrossCarryingAmount |         | AccumulatedAmortization |   | NetCarryingAmount
|Sprint management agreement, IWO acquisition         |  | 218 months                   |  | $                   | 19,766  |                         | $ | 2,435             |  | $ | 17,331
|Subscriber base, IWO acquisition                     |  | 24 months                    |  |                     | 57,500  |                         |   | 57,500            |  |   |      
|Sprint management agreement, Georgia PCS acquisition |  | 219 months                   |  |                     | 15,500  |                         |   | 2,407             |  |   | 13,093
|Subscriber base, Georgia PCS acquisition             |  | 24 months                    |  |                     | 12,300  |                         |   | 12,300            |  |   |      
|Subscriber base, Louisiana Unwired                   |  | 24 months                    |  |                     | 3,854   |                         |   | 3,854             |  |   |      
|Subscriber base, Texas Unwired                       |  | 24 months                    |  |                     | 2,280   |                         |   | 2,280             |  |   |      
|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       
|Total                                                |  |                              |  | $                   | 111,200 |                         | $ | 80,776            |  | $ | 30,424
|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       
|---------------------------------------------------- |  | ---------------------------- |  | ------------------- | ------- | ----------------------- | - | ----------------- |  | - | ------
|                                                     |  | Year Ended December 31, 2003
|                                                     |  | Amortizationperiod           |  | GrossCarryingAmount |         | AccumulatedAmortization |   | NetCarryingAmount
|Sprint management agreement, IWO acquisition         |  | 218 months                   |  | $                   | 19,766  |                         | $ | 1,311             |  | $ | 18,455
|Subscriber base, IWO acquisition                     |  | 24 months                    |  |                     | 57,500  |                         |   | 50,313            |  |   | 7,187 
|Sprint management agreement, Georgia PCS acquisition |  | 219 months                   |  |                     | 15,500  |                         |   | 1,557             |  |   | 13,943
|Subscriber base, Georgia PCS acquisition             |  | 24 months                    |  |                     | 12,300  |                         |   | 11,100            |  |   | 1,200 
|Subscriber base, Louisiana Unwired                   |  | 24 months                    |  |                     | 3,854   |                         |   | 3,854             |  |   |      
|Subscriber base, Texas Unwired                       |  | 24 months                    |  |                     | 2,280   |                         |   | 2,280             |  |   |      
|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       
|Total                                                |  |                              |  | $                   | 111,200 |                         | $ | 70,415            |  | $ | 40,785
|                                                     |  |                              |  |                     |         |                         |   |                   |  |   |       



Estimated future amortization expense on intangible assets for the years ended December 31,



|     |  |   |      
|---- |  | - | -----
|2005 |  | $ | 1,973
|     |  |   |      
|2006 |  | $ | 1,973
|     |  |   |      
|2007 |  | $ | 1,973
|     |  |   |      
|2008 |  | $ | 1,973
|     |  |   |      
|2009 |  | $ | 1,973
|     |  |   |      



5. Acquisitions



On March 8, 2002, the Company acquired 100% of the ownership interest of
Georgia PCS for approximately $84.5 million. In conjunction with the Companys acquisition of Georgia PCS, 1.1 million shares valued at $5.26 per share of the Companys common stock were placed in escrow pending resolution of certain post
closing adjustments. On June 20, 2003 the Company notified the former owners of Georgia PCS that the Company intended to offset 1.0 million shares of the Companys common stock that was in the escrow account in satisfaction of certain post
closing adjustments. As a result, the Company recorded a receivable and a reduction of goodwill for the return of this stock from escrow in 2003. In June 2003, these shares were returned to the Company and have been recorded as treasury shares in
the accompanying balance sheet.



On April 1, 2002, the Company
acquired 100% of the ownership interest in IWO for approximately $446 million in Company stock. The aggregate purchase price was allocated to the assets acquired and liabilities assumed based on estimates of fair values as determined by American
Appraisal. The excess of the purchase price over the fair value of the net identifiable assets was allocated to goodwill. The Companys operating results include the operating results of IWO from date of acquisition, April 1, 2002.



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The following unaudited supplemental pro forma information for the year ended December 31, 2002
presents the results of operations as if the IWO acquisition had occurred at the beginning of 2002 and is not necessarily indicative of future results or actual results that would have been achieved had these acquisitions occurred as of the
beginning of the period.



|               |  |                                       |          |  
|-------------- |  | ------------------------------------- | -------- | -
|               |  | Year ended December 31, 2002          |         
|               |  | (In thousands, except per share data) |         
|Revenue        |  | $                                     | 569,616  |  
|               |  |                                       |          |  
|Net loss       |  | $                                     | (615,203 | )
|               |  |                                       |          |  
|Loss per share |  | $                                     | (5.21    | )
|               |  |                                       |          |  



6. Details of Certain Balance Sheet
Accounts



Additional information regarding certain balance
sheet accounts is presented below:



|                                  |  |                |         |      |   |        
|--------------------------------- |  | -------------- | ------- | ---- | - | -------
|                                  |  | December 31,  
|                                  |  | 2004           |         | 2003
|                                  |  | (in thousands)
|Property and equipment            |  |                |         |      |   |        
|Land                              |  | $              | 620     |      | $ | 754    
|Buildings                         |  |                | 15,145  |      |   | 14,755 
|Leasehold improvements            |  |                | 7,250   |      |   | 7,074  
|Facilities and equipment          |  |                | 602,123 |      |   | 578,891
|Furniture, fixtures, and vehicles |  |                | 30,764  |      |   | 29,598 
|Construction in progress          |  |                | 16,318  |      |   | 14,594 
|                                  |  |                |         |      |   |        
|                                  |  |                | 672,220 |      |   | 645,666
|Less accumulated depreciation     |  |                | 316,048 |      |   | 235,125
|                                  |  |                |         |      |   |        
|                                  |  | $              | 356,172 |      | $ | 410,541
|                                  |  |                |         |      |   |        



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003



|                                       |  |              |        |      |   |        
|-------------------------------------- |  | ------------ | ------ | ---- | - | -------
|                                       |  | December 31,
|                                       |  | 2004         |        | 2003
|Intangible assets                      |  |              |        |      |   |        
|Sprint management agreement            |  | $            | 35,266 |      | $ | 35,266 
|Subscriber base                        |  |              |       |      |   | 81,824 
|                                       |  |              |        |      |   |        
|                                       |  |              | 35,266 |      |   | 117,090
|Less accumulated amortization          |  |              | 4,842  |      |   | 76,305 
|                                       |  |              |        |      |   |        
|                                       |  | $            | 30,424 |      | $ | 40,785 
|                                       |  |              |        |      |   |        
|Other assets                           |  |              |        |      |   |        
|Licenses                               |  | $            | 5,445  |      | $ | 14,548 
|Deferred financing costs               |  |              | 32,587 |      |   | 34,603 
|Other                                  |  |              | 5,089  |      |   | 7,522  
|                                       |  |              |        |      |   |        
|                                       |  |              | 43,121 |      |   | 56,673 
|Less accumulated amortization          |  |              | 10,129 |      |   | 14,102 
|                                       |  |              |        |      |   |        
|                                       |  | $            | 32,992 |      | $ | 42,571 
|                                       |  |              |        |      |   |        
|Accrued expenses                       |  |              |        |      |   |        
|Unearned revenue and customer deposits |  | $            | 18,942 |      | $ | 17,196 
|Accrued commissions                    |  |              | 6,818  |      |   | 11,858 
|Accrued Sprint settlements             |  |              | 13,712 |      |   | 9,093  
|Other                                  |  |              | 45,803 |      |   | 38,990 
|                                       |  |              |        |      |   |        
|                                       |  | $            | 85,275 |      | $ | 77,137 
|                                       |  |              |        |      |   |        



7. Investments in Unconsolidated
Affiliates



Investments in unconsolidated affiliates
consists of the following:



|                                                               |  |                     |      |  |                |        |   |  |   |        |  
|-------------------------------------------------------------- |  | ------------------- | ---- |  | -------------- | ------ | - |  | - | ------ | -
|                                                               |  | PercentageOwnership |      |  | December 31,   |       
|                                                               |  |                     | 2004 |  |                | 2003   |  
|                                                               |  |                     |      |  | (In thousands) |       
|Gulf Coast Wireless, LP (Gulf Coast Wireless)                |  | 13.28               | %    |  | $              | (2,467 | ) |  | $ | (2,467 | )
|Wireless Management Corporation                                |  | 20.00               | %    |  |                |       |   |  |   |       |  
|Command Connect, LLC (Command Connect)                       |  | 0.00                | %    |  |                |       |   |  |   | (51    | )
|GTE Mobilenet of Texas RSA #21 Limited Partnership (GTE #21) |  | 0.00                | %    |  |                |       |   |  |   | 1,302  |  
|                                                               |  |                     |      |  |                |        |   |  |   |        |  
|                                                               |  |                     |      |  | $              | (2,467 | ) |  | $ | (1,216 | )
|                                                               |  |                     |      |  |                |        |   |  |   |        |  



Gulf Coast Wireless is
a Sprint PCS network partner and provides services under the Sprint brand name in the Baton Rouge, Hammond and Lafayette, Louisiana and Biloxi, Mississippi markets. In 2004, we divested our interests in Command Connect and GTE Mobilenet.



8. Asset Retirement Obligations



The Companys network is primarily located on leased property, and, in
certain cases, the Company has certain contractual obligations, principally related to its leased space on towers, that fall within the scope of



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



SFAS No. 143, Accounting for Asset Retirement Obligations. These obligations upon lease termination primarily include certain remediation of
leased tower space and land on which the Companys network equipment is located and may include the repair of the towers, the removal of fencing that protects the base station and the concrete pad on which the base station is mounted, testing
soil for remediation and the removal of cables and other equipment. In addition, the Company has leases related to switch sites, retail and administrative locations subject to the provisions of SFAS No. 143. Remediation upon termination may include
the removal of fixtures and equipment and delivering the premises in good condition except for normal wear and tear.



In 2004, the Company recorded a total initial asset retirement obligation of approximately $1.0 million for US Unwired and $0.5 million for IWO. As of
December 31, 2004, the Company had limited experience related to vacated leased properties having vacated only a few leased properties during the past several years and has incurred only nominal costs associated with the termination of the tower
leases and retail outlets. As such, the Company made certain assumptions in determining its initial asset retirement obligation under FAS 143 related to the probability of remediation, the estimated terms of the leases, interest rates and
inflationary factors. The Company concluded an average estimated cost of $5,200 to remediate each of its 1,224 leased tower sites at US Unwired and 721 leased tower sites at IWO and concluded that it would have only a nominal financial obligation to
remediate its leased retail outlets.



