Leap Reports Second Quarter Results

                     Leap Reports Second Quarter Results

- ARPU increased over $3 year-over-year as device mix continues to shift to
smartphones and higher-end service plans

- Significant year-over-year improvement in free cash flow

Note: A webcast of Leap's conference call and accompanying presentation slides
will be available at 5:00 p.m. EDT today at http://investor.leapwireless.com.

PR Newswire

SAN DIEGO, Aug. 1, 2013

SAN DIEGO, Aug. 1, 2013 /PRNewswire/ -- Leap Wireless International, Inc.
(NASDAQ: LEAP) today reported operational and financial results for the three
and six months ended June30, 2013. Total revenues for the second quarter of
2013 decreased 7 percent to $731.5 million and service revenues decreased 10
percent to $678.5 million. The Company reported $148.8 million of adjusted
operating income before depreciation and amortization (OIBDA) for the second
quarter of 2013, compared to $190.8 million for the prior year quarter. Second
quarter 2013 operating loss was $7.6 million, compared to operating income of
$31.6 million for the second quarter of 2012.

(Logo: http://photos.prnewswire.com/prnh/20101220/MM20546LOGO-a)

The Company reported approximately 240,000 core wireless gross customer
additions for the second quarter of 2013 and approximately 255,000 core
wireless net customer losses. Core wireless churn for the second quarter of
2013 was 3.6 percent. "Core wireless" refers to the Company's traditional,
monthly voice service (Cricket Wireless) and excludes customers for Cricket
Broadband and Cricket PAYGo™.

The Company reported a total of approximately 283,000 gross customer additions
and a total of approximately 364,000 net customer losses for the second
quarter of 2013. Total churn for the second quarter of 2013 was 4.3 percent.

Financial Results and Operating Metrics ^(1)

(Unaudited; in millions^(2), except for customer data, operating metrics and per share
amounts)
                  Three Months Ended June 30,         Six Months Ended June 30,
                  2013         2012         Change    2013         2012         Change
Service revenues  $ 678.5      $ 751.3      (9.7)  %  $ 1,363.1    $ 1,525.3    (10.6) %
Total revenues    $ 731.5      $ 786.8      (7.0)  %  $ 1,521.4    $ 1,612.4    (5.6)  %
Operating income  $ (7.6)      $ 31.6       *         $ (36.9)     $ 15.8       *
(loss)
Adjusted OIBDA    $ 148.8      $ 190.8      (22.0) %  $ 269.9      $ 321.3      (16.0) %
Adjusted OIBDA
as a percentage   22        %  25        %  —         20        %  21        %  —
of service
revenues
Net loss          $ (156.4)    $ (46.0)     *         $ (266.0)    $ (140.3)    89.6   %
Net loss
attributable to   $ (163.1)    $ (41.6)     *         $ (274.4)    $ (140.0)    96.0   %
common
stockholders
Diluted loss per
share
attributable to   $ (2.09)     $ (0.54)     *         $ (3.50)     $ (1.82)     92.3   %
common
stockholders
Gross customer    283,066      492,720      (42.6) %  756,947      1,352,267    (44.0) %
additions^(3)
Net customer      (364,268)    (289,270)    25.9   %  (457,305)    (31,210)     *
losses
End of period     4,839,478    5,902,803    (18.0) %  4,839,478    5,902,803    (18.0) %
customers
Weighted-average  5,031,930    5,992,047    (16.0) %  5,122,768    6,008,737    (14.7) %
customers
Churn             4.3       %  4.4       %  —         4.0       %  3.8       %  —
End of period     ~96.2        ~95.4        —         ~96.2        ~95.4        —
covered POPS
Average revenue   $ 44.89      $ 41.64      7.8    %  $ 44.30      $ 42.12      5.2    %
per user (ARPU)
Cash cost per     $ 27.79      $ 22.91      21.3   %  $ 27.06      $ 23.73      14.0   %
user (CCU)
Cost per gross    $ 387        $ 296        30.7   %  $ 343        $ 253        35.6   %
addition (CPGA)
Free cash flow    $ (33.0)     $ (103.8)    (68.2) %  $ (33.8)     $ (214.8)    (84.3) %
Free cash flow
(excluding early  $ 9.6        $ (103.8)    *         $ 8.8        $ (214.8)    *
debt prepayment
premium)
Net cash
provided by
(used in)         $ (10.5)     $ 15.3       *         $ 15.0       $ 50.6       (70.4) %
operating
activities
Cash purchases
of property and   $ 22.5       $ 119.1      (81.1) %  $ 48.9       $ 265.4      (81.6) %
equipment
Unrestricted
cash, cash
equivalents and   $ 913.1      $ 524.4      74.1   %  $ 913.1      $ 524.4      74.1   %
short-term
investments
Core Wireless
Metrics
Core wireless
gross customer    239,514      364,678      (34.3) %  632,498      996,590      (36.5) %
additions
Core wireless
net customer      (255,132)    (142,779)    78.7   %  (263,634)    20,834       *
additions
(losses)
Core wireless
end of period     4,381,735    5,029,314    (12.9) %  4,381,735    5,029,314    (12.9) %
customers
Core wireless     3.6       %  3.3       %  —         3.3       %  3.2       %  —
churn

