Exhibit 99.1
(LEAP LOGO)
Bock Communications, Inc. Leap contacts:
Stacee Lewis, Media Relations Kristin Atkins, Media Relations
714-540-1030 ext. 19 858-882-9105
slewis@bockpr.com katkins@leapwireless.com
Jim Seines, Investor Relations
858-882-6084
jseines@leapwireless.com
LEAP REPORTS RESULTS FOR FIRST FISCAL QUARTER OF 2004
~ Company Reports Significant Year-over-Year Improvement in Operating Metrics ~
SAN DIEGO - May 17, 2004 - Leap Wireless International, Inc., a leading provider
of innovative and value-driven wireless communications services, today announced
strong financial and operating results for the first quarter of 2004, which
reflect broadly improved performance across the Company's operations. Total
consolidated revenues for the first quarter were $206.8 million, representing a
12% increase over the $183.8 million total consolidated revenues reported for
the first quarter of 2003. Consolidated operating loss for the first quarter was
$22.3 million, representing an improvement of 65% over the $63.9 million
consolidated operating loss reported for the first quarter of 2003. Consolidated
net loss for the first quarter was $28.0 million, representing an improvement of
79% over the $133.5 million consolidated net loss reported for the first quarter
of 2003. Consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first quarter of 2004 was $51.2 million,
representing a 311% increase over the consolidated EBITDA of $12.5 million for
the first quarter of 2003. Leap's Cricket operations added approximately 65,700
net new subscribers during the first quarter to end the period with
approximately 1,538,000 total customers, and had a customer churn rate of 3.1%.
"Throughout the Company's restructuring process, we have maintained a
disciplined focus on improving our financial performance while remaining
committed to strengthening our business through the development of new products
and services," said Doug Hutcheson, Leap's executive vice president and CFO.
"Recently completed internal research indicates that 43% of Cricket customers do
not have traditional wireline phone service at home, up from 37% as measured in
May 2003 and from 26% as measured in June 2002. Our continued leadership
position in the wireless industry's trend toward landline displacement, combined
with the operational and financial results we have delivered for the first
quarter of 2004, demonstrate that we continue to
Leap Reports Results for First Fiscal Quarter of 2004 Page 2 of 14
(LEAP LOGO)
make strong progress in positioning our company for long-term success in the
telecommunications marketplace."
Key operational and financial performance measures for the first quarter of 2004
were as follows:
- - Average revenue per user per month (ARPU), based on service revenue,
was approximately $37.45, an improvement of $2.33 from the ARPU of
$35.12 for the first quarter of 2003.
- - Overall non-selling cash costs per user per month (CCU) for Leap's
consolidated business was approximately $20.08, an improvement of $3.68
from the CCU of $23.76 for the first quarter of 2003.
- - Cost per gross customer addition (CPGA) was approximately $124, an
improvement of $53 from the CPGA of approximately $177 for the first
quarter of 2003.
- - Churn was approximately 3.1%, an improvement of 1% from the churn of
approximately 4.1% for the first quarter of 2003.
- - Average minutes of use per customer per month (MOU) was approximately
1,500, compared to an average minutes of use per customer per month of
approximately 1,350 for the first quarter of 2003.
- - Cash paid for property and equipment (cash capital expenditures) was
$16.2 million for the first quarter of 2004.
As a result of the adoption of Emerging Issues Task Force (EITF) Issue No.
00-21, "Accounting for Revenue Arrangements with Multiple Deliverables" on July
1, 2003, the Company began recognizing activation fees immediately as equipment
revenue, which reduced ARPU and CPGA by $0.75 and $28, respectively, for the
three months ended March 31, 2004, compared to the ARPU and CPGA results that
would have been reflected if EITF Issue No. 00-21 had not been adopted.
"Over the past year we have focused on lowering our fixed cost structure, and
our performance during the first quarter reflects the results of this process,"
said Glenn Umetsu, Leap's executive vice president and COO. "While we have
benefited from a traditionally strong first quarter which had a positive impact
on both customer growth and churn rates, we expect to continue
Leap Reports Results for First Fiscal Quarter of 2004 Page 3 of 14
(LEAP LOGO)
exploring every opportunity to improve the operational efficiencies and growth
potential of our business."