9. Long-Term Debt



Long-term debt, including capital lease obligations, consisted of the
following:



|                                                                           |  |                |         |      |   |        
|-------------------------------------------------------------------------- |  | -------------- | ------- | ---- | - | -------
|                                                                           |  | December 31,  
|                                                                           |  | 2004           |         | 2003
|                                                                           |  | (In thousands)
|US Unwired long-term obligations:                                          |  |                |         |      |   |        
|US Unwired Inc. first priority senior secured floating rate notes due 2010 |  | $              | 125,000 |      | $ |       
|US Unwired Inc. 10% second priority senior secured notes due 2012          |  |                | 233,482 |      |   |       
|US Unwired Inc. 133/8% senior subordinated discount notes due 2009         |  |                |        |      |   | 359,302
|Capital leases                                                             |  |                | 6,359   |      |   | 6,825  
|US Unwired Inc. senior credit facility                                     |  |                |        |      |   | 76,000 
|Promissory note                                                            |  |                |        |      |   | 3,452  
|Vendor financing                                                           |  |                |        |      |   | 311    
|                                                                           |  |                |         |      |   |        
|Total long-term obligations, US Unwired Inc.                               |  |                | 364,841 |      |   | 445,890
|                                                                           |  |               
|IWO long-term obligations:                                                 |  |                |         |      |   |        
|IWO Holdings, Inc. senior notes                                            |  |                | 140,275 |      |   | 138,513
|IWO Holdings, Inc. senior credit facility, in default                      |  |                | 215,000 |      |   | 213,184
|                                                                           |  |                |         |      |   |        
|Total long-term debt, in default, IWO Holdings, Inc.                       |  |                | 355,275 |      |   | 351,697
|                                                                           |  |               
|Less current maturities:                                                   |  |                |         |      |   |        
|US Unwired current maturities                                              |  |                | 490     |      |   | 11,145 
|IWO current maturities                                                     |  |                | 355,275 |      |   | 351,697
|                                                                           |  |                |         |      |   |        
|Total current maturities                                                   |  |                | 355,765 |      |   | 362,842
|                                                                           |  |                |         |      |   |        
|Long-term obligations, excluding current maturities                        |  | $              | 364,351 |      | $ | 434,745
|                                                                           |  |                |         |      |   |        



US Unwired and IWO have separate debt
structures. US Unwired is not obligated for the payment of IWOs debt, and IWO is not obligated for the payment of US Unwireds debt.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



US Unwired long-term obligations



In 2004, US Unwired executed a series of transactions to refinance the US
Unwired long-term debt that included the issuance of $125.0 million in first priority senior secured floating rate notes due 2010 and $235.0 million in 10% second priority senior secured notes due 2012. As a part of this refinancing, US Unwired paid
in full and terminated its senior credit facility and its 13 3/8 % senior subordinated discount notes in a series of transactions as discussed in Note 2.



US Unwired First Priority Senior Secured Floating Rate Notes due 2010 and 10% Second Priority Senior Secured Notes due 2012



In June 2004, US Unwired issued $125 million aggregate principal amount of
First Priority Senior Secured Floating Rate Notes due June 15, 2010 (the 2010 Notes) and $235 million aggregate principal amount of 10% Second Priority Senior Secured Notes due June 15, 2012 (the 2012 Notes). The 2010 Notes
bear interest at a floating rate equal to LIBOR plus 4.25% per year, and the 2012 Notes bear interest at a fixed rate of 10% per year. Interest on the 2010 Notes resets quarterly and is payable quarterly in arrears on March 15, June 15, September 15
and December 15 of each year, beginning on September 15, 2004. Interest on the 2012 Notes is payable semi-annually on June 15 and December 15 of each year, beginning on December 15, 2004. The 2010 Notes will mature on June 15, 2010, and the 2012
notes will mature on June 15, 2012. The Company may redeem all or a part of the 2010 Notes on or after June 15, 2006 and all or a part of the 2012 Notes on or after June 15, 2008. In addition, before June 15, 2006 the Company may redeem up to 35% of
the 2010 Notes, and before June 15, 2007 the Company may redeem up to 35% of the 2012 Notes, in each case with the proceeds of certain equity offerings. The 2010 Notes and 2012 Notes are senior secured obligations, and are guaranteed on a
senior secured basis by all of the Companys existing and future restricted subsidiaries. The US Unwired 2010 Notes and 2012 Notes are not guaranteed by IWO. The 2010 Notes and 2012 Notes rank equally in right of payment with all existing and
future senior debt and any future subordinated debt. The 2010 Notes are secured on a first priority basis and the 2012 Notes are secured on a second priority basis, in each case by liens on substantially all of the US Unwireds assets.



Possessory Security Agreement



On July 14, 2004, US Unwired entered into a Possessory Security Agreement
with Whitney National Bank (Whitney) pursuant to which US Unwired pledged cash to Whitney in an amount equal to 100% of US Unwireds maximum repayment obligations with respect to any letters of credit issued by Whitney National
Bank. As of December 31, 2004, the Company had $1.7 million in outstanding letters of credit.



IWO long-term obligations



As of December 31, 2004, IWO was in default of its senior bank credit facility. Since March 2004, IWO has failed to make $13.5 million in principal payments due on the senior secured credit facility and was not in
compliance with the restrictive covenants under the senior secured credit facility. The holders of the IWO senior secured credit facility have denied IWO access to the remaining $23.4 million in availability. Additionally, IWO has failed to make
scheduled semi-annual interest payments on the IWO senior notes due July 15, 2004 and January 15, 2005 and the holders of the IWO senior notes can place IWO in default of its senior notes. On February 10, 2005, upon consummation of the IWO
reorganization, IWO repaid in full and terminated its existing $215.0 million senior credit facility, the $160.0 million senior notes were cancelled and exchanged for all of the new common stock of IWO and the existing common stock of IWO, all of
which was owned by US Unwired, was cancelled, with no distribution or payments thereon. For a detailed discussion of IWO Liquidity and Recent Developments, refer to Note 2.



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



IWO Senior Notes14%



In February 2001, IWO issued 160,000 units, each consisting of $1,000 principal amount of 14% Senior Notes (the IWO senior notes) due
January 15, 2011 and one warrant to purchase 12.50025 shares of IWOs class C common stock at an exercise price of $7.00 per share. As a result of US Unwireds acquisition of IWO in April 2002, this warrant was converted to a US Unwired
warrant to purchase 12.96401 shares of US Unwireds common stock at $6.75 per share. Interest was payable semi-annually on January 15 and July 15 of each year. Independent Wireless One Corporation, a wholly owned subsidiary of IWO, was the sole
guarantor of the IWO senior notes. All of IWOs restricted subsidiaries formed or acquired after the issuance of the IWO senior notes that guarantee the IWO senior secured credit facility were also required to guarantee the IWO senior notes.
The IWO senior notes were not guaranteed by Independent Wireless One Realty Corporation, a wholly owned subsidiary of IWO, or US Unwired and its subsidiaries.



A portion of the original proceeds of the IWO senior notes were set aside as restricted cash and used to make the first six scheduled interest payments
on the IWO senior notes through January 2004.



IWO Senior Secured Credit
Facility



Effective December 2000, Independent Wireless One
Corporation, a wholly owned subsidiary of IWO, entered into an amended and restated secured credit facility (the IWO senior secured credit facility) under which it could borrow up to $240 million in the aggregate consisting of up to $70
million in revolving loans and $170 million in term loans. The IWO senior secured credit facility was to mature in 2008. The term loans were due to be repaid in quarterly installments that began in March 2004 and the reducing revolver was to mature
in March 2008. All loans under the senior secured credit facility, effective with the date of the default, bore interest at a rate of 4.25-4.75 percent above the agent banks prime rate. The IWO senior secured credit facility was secured by all
of the assets of IWO and its subsidiaries. As discussed above, the holders of the IWO senior secured credit facility have denied IWO access to the remaining $23.4 million of availability as a result of IWOs covenant violations. The IWO credit
facility was available for use only by IWO and its subsidiaries.



Maturities of contractual obligations are as follows assuming acceleration of IWO obligations in 2005:



|                                                          |  |                        |         |     |   |         |  |                           |         |       |   |       |  |   |        
|--------------------------------------------------------- |  | ---------------------- | ------- | --- | - | ------- |  | ------------------------- | ------- | ----- | - | ----- |  | - | -------
|                                                          |  | LongTerm Obligations* |         |     |   |        
|                                                          |  |                        |         |     |   |         |  | Capital Lease Obligations |         | Total
|                                                          |  | USUnwired              |         | IWO |   | Total   |  |                          
|                                                          |  | (In thousands)        
|2005                                                      |  | $                      |        |     | $ | 375,000 |  | $                         | 375,000 |       | $ | 792   |  | $ | 375,792
|2006                                                      |  |                        |        |     |   |        |  |                           |        |       |   | 792   |  |   | 792    
|2007                                                      |  |                        |        |     |   |        |  |                           |        |       |   | 792   |  |   | 792    
|2008                                                      |  |                        |        |     |   |        |  |                           |        |       |   | 792   |  |   | 792    
|2009                                                      |  |                        |        |     |   |        |  |                           |        |       |   | 799   |  |   | 799    
|Thereafter                                                |  |                        | 360,000 |     |   |        |  |                           | 360,000 |       |   | 4,104 |  |   | 364,104
|                                                          |  |                        |         |     |   |         |  |                           |         |       |   |       |  |   |        
|                                                          |  |                        | 360,000 |     |   | 375,000 |  |                           | 735,000 |       |   | 8,071 |  |   | 743,071
|Less amounts representing interest                        |  |                        |        |     |   |        |  |                           |        |       |   | 1,712 |  |   | 1,712  
|                                                          |  |                        |         |     |   |         |  |                           |         |       |   |       |  |   |        
|Long-term debt and present value of future lease payments |  | $                      | 360,000 |     | $ | 375,000 |  | $                         | 735,000 |       | $ | 6,359 |  | $ | 741,359
|                                                          |  |                        |         |     |   |         |  |                           |         |       |   |       |  |   |        

---

|* | For an update of IWO long-term obligations, refer to Note 2.
|- | ------------------------------------------------------------



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



10. Income Taxes



Income tax expense (benefit) consisted of the following:



|         |  |                          |   |      |   |      |      |  |   |      |  
|-------- |  | ------------------------ | - | ---- | - | ---- | ---- |  | - | ---- | -
|         |  | Years Ended December 31, |  
|         |  | 2004                     |   | 2003 |   |      | 2002 | 
|         |  | (In thousands)           |  
|Federal: |  |                          |   |      |   |      |      |  |   |      |  
|Current  |  | $                        |  |      | $ |     |      |  | $ | (781 | )
|Deferred |  |                          |  |      |   |     |      |  |   |     |  
|         |  |                          |   |      |   |      |      |  |   |      |  
|State:   |  |                          |   |      |   |      |      |  |   |      |  
|Current  |  |                          |  |      |   | (531 | )    |  |   |     |  
|Deferred |  |                          |  |      |   |     |      |  |   |     |  
|         |  |                          |   |      |   |      |      |  |   |      |  
|         |  |                          |  |      |   |     |      |  |   |     |  
|         |  |                          |   |      |   |      |      |  |   |      |  
|         |  | $                        |  |      | $ | (531 | )    |  | $ | (781 | )
|         |  |                          |   |      |   |      |      |  |   |      |  



The benefit for 2003
resulted from a reduction to the prior year state tax contingencies resolved in 2003. The benefit for 2002 resulted from a carry back of certain AMT net operating loss carry forwards during 2002 for which a valuation allowance had been provided at
December 31, 2002.