*   Percentage change not meaningful.
    For a reconciliation of non-GAAP financial measures, please refer to the
    section entitled "Definition of Terms and Reconciliation of Non-GAAP
(1) Financial Measures" included at the end of this release. Information
    relating to population and potential customers (POPs) is based on
    population estimates provided by Claritas Inc. for the relevant year.
(2) Minor calculation differences may exist in percentage changes due to
    rounding.
    The Company recognizes a gross customer addition for each Cricket
(3) Wireless, Cricket Broadband and Cricket PAYGo line of service activated by
    a customer.



Discussion of Financial and Operational Results for the Quarter

Customer Activity

  oEnd-of-period customers for the second quarter of 2013 were 4,839,478, an
    18 percent decrease from end-of-period customers for the second quarter of
    2012.
  oThe Company reported a net loss of 364,268 customers for the second
    quarter of 2013, compared to a net loss of 289,270 customers for the
    second quarter of 2012.

       oNet customer losses reflected fewer gross additions due to
         intensified competition in our markets and increasing customer demand
         for 4G data services, combined with a 57 percent year-over-year
         increase in our out-the-door handset pricing and fewer reactivating
         customers.

  oTotal churn for the second quarter of 2013 was 4.3 percent, compared to
    4.4 percent for the second quarter of 2012, and reflected approximately
    400,000 fewer gross deactivations in the second quarter 2013 compared to
    the prior year period, partially offset by fewer reactivations.

       oCore wireless churn for the second quarter of 2013 was 3.6 percent,
         compared to 3.3 percent for the comparable period of the prior year.

  o72 percent of the Company's new handset sales in the second quarter of
    2013 were for smartphones and approximately 10 percent of the Company's
    voice customer base upgraded their handsets during the quarter.

Revenues and ARPU

  oTotal revenues for the second quarter of 2013 were $731.5 million, a 7
    percent decrease over the comparable period of the prior year, primarily
    due to a lower average number of customers, partially offset by higher
    average service revenue per customer (ARPU) and sales of higher-priced
    devices.
  oService revenues for the second quarter of 2013 were $678.5 million, a 10
    percent decrease over the comparable period of the prior year, primarily
    due to a lower average number of customers resulting from net customer
    losses, partially offset by higher ARPU.
  oARPU for the second quarter of 2013 was $44.89, an increase of $3.25 over
    the comparable period of the prior year. The year-over-year increase in
    ARPU primarily reflected an improved mix of higher-value service plans and
    additional fees and a reduction in the number of customers for the
    Company's daily PAYGo product.

Adjusted OIBDA, Operating Expense & Financial Metrics

  oAdjusted OIBDA for the second quarter of 2013 was $148.8 million, a
    decrease of 22 percent over the comparable period of the prior year. The
    year-over-year decrease was primarily driven by lower revenues due to
    lower average number of customers, partially offset by lower operating
    expenses, including lower device subsidy.
  oSecond quarter 2013 operating loss was $7.6 million, compared to an
    operating income of $31.6 million for the comparable period of the prior
    year. The year-over-year change was primarily driven by lower revenues due
    to the lower average number of customers.
  oCCU for the second quarter of 2013 increased 21 percent over the prior
    year quarter to $27.79, reflecting the year-over-year reduction in the
    average number of customers, increased product costs and changes in the
    Company's dealer compensation structure to focus on customer retention.
  oCPGA for the second quarter of 2013 increased by 31 percent over the prior
    year quarter to $387, reflecting 43 percent fewer gross customer additions
    than in the second quarter of 2012.
  oNet loss attributable to common stockholders for the second quarter of
    2013 was $163.1 million, or ($2.09) per diluted share, compared to a net
    loss attributable to common stockholders of $41.6 million, or ($0.54) per
    diluted share, for the second quarter of 2012. The year-over-year increase
    in net loss attributable to common stockholders was primarily driven by
    lower revenues due to the lower average number of customers, as well as a
    loss on early extinguishment of debt of $73 million related to the
    redemption of the Company's $1.1 billion in principal amount of senior
    secured notes and the purchase of $1.8 million of the Company's
    convertible senior notes in connection with the borrowing of $1,425
    million of term loans under the Company's Credit Agreement in April 2013.

