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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

(Mark One)

For The Fiscal Year Ended December 31, 2003.

OR

Commission File Number: 000-22003

US UNWIRED INC.

(Exact name of registrant as specified in its charter)

901 Lakeshore Drive

Lake Charles, Louisiana 70601

(Address of principal executive offices)

(337) 436-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

Title of Each Class

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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

The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing sales price on the OTC Bulletin Board on June 30, 2003, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $38,445,956. (For purposes of determination of the foregoing amount, only our directors, executive officers and 10% shareholders have been deemed affiliates).

There were 128,831,535 shares of common stock, $0.01 par value per share, outstanding at February 15, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the US Unwired Inc. Proxy Statement of Registrant for its 2004 annual meeting of shareholders.

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US UNWIRED INC.

ANNUAL REPORT ON FORM 10-K

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Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which are statements about future business strategy, operations and capabilities, construction plans, construction schedules, financial projections, plans and objectives of management, expected actions of third parties and other matters. Forward-looking statements often include words like believes, belief, expects, plans, anticipates, intends, projects, estimates, may, might, would or similar words. Forward-looking statements speak only as of the date of this report. They involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. In addition to the risk factors described elsewhere, specific factors that might cause such a difference include, but are not limited to (i) our ability to finance future growth opportunities; (ii) our dependence on Sprint PCS; (iii) our ability to expand our Sprint PCS network or to upgrade the Sprint PCS network to accommodate new technologies; (iv) limited operating history in the PCS market and anticipation of future losses; (v) potential fluctuations in operating results; (vi) changes or advances in technology; (vii) changes in law or government regulation; (viii) competition in the industry and markets in which we operate; (ix) future acquisitions; (x) our ability to attract and retain skilled personnel; (xi) our dependence on contractor and consultant services, network implementation and information technology support; (xii) our potential inability to expand the services and related products we provide in the event of substantial increases in demand in excess of supply for network and handset equipment and related services and products; (xiii) the availability at acceptable terms of sufficient funds to pay for our business plans; (xiv) changes in labor, equipment and capital costs; (xv) any inability to comply with the indentures that govern our senior notes or credit agreements; (xvi) changes in management; and (xvii) general economic and business conditions.

You should not rely too heavily on any forward-looking statement. We cannot assure you that our forward-looking statements will prove to be correct. We have no obligation to update or revise publicly any forward-looking statement based on new information, future events or otherwise. For a discussion of some of the factors discussed above as well as additional factors, see “RISK FACTORS” contained in this document.

PART I

ITEM 1. Business

General

Through our wholly owned subsidiaries, Louisiana Unwired, LLC (“Louisiana Unwired”) and IWO Holdings, Inc. (“IWO”), we provide wireless personal communication services, commonly referred to as PCS, in eastern Texas, southern Oklahoma, southern Arkansas, the Florida panhandle, southern Tennessee, upstate New York, New Hampshire (other than the Nashua market) and Vermont; significant portions of Louisiana, Alabama, Georgia and Mississippi; and portions of Massachusetts and Pennsylvania. We are a network partner of Sprint PCS, the personal communications services group of Sprint Corporation. Sprint PCS, directly and through network partners like us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide PCS services under the Sprint^® and Sprint PCS^® brand names in service areas that had approximately 17.6 million residents as of December 31, 2003. Our combined service areas are among the largest in population and subscribers of the Sprint PCS network partners and are contiguous with Sprint PCS’s launched markets of Houston, Dallas, Little Rock, New Orleans, Birmingham, Jacksonville, Memphis, Atlanta, New York and Boston.

At December 31, 2003, we were providing PCS service to approximately 617,800 subscribers and network coverage to approximately 12.8 million residents or 73% out of approximately 17.6 million total residents. The number of residents in our service area does not represent the number of Sprint PCS subscribers that we expect to have in our service area.

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Recent Developments

For a discussion of recent developments in 2003 including our operating results, liquidity and relationship with Sprint PCS, please refer to Recent Developments in Item 7. Management’s Discussion and Analysis of Financial Condition And Results of Operations.

Our Affiliation with Sprint PCS

Sprint PCS adopted a strategy to extend its 100% digital, 100% PCS network by entering into agreements with independent wireless companies such as us, which we refer to as affiliates, to construct and manage Sprint PCS markets and market Sprint PCS services. Through these affiliations, Sprint PCS services are available in key cities contiguous to current and future Sprint PCS markets.

Under our agreements with Sprint PCS, we market Sprint PCS products and services in our service area using licenses that Sprint PCS acquired from the FCC in 1994 and 1996. We are the only provider of Sprint PCS products and services in our service area. Some key points about these agreements are:

In addition, through services agreements, we pay Sprint PCS service fees for certain ‘back office’ functions performed by Sprint PCS for us. We pay service fees to Sprint PCS for new subscribers activations as well recurring monthly fees for services performed for existing subscribers such as billing and customer service.

We also purchase other goods and services, such as handsets, from Sprint PCS where Sprint PCS has contracted with third party vendors. Sprint PCS has entered into agreements with national retailers that sell handsets and service to new subscribers in our markets. Sprint PCS pays these national retailers a new subscriber commission and provides handsets to them below cost. For new subscribers added in our markets by these national retailers, Sprint PCS passes the costs of commissions and handset subsidies to us.

We believe that our service area is important to the Sprint PCS network. To date, Sprint PCS has made considerable investments in the licenses covering our service area.

Our Service Area

Our Sprint PCS service area includes all or portions of 68 markets spanning over 237,000 square miles with a population of approximately 17.6 million people in eastern Texas, southern Oklahoma, southern Arkansas, the Florida panhandle, southern Tennessee, upstate New York, New Hampshire (other than the Nashua market) and Vermont; significant portions of Louisiana, Alabama, Georgia and Mississippi; and portions of Massachusetts and Pennsylvania as a network partner of Sprint PCS. The number of residents in our service area does not represent the number of Sprint PCS subscribers that we expect to have in our service area.

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PCS Services and Features

We offer Sprint PCS products and services in our service area. Our products and services are designed to mirror those of Sprint PCS and to be a part of the Sprint PCS nationwide network. Sprint PCS subscribers in our service area may use Sprint PCS services throughout our contiguous markets and seamlessly throughout the Sprint PCS network.

We support Sprint PCS’s newest technology, PCS Vision^™, throughout our service area. PCS Vision^™ allows subscribers that purchase handsets with the appropriate features the ability to access the Internet, receive and send email, download pictures and sounds, and take digital pictures either with a built-in or attachable camera.

We offer Code Division Multiple Access (CDMA) handsets that weigh 2.7 to 7.0 ounces and can offer up to 16 days of standby time and up to 3.8 hours of talk time. Many of these models are dual-mode handsets that allow subscribers to make and receive calls on both PCS and cellular frequency bands. All handsets are equipped with preprogrammed features and are sold under the Sprint PCS brand name.

We provide roaming service to both Sprint PCS subscribers that are traveling through our service area as well as certain non-Sprint PCS subscribers traveling through our service area. Sprint PCS and other affiliates provide a similar service to our subscribers traveling outside of our market area. Roaming allows a person to make a phone call outside the service area where they purchased the service.

PCS Marketing Strategy

We benefit from the recognizable Sprint PCS brand names and logos and from Sprint PCS’s technological developments. We enhance the national effort with local marketing managers and coordinators who develop strategies specifically tailored to our local markets. They assist the sales force in driving traffic to the stores through promotions, contests and community relations programs and assist the outside sales force in targeting business sales.

Pricing

We use the Sprint PCS pricing strategy to offer our subscribers a menu of service plans typically structured with monthly recurring charges, large local calling areas, bundles of minutes and options and features such as voicemail, enhanced caller identification, call waiting, three-way calling and PCS Vision web. In order to meet the competitive needs of our specific local markets, we occasionally alter Sprint PCS’s pricing plans. In addition, we offer a pre-paid service called Chat Pak in certain markets where we believe that it will provide a competitive advantage.

Advertising

We capitalize on the Sprint PCS name and reputation to attract subscribers. We benefit from Sprint PCS’s national advertising campaign at no additional cost. Sprint PCS also runs numerous promotional campaigns that provide subscribers with benefits such as additional features at the same rate or free ancillary services. We direct our media and promotional efforts at the community level by advertising Sprint PCS’s products and services through radio, print, outdoor, billing inserts, direct mail and promotional displays in our retail stores.

Sponsorships

Sprint PCS sponsors numerous national and regional events. These sponsorships provide Sprint PCS with brand name and product awareness. Our regional marketing teams sponsor local events, teams and projects to increase consumer awareness of the Sprint PCS brand in the local community and to provide occasions to develop positive community relationships in our markets.

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Sales and Distribution

We target a broad range of consumer and business markets through a sales and distribution plan. We use traditional sales channels, like our retail stores, mass merchandisers and other national retail outlets, independent agents and an outside sales force. We also use lower-cost methods like direct marketing and a corporate website.

Retail stores

At December 31, 2003, we had 54 retail outlets. Our retail outlets are located in principal retail districts in each market, designed in accordance with Sprint PCS specifications and branded as Sprint stores. We use our stores for the distribution and sale of our handsets and services. Sales representatives in these outlets receive in-depth training that allows them to explain our service in an informed manner. We believe that these representatives foster effective and enduring customer relationships.

Mass merchandisers and outlets

We target subscribers through our mass-market retail outlets through Sprint PCS negotiated distribution agreements with national and regional mass merchandisers and consumer electronic retailers, including Radio Shack, Wal-Mart, Best Buy and Office Depot and, at December 31, 2003, had a presence in over 600 national retail outlet locations in our service area.

Independent agents

We have a contracted network of independent agents that creates additional opportunities for local distribution. Most of these businesses are family-owned consumer electronics dealers and wireless telecommunication retailers. At December 31, 2003, we had approximately 300 independent agents under contract.

Other Sprint PCS initiatives

We participate in Sprint PCS’s national accounts program, which targets Fortune 1000 companies. This allows us to take advantage of Sprint PCS’s inbound telemarketing sales program and Sprint PCS’s internet site that allows subscribers in our service area who purchase products and services over the Sprint PCS internet site become subscribers of our PCS network.

Resellers

Effective July 2002, we agreed to participate in a reseller program in our service area through Sprint PCS as part of the partnership between Sprint PCS and Virgin Mobile USA, LLC (“Virgin”). The agreement allows Virgin to sell prepaid wireless services and pay us for use of our network on a per minute basis. Virgin targets the 15- to 30-year-old consumer market to purchase pay-as-you-go wireless communications services while eliminating the responsibilities of monthly bills and credit requirements.

No single manufacturer has accounted for more than 10% of our sales in the current reporting period or in the past three years.

Suppliers and Equipment Vendors

We do not manufacture any of the handsets that we use in our operations. We purchase our handsets directly from Sprint PCS and our accessories from certain other third party vendors.

Competition

We face significant competition in our service area from a number of competitors. There are five other national mobile telephony operators that offer service in at least some portion of our service area—AT&T

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Wireless, Verizon, Cingular, Nextel and T-Mobile. In addition, there are many local and regional carriers that offer PCS and cellular services in our service area. According to the FCC’s Eighth Annual Commercial Mobile Services Competition (“CDMR”) Report, released July 14, 2003, “…270 million people, or 95% of the total population, have three or more different operators offering mobile telephone service in the counties in which they live.”

Wireless local number portability (“WLNP”) was introduced in a portion of our markets in November 2003. WNLP allows customers to retain existing telephone numbers when switching from one wireless carrier to another. The introduction of WLNP in all of our markets in May 2004 may result in higher customer turnover, lower revenues and increased operating costs. We are closely monitoring the effects of WNLP but cannot state with any certainty the impact that it will have on our future operations.

In order to attract new subscribers, we offer discounts on handsets and service plans that include more minutes and/or more anytime minutes and other enhancements such as complimentary periods of free data usage. Based upon increased competition, we anticipate that market prices for two-way wireless services will continue to decline in the future. We compete to attract and retain subscribers principally on the basis of services and features, the size and location of our service areas, network coverage and reliability, customer care and pricing. Our ability to compete successfully depends, in part, on our ability to anticipate and respond to various competitive factors affecting the industry, including new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies by competitors.

We believe that our ability to compete effectively with other PCS providers will depend on:

The main wireless technologies used in the United States are: Code Division Multiple Access (“CDMA”), Global System Mobile Communications (“GSM”) and Time Division Multiple Access (“TDMA”).

Sprint PCS has chosen CDMA technology, which we believe offers significant advantages in the marketplace.

CDMA offers superior call quality and clarity. CDMA also offers the highest capacity of the three standards. This means that more simultaneous calls can be handled on a CDMA network than on equivalent TDMA or GSM networks. CDMA also offers a high level of security, giving subscribers confidence that their calls remain private. CDMA offers many advanced features such as short text messaging, Internet access, call waiting, call forwarding and three way calling. Several providers in the United States, including Sprint PCS and Verizon use CDMA technology.

TDMA is generally less expensive to deploy if a carrier seeks to overlay an analog network, like a cellular carrier would be required to do. TDMA also offers increased call security and advanced features like those available on a CDMA network. Several providers in the United States, including AT&T and Cingular use TDMA but have announced intentions to overlay their existing TDMA networks with GSM technology.

GSM is the most widely adopted standard around the world. It originated in Europe, where it continues to be the dominant standard. It has been widely deployed for over ten years, which means that economies of scale for network and handset equipment have been achieved. This has lowered the cost of purchasing the equipment for a GSM system. GSM also offers increased call security and advanced features like those available on a CDMA network. T-Mobile uses GSM technology.

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We do not currently face significant competition from resellers on our facilities and believe our relationship with Virgin compliments our other distribution channels. We expect to continue to be subject to the FCC rule that requires cellular and PCS licensees to permit resale of carrier service.

Network Operations

We have completed the initial network build out plan for all of our markets, except for certain IWO markets. The Sprint PCS Management Agreement requires us to provide network coverage to 65% of the resident population in our service area.

We have met this requirement in all of our service areas except for IWO’s service area, and it is unlikely that IWO will have sufficient liquidity to complete the build-out in the IWO service area. Should we be unable to complete the IWO build-out, Sprint PCS has the right to place the IWO Sprint PCS management agreement in default and take actions up to and including termination of the IWO Sprint PCS Management Agreement.

We believe that our inability to complete the build-out of the IWO service area will have no effect on the non-IWO service area. We are continuing to expand our service by selectively upgrading network equipment and adding cell sites in only certain markets that we believe will help us provide increased subscriber growth or enhanced coverage that we believe will reduce subscriber turnover.

Cell sites

Our preference is to selectively add cell sites through co-location, which is leasing available space on a tower owned by another company. When we co-locate, we generally have lower construction costs, and it is likely that any zoning difficulties have been resolved. As of December 31, 2003, we had 1,878 PCS cell sites, of which approximately 94% were co-locations and 6% owned with network coverage of approximately 12.8 million residents out of approximately 17.6 million total residents. The number of people in our service area does not represent the number of Sprint PCS subscribers that we expect to have in our service area.

Microwave relocation

Fixed microwave operators previously used the frequencies that are now allocated for PCS licenses. The FCC has established procedures for PCS licensees to relocate these existing microwave paths, generally at the PCS licensee’s expense. We have paid our share of those reported cost for relocation that have been triggered by our current site build out. We do not expect any substantial relocation cost for additional planned build out of sites.

