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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

(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, 2003

OR

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

For the transition period from                                to                                .

Commission file number 0-29752

LEAP WIRELESS INTERNATIONAL, INC.

(858) 882-6000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.0001 par value

Preferred Stock Purchase Rights

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 o

      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. 10-K.     x

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

      As of June 30, 2003, the aggregate market value of the registrant’s voting and nonvoting common stock held by non-affiliates of the registrant was approximately $1,828,000, based on the closing price of Leap’s common stock on the OTC Bulletin Board on June 30, 2003, of $.05 per share.

      As of May 7, 2004, 58,704,224 shares of the registrant’s Common Stock, $.0001 par value per share, were outstanding.

LEAP WIRELESS INTERNATIONAL, INC.

ANNUAL REPORT ON FORM 10-K

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PART I

      As used in this report, the terms “we,” “our,” “ours” and “us” refer to Leap Wireless International, Inc., a Delaware corporation, and its subsidiaries, unless the context suggests otherwise. Unless otherwise specified, information relating to population and potential customers, or POPs, is based on 2004 population estimates provided by Claritas Inc.

Forward-Looking Statements; Cautionary Statement

      Except for the historical information contained herein, this document contains forward-looking statements reflecting management’s current forecast of certain aspects of Leap’s future. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:

	•	limitations on our ability to predict the future performance and actions of Leap because we will have new stockholders and a new Board of Directors if and when we emerge from bankruptcy, and we expect that a new CEO will be appointed in the near future. Changes in management or direction implemented by the new stockholders, the new Board or new management may cause actual results to differ materially from those anticipated or implied in our forward-looking statements;
	•	our ability to obtain approval from the Federal Communications Commission, or FCC, for the change of control of our wireless licenses that will occur upon our emergence from bankruptcy, and our ability to successfully implement our Fifth Amended Joint Plan of Reorganization dated as of July 30, 2003, referred to herein as the Plan of Reorganization, which has been confirmed by the United States Bankruptcy Court for the Southern District of California, or the Bankruptcy Court;
	•	our ability to continue as a going concern;
	•	our ability to obtain Bankruptcy Court approval with respect to motions prosecuted by us in our Chapter 11 cases from time to time;
	•	risks associated with third parties seeking and obtaining Bankruptcy Court approval to convert the Chapter 11 cases of Leap, Cricket and substantially all of their subsidiaries to Chapter 7 cases if our Plan of Reorganization does not become effective in a timely fashion;
	•	the potential continuing adverse impacts of the Chapter 11 cases on the liquidity or results of operations of Leap and Cricket and on our ability to predict future customer growth and other key operating metrics;
	•	our ability to attract and retain customers in an extremely competitive marketplace;
	•	our ability to attract, motivate and/or retain an experienced workforce;
	•	changes in economic conditions that could adversely affect the market for wireless services;
	•	rulings or actions by courts or the FCC adversely affecting our rights to own and/or operate certain wireless licenses, or changes in our ownership that could adversely affect our status as an “entrepreneur” under FCC rules and regulations;
	•	failure of network systems to perform according to expectations;
	•	global political unrest, including the threat or occurrence of war or acts of terrorism; and
	•	other factors detailed in the section entitled “Risk Factors” included in this report.

      You can identify these forward-looking statements by forward-looking words such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” and similar expressions in this report.

      We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward-

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      Leap Wireless International, Inc., a Delaware corporation, and its subsidiaries are collectively referred to in this report as the Company. Leap Wireless International, Inc., or Leap, conducts operations through its subsidiaries. Leap has no independent operations or sources of operating revenue other than through dividends, if any, from its operating subsidiaries. Cricket Communications, Inc., or Cricket, and the subsidiaries of Leap and Cricket that hold assets that are used in Cricket’s wireless telephone business or that hold assets pledged under Cricket’s senior secured vendor credit facilities are collectively referred to in this report as the Cricket Companies.

      Leap was formed in 1998 by Qualcomm Incorporated. Qualcomm distributed the common stock of Leap in a “spin-off” distribution to Qualcomm’s stockholders in September 1998. Under a license from Leap, Cricket service was first introduced in Chattanooga, Tennessee in March 1999 by Chase Telecommunications, Inc., a company that Leap acquired in March 2000.