Capital Expenditures and Free Cash Flow

  oCapital expenditures during the second quarter of 2013 were $22.5 million,
    compared to $119.1 million for the prior year quarter.
  oFree cash flow for the second quarter of 2013 was ($33.0) million,
    compared to ($103.8) million for the prior year quarter. Second quarter
    2013 free cash flow reflected approximately $43 million of premium
    payments made in April 2013 in connection with the Company's redemption of
    $1.1 billion in principal amount of senior secured notes. The improvement
    to free cash flow was primarily driven by lower capital expenditures,
    partially offset by a decrease in cash flow from operations resulting from
    a lower average number of customers.
  oNet cash provided by (used in) operating activities for the second quarter
    2013 was ($10.5) million, compared to $15.3 million for the prior year
    quarter, reflecting the effect of the premium payments on the senior
    secured notes in April 2013.
  oTotal capital expenditures for 2013 are expected to be between $150
    million and $200 million.

Other Significant Business Highlights

  oIntroduced the Kyocera Kona flip-phone catering to talk-and-text users
  oIntroduced Cricket's new Family Plan
  oAppointed Julie Dexter Berg as the Company's Chief Marketing Officer
  oIntroduced the 4G Samsung Galaxy S4
  oLaunched the Company's "Half is More" marketing campaign

Merger Agreement with AT&T

On July 12, 2013, the Company entered into a merger agreement with AT&T, Inc.
(AT&T) for AT&T to acquire the Company for $15 in cash per share, plus one
non-transferable contingent value right per share, subject to customary
closing conditions, including stockholder and regulatory approvals. For
additional information regarding the transaction, please see the Company's
filings with the Securities and Exchange Commission (the "SEC"), including its
current report on Form 8-K dated July 12, 2013, as filed with the SEC on July
15, 2013.

Webcast Information
As previously announced, Leap management will host a live webcast at
approximately 5:00 p.m. EDT / 2:00 p.m. PDT today to discuss these results.
Other forward-looking and material information may also be discussed during
this call.

To listen live via telephone, dial 1-800-926-9907 (domestic) or 1-212-271-4657
(international). No participant pass code number is required for this call.

More information about this event including a live webcast, the accompanying
presentation slides and other supporting materials may be accessed by visiting
http://earnings.leapwireless.com.These materials will be available for
download at approximately 5:00 p.m. EDT/2:00 p.m. PDT.

A replay of the conference call will be available for a limited time via
webcast, MP3 or telephone and may be accessed by visiting
http://earnings.leapwireless.comor dialing 1-800-633-8284 (domestic) or
1-402-977-9140 (international) and entering reservation number 21667819.

About Leap
Leap provides innovative, high-value wireless services to a young and
ethnically diverse customer base. With the value of unlimited wireless
services as the foundation of its business, Leap pioneered its Cricket
service. Cricket products and services are available nationwide through
company-owned stores, dealers, national retailers and at MyCricket.com. 
Through its affordable, flat-rate service plans, Cricket offers customers a
choice of unlimited voice, text, data and mobile Web services. Headquartered
in San Diego, Calif., Leap is traded on the NASDAQ Global Select Market under
the ticker symbol "LEAP." For more information, please visit
www.leapwireless.com. 

Notes Regarding Non-GAAP Financial Measures
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 non-GAAP
financial measures. Generally, a non-GAAP financial measure, within the
meaning of Item 10 of Regulation S-K promulgated by the Securities and
Exchange Commission (SEC), is a numerical measure of a company's financial
performance or cash flows that (a) excludes amounts, or is subject to
adjustments that have the effect of excluding amounts, which are included in
the most directly comparable measure calculated and presented in accordance
with GAAP in the condensed consolidated balance sheets, condensed consolidated
statements of comprehensive income or condensed consolidated statements of
cash flows; or (b) includes amounts, or is subject to adjustments that have
the effect of including amounts, which are excluded from the most directly
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.
Adjusted OIBDA, free cash flow, CPGA, ARPU 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 measures can be found in the section
entitled "Definition of Terms and Reconciliation of Non-GAAP Financial
Measures" included toward the end of this release.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements reflect
management's current expectations based on currently available operating,
financial and competitive information, but are subject to risks, uncertainties
and assumptions that could cause actual results to differ materially from
those anticipated in or implied by the forward-looking statements. Our
forward-looking statements include our discussions about planned product and
service plan developments, expected customer activity, future capital
expenditures and LTE deployment and expected financial and operational
performance, and are generally identified with words such as "believe,"
"expect," "intend," "plan," "could," "may" and similar expressions. Risks,
uncertainties and assumptions that could affect our forward-looking statements
include, among other things:

