Leap Wireless International, Inc.
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Washington, D.C. 20549

Form 8-K

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 6, 2002

Leap Wireless International, Inc.

(Exact name of registrant as specified in its charter)
Delaware   0-29752   33-0811062
(State or Other Jurisdiction
of Incorporation)
  (Commission File Number)   (I.R.S. Employer Identification No.)
10307 Pacific Center Court, San Diego, California   92121
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (858) 882-6000



Item 5. Other Events.

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     This Current Report on Form 8-K is filed by Leap Wireless International, Inc., a Delaware corporation (“Leap” or the “Company”), in connection with the matters described herein.

Item 5. Other Events.

     On September 6, 2002, Leap announced that it had paid a purchase price adjustment to MCG PCS, Inc. (“MCG”), as ordered by an arbitrator, by issuing approximately 21 million shares of its common stock. Because Leap did not have time to seek shareholder approval of this issuance, it may face delisting from the Nasdaq National Market System.

     As previously announced, Leap has retained UBS Warburg (“UBS”) to assist the Company in exploring new sources of financing and a restructuring of the Company’s outstanding indebtedness. UBS has begun contacting interested parties. In advance of formal discussions, some of the lenders under the Company’s vendor credit facilities have ceased funding new loan requests, including loan proceeds for interest that had previously been paid through draws under the credit facilities. As a result, Leap has chosen not to pay interest on the loans under these facilities. Leap’s issuance of the shares to MCG and failure to pay interest constitute events of default under the credit facilities. These events of default provide the credit facility lenders with certain rights under their credit agreements, including the right to declare their existing loans to be due and payable.

     Except for the historical information contained herein, this report contains “forward-looking statements” reflecting management’s current forecast of certain aspects of Leap’s future. Some forward-looking statements can be identified by forward-looking words such as “believe,” “think,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” and similar expressions. This report is based on current information, which Leap has assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Leap’s actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Leap’s business. Factors that could cause actual results to differ include, but are not limited to:

          the unsettled nature of the wireless market, decreased consumer confidence in the economy, new service offerings of increasingly large bundles of minutes of use at increasingly low prices by some major carriers, and the other issues facing the telecommunications industry in general, which have created a level of uncertainty that adversely affects Leap’s ability to predict future customer growth, as well as other key operating metrics;
          the recent decision by the arbitrator in Leap’s dispute with the seller of Leap’s Buffalo and Syracuse licenses which could significantly reduce the Company’s liquidity and/or result in substantial dilution to existing stockholders;
          changes in economic conditions, which could adversely affect the market for wireless services;
          a failure to meet the operational, financial or other covenants contained in Leap’s credit facilities;
          a deterioration of Leap’s relationships with its equipment vendors and related lenders, including Leap’s failure to obtain amendments to its credit facilities that it will request from time to time;
          the acceptance of Leap’s product offering by its target customers;
          the effects of actions beyond Leap’s control in its distribution network;
          Leap’s ability to retain customers;
          rulings by courts or the Federal Communications Commission (FCC) adversely affecting Leap’s rights to own and/or operate certain wireless licenses or impacting Leap’s rights and obligations to acquire the licenses on which it was the winning bidder in the FCC’s broadband PCS auction


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            completed in January 2001 (Auction 35), or changes in Leap’s ownership that could adversely affect its status as an “entrepreneur” under FCC rules and regulations;
          Leap’s ability to access capital markets;
          changes in Leap’s credit ratings;
          Leap’s ability to maintain its cost, market penetration and pricing structure in the face of competition and fraud;
          failure of network systems to perform according to expectations;
          the effect of competition;
          technological challenges in developing wireless information services and customer acceptance of such services if developed;
          the impacts on the global and domestic economies and the financial markets of recent terrorist activities;
          the ensuing declaration of war on terrorism and the continued threat of terrorist activity and other acts of war or hostility; and
          other factors detailed in the section entitled “Risk Factors” included in Leap’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002 and in Leap’s other SEC filings.

     The forward-looking statements should be considered in the context of these risk factors. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. Leap undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


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

  James E. Hoffmann
Senior Vice President, General Counsel
and Secretary