Switching centers

We own or lease property for our eight switching centers for our service area. These centers are located in Albany, New York, Londonderry, New Hampshire, Shreveport, Louisiana, Macon, Georgia, Jackson, Mississippi and Montgomery, Alabama. Each switching center serves several purposes, including subscriber validation, call routing, managing call hand off and managing access to landlines and access to Sprint PCS national platforms.

Interconnection

We connect our digital PCS network to the landline telephone system through interconnection agreements with local exchange carriers. Through our agreements with Sprint PCS, we benefit from the interconnection agreements that Sprint PCS negotiates.

Network monitoring systems

We use Sprint PCS’s Network Operations Control to provide monitoring and maintenance of our entire network, including the constant monitoring for blocked or dropped calls, call clarity and signs of tampering, cloning or fraud, the recording of network traffic statistics and the overseeing of customer usage, data collected at switch facilities and billing.

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Government Regulation

The FCC and other federal, state and local regulatory agencies regulate our PCS system.

Licensing of PCS systems

A broadband PCS system operates under a service area license granted by the FCC for a particular market. These licenses operate on one of six frequency blocks allocated for broadband PCS service. Narrowband PCS is for non-voice applications such as paging and data service and is separately licensed. The FCC awards all PCS licenses by auction.

All PCS licenses have a 10-year term and must be renewed at the end of this term. The FCC generally will renew a PCS license if the licensee provided substantial service during the past license term and substantially complied with applicable law. The FCC may revoke a license for serious violations of FCC rules. All PCS licensees must satisfy coverage requirements. Licensees that fail to meet the coverage requirements may lose the service area that is not covered, or the license.

For up to five years after a PCS license is granted, the licensee must share spectrum with existing licensees that operate fixed microwave systems within its license area. To operate our PCS systems efficiently and with adequate population coverage, we must relocate many of these existing licensees. The FCC has adopted a transition plan to relocate microwave operators and a cost-sharing plan for relocation that benefits more than one PCS licensee. These plans expire on April 4, 2005.

Other regulatory requirements

The Communications Act preempts state and local regulation of the entry of, or the rates charged by, any provider of private mobile radio service or of commercial mobile radio service (“CMRS”), which includes PCS and cellular service. The FCC does not regulate CMRS or private mobile radio service rates. However, CMRS providers are common carriers and are required under the Communications Act to offer their services to the public without unreasonable discrimination.

The FCC imposes additional regulatory requirements on all CMRS, operators, which include PCS and cellular systems as well as some specialized mobile radio systems. These requirements may change. Some of the current requirements include:

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Transfers and assignments of PCS licenses

The FCC must approve the assignment or transfer of control of a license for a PCS system. In addition, the FCC requires licensees who transfer control of a PCS license within the first three years of their license term to disclose the total consideration received for the transfer. FCC approval is not required for the sale of an interest that does not transfer control of a license. Any acquisition or sale of a PCS interest may also require the prior approval of the Federal Trade Commission, the Department of Justice and state or local regulatory authorities.

State and Local Regulation

State governments can regulate other terms and conditions of wireless service. Several states have imposed, or have proposed legislation that will impose, various consumer protection regulations on the wireless industry. States also may impose their own universal service support fees on wireless carriers, similar to the requirements that have been established by the FCC. At the local level, wireless facilities typically are subject to zoning and land use regulation, although the Communications Act preempts both state and local governments from categorically prohibiting the construction of wireless facilities in any community or unreasonably discriminating against a carrier. Numerous state and local jurisdictions have considered imposing conditions on a driver’s use of wireless technology while operating a motor vehicle, and a few have actually done so.

Foreign ownership

The Communications Act of 1934 limits the non-U.S. ownership of licensees. If foreign ownership exceeds the permitted level, the FCC may revoke the PCS licenses or require an ownership restructuring.

Additional spectrum

From time to time, the FCC conducts auctions of additional spectrum. We have no way of knowing whether the new spectrum in our service area will be used to compete with our PCS systems.

Intellectual Property

The Sprint^® and Sprint PCS^® brand names and logos are registered service trademarks owned by Sprint. We have license agreements with Sprint that allow us to use, without payment and only in our service area, the Sprint design logo and diamond symbol and other Sprint service trademarks, like PCS Vision^™. We can use some of Sprint’s licensed trademarks on some wireless telephone handsets. The license agreements have many restrictions on our use of their licensed trademarks. We are the only person entitled to market Sprint PCS products and services in our service area, except for the Sprint PCS national marketing programs.

Employees

As of December 31, 2003, we had approximately 939 employees. No union represents our employees. We believe that we have good relations with our employees.

Seasonality

Like the wireless communications industry in general, our subscribers increase in the fourth quarter due to the holiday season. A greater number of phones sold at holiday promotional prices increases our losses on

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merchandise sales. Our sales and marketing expenses increase also with holiday promotional activities. We generally have the most use and revenue per subscriber in the summer because of an increase in revenues from fees charged to non-US Unwired, non-Sprint PCS subscribers who use our network while traveling in our service area. We believe that the increased traffic in our service area comes from people traveling during summer vacation. We expect these trends to continue based on historical operating results.

RISK FACTORS

OUR SECURITY HOLDERS AND PERSONS WHO ARE CONSIDERING AN INVESTMENT IN OUR SECURITIES SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, IN ADDITION TO THE FACTORS DESCRIBED ELSEWHERE.

The risk factors described below are qualified and supplemented in their entirety by the discussions in Note 2 to the condensed consolidated financial statements included herein and in Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) under the captions “Overview” and “Liquidity.” These items contain important disclosures related to our and IWO Holdings, Inc.’s current liquidity, debt, relationship with Sprint PCS and constraints on our business in the current environment. An adequate understanding of near term risks facing us requires consideration of the referenced discussions.

Introduction

In this section, unless the context indicates otherwise, “we” and “our” and “combined company” refer collectively to US Unwired and all of its subsidiaries. We use “US Unwired” to refer just to our parent company without reference to its subsidiaries. “LA Unwired” refers collectively to our subsidiaries Louisiana Unwired, LLC, Texas Unwired general partnership, and Georgia PCS Management, L.L.C. (“Georgia PCS”), unless the context of the reference indicates otherwise.

An extremely brief overview introduces each of the subsections below. We think the overview captures the gist of the subsection, but it is not a substitute for reading the entire subsection.

Risks Related to Our Stock Price

Overview of this subsection:

Our stock price has not been stable. Many additional shares have become freely tradeable in the public market. This may have caused our stock price to fluctuate greatly. Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and since then it has been traded on the Over the Counter (“OTC”) Bulletin Board.

The stock price of US Unwired may continue to be unstable or depressed.

The market price of our common stock has been significantly depressed and could be subject to fluctuations in response to factors such as the following, some of which are beyond our control:

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The number of shares of our common stock that is freely tradeable in the public market increased substantially after November 22, 2002. Sales of unusually large numbers of shares of our common stock in the public market, or the perception that such sales could occur, could further depress our stock price.

We issued approximately 44,400,000 additional shares of our common stock when we acquired Georgia PCS and IWO in March and April 2002 through two mergers, and we agreed to issue about another 6,900,000 shares upon the exercise of warrants and options that we assumed from IWO. Before November 22, 2002, most of these shares were not freely tradeable in the public market because of the combined effect of restrictions under federal securities laws and of agreements, called lock up agreements, that we obtained from the holders not to sell shares before specified dates. The restrictions imposed by federal securities laws on sales of these shares terminated on November 22, 2002, which was the effective date of the registration statement that we were required to file to register certain of those shares for resale. On March 28, 2003, all remaining shares that were then still subject to the lock up agreements, equal to about 1,080,000 shares became freely tradeable.

The market price of our common stock could continue to be depressed if the holders of shares that have become freely tradeable sell them or if the market perceives that they intend to sell them. We cannot predict whether future sales of our common stock or the availability of our common stock for sale will adversely affect the market price for our common stock.

We rely on Sprint PCS for a substantial amount of our financial information. If that information is not accurate, the investment community could lose confidence in us.

Under our agreements with Sprint PCS, it performs our billing, manages our accounts receivable and provides a substantial amount of financial data about our accounts. We use that information to calculate our financial results and to prepare our financial statements. If we later find errors in that information, we may be

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required to restate our financial statements. If that occurs with respect to us or any other Sprint PCS affiliate, investors and securities analysts may lose confidence in us. In fact, we and Sprint PCS have discovered billing and other errors or inaccuracies that have been material to us. If we are required to make adjustments to our financial statements as a result of these inaccuracies, that could negatively affect the investment community’s perception of us. For more information about these inaccuracies, please see the section of these Risk Factors entitled “Risks Particular to the Our Relationship with Sprint PCS.”

Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and is now quoted on the Over the Counter (“OTC”) Bulletin Board.

Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and is now quoted on the OTC Bulletin Board. The stock was delisted because we did not meet Nasdaq’s requirements for continued listing related to our stock price and stockholders’ equity. Since then, it has become more difficult to buy and sell our shares and securities analysts and news media have lost much of their interest in us. Additionally, we may become subject to SEC rules that affect “penny stocks,” which are stocks priced below $5.00 per share that are not quoted on a Nasdaq market. These rules would make it more difficult for brokers to find buyers for our shares and could lower the net sales prices that our stockholders are able to obtain.

If our common stock price remains low, we may not be willing or able to raise equity capital.

Our business is capital intensive, and we may contemplate raising equity capital in the future. A low stock price may frustrate our doing so, for two reasons:

Risks Related to the Our Business, Strategy and Operations

Overview of this subsection:

None of our operating subsidiaries has ever operated profitably or achieved consistent positive cash flow. If that doesn’t change, we will not have enough cash to run our business, as more fully discussed in the Management’s Discussion section of this report. Timely expansion or completion of the PCS networks of our operating subsidiaries is a key to our success, but we face numerous challenges in doing that. Revenues we receive from travelers in our territories will likely not meet our expectations.

Our operating subsidiaries have not yet operated their PCS businesses profitably or achieved consistent positive cash flow.

We expect to continue to incur significant operating losses and we expect IWO to continue to generate negative cash flow while we complete and/or expand our PCS networks and build our customer base. Our ultimate profitability will depend upon many factors, including our ability to market our services successfully and operate our networks efficiently, in addition to numerous other factors that are described in this “Risk Factors” section. If we fail to achieve at least consistent positive cash flow within a reasonable period of time, we may not be able to service our debt and an investment in our securities may not have much value.

If our business strategies are not implemented or are unsuccessful, our business could be adversely affected.

Our strategies seek to (1) limit capital expenditures to required technical upgrades and only adding cell site coverage in areas that are expected to produce positive cash returns, (2) sell certain assets that are not part of our core PCS business, (3) reduce the number of our employees and our corporate overhead and close retail outlets that do not meet minimum internal rates of return, (4) evaluate, and in certain cases renegotiate, certain expenses, (5) reduce customer turnover or churn rate and improve customer service and credit quality, (6) improve US Unwired’s relationship with Sprint PCS and (7) increase our market share among higher credit quality customers

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and initiate pre-payment and deposit programs for certain high credit risk subscribers. We have implemented all of these strategies, except for improving our relationship with Sprint PCS, but it is still too early to determine whether these strategies will have any positive or negative long-term effect on our business. In particular:

Potential loss of management fees from IWO would result in material loss of revenue and income and have a material adverse effect on our liquidity and financial condition.

US Unwired currently receives management fees from IWO, which amounted to $8.4 million in 2003. There is a risk that this arrangement could be terminated due to the uncertainties surrounding IWO. This result could occur if IWO were to file for bankruptcy and elect to terminate this arrangement. Moreover, IWO’s lenders are entitled to designate a manager for the IWO business and may not choose us. In addition, we believe our equity position in IWO currently has negligible value.

We will not receive as much Sprint PCS net travel, or roaming, revenue as we anticipated.

We are paid a fee from Sprint PCS for every minute that a Sprint PCS subscriber based outside of our markets uses the Sprint PCS network in our markets. Similarly, we pay a fee to Sprint PCS for every minute that a Sprint PCS subscriber based in our markets uses the Sprint PCS network outside our markets. Sprint PCS subscribers from our markets may spend more time in other Sprint PCS coverage areas than we anticipate and Sprint PCS subscribers from outside our markets may spend less time in our markets or may use our services less than we anticipate. As a result, we may receive less Sprint PCS travel revenue than we anticipate or we may have to pay more Sprint PCS travel fees than the travel revenue we collect.

Under our agreements with Sprint PCS, we believe that Sprint PCS can change the fee, called a travel rate, within certain limitations, that we receive and pay for each Sprint PCS travel minute. Sprint PCS changed the reciprocal travel rate for Louisiana Unwired from $0.20 per minute in 2002 to $0.058 per minute in 2003 and for IWO, Georgia PCS and Texas Unwired from $0.10 per minute in 2002 to $0.058 per minute in 2003. Sprint PCS notified us that the rate will further decrease for all of our markets from $0.058 per minute to $.041 per minute in 2004. We have notified Sprint and Sprint PCS that we believe these particular reductions are not in accordance with our agreements with Sprint PCS, and we have included these reductions among our claims in our lawsuit against Sprint and Sprint PCS that is discussed in more detail below under the caption “Risks Particular to Our Relationship with Sprint PCS.” However, our recourse against Sprint PCS for these reductions may be limited. Currently the revenues we receive for subscribers of Sprint PCS and its other network partners using our networks exceed the expenses that we pay for our subscribers using their networks. The change in the travel rate

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will further materially decrease our revenues, expenses and our net travel position, which is the difference between travel revenue and travel expense, and will further materially decrease our cash flow from operations. For 2003, the reduction in the travel rate caused a $133.4 million decrease to our revenues, a $107.4 million decrease to our expenses and a reduction in cash flow of $26.0 million.

If we do not successfully manage our operations and expected growth, our operating performance may be adversely impacted.

Our operating subsidiaries have limited operating histories as Sprint PCS affiliates. Louisiana Unwired began operations as a Sprint PCS affiliate on June 8, 1998, IWO on January 5, 2000, Texas Unwired on January 7, 2000 and Georgia PCS on June 8, 1998. The combined company’s ability to achieve and sustain operating profitability will depend upon many factors, including our operating subsidiaries’ abilities to effectively market Sprint PCS services and manage customer turnover rates in their respective markets. In addition, a key factor the combined company’s operational performance will depend upon is our ability to manage growth of the combined company through the expansion or completion of IWO’s network build-out, which appears unlikely at present. To be successful, our operating subsidiaries will require continued development, construction, testing, deployment and operation of their respective networks. These activities are expected to place demands on our managerial, operational and financial resources.

The failure of any of our operating subsidiaries to timely expand or complete the build-out of its network, or to obtain the equipment needed for completion on a timely basis, may result in a decrease in the number of expected new PCS subscribers and adversely affect its and the combined company’s results of operations or, in the case of IWO, result in a breach of its agreements with Sprint PCS or, in the case of LA Unwired, result in the loss of the FCC licenses that it owns.