  oour ability to attract and retain customers in an extremely competitive
    marketplace;
  oour ability to successfully implement product and service plan offerings
    and execute effectively on our strategic activities;
  oour ability to compete effectively against wireless carriers with
    nationwide networks and significantly greater deployment of 4G Long Term
    Evolution, or LTE, network technology, and the impact of competitors'
    initiatives (including new service plans and pricing) and our ability to
    anticipate and respond to such initiatives;
  oour ability to offer customers cost-effective 4G LTE services and to meet
    increasing customer demand for high-quality, high-speed data services;
  ouncertainties with respect to the proposed merger with AT&T, including the
    possibility that the proposed merger may not close or may be delayed,
    including due to the failure to timely receive required regulatory and
    stockholder approvals or satisfy other closing conditions;
  othe effect of the announcement of the proposed merger with AT&T on our
    customers, employees, suppliers, vendors, distributors, dealers,
    retailers, content and application providers, operating results and
    business generally;
  othe diversion of management's time and attention while the proposed merger
    transaction is pending;
  othe amount of the costs, fees, expenses and charges related to the merger;
  oour ability to operate our business in light of the proposed merger with
    AT&T and the covenants contained in the Agreement and Plan of Merger,
    dated as of July 12, 2013, between Leap, AT&T and the other parties
    thereto;
  ochanges in economic conditions, including interest rates, consumer credit
    conditions, consumer debt levels, consumer confidence, unemployment rates,
    energy and transportation costs and other macro-economic factors that
    could adversely affect demand for the services we provide;
  oour ability to meet significant purchase commitments under agreements we
    have entered into;
  oour ability to refinance our indebtedness under, and comply with the
    covenants in, any credit agreement, indenture or similar instrument
    governing our existing indebtedness or any future indebtedness;
  ofuture customer usage of our wireless services, which could exceed our
    expectations, and our ability to manage or increase network capacity to
    meet increasing customer demand, in particular demand for data services;
  oour ability to obtain and maintain 3G and 4G roaming and wholesale
    services from other carriers at cost-effective rates;
  oour ability to acquire or obtain access to additional spectrum in the
    future at a reasonable cost or on a timely basis;
  oour ability to cost-effectively procure handsets compatible with our
    network technology and frequency channels;
  ofailure of our network or information technology systems to perform
    according to expectations and risks associated with the ongoing operation
    and maintenance of those systems, including our customer billing system;
  oour ability to attract, integrate, motivate and retain an experienced
    workforce, including members of senior management;
  oour ability to maintain effective internal control over financial
    reporting; and
  oother factors detailed in the section entitled "Risk Factors" included in
    our periodic reports filed with the SEC, including our Quarterly Report on
    Form 10-Q for the quarter ended March 31, 2013 filed with the SEC on May
    2, 2013 and our Quarterly Report on Form 10-Q for the quarter ended June
    30, 2013, which we expect to file shortly with the SEC.

All forward-looking statements included in this news release should be
considered in the context of these risks. All forward-looking statements speak
only as of August 1, 2013, and we undertake no obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise. Investors and prospective investors are cautioned not to
place undue reliance on our forward-looking statements.

Leap is a U.S.registered trademark and the Leap logo is a trademark of Leap.
Cricket, Cricket Wireless, Cricket Clicks, Muve Music, Muve First, Muve
Headliner, MyPerks, Flex Bucket, Real Unlimited Unreal Savings and the Cricket
"K" are U.S.registered trademarks of Cricket. In addition, the following are
trademarks or service marks of Cricket: BridgePay, Cricket By Week, Cricket
Choice, Cricket Connect, Cricket Nation, Cricket PAYGo, Muve, Muve Money,
Cricket Crosswave, Seek Music, Cricket MyPerks and Cricket Wireless Internet
Service. All other trademarks are the property of their respective owners.



LEAP WIRELESS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS ^(1)

(In thousands, except share amounts)
                                                    June 30,      December 31,

                                                    2013          2012
Assets                                              (Unaudited)
Cash and cash equivalents                           $ 605,039     $ 515,550
Short-term investments                              308,012       159,426
Inventories                                         102,533       121,601
Deferred charges                                    49,331        60,963
Other current assets                                167,442       139,242
Total current assets                                1,232,357     996,782
Property and equipment, net                         1,499,934     1,762,090
Wireless licenses                                   2,090,821     1,947,333
Assets held for sale                                1,835         136,222
Goodwill                                            31,886        31,886
Intangible assets, net                              18,581        24,663
Other assets                                        87,999        68,284
Total assets                                        $ 4,963,413   $ 4,967,260
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities            $ 325,928     $ 396,110
Current maturities of long-term debt                18,250        4,000
Other current liabilities                           211,604       216,880
Total current liabilities                           555,782       616,990
Long-term debt, net                                 3,619,964     3,298,463
Deferred tax liabilities                            407,794       385,111
Other long-term liabilities                         157,027       169,047
Total liabilities                                   4,740,567     4,469,611
Redeemable non-controlling interests                58,550        64,517
Stockholders' equity:
Preferred stock- authorized 10,000,000shares,     —             —
$.0001par value; no shares issued and outstanding
Common stock - authorized 160,000,000 shares,
$.0001 par value; 79,180,726 and 79,194,750 shares  8             8
issued and outstanding at June 30, 2013 and
December 31, 2012, respectively
Additional paid-in capital                          2,179,639     2,182,503
Accumulated deficit                                 (2,014,653)   (1,748,694)
Accumulated other comprehensive loss                (698)         (685)
Total stockholders' equity                          164,296       433,132
Total liabilities and stockholders' equity          $ 4,963,413   $ 4,967,260



