UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
Commission File Number 0-29752
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NOTIFICATION OF LATE FILING
(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q [ ] Form
N-SAR
For Period Ended: December 31, 2004
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[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended: __________________________
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION HAS
VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
Full Name of Registrant:
Leap Wireless International, Inc.
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Former Name if Applicable:
Not Applicable
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Address of Principal Executive Office (Street and Number):
10307 Pacific Center Court
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City, State and Zip Code
San Diego, California 92121
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PART II - RULE 12B-25 (B) AND (C)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate.)
(a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
[X] (b) The subject annual report, semi-annual report, transition report
on Form 10-K, 20-F, 11-K or Form N-SAR, or portion thereof will
be filed on or before the fifteenth calendar day following the
prescribed due date; or the subject quarterly report or
transition report on Form 10-Q, or portion thereof will be filed
on or before the fifth calendar day following the prescribed due
date; and
(c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K,
10-Q, N-SAR or the transition report portion thereof could not be filed within
the prescribed time period.
Leap Wireless International, Inc. (the "Company") is unable to file its
Annual Report on Form 10-K for the year ended December 31, 2004 (the "2004 Form
10-K") in a timely manner without unreasonable effort and expense in light of
the circumstances described below.
Like many other publicly-traded companies, the Company is reviewing its
lease-related accounting practices in light of a letter from the staff of the
Office of the Chief Accountant of the Securities and Exchange Commission to the
American Institute of Certified Public Accountants, dated February 7, 2005. The
Company's review is focusing on its accounting for cell site leases. Although
the Company has been working diligently on such review, the review process has
been taking a considerable amount of time because the Company has more than
2,500 cell site leases, many of which were amended during the course of the
Company's bankruptcy proceedings. Until the review of its accounting practices
relating to cell site leases is completed, the Company cannot finalize its
financial statements for the period ended December 31, 2004 or file its 2004
Form 10-K. In addition, the amount of work associated with the review of cell
site lease accounting has generally delayed the preparation of the Company's
financial statements. The Company expects that management and the Audit
Committee of the Company's Board of Directors will complete in the near future
their review of the Company's lease-related accounting practices and other
issues that remain open as a result of delays caused by the lease-related
issues, which will allow the Company (1) to complete the preparation and filing
of its 2004 Form 10-K, and (2) to determine whether any previously issued
financial statements of the Company need to be amended.
The Company plans to finalize its financial statements for the period
ending December 31, 2004 and to file its 2004 Form 10-K on or before April 15,
2005. The Company's failure to provide the lenders under its senior secured
credit agreement (relating to a $500 million term
loan and a $110 million revolving credit facility) with audited financial
statements for fiscal 2004 by March 31, 2005 constitutes a breach of the terms
of such credit agreement. Although the Company is working diligently to complete
its review of the matters discussed in this report, if it is unable to finalize
its financial statements for the period ended December 31, 2004 and file its
2004 Form 10-K by April 15, 2005, such failure will constitute an event of
default under the credit agreement. If such an event occurs, the Company would
seek a waiver of the event of default. Unless waived by the required lenders,
such an event of default would permit the administrative agent to exercise its
remedies under the credit agreement, including declaring all outstanding debt
under the agreement to be immediately due and payable.
IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Robert J. Irving, Jr. (858) 882-6000
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s). [X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
In August 2004, the Company and Cricket Communications, Inc. satisfied the
conditions to the Company's Fifth Amended Joint Plan of Reorganization and the
Company emerged from Chapter 11 bankruptcy. The Plan of Reorganization
implemented a comprehensive financial reorganization that, among other matters,
significantly reduced the Company's outstanding indebtedness. On the effective
date of the Plan of Reorganization, the Company's long term debt was reduced
from a book value of more than $2.4 billion to debt with an estimated fair value
of approximately $412.8 million. In addition, in connection with the Company's
emergence from bankruptcy, it adopted fresh-start reporting as of July 31, 2004
which resulted in material adjustments to the historical carrying values of many
of the Company's assets and liabilities. Under fresh-start reporting, the
Company is deemed to be a new entity for financial reporting purposes. As a
result of the foregoing, the Company's financial statements at and for the
period ended December 31, 2004 will not be comparable in many respects to the
Company's financial statements at and for the period ended December 31, 2003.
As discussed in Part III above, as of the date of this filing, the Company
is still reviewing its cell site lease accounting practices and, as a result,
has not yet finalized its financial statements for the period ended December 31,
2004. As a result, the Company cannot provide
quantitative assessments of its fiscal 2004 operating results compared to its
fiscal 2003 operating results. However, the Company expects that its combined
operating results for the seven months ended July 31, 2004 and the five months
ended December 31, 2004 will generally compare to its operating results for the
fiscal year ended December 31, 2003 as follows:
- revenue in 2004 will be greater than revenue in 2003, reflecting
in part an increase in net customers, an increase in average
revenues per customer, higher average net revenue per handset
sold and higher handset sales volumes;
- total operating expenses in 2004 will be lower than in 2003,
reflecting primarily a decrease in depreciation and amortization
expense in 2004 and approximately $195 million of asset
impairment and related charges in 2003 compared to less than $1
million of asset impairment and related charges in 2004; and
- interest expense in 2004 will be lower than interest expense in
2003.
In addition, the Company recorded a net gain from reorganization items in
excess of $900 million for the seven months ended July 31, 2004, which the
Company expects will result in substantial net income for the year ended
December 31, 2004 compared to a net loss for the year ended December 31, 2003.
Management may determine and report in the 2004 Form 10-K that the Company
had a material weakness in internal controls arising in connection with turnover
and staffing levels in the Company's accounting department (related in part to
the Company's now completed bankruptcy proceedings). Because the Company is
still in the process of finalizing its financial statements for the period ended
December 31, 2004 and evaluating the effectiveness of its internal controls over
financial reporting as of such date, management may determine that additional
deficiencies in internal controls exist that constitute material weaknesses.
Leap Wireless International, Inc.
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(Name of Registrant as Specified in Charter)
Has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date March 31, 2005 By /s/ DEAN LUVISA
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Dean Luvisa
Acting Chief Financial Officer and
Treasurer