As previously announced, Leap, Cricket and substantially all of their
subsidiaries filed voluntary petitions for reorganization under Chapter 11 of
the Bankruptcy Code on April 13, 2003 in the U.S. Bankruptcy Court for the
Southern District of California, in San Diego, Calif. In October 2003, the
Bankruptcy Court entered an order confirming the Company's Fifth Amended Joint
Plan of Reorganization, clearing the way for the Company to complete its
financial restructuring and emerge from Chapter 11. Consummation of the Plan of
Reorganization is subject to compliance with the terms and conditions set forth
in the Plan, including receipt of the required regulatory approval from the
Federal Communications Commission.
The existing stockholders of Leap will not receive any distribution under the
Plan of Reorganization, and the existing stock, options and warrants of Leap
Wireless International, Inc. will be cancelled on the effective date of the
Plan. The full text of the Company's Plan of Reorganization can be found under
the Restructuring Overview/Legal Documents section of the Company's website,
www.leapwireless.com.
ABOUT LEAP
Leap, headquartered in San Diego, Calif., is a customer-focused company
providing innovative communications services for the mass market. Leap pioneered
the Cricket Comfortable Wireless(R) service that lets customers make all of
their local calls from within their local calling area and receive calls from
anywhere for one low, flat rate. For more information, please visit
www.leapwireless.com
ABOUT CRICKET SERVICE
Cricket(R) service is an affordable wireless alternative to traditional landline
service and appeals to customers who want the most affordable, predictable and
best wireless value. With a commitment to value, predictability and simplicity
as the foundation of its business, Cricket designs and markets wireless products
to meet the needs of everyday people. Cricket(R) service is available in 39
markets in 20 states across the country stretching from New York to California.
For more information, please visit www.mycricket.com.
Leap Reports Results for First Fiscal Quarter of 2004 Page 4 of 14
(LEAP LOGO)
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
The information presented in this press release and in the attached financial
tables includes financial information prepared in accordance with generally
accepted accounting principles in the U.S., or GAAP, as well as other financial
measures that may be considered non-GAAP financial measures. Generally, a
non-GAAP financial measure, within the meaning of Securities and Exchange
Commission (SEC) Item 10 to Regulation S-K, is a numerical measure of a
company's financial performance that (a) excludes amounts, or is subject to
adjustments that have the effect of excluding amounts, that are included in the
comparable measure calculated and presented in accordance with GAAP in the
consolidated statement of operations or consolidated statement of cash flows; or
(b) includes amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the comparable measure so calculated
and presented. As described more fully in the notes to the attached financial
tables, management supplements the information provided by financial statement
measures with several customer focused performance metrics that are widely used
in the telecommunications industry. EBITDA, CPGA, and CCU are non-GAAP financial
measures. Non-GAAP financial measures should be considered in addition to, but
not as a substitute for, the information prepared in accordance with GAAP.
Reconciliations of non-GAAP financial measures used in this release to the most
directly comparable GAAP financial measure can be found in the section entitled
"Notes to Condensed Consolidated Financial Statements" included at the end of
this release.
Except for the historical information contained herein, this news release
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 news release is based
on current information, which we have assessed but which by its nature is
dynamic and subject to rapid and even abrupt changes. Our actual results could
differ materially from those stated or implied by such forward-looking
statements due to risks and uncertainties associated with our business. Factors
that could cause actual results to differ include, but are not limited to:
- - 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, including certain technical amendments
thereto, referred to herein as the Plan of Reorganization,
Leap Reports Results for First Fiscal Quarter of 2004 Page 5 of 14
(LEAP LOGO)
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 our Quarterly Report on Form 10-Q for the three months ended March
31, 2004 and in our 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. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Leap and the Leap logo design are trademarks of Leap Wireless International,
Inc. Cricket and Comfortable Wireless are registered trademarks of Cricket
Communications, Inc. Cricket +1, Cricket +2, Cricket Unlimited and Cricket Multi
Value Plan are trademarks of Cricket Communications, Inc.