LEAP WIRELESS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ^(1)

(Unaudited and in thousands, except per share data)
                       Three Months Ended June 30,  Six Months Ended June 30,
                       2013            2012         2013          2012
Revenues:
Service revenues       $  678,497      $ 751,285    $ 1,363,119   $ 1,525,283
Equipment revenues     53,046          35,487       158,282       87,108
 Total revenues      731,543         786,772      1,521,401     1,612,391
Operating expenses:
Cost of service
(exclusive of items    249,371         256,555      500,229       517,866
shown separately
below)
Cost of equipment      183,658         171,673      442,626       419,520
Selling and marketing  69,397          77,247       148,235       172,801
General and            83,402          94,892       165,627       184,591
administrative
Depreciation and       150,856         154,483      303,429       301,026
amortization
Impairments and other  4,287           —            5,022         —
charges
 Total operating     740,971         754,850      1,565,168     1,595,804
expenses
Gain (loss) on sale,
exchange or disposal   1,870           (333)        6,858         (801)
of assets, net
 Operating income    (7,558)         31,589       (36,909)      15,786
(loss)
Equity in net income
(loss) of investees,   1,696           (59)         538           134
net
Interest income        58              28           105           57
Interest expense       (66,851)        (66,983)     (131,576)     (134,025)
Loss on
extinguishment of      (72,988)        —            (72,988)      —
debt
 Loss before income  (145,643)       (35,425)     (240,830)     (118,048)
taxes
Income tax expense     (10,710)        (10,562)     (25,130)      (22,273)
 Net loss            (156,353)       (45,987)     (265,960)     (140,321)
Accretion of
redeemable
non-controlling        (6,756)         4,397        (8,461)       292
interests and
distributions, net of
tax
 Net loss
attributable to        $  (163,109)    $ (41,590)   $ (274,421)   $ (140,029)
common stockholders
Loss per share
attributable to
common stockholders:
Basic                  $  (2.09)       $ (0.54)     $ (3.50)      $ (1.82)
Diluted                $  (2.09)       $ (0.54)     $ (3.50)      $ (1.82)
Shares used in per
share calculations:
Basic                  77,915          77,206       78,347        77,116
Diluted                77,915          77,206       78,347        77,116
Other comprehensive
loss:
 Net loss             $  (156,353)    $ (45,987)   $ (265,960)   $ (140,321)
 Net unrealized
holding gains          (10)            10           (13)          12
(losses) on
investments and other
Comprehensive loss     $  (156,363)    $ (45,977)   $ (265,973)   $ (140,309)



LEAP WIRELESS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ^ (1)

(Unaudited and in thousands)
                                                    Six Months Ended June 30,
                                                    2013          2012
Operating activities:
Net cash provided by operating activities      $ 15,028      $ 50,619
Investing activities:
Purchases of property and equipment                 (48,861)      (265,412)
Change in prepayments for purchases of property     (4,986)       (1,940)
and equipment
Purchases of wireless licenses and spectrum         (2,337)       (2,712)
clearing costs
Proceeds from sales of wireless licenses and        3,404         1,420
operating assets, net
Purchases of investments                            (334,935)     (173,141)
Sales and maturities of investments                 186,103       440,734
Change in restricted cash                           (891)         (1,501)
Net cash used in investing activities               (202,503)     (2,552)
Financing activities:
Proceeds from issuance of long-term debt            1,414,313     —
Repayment of long-term debt                         (1,103,796)   —
Payment of debt issuance costs                      (15,800)      —
Proceeds from issuance of common stock              620           483
Payments made to joint venture partners             (14,867)      (5,230)
Other                                               (3,506)       (2,187)
Net cash provided by (used in) financing            276,964       (6,934)
activities
Net increase in cash and cash equivalents           89,489        41,133
Cash and cash equivalents at beginning of period    515,550       345,243
Cash and cash equivalents at end of period          $ 605,039     $ 386,376
Supplementary disclosure of cash flow information:
Cash paid for interest                              $ (138,236)   $ (126,747)
Cash paid for income taxes                          $ (4,088)     $ (3,943)
Net wireless licenses received in exchange          (6,809)       —
transaction



Explanatory Note to Financial Statements


    The condensed consolidated financial statements and the tables of results
    and operating and financial metrics included at the beginning of this
    release include the operating results and financial position of Leap and
    its wholly-owned subsidiaries and consolidated joint ventures. The Company
(1) consolidates STX Wireless, LLC in accordance with the authoritative
    guidance for consolidations based on the voting interest model. All
    intercompany accounts and transactions have been eliminated in the
    condensed consolidated financial statements.