      On April 13, 2003, referred to herein as the Petition Date, Leap, Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 in the U.S. Bankruptcy Court. Each of the debtors continues to manage its properties and operate its business as a “debtor-in-possession.” Our Plan of Reorganization was confirmed by the Bankruptcy Court in October 2003. We expect to emerge from bankruptcy promptly after the FCC approves the change of control of our wireless licenses that will occur when we emerge from bankruptcy. For a description of our bankruptcy proceedings, see “Chapter 11 Proceedings Under the Bankruptcy Code” below.

Cricket Business Overview

      The following overview describes Cricket’s current business. If and when we emerge from bankruptcy, we will have new stockholders and a new Board of Directors, and we expect that a new CEO will be appointed in the near future. The new stockholders, new Board or new management may change the service, strategy or operations of Cricket’s business.

Cricket Service

      The Cricket Companies offer wireless service in the United States under the brand “Cricket®.” We market Cricket service as “Comfortable Wireless®.” On December 31, 2003, Cricket had approximately 1,473,000 customers located in 39 markets throughout the United States. These markets are located in 47 basic trading areas, or BTAs, which cover a total population of approximately 25.9 million potential customers. At December 31, 2003, we owned wireless licenses covering approximately 53.8 million potential customers in 33 states.

      Our service allows customers to make and receive virtually unlimited calls within a local calling area and receive virtually unlimited calls from any area for a flat monthly rate. Cricket customers can also make long distance calls on a per-minute basis or as part of a packaged offering. During the fourth quarter of 2003, we simplified our service offerings to offer three service plans to our new customers. Our basic Cricket service offers virtually unlimited local calls at a flat price. We also offer a plan that bundles certain additional features (such as voicemail and call waiting) at a slightly higher price. Additionally, we offer a premium plan, which includes virtually unlimited local service, multiple calling features and a large block of available long distance minutes per month. We continually review our service offering portfolio and make modifications that we believe will deliver high-value services to our customers. As part of this process, on March 16, 2004, we introduced a plan that includes virtually unlimited local and long distance calling for a flat rate and also introduced a plan that provides discounts on additional lines added to an existing qualified account.

      Our business model is different from most other cellular and PCS wireless business models. Most of these providers offer consumers a complex array of rate plans that include additional charges for minutes above a set

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Cricket Business Strategy

      Simple, Understandable Service. Our innovative Cricket service is designed to attract new customers by removing the price and complexity barriers that we believe have prevented many potential customers from using wireless service. We believe many potential customers view wireless service as expensive, feel that they cannot control the cost of service, or find existing service offerings too confusing. As a result, our service plans are designed to attract customers by offering simple, predictable and affordable wireless services that are a competitive mobile alternative to traditional landline service.

      Appealing Value Proposition. Our service offerings combine high quality service and advanced features in simple packages that provide a “high value/reasonable price” proposition for customers. We continually focus on enhancing our Cricket service with new offerings to meet the needs of our growing customer base.

      Control and Minimize Costs. To become one of the lowest cost providers in the industry, we minimize our capital costs by engineering high-quality, efficient networks that cover only the urban and suburban areas of our markets where most of our potential customers live, work and play, while avoiding rural areas and corridors between distant markets. This strategy also allows us to acquire only those wireless licenses that we deem to be appropriately priced and to avoid acquiring wireless licenses simply to provide expansive geographic coverage and roaming capability, while minimizing network operating costs. We also reduce our general operating costs through streamlined billing procedures, the control of customer care expenses and low customer investigation costs. In addition, we are focused on streamlining marketing and distribution operations and maintaining lower customer acquisition costs. These strategies allow the Cricket Companies to be a low-cost provider of wireless services in each Cricket market.

      Leverage CDMA Technology. We have deployed state-of-the-art CDMA networks that are designed to provide higher capacity at a lower capital cost than competing technologies, and that can be easily upgraded to support enhanced capacity. We believe this enables us to operate efficient, quality networks that support planned customer growth and high usage. In addition, we believe our CDMA networks provide a better platform to expand into other wireless services based on advances in digital technology in the future.