LA Unwired has completed the network build-out that is required by its agreements with Sprint PCS. Nevertheless, we may decide from time to time to build out additional portions of its markets to increase the population that is covered by its Sprint PCS service or we may acquire additional territory to be built out by acquiring additional markets from Sprint PCS or by acquiring other Sprint PCS network partners that have not completed their build-out requirements. Due to liquidity issues as described in Note 2 above, IWO has not yet completed its required build-out and has determined to abandon the construction of cell sites that do not provide a sufficient level of enhanced coverage. In 2003, IWO recorded an asset abandonment charge of $12.1 million for the cell sites and related property leases of these abandoned cell sites. Included in this asset abandonment are cell sites that IWO is required to construct to meet the build out requirements under the IWO Sprint Management Agreement. Failure to complete the build-out of the IWO service area may place IWO in default of its Sprint PCS Management Agreement, and Sprint PCS may take actions up to and including termination of the Management Agreement. We estimate that IWO will need to spend approximately $11.4 million to complete the construction of the cell sites it plans to complete and make those sites operational.

In order to expand or complete network build-outs, our operating subsidiaries must successfully lease or otherwise retain rights to a sufficient number of radio communications and network control sites, complete the purchase and installation of equipment, build-out the physical infrastructure and test the network. The applicable company must also meet all requirements of its agreements with Sprint PCS and all FCC requirements. One of these FCC requirements is that our networks not interfere with microwave radio systems. Compliance with that requirement could delay or impede expansion or build-out of our networks. Regulatory changes, engineering design changes and required technological upgrades could affect the number and location of our operating subsidiaries’ towers as well as their ability to obtain sufficient rights to meet their network build-out expansion goals or requirements. Some of the radio communications and network control sites required for IWO to complete its required build-out are likely to require zoning variances or other local governmental or third party approvals. The local governmental authorities in various locations in IWO’s markets have, at times, placed moratoriums on the construction of additional cell sites. The expansion of our networks or the completion of

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IWO’s build-out could also be impaired by changes Sprint PCS may make in its technology or network. Any failure by IWO to complete its network build-out on a timely basis may limit its network capacity and/or reduce the number of its expected new PCS subscribers, either of which could adversely affect our or IWO’s results of operations and financial condition or result in IWO’s breach of its agreements with Sprint PCS. Any failure by LA Unwired to expand its network on a timely basis may limit its network capacity and/or reduce the number of its expected new PCS subscribers, either of which could adversely affect our results of operations and financial condition or result in a loss of LA Unwired’s licenses.

The foregoing expansion, as well as maintenance, capacity enhancements and coverage improvements, could require additional capital expenditures that we may not be able to fund. Additional funds could be required for a variety of reasons, including unanticipated expenses or operating losses. We may face significant limitations on our ability to obtain additional funds. Even if those funds are available, we may not be able to obtain them on a timely basis, or on terms acceptable to us or within limitations permitted by our debt agreements. Failure to obtain additional funds, should the need for them develop, would result in the delay or abandonment of our development and expansion plans.

Our liquidity situation has forced us to sell assets without any certainty of improvement in our long-term financial condition.

Because our cash flow from operations may be insufficient in the long term to fund our capital requirements and our access to capital markets may be limited, we have sold certain assets that we consider non-core to our business consisting of our cellular business and certain non-essential PCS licenses. We have also entered into a sale and leaseback agreement for approximately 90 cell site towers with a minimum aggregate purchase commitment of $10 million, with the possibility of selling the remaining towers at a later date. Although we have divested certain non-core assets, the amounts realized will not be significant to our overall cash flow requirements because the holders of the US Unwired senior bank credit facility are requiring us to use a significant portion of the net proceeds from the non-core asset sales to repay existing bank debt.

Our ability to sell core assets is subject to several restrictions under the Sprint PCS agreement. Our operating subsidiaries are subject to a prohibition on the sale of certain of its assets to competitors of Sprint or Sprint PCS. Also, Sprint PCS has the right of first refusal on certain sales of our operating subsidiaries’ operating assets to a third party, and under certain circumstances Sprint PCS could purchase our operating subsidiaries’ operating assets at a discount. See “Risks Particular to Our Relationship with Sprint PCS.” These and other restrictions may limit our ability to sell core assets and may also reduce the value a buyer would be willing to pay for such core assets. Also, we cannot assure you that our core assets will be sold quickly enough or for sufficient amounts to enable us to meet our obligations.

Sales of core assets may lead to loss of revenues generated by these core assets and/or an increase in operating expenses and may materially reduce our capacity to generate cash flows. This, in turn, may adversely impact our ability to satisfy financial covenants and to service our outstanding obligations as they become due. If we fail to satisfy our financial covenants under our senior secured credit facility, our lenders would be permitted to declare a default and accelerate payments due under the loan which would in turn give rise to an event of default under our senior notes.

We may not be able to obtain the communications equipment that we need to expand our network.

From time to time, there is considerable demand for the communications equipment that our operating subsidiaries need to expand or complete their networks, and manufacturers of this equipment could have substantial backlogs of orders. Competitors who purchase large quantities of communications equipment may receive priority in the delivery of this equipment. If our operating subsidiaries cannot get this equipment, they may fail to expand or construct their networks timely.

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We obtain most of our network equipment from two suppliers. This equipment is not interchangeable, and we would be materially adversely affected if we could not obtain this network equipment timely or at all.

Our PCS networks are either Lucent networks, meaning that the network equipment is supplied by Lucent, or Nortel networks, meaning that the network equipment is supplied by Nortel. If additional equipment is needed for expansion or repair of a network, it must come from Lucent, if the network is a Lucent network, or Nortel, if the network is a Nortel network, for compatibility with our existing network equipment. If either of these suppliers should cease or delay to supply its equipment, we would be prevented or delayed in expanding or repairing the affected network or completing the IWO build-out.

Any inability to expand our networks, or to keep them repaired or to complete the IWO build-out, could have a material adverse effect on us.

Our territory has limited amounts of licensed spectrum, which may adversely affect the quality of our service and our results of operations.

We have sold eight non-core PCS licenses. LA Unwired still owns five PCS licenses for 10 MHz of spectrum. Sprint PCS has licenses for 10 to 30 MHz of spectrum in all of our territories, which we have an agreement to use. In the future, as the number of subscribers in our territories increases, this limited amount of licensed spectrum may not be able to accommodate increases in call volume, may lead to increased dropped or blocked calls and may limit our ability to offer enhanced services, all of which could result in increased customer turnover and adversely affect the combined company’s results of operations and financial condition.

If any of our operating subsidiaries loses the right to install its equipment on wireless towers or is unable to renew expiring leases for wireless towers on favorable terms or at all, our business and results of operations could be adversely impacted and we may not comply with our agreements with Sprint PCS.

Substantially all of the cell sites of our operating subsidiaries are installed on leased tower facilities that are shared with one or more other wireless service providers. In addition, a large portion of these leased tower sites are owned by a few tower companies. If a master agreement with one of these tower companies were to terminate, or if one of these tower companies were unable to support use of its tower sites by any of our operating subsidiaries, the affected subsidiaries would have to find new sites or may be required to rebuild the affected portion of their networks. In addition, the concentration of our operating subsidiaries’ cell sites with a few tower companies could adversely affect our results of operations and financial condition if any of our operating subsidiaries is unable to renew its expiring leases with these tower companies on favorable terms or at all. If any of the tower leasing companies that we do business with should experience severe financial difficulties, or file for bankruptcy protection, our ability to use our towers could be adversely affected. That, in turn, would aversely affect our revenues and financial condition if a material number of towers were involved and may result in non-compliance with our Sprint PCS management agreements.

The loss of the officers and skilled employees upon whom we depend to operate our business or the inability to attract additional personnel for the combined company’s growth could adversely affect the combined company’s results of operations.

Our business is managed by a small number of executive officers. We believe that our future success will depend in part on our continued ability to retain these executive officers and to attract and retain highly qualified technical and management personnel for the combined company. We may not be successful in retaining key personnel or in attracting and retaining other highly qualified technical and management personnel. We have adopted a retention plan for our key employees under which they can receive a payment of 30% to 50% of their base salary on certain dates over the next two years, if they remain employed by us and if certain other conditions are met. We cannot guarantee that this plan will be successful. We do not maintain policies of life insurance on our key executives. In addition, we granted stock options as a method of attracting and retaining employees, to motivate performance and to align the interests of management with those of our stockholders. Due to the decline

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in the trading price of our common stock, a substantial number of the stock options held by our employees have an exercise price that is higher than the current trading price of our common stock, and therefore these stock options may not be effective in helping us to retain valuable employees.

Expanding LA Unwired’s or IWO’s territory may have a material adverse effect on its business and reduce the market value of our securities.

As part of LA Unwired’s and IWO’s continuing operating strategy, it may expand its territory through the grant of additional markets from Sprint PCS or through acquisitions of other Sprint PCS network partners. These transactions may require the approval of Sprint PCS and commonly involve a number of risks, including the:

Failure to overcome these risks or any other problems encountered in these transactions could have a material adverse effect on the combined company’s business. In connection with these transactions, we may issue additional equity securities, and we may, subject to any necessary approval of existing bank credit facility lenders, incur additional debt or incur significant amortization expenses related to certain intangible assets connected with a newly acquired Sprint PCS management agreement or a newly acquired subscriber base.

Our service area will be threatened by bad weather, including hurricanes and severe winter weather, which could cause interruptions in service resulting in increased expenses and reduced operating results.

Much of LA Unwired’s service area is on or near the Gulf of Mexico or the Atlantic Ocean and could be damaged by bad weather like hurricanes and excessive rain. In addition, the IWO service area could be adversely affected by severe winter storms. We may face service interruptions for indefinite periods if a major hurricane or winter storm strikes one or more of our service areas, resulting in increased expenses and reduced operating results.

Unauthorized use of our networks could disrupt our business.

We will likely incur costs associated with the unauthorized use of our networks, including administrative and capital costs associated with detecting, monitoring and reducing the incidence of fraud. Fraud impacts interconnection costs, capacity costs, administrative costs, fraud prevention costs and payments to other carriers for unbillable fraudulent roaming.

IWO’s projected build-out plan and LA Unwired’s completed build-out do not cover all of their territories, which could make it difficult to maintain profitable customer bases.

As of December 31, 2003, LA Unwired covered approximately 73% of the resident population in its territory and IWO covered 75% of residents in its territory. IWO’s projected build-out plan, which has currently been suspended due to liquidity issues, and LA Unwired’s build-out do not cover all their service areas. The coverage may not adequately serve the needs of the potential subscribers in the respective territories or attract

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enough subscribers to operate our business successfully. To correct this potential problem, LA Unwired or IWO may have to cover a greater percentage of its territory than anticipated, which it may not have the financial resources to complete or may be unable to do profitably.

Sprint PCS’s roaming arrangements may not be competitive with other wireless service providers, which may restrict our ability to attract and retain subscribers and create other risks for us.

We rely on Sprint PCS’s roaming arrangements with other wireless service providers for coverage in some areas where Sprint PCS service is not yet available. The risks related to these arrangements include:

If Sprint PCS subscribers are not able to roam instantaneously or efficiently onto other wireless networks, we may lose current Sprint PCS subscribers and our Sprint PCS services will be less attractive to new subscribers.

Sales of wireless products and services in our territory by a “reseller” that is 50% owned by Sprint PCS could reduce our number of subscribers and our margins.

We allow a company, called a reseller, to sell wireless products and services in our territories. Our networks provide the wireless services that are sold by the reseller in our territories. We receive income from the reseller that we consider to be a fair return for this use of our networks, but our margins are greater when we generate our own subscribers. The reseller is 50% owned by Sprint PCS.

Risks Particular to the Indebtedness of the Combined Company

Note: We have two separate debt structures. Each of US Unwired and IWO has issued senior notes under agreements called indentures, and each of them has senior credit facilities with banks. Because of restrictions in the indentures governing the senior notes and the credit agreements governing the senior credit facilities, funds borrowed by US Unwired may not be used to finance IWO and IWO’s subsidiaries but are available for all of US Unwired’s other subsidiaries. Because of the same restrictions, funds borrowed by IWO may be used only to finance IWO and IWO’s subsidiaries.

Overview of this subsection:

US Unwired and IWO have a substantial amount of debt. They cannot borrow from their banks unless they meet the banks’ requirements for borrowing. IWO has in fact failed to make interest payments on its senior bank credit facility. The recent economic downturn is making it more difficult to meet the banks’ requirements. US Unwired and its senior lenders have agreed to a reduction in the amount of credit available under its revolving credit facility from $80 million to $40 million. If we fail to repay our debt on time, our lenders may foreclose on our assets and, if that occurs, our stock will probably be worthless.

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Both US Unwired and IWO have substantial debt that neither of them may be able to service; a failure to service this debt may result in the lenders under this debt taking away assets of ours (other than IWO’s) if US Unwired fails to service its debt, or assets of IWO if IWO fails to service its debt.

The substantial debt of US Unwired and IWO will have a number of important consequences for our operations and our investors, including the following:

US Unwired’s and IWO’s ability to make payments on their respective debt will depend upon their future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which neither of them can control. If the cash flow from either company’s operating activities is insufficient, US Unwired or IWO may continue to take actions such as delaying or reducing capital expenditures, attempting to restructure or refinance its debt, or selling assets or operations or it may seek additional equity capital. Any or all of these actions may not be sufficient to allow US Unwired or IWO to service its debt obligations or may adversely affect its results of operations. Further, US Unwired or IWO may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. The credit facilities and indentures governing US Unwired’s and IWO’s respective debt limit their ability to take several of these actions, and limit their ability to borrow more money. Their failure to generate sufficient funds to pay their debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of US Unwired common stock or other securities or result in lenders controlling the assets of each of them and their subsidiaries (other than unrestricted subsidiaries).

If US Unwired does not meet all of the conditions required under its credit facilities, it may not be able to draw down all of the funds it anticipates receiving from the lenders and it may not be able to fund operating losses and working capital needs. IWO does not meet the conditions required under its credit facility, and its lenders have refused to make further funds available to it. Without additional funds, IWO will not be able to fund operating losses and working capital needs.

As of December 31, 2003, US Unwired had approximately $76.0 million outstanding under its senior credit facility and IWO had approximately $213.2 million outstanding under its senior credit facility. As of December 31, 2003, IWO had $19.4 million in restricted cash. As of December 31, 2003, US Unwired had $38.3 million of availability under its senior bank credit facility, after giving consideration to $1.7 million in outstanding letters of credit, and IWO had no availability under its senior bank credit facility. As discussed in Note 2 to our consolidated financial statements below, on October 30, 2003, US Unwired and the holders of the US Unwired senior bank credit facility revised certain provisions of the US Unwired $130 million senior bank credit facility through execution of the third amendment to the US Unwired senior bank credit facility. US Unwired and its senior lenders agreed to a revised set of financial covenants, a reduction in the amount of available credit under its revolving credit facility from $80 million to $40 million, subject to certain borrowing conditions, an

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immediate $10.0 million partial repayment of the US Unwired senior bank term loans and a 0.5% increase in the interest rate. The US Unwired senior bank credit facility allows for up to $2.0 million in letters of credit and any letters of credit issued by US Unwired reduce the amount available under the revolving credit facility.

The availability of US Unwired’s or IWO’s senior bank credit facilities is subject to the applicable company meeting all of the conditions specified by the respective financing documents and, in addition, is subject at each funding date to specific conditions, including the following:

US Unwired was in compliance with the restrictive covenants of its senior secured credit facility at December 31, 2003 and, as noted above, recently amended its covenants to permit more flexibility in covenant compliance. However, due to the nature of the revised covenants, should actual results differ from the underlying business model assumptions, US Unwired’s ability to comply with the amended financial covenants could be adversely affected. US Unwired could be required to raise additional capital that may or may not be available on terms acceptable to it, if at all. This could have a material adverse effect on US Unwired’s ability to achieve its intended business objectives. Based on our current assumptions, however, we believe that US Unwired will comply with the financial covenants of its amended senior bank credit facility and will have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months.