Leap Reports Results for First Fiscal Quarter of 2004 Page 6 of 14
(LEAP LOGO)
LEAP WIRELESS INTERNATIONAL, INC.
(DEBTORS-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
MARCH 31, DECEMBER 31,
2004 2003
----------- -------------
ASSETS
Cash and cash equivalents ....................................... $ 94,472 $ 84,070
Short-term investments .......................................... 80,251 65,811
Restricted cash, cash equivalents and short-term investments(1).. 55,671 55,954
Funds distributed to Leap Creditor Trust(2) ..................... 68,790 67,800
Inventories ..................................................... 19,042 17,680
Other current assets ............................................ 46,153 39,145
----------- -------------
Total current assets ....................................... 364,379 330,460
Property and equipment, net ..................................... 760,769 817,075
Wireless licenses, net .......................................... 560,056 560,056
Other assets .................................................... 53,447 49,252
----------- -------------
Total assets ............................................... $ 1,738,651 $ 1,756,843
=========== =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued liabilities ........................ $ 70,192 $ 64,485
Debt in default(3) .............................................. 74,218 74,112
Other current liabilities ....................................... 71,887 68,952
----------- -------------
Total current liabilities not subject to compromise ........ 216,297 207,549
Other long-term liabilities ..................................... 57,697 55,157
----------- -------------
Total liabilities not subject to compromise ................ 273,994 262,706
Liabilities subject to compromise(4) ............................ 2,386,432 2,387,493
Stockholders' deficit:
Common stock .................................................. 6 6
Additional paid-in capital .................................... 1,155,528 1,156,410
Unearned stock-based compensation ............................. (193) (421)
Accumulated deficit ........................................... (2,076,461) (2,048,431)
Accumulated other comprehensive loss .......................... (655) (920)
----------- -------------
Total stockholders' deficit ................................ (921,775) (893,356)
----------- -------------
Total liabilities and stockholders' deficit ................ $ 1,738,651 $ 1,756,843
=========== =============
Leap Reports Results for First Fiscal Quarter of 2004 Page 7 of 14
(LEAP LOGO)
LEAP WIRELESS INTERNATIONAL, INC.
(DEBTORS-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2003
---------- ----------
Revenues:
Service revenues ............................................. $ 169,051 $ 160,648
Equipment revenues ........................................... 37,771 23,199
---------- ----------
Total revenues ........................................ 206,822 183,847
Operating expenses:
Cost of service (exclusive of items shown separately below)... (48,000) (52,748)
Cost of equipment ............................................ (43,755) (42,440)
Selling and marketing ........................................ (23,253) (21,265)
General and administrative ................................... (38,610) (47,414)
Depreciation and amortization ................................ (75,461) (76,615)
Impairment of long-lived assets .............................. -- (8,725)
---------- ----------
Total operating expenses .............................. (229,079) (249,207)
Gains on sale of wireless licenses ............................. -- 1,472
---------- ----------
Operating loss ............................................... (22,257) (63,888)
Interest income ................................................ -- 694
Interest expense ............................................... (1,823) (68,147)
Other income (expense), net .................................... 19 (268)
---------- ----------
Loss before reorganization items and income taxes .............. (24,061) (131,609)
Reorganization items, net(5) ................................... (2,025) --
---------- ----------
Loss before income taxes ....................................... (26,086) (131,609)
Income taxes ................................................... (1,944) (1,929)
---------- ----------
Net loss .............................................. $ (28,030) $ (133,538)
========== ==========
Basic and diluted net loss per common share .................... $ (0.48) $ (2.28)
========== ==========
Shares used in per share calculations:
Basic and diluted ............................................ 58,645 58,594
========== ==========
Leap Reports Results for First Fiscal Quarter of 2004 Page 8 of 14
(LEAP LOGO)
LEAP WIRELESS INTERNATIONAL, INC.