Cricket Business Operations

      Market Opportunity. Wireless penetration was approximately 54% in the U.S. as of December 31, 2003. We believe that the numerous plans offered by wireless companies have tended to confuse many potential customers. Market research indicates that many people are interested in a wireless product but are concerned about the cost, complexity and unpredictability of traditional wireless pricing plans.

      Sales and Distribution. The Cricket approach is to penetrate our target markets while minimizing our sales and marketing expenses, primarily by keeping the customer’s purchase decision simple. This also minimizes the need for sales commissions and associated residuals. The Cricket service and wireless handsets are sold through three main channels: Cricket retail stores and kiosks in high-traffic locations, local stores of national retail chains and independent third-party dealers. Our own retail locations sell approximately 30% of the new Cricket handsets sold and third-party dealers and distributors generate the other 70% of sales. Many carriers sell a substantially higher percentage of their total handsets through company owned and operated stores. For Cricket, the costs of sales by third-party retailers are largely variable costs, while the operation of our own retail locations involves substantial fixed costs. As a result, management believes that the retail strategy we have adopted is more cost effective for our business model than alternative strategies that rely on company owned stores to a substantially greater degree.

      The Cricket service plan is designed so that a potential customer can make a purchase decision with little or no sales assistance. Customers can read about the Cricket service at the point of sale and learn virtually all

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      We combine mass marketing strategies and tactics to build brand awareness of the Cricket service within the communities we serve. Because the Cricket service is offered in distinct “island” markets, we advertise in local publications, radio stations and television commercials. We also maintain a Cricket website (www.mycricket.com) for informational, e-commerce, and customer service purposes. Some third-party Internet retailers sell the Cricket service over the Internet and, together with a vendor partner, we have also developed and launched Internet sales on our Cricket website.

      Network and Operations. The Cricket service is based on providing customers with levels of usage equivalent to landline service and at prices substantially lower than most of our wireless competitors for similar usage. We believe our success depends on operating our CDMA networks to provide high, concentrated capacity with good in-building coverage rather than the broad, geographically dispersed coverage provided by traditional wireless carriers. The appeal of our service in any given market is not dependent on the Cricket service having ubiquitous coverage in the rest of the country or regions surrounding the market. Our Cricket networks are in local population centers of self-contained communities where we believe roaming is not an important component of service for our target customers. We believe that we can deploy our capital more efficiently by tailoring our networks only to our target population centers and omitting underutilized roaming sites between those population centers. We engage an independent third party to test the network call quality offered by Cricket and its competitors. The most current results demonstrate that Cricket’s network call quality places us in the top 20% of carriers within the coverage area of the markets we tested. On September 30, 2003, we discontinued service in Hickory, North Carolina.

      Capital Requirements and Projected Investments. If we decide to build out and operate several additional networks beyond our existing 39 markets, we would likely require substantial new capital. The amount of financing that we would require for these efforts will vary depending on the number of networks developed and the speed at which we construct and launch these networks. For a more detailed description of our capital requirements and liquidity, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Chapter 11 Proceedings Under the Bankruptcy Code

Plan of Reorganization

      On April 13, 2003, Leap, Cricket and substantially all of their subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of California (jointly administered as Case Nos. 03-03470-A11 to 03-03535-A11). Each of the debtors continues to manage its properties and operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11.

      On July 30, 2003, the debtors filed their Plan of Reorganization and the accompanying Disclosure Statement with the Bankruptcy Court. The Plan of Reorganization was the product of vigorous negotiations between the Company, the informal committee of Cricket’s senior secured vendor debtholders, the Official Unsecured Creditors’ Committee of Leap and an informal committee of Leap noteholders (prior to the formation of the Official Committee). Each of these entities recommended to the creditors it represents that they vote in favor of approval of the Plan of Reorganization. On July 31, 2003, after notice and prior hearings, the Bankruptcy Court approved the Disclosure Statement, and the debtors then mailed the Disclosure Statement and the Plan of Reorganization to the creditors entitled to vote on the Plan of Reorganization. The debtors received sufficient affirmative votes from creditors to confirm the Plan of Reorganization, subject to the approval of the Bankruptcy Court.