Income tax expense from continuing
operations differs from the amounts computed by applying applicable U.S. federal income tax rate to loss before income taxes, minority interest and equity in losses of affiliates as a result of the following:



|                                                |  |                          |         |   |      |   |         |      |  |   |          |  
|----------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                |  | Years Ended December 31, |        
|                                                |  | 2004                     |         |   | 2003 |   |         | 2002 | 
|                                                |  | (In thousands)           |        
|Computed expected tax expense                 |  | $                        | (52,247 | ) |      | $ | (56,679 | )    |  | $ | (206,201 | )
|Equity in loss of affiliates                    |  |                          |        |   |      |   |        |      |  |   | 245      |  
|Refund of AMT taxes                             |  |                          |        |   |      |   |        |      |  |   | (781     | )
|Disqualified interest                           |  |                          | 721     |   |      |   | 1,329   |      |  |   | 1,169    |  
|Change in valuation allowance                   |  |                          | 58,563  |   |      |   | 82,020  |      |  |   | 149,879  |  
|Other, net                                      |  |                          | 80      |   |      |   | 81      |      |  |   | 100      |  
|State income taxes, net of federal income taxes |  |                          | (7,464  | ) |      |   | (8,010  | )    |  |   | (20,092  | )
|Prior year return to provision reconciliation   |  |                          | 347     |   |      |   | (18,741 | )    |  |   |         |  
|Change in state tax contingency                 |  |                          |        |   |      |   | (531    | )    |  |   |         |  
|Goodwill impairment                             |  |                          |        |   |      |   |        |      |  |   | 74,900   |  
|                                                |  |                          |         |   |      |   |         |      |  |   |          |  
|                                                |  | $                        |        |   |      | $ | (531    | )    |  | $ | (781     | )
|                                                |  |                          |         |   |      |   |         |      |  |   |          |  



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The tax effects of temporary differences that give rise to the significant components of deferred tax
assets and deferred tax liabilities are presented below:



|                                      |  |                |         |      |   |        
|------------------------------------- |  | -------------- | ------- | ---- | - | -------
|                                      |  | December 31,  
|                                      |  | 2004           |         | 2003
|                                      |  | (In thousands)
|Deferred tax assets:                  |  |                |         |      |   |        
|Federal net operating losses          |  | $              | 266,901 |      | $ | 208,133
|State net operating losses            |  |                | 19,532  |      |   | 10,373 
|Interest on Notes                     |  |                | 12,207  |      |   | 56,607 
|Stock compensation                    |  |                | 8,529   |      |   | 8,379  
|Tax credit carry forward              |  |                | 246     |      |   | 246    
|Allowance for bad debts               |  |                | 2,589   |      |   | 2,597  
|Intangible assets                     |  |                | 12,564  |      |   | 12,237 
|Unearned revenues                     |  |                | 18,821  |      |   | 16,516 
|Accrued Rebates                       |  |                | 1,632   |      |   | 1,102  
|Unrealized loss on sale of securities |  |                | 266     |      |   | 266    
|Discontinued operations               |  |                | 71      |      |   | 159    
|Other exp                             |  |                |        |      |   | 1,895  
|Accrued expenses                      |  |                | 10,280  |      |   | 6,574  
|                                      |  |                |         |      |   |        
|Deferred tax assets                   |  |                | 353,638 |      |   | 325,084
|Less valuation allowance              |  |                | 290,908 |      |   | 261,984
|                                      |  |                |         |      |   |        
|                                      |  |                | 62,730  |      |   | 63,100 
|                                      |  |                |         |      |   |        
|Deferred tax liabilities:             |  |                |         |      |   |        
|Fixed assets                          |  |                | 61,962  |      |   | 63,100 
|Other expense                         |  |                | 768     |      |   |       
|Intangible assets                     |  |                |        |      |   |       
|                                      |  |                |         |      |   |        
|                                      |  |                | 62,730  |      |   | 63,100 
|                                      |  |                |         |      |   |        
|Net deferred tax liability            |  | $              |        |      | $ |       
|                                      |  |                |         |      |   |        



At December 31, 2004,
the Company had available approximately $762 million of net operating loss carry forwards for federal income tax purposes. This carry forward, which may provide future tax benefits, begins to expire in 2019. Under the provisions of the Internal
Revenue Code, certain substantial changes in the Companys ownership may limit the amount of federal net operating loss carry forwards that could be used in future years to offset taxable income and taxes payable. The Company also had available
approximately $388 million of net tax operating loss carry forwards for state income tax purposes which will begin to expire in 2012.



In assessing the possibility of realization of deferred tax assets at December 31, 2004, the Company considered whether it was more likely than not that
some portion or all of the deferred tax assets would not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become
deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon these considerations, the Company provided a valuation allowance
to reduce the carrying value of certain of its deferred tax assets.



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US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



After the IWO bankruptcy reorganization described in Note 2, the Company will have approximately $391
million of net operating loss carry forwards for federal income tax purposes and approximately $380 million of net operating loss carryforwards for state income tax purposes. In addition, after the bankruptcy reorganization, the Company may have
remaining basis in its IWO stock that is deductible for federal income tax purposes. This would further increase the net operating losses of the Company.



11. Stockholders Equity



The Company is authorized by its Articles of Incorporation to issue 800 million shares of common stock, $0.01 par value, and 200 million shares of no par
preferred stock, of which 169,679,212 shares of common stock and 0 shares of preferred stock are issued and outstanding at December 31, 2004. The Board of Directors is authorized to fix the dividend rights and terms, conversion and voting rights,
redemption rights and other privileges and restrictions applicable to the preferred stock.



12. Stock Option Plan



During 1999, the Board of Directors amended and modified the 1998 Equity Plan to the US Unwired Inc. 1999 Equity Incentive Plan (the 1999 Equity Plan). As part of this amendment, the maximum aggregate amount of Common Stock with respect to
which options or other awards may be granted was increased from 8,528,640 to 12,259,920 shares. As of December 31, 2004, 1,625,973 shares of common stock were available for future grants under the 1999 Equity Plan.



The following summarizes stock option activity and related information:



|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|------------------------------------------------------------------- |  | ---------------------------------------- | - | ---- | ------------------------------- | ---- | ------ | ----- | - | ------------------------------- | - | ------ |  | ----- | ---------------------------- |  | - | ----
|                                                                    |  | Years Ended December 31,                
|                                                                    |  | 2004                                     |   | 2003 |                                 | 2002
|                                                                    |  | Shares                                   |   |      | Weighted Average Exercise Price |      | Shares |       |   | Weighted Average Exercise Price |   | Shares |  |       | WeightedAverageExercisePrice
|                                                                    |  | (In thousands, except per share amounts)
|Outstandingbeginning of year                                       |  | 8,709                                    |   |      | $                               | 3.66 |        | 7,511 |   |                                 | $ | 3.69   |  | 6,626 |                              |  | $ | 3.69
|Granted                                                             |  | 1,888                                    |   |      |                                 | 1.79 |        | 1,842 |   |                                 |   | 0.12   |  | 1,148 |                              |  |   | 4.78
|Exercised                                                           |  | (176                                     | ) |      |                                 | 0.20 |        |      |   |                                 |   |       |  | (43   | )                            |  |   | 4.98
|Forfeited                                                           |  | (414                                     | ) |      |                                 | 3.20 |        | (644  | ) |                                 |   | 4.73   |  | (220  | )                            |  |   | 5.38
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Outstandingend of year                                             |  | 10,007                                   |   |      |                                 | 3.39 |        | 8,709 |   |                                 |   | 3.66   |  | 7,511 |                              |  |   | 4.62
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Exercisableend of year                                             |  | 6,543                                    |   |      |                                 | 4.28 |        | 5,541 |   |                                 | $ | 4.11   |  | 3,931 |                              |  |   | 4.05
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Weighted average fair value of options granted with exercise price: |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Equal to market price                                               |  |                                          |   |      | $                               |     |        |       |   |                                 | $ |       |  |       |                              |  | $ | 4.78
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Less than market price                                              |  |                                          |   |      | $                               | 2.89 |        |       |   |                                 | $ |       |  |       |                              |  | $ |    
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     
|Greater than market price                                           |  |                                          |   |      | $                               | 1.71 |        |       |   |                                 | $ | 0.12   |  |       |                              |  | $ |    
|                                                                    |  |                                          |   |      |                                 |      |        |       |   |                                 |   |        |  |       |                              |  |   |     



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The following table summarizes information concerning outstanding options at December 31, 2004:



|                        |  |                                             |  |                              
|----------------------- |  | ------------------------------------------- |  | -----------------------------
|Range of Exercise Price |  | Weighted Average Remaining Contractual Life |  | Number of Options Outstanding
|$  0.12                 |  | 8.2 years                                   |  | 1,421,375                    
|$  1.13                 |  | 4.8 years                                   |  | 2,673,594                    
|$  1.85                 |  | 9.2 years                                   |  | 1,666,500                    
|$  4.77                 |  | 7.2 years                                   |  | 712,125                      
|$  4.98                 |  | 4.8 years                                   |  | 2,008,615                    
|$  5.06                 |  | 7.2 years                                   |  | 17,000                       
|$  5.12                 |  | 7.3 years                                   |  | 66,125                       
|$  6.81                 |  | 6.3 years                                   |  | 375,000                      
|$  8.72                 |  | 5.8 years                                   |  | 200,000                      
|$11.00                  |  | 4.6 years                                   |  | 866,864                      



All options granted
under the 1999 Equity Plan have a ten-year term and vest over a four-year period. As allowed by SFAS No. 123, the Company has elected to continue to follow APB Opinion No. 25, Accounting for Stock Issued to Employees, which does not
provide for compensation expense on the issuance of stock options if the option terms are fixed and the exercise price equals or exceeds the fair value of the underlying stock on the grant date.



In connection with these options, the Company has total deferred stock
compensation of $18.6 million, of which $0.4 million, $2.4 million and $4.3 million has been recognized as stock compensation expense for the years ended December 31, 2004, 2003 and 2002, respectively, as the exercise prices of these options were
less than the estimated fair value of the Companys stock at the grant date. The non-cash compensation expense of $0.0 million, $0.4 million and $0.0 million was related to cost of services, general and administrative and sales and marketing,
respectively for 2004; $0.1 million, $2.2 million and $0.1 million was related to cost of services, general and administrative and sales and marketing, respectively for 2003; and $0.1 million, $4.1 million and $0.1 million was related to cost of
services, general and administrative and sales and marketing, respectively for 2002.



As required by SFAS No. 123, the Company determined the pro forma information as if the Company had accounted for stock options granted under the fair value method of SFAS No. 123. The Black-Scholes option-pricing
model was used with the following weighted average assumptions:



|                                          |  |                          |   |  |      |   |  |      |  
|----------------------------------------- |  | ------------------------ | - |  | ---- | - |  | ---- | -
|                                          |  | Years Ended December 31, |  
|                                          |  | 2004                     |   |  | 2003 |   |  | 2002 |  
|Risk-free interest rate                   |  | 3.76                     | % |  | 3.49 | % |  | 5.02 | %
|Expected dividend yield                   |  | 0                        |   |  | 0    |   |  | 0    |  
|Expected volatility                       |  | 1.52                     |   |  | 1.43 |   |  | .82  |  
|Weighted average expected life (in years) |  | 7                        |   |  | 7    |   |  | 7    |  



13. Commitments and Contingencies



Effective February 10, 2005, US Unwired ceased to have an
equity interest in IWO. Refer to Note 2 for additional information.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



The Company entered into a three-year agreement, commencing July 7, 2002 and ending July 6, 2005, to
allow a reseller program in our service area through Sprint as part of a partnership between Sprint and Virgin Mobile USA, LLC (Virgin Mobile). At December 31, 2004, the Company had 189,930 Virgin Mobile subscribers using our network. We
have taken steps under the Virgin reseller program that would allow us to opt out of the program if necessary. We cannot state with certainty at this time whether this reseller agreement will be renewed in July 2005 on terms acceptable to either US
Unwired or Sprint.



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



The Company periodically reviews all charges from Sprint and from time to
time, the Company may dispute certain of these charges. As of December 31, 2004, the Company had disputed approximately $35.1 million of charges to US Unwired and $19.3 million of charges to IWO. Based upon the information provided to the Company by
Sprint to date, the Company believes the accompanying condensed consolidated balance sheet adequately reflects its obligation that may be due to Sprint for these charges.



The Companys PCS licenses and the PCS licenses that the Company operates for Sprint are subject to a requirement that
Sprint 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, 2004, management
believes that Sprint has met the requirements necessary for the licenses that the Company operates for Sprint under the Sprint affiliation agreements and that the Company has met the requirements necessary for the licenses that it owns.