    
    The following tables summarize operating data for the Company's
    consolidated operations for the three and six months ended June 30, 2013
    and 2012 (in thousands, except percentages):



                Three Months Ended June 30,
                                                              Change from Prior
                                                              Year
                             % of                   % of
                2013         2013      2012         2012      Dollars      Percent
                             Service                Service
                             Revenues               Revenues
                (Unaudited)            (Unaudited)
Revenues:
Service         $  678,497             $  751,285             $ (72,788)   (9.7)  %
revenues
Equipment       53,046                 35,487                 17,559       49.5   %
revenues
Total revenues  731,543                786,772                (55,229)     (7.0)  %
Operating
expenses:
Cost of         249,371      36.8   %  256,555      34.1   %  (7,184)      (2.8)  %
service
Cost of         183,658      27.1   %  171,673      22.9   %  11,985       7.0    %
equipment
Selling and     69,397       10.2   %  77,247       10.3   %  (7,850)      (10.2) %
marketing
General and     83,402       12.3   %  94,892       12.6   %  (11,490)     (12.1) %
administrative
Depreciation
and             150,856      22.2   %  154,483      20.6   %  (3,627)      (2.3)  %
amortization
Impairments
and other       4,287        0.6    %  —            —      %  4,287        *
charges
Total
operating       740,971      109.2  %  754,850      100.5  %  (13,879)     (1.8)  %
expenses
Gain (loss) on
sale, exchange  1,870        0.3    %  (333)        —      %  2,203        *
or disposal of
assets, net
Operating       $  (7,558)   (1.1)  %  $  31,589    4.2    %  $ (39,147)   *
income (loss)

*Percentage change not meaningful.



                Six Months Ended June 30,
                                                                Change from Prior
                                                                Year
                              % of                    % of
                2013          2013      2012          2012      Dollars       Percent
                              Service                 Service
                              Revenues                Revenues
                (Unaudited)             (Unaudited)
Revenues:
Service         $ 1,363,119             $ 1,525,283             $ (162,164)   (10.6) %
revenues
Equipment       158,282                 87,108                  71,174        81.7   %
revenues
Total revenues  1,521,401               1,612,391               (90,990)      (5.6)  %
Operating
expenses:
Cost of         500,229       36.7   %  517,866       34.0   %  (17,637)      (3.4)  %
service
Cost of         442,626       32.5   %  419,520       27.5   %  23,106        5.5    %
equipment
Selling and     148,235       10.9   %  172,801       11.3   %  (24,566)      (14.2) %
marketing
General and     165,627       12.2   %  184,591       12.1   %  (18,964)      (10.3) %
administrative
Depreciation
and             303,429       22.3   %  301,026       19.7   %  2,403         0.8    %
amortization
Impairments
and other       5,022         0.4    %  —             —      %  5,022         *
charges
Total
operating       1,565,168     114.8  %  1,595,804     104.6  %  (30,636)      (1.9)  %
expenses
Gain (loss) on
sale, exchange  6,858         0.5    %  (801)         (0.1)  %  7,659         *
or disposal of
assets, net
Operating       $ (36,909)    (2.7)  %  $ 15,786      1.0    %  $ (52,695)    *
income (loss)

*Percentage change not meaningful.



Definition of Terms and Reconciliation of Non-GAAP Financial Measures
The Company utilizes certain financial measures that are widely used in the
telecommunications industry and are not calculated based on GAAP. Certain of
these financial measures are considered non-GAAP financial measures within the
meaning of Item 10 of Regulation S-K promulgated by the SEC.
    Churn, which 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 the first bill
    they receive following initial activation are deducted from our gross
    customer additions in the month in which they are disconnected; as a
    result, these customers are not included in churn. Customers of our
    Cricket Wireless and Cricket Broadband service are generally disconnected
    from service approximately 30days after failing to pay a monthly bill,
    and pay-in-advance customers who ask to terminate their service are
    disconnected when their paid service period ends. Cricket PAYGo customers
(1) generally have 60 days from the date they activated their account, were
    charged a daily or monthly access fee for service or last "topped-up"
    their account (whichever is later) to do so again, or they will have their
    account suspended for a subsequent 60-day period before being
    disconnected. 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 communications providers. Other companies may calculate this
    measure differently.
    ARPU is service revenues, less pass-through regulatory fees and
    telecommunications taxes, 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,
    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. Our customers are generally disconnected from service after a
(2) specified period following their failure to either pay a monthly bill or
    replenish, or "top-up," their account. Because our calculation of
    weighted-average number of customers includes customers who are not
    currently paying for service but who have not yet been disconnected from
    service because they have not paid their last bill or have not replenished
    their account, ARPU may appear lower during periods in which we have
    significant disconnect activity. 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
    communications providers. Other companies may calculate this measure
    differently.
    The following table reconciles total service revenues used in the
    calculation of ARPU to service revenues, which we consider to be the most
    directly comparable GAAP financial measure to ARPU (unaudited; in
    thousands, except weighted-average number of customers and ARPU):



