Leap Wireless International, Inc.
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Washington, DC 20549


(Amendment No. 1)

(Mark One)


For the quarterly period ended September 30, 2003



For the transition period from                     to                     .

Commission File Number 0-29752

Leap Wireless International, Inc.

(Exact name of registrant as specified in its charter)
Delaware   33-0811062
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
10307 Pacific Center Court, San Diego, CA   92121
(Address of principal executive offices)   (Zip Code)

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

Not applicable
(Former name, former address and former fiscal year, if changed since last

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

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

     The number of shares of registrant’s common stock outstanding on May 6, 2004 was 58,704,224.



Item 4. Controls and Procedures

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          This Amendment No. 1 to Leap Wireless International, Inc.’s (“Leap” or the “Company”) Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2003 amends and restates Item 4 of Part I of the original Form 10-Q and supplements Item 6(a) of Part II to include current Certifications of Leap’s Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed as Exhibits 31.1 and 31.2 to this Amendment. No other information included in the original Form 10-Q is amended hereby.

Item 4. Controls and Procedures

     (a) Evaluation of 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 Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Management has designed the Company’s disclosure controls and procedures to provide a reasonable assurance of achieving the desired objectives. As required by SEC Rule 13a-15(b), in connection with filing this Amendment to Form 10-Q, the Company’s management conducted an evaluation, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2003, the end of the period covered by this report. Based on that evaluation, including consideration of the matters described in subsection (b) below, the Company’s Chief Executive Officer and Chief Financial Officer concluded that: (1) the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2003; and (2) the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of April 22, 2004, the date the evaluation was conducted.

     (b) Changes in Internal Controls

     Field Change Orders

     In May 2002, the Company implemented new procurement management software and accompanying procedures to automate and improve its then-existing procurement procedures. The Company has continued to enhance these controls and procedures since their implementation. Following the implementation of the new procurement controls in May 2002, the Company verified that its controls were operating as designed by confirming operating procedures, analyzing and testing system reports, and performing selective physical counts of network assets in the field. In addition, the Company held discussions with its three significant network equipment vendors in 2002 to determine whether the Company owed the vendors for field change orders that may have occurred prior to the May 2002 implementation of the new software. Only one vendor indicated that the Company had outstanding field change orders that had not yet been invoiced by the vendor. The Company worked with the vendor for several months and, in September 2002, reached a resolution with the vendor that the Company believed covered all material change orders for periods prior to May 2002. The significant deficiency in the ability of the Company’s procurement process to accurately track network construction change orders resulted from the high volume of network construction activity occurring during the design and launch of the Company’s networks, the outsourcing of significant portions of the network asset procurement processes to the Company’s equipment vendors, and internal control weaknesses in the Company’s procurement process. New construction has been substantially reduced, in large part due to the completion of the network buildout for the Company’s 39 operating markets. Because of the implementation of its new procurement controls and the substantial reduction in network equipment procurement in 2002, the Company, its Chief Executive Officer and its Chief Financial Officer believe this significant deficiency was remediated prior to December 31, 2002. In the first two quarters of 2003, this vendor presented the Company with documentation for additional change orders, all of which pertained to orders procured prior to May 2002, even though the Company had worked diligently with that vendor in 2002 to identify all open field change orders and the Company’s contract with the vendor required it to submit invoices to the Company as services were performed and when equipment was shipped. In the third quarter of 2003, the Company negotiated a final settlement with this vendor regarding these additional pre-May 2002 field change orders. The impact of the settlement was not material to the Company’s financial condition, results of operations or liquidity for the quarter ended September 30, 2003 or for any prior period.


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     Tracking Network Assets

     The Company’s wireless network assets are situated at more than 2,500 different locations. From time to time, the Company relocates certain of these assets in order to optimize its network coverage and asset utilization. Although the Company did not track all assets that were transferred from one location to another prior to the fourth quarter of 2003, the Company conducted inventories and utilized comparative analyses to track and account for its network assets. At December 31, 2002, the Company conducted an inventory of the principal network assets used to provide service in its markets and compared the aggregate value and amounts of such inventory against the Company’s purchase and financial records. Since the second quarter of 2003, the Company has performed selective physical counts of its network assets from time to time to confirm the existence of such assets. Based on the results of that inventory and comparative analysis and the selective counts, management concluded that the amounts presented in the condensed consolidated financial statements for the period ended September 30, 2003 for property and equipment, and associated depreciation, are fairly presented. In the fourth quarter of 2003, the Company implemented additional reports and enhanced approval procedures to supplement its controls and procedures with respect to tracking asset transfers.

     There were no other changes in the Company’s internal controls over financial reporting during the Company’s fiscal quarter ended September 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.



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     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Amendment No. 1 to quarterly report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 10, 2004
  By:   /s/ Harvey P. White 
      Harvey P. White
      Chief Executive Officer and Director
      (Principal Executive Officer)
Date: May 10, 2004
  By:   /s/ Stewart D. Hutcheson 
      Stewart D. Hutcheson
      Chief Financial Officer
      (Principal Financial Officer)