On July 11, 2003, US Unwired and two of its subsidiaries (collectively,
US Unwired) sued Sprint Corporation and certain of its affiliates (collectively, Sprint) in the United States District Court for the Western District of Louisiana. The suit, as amended, alleges violations of the Racketeer
Influenced and Corrupt Organizations (RICO) Act, breach of fiduciary duty, breach of contract, and fraud arising out of Sprints conduct in its dealings with US Unwired. US Unwired also seeks appointment of a receiver or fiscal
agent over property and assets controlled by Sprint. US Unwired seeks monetary damages on its contractual claims totaling $35.1 million at December 31, 2004, and further monetary damages in connection with its RICO, breach of fiduciary duty, and
fraud claims. Sprint filed its answer and a counterclaim, which, as amended, alleges that US Unwired owes Sprint approximately $30.4 million based on alleged contractual claims, according to the last court filings made by Sprint, and this alleged
amount owed by US Unwired has increased since Sprints last court filings. On August 27, 2004, the Court appointed Robert S. Cohen, CPA, of Crowe Chizek & Company, LLP, as the special master to consider and make findings upon issues that
arise out of the accuracy of the accounting for revenues Sprint passes on to US Unwired and the fees Sprint charges US Unwired. The special master will report proposed findings of fact to the Court. The Court has set a jury trial date for May 9,
2005. US Unwired does not believe that a negative outcome on Sprints counterclaim will have a material adverse effect on US Unwired.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



On August 12, 2004, a federal class action lawsuit was filed by Clodile Romero, Jr., individually and
on behalf of all purchasers of our common stock between May 23, 2000 and August 13, 2002 (the Class Period), against us and three of our executive officers. This suit, which was filed in the United States District Court for the Eastern
District of Louisiana, alleges that we and the other named defendants issued false and misleading statements to the investing public during the Class Period regarding our financial condition, which resulted in the artificial inflation of the price
of our common stock during the Class Period. More specifically, the plaintiffs in this case allege that the defendants knowingly or recklessly failed to disclose and/or misrepresented that: (1) we were increasing our subscriber base by signing up
high credit risk customers; (2) accounting changes implemented by us were done in order to conceal our declining revenues; (3) we had been experiencing high involuntary disconnections related to our high credit risk customers; (4) we experienced
lower subscription growth as a result of our policy that required credit-challenged customers to pay substantial deposits upon initiation of services; and (5) we were engaged in a significant dispute with Sprint regarding our business relationship
with that entity. The plaintiffs in this case seek: (A) compensatory damages against all defendants for all damages alleged to have been sustained as a result of the defendants alleged wrongdoing; (B) an award to the plaintiffs for their
reasonable costs and expenses incurred in this action; and (C) other relief customarily sought in a class action lawsuit. On August 25, 2004, a federal shareholder derivative action lawsuit was filed by Don Feyler, derivatively on behalf of us,
against certain of our executive officers and directors, and against us as a nominal defendant. This suit, which was filed in the United States District Court for the Eastern District of Louisiana and with which the class action lawsuit described
above was consolidated on December 6, 2004, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and
unjust enrichment during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. More specifically, the plaintiffs in this case allege that: (1) our increasing revenues and profits
from 2000 through 2002 were not the result of increased PCS subscribers, but rather were the result of a scheme to artificially inflate the price of our common stock; (2) the defendants deliberately, repeatedly and systematically failed to exercise
independent or effective judgment and oversight of our business and executives; (3) the defendants participated in and/or approved of such misconduct to obtain financial and social benefits for themselves, to enrich and further the personal and
business interests of all of the defendants, and to allow many of the defendants to maintain their positions of control over us so that they would not be sued for wrongdoing; and (4) while disseminating this false information, certain of our
officers and directors sold over $13 million of their personally held stock. The plaintiffs in this case seek: (A) judgment against the individual defendants and in favor of us for the amount of damages alleged to have been sustained by us as a
result of the individual defendants alleged breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment; (B) equitable and/or injunctive relief, including attaching, impounding, imposing a
constructive trust on or otherwise restricting the proceeds of the individual defendants trading activities or their other assets so as to assure that the plaintiff, on behalf of us, has an effective remedy; (C) an award to us of restitution
from the individual defendants and ordering disgorgement of all alleged profits, benefits and other compensation obtained by the individual defendants; (D) an award to the plaintiff for the costs and disbursements of this action; and (E) other
relief customarily sought in a shareholder derivative action lawsuit. On October 21, 2004, a state shareholder derivative action lawsuit was filed by Stephen Morris, derivatively on behalf of us, against certain of our executive officers and
directors, and against us as a nominal defendant. This suit, which was filed in the 14thJudicial District Court for
the Parish of Calcasieu in the State of Louisiana, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, and insider selling and misappropriation of
information during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. The plaintiffs in this case make essentially the same allegations as the plaintiffs in the federal
class action and derivative lawsuits described above. The plaintiffs in this case seek: (A) all damages allegedly sustained by us as



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



a result of the alleged breaches of fiduciary duty and abuse of control; (B) all equitable and/or injunctive relief permitted by law; (C) restitution and
disgorgement of alleged profits; (D) attorneys fees and costs; and (E) other relief customarily sought in a shareholder derivative action lawsuit. We are vigorously defending these class action and derivative lawsuits, but it is too soon to
make any meaningful predictions as to their outcomes.



Employees of the Company participate in a 401(k) retirement plan (the 401(k) plan). Employees are eligible to participate in the 401(k) plan when the employee has completed six months of service. Under the 401(k) plan,
participating employees may defer a portion of their pretax earnings up to certain limits prescribed by the Internal Revenue Service. The Company contributes a discretionary match equal to a percentage of the deferred by the employee. The
Companys contributions are fully vested upon the completion of 5 years of service. Contribution expense related to the 401(k) plan were approximately $0.8 million, $0.6 million and $0.8 million for the years ended December 31, 2004, 2003 and
2002, respectively.



The Company is a party to various
non-cancelable operating leases for facilities and equipment. The Company recognizes rent expense on a straight-line basis over the life of the lease, which establishes deferred rent on the balance sheet. The Company considers the lease term to
include the renewal periods of any lease that could cause a significant economic detriment to the Company if such lease renewal option is not exercised. Future minimum lease payments due under non-cancelable operating leases with terms in excess of
one year are as follows:



|                         |  |                |         |     |   |         |  |   |        
|------------------------ |  | -------------- | ------- | --- | - | ------- |  | - | -------
|                         |  | US Unwired     |         | IWO |   | Total  
|                         |  | (In thousands)
|Year ending December 31, |  |                |        
|2005                     |  | $              | 26,665  |     | $ | 16,526  |  | $ | 43,191 
|2006                     |  |                | 27,393  |     |   | 16,770  |  |   | 44,163 
|2007                     |  |                | 27,829  |     |   | 16,184  |  |   | 44,013 
|2008                     |  |                | 27,789  |     |   | 15,886  |  |   | 43,675 
|2009                     |  |                | 27,283  |     |   | 15,311  |  |   | 42,594 
|Thereafter               |  |                | 37,593  |     |   | 23,514  |  |   | 61,107 
|                         |  |                |         |     |   |         |  |   |        
|                         |  | $              | 174,552 |     | $ | 104,191 |  | $ | 278,743
|                         |  |                |         |     |   |         |  |   |        



Including the restatement adjustments
described in Note 1, rental expense was $39.0 million, and $37.5 million and $33.8 million for the years ended December 31, 2004, 2003 and 2002, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



14. Disclosure About Fair Value of Financial Instruments



The carrying amounts of cash and cash equivalents, subscriber receivables,
accrued interest and other receivables, and accounts payable and accrued expenses approximate fair value because of the short-term nature of these items. The estimated fair value and carrying values of the Companys senior subordinated discount
notes at December 31, 2004 and 2003 was:



|                                                   |  |                    |         |            |   |               |  |            |         |  |   |        
|-------------------------------------------------- |  | ------------------ | ------- | ---------- | - | ------------- |  | ---------- | ------- |  | - | -------
|                                                   |  | As of December 31,
|                                                   |  | 2004               |         | 2003      
|                                                   |  | CarryingValue      |         | Fair Value |   | CarryingValue |  | Fair Value
|US Unwired Inc.:                                   |  |                    |         |            |   |               |  |            |         |  |   |        
|First priority senior secured floating rate notes  |  | $                  | 125,000 |            | $ | 129,375       |  | $          |        |  | $ |       
|10% Second priority senior secured notes due 2012  |  |                    | 233,482 |            |   | 265,080       |  |            |        |  |   |       
|US Unwired Inc. senior subordinated discount notes |  |                    |        |            |   |              |  |            | 359,302 |  |   | 290,000
|                                                   |  |                    |         |            |   |               |  |            |         |  |   |        
|Total, US Unwired Inc.                             |  |                    | 358,482 |            |   | 394,455       |  |            | 359,302 |  |   | 290,000
|IWO Holdings, Inc. senior notes                    |  |                    | 140,275 |            |   | 103,360       |  |            | 138,513 |  |   | 24,800 
|                                                   |  |                    |         |            |   |               |  |            |         |  |   |        
|                                                   |  | $                  | 498,757 |            | $ | 497,815       |  | $          | 497,815 |  | $ | 314,800
|                                                   |  |                    |         |            |   |               |  |            |         |  |   |        



The fair value of
these notes is based on the most recently available trading prices. The carrying amount of substantially all of the remainder of the Companys long-term debt approximates fair value due to the borrowings variable interest rates.



Fair value estimates are subject to inherent limitations. Estimates of fair
value are made at a specific point in time, based on relevant market information and information about the financial instrument. The estimated fair values of financial instruments presented above are not necessarily indicative of amounts the Company
might realize in actual market transactions. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly
affect the estimates.



15. Related Party Transactions



In December 2004, the Company sold its 50% ownership interest in Command
Connect to Cameron Communications LLC (Cameron) for $30,000.



The Company contracted with Unibill, Inc. (Unibill), a subsidiary of Cameron, for a portion of its subscriber billing and programming. The aggregate amounts paid to Cameron for such services during the years ended
December 31, 2004, 2003 and 2002 totaled $1.7 million, $1.7 million and $1.9 million, respectively. Additionally, the Company leases office space, equipment and warehouse space from Unibill. The Company paid Unibill $0.2 million during the year
ended December 31, 2004 and $0.3 million during each of the years ended December 31, 2003 and 2002 to lease these properties.



The Company also purchases long distance services from Cameron pursuant to a verbal agreement and resells the service to the Companys customers. The
aggregate amounts paid to Cameron for such services during the years ended December 31, 2004, 2003 and 2002, totaled $49,000, $0.3 million and $2.9 million, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Cameron also provides circuit and interconnect services to the Company and was paid $0.3 million, $0.4 million and $0.4 million for the years ended December
31, 2004, 2003 and 2002, respectively. The Company leases tower space and paid Cameron $71,000, $0.1 million and $0.1 million for the years ended December 31, 2004, 2003 and 2002, respectively. The Company also leases time on the Cameron corporate
jet at rate of $3.00 per nautical mile and paid Cameron $30,000, $32,000 and $0.2 million for the years ended December 31, 2004, 2003 and 2002, respectively.



During the years ended December 31, 2002, the Company paid $1.7 million to a company owned by certain of the Companys principal stockholders for
internet, voice mail services and local telephone service which the Company uses in its business. There was no such amount in 2004 or 2003. The Company leases office space to this related entity and realized rental income of $0.7 million for the
year ended December 31, 2002. There was no such amount in 2004 or 2003.