                       Three Months Ended June 30,  Six Months EndedJune 30,
                       2013            2012         2013          2012
Service revenues       $  678,497      $  751,285   $ 1,363,119   $ 1,525,283
Less pass-through
regulatory fees and    (774)           (2,678)      (1,629)       (6,815)
telecommunications
taxes
Total service
revenues used in the   $  677,723      $  748,607   $ 1,361,490   $ 1,518,468
calculation of ARPU
Weighted-average       5,031,930       5,992,047    5,122,768     6,008,737
number of customers
ARPU                   $  44.89        $  41.64     $ 44.30       $ 42.12



    CPGA is selling and marketing costs (excluding applicable share-based
    compensation expense or benefit included in selling and marketing
    expense), and equipment subsidy (generally defined as cost of equipment
    less equipment revenue), less the net loss on equipment transactions and
    third-party commissions unrelated to customer acquisition, divided by the
    total number of gross new customer additions during the period being
    measured. The net loss on equipment transactions unrelated to customer
    acquisition includes the revenues and costs associated with the sale of
    wireless devices to existing customers as well as costs associated with
    device replacements and repairs (other than warranty costs which are the
    responsibility of the device manufacturers). Third-party commissions
    unrelated to customer acquisition are commissions paid to third parties
    for certain activities related to the continuing service of customers. We
(3) deduct customers who do not pay the first bill they receive following
    initial activation from our gross customer additions in the month in which
    they are disconnected, which tends to increase CPGA because we incur the
    costs associated with a new 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 communications providers. Other companies may calculate
    this measure differently.
    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 (unaudited; in
    thousands, except gross customer additions and CPGA):



                        Three Months Ended June 30,  Six Months Ended June 30,
                        2013            2012         2013           2012
Selling and marketing   $  69,397       $  77,247    $  148,235     $ 172,801
expense
Less share-based
compensation expense    (211)           (616)        (322)          (639)
included in selling
and marketing expense
Plus cost of equipment  183,658         171,673      442,626        419,520
Less equipment revenue  (53,046)        (35,487)     (158,282)      (87,108)
Less net loss on
equipment transactions
and third-party         (90,385)        (66,932)     (172,457)      (163,029)
commissions unrelated
to customer
acquisition
Total costs used in
the calculation of      $  109,413      $  145,885   $  259,800     $ 341,545
CPGA
Gross customer          283,066         492,720      756,947        1,352,267
additions
CPGA                    $  387          $  296       $  343         $ 253



    CCU is cost of service and general and administrative costs (excluding
    applicable share-based compensation expense or benefit included in cost of
    service and general and administrative expense) plus net loss on equipment
    transactions and third-party commissions unrelated to customer acquisition
    (which includes the gain or loss on the sale of devices to existing
    customers, costs associated with device replacements and repairs (other
    than warranty costs which are the responsibility of the device
    manufacturers) and commissions paid to third parties for certain
    activities related to the continuing service of customers), less
    pass-through regulatory fees and telecommunications taxes, divided by the
    weighted-average number of customers, divided by the number of months
(4) 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 communications providers. Other companies may calculate
    this measure differently.
    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 (unaudited; in thousands, except
    weighted-average number of customers and CCU):



                        Three Months Ended June 30,  Six Months Ended June 30,
                        2013            2012         2013           2012
Cost of service         $  249,371      $  256,555   $  500,229     $ 517,866
Plus general and        83,402          94,892       165,627        184,591
administrative expense
Less share-based
compensation expense
included in cost of     (2,860)         (3,813)      (4,863)        (3,096)
service and general
and administrative
expense
Plus net loss on
equipment transactions
and third-party         90,385          66,932       172,457        163,029
commissions unrelated
to customer
acquisition
Less pass-through
regulatory fees and     (774)           (2,678)      (1,629)        (6,815)
telecommunications
taxes
Total costs used in     $  419,524      $  411,888   $  831,821     $ 855,575
the calculation of CCU
Weighted-average        5,031,930       5,992,047    5,122,768      6,008,737
number of customers
CCU                     $  27.79        $  22.91     $  27.06       $ 23.73