      On October 22, 2003, the Bankruptcy Court entered an order confirming our Plan of Reorganization, including certain technical amendments thereto. Upon satisfaction of the conditions precedent to effectiveness

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      It may take several months from the filing date of this report to obtain FCC approval of the change of control of wireless licenses that will occur when we emerge from bankruptcy. If the FCC determines in connection with its review of our proposed change of control that we will no longer be qualified to hold C-Block and F-Block licenses (i.e., “entrepreneur’s block” licenses that are subject to certain resale restrictions under applicable FCC rules) or that we will not be entitled to the benefits afforded to a “small business” or “very small business” when we emerge from bankruptcy: (1) we may forfeit our right to continue to own our C-Block and F-Block licenses for which we have not then met the FCC’s minimum coverage requirements; (2) our $76.7 million of indebtedness to the FCC may become immediately due and payable; and/or (3) we may be required to pay approximately $2-$4 million of unjust enrichment penalties. The carrying value of the C-Block and F-Block licenses for which we have not yet met the minimum coverage requirement is approximately $33.3 million. We expect that the FCC will approve the proposed transfer of control of our wireless licenses. However, we cannot provide assurances that the FCC will grant such approval or will determine that we will remain qualified to hold C-Block and F-Block licenses upon our emergence from bankruptcy or that we will otherwise avoid acceleration of our FCC indebtedness or other “unjust enrichment” penalties.

      The Plan of Reorganization implements a comprehensive financial reorganization that significantly reduces the debtors’ outstanding indebtedness. In connection with the Plan of Reorganization, the debtors’ current long-term debt will be reduced from a book value of more than $2.4 billion to a principal amount of approximately $426.7 million as of the effective date of the Plan of Reorganization. Following is a summary of the material terms of the Plan of Reorganization.

      On November 3, 2003, referred to herein as the Initial Distribution Date, or shortly thereafter:

	•	Holders of allowed general unsecured claims against Leap, including the holders of Leap’s 12.5% senior notes and 14.5% senior discount notes, received, on a pro rata basis, beneficial interests in a creditor trust, referred to herein as the Leap Creditor Trust. The initial trustee for the beneficiaries of the Leap Creditor Trust is U.S. Bank National Association.
	•	Leap transferred $67.8 million to the Leap Creditor Trust. This amount consisted of substantially all of Leap’s unrestricted cash, cash equivalents and short-term investments less a reserve for administrative claims and priority claims in an aggregate amount of approximately $16 million (which amount was agreed upon by the debtors and the Official Unsecured Creditors’ Committee of Leap prior to the Initial Distribution Date). At December 31, 2003, Leap had $13.8 million remaining of cash, cash equivalents and short-term investments, all of which were classified as restricted in our consolidated financial statements.
	•	In May and November 2003, Leap paid approximately $14.1 million and $221,000, respectively, of restricted cash that secured Leap’s obligations under its senior notes, to the indenture trustee for the holders of the senior notes for distribution to such holders, as permitted by an order of the Bankruptcy Court.
	•	The Plan of Reorganization implemented the settlements and releases of all intercompany claims among the debtors, as well as the settlements and releases by the debtors, their estates, the holders of Leap general unsecured claims, the Official Unsecured Creditors’ Committee of Leap, the current and former holders of Cricket’s senior secured vendor debt (and the administrative agents under such facilities), and the informal committee of holders of Cricket senior secured vendor debt of all litigation claims that have been or may be asserted or filed by any debtor, related to (1) transfers of cash or property from Leap to non-Leap debtors or for the benefit of the current or former holders of Cricket’s

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		senior secured vendor debt, the administrative agents or any other holder of a claim or interest in a non-Leap debtor, or (2) the failure to transfer cash or property from Leap to any non-Leap debtor or for the benefit of the current or former holders of Cricket’s senior secured vendor debt, the administrative agents, or any other holder of a claim or interest in a non-Leap Debtor. These releases are set forth in Section 5.05 of the Plan of Reorganization.