16.
Selected Quarterly Financial Data (Unaudited)



The
following table summarizes the Companys quarterly financial data for the years ended December 31, 2004 and December 31, 2003, respectively. For the quarters ended September 30, 2004, June 30, 2004 and March 31, 2004 and the year ended
December 31, 2003, the data includes originally and restated amounts (see Note 1 for further discussion on the restatement):



|                                     |  |                                              |          |   |               |   |          |                      |  |   |               |   |  |   |          |  
|------------------------------------ |  | -------------------------------------------- | -------- | - | ------------- | - | -------- | -------------------- |  | - | ------------- | - |  | - | -------- | -
|                                     |  | 2004                                         |         
|                                     |  | First Quarter                                |          |   | First Quarter |   |          | SecondQuarter        |  |   | SecondQuarter |  
|                                     |  | AsOriginallyReported                         |          |   | As Restated   |   |          | AsOriginallyReported |  |   | As Restated   |  
|                                     |  | (In thousands, except for per share amounts) |         
|Revenues                             |  | $                                            | 141,611  |   |               | $ | 141,611  |                      |  | $ | 147,892       |   |  | $ | 147,892  |  
|Operating income (loss)              |  |                                              | (1,397   | ) |               |   | (2,136   | )                    |  |   | 2,697         |   |  |   | 1,975    |  
|Net loss                             |  |                                              | (9,662   | ) |               |   | (10,401  | )                    |  |   | (75,037       | ) |  |   | (75,759  | )
|Basic and diluted loss per share (1) |  | $                                            | (0.07    | ) |               | $ | (0.08    | )                    |  | $ | (0.53         | ) |  | $ | (0.54    | )
|Total liabilities                    |  |                                              | 954,136  |   |               |   | 967,216  |                      |  |   | 979,364       |   |  |   | 993,078  |  
|Accumulated deficit                  |  |                                              | (895,425 | ) |               |   | (909,567 | )                    |  |   | (970,464      | ) |  |   | (985,327 | )
|Stockholders deficit                |  |                                              | (239,200 | ) |               |   | (253,342 | )                    |  |   | (217,697      | ) |  |   | (232,559 | )



|                                     |  |                                              |          |   |              |   |            |               |  |   |            |  
|------------------------------------ |  | -------------------------------------------- | -------- | - | ------------ | - | ---------- | ------------- |  | - | ---------- | -
|                                     |  | 2004                                         |         
|                                     |  | Third Quarter                                |          |   | ThirdQuarter |   |            | FourthQuarter | 
|                                     |  | AsOriginallyReported                         |          |   | As Restated  |   |            |               | 
|                                     |  | (In thousands, except for per share amounts) |         
|Revenues                             |  | $                                            | 152,771  |   |              | $ | 152,771    |               |  | $ | 152,564    |  
|Operating income (loss)              |  |                                              | 8,781    |   |              |   | 8,112      |               |  |   | (6,659     | )
|Net loss                             |  |                                              | (16,226  | ) |              |   | (16,895    | )             |  |   | (29,920    | )
|Basic and diluted loss per share (1) |  | $                                            | (0.10    | ) |              | $ | (0.10      | )             |  | $ | (0.18      | )
|Total liabilities                    |  |                                              | 942,494  |   |              |   | 956,794    |               |  |   | 918,727    |  
|Accumulated deficit                  |  |                                              | (986,688 | ) |              |   | (1,002,222 | )             |  |   | (1,032,142 | )
|Stockholders deficit                |  |                                              | (233,626 | ) |              |   | (249,160   | )             |  |   | (278,939   | )



F-33



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



|                                     |  |                                              |          |   |               |   |          |                      |  |   |               |   |  |   |          |  
|------------------------------------ |  | -------------------------------------------- | -------- | - | ------------- | - | -------- | -------------------- |  | - | ------------- | - |  | - | -------- | -
|                                     |  | 2003                                         |         
|                                     |  | First Quarter                                |          |   | First Quarter |   |          | SecondQuarter        |  |   | SecondQuarter |  
|                                     |  | AsOriginallyReported                         |          |   | As Restated   |   |          | AsOriginallyReported |  |   | As Restated   |  
|                                     |  | (In thousands, except for per share amounts) |         
|Revenues                             |  | $                                            | 124,730  |   |               | $ | 124,730  |                      |  | $ | 133,680       |   |  | $ | 133,680  |  
|Operating income (loss)              |  |                                              | (37,887  | ) |               |   | (38,841  | )                    |  |   | (14,570       | ) |  |   | (15,463  | )
|Net loss                             |  |                                              | (57,472  | ) |               |   | (58,426  | )                    |  |   | (35,020       | ) |  |   | (35,913  | )
|Basic and diluted loss per share (1) |  | $                                            | (0.45    | ) |               | $ | (0.45    | )                    |  | $ | (0.27         | ) |  | $ | (0.28    | )
|Total liabilities                    |  |                                              | 919,965  |   |               |   | 930,041  |                      |  |   | 934,258       |   |  |   | 945,142  |  
|Accumulated deficit                  |  |                                              | (786,282 | ) |               |   | (797,191 | )                    |  |   | (821,303      | ) |  |   | (833,102 | )
|Stockholders deficit                |  |                                              | (126,641 | ) |               |   | (137,550 | )                    |  |   | (160,584      | ) |  |   | (172,383 | )



|                                     |  |                                              |          |   |              |   |          |                      |  |   |               |   |  |   |          |  
|------------------------------------ |  | -------------------------------------------- | -------- | - | ------------ | - | -------- | -------------------- |  | - | ------------- | - |  | - | -------- | -
|                                     |  | 2003                                         |         
|                                     |  | Third Quarter                                |          |   | ThirdQuarter |   |          | Fourth Quarter       |  |   | FourthQuarter |  
|                                     |  | AsOriginallyReported                         |          |   | As Restated  |   |          | AsOriginallyReported |  |   | As Restated   |  
|                                     |  | (In thousands, except for per share amounts) |         
|Revenues                             |  | $                                            | 139,305  |   |              | $ | 139,305  |                      |  | $ | 138,036       |   |  | $ | 138,036  |  
|Operating income (loss)              |  |                                              | (8,237   | ) |              |   | (9,063   | )                    |  |   | (11,405       | ) |  |   | (12,180  | )
|Net loss                             |  |                                              | (31,307  | ) |              |   | (32,133  | )                    |  |   | (33,155       | ) |  |   | (33,930  | )
|Basic and diluted loss per share (1) |  | $                                            | (0.25    | ) |              | $ | (0.25    | )                    |  | $ | (0.26         | ) |  | $ | (0.26    | )
|Total liabilities                    |  |                                              | 940,769  |   |              |   | 952,489  |                      |  |   | 948,095       |   |  |   | 960,520  |  
|Accumulated deficit                  |  |                                              | (852,610 | ) |              |   | (865,235 | )                    |  |   | (885,765      | ) |  |   | (899,167 | )
|Stockholders deficit                |  |                                              | (196,903 | ) |              |   | (209,528 | )                    |  |   | (229,767      | ) |  |   | (243,169 | )

---

|(1) | The sum of the quarterly per share amounts may not equal the annual per share amount due to relative changes in the weighted average number of shares used in the per share
computation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17. Condensed Consolidating Financial
Information



As discussed in Note 9, the US Unwired senior
subordinated discount notes are guaranteed by certain of the Companys subsidiaries. The following information presents the condensed consolidating balance sheets as of December 31, 2004 and 2003 and the condensed consolidating statements of
operations and cash flows for the years ended December 31, 2004, 2003 and 2002 of (a) the Parent Company, US Unwired Inc., (b) the Guarantors, Unwired Telecom Corporation and Louisiana Unwired, and (c) the
Non-Guarantor, IWO Holding Inc. and includes eliminating entries and the Company on a consolidated basis.



The separate consolidated financial statements of IWO, including disclosure of condensed consolidating financial information for IWO, are included in
IWOs separate Form 10-K filing.



F-34



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Balance Sheet



|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ------------------------------------ | - | ------------------------------ |  | - | ---------------- | - |  | ------------------------------------ | -------- | - | -------------------- | - | -------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                                                              |  | As of December 31, 2004 |           
|                                                                              |  | US UnwiredInc. (Parent) |            |   | UnwiredTelecomCorporation(Guarantor) |   | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorporation(Non-Guarantor) |          |   | ConsolidatingEntries |   |          | Consolidated | 
|                                                                              |  | (In thousands)          |           
|ASSETS:                                                                       |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Current assets:                                                               |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Cash and cash equivalents                                                     |  | $                       | 74,701     |   |                                      | $ |                               |  | $ | 5,712            |   |  | $                                    | 5,712    |   |                      | $ | 33,840   |              |  | $ |           |   |  | $ | 114,253    |  
|Restricted cash and US Treasury securities at amortized cost-held to maturity |  |                         |           |   |                                      |   |                               |  |   |                 |   |  |                                      |         |   |                      |   | 80       |              |  |   |           |   |  |   | 80         |  
|Subscriber receivables, net                                                   |  |                         |           |   |                                      |   |                               |  |   | 25,349           |   |  |                                      | 25,349   |   |                      |   | 11,381   |              |  |   |           |   |  |   | 36,730     |  
|Other receivables                                                             |  |                         | 122        |   |                                      |   |                               |  |   | 1,315            |   |  |                                      | 1,315    |   |                      |   | 145      |              |  |   |           |   |  |   | 1,582      |  
|Inventory                                                                     |  |                         |           |   |                                      |   |                               |  |   | 3,683            |   |  |                                      | 3,683    |   |                      |   | 1,386    |              |  |   |           |   |  |   | 5,069      |  
|Prepaid expenses and other assets                                             |  |                         | 1,024      |   |                                      |   |                               |  |   | 7,025            |   |  |                                      | 7,025    |   |                      |   | 7,576    |              |  |   |           |   |  |   | 15,625     |  
|Receivables from (payables to) related parties                                |  |                         | 196        |   |                                      |   |                               |  |   | 275              |   |  |                                      | 275      |   |                      |   | (471     | )            |  |   |           |   |  |   |           |  
|Receivables from officers                                                     |  |                         | 156        |   |                                      |   |                               |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   |           |   |  |   | 156        |  
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Total current assets                                                          |  |                         | 76,199     |   |                                      |   |                               |  |   | 43,359           |   |  |                                      | 43,359   |   |                      |   | 53,937   |              |  |   |           |   |  |   | 173,495    |  
|Property and equipment, net                                                   |  |                         | 9,854      |   |                                      |   |                               |  |   | 195,491          |   |  |                                      | 195,491  |   |                      |   | 150,796  |              |  |   | 31         |   |  |   | 356,172    |  
|Goodwill and other intangible assets, net                                     |  |                         |           |   |                                      |   |                               |  |   | 59,798           |   |  |                                      | 59,798   |   |                      |   | 17,331   |              |  |   |           |   |  |   | 77,129     |  
|Notes receivable from unconsolidated affiliates                               |  |                         | 66,103     |   |                                      |   |                               |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   | (66,103    | ) |  |   |           |  
|Other assets                                                                  |  |                         | 14,620     |   |                                      |   |                               |  |   | 4,729            |   |  |                                      | 4,729    |   |                      |   | 13,643   |              |  |   |           |   |  |   | 32,992     |  
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Total assets                                                                  |  | $                       | 166,776    |   |                                      | $ |                               |  | $ | 303,377          |   |  | $                                    | 303,377  |   |                      | $ | 235,707  |              |  | $ | (66,072    | ) |  | $ | 639,788    |  
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|                                                                              |  |                         |            |   |                                      |   |                               
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT):                               |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Current liabilities:                                                          |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Accounts payable                                                              |  | $                       | 2,057      |   |                                      | $ |                               |  | $ | 41,592           |   |  | $                                    | 41,592   |   |                      | $ | 24,277   |              |  | $ |           |   |  | $ | 67,926     |  
|Accrued expenses                                                              |  |                         | 8,219      |   |                                      |   |                               |  |   | 36,723           |   |  |                                      | 36,723   |   |                      |   | 40,333   |              |  |   |           |   |  |   | 85,275     |  
|Current maturities of long term debt                                          |  |                         |           |   |                                      |   |                               |  |   | 66,593           |   |  |                                      | 66,593   |   |                      |   | 355,275  |              |  |   | (66,103    | ) |  |   | 355,765    |  
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Total current liabilities                                                     |  |                         | 10,276     |   |                                      |   |                               |  |   | 144,908          |   |  |                                      | 144,908  |   |                      |   | 419,885  |              |  |   | (66,103    | ) |  |   | 508,966    |  
|Long term debt, net of current maturities                                     |  |                         | 358,482    |   |                                      |   |                               |  |   | 5,869            |   |  |                                      | 5,869    |   |                      |   |         |              |  |   |           |   |  |   | 364,351    |  
|Other long-term liabilities                                                   |  |                         |           |   |                                      |   |                               |  |   | 37,092           |   |  |                                      | 37,092   |   |                      |   | 5,851    |              |  |   |           |   |  |   | 42,943     |  
|Investments in and advance to unconsolidated affiliates                       |  |                         | 70,457     |   |                                      |   |                               |  |   | 190,223          |   |  |                                      | 190,223  |   |                      |   |         |              |  |   | (258,213   | ) |  |   | 2,467      |  
|Stockholders equity (deficit):                                               |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Common stock                                                                  |  |                         | 1,637      |   |                                      |   |                               |  |   |                 |   |  |                                      |         |   |                      |   | 1        |              |  |   | (1         | ) |  |   | 1,637      |  
|Additional paid in capital                                                    |  |                         | 754,644    |   |                                      |   |                               |  |   | 803,808          |   |  |                                      | 803,808  |   |                      |   | 446,449  |              |  |   | (1,253,325 | ) |  |   | 751,576    |  
|Retained deficit                                                              |  |                         | (1,028,710 | ) |                                      |   |                               |  |   | (878,523         | ) |  |                                      | (878,523 | ) |                      |   | (636,479 | )            |  |   | 1,511,570  |   |  |   | (1,032,142 | )
|Treasury stock                                                                |  |                         | (10        | ) |                                      |   |                               |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   |           |   |  |   | (10        | )
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Total stockholders equity (deficit)                                          |  |                         | (272,439   | ) |                                      |   |                               |  |   | (74,715          | ) |  |                                      | (74,715  | ) |                      |   | (190,029 | )            |  |   | 258,244    |   |  |   | (278,939   | )
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  
|Total liabilities and stockholders equity (deficit)                          |  | $                       | 166,776    |   |                                      | $ |                               |  | $ | 303,377          |   |  | $                                    | 303,377  |   |                      | $ | 235,707  |              |  | $ | (66,072    | ) |  | $ | 639,788    |  
|                                                                              |  |                         |            |   |                                      |   |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |            |  