    Adjusted OIBDA is a non-GAAP financial measure defined as operating income
    (loss) before depreciation and amortization, adjusted to exclude the
    effects of: (gain)/loss on sale, exchange or disposal of assets, net;
(5) impairments and other charges; and share-based compensation expense or
    benefit. Adjusted OIBDA should not be construed as an alternative to
    operating income (loss) or net income (loss) as determined in accordance
    with GAAP, or as an alternative to cash flows from operating activities as
    determined in accordance with GAAP or as a measure of liquidity.
    In a capital-intensive industry such as wireless telecommunications,
    management believes that adjusted OIBDA, and the associated percentage
    margin calculations, are meaningful measures of our operating performance.
    We use adjusted OIBDA as a supplemental performance measure because
    management believes it facilitates comparisons of our operating
    performance from period to period and comparisons of our operating
    performance to that of other companies by backing out potential
    differences caused by the age and book depreciation of fixed assets
    (affecting relative depreciation expenses) as well as the items described
    above for which additional adjustments were made. While depreciation and
    amortization are considered operating costs under GAAP, these expenses
    primarily represent the non-cash current period allocation of costs
    associated with long-lived assets acquired or constructed in prior
    periods. Because adjusted OIBDA facilitates internal comparisons of our
    historical operating performance, management also uses this metric for
    business planning purposes and to measure our performance relative to that
    of our competitors. In addition, we believe that adjusted OIBDA and
    similar measures are widely used by investors, financial analysts and
    credit rating agencies as measures of our financial performance over time
    and to compare our financial performance with that of other companies in
    our industry.
    Adjusted OIBDA has limitations as an analytical tool, and should not be
    considered in isolation or as a substitute for analysis of our results as
    reported under GAAP. Some of these limitations include:
    •               it does not reflect 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 adjusted
                    OIBDA does not reflect cash requirements for such
                    replacements;
    •               it does not reflect costs associated with share-based
                    awards exchanged for employee services;
    •               it does not reflect the interest expense necessary to
                    service interest or principal payments on 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.
    Management understands these limitations and considers adjusted OIBDA as a
    financial performance measure that supplements but does not replace the
    information provided to management by our GAAP results.
    The following table reconciles adjusted OIBDA to operating loss, which we
    consider to be the most directly comparable GAAP financial measure to
    adjusted OIBDA (unaudited; in thousands):



                        Three Months Ended June 30,  Six Months Ended June 30,
                        2013            2012         2013           2012
Operating loss          $  (7,558)      $  31,589    $  (36,909)    $ 15,786
Plus depreciation and   150,856         154,483      303,429        301,026
amortization
OIBDA                   $  143,298      $  186,072   $  266,520     $ 316,812
Plus (gain) loss on
sale, exchange or       (1,870)         333          (6,858)        801
disposal of assets, net
Plus impairments and    4,287           —            5,022          —
other charges
Plus share-based        3,071           4,429        5,185          3,735
compensation expense
Adjusted OIBDA          $  148,786      $  190,834   $  269,869     $ 321,348



    Free cash flow is a non-GAAP financial measure defined as net cash
    provided by operating activities less purchases of property and equipment.
(6) Free cash flow should not be considered as an alternative to net cash flow
    provided by operating activities as determined in accordance with GAAP or
    as a measure of liquidity.
    Management believes that free cash flow provides useful information about
    the amount of cash available to us to fund ongoing operations and working
    capital needs, service our debt, satisfy our tax obligations, strengthen
    our balance sheet and make investments in our business. Management also
    believes that the presentation of free cash flow is relevant and useful
    for investors because it allows investors to evaluate cash generated from
    our underlying operations in a manner similar to that used by management.
    In addition, free cash flow is a primary measure used externally by
    investors, analysts and peers in our industry for purposes of valuation
    and comparing our operating performance to that of other companies in our
    industry.
    Free cash flow has limitations as an analytical tool, and should not be
    considered in isolation or as a substitute for analysis of our results as
    reported under GAAP. Free cash flow, as we calculate it, may not be
    comparable to similarly titled measures used by other companies. In
    addition, free cash flow (as a measure of liquidity) has certain
    limitations and does not represent funds available for discretionary use
    and is not necessarily a measure of our ability to fund our cash needs.
    The following table reconciles free cash flow to net cash provided by
    operating activities, which we consider to be the most directly comparable
    GAAP financial measure to free cash flow (unaudited; in thousands):



                        Three Months Ended June 30,  Six Months Ended June 30,
                        2013           2012          2013         2012
Net cash provided by
(used in) operating     $  (10,529)    $ 15,262      $ 15,028     $ 50,619
activities
Less purchases of       (22,499)       (119,098)     (48,861)     (265,412)
property and equipment
Free cash flow          $  (33,028)    $ (103,836)   $ (33,833)   $ (214,793)
 Plus early debt       42,625         —             42,625       —
prepayment premium
Free cash flow
(excluding early debt   $  9,597       $ (103,836)   $ 8,792      $ (214,793)
prepayment premium)





SOURCE Cricket Communications, Inc.

Website: http://www.leapwireless.com
Contact: Greg Lund, Media Relations, 858-882-9238, glund@leapwireless.com, or
Amy Wakeham, Investor Relations, 858-882-9876, awakeham@leapwireless.com
 
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