      In addition, the following will occur on the effective date of the Plan of Reorganization:

	•	All of the outstanding shares of Leap common stock, warrants and options will be cancelled. The holders of Leap common stock, warrants and options will not receive any distributions under the Plan of Reorganization.
	•	The holders of Cricket’s senior secured vendor debt claims will receive, on a pro rata basis, 96.5% of the issued and outstanding shares of new Leap common stock as of the effective date, as well as new senior secured pay-in-kind notes with an aggregate face value of $350.0 million. See the section entitled “New Senior Secured Notes to be Issued Upon Emergence from Bankruptcy” included within this section for a description of the new senior secured pay-in-kind notes.
	•	Reorganized Leap will: (1) issue and transfer to the Leap Creditor Trust 3.5% of the issued and outstanding shares of new Leap common stock as of the effective date, for distribution to holders of allowed Leap general unsecured claims, on a pro rata basis; and (2) transfer to the Leap Creditor Trust other assets specified in the Plan of Reorganization which are to be liquidated by the Leap Creditor Trust with the cash proceeds thereof distributed to the holders of allowed Leap general unsecured claims. These other assets include a note receivable of $35.0 million that is currently in dispute with Endesa, S.A., (see Note 11 to the consolidated financial statements included in Item 8 of this report), nine wireless licenses with a book value of approximately $914,000 at December 31, 2003, Leap’s equity interest in IAT Communications, Inc. which had no carrying value at December 31, 2003, certain causes of action and reimbursement of cash deposits previously made by Leap for contracts that have been assumed by reorganized Leap in connection with the bankruptcy proceedings.
	•	The executory contracts and unexpired leases that are being assumed by the reorganized debtors in connection with the Plan of Reorganization generally will be assumed as of the effective date of the Plan of Reorganization. Reorganized Cricket will pay all cure amounts associated with such contracts and leases.
	•	The holders of general unsecured claims against Cricket will receive de minimus or no distributions in respect of their claims. Holders of general unsecured claims against the other subsidiaries of Leap and Cricket will receive no distributions under the Plan of Reorganization.
	•	All of the debtors’ pre-petition indebtedness, other than indebtedness owed to the FCC, will be cancelled in full, including approximately $1.6 billion net book value of debt outstanding under Cricket’s senior secured vendor credit facilities and approximately $739.2 million net book value of debt outstanding under Leap’s senior notes, senior discount notes, the note payable to GLH and the Qualcomm term loan. See Note 7 to the consolidated financial statements included in Item 8 of this report.

      Also on the effective date of the Plan of Reorganization, Leap, Cricket and their subsidiaries will undertake certain reorganization transactions intended to streamline their corporate structure. As a result, reorganized Cricket will own 100% of the issued and outstanding shares of each of the reorganized wireless license holding companies and the reorganized property holding companies, and reorganized Leap will own 100% of the issued and outstanding shares of reorganized Cricket and each of Leap’s other reorganized subsidiaries.

      Following the effective date of the Plan of Reorganization, after satisfaction of all allowed administrative claims and allowed priority claims against Leap, any remaining cash held in reserve by Leap will be distributed to the Leap Creditor Trust. If any assets pledged to the Leap Creditor Trust are converted to cash after the Initial Distribution Date but prior to the effective date of the Plan of Reorganization, the cash proceeds will be

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      The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the petitions and the motions, pleadings and papers on file with the Bankruptcy Court, including the Plan of Reorganization and the accompanying Disclosure Statement, which were filed as Exhibits 2.1 and 2.2, respectively, to Leap’s Current Report on Form 8-K dated July 30, 2003, as amended by Amendment No. 1 thereto. The Disclosure Statement also includes detailed information about the Plan of Reorganization.