F-35



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Balance Sheet

|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|----------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ------------------------------------ | - | ------ | ------------------------------ |  | - | ---------------- | - |  | ------------------------------------ | -------- | - | -------------------- | - | -------- | ------------ |  | - | ---------- | - |  | - | -------- | -
|                                                                              |  | As of December 31, 2003 |         
|                                                                              |  | US UnwiredInc. (Parent) |          |   | UnwiredTelecomCorporation(Guarantor) |   |        | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorporation(Non-Guarantor) |          |   | ConsolidatingEntries |   |          | Consolidated | 
|                                                                              |  | (In thousands)          |         
|ASSETS:                                                                       |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Current assets:                                                               |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Cash and cash equivalents                                                     |  | $                       | 60,424   |   |                                      | $ | 911    |                                |  | $ | 3,521            |   |  | $                                    | 4,432    |   |                      | $ | 32,337   |              |  | $ |           |   |  | $ | 97,193   |  
|Restricted cash and US Treasury securities at amortized cost-held to maturity |  |                         |         |   |                                      |   |       |                                |  |   |                 |   |  |                                      |         |   |                      |   | 19,358   |              |  |   |           |   |  |   | 19,358   |  
|Subscriber receivables, net                                                   |  |                         |         |   |                                      |   | 155    |                                |  |   | 18,594           |   |  |                                      | 18,749   |   |                      |   | 9,938    |              |  |   |           |   |  |   | 28,687   |  
|Other receivables                                                             |  |                         | 52       |   |                                      |   |       |                                |  |   | 2,425            |   |  |                                      | 2,425    |   |                      |   | 148      |              |  |   |           |   |  |   | 2,625    |  
|Inventory                                                                     |  |                         |         |   |                                      |   |       |                                |  |   | 3,996            |   |  |                                      | 3,996    |   |                      |   | 1,619    |              |  |   |           |   |  |   | 5,615    |  
|Prepaid expenses and other assets                                             |  |                         | 1,297    |   |                                      |   |       |                                |  |   | 7,817            |   |  |                                      | 7,817    |   |                      |   | 5,719    |              |  |   |           |   |  |   | 14,833   |  
|Receivables from (payables to) related parties                                |  |                         | (147     | ) |                                      |   | (97    | )                              |  |   | 930              |   |  |                                      | 833      |   |                      |   | (39      | )            |  |   |           |   |  |   | 647      |  
|Receivables from officers                                                     |  |                         | 85       |   |                                      |   |       |                                |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   |           |   |  |   | 85       |  
|Current assets related to discontinued operations                             |  |                         |         |   |                                      |   | 1,049  |                                |  |   |                 |   |  |                                      | 1,049    |   |                      |   |         |              |  |   |           |   |  |   | 1,049    |  
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Total current assets                                                          |  |                         | 61,711   |   |                                      |   | 2,018  |                                |  |   | 37,283           |   |  |                                      | 39,301   |   |                      |   | 69,080   |              |  |   |           |   |  |   | 170,092  |  
|Property and equipment, net                                                   |  |                         | 10,210   |   |                                      |   | 1,107  |                                |  |   | 233,682          |   |  |                                      | 234,789  |   |                      |   | 165,511  |              |  |   | 31         |   |  |   | 410,541  |  
|Goodwill and other intangible assets, net                                     |  |                         |         |   |                                      |   |       |                                |  |   | 61,848           |   |  |                                      | 61,848   |   |                      |   | 25,642   |              |  |   |           |   |  |   | 87,490   |  
|Notes receivable from unconsolidated affiliates                               |  |                         | 143,234  |   |                                      |   | 33,623 |                                |  |   |                 |   |  |                                      | 33,623   |   |                      |   | 179      |              |  |   | (175,149   | ) |  |   | 1,887    |  
|Other assets                                                                  |  |                         | 12,211   |   |                                      |   |       |                                |  |   | 13,820           |   |  |                                      | 13,820   |   |                      |   | 16,540   |              |  |   |           |   |  |   | 42,571   |  
|Non-current assets related to discontinued operations                         |  |                         |         |   |                                      |   | 4,770  |                                |  |   |                 |   |  |                                      | 4,770    |   |                      |   |         |              |  |   |           |   |  |   | 4,770    |  
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Total assets                                                                  |  | $                       | 227,366  |   |                                      | $ | 41,518 |                                |  | $ | 346,633          |   |  | $                                    | 388,151  |   |                      | $ | 276,952  |              |  | $ | (175,118   | ) |  | $ | 717,351  |  
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT):                               |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Current liabilities:                                                          |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Accounts payable                                                              |  | $                       | 745      |   |                                      | $ | 340    |                                |  | $ | 23,213           |   |  | $                                    | 23,553   |   |                      | $ | 17,079   |              |  | $ |           |   |  | $ | 41,377   |  
|Accrued expenses                                                              |  |                         | 6,546    |   |                                      |   | 685    |                                |  |   | 31,655           |   |  |                                      | 32,340   |   |                      |   | 38,251   |              |  |   |           |   |  |   | 77,137   |  
|Current maturities of long term debt                                          |  |                         | 42,351   |   |                                      |   | 64     |                                |  |   | 143,700          |   |  |                                      | 143,764  |   |                      |   | 351,697  |              |  |   | (174,970   | ) |  |   | 362,842  |  
|Current liabilities related to discontinued operations                        |  |                         |         |   |                                      |   | 49     |                                |  |   |                 |   |  |                                      | 49       |   |                      |   |         |              |  |   |           |   |  |   | 49       |  
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Total current liabilities                                                     |  |                         | 49,642   |   |                                      |   | 1,138  |                                |  |   | 198,568          |   |  |                                      | 199,706  |   |                      |   | 407,027  |              |  |   | (174,970   | ) |  |   | 481,405  |  
|Long term debt, net of current maturities                                     |  |                         | 428,139  |   |                                      |   | 247    |                                |  |   | 6,359            |   |  |                                      | 6,606    |   |                      |   |         |              |  |   |           |   |  |   | 434,745  |  
|Other long-term liabilities                                                   |  |                         |         |   |                                      |   |       |                                |  |   | 38,014           |   |  |                                      | 38,014   |   |                      |   | 5,140    |              |  |   |           |   |  |   | 43,154   |  
|Investments in and advance to unconsolidated affiliates                       |  |                         | 28,463   |   |                                      |   | 1,857  |                                |  |   | 135,409          |   |  |                                      | 137,266  |   |                      |   |         |              |  |   | (164,513   | ) |  |   | 1,216    |  
|Stockholders equity (deficit):                                               |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Common stock                                                                  |  |                         | 1,288    |   |                                      |   |       |                                |  |   |                 |   |  |                                      |         |   |                      |   | 1        |              |  |   | (1         | ) |  |   | 1,288    |  
|Additional paid in capital                                                    |  |                         | 656,020  |   |                                      |   | 1,947  |                                |  |   | 803,808          |   |  |                                      | 805,755  |   |                      |   | 446,449  |              |  |   | (1,253,325 | ) |  |   | 654,899  |  
|Retained deficit                                                              |  |                         | (936,176 | ) |                                      |   | 36,329 |                                |  |   | (835,525         | ) |  |                                      | (799,196 | ) |                      |   | (581,665 | )            |  |   | 1,417,870  |   |  |   | (899,167 | )
|Promissory note                                                               |  |                         |         |   |                                      |   |       |                                |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   | (179       | ) |  |   | (179     | )
|Treasury stock                                                                |  |                         | (10      | ) |                                      |   |       |                                |  |   |                 |   |  |                                      |         |   |                      |   |         |              |  |   |           |   |  |   | (10      | )
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Total stockholders equity (deficit)                                          |  |                         | (278,878 | ) |                                      |   | 38,276 |                                |  |   | (31,717          | ) |  |                                      | 6,559    |   |                      |   | (135,215 | )            |  |   | 164,365    |   |  |   | (243,169 | )
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  
|Total liabilities and stockholders equity (deficit)                          |  | $                       | 227,366  |   |                                      | $ | 41,518 |                                |  | $ | 346,633          |   |  | $                                    | 388,151  |   |                      | $ | 276,952  |              |  | $ | (175,118   | ) |  | $ | 717,351  |  
|                                                                              |  |                         |          |   |                                      |   |        |                                |  |   |                  |   |  |                                      |          |   |                      |   |          |              |  |   |            |   |  |   |          |  