(DEBTORS-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED,
MARCH 31,
-------------------------
2004 2003
---------- ----------
Operating activities:
Net cash provided by operating activities ........ $ 40,760 $ 29,181
---------- ----------
Investing activities:
Purchase of property and equipment ................ (16,157) (4,222)
Net proceeds from sale of wireless licenses ....... -- 1,472
Purchase of investments ........................... (33,651) (22,440)
Sale and maturity of investments .................. 16,850 25,254
Restricted cash equivalents and investments, net... 2,600 (281)
---------- ----------
Net cash used in investing activities ...... (30,358) (217)
---------- ----------
Financing activities:
Repayment of notes payable ........................ -- (4,365)
---------- ----------
Net cash used in financing activities ...... -- (4,365)
---------- ----------
Net increase in cash and cash equivalents ........... 10,402 24,599
Cash and cash equivalents at beginning of period .... 84,070 100,860
---------- ----------
Cash and cash equivalents at end of period .......... $ 94,472 $ 125,459
========== ==========
Leap Reports Results for First Fiscal Quarter of 2004 Page 9 of 14
(LEAP LOGO)
LEAP WIRELESS INTERNATIONAL, INC.
(DEBTORS-IN-POSSESSION)
SCHEDULE OF SELECTED OPERATING METRICS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2003
---------- ----------
Gross additions ................................... 206,941 185,388
Net additions ..................................... 65,691 1,357
End of period customers ........................... 1,538,231 1,513,477
Churn(6) .......................................... 3.1% 4.1%
ARPU(7) (9) ....................................... $ 37.45 $ 35.12
CPGA(8) (9) ....................................... $ 124 $ 177
CCU(10) ........................................... $ 20.08 $ 23.76
Covered POPs (estimate, in millions)(11) .......... 25.9 25.5
Average minutes of use per customer per month ..... 1,500 1,350
Consolidated EBITDA (in thousands)(12) ............ $ 51,198 $ 12,459
Capital expenditures for property and equipment.... $ 16,157 $ 4,222
Leap Reports Results for First Fiscal Quarter of 2004 Page 10 of 14
(LEAP LOGO)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Pursuant to the Plan of Reorganization, the Company and the informal
committee of Cricket's senior secured vendor debtholders agreed to
establish a reserve at Cricket in the amount of $70.1 million to
satisfy allowed administrative claims and allowed priority claims
against Cricket and the related subsidiaries of Cricket and Leap that
hold assets that are either used in the Cricket business or pledged
under the senior secured vendor credit facilities, collectively
referred to as "the Cricket Companies," through the effective date of
the Plan of Reorganization. As of March 31, 2004, approximately $30
million remained in this reserve, which was included in restricted
cash, cash equivalents and short-term investments in the condensed
consolidated financial statements. In addition, at March 31, 2004, Leap
had $12.9 million of cash, cash equivalents and short-term investments,
all of which were classified as restricted in the condensed
consolidated financial statements.
(2) During the fourth quarter of 2003, Leap transferred $67.8 million to
the Leap Creditor Trust. The amount transferred has been classified as
an asset in the Company's condensed consolidated financial statements
because it generally will be used to discharge general unsecured claims
against Leap. In March 2004, Leap transferred an additional $990,000 to
the Leap Creditor Trust in connection with the agreement of the
informal committee of Cricket's senior secured vendor debt holders that
Cricket would pay 100% of the success fee payable to the debtors'
financial advisor upon the debtors' emergence from bankruptcy.
(3) The Company has classified the principal and accrued interest balances
outstanding for U.S. government financing as a short-term obligation in
the condensed consolidated balance sheets as of March 31, 2004 and
December 31, 2003, as a result of its Chapter 11 filing in April 2003,
which constituted an event of default of the underlying agreements.
(4) Liabilities subject to compromise refer to liabilities of the Company
incurred prior to the Petition Date that are with unrelated parties.
Substantially all of the Company's pre-petition liabilities, other than
principal and accrued interest payable to the FCC, have been classified
as liabilities subject to compromise in the condensed consolidated
balance sheets. Adjustments to the liabilities subject to compromise
may result from negotiations, actions of the Bankruptcy Court,
rejection of executory contracts including leases, implementation of
the Plan of Reorganization, or other events.