      If the Plan of Reorganization does not become effective by October 22, 2004, the anniversary of the confirmation of the Plan of Reorganization, then upon notification by the Company to the Bankruptcy Court, the confirmation order will be vacated, no additional distributions will be made under the Plan of Reorganization, and the debtors and the holders of all claims against the debtors will be restored to their status as of the day immediately preceding the confirmation of the Plan of Reorganization, except: (1) the holders of claims against Leap and the Leap Creditor Trust generally will be allowed to retain all assets distributed to them prior to the notice to the Bankruptcy Court; (2) the Leap Creditor Trust will retain its right to receive a distribution equal in value to the 3.5% of new Leap common stock it was to receive under the Plan of Reorganization; and (3) the debtors and their creditors shall be entitled to the benefit of the settlements and releases of intercompany claims and certain litigation claims contemplated by the Plan of Reorganization. If the Plan of Reorganization does not become effective, Cricket’s senior secured vendor creditors may seek to foreclose on the assets of the Cricket Companies that have been pledged to secure the obligations under such facilities (with any such foreclosure subject to approval of the Bankruptcy Court), and Leap and its subsidiaries may be forced to liquidate under the applicable provisions of the United States Bankruptcy Code.

      The debtors and the informal committee of Cricket’s senior secured vendor debtholders have agreed, pursuant to Section 8.05(e) of the Plan of Reorganization, to establish a reserve at Cricket in the amount of $70.1 million to satisfy (1) allowed administrative claims, including an estimated $55 million of cure payments in connection with assumed executory contracts and leases, and (2) allowed priority claims against the Cricket Companies through the effective date of the Plan of Reorganization. As of December 31, 2003, the Cricket Companies had paid approximately $40 million of cure payments to satisfy the administrative claims of vendors whose contracts were assumed by the Cricket Companies in the bankruptcy proceedings, and approximately $30 million of the $70.1 million reserve remained which is included in restricted cash, cash equivalents and short-term investments in our consolidated financial statements. Our estimate of cure payments could vary materially after we have finally negotiated or resolved any disputed amounts.

New Senior Secured Notes to be Issued Upon Emergence from Bankruptcy

      On the effective date of the Plan of Reorganization, Cricket will issue $350.0 million of new senior secured pay-in-kind notes. The notes will mature on the seventh anniversary of the effective date of the Plan of Reorganization. The notes bear interest at 13% per annum. Interest on the notes is payable semi-annually. Interest is payable in cash, except Cricket may elect to pay up to 12% interest on each of the first four regularly scheduled interest payment dates by issuing additional notes in a principal amount equal to the amount of interest not paid in cash. Each note will be issued in denominations of $100 principal amount and larger integral multiples thereof.

      The notes will be secured by all of the personal property and any owned real property of Leap and its direct and indirect subsidiaries. The notes will also be secured by all of the stock of Leap’s direct and indirect subsidiaries and will be guaranteed by Leap and all of its direct and indirect subsidiaries (in each case, other than Cricket which is the primary obligor under the notes).

      Cricket may redeem the outstanding notes in whole or in part at any time, in cash at a redemption price equal to: 106.5% of their principal amount plus accrued and unpaid interest during the first full year following the effective date of the Plan of Reorganization, referred to herein as the Initial Issuance Date; 104.88% of their principal amount plus accrued and unpaid interest during the second full year following the Initial Issuance Date; 103.25% of their principal amount plus accrued and unpaid interest during the third full year following the Initial Issuance Date; 101.63% of their principal amount plus accrued and unpaid interest during

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      The indenture that will govern the new notes will contain significant limitations on our ability to incur additional debt or to grant additional liens on our assets. We must meet certain financial ratios in order to incur additional unsecured indebtedness, subject to certain limited exceptions. In addition, the indenture permits us to incur up to $50 million of additional debt outstanding at any one time to procure equipment, inventory and telecommunications network assets. This additional debt may be secured, but only by the equipment, inventory or network assets financed with the proceeds of the debt. The terms of the notes include other covenants that restrict our ability to, among other things:

	•	pay dividends;
	•	make investments;
	•	sell assets;
	•	issue or sell the stock of some of Leap’s subsidiaries;
	•	enter into transactions with affiliates; and
	•	effect a consolidation or merger.

      These limitations are subject to certain qualifications and exceptions contained in the indenture governing the new notes.

      Upon the occurrence of events constituting a change of control of the Company, Cricket must make an offer to all noteholders to repurchase all or part of each holder’s notes in cash at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest. In addition, in some cases if we sell assets and do not use the net proceeds of the sale either to retire secured debt or to reinvest in other assets that are used in our business, Cricket must offer to repurchase the notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest.