F-36



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Operations



|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|-------------------------------------------------------- |  | ---------------------------- | -------- | - | ------------------------------------ | - | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------- | - |  | - | -------- | -
|                                                         |  | Year Ended December 31, 2004 |         
|                                                         |  | US UnwiredInc. (Parent)      |          |   | UnwiredTelecomCorporation(Guarantor) |   | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |         |   | ConsolidatingEntries |   |         | Consolidated | 
|                                                         |  | (In thousands)               |         
|Revenue                                                  |  | $                            | 27,556   |   |                                      | $ |                               |  | $ | 407,586          |   |  | $                              | 407,586 |   |                      | $ | 187,253 |              |  | $ | (27,557 | ) |  | $ | 594,838  |  
|Operating expense                                        |  |                              | 29,821   |   |                                      |   |                               |  |   | 388,461          |   |  |                                | 388,461 |   |                      |   | 202,756 |              |  |   | (27,492 | ) |  |   | 593,546  |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Operating (loss) income                                  |  |                              | (2,265   | ) |                                      |   |                               |  |   | 19,125           |   |  |                                | 19,125  |   |                      |   | (15,503 | )            |  |   | (65     | ) |  |   | 1,292    |  
|Other income (expense), net                              |  |                              | (107,899 | ) |                                      |   | 3,435                          |  |   | (7,309           | ) |  |                                | (3,874  | ) |                      |   | (39,311 | )            |  |   |        |   |  |   | (151,084 | )
|Equity in income (losses) of unconsolidated subsidiaries |  |                              | (22,472  | ) |                                      |   | 215                            |  |   | (54,814          | ) |  |                                | (54,599 | ) |                      |   |        |              |  |   | 77,286  |   |  |   | 215      |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Income (loss) before income tax benefit                  |  |                              | (132,636 | ) |                                      |   | 3,650                          |  |   | (42,998          | ) |  |                                | (39,348 | ) |                      |   | (54,814 | )            |  |   | 77,221  |   |  |   | (149,577 | )
|Income tax benefit                                       |  |                              |         |   |                                      |   |                               |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   |         |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|(Loss) income from continuing operations                 |  |                              | (132,636 | ) |                                      |   | 3,650                          |  |   | (42,998          | ) |  |                                | (39,348 | ) |                      |   | (54,814 | )            |  |   | 77,221  |   |  |   | (149,577 | )
|Income from discontinued operations, net                 |  |                              |         |   |                                      |   | 16,537                         |  |   |                 |   |  |                                | 16,537  |   |                      |   |        |              |  |   | 65      |   |  |   | 16,602   |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net (loss) income                                        |  | $                            | (132,636 | ) |                                      | $ | 20,187                         |  | $ | (42,998          | ) |  | $                              | (22,811 | ) |                      | $ | (54,814 | )            |  | $ | 77,286  |   |  | $ | (132,975 | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  



F-37



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Operations



|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  
|-------------------------------------------------------- |  | ---------------------------- | -------- | - | ------------------------------------ | - | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | -------- | - | -------------------- | - | ------- | ------------ |  | - | ------- | - |  | - | -------- | -
|                                                         |  | Year Ended December 31, 2003 |         
|                                                         |  | US UnwiredInc. (Parent)      |          |   | UnwiredTelecomCorporation(Guarantor) |   | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |          |   | ConsolidatingEntries |   |         | Consolidated | 
|                                                         |  | (In thousands)               |         
|Revenue                                                  |  | $                            | 30,816   |   |                                      | $ |                               |  | $ | 363,717          |   |  | $                              | 363,717  |   |                      | $ | 171,849 |              |  | $ | (30,631 | ) |  | $ | 535,751  |  
|Operating expense                                        |  |                              | 35,912   |   |                                      |   |                               |  |   | 376,417          |   |  |                                | 376,417  |   |                      |   | 228,594 |              |  |   | (29,625 | ) |  |   | 611,298  |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Operating (loss) income                                  |  |                              | (5,096   | ) |                                      |   |                               |  |   | (12,700          | ) |  |                                | (12,700  | ) |                      |   | (56,745 | )            |  |   | (1,006  | ) |  |   | (75,547  | )
|Other income (expense), net                              |  |                              | (44,225  | ) |                                      |   | 1,418                          |  |   | (7,815           | ) |  |                                | (6,397   | ) |                      |   | (40,212 | )            |  |   | 31      |   |  |   | (90,803  | )
|Equity in income (losses) of unconsolidated subsidiaries |  |                              | (113,386 | ) |                                      |   | 392                            |  |   | (96,957          | ) |  |                                | (96,565  | ) |                      |   |        |              |  |   | 212,862 |   |  |   | 2,911    |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Income (loss) before income tax benefit                  |  |                              | (162,707 | ) |                                      |   | 1,810                          |  |   | (117,472         | ) |  |                                | (115,662 | ) |                      |   | (96,957 | )            |  |   | 211,887 |   |  |   | (163,439 | )
|Income tax benefit                                       |  |                              | (531     | ) |                                      |   |                               |  |   |                 |   |  |                                |         |   |                      |   |        |              |  |   |        |   |  |   | (531     | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  
|(Loss) income from continuing operations                 |  |                              | (162,176 | ) |                                      |   | 1,810                          |  |   | (117,472         | ) |  |                                | (115,662 | ) |                      |   | (96,957 | )            |  |   | 211,887 |   |  |   | (162,908 | )
|Income from discontinued operations                      |  |                              |         |   |                                      |   | 1,500                          |  |   |                 |   |  |                                | 1,500    |   |                      |   |        |              |  |   | 1,006   |   |  |   | 2,506    |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net (loss) income                                        |  | $                            | (162,176 | ) |                                      | $ | 3,310                          |  | $ | (117,472         | ) |  | $                              | (114,162 | ) |                      | $ | (96,957 | )            |  | $ | 212,893 |   |  | $ | (160,402 | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |         |              |  |   |         |   |  |   |          |  



F-38



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Operations



|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  
|-------------------------------------------------------- |  | ---------------------------- | -------- | - | ------------------------------------ | - | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | -------- | - | -------------------- | - | -------- | ------------ |  | - | --------- | - |  | - | --------- | -
|                                                         |  | Year Ended December 31, 2002 |         
|                                                         |  | US UnwiredInc. (Parent)      |          |   | UnwiredTelecomCorporation(Guarantor) |   | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |          |   | ConsolidatingEntries |   |          | Consolidated | 
|                                                         |  | (In thousands)               |         
|Revenue                                                  |  | $                            | 29,428   |   |                                      | $ |                               |  | $ | 385,847          |   |  | $                              | 385,847  |   |                      | $ | 124,896  |              |  | $ | (28,607   | ) |  | $ | 511,564   |  
|Operating expense                                        |  |                              | 38,391   |   |                                      |   |                               |  |   | 441,700          |   |  |                                | 441,700  |   |                      |   | 583,453  |              |  |   | (26,539   | ) |  |   | 1,037,005 |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  
|Operating (loss) income                                  |  |                              | (8,963   | ) |                                      |   |                               |  |   | (55,853          | ) |  |                                | (55,853  | ) |                      |   | (458,557 | )            |  |   | (2,068    | ) |  |   | (525,441  | )
|Other income (expense), net                              |  |                              | (37,473  | ) |                                      |   | 912                            |  |   | (8,616           | ) |  |                                | (7,704   | ) |                      |   | (26,151  | )            |  |   |          |   |  |   | (71,328   | )
|Equity in income (losses) of unconsolidated subsidiaries |  |                              | (542,944 | ) |                                      |   | 447                            |  |   | (484,708         | ) |  |                                | (484,261 | ) |                      |   |         |              |  |   | 1,026,554 |   |  |   | (651      | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  
|Income (loss) before income tax benefit                  |  |                              | (589,380 | ) |                                      |   | 1,359                          |  |   | (549,177         | ) |  |                                | (547,818 | ) |                      |   | (484,708 | )            |  |   | 1,024,486 |   |  |   | (597,420  | )
|Income tax benefit                                       |  |                              | (781     | ) |                                      |   |                               |  |   |                 |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   | (781      | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  
|(Loss) income from continuing operations                 |  |                              | (588,599 | ) |                                      |   | 1,359                          |  |   | (549,177         | ) |  |                                | (547,818 | ) |                      |   | (484,708 | )            |  |   | 1,024,486 |   |  |   | (596,639  | )
|Income from discontinued operations                      |  |                              |         |   |                                      |   | 6,204                          |  |   |                 |   |  |                                | 6,204    |   |                      |   |         |              |  |   | 2,068     |   |  |   | 8,272     |  
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  
|Net (loss) income                                        |  | $                            | (588,599 | ) |                                      | $ | 7,563                          |  | $ | (549,177         | ) |  | $                              | (541,614 | ) |                      | $ | (484,708 | )            |  | $ | 1,026,554 |   |  | $ | (588,367  | )
|                                                         |  |                              |          |   |                                      |   |                                |  |   |                  |   |  |                                |          |   |                      |   |          |              |  |   |           |   |  |   |           |  



F-39



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Cash Flows



|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|---------------------------------------------------- |  | ---------------------------- | -------- | - | ------------------------------------ | - | ------ | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------- | - |  | - | -------- | -
|                                                     |  | Year Ended December 31, 2004 |         
|                                                     |  | US UnwiredInc.(Parent)       |          |   | UnwiredTelecomCorporation(Guarantor) |   |        | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |         |   | ConsolidatingEntries |   |         | Consolidated | 
|                                                     |  | (In thousands)               |         
|Cash flows from operating activities:                |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net cash provided by (used in) operating activities  |  | $                            | (21,117  | ) |                                      | $ | 2,827  |                                |  | $ | 89,503           |   |  | $                              | 92,330  |   |                      | $ | (7,868  | )            |  | $ |        |   |  | $ | 63,345   |  
|                                                     |  |                              |          |   |                                      |   |       
|Cash flows from investing activities:                |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Payments for the purchase of equipment               |  |                              | (1,128   | ) |                                      |   |       |                                |  |   | (22,518          | ) |  |                                | (22,518 | ) |                      |   | (11,883 | )            |  |   |        |   |  |   | (35,529  | )
|Proceeds from the sale of assets                     |  |                              | 42,883   |   |                                      |   |       |                                |  |   | 302              |   |  |                                | 302     |   |                      |   | 159     |              |  |   |        |   |  |   | 43,344   |  
|Proceeds from restricted cash                        |  |                              |         |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   | 19,279  |              |  |   |        |   |  |   | 19,279   |  
|Investments in unconsolidated affiliates             |  |                              | 653      |   |                                      |   | 500    |                                |  |   |                 |   |  |                                | 500     |   |                      |   |        |              |  |   |        |   |  |   | 1,153    |  
|Disbursement of intercompany note                    |  |                              | 64,631   |   |                                      |   | (3,927 | )                              |  |   |                 |   |  |                                | (3,927  | ) |                      |   |        |              |  |   | (60,704 | ) |  |   |         |  
|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net cash provided by (used in) investing activities  |  |                              | 107,039  |   |                                      |   | (3,427 | )                              |  |   | (22,216          | ) |  |                                | (25,643 | ) |                      |   | 7,555   |              |  |   | (60,704 | ) |  |   | 28,247   |  
|                                                     |  |                              |          |   |                                      |   |       
|Cash flows from financing activities:                |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Proceeds from long-term debt                         |  |                              | 362,342  |   |                                      |   |       |                                |  |   | 5,550            |   |  |                                | 5,550   |   |                      |   | 1,816   |              |  |   | (9,476  | ) |  |   | 360,232  |  
|Proceeds from stock options exercised                |  |                              | 438      |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   | 438      |  
|Proceeds from promissory notes                       |  |                              |         |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   |         |  
|Principal payments of long-term debt                 |  |                              | (421,857 | ) |                                      |   | (311   | )                              |  |   | (70,646          | ) |  |                                | (70,957 | ) |                      |   |        |              |  |   | 70,180  |   |  |   | (422,634 | )
|Debt issuance costs                                  |  |                              | (12,568  | ) |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   | (12,568  | )
|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net cash provided by (used in) activities            |  |                              | (71,645  | ) |                                      |   | (311   | )                              |  |   | (65,096          | ) |  |                                | (65,407 | ) |                      |   | 1,816   |              |  |   | 60,704  |   |  |   | (74,532  | )
|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  |                              | 14,277   |   |                                      |   | (911   | )                              |  |   | 2,191            |   |  |                                | 1,280   |   |                      |   | 1,503   |              |  |   |        |   |  |   | 17,060   |  
|Cash and cash equivalents at beginning of period     |  |                              | 60,424   |   |                                      |   | 911    |                                |  |   | 3,521            |   |  |                                | 4,432   |   |                      |   | 32,337  |              |  |   |        |   |  |   | 97,193   |  
|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  
|Cash and cash equivalents at end of period           |  | $                            | 74,701   |   |                                      | $ |       |                                |  | $ | 5,712            |   |  | $                              | 5,712   |   |                      | $ | 33,840  |              |  | $ |        |   |  | $ | 114,253  |  
|                                                     |  |                              |          |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |          |  