(5) Reorganization items represent amounts incurred by the Company as a
direct result of the Chapter 11 filings and are presented separately in
the condensed consolidated statements of operations. For the three
months ended March 31, 2004, reorganization items primarily consisted
of professional fees for legal, financial advisory and valuation
services directly associated with the Company's Chapter 11 filings and
reorganization process.
Leap Reports Results for First Fiscal Quarter of 2004 Page 11 of 14
(LEAP LOGO)
DEFINITION OF TERMS AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(6) Churn, an industry metric that measures customer turnover, is
calculated as the net number of customers that disconnect from our
service divided by the weighted average number of customers divided by
the number of months during the period being measured. Customers who do
not pay their first monthly bill are deducted from our gross customer
additions; as a result, these customers are not included in churn.
Management uses churn to measure our retention of customers, to measure
changes in customer retention over time, and to help evaluate how
changes in our business affect customer retention. In addition, churn
provides management with a useful measure to compare our customer
turnover activity to that of other wireless communications providers.
We believe investors use churn primarily as a tool to track changes in
our customer retention over time and to compare our customer retention
to that of other wireless providers.
(7) ARPU is an industry metric that measures service revenue divided by the
weighted average number of customers, divided by the number of months
during the period being measured. Management uses ARPU to identify
average revenue per customer, to track changes in average customer
revenues over time, to help evaluate how changes in our business,
including changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to compare our
subscriber revenue to that of other wireless communications providers.
We believe investors use ARPU primarily as a tool to track changes in
our average revenue per customer and to compare our per customer
service revenues to those of other wireless providers.
(8) CPGA is an industry metric that represents selling and marketing costs
and the loss on sale of handsets (generally defined as cost of
equipment less equipment revenue), excluding costs unrelated to initial
customer acquisition, divided by the total number of gross new customer
additions during the period being measured. Costs unrelated to initial
customer acquisition include the revenues and costs associated with the
sale of handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs relating to
handsets). We deduct customers who do not pay their first monthly bill
from our gross customer additions, which tends to increase CPGA because
we incur the costs associated with this customer without receiving the
benefit of a gross customer addition. Management uses CPGA to measure
the efficiency of our customer acquisition efforts, to track changes in
our average cost of acquiring new subscribers over time, and to help
evaluate how changes in our sales and distribution strategies affect
the cost-efficiency of our customer acquisition efforts. In addition,
CPGA provides management with a useful measure to compare our per
customer acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to track
changes in our average cost of acquiring new customers and to compare
our per customer acquisition costs to those of other wireless
providers.
Leap Reports Results for First Fiscal Quarter of 2004 Page 12 of 14
(LEAP LOGO)
The following table reconciles total costs used in the calculation of
CPGA to selling and marketing expense, which we consider to be the most
directly comparable GAAP financial measure to CPGA (in thousands,
except gross additions and CPGA):
THREE MONTHS ENDED,
MARCH 31,
-------------------------
2004 2003
---------- ----------
Selling and marketing expense ................................ 23,253 $ 21,265
Plus cost of equipment ..................................... 43,755 42,440
Less equipment revenue ..................................... (37,771) (23,199)
Less net loss on equipment transactions unrelated to initial
customer acquisition ....................................... (3,667) (7,627)
---------- ----------
Total costs used in the calculation of CPGA .............. $ 25,570 $ 32,879
Gross additions .............................................. 206,941 185,388
---------- ----------
CPGA ......................................................... $ 124 $ 177
========== ==========
(9) The Company adopted Emerging Issues Task Force (EITF) Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables" on
July 1, 2003. Prior to the adoption of EITF Issue No. 00-21, activation
fees were included in ARPU as service revenue and deferred over the
estimated customer relationship period. Upon the adoption of EITF Issue
No. 00-21, we began recognizing activation fees immediately as
equipment revenue, which reduced ARPU and CPGA by $0.75 and $28,
respectively, for the three months ended March 31, 2004, compared to
the ARPU and CPGA results that would have been reflected if EITF Issue
No. 00-21 had not been adopted.