IWO was not in compliance with its restrictive covenants of its senior bank credit facility at December 31, 2003 and in 2003, IWO failed to make $9.5 million in interest payments on its $240 million senior bank credit facility. The holders of the IWO senior bank credit facility have denied IWO access to the remaining $25.2 million of availability as a result of covenant violations and the missed interest payments. As a result, we have classified all of IWO’s outstanding indebtedness, including its senior bank credit facility and its senior notes, as a current liability. The Company is in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve IWO liquidity but has been unable to develop an acceptable plan. We currently anticipate seeking bankruptcy protection for IWO in 2004.

Please see the discussion under “Risks Related to Factors Currently Affecting Our Business,” below.

US Unwired may fail and IWO has failed to pass financial and business tests under its separate senior credit facilities.

US Unwired’s and IWO’s senior credit facilities require US Unwired and IWO to maintain specified financial ratios and to satisfy specified tests. Depending on the company, these tests include:

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As a result of covenant violations, the holders of the IWO senior bank credit facility have denied IWO access to the remaining available funds. We believe that US Unwired is currently in compliance with all financial and operating covenants relating its senior secured credit facility and, based upon existing assumptions in the business model, we believe that it will be able to comply with the financial covenants of the amended US Unwired senior bank credit and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. Should actual results differ from the underlying business model assumptions, our liquidity position and ability to comply with the amended financial covenants could be adversely affected. Additionally, if our business does not generate the results required by the covenants in the senior secured credit facility, our ability to make borrowings under the revolving line of credit required to operate our business would be restricted or terminated and the credit facility could be declared in default. Such a restriction, termination or declaration of default would have a material adverse affect on our liquidity. In addition to making funds under the senior bank credit facility unavailable to US Unwired and, in the case of IWO where there is no availability under the senior bank credit facility, an event of default under its senior credit facilities would in the case of US Unwired and does in the case of IWO prohibit it from paying its senior notes, which would cause a default under the affected company’s indenture, or may result in the affected company’s lenders controlling substantially all of the affected company’s assets or accelerating the maturity of the affected company’s debt. Should this occur to US Unwired, the common stock and other securities of US Unwired may have little or no value.

Please see the discussion under “Risks Related to Factors Currently Affecting Our Business,” below.

If US Unwired or IWO needs additional financing that it cannot obtain, it may have to change its network construction plans and modify its business plans. If the affected company is US Unwired, the network construction plans of LA Unwired may also have to be changed.

US Unwired expects to make significant capital expenditures to expand the PCS networks of LA Unwired. Actual expenditures may differ significantly from estimates. US Unwired would have to obtain, subject to the approval of its senior lenders, additional financing to fund LA Unwired’s network expansion plans, and IWO would have to obtain additional financing to fund its network construction or expansion plans, if:

IWO needs to make significant capital expenditures to complete or expand its PCS network and has abandoned cell sites required to complete its build-out due to liquidity issues. IWO will be required to obtain additional financing to fund its network completion or expansion, including the completion of the cell sites it has not abandoned.

We cannot predict whether any additional financing will be available to US Unwired or IWO or on what terms such financing would be available. If either US Unwired or IWO needs additional financing that it cannot obtain, the affected company will have to change its plans for the remainder of its network, which would adversely affect such company’s expected future results of operations.

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US Unwired’s and IWO’s indebtedness place restrictions on them which will limit their operating flexibility and US Unwired’s and IWO’s ability to engage in some transactions.

The respective indentures governing US Unwired’s and IWO’s senior notes and their respective senior credit facilities impose material operating and financial restrictions on US Unwired and its subsidiaries (other than IWO), on the one hand, and on IWO and its subsidiaries, on the other hand. These restrictions may limit their ability to engage in some transactions, including the following:

These restrictions could also limit their ability to obtain financing by borrowing money or issuing common stock, refinance or pay principal or interest on US Unwired’s or IWO’s outstanding debt, consummate acquisitions for cash or debt or react to changes in their operating environment. Moreover, these restrictions could cause the combined company to be at a competitive disadvantage to competitors who do not have similar restrictions.

If a specified change in control of US Unwired or IWO occurs, the affected company may not be able to buy back its senior notes as required by its indenture.

If US Unwired or IWO has a change in control as defined under its indenture, the applicable company will be required to offer to buy back all of its outstanding senior notes. We cannot assure you that US Unwired or IWO will have sufficient funds at the time of a change in control to perform this obligation or that restrictions in its credit facilities would allow it to do so. US Unwired’s or IWO’s requirement to buy back its notes upon a change in control could impair the value of US Unwired common stock and other securities or could cause a default under the affected company’s indenture which, in turn, would cause a default under its senior credit facility. In addition, a change in control as defined under US Unwired’s or IWO’s respective credit facilities would cause the affected company to default under its senior credit facility.

If US Unwired or IWO defaults under its senior credit facilities, the affected company’s lenders may declare its debt to be immediately due and payable and Sprint PCS may force the affected company to sell its assets to Sprint PCS without stockholder approval.

IWO has defaulted on its senior credit facility. If its lenders accelerate the maturity of its debt, or if US Unwired defaults and its debt is accelerated, Sprint PCS has the option to purchase the affected company’s assets at a discount to market value and assume that company’s obligations under its senior credit facility without further approval of the stockholders of the affected company. If Sprint PCS does not exercise this option, the affected company’s lenders may sell its assets to third parties without further approval of the stockholders of the affected company.

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If either US Unwired or IWO fails to pay the debt under its credit facility, Sprint PCS has the option of purchasing the affected company’s loans, giving Sprint PCS certain rights of a creditor to foreclose on that company’s assets.

Sprint PCS has contractual rights, triggered by an acceleration of the maturity of the debt under US Unwired’s or IWO’s respective senior credit facility, pursuant to which Sprint PCS may purchase US Unwired’s or IWO’s obligations to its senior lenders and obtain the rights of a senior lender. To the extent Sprint PCS purchases these obligations, Sprint PCS’s interests as a creditor would likely conflict with our interests. Sprint PCS’s rights as a senior lender would enable it to exercise rights with respect to the affected company’s assets and its continuing relationship with Sprint PCS in a manner not otherwise permitted under US Unwired’s or IWO’s Sprint PCS agreements.

Risks Particular to Our Relationship with Sprint PCS

Overview of this subsection:

We depend heavily on Sprint PCS. It performs our billing, designs and advertises the products and services we sell, and provides our customer service, in addition to a wide variety of other services, including network design, research and development. If Sprint PCS does not succeed, it is highly unlikely that we will succeed. We have little influence with Sprint PCS under our agreements with it. We have recently sued and been countersued by Sprint.

The termination of LA Unwired’s or IWO’s affiliation with Sprint PCS or Sprint PCS’s failure to perform its obligations under the Sprint PCS agreements would severely restrict the affected company’s ability to conduct its business.

LA Unwired owns few of the FCC licenses that we operate. IWO does not own any FCC licenses. Each of our operating subsidiaries operates under the FCC licenses of Sprint PCS and LA Unwired that are applicable to its territory. Other than performing its contractual obligations under the management agreement and other related agreements between us, Sprint PCS is not obligated to provide us with any support in connection with our business or otherwise. The ability of each of our operating subsidiaries to offer Sprint PCS products and operate a PCS network is almost entirely dependent on its Sprint PCS agreements remaining in effect and not being terminated.

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Sprint PCS may make business decisions that are not in the best interests of our operating subsidiaries, which may adversely affect the relationships of our operating subsidiaries with subscribers in their territories, increase their expenses and/or decrease their revenues.

Sprint PCS, under the Sprint PCS agreements, has a substantial amount of influence and control over the conduct of the businesses of our operating subsidiaries. Conflicts between us and Sprint PCS may arise and, if Sprint PCS owes us no duties except as set forth in the agreements, those conflicts may not be resolved in our favor. Accordingly, Sprint PCS has made and may continue to make decisions that adversely affect LA Unwired’s or IWO’s business, such as the following:

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Decisions such as those referred to above could adversely affect our operating subsidiaries’ relationships with their subscribers by changing products, services and price plans to which those subscribers had become accustomed. Should Sprint PCS have a change of control, or should management of Sprint PCS change, the pace at which decisions such as the foregoing occur could change, increasing the risk of disfavor from subscribers of our operating subsidiaries. In fact, Sprint has made changes to its senior management, including replacing its chairman and chief executive officer and dismissing its president and chief operating officer.

We deal with Sprint PCS daily on a variety of issues. Sometimes we disagree with Sprint PCS or oppose what Sprint PCS would like us to do or require us to pay, and we have numerous disputes with Sprint PCS that we have as yet been unable to resolve, many of which we have described elsewhere in these Risk Factors. This occurs particularly when Sprint PCS tells us we must adopt business methods or pricing plans that we think will hurt our business. Our disputes with Sprint PCS, including our lawsuit against Sprint that is referred to in Note 10 to our audited consolidated financial statements that are a part of this filing and is further described below, could adversely affect our relationship with Sprint PCS. Because we rely so heavily on our relationship with Sprint PCS, any deterioration of that relationship or of Sprint PCS’s desire to cooperate with LA Unwired or IWO could adversely affect the combined company’s business. In addition, Sprint PCS’s level of control and influence over us would make it difficult for us to sell our business to anyone other than Sprint PCS.

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In the future, we may approach Sprint PCS and seek to modify our management agreements, the consent and agreement and our other agreements with Sprint PCS and take other actions consistent with such objective, including formally bringing certain claims or proceedings under such arrangements that we believe we may have against Sprint PCS. We have not determined whether we will approach Sprint PCS or bring such claims or proceedings or take such other actions. In the event we do, we can provide no assurance that any such modifications will be made or that, if any such claims are brought or other such actions taken, they will be resolved in our favor.

If Sprint PCS decides to terminate its contracts with national retailers to whom we sell our products, our revenues would be materially and adversely impacted.

We rely on Sprint PCS to negotiate contracts with national retailers such as Best Buy and RadioShack to whom we sell our product. We are not permitted under our agreements with Sprint PCS to enter into contracts with those retailers directly unless Sprint allows us to. Our sales to national retailers who have contracted with Sprint PCS account for almost 30% of our total sales. If Sprint PCS decides to terminate its contracts with such vendors and refuses to allow us to deal with them directly, our revenues would be materially adversely affected.

Sprint’s reintegration of its PCS wireless business into its wireline operations could disrupt the services it provides to us.

Sprint has announced that it is reintegrating its PCS wireless business into its wireline operations and will realign its internal resources. Instead of aligning its resources according to business segments, Sprint will focus on two distinct consumer types—businesses and individuals. The elimination of a separate division within Sprint that is focused specifically on PCS services could result in a disruption in the services Sprint provides to us, which could adversely affect our subscribers and lead to increased churn.

Our dependence on Sprint PCS may adversely affect our ability to predict our results of operations.

Our dependence on Sprint PCS injects a great degree of uncertainty into our business and financial planning. Unanticipated expenses and reductions in revenue have had and, if they occur in the future, will have a negative impact on our liquidity and make it more difficult to predict with reliability our future performance. Inaccuracies in data provided by Sprint PCS could understate our expenses or overstate our revenues, result in out-of-period adjustments or lead us to make bad business decisions that may materially adversely affect our financial results. A significant portion of cost of service and roaming in our financial statements relates to charges from Sprint PCS. In addition, because Sprint PCS provides billing and collection services for us, it collects cash from our subscribers on our behalf and remits that cash to us. As a result, we rely on Sprint PCS to provide accurate, timely and sufficient data and information to properly record our revenues, expenses and accounts receivable that underlie a substantial portion of our periodic financial statements and other financial disclosures.

We and Sprint PCS have disputes concerning billing and other errors or inaccuracies. As of December 31, 2003, we and IWO had disputed approximately $19.1 million and $9.3 million, respectively, of charges from Sprint PCS. If we are required in the future to make additional adjustments or charges as a result of errors or inaccuracies in data provided to us by Sprint PCS, such adjustments or charges may have a material adverse effect on our financial results in the period that the adjustments or charges are made, on our ability to satisfy covenants contained in our credit facilities, and our ability to make fully informed business decisions.

The inability of Sprint PCS to maintain high quality back office services or our inability to use Sprint PCS’s back office services and third party vendors’ back office systems could lead to customer dissatisfaction, increase the loss of subscribers or otherwise increase our costs or adversely affect our businesses.

We rely on Sprint PCS’s internal support systems, including customer care, billing and other back office support. Our operations could be disrupted if Sprint PCS is unable to maintain and expand its internal support systems in a high quality manner, or to efficiently outsource those services and systems through third party

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vendors. We expect the rapid expansion of Sprint PCS’s business and the consolidation of back office services by Sprint PCS to continue to pose a significant challenge to its internal support systems. Additionally, Sprint PCS has relied on third party vendors for a significant number of important functions and components of its internal support systems and may continue to rely on these vendors in the future. Our operating subsidiaries depend on Sprint PCS’s willingness to offer and provide back office services effectively and at competitive costs. Our agreements with Sprint PCS provide that, upon nine months’ prior written notice, Sprint PCS may elect to terminate any of these services. The inability of Sprint PCS to maintain high quality back office services, or provide us with adequate notification of our inability to continue to provide those services or our inability to use Sprint PCS’s back office services and third party vendors’ back office systems could lead to customer dissatisfaction, increase the loss of subscribers or otherwise disrupt our business and increase our costs. Additionally, we are dependent on Sprint PCS to assist us in transferring our back office services from Sprint PCS to a third party if we choose to do that, and any failure by Sprint PCS to cooperate in this effort, such as by making a transfer cost prohibitive, could have a similar adverse effect on us.

We rely on Sprint PCS for providing timely and accurate information to allow us to meet our financial reporting obligations. If material internal control weaknesses exist at Sprint PCS, we may not be able to provide timely and accurate information.

Inaccuracies in data provided by Sprint PCS could understate our expenses or overstate our revenues, result in out-of-period adjustments or lead us to make bad business decisions that may materially adversely affect our financial results.

A significant portion of “Cost of Service” expenses and “Roaming” revenues in our financial statements relates to charges from Sprint PCS. In addition, because Sprint PCS provides billing and collection services for us, it collects cash from our subscribers on our behalf and remits that cash to us. As a result, we rely on Sprint PCS to provide accurate, timely and sufficient data and information to properly record our revenues, expenses and accounts receivables that underlie a substantial portion of our periodic financial statements and other financial disclosures.

We and Sprint PCS have discovered billing and other errors or inaccuracies that could be material to us. We have disputed invoices that Sprint PCS has sent us in the amount of $19.1 million for US Unwired and $9.3 million for IWO as of December 31, 2003. If we are required in the future to make additional adjustments or charges as a result of errors or inaccuracies in data provided to us by Sprint PCS, such adjustments or charges may have a material adverse affect on our financial results in the period that the adjustments or charges are made, on our ability to satisfy covenants contained in our credit facility, and our ability to make fully informed business decisions.

Changes in Sprint PCS products and services may reduce customer additions and may be otherwise economically adverse.