F-40



---

##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Cash Flows



|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|---------------------------------------------------- |  | ---------------------------- | ------- | - | ------------------------------------ | - | ------ | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | ------- | - | -------------------- | - | ------- | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                     |  | Year Ended December 31, 2003 |        
|                                                     |  | US UnwiredInc.(Parent)       |         |   | UnwiredTelecomCorporation(Guarantor) |   |        | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |         |   | ConsolidatingEntries |   |         | Consolidated | 
|                                                     |  | (In thousands)               |        
|Cash flows from operating activities:                |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Net cash provided by (used in) operating activities  |  | $                            | 2,376   |   |                                      | $ | 5,757  |                                |  | $ | 63,820           |   |  | $                              | 69,577  |   |                      | $ | (11,250 | )            |  | $ | (62     | ) |  | $ | 60,641  |  
|                                                     |  |                              |         |   |                                      |   |       
|Cash flows from investing activities:                |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Payments for the purchase of equipment               |  |                              | (378    | ) |                                      |   | (54    | )                              |  |   | (16,836          | ) |  |                                | (16,890 | ) |                      |   | (13,354 | )            |  |   | 136     |   |  |   | (30,486 | )
|Proceeds from the sale of assets                     |  |                              |        |   |                                      |   | 350    |                                |  |   |                 |   |  |                                | 350     |   |                      |   | 74      |              |  |   | (74     | ) |  |   | 350     |  
|Proceeds from restricted cash                        |  |                              |        |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   | 21,859  |              |  |   |        |   |  |   | 21,859  |  
|Investments in unconsolidated affiliates             |  |                              |        |   |                                      |   | 250    |                                |  |   |                 |   |  |                                | 250     |   |                      |   |        |              |  |   |        |   |  |   | 250     |  
|Disbursement of intercompany note                    |  |                              | 44,366  |   |                                      |   | (7,938 | )                              |  |   |                 |   |  |                                | (7,938  | ) |                      |   |        |              |  |   | (36,428 | ) |  |   |        |  
|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Net cash provided by (used in) investing activities  |  |                              | 43,988  |   |                                      |   | (7,392 | )                              |  |   | (16,836          | ) |  |                                | (24,228 | ) |                      |   | 8,579   |              |  |   | (36,366 | ) |  |   | (8,027  | )
|                                                     |  |                              |         |   |                                      |   |       
|Cash flows from financing activities:                |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Proceeds from long-term debt                         |  |                              | 8,717   |   |                                      |   |       |                                |  |   | 46,550           |   |  |                                | 46,550  |   |                      |   |        |              |  |   | (55,267 | ) |  |   |        |  
|Proceeds from stock options exercised                |  |                              |        |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   |        |  
|Proceeds from promissory notes                       |  |                              |        |   |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   |        |  
|Principal payments of long-term debt                 |  |                              | (14,994 | ) |                                      |   | (59    | )                              |  |   | (91,360          | ) |  |                                | (91,419 | ) |                      |   |        |              |  |   | 91,695  |   |  |   | (14,718 | )
|Debt issuance costs                                  |  |                              | (2,688  | ) |                                      |   |       |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |        |   |  |   | (2,688  | )
|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Net cash provided by (used in) activities            |  |                              | (8,965  | ) |                                      |   | (59    | )                              |  |   | (44,810          | ) |  |                                | (44,869 | ) |                      |   |        |              |  |   | 36,428  |   |  |   | (17,406 | )
|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |                              | 37,399  |   |                                      |   | (1,694 | )                              |  |   | 2,174            |   |  |                                | 480     |   |                      |   | (2,671  | )            |  |   |        |   |  |   | 35,208  |  
|Cash and cash equivalents at beginning of period     |  |                              | 23,025  |   |                                      |   | 2,605  |                                |  |   | 1,347            |   |  |                                | 3,952   |   |                      |   | 35,008  |              |  |   |        |   |  |   | 61,985  |  
|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  
|Cash and cash equivalents at end of period           |  | $                            | 60,424  |   |                                      | $ | 911    |                                |  | $ | 3,521            |   |  | $                              | 4,432   |   |                      | $ | 32,337  |              |  | $ |        |   |  | $ | 97,193  |  
|                                                     |  |                              |         |   |                                      |   |        |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |         |   |  |   |         |  



F-41



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2004



Condensed Consolidating Statement of Cash Flows



|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|---------------------------------------------------- |  | ---------------------------- | -------- | - | ------------------------------------ | - | ------- | ------------------------------ |  | - | ---------------- | - |  | ------------------------------ | ------- | - | -------------------- | - | ------- | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                     |  | Year Ended December 31, 2002 |         
|                                                     |  | US UnwiredInc.(Parent)       |          |   | UnwiredTelecomCorporation(Guarantor) |   |         | LouisianaUnwiredLLC(Guarantor) |  |   | Total Guarantors |   |  | IWOHoldingCorp (Non-Guarantor) |         |   | ConsolidatingEntries |   |         | Consolidated | 
|                                                     |  | (In thousands)               |         
|Cash flows from operating activities:                |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) operating activities  |  | $                            | 10,315   |   |                                      | $ | 17,817  |                                |  | $ | (21,346          | ) |  | $                              | (3,529  | ) |                      | $ | (32,700 | )            |  | $ | 2,564    |   |  | $ | (23,350  | )
|                                                     |  |                              |          |   |                                      |   |        
|Cash flows from investing activities:                |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Payments for the purchase of equipment               |  |                              | (2,120   | ) |                                      |   | (1,078  | )                              |  |   | (65,590          | ) |  |                                | (66,668 | ) |                      |   | (53,820 | )            |  |   |         |   |  |   | (122,608 | )
|Acquisition of business, net of cash acquired        |  |                              | (61,990  | ) |                                      |   |        |                                |  |   | 3,032            |   |  |                                | 3,032   |   |                      |   | (191    | )            |  |   | (2,564   | ) |  |   | (61,713  | )
|Proceeds from maturities and sales of investments    |  |                              |         |   |                                      |   |        |                                |  |   |                 |   |  |                                |        |   |                      |   | 66,967  |              |  |   |         |   |  |   | 66,967   |  
|Proceeds from the sale of assets                     |  |                              | 303      |   |                                      |   |        |                                |  |   | 10,016           |   |  |                                | 10,016  |   |                      |   |        |              |  |   |         |   |  |   | 10,319   |  
|Proceeds from restricted cash                        |  |                              |         |   |                                      |   |        |                                |  |   |                 |   |  |                                |        |   |                      |   | 10,449  |              |  |   |         |   |  |   | 10,449   |  
|Investments in unconsolidated affiliates             |  |                              |         |   |                                      |   | (699    | )                              |  |   |                 |   |  |                                | (699    | ) |                      |   |        |              |  |   |         |   |  |   | (699     | )
|Disbursement of intercompany note                    |  |                              | (59,770  | ) |                                      |   | (17,798 | )                              |  |   |                 |   |  |                                | (17,798 | ) |                      |   |        |              |  |   | 77,568   |   |  |   |         |  
|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) investing activities  |  |                              | (123,577 | ) |                                      |   | (19,575 | )                              |  |   | (52,542          | ) |  |                                | (72,117 | ) |                      |   | 23,405  |              |  |   | 75,004   |   |  |   | (97,285  | )
|                                                     |  |                              |          |   |                                      |   |        
|Cash flows from financing activities:                |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Proceeds from long-term debt                         |  |                              | 57,798   |   |                                      |   |        |                                |  |   | 91,851           |   |  |                                | 91,851  |   |                      |   | 43,184  |              |  |   | (109,649 | ) |  |   | 83,184   |  
|Proceeds from stock options exercised                |  |                              | 282      |   |                                      |   |        |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |         |   |  |   | 282      |  
|Proceeds from promissory notes                       |  |                              |         |   |                                      |   |        |                                |  |   |                 |   |  |                                |        |   |                      |   | 20      |              |  |   |         |   |  |   | 20       |  
|Principal payments of long-term debt                 |  |                              | (215     | ) |                                      |   | (55     | )                              |  |   | (32,504          | ) |  |                                | (32,559 | ) |                      |   |        |              |  |   | 32,081   |   |  |   | (693     | )
|Debt issuance costs                                  |  |                              | (762     | ) |                                      |   |        |                                |  |   |                 |   |  |                                |        |   |                      |   |        |              |  |   |         |   |  |   | (762     | )
|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) activities            |  |                              | 57,103   |   |                                      |   | (55     | )                              |  |   | 59,347           |   |  |                                | 59,292  |   |                      |   | 43,204  |              |  |   | (77,568  | ) |  |   | 82,031   |  
|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  |                              | (56,159  | ) |                                      |   | (1,813  | )                              |  |   | (14,541          | ) |  |                                | (16,354 | ) |                      |   | 33,909  |              |  |   |         |   |  |   | (38,604  | )
|Cash and cash equivalents at beginning of period     |  |                              | 79,184   |   |                                      |   | 4,418   |                                |  |   | 15,888           |   |  |                                | 20,306  |   |                      |   | 1,099   |              |  |   |         |   |  |   | 100,589  |  
|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  
|Cash and cash equivalents at end of period           |  | $                            | 23,025   |   |                                      | $ | 2,605   |                                |  | $ | 1,347            |   |  | $                              | 3,952   |   |                      | $ | 35,008  |              |  | $ |         |   |  | $ | 61,985   |  
|                                                     |  |                              |          |   |                                      |   |         |                                |  |   |                  |   |  |                                |         |   |                      |   |         |              |  |   |          |   |  |   |          |  



18. Subsequent Events (Unaudited)



Effective February 10, 2004, US Unwired ceased to have an
equity interest in IWO. Refer to Note 2 for additional information.



F-42



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##### Table of Contents

US UNWIRED INC. AND SUBSIDIARIES

Schedule II  Valuation and Qualifying Accounts

(In thousands)



|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|---------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                   |  | Year Ended December 31, |        
|                                   |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|Income tax valuation allowance     |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at beginning of year       |  | $                       | 261,984 |   |      | $ | 179,964 |      |  | $ | 61,534  |  
|Additions                          |  |                         | 28,924  |   |      |   | 82,020  |      |  |   | 118,430 |  
|Reductions                         |  |                         |        |   |      |   |        |      |  |   |        |  
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at end of year             |  | $                       | 290,908 |   |      | $ | 261,984 |      |  | $ | 179,964 |  
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|Allowance for doubtful accounts    |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at beginning of year       |  | $                       | 6,418   |   |      | $ | 6,981   |      |  | $ | 3,079   |  
|Additions                          |  |                         | 4,889   |   |      |   | 6,673   |      |  |   | 24,926  |  
|Reductions                         |  |                         | (4,835  | ) |      |   | (7,236  | )    |  |   | (21,024 | )
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at end of year             |  | $                       | 6,472   |   |      | $ | 6,418   |      |  | $ | 6,981   |  
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|Reserve for inventory obsolescence |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at beginning of year       |  | $                       | 1,401   |   |      | $ | 351     |      |  | $ | 785     |  
|Additions                          |  |                         |        |   |      |   | 1,050   |      |  |   |        |  
|Reductions                         |  |                         | (838    | ) |      |   |        |      |  |   | (434    | )
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|Balance at end of year             |  | $                       | 563     |   |      | $ | 1,401   |      |  | $ | 351     |  
|                                   |  |                         |         |   |      |   |         |      |  |   |         |  





S-1