      Events of default under the notes include, among others, our failure to make payments under the notes when due, our failure to comply with covenants or other provisions under the indenture governing the notes or the related security documents, our defaulting under other indebtedness with an aggregate principal amount in excess of $10.0 million and which default gives the holder thereof the right to accelerate payment of the debt, a final judgment or order not covered by insurance for the payment of money of $10.0 million or more is rendered against us and the judgment or order is not stayed or discharged for a period of 30 consecutive days after entry, the bankruptcy or insolvency of Leap or Cricket or their subsidiaries, any security document or guaranty of the notes ceases to be in full force and effect, or the loss, suspension, revocation or non-renewal of wireless licenses covering 50% or more of the total potential customers covered by all of our wireless licenses. In the case of an event of default arising from bankruptcy or insolvency, all outstanding notes become immediately due and payable.

Litigation with MCG PCS, Inc.

      On October 24, 2003, MCG PCS, Inc. filed a motion with the Bankruptcy Court seeking to stay the implementation of the Plan of Reorganization while MCG pursued an appeal of the Bankruptcy Court’s confirmation order. On October 28, 2003, the Bankruptcy Court denied MCG’s motion for a stay, permitting the debtors to proceed with the Plan of Reorganization. Previously, on August 1, 2003, Leap filed an action in the Bankruptcy Court against MCG and Michael C. Gelfand, MCG’s sole stockholder, seeking to (a) avoid and recover from the defendants a preferential payment of $1.5 million and (b) subordinate MCG’s alleged general unsecured claim for $39.8 million to the same priority as that of other common stockholders. On January 30, 2004, Leap, MCG, Michael Gelfand, the Leap Creditor Trust, the Official Unsecured Creditors’ Committee of Leap and the informal committee of Cricket’s senior secured vendor debtholders agreed to settle their various disputes. Under the settlement agreement, the parties have agreed to dismiss their respective claims and litigations and to grant each other mutual releases, in exchange for Cricket paying a

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Other Chapter 11 Matters

      Although the debtors are authorized to operate their business and manage their properties as debtors-in-possession, they may not engage in transactions outside the ordinary course of business without complying with the notice and hearing provisions of Chapter 11 and obtaining prior Bankruptcy Court approval.

      Shortly after the Petition Date, the debtors began notifying all known or potential creditors of the Chapter 11 filings. The Chapter 11 filings triggered defaults on substantially all debt and lease obligations of the debtors. Under Section 362 of Chapter 11, most pending pre-petition claims and litigation against the debtors were stayed automatically and, absent further order of the Bankruptcy Court, no party may take any action to recover such pre-petition claims, enforce any pre-petition lien against or obtain possession of any property from the debtors.

      We have filed schedules with the Bankruptcy Court indicating which of our executory contracts and unexpired real property leases we are assuming under the Plan of Reorganization. Unless otherwise agreed, our assumption of an executory contract or lease will require us to cure all prior defaults under the contract or lease, including all pre-petition liabilities. Under the Plan of Reorganization, any such cure amounts are the responsibility of reorganized Cricket. Unless otherwise agreed by the parties to the assumed contracts and leases, the cure amounts are to be paid by or shortly after the effective date of the Plan of Reorganization. Our estimate of cure payments could vary materially after we have finally negotiated or resolved any disputed amounts. Our pre-petition executory contracts and unexpired real property leases that were not listed on the assumption schedules were rejected as of October 22, 2003 (or the later date listed in a rejection schedule). As part of the bankruptcy process, we have successfully renegotiated numerous executory contracts and real estate leases and expect to realize substantial cost savings going forward. Parties affected by rejections of these contracts or leases were required to file claims with the Bankruptcy Court not later than December 22, 2003. We are evaluating these rejection claims as well as claims for pre-petition obligations filed against the debtors in the bankruptcy proceedings. Various proceedings to resolve claims against Leap are currently pending before the Bankruptcy Court.

Wireless Licenses

      The following table shows the wireless licenses that we owned as of December 31, 2003, and expect to continue to own after our emergence from bankruptcy. These wireless licenses cover approximately 52.6 million potential customers.

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