The competitiveness and effective promotion of Sprint PCS products and services are key factors in our ability to attract and retain subscribers. For example, under the Sprint PCS service plans, subscribers who do not meet certain credit criteria can nevertheless select any plan offered subject to an account-spending limit, referred to as ASL, to control credit exposure. Account spending limits range from $125 to $200 depending on the credit quality of the customer. Prior to May 2001, all of these subscribers were required to make a deposit ranging from $125 to $250 that could be credited against future billings. In May 2001, a new Sprint PCS program, called NDASL for “no deposit account spending limit,” eliminated the deposit requirement on certain, but not all, credit classes. A significant amount of our new customer additions occurred in 2002 under the NDASL program. Sprint PCS has replaced the NDASL program with the “Clear Pay Program”. The Clear Pay Program is substantially similar to the NDASL program but with an increased emphasis on payment of outstanding amounts. Under the Clear Pay Program, subscribers who do not meet certain credit criteria can select any plan offered, subject to an account-spending limit.

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The NDASL program had the effect of increasing churn and bad debt expense and, though better than the NDASL program, the Clear Pay Program still caused an unacceptable rate of churn. Sprint PCS has the right to end or materially change the terms of the Clear Pay Program. If Sprint PCS chooses to eliminate the Clear Pay Program or alter its features, the growth rate we expect to achieve may decrease. Our operating subsidiaries requested and received, effective February 24, 2002, the ability to reinstate deposits in their territories for subscribers with poor or inadequate payment histories. We believe that reinstatement of the deposit has reduced the number of potential new subscribers in these markets. While deposits for Clear Pay customers provide us with protection against bad debt expense for sub-prime customers, it has and may continue to deter some people with sub-prime credit from becoming subscribers. As a result, our gross additions have declined and may continue to do so, which may further result in lower cash flows and impair our ability to service our debt. As of December 31, 2003, approximately 30% of our subscribers had a credit rating placing them in the sub-prime category.

Sprint PCS may elect to offer additional programs that may attract high credit risk subscribers. Sprint PCS may not offer relief in any of such programs.

If Sprint PCS does not complete the construction of its nationwide PCS network, our operating subsidiaries may not be able to attract and retain subscribers.

Sprint PCS and its affiliates currently intend to cover a significant portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands by creating a nationwide PCS network through Sprint PCS’s own construction efforts and those of its network partners like LA Unwired and IWO. Sprint PCS and its affiliates are still constructing the nationwide network and do not yet offer PCS services, either on Sprint PCS’s own network or through its roaming agreements, everywhere in the United States.

If one of LA Unwired’s or IWO’s subscribers travels in an area where a Sprint PCS or compatible system is not yet operational, the customer would not be able to make a call on that area’s system unless he or she has a telephone handset that can make calls on both systems. Generally, these handsets are more costly. Moreover, the Sprint PCS network does not allow for calls to be transferred without interruption between the Sprint PCS network and another wireless network. This means that a customer must end a call in progress and initiate a new call when entering an area not served by the Sprint PCS network. The quality of the service provided by another network may not be equal to that of the Sprint PCS network, and LA Unwired’s or IWO’s subscribers may not be able to use some of the advanced features of its network. This could result in customer dissatisfaction and loss of subscribers.

Sprint PCS has entered into management agreements similar to LA Unwired’s and IWO’s with companies in other markets under its nationwide PCS build-out strategy. LA Unwired’s and IWO’s results of operations are dependent on Sprint PCS’s national network and, to a lesser extent, on the networks of Sprint PCS’s other network partners. Sprint PCS’s network may not provide nationwide coverage to the same extent as its competitors, which could adversely affect LA Unwired’s and IWO’s ability to attract and retain subscribers.

If Sprint PCS does not succeed, or if LA Unwired or IWO does not maintain a good relationship with Sprint PCS, LA Unwired’s or IWO’s business may not succeed.

If Sprint PCS has a significant disruption to its business plan or network, fails to operate its business in an efficient manner, or suffers a weakening of its brand name, LA Unwired’s and IWO’s operations and profitability would likely be impaired. Sprint PCS currently intends to cover a significant portion of the population of the United States, Puerto Rico and the U.S. Virgin Islands by creating a nationwide PCS network through its own construction efforts and those of its network partners. Sprint PCS is still constructing its nationwide network and does not offer PCS services, either on its own network or through its roaming agreements, in every city in the United States. Sprint PCS’s network may not provide nationwide coverage to the same extent as its competitors, which would adversely affect our ability to attract and retain customers.

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If Sprint PCS should have significant financial problems, including bankruptcy, our PCS business would suffer material adverse consequences that could include termination or revision of our Sprint PCS agreements.

LA Unwired and IWO use their relationships with Sprint PCS to obtain, at favorable prices, handsets and the equipment for the construction or expansion and operation of their networks. Any disruption in their relationships with Sprint PCS could make it much more difficult for them to obtain this equipment.

On July 11, 2003, we sued Sprint and Sprint PCS for violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud. On September 25, 2003, we filed an amended complaint to include contractual claims. On October 20, 2003, Sprint and Sprint PCS answered the suit and filed a counterclaim against us for approximately $13.3 million related primarily to contractual disputes. They also asked that our suit be partially dismissed. On October 21, 2003, Sprint filed a partial motion for judgment and asked that the court disregard our request for a jury trial. On February 3, 2004, the court denied Sprint’s and Sprint PCS’s motion for judgment and their motion to strike our request for a jury trial. Our disputes with Sprint PCS, such as our lawsuit against Sprint and Sprint PCS and their lawsuit against us, could cause our relationship with Sprint PCS to further deteriorate, which could in turn adversely affect our business

If Sprint PCS or other Sprint PCS network partners have financial difficulties, the Sprint PCS network could be disrupted.

Sprint PCS’s national network is a combination of networks. The large metropolitan areas are owned and operated by Sprint PCS, and the areas in between them are owned and operated by Sprint PCS network partners, all of which are independent companies like we are. We believe that most, if not all, of these companies have incurred substantial debt to pay the large cost of building out their networks. Some of these companies have experienced financial difficulties, and if this continues, the Sprint PCS network could be disrupted in those companies’ territories, which would adversely affect our ability to attract and retain customers.

If other network partners experience financial difficulties, the Sprint PCS network could be disrupted in the territories of those partners. If the Sprint PCS agreements of those partners are like ours, Sprint PCS would have the right to step in and operate the affected territory. Of course this right could be delayed or hindered by legal proceedings, including any bankruptcy proceeding relating to the affected network partner. Sprint PCS network partners iPCS, Inc. and Horizon have filed for bankruptcy, and other network partners, including IWO, may follow. The impact of these developments on the Sprint PCS network, on our funding and our relationship with Sprint PCS, and on our travel revenue from subscribers roaming in iPCS markets may be materially adverse.

Material disruptions in the Sprint PCS network would have a material adverse effect on our ability to attract and retain subscribers.

Certain provisions of the Sprint PCS agreements may diminish the value of US Unwired common stock and other securities and restrict the sale of our business.

Under some circumstances and without further stockholder approval, Sprint PCS may purchase LA Unwired’s or IWO’s operating assets at a discount. In addition, Sprint PCS must approve any change of control of the ownership of LA Unwired or IWO and must consent to any assignment of LA Unwired’s or IWO’s Sprint PCS agreements.

Sprint PCS also has a right of first refusal if LA Unwired or IWO decides to sell its operating assets to a third party. LA Unwired and IWO also are subject to a number of restrictions on the transfer of their businesses, including a prohibition on the sale of LA Unwired or IWO or their operating assets to competitors of Sprint or Sprint PCS. These restrictions and other restrictions contained in the Sprint PCS agreements could adversely affect the value of US Unwired common stock and other securities, may limit our ability to sell LA Unwired’s and IWO’s business, may reduce the value a buyer would be willing to pay for LA Unwired’s or IWO’s business and may reduce LA Unwired’s or IWO’s or the combined company’s entire business value.

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LA Unwired or IWO may have difficulty in obtaining an adequate supply of certain handsets from Sprint PCS, which could adversely affect LA Unwired’s or IWO’s results of operations.

LA Unwired and IWO depend on our and their relationships with Sprint PCS to obtain handsets at a competitive cost. Sprint PCS orders handsets from various manufacturers. LA Unwired or IWO could have difficulty obtaining specific types of handsets at a competitive cost and in a timely manner if:

The occurrence of any of the foregoing could disrupt LA Unwired’s or IWO’s customer service and/or result in a decrease in LA Unwired’s or IWO’s subscribers, which could adversely affect its results of operations.

Non-renewal or revocation by the FCC of LA Unwired’s licenses or the Sprint PCS licenses LA Unwired or IWO uses would significantly harm the affected company’s business.

PCS licenses are subject to renewal and revocation by the FCC. LA Unwired’s and Sprint PCS’s licenses in LA Unwired’s and IWO’s territories will begin to expire in 2005 but may be renewed for additional ten-year terms. There may be opposition to renewal of these licenses upon their expiration, and the licenses may not be renewed. The FCC has adopted specific standards to apply to PCS license renewals. Any failure by Sprint PCS, LA Unwired or IWO to comply with these standards could cause revocation or forfeiture of the licenses for its territories. If any of the licenses of Sprint PCS that our operating subsidiaries are using should be lost, the affected subsidiary would be severely restricted in its ability to conduct its business. If we were to lose any of the licenses we own, we could replace it with a Sprint PCS license in the affected territory, but at a greater cost to us than the use of our own license.

If Sprint PCS does not maintain control over its licensed spectrum, the Sprint PCS agreements may be terminated, which would result in LA Unwired’s and IWO’s inability to provide PCS service.

The FCC requires that license holders like Sprint PCS and LA Unwired maintain control of their licensed spectrum and not delegate control to third-party operators or managers. Although the Sprint PCS agreements with LA Unwired and IWO reflect an arrangement that the parties believe meets the FCC requirements for licensee control of licensed spectrum, we cannot assure you that the FCC will agree. If the FCC were to determine that the Sprint PCS agreements need to be modified to increase the level of licensee control, LA Unwired and IWO have agreed with Sprint PCS to use best efforts to modify the Sprint PCS agreements to comply with applicable law. If LA Unwired and IWO cannot agree with Sprint PCS to modify the Sprint PCS agreements, the agreements may be terminated. If the Sprint PCS agreements are terminated, LA Unwired and IWO would no longer be a part of the Sprint PCS network and the combined company would be severely restricted in its ability to conduct business.

We have limited rights if Sprint PCS fails to perform its obligations to our operating subsidiaries under their agreements with Sprint PCS. Should that occur, the consequences to us would be severe.

If Sprint PCS fails to perform its obligations to our operating subsidiaries, the consequences to us would be severe. Our operating subsidiary could terminate its Sprint PCS agreements, but in that case it may have to discontinue its PCS business or to conduct it on a reduced scale. It would not be permitted to offer Sprint PCS products and services. We would in these events suffer material adverse consequences to our results of

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operations and financial condition. The only remedy of our operating subsidiary would be to require Sprint PCS either to purchase its operating assets at a price that would be unfavorable to us, or to assign to our operating subsidiary limited amounts of Sprint PCS’s licensed spectrum for a price equal to the greater of 10% of the business value of our operating subsidiary or Sprint PCS’s original cost for the spectrum plus any costs incurred in relocating microwave radio systems.

Sprint PCS has notified us of charges and fees that it intends to pass on to us. We did not anticipate these charges and fees when we formulated our business plan. We believe these charges and fees are material, and if Sprint PCS is entitled to collect them, they could materially and adversely affect out results of operations and financial condition.

Sprint PCS has presented us with a number of charges and fees that we did not expect when we formulated our business plan, including:

Sprint PCS invoked certain dispute resolution provisions of our agreements with respect to several ongoing disputes between our companies. This process required senior management officials of each company to attempt to resolve the disputes, and if a dispute was not resolved, the parties were free to proceed with litigation or, in certain specified cases, to arbitration. We also invoked certain dispute resolution provisions under the agreements.

The disputes were not resolved pursuant to the dispute resolution process and therefore we filed a lawsuit against Sprint and Sprint PCS related to disputes that had been subject to the resolution process and to other disputes among Sprint, Sprint PCS and us that are not within the scope of the dispute resolution process. Sprint and Sprint PCS have sued us for recovery of approximately $13 million of fees and other charges that we have disputed. The dispute resolution process under our agreements with Sprint PCS has been terminated pending the outcome of our lawsuits.

The total amount of charges and fees we have disputed at December 31, 2003 is $19.1 million for US Unwired and $9.3 million for IWO. We believe that these charges and fees are material, and if Sprint PCS is entitled to collect them, they could have a material adverse effect on our results of operations or financial condition or both.

We rely on the use of the Sprint PCS brand name and logo to market our services, and a loss of use of this brand and logo or a decrease in the attractiveness of this brand and logo to potential customers would significantly impair our ability to market our products.

The Sprint PCS brand and logo is highly recognizable. If we lose our rights to use the Sprint PCS brand and logo under our trademark and service mark license agreements, we would lose the advantages associated with marketing efforts conducted by Sprint PCS. If we lose the rights to use this brand and logo or the value of the brand and logo decreases, it is highly unlikely that customers would recognize our brand and we would have to spend significantly more money on advertising to create brand recognition.

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Our July 2003 lawsuit and our September amended complaint against Sprint and Sprint PCS may cause Sprint PCS to retaliate against LA Unwired, which is also a plaintiff in the lawsuit, or IWO, which is not. The lawsuit and the countersuit filed by Sprint and Sprint PCS against us may also cause further deterioration in our relationship with Sprint and Sprint PCS.

Our lawsuit against Sprint and Sprint PCS alleges, among other things, that:

The Sprint and Sprint PCS countersuit against us alleges that we have refused to pay Sprint certain fees and charges we are obligated to pay under our agreements with Sprint, currently amounting to over $13 million.

We had a tense relationship with Sprint PCS before we and Sprint and Sprint PCS filed lawsuits. Our allegations may cause further deterioration in that relationship, with the adverse effects that are described above. Should Sprint and Sprint PCS prevail in their claims, our liquidity could be further eroded.

If, despite our lawsuit, Sprint PCS succeeds in what we believe to be its plan to acquire us at a substantial discount, our stockholders and creditors would be adversely affected.

Risks Particular to the Combined Company’s Industry

Overview of this subsection:

We face significant competition in our service areas from a number of competitors. There are five other national operators that offer service in at least some portion of our service areas in addition to a number of local and regional carriers. Approximately 95% of the population has three or more different operators offering mobile telephone service in the counties in which they live. The result is that prices of wireless services have dramatically dropped. Providers are offering larger bundles of minutes at lower prices and this has resulted in a decrease in airtime revenue, which is the price a customer pays for using the service in excess of allotted minutes. In addition, other factors affecting our industry are changing rapidly. If we cannot effectively meet the challenges of these conditions, we probably will not succeed. Activists are seeking new laws that would restrict use of telephones by drivers, our placement of the towers that carry our transmissions and disposal of wireless phones. Such laws could adversely impact our business.

Our operating subsidiaries’ business may suffer because subscribers frequently disconnect their service in the PCS industry. The rate at which these disconnections occur, or churn, may be even higher in the future.