(10) CCU is an industry metric that measures cost of service, general and
administrative costs, gain or loss on sale of handsets to existing
customers and costs associated with handset replacements and repairs
(other than warranty costs relating to handsets), divided by the
weighted average number of customers, divided by the number of months
during the period being measured. CCU does not include any depreciation
and amortization expense. Management uses CCU as a tool to evaluate the
non-selling cash expenses associated with ongoing business operations
on a per customer basis, to track changes in these non-selling cash
costs over time, and to help evaluate how changes in our business
operations affect non-selling cash costs per customer. In addition, CCU
provides management with a useful measure to compare our non-selling
cash costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to track
changes in our non-selling cash costs over time and to compare our
non-selling cash costs to those of other wireless providers.
The following table reconciles total costs used in the calculation of
CCU to cost of service, which we consider to be the most directly
comparable GAAP financial measure to CCU (in thousands, except
weighted-average customers and CCU):
Leap Reports Results for First Fiscal Quarter of 2004 Page 13 of 14
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THREE MONTHS ENDED
MARCH 31,
------------------------
2004 2003
---------- ----------
Cost of service .............................................. $ 48,000 $ 52,748
Plus general and administrative expense .................... 38,610 47,414
Plus net loss on equipment transactions unrelated to initial
customer acquisition ....................................... 3,667 7,627
---------- ----------
Total costs used in the calculation of CCU ............... $ 90,277 $ 107,789
Weighted-average customers ................................... 1,498,449 1,512,043
---------- ----------
CCU .......................................................... $ 20.08 $ 23.76
========== ==========
(11) Covered POPs represent the number of residents covered by our networks.
The number of residents covered by our networks does not represent the
number of wireless customers that we serve or expect to serve in our
Cricket markets.
(12) Consolidated EBITDA represents net income (loss) before income taxes,
interest expense, interest income, depreciation, and amortization. We
present consolidated EBITDA as a supplemental performance measure
because management believes it facilitates operating performance
comparisons from period to period and company to company by backing out
potential differences caused by variations in capital structures
(affecting interest expense), tax positions (such as the impact on
periods or companies of changes in effective tax rates or net operating
losses) and the age and book depreciation of fixed assets (affecting
relative depreciation expenses). While depreciation and amortization
are considered operating costs under generally accepted accounting
principles, these expenses primarily represent the non-cash current
period allocation of costs associated with long-lived assets acquired
or constructed in prior periods. Because consolidated EBITDA
facilitates internal comparisons of our historical operating
performance, management also uses consolidated EBITDA for business
planning purposes and in measuring our performance relative to that of
our competitors. Also, a substantial portion of the bonuses paid to our
employees under the Company's bonus plan is based on the Company's
achieving consolidated EBITDA targets. In addition, we believe that
consolidated EBITDA and similar measures are widely used by investors,
financial analysts and credit rating agencies as a measure of our
financial performance over time and to compare our financial
performance with that of other companies in our industry. Consolidated
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation or as a substitute for analysis of our results
as reported under GAAP. Some of these limitations are:
- - it does not reflect our expenditures for capital expenditures;
- - although it does not include depreciation and amortization, the assets
being depreciated and amortized will often have to be replaced in the
future, and consolidated EBITDA does not reflect cash requirements for
such replacements;
- - it does not reflect the interest expense necessary to service interest
or principal payments on current or future indebtedness;
- - it does not reflect expenses incurred for the payment of income taxes
and other taxes; and
- - other companies, including companies in our industry, may calculate
this measure differently than we do, limiting its usefulness as a
comparative measure.
Leap Reports Results for First Fiscal Quarter of 2004 Page 14 of 14
(LEAP LOGO)
Management compensates for these limitations by relying on our
GAAP results and using consolidated EBITDA only
supplementally.
The reconciliation of consolidated EBITDA to net income
(loss), the most directly comparable GAAP financial measure,
is provided below:
THREE MONTHS ENDED,
MARCH 31,
-------------------------
2004 2003
---------- ----------
Consolidated net loss ................. $ (28,030) $ (133,538)
Plus income taxes ................... 1,944 1,929
Plus interest expense ............... 1,823 68,147
Less interest income ................ -- (694)
Plus depreciation and amortization... 75,461 76,615
---------- ----------
Consolidated EBITDA .................. $ 51,198 $ 12,459
========== ==========
###