The PCS industry in general and Sprint PCS in particular have experienced a high rate of subscribers who disconnect their service. This rate is referred to as churn. We experienced even higher churn in 2002 due in large part, we believe, to the NDASL program that Sprint PCS introduced in May 2001 and the Clear Pay program that replaced NDASL. These programs are described under “Risks Particular to Our Relationship with Sprint PCS.” Although our churn declined in 2003, our future churn rate may be higher due to intense competition and general economic conditions, among other factors. Factors that tend to contribute to higher churn include:

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A high rate of PCS subscriber churn could harm the competitive position of our operating subsidiaries and their results of operations. We subsidize some of the costs of handsets for our new subscribers, pay commissions for new accounts and incur expenses to advertise and maintain a distribution network. When we experience a high rate of churn, we may not receive sufficient revenue to offset these costs. Sprint PCS may elect to offer additional programs that may attract high credit risk subscribers.

Sprint PCS and we face intense competition that may reduce its and our market share and harm its and our financial performance.

There is substantial competition in the telecommunications industry. According to information it has filed with the SEC, Sprint PCS believes that the traditional dividing lines between long distance, local, wireless, and Internet services are increasingly becoming blurred. Through mergers and various service integration strategies, major providers, including Sprint PCS, are striving to provide integrated solutions both within and across all geographical markets.

Sprint PCS expects competition to intensify as a result of the entrance of new competitors and the rapid development of new technologies, products, and services. Sprint PCS cannot predict which of many possible future technologies, products, or services will be important to maintain its competitive position or what expenditures will be required to develop and provide these technologies, products or services. Sprint PCS’s ability to compete successfully will depend on marketing and on its ability to anticipate and respond to various competitive factors affecting the industry, including new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions, and discount pricing strategies by competitors. To the extent Sprint PCS does not keep pace with technological advances or fails to respond timely to changes in competitive factors in its industry, it could lose market share or experience a decline in revenue and net income.

Each of the markets in which Sprint PCS competes is served by other wireless service providers, including cellular, enhanced specialized mobile radio, called ESMR, and PCS operators and resellers. A majority of markets have five or more commercial mobile radio services or CMRS providers. Each of the top 50 metropolitan markets has at least two other PCS competitors in addition to one ESMR competitor and two cellular incumbents. Some of these competitors have been operating for a number of years and currently serve a substantial subscriber base. The FCC has eliminated its rule imposing limits on spectrum aggregation, but it continues to evaluate the competitive effects of CMRS spectrum aggregation on a case-by-case basis. Competition may continue to increase to the extent that licenses are transferred from smaller stand-alone operators to larger, better capitalized, and more experienced wireless communications operators. These larger wireless communications operators may be able to offer subscribers network features not offered by Sprint PCS. The actions of these larger wireless communications operators could negatively affect Sprint PCS’s and our customer churn, ability to attract new subscribers, average revenue per user, cost to acquire subscribers, and operating costs per customer.

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Sprint PCS relies on agreements with competitors to provide automatic roaming capability to Sprint PCS subscribers in many of the areas of the United States not covered by the Sprint PCS network, which primarily serves metropolitan areas. Certain competitors may be able to offer coverage in areas not served by Sprint PCS’s network or may be able to offer roaming rates that are lower than those offered by Sprint PCS. Certain of Sprint PCS’s competitors are seeking to reduce access to their networks through actions pending with the FCC. Moreover, analog wireless technology, called AMPS, the dominant air interface for cellular systems on which PCS subscribers roam, is being phased out by many carriers and by 2007 cellular carriers will no longer be required to operate analog networks. If cellular operators cease to offer their AMPS networks for roaming, some Sprint PCS subscribers may have difficulty roaming in certain markets.

Some wireless providers, some of which have an infrastructure in place and have been operating for a number of years, have been upgrading their systems and provide expanded and digital services to compete with Sprint PCS’s services. Some of these wireless providers require their subscribers to enter into long-term contracts, which may make it more difficult for Sprint PCS to attract subscribers away from these wireless providers.

Significant competition in the wireless communications services has resulted in LA Unwired, IWO and their competitors offering lower prices and may result in LA Unwired’s and IWO’s competitors offering new or better products and services. These factors could prevent LA Unwired or IWO from operating profitably or reduce their profitability.

Competition in the wireless communications industry is intense. Our major competitors include such wireless companies as Verizon, T-Mobile, Cingular, AT&T Wireless, and Nextel. LA Unwired’s and IWO’s ability to compete will depend, in part, on their ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies by our competitors. We anticipate that competition will continue to cause the market prices for two-way wireless products and services to decline in the future. In order to attract new subscribers, we have offered steeper discounts on handsets and more generous service plans that may include more minutes and other enhancements such as complimentary periods of free data usage. Offering larger bundles of minutes at lower prices has resulted in a decrease in airtime revenue, which is the price a customer pays for using the service in excess of allotted minutes.

Our operating subsidiaries’ dependence on Sprint PCS to develop competitive products and services and the requirement that they obtain Sprint PCS’s consent to sell local pricing plans and equipment that Sprint PCS has not approved may limit their ability to keep pace with competitors on the introduction of new products, services and equipment. Many of these competitors are larger than our operating subsidiaries individually or combined, may have entered the wireless communications services market before our operating subsidiaries did, possess greater resources and more extensive coverage areas, may offer lower rates, and may market other services, such as landline telephone service, cable television and Internet access, with their wireless communications services. In addition, we may be at a competitive disadvantage since we may have more debt than some of our competitors.

Furthermore, there has been a recent trend in the wireless communications industry towards consolidation of wireless service providers through joint ventures, reorganizations and acquisitions. We expect this consolidation to lead to larger competitors over time. We may be unable to compete successfully with larger companies that have substantially greater resources or that offer more services than LA Unwired and IWO do.

We believe that our ability to compete effectively with other PCS providers will depend on:

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Alternative technologies and current uncertainties in the wireless market may reduce demand for PCS.

PCS providers in the United States use one of three technological standards. Even though the three standards share basic characteristics, they are not compatible or interchangeable with each other. Our operating subsidiaries and Sprint PCS use the standard known as CDMA. If another standard becomes preferred in the industry, our operating subsidiaries may be at a competitive disadvantage. If Sprint PCS changes its standard, our operating subsidiaries will need to change theirs as well, which will be costly and time consuming. If our operating subsidiaries cannot change the standard, they may not be able to compete with other systems.

The wireless communications industry is experiencing significant technological change, as evidenced by the increasing pace of digital upgrades in existing analog wireless systems, satellite coverage, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. Technological advances and industry changes could cause the technology used on our operating subsidiaries’ networks to become obsolete. Sprint PCS may not be able to respond to such changes and implement new technology on a timely basis, or at an acceptable cost.

If Sprint PCS is unable to keep pace with these technological changes or changes in the wireless communications market based on industry consolidation, the effects of new regulations flowing from the Telecommunications Act of 1996, the uncertainty of future government regulation, the technology used on our operating subsidiaries’ networks, or their business strategy, may become obsolete. In addition, some wireless carriers have implemented an upgrade to their digital systems known as one times radio transmission technology, or 1XRTT, which is also broadly known as third generation, or 3G, technology throughout the industry. Some carriers are upgrading their digital systems to implement what is known as 1X EvDO, a 3G data technology that is a generation above 1XRTT. 3G technology promises high-speed, always-on Internet connectivity and high-quality video and audio. We cannot assure you that our operating subsidiaries or Sprint PCS can implement 3G technology successfully or on a cost-effective basis.

Regulation by government and taxing agencies may increase our operating subsidiaries’ costs of providing service or require them to change their services, either of which could impair the combined company’s financial performance.

Our operations and the operations of Sprint PCS are subject to varying degrees of regulation by the FCC, the Federal Trade Commission, the Federal Aviation Administration, the Environmental Protection Agency, the Occupational Safety and Health Administration and state and local regulatory agencies and legislative bodies. Adverse decisions or regulations of these regulatory bodies could negatively impact operations and costs of doing business. For example, changes in tax laws or the interpretation of existing tax laws by state and local authorities could subject us to increased income, sales, gross receipts or other tax costs or require LA Unwired or IWO to alter the structure of its current relationship with Sprint PCS. In addition:

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The introduction of wireless number portability is likely to lead to an increase in subscriber churn.

The FCC has mandated that wireless carriers implement phone number portability for wireless subscribers that affected a significant portion of our markets starting in November 2003. This permits users of wireless services the opportunity to retain the same phone number when they change local wireless carriers. Prior to implementation, subscribers who changed carriers were also required to change phone numbers. We believe that portability will make it easier for subscribers to switch wireless carriers, resulting in increased subscriber churn, increased costs associated with retaining our overall subscriber base and lower revenues. The manner in which wireless carriers implement this program may also adversely affect us.

In preparation for wireless local number portability BellSouth has implemented dialing pattern changes for wireless providers who use reverse toll billing. This change will now require wireline carriers to dial 1+ to reach

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wireless customers that are not within the local calling area regardless of their reverse toll billing status. We believe that this process is very confusing to our subscribers and is likely to result in a higher level of subscriber churn.

An increase in the amount of our foreign ownership could cause us to lose our FCC licenses or restructure our ownership.

Ownership of US Unwired capital stock by non-U.S. citizens is subject to limitations under the Communications Act of 1934 and FCC regulations. In the absence of FCC consent, not more than 25% of US Unwired capital stock may be owned or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives, or by a foreign corporation. We believe the level of foreign ownership in US Unwired common stock to be approximately 25%. Because US Unwired common stock is publicly traded, the level of foreign ownership may fluctuate.

The FCC has granted us the authority to permit US Unwired’s foreign ownership to exceed 25%, subject to specific limitations. If US Unwired exceeds the permitted levels or does not comply with the applicable limitations, it may have to restructure its ownership to come within the permitted ownership limit or else we may lose our FCC licenses. In that case, the articles of incorporation of US Unwired permit it to force foreign shareholders to sell their shares to US Unwired, whether they wish to do so or not, so as to reduce the foreign ownership of US Unwired to slightly lower than permitted levels.

Our future prospects are uncertain because the future prospects of the PCS industry are uncertain.

PCS systems have not operated in the United States for very long, and we cannot assure you that the operation of these systems in our markets will become profitable. In addition, we cannot estimate how much demand there will be for PCS in our markets or how much competitive pricing pressure there will be. As a result, the future prospects of the PCS industry, including LA Unwired’s and IWO’s prospects, remain uncertain. The future demand for wireless communications services in general is uncertain. We also cannot predict what new challenges we may face in this changing industry environment. If we cannot react promptly and effectively to these challenges, our business could be materially and adversely affected.

Use of hand-held phones may pose health risks, which could result in the reduced use of wireless services or liability for personal injury claims.

Some media reports and some studies have suggested that certain radio frequency emissions from wireless handsets may be linked to various health problems, including cancer, and may interfere with various electronic medical devices, including hearing aids and pacemakers. Concerns over radio frequency emissions may discourage use of wireless handsets or expose the combined company to potential litigation. Any resulting decrease in demand for wireless services, or costs of litigation and damage awards, could impair the combined company’s ability to achieve and sustain profitability.

Our operating subsidiaries may be subject to potential litigation relating to the use of wireless phones while driving. In addition, several state and local governments are considering, or have adopted, legislation that restricts the use of wireless handsets by drivers.

Some studies have indicated that some aspects of using wireless phones while driving may impair drivers’ attention in certain circumstances, making accidents more likely. These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries, or to new restrictions or regulations on wireless phone use, any of which also could have material adverse effects on our results of operations.

A number of U.S. state and local governments are considering or have enacted legislation that would restrict or prohibit the use of a wireless handset while driving a vehicle or, alternatively, require the use of a hands-free telephone. Legislation of this sort, if continued to be enacted, would require wireless service providers to provide

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hands-free enhanced services such as voice activated dialing and hands-free speaker phones and headsets so that they can keep generating revenue from their subscribers, who make many of their calls while on the road. If we are unable to provide hands-free services and products to our subscribers in a timely and adequate fashion, the volume of wireless phone usage would likely decrease, and our ability to generate revenues would suffer. Moreover, studies have found that driver distraction due to cell phone use can occur regardless of whether hand-held or hands-free cell phones are used, and that cell phone conversations create much higher levels of driver distractions than listening to the radio or even driving under the influence of alcohol. If legislation is adopted in our service areas banning all cell phone use while driving, our revenues would be even more significantly impacted.

Environmental groups have asked the FCC to halt the building of towers used for transmission of wireless signals.

Environmental groups claim that towers used for transmission of wireless signals kill migratory birds. They have petitioned the FCC to study how many birds die from flying into towers, and have asked the FCC to halt tower construction until the study is completed. In February 2003, environmental groups filed suit against the FCC to force it to protect migratory birds from communication towers. On May 1, 2003, the FCC announced that it would launch a study of this issue but the lawsuit has been dismissed. If we cannot build new towers, we may not be able to complete or expand our networks.

Some environmental groups believe that the disposal of wireless phones could pose a threat to public health. If new regulations governing wireless phone disposal are passed, or if our industry does not develop an efficient disposal or recycling program, our operating costs could increase.

An environmental research group has argued that the disposal of used wireless phones could pose a threat to public health because the phones contain small amounts of toxic chemicals that may leak into the soil and water supply when they are deposited in landfills. If new and burdensome regulations governing the disposal of wireless phones are passed in the states covered by our network, or if the PCS industry cannot develop a cost-effective disposal or recycling program for wireless phones, our operating costs could increase.

General Risks Currently Affecting our Business

Overview of this subsection

Our business has recently been challenged by a number of adverse factors. IWO has violated covenants of its senior bank credit facility and has failed to make required payments of interest in 2003 amounting to approximately $9.5 million. As a result, IWO’s lenders have denied IWO access to remaining credit under this facility. If our assumptions in the US Unwired business model are impacted by adverse factors as discussed in Note 2 below, it is likely that US Unwired’s business will suffer to the point that US Unwired will not meet some of the amended covenants in the US Unwired bank debt agreements. If that occurs and the US Unwired banks do not agree to again revise the US Unwired amended covenants, they would be able to declare a default under the US Unwired bank debt and to refuse to advance funds to us.

Our business is being adversely affected by our highly leveraged capital structure, increased competition, slower subscriber growth than we anticipated, uncertainties regarding churn due to the introduction of wireless number portability, our relationship with Sprint and Sprint PCS, general economic conditions and other factors. If these factors continue, it is likely that we will not have enough cash to operate our business. IWO is already in default of its senior bank credit facility due to covenant violations and missed interest payments. The IWO bank lenders could demand payment of what we owe them, and they have already denied IWO access to the remaining available funds under the facility. If payment were demanded, we would also be in default under the IWO senior notes and the related indenture. US Unwired’s liquidity status and ability to comply with its amended senior bank credit facility financial covenants are dependent upon a number of factors. Should actual results differ from the assumptions underlying our business model, US Unwired’s liquidity position and its ability to comply with

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the amended financial covenants could be adversely affected. It could be required to raise additional capital that may or may not be available on terms acceptable to it, if at all. This could have a material adverse effect on US Unwired’s ability to achieve its intended business objectives. If we were unable to comply with our amended covenants, the banks could place us in default and demand payment. If payment were demanded, we would also be in default under our senior notes and the related indenture and it is likely that we will not have enough cash to operate.

Our business has been adversely affected by the following factors:

In addition, there are other factors that could contribute to a continuation of poor business conditions for us. These include:

As a result of our adverse business conditions, due to the above and other factors, IWO has failed to meet some of the financial covenants with its banks and in 2003, it failed to make $9.5 million in interest payments on the IWO $240 million senior bank credit facility.

Loan covenants are promises that borrowers make either to do or not to do specified things or not to allow specified things to happen. A failure to meet a loan covenant has three principal consequences. First, it permits the lender to refuse to advance additional borrowings. IWO’s lenders have already taken this action. IWO will not have sufficient cash to operate if it is unable to obtain the proceeds under its bank loan agreements or comparable amounts from alternative financing sources, and it is most unlikely that alternate financing will be available. We believe that US Unwired will have sufficient cash to fund its operations, debt service and capital requirements in the next twelve months without additional borrowing, but, should the assumptions underlying our business model for US Unwired be incorrect, it may need additional borrowing to fund those needs in 2004.

Second, failure to meet a loan covenant allows the lender to declare the loan to be in default and to insist on payment of all amounts due under the loan. US Unwired and IWO would not have sufficient cash to repay these loans, and their failure to repay them, if repayment is demanded by the banks, would allow their note holders to declare a default under the indentures that govern the senior notes and to insist on payment of all amounts due under the senior notes. If these things happen and we were unable to work out a debt restructuring with our banks and note holders on mutually acceptable terms, we likely would have no other alternative than to seek protection under bankruptcy laws.

Third, during any time that a default exists, even if the lenders do not insist on payment, our debt would be classified as a current liability on our balance sheet and our outside auditors would place a going concern qualification on their opinion on our financial statements. In fact, we have already classified all of IWO’s debt as a current liability and our auditors have placed a going concern opinion on IWO’s financial statements.

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We have updated the US Unwired business model to take into account its operating performance in 2003 and the initiatives as discussed above, such as our limitation of capital expenditures, sale of non-core assets and personnel changes. Based upon existing assumptions underlying the business model, we believe that, over the next twelve months, US Unwired will be able to comply with the financial covenants of its amended senior bank credit facility and have sufficient cash to fund its operations, debt service and capital requirements. US Unwired’s funding status and ability to comply with these amended financial covenants is dependent upon a number of factors influencing projections of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user, customer churn and cost per gross addition. Should actual results differ from the underlying business model assumptions, US Unwired’s liquidity position and its ability to comply with the amended financial covenants could be adversely affected. We could be required to raise additional capital that may or may not be available on terms acceptable to it, if at all. This could have a material adverse effect on its ability to achieve its intended business objectives.

We have been in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve IWO’s liquidity, but have been unable to develop an acceptable plan. We anticipate seeking bankruptcy protection for IWO in the near future.

The economic downturn in the United States contributed to a general weakening of our business. If our business in general, and our sales and churn in particular, do not improve, we may not have the financial and operational performance that we were expecting.

We have not achieved the number of new subscribers that we expected in our business plan. We attribute this to weak economic conditions, churn associated with high credit risk subscribers and intense price competition. In addition, our primary customer base is individual consumers. The weak economy may have hurt the ability of our existing subscribers, who are primarily individual consumers, to pay us on time, which may force us to terminate their service. Furthermore, there is also uncertainty as to the extent of customer demand as well as the extent to which airtime and monthly recurring charges may continue to decline. If all of the foregoing events occur, our financial and operational performance may suffer.

A recession in the United States involving significantly lowered spending could continue to negatively affect our results of operations.

Our primary customer base is individual consumers and our accounts receivable represent unsecured credit. If the economic downturn that the United States and our territories have recently experienced does not continue to improve and spending by individual consumers drops significantly, our business would continue to be negatively affected. Moreover, the recent upturn in the national economy has not significantly resulted in improvements to our financial performance, and there is no assurance that it will ultimately do so.

Our allowance for doubtful accounts may not be sufficient to cover uncollectible accounts.

On an ongoing basis, we estimate the amount of customer receivables that we will not be able to collect. This allows us to calculate the expected loss on our receivables for the period we are reporting. Our allowance for doubtful accounts may underestimate actual unpaid receivables for various reasons, including:

If our allowance for doubtful accounts is insufficient to cover losses on our receivables, our business, financial position or results of operations could be materially adversely affected.

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Demand for some of Sprint PCS’s communications products and services has been adversely affected by the recent downturn in the United States economy as well as changes in the global economy.

Demand for some of Sprint PCS’s communications products and services has been adversely affected by a downturn in the United States economy as well as changes in the global economy. According to Sprint PCS, a number of its suppliers have recently experienced financial challenges. If these suppliers cannot meet their commitments, Sprint PCS states that it would have to use different vendors and this could result in delays, interruptions, or additional expenses associated with the upgrade and expansion of Sprint PCS’s networks and the offering of its products and services. If general economic conditions do not continue to improve, the revenues, cash flow, and operating results of Sprint PCS could be adversely affected. Any of these developments could adversely affect our business, financial position or results of operations.

Our customers are using more minutes of use than they have in past. Accommodating this additional call volume could cause our operating costs and capital expenditures to increase.

Our customers are increasingly expending more minutes of use. In order to accommodate this additional call volume from our existing customers as well as to meet the demand created by new customers, we may be required to purchase additional equipment to increase our network capacity. This would cause our operating costs and the long term capital expenditures needed to maintain our network to increase. Given our liquidity situation discussed above, there can be no assurance that we will have or will be able to acquire the funds needed to increase our network capacity.

Risks Related to Anti-Takeover Provisions

Overview of this subsection:

Our anti-takeover provisions may permit our board of directors to turn down a proposal that our stockholders would like us to accept.

Anti-takeover provisions in US Unwired’s charter and by-laws will make it difficult for anyone to acquire US Unwired without approval of its board of directors (other than an acquisition of LA Unwired or IWO, or both, by Sprint PCS under the terms of our agreements with Sprint PCS that are described above).

Prior to acquiring IWO, US Unwired had little concern about being acquired against the will of its board of directors (other than an acquisition of LA Unwired or IWO, or both, by Sprint PCS under the terms of our agreements with Sprint PCS that are described above) because the voting power of its founding family and their related interests, even if not completely united, could prevent such an acquisition of it. That voting power decreased to about 33% after the IWO acquisition as a result of that acquisition and the amendments to US Unwired’s articles of incorporation that converted its class B common stock, which had 10 votes per share, to class A common stock (later renamed “common stock”), which has one vote per share. Because of this, US Unwired’s board of directors has implemented additional anti-takeover provisions. These anti-takeover provisions, and others, including a “poison pill” that our board of directors may adopt hereafter, may discourage offers to acquire us and may permit our board of directors to choose not to entertain offers to purchase us, even offers that are at a substantial premium to the market price of our stock. Our stockholders may therefore be deprived of opportunities to profit from a sale of control.

Internet Website and Availability of Public Filings

Our Internet address is www.usunwired.com. We make available free of charge on our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practical after we electronically file such material with, or furnish such material to the SEC. We also include 16(a) reports of our directors and officers. Commencing on February 3, 2003 we made our SEC

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filings available via a direct link to our filings on the SEC website. Our reports may also be examined on the SEC’s website at www.sec.gov. Prior to February 3, 2003 and during 2002, our filings could be accessed at the FreeEdgar website.

ITEM 2. Properties

We own an 11-story, 115,300 square foot office building in Lake Charles, Louisiana that is used as our corporate headquarters and lease 38,000 square feet of office space in Albany, New York that serves as a regional headquarters for our IWO operations.

We own property that houses our switching equipment in Albany, New York and lease space for all of our other switching centers. We lease all of our other retail outlets, kiosk floor space and sales and operations offices. We operated 1,878 PCS cell sites at December 31, 2003, of which approximately 94% were leased and 6% owned.

ITEM 3. Legal Proceedings

On July 11, 2003, US Unwired and two of its subsidiaries, Louisiana Unwired, LLC and Texas Unwired (“the Company”), filed suit in the U.S. District Court for the Western District of Louisiana (“U.S. District Court”), against Sprint Corporation, Sprint Spectrum, L.P., Wireless, L.P. and Sprintcom, Inc. (collectively, “Sprint”). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act, breach of fiduciary duty and fraud arising out of Sprint’s conduct in its dealings with the plaintiff companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in Louisiana. On September 25, 2003, the Company filed an amended complaint to include contractual claims. On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants seeking dismissal of US Unwired’s First Amended Complaint and filing a counter-claim for approximately $13.3 million related primarily to contractual disputes as discussed above. On October 21, 2003, Sprint filed a Defendants’ Partial Motion for Judgment on the Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed Defendant’s Motion to Strike Plaintiffs’ Jury Demand from the First Amended Complaint. On February 3, 2004, the U.S. District Court denied in all respects Sprint’s request to dismiss U.S. Unwired’s lawsuit. US Unwired and Sprint have submitted to the District Court an agreed upon schedule to complete the discovery process by and anticipate a late-2004 trial by jury in the State of Louisiana.

We are from time to time involved in other litigation that we believe ordinarily accompanies the communications business. We do not believe that any of our other pending or threatened litigation will have a material adverse effect on our business or financial situation.

ITEM 4. Submission of Matters to a Vote of Security Holders

None

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PART II

ITEM 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Our common stock was delisted from the Nasdaq National Market effective May 8, 2003 and is now quoted on the OTC Bulletin Board. Prior to that, our common stock was traded on the Nasdaq National Market under the symbol UNWR since May 23, 2000 and prior to that date, there was no public market for our common stock. The following table sets forth, the periods indicated, the range of high and low sales prices for our common stock as reported on the OTC Bulletin Board and Nasdaq:

On January 29, 2004, there were 374 holders of record of our common stock.

We have not declared or paid any cash dividends on our common stock or any other of our securities. We do not expect to pay cash dividends on our capital stock in the foreseeable future. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. Our future decisions concerning the payment of dividends on our common stock will depend upon our results of operations, financial condition and capital expenditure plans, as well as such other factors as the board of directors, in its sole discretion, may consider relevant. In addition, our existing indebtedness restricts, and we anticipate our future indebtedness may restrict, our ability to pay dividends.

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ITEM 6. Selected Financial Data

The following selected financial data are derived from the consolidated financial statements of US Unwired Inc. and subsidiaries. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein.

ITEM 7. Management’s Discussion and Analysis of Financial Condition And Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Report. The discussion contains forward-looking statements that involve risks and uncertainties. For a detailed discussion on this topic, refer to our opening comments at the beginning of this Form 10-K.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of

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contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to Sprint PCS disputes, bad debts, activation fee revenues and related expense, determination of fair value of separate units for the application of EITF 00-21, revenue recognition for contract cancellation and late fees, inventory reserves, intangible assets and contingencies. We base our estimates on our historical experience, the historical experience of Sprint PCS and the historical experience of other Sprint PCS affiliates and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of our consolidated financial statements.

Reliance on Sprint PCS Processing

We rely on Sprint PCS for much of our financial reporting information including: revenues; commissions paid to national retailers; fees paid for customer care and billing; roaming revenue and roaming expense on the Sprint PCS and Sprint PCS affiliate network; and, the maintenance of accounts receivable, including cash collections and the write off of customer balances that are not collectible and the accuracy of our accounts receivable balance. Where uncertainty exists regarding revenues, we do not record these revenues until substantive information has been provided to ensure that such revenues have been earned. Based upon the timing of the information received from Sprint PCS, we make certain assumptions that the information is accurate and that it is consistent with historical trends. We also rely upon the evaluation of internal controls as performed by Sprint PCS’s external auditors that were performed in accordance with AICPA Statement on Auditing Standards (SAS) No. 70.

Bad Debt Expense

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of subscribers to make payments. If the financial conditions of our subscribers deteriorate, resulting in the subscribers’ inability to make payments, additional allowances will be required.

We estimate our allowance by examining the components of our revenue. We establish a general reserve of all accounts receivable that are estimated to be uncollectible. In addition, we do not recognize 100% of our late fees or cancellation fees as revenue because of high uncertainty of the collectibility of these amounts. Reserves for these amounts are recorded to our allowance for doubtful accounts. Our evaluation of the adequacy of these amounts includes our own historical experience and discussions with Sprint PCS and other Sprint PCS affiliates.

Revenue Recognition

We recognize only a portion of contract cancellation fees billed to subscribers that disconnect service prior to fulfilling the contractual length of service, as there is significant uncertainty that all contract cancellation fees that are billed will be collected. We have very limited information at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on contract cancellation fees are less than that recognized, additional allowances may be required.

We recognize only a portion of late fees billed to subscribers that fail to pay their bills within the required payment period, as there is no assurance that all late fees that are billed will be collected. We have very limited information at a detail level sufficient to perform our own evaluation and rely on Sprint PCS historical trending to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.

For sales channels other than our retail outlets, we defer revenues collected for activation fees over the estimated life of the subscriber relationship, which we believe to be up to 32 months, based upon our historical trends of average customer lives and discussions with Sprint PCS. For these same sales channels, we also defer an activation expense in an amount equal to the activation fee revenue and amortize this expense in an amount

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equal to the activation fee revenue over the life of the subscriber relationship. If the estimated life of the subscriber relationship increases or decreases, the amounts of deferred revenue and deferred expense will be adjusted over the revised estimated life of the subscriber relationship. For our retail sales channels, the sale of handsets and future service under contract are accounted for as separate units under EITF 00-21. As a result, the total consideration under these arrangements, including any related activation fees, is allocated between these separate units based upon their relative fair values. The determination of fair values for these separate units can vary depending upon market conditions.

Inventory Reserves

We review our inventory semi-annually and write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be necessary.

Accrued Commissions

We accrue commissions and other costs related to national retailers based upon their sales to new subscribers. The national retailers receive both a commission and, because the handset is typically sold below cost, a reimbursement for the difference between the sales price and the cost. We base our accruals on information provided by Sprint PCS on subscriber additions and recognize that there are typically timing differences between the point of subscriber activation and the time that we are invoiced for commissions by Sprint PCS. We periodically and annually evaluate the adequacy of our accruals through analysis of historical information and discussions with Sprint PCS. Depending on the level of sales and other factors, our estimates of the amounts accrued for commissions and other costs owed to such retailers may require modification of our previous estimates.

Goodwill and Intangible Assets Impairment Analysis

We perform impairment tests of goodwill and long lived assets, including intangible assets, as required by Statements of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142) and No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The impairment analysis requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell the asset. SFAS No. 142 requires annual tests for impairment of goodwill and intangible assets that have indefinite useful lives and interim tests when an event has occurred that more likely than not has reduced the fair value of such assets.

We determined that US Unwired and IWO are to be considered separate reporting units under SFAS No. 142, as each constitutes a separate business for which discrete financial information is available and management regularly reviews the operating results of each of these businesses. This determination is further supported as each has separate senior bank credit facilities and separate senior subordinated discount notes (US Unwired) or senior notes (IWO). Under the terms of these debt instruments, funds available under the US Unwired debt can only be used by US Unwired, and funds available under the IWO debt can only be used by IWO. US Unwired is not obligated for the payment of IWO’s debt, and IWO is not obligated for the payment of US Unwired’s debt.

The abovementioned impairment analyses require numerous subjective assumptions and estimates to determine future undiscounted cash flows and fair values of each of the respective reporting units. Changes in these subjective assumptions and estimates that may be caused by future changes in the levels of revenues, liquidity, or other factors, may result in the recognition of impairment charges in the future. Based upon valuation analyses performed by an independent third-party valuations as of October 31, 2003, there was no impairment of goodwill or intangible assets as of October 31, 2003.

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Overview

Through our wholly owned subsidiaries, we provide wireless personal communication services, commonly referred to as PCS, in eastern Texas, southern Oklahoma, southern Arkansas, the Florida panhandle, southern Tennessee, upstate New York, New Hampshire (other than the Nashua market) and Vermont; significant portions of Louisiana, Alabama, Georgia and Mississippi; and portions of Massachusetts and Pennsylvania. We are a network partner of Sprint PCS, the personal communications services group of Sprint Corporation. Sprint PCS, directly and through network partners like us, provides wireless services in more than 4,000 cities and communities across the country. We have the exclusive right to provide digital PCS services under the Sprint^® and Sprint PCS^® brand names in service areas that had approximately 17.6 million residents as of December 31, 2003. Our combined service areas are among the largest in population and subscribers of the Sprint PCS network partners and are contiguous with Sprint PCS’s launched markets of Houston, Dallas, Little Rock, New Orleans, Birmingham, Jacksonville, Memphis, Atlanta, New York and Boston.

Recent Developments

Our operating results continue to be impacted by our highly leveraged capital structure, our relationship with Sprint PCS and a highly competitive marketplace.

Our Highly Leveraged Capital Structures

US Unwired and IWO have separate debt structures. US Unwired entered into a senior bank credit facility and senior subordinated discount notes prior to the April 2002 acquisition of IWO. IWO has a senior bank credit facility and senior notes that were also entered into prior to the April 2002 acquisition. Under the terms of these debt instruments, funds available under the US Unwired debt can only be used by US Unwired, and funds available under the IWO debt can only be used by IWO. US Unwired is not obligated for the payment of IWO’s debt, and IWO is not obligated for the payment of US Unwired’s debt.

US Unwired

As of December 31, 2003, US Unwired had $64.9 million in cash and cash equivalents; availability under the US Unwired senior bank credit facility of $38.3 million, net of $1.7 million in outstanding letters of credit; and indebtedness that consisted of $76.0 million related to the US Unwired senior bank credit facility, $359.3 million related to the US Unwired senior subordinated discount notes and $10.6 million in capital leases, promissory notes and vendor financing for a total of $445.9 million. As a result of the sale of our cellular properties in February 2004 as discussed below, our bank indebtedness was reduced by $6.2 million to $69.8 million See Note 11 for commitments and contingencies that may affect US Unwired’s liquidity. US Unwired must comply with certain financial covenants of the US Unwired senior bank credit facility and the US Unwired senior subordinated discount notes, and as of December 31, 2003, was in compliance with these financial covenants.

On October 30, 2003, we and the holders of the US Unwired senior bank credit facility revised certain provisions of the US Unwired senior bank credit facility through execution of the third amendment to the US Unwired senior bank credit facility. We and our senior lenders agreed to a revised set of financial covenants, a $40 million revolving credit facility that is subject to certain borrowing conditions, an immediate $10.0 million partial repayment of the senior bank term loans and a 0.5% increase to the interest rate. The October 30, 2003 amendment requires us to remit a portion of the net proceeds of any asset disposals. The amendment also provides for additional restrictions on our ability to draw on the $40.0 million revolver that includes certain financial requirements and only allow for additional draws if our cash balance falls below $15.0 million prior to March 31, 2005 or $10.0 million on or subsequent to March 31, 2005. We incurred approximately $2.7 million in banking and other professional fees related to this amendment.

On February 6, 2004, we consummated the sale of our cellular operations and certain PCS licenses for approximately $30.0 million and used $6.2 million of the proceeds to partially repay our recently amended

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US Unwired senior bank credit facility. We have entered into an agreement for the sale and leaseback of approximately 90 cell site towers. This sale is expected to close in March and April 2004 for approximately $10.0 million. A portion of the proceeds, approximately $4.7 million, will be used to further reduce our bank debt.

On May 15, 2003, we announced an offer to exchange any and all of our existing $400 million US Unwired 13.375% senior subordinated discount notes for $187.50 in cash and $185.00 in face amount of new notes per $1,000 face amount of existing notes with a maximum amount of cash to be paid of $37.5 million. On June 24, 2003, we announced that the offer had expired and none of the notes were exchanged. In conjunction with this offering, we incurred approximately $3.5 million in outside legal and other professional services and costs. These costs are included in General & Administrative Expenses in the accompanying consolidated financial statements.

Based on our 2004 operating forecasts, we believe that US Unwired will be able to comply with the financial covenants of the amended US Unwired senior bank credit facility and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. However, our liquidity and ability to comply with these amended financial covenants is dependent upon a number of factors influencing forecasts of earnings and operating cash flows. These factors include subscriber growth, average monthly revenue per user (“ARPU”), customer turnover or “churn” and cost per gross addition (“CPGA”). These performance metrics are explained in our Management Discussion and Analysis section of this filing.

Should actual results differ from our underlying business model assumptions, our liquidity position and ability to comply with the amended financial covenants could be adversely affected. We could be required to raise additional capital that may or may not be available on terms acceptable us, if at all. This could have a material adverse effect on our ability to achieve our intended business objectives.

IWO Liquidity

We have been unable to develop a business plan for IWO that provides sufficient cash to fund operations, debt service and capital requirements for 2004. We have been in discussions with the IWO banking group to arrive at an acceptable restructuring to preserve liquidity but have been unable to arrive at an acceptable plan. We anticipate seeking protection under bankruptcy in 2004.

During 2003 IWO failed to make $9.5 million in interest payments on the IWO on senior bank credit facility and was not in compliance with the restrictive covenants under the IWO senior bank credit facility at December 31, 2003. As a result of IWO’s failure to make scheduled interest payments and the covenant violations, IWO was in default of the IWO senior bank credit facility at December 31, 2003 and the holders of the IWO senior bank credit facility have denied IWO access to the remaining $25.2 million of availability. As a result, we have classified all outstanding indebtedness of both the IWO senior bank credit facility and the IWO senior notes as a current liability.

As of December 31, 2003, IWO had $32.3 million in cash and cash equivalents and $19.4 million in restricted cash; and indebtedness that consisted of $213.2 million related to the IWO senior bank credit facility and $138.5 million related to the IWO senior notes for a total of $351.7 million. A portion of the original proceeds of the IWO senior notes offering was set aside as restricted cash to make the first six scheduled semi-annual interest payments on the IWO senior notes through January 2004. Principal repayment of the IWO senior bank credit facility commences in March 2004.

As a result of liquidity challenges, IWO has made the decision to reduce capital expenditures for network expansion and abandon the construction of cell sites that do not provide a sufficient level of enhanced coverage. IWO recorded an asset abandonment charge of $12.1 million during 2003 for these abandoned cell sites and their related property leases. Included in this asset abandonment charge are cell sites that IWO is required to construct to meet the build out requirements under the IWO Sprint PCS management agreement. Failure to complete the build out of the IWO service area will place IWO in violation of the IWO Sprint PCS management agreement. As a result, Sprint PCS could declare IWO in default and take action up to and including termination of the IWO Sprint management agreement. At December 31, 2003, IWO’s construction in progress included $6.0 million

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primarily related to cell sites that IWO plans to complete, and we estimate that completion of these cell sites will require approximately $11.4 million in additional costs to complete construction and place these sites in operation.

Due to restrictions in the US Unwired debt instruments, US Unwired cannot provide any capital or other financial support to IWO. Further, IWO creditors, IWO lenders and IWO note holders cannot place any liens or encumbrances on the assets of US Unwired. Should the holders of the IWO senior bank credit facility place IWO in default, US Unwired’s relationship with IWO may change and several alternatives exist ranging from working for the holders of the IWO senior bank credit facility and the holders of the IWO senior notes as a manager of the IWO territory, possibly subject to the approval by Sprint PCS, to no involvement with IWO at all.

Considering IWO’s default of the IWO loan agreements and its liquidity as discussed above, there is substantial doubt about IWO’s ability to continue as a going concern.

Our Relationship with Sprint PCS

See “Our Affiliation with Sprint PCS” for a detailed discussion of the Sprint PCS Management Agreements.

We are dependent on Sprint PCS for a significant portion of our financial information as a result of our contractual relationship with Sprint PCS as a service bureau provider for billing, cash collections and other back office functions such as customer service. We also purchase certain goods and services through Sprint PCS, such as handsets, network maintenance and access to national retail chain sales channels in our markets, where Sprint PCS has negotiated contracts and allows us to operate under those contractual arrangements.

We do not always agree with the validity of charges assessed by Sprint PCS and as of December 31, 2003, had disputed approximately $19.1 million of charges to US Unwired and $9.3 million of charges to IWO. Based upon the information provided to us by Sprint PCS to date, we believe the accompanying consolidated balance sheet adequately reflects our obligation that may be due to Sprint PCS for these charges. However, our cash flow could be adversely affected in the future should these disputes not be settled in our favor.

On July 11, 2003, we, Louisiana Unwired and its wholly owned subsidiary, Texas Unwired, a limited partnership, (“Texas Unwired”), filed suit in the U.S. District Court for the Western District of Louisiana (“US District Court”), against Sprint Corporation, Sprint Spectrum, L.P., Wireless, L.P. and Sprintcom, Inc. (collectively, “Sprint”). The suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), breach of fiduciary duty and fraud arising out of Sprint’s conduct in its dealings with the plaintiff companies. It seeks treble actual damages in unspecified amounts and appointment of a receiver over property and assets controlled by Sprint in Louisiana. On September 25, 2003, we filed an amended complaint to include contractual claims. On October 20, 2003, Sprint submitted their Answer, Defenses, and Counterclaim of Defendants seeking dismissal of our First Amended Complaint and filing a counter-claim for approximately $13.3 million related primarily to contractual disputes as discussed above. On October 21, 2003, Sprint filed a Defendants’ Partial Motion for Judgment on the Proceedings seeking partial dismissal of claims filed in the First Amended Complaint. On October 21, 2003, Sprint filed Defendant’s Motion to Strike Plaintiffs’ Jury Demand from the First Amended Complaint. On February 3, 2004, the U.S. District Court denied in all respects Sprint’s motions for judgment on the proceedings, allowed US Unwired to hire an outside accounting company to monitor monies with a receiver as an acceptable option at a later time and agreed with US Unwired’s request for a trial by jury in Louisiana. US Unwired and Sprint have submitted to the District Court an agreed upon schedule to complete the discovery process during 2004 and anticipate a late-2004 trial date. We do not believe that a negative outcome of our lawsuit will have a material adverse effect on the Company.

We have been in discussions with Sprint PCS to modify certain components of IWO’s Sprint PCS management agreement including a fee simplification process, modification of certain build-out requirements and the settlement of IWO’s outstanding disputes with Sprint, but no definitive agreement has been reached at this time. We have had no such discussions with Sprint PCS as it relates to the affiliate agreements with other US Unwired subsidiaries.

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Our agreements with Sprint PCS stipulate a reciprocal travel rate. Sprint PCS travel revenue is generated on a per minute basis when a Sprint PCS subscriber outside of our markets uses our service when traveling through our markets. Sprint PCS travel expense is generated on a per minute basis when our subscribers travel outside our market area and use the Sprint PCS network. Historically, our Sprint PCS travel revenue exceeds our Sprint PCS travel expense. Effective January 1, 2003, Sprint PCS reduced the reciprocal travel rate for Louisiana Unwired from $0.20 per minute in 2002 to $0.058 per minute in 2003 and for Texas Unwired and Georgia PCS Management, LLC (“Georgia PCS”), both subsidiaries of LA Unwired, and IWO from $0.10 per minute in 2002 to $0.058. On December 4, 2003, Sprint PCS notified us that it is reducing the reciprocal roaming rate to $0.041 per minute of use in 2004.

Competitive Market Place

We face significant competition in our service area. In order to attract new subscribers, we offer steeper discounts on handsets and generous service plans that include more minutes and/or more anytime minutes and other ancillary enhancements such as free long distance. Based upon increased competition, we anticipate that market prices for two-way wireless services will continue to decline in the future. Wireless local number portability (“WLNP”), which allows subscribers to change carriers and retain their existing phone numbers, was introduced into a portion of our marketplace in November 2003 and will be in effect in all of our markets in May 2004. Given the limited time that we have had to evaluate WLNP, we are uncertain of the future impact. For more detail, see the “Competition” discussion in Item 1 Business.

Our Business Strategy

We have undertaken a number of key initiatives designed to enable US Unwired to achieve the underlying assumptions of the US Unwired business model and preserve IWO liquidity. We have:

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As a result of these initiatives and operating results to date, we believe that US Unwired will be able to comply with the US Unwired senior bank credit facility financial covenants and have sufficient cash to fund its operations, debt service and capital requirements over the next twelve months. However, as discussed above, US Unwired’s funding status and ability to comply with these amended financial covenants is dependent upon a number of factors influencing forecasts of earnings and operating cash flows. While we believe that these initiatives have had and will continue to have a positive impact on operating results and support the ability of US Unwired to comply with its amended senior bank credit facility covenants and have sufficient cash to support the operations of US Unwired over the next twelve months, we cannot state with certainty that these initiatives will result in our ability to sustain IWO’s operations in 2004.

Cash Flows

Operating Activities. Cash provided by operating activities was $60.6 million in 2003. This primarily consisted of our net loss of $157.0 million offset by a $34.7 million increase in working capital, $125.7 million in depreciation and amortization, a $12.1 million IWO asset abandonment charge and $45.1 million in debt discount accretion. Cash used in operations was $23.4 million for 2002 and cash used in operations was $22.8 million for 2001.

Investing Activities. Cash used in investing activities was $8.0 million for 2003. This primarily consisted of $30.5 million in purchases of property and equipment offset by $21.9 million in proceeds from the release of restricted cash and $0.6 million in miscellaneous other investing activities. Net cash used in investing activities was $97.3 million in 2002 and net cash provided by investing activities was $106.5 million in 2001.

Financing Activities. Cash flow used in financing activities was $17.4 million in 2003 and consisted of $14.7 million in principal payments on long-term debt and $2.7 million in debt issuance costs. Net cash provided by financing activities was $82.0 million in 2002 and $1.8 million in 2001.

Contractual Obligations

Our future contractual obligations related to long-term debt, capital lease obligations, and non-cancelable operating leases at December 31, 2003 were as follows assuming acceleration of IWO obligations in 2004:

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During 2003, IWO failed to make $9.5 million in interest payments on the IWO senior bank credit facility, and IWO was not in compliance with its restrictive covenants under the IWO senior bank credit facility at December 31, 2003. As a result of IWO’s failure to make scheduled interest payments and the covenant violations, IWO was in default of the IWO senior bank credit facility at December 31, 2003 and the holders of the senior bank credit facility have denied IWO access to the remaining $25.2 million of availability. As a result, we have classified all outstanding indebtedness of both the IWO senior bank credit facility and the IWO senior notes as a current liability.

The availability under the US Unwired senior bank credit facility will be permanently reduced by the following amounts in the future as follows (in millions). As discussed above, due to the failure to make scheduled interest payments and covenant violations, IWO has no available funds remaining on the IWO senior bank credit facility:

PCS Performance Measurements and Metrics

The wireless telecommunications industry uses terms such as subscriber additions, average revenue per user, churn and cost per gross addition as performance measurements or metrics. None of these terms are measures of financial performance under accounting principles generally accepted in the United States (“GAAP”). When we use these terms, they may not be comparable to similar terms used by other wireless telecommunications companies.