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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, 2004.

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, 2004, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $386,264,374. (For purposes of determination of the foregoing amount, only our directors, executive officers and 10% shareholders have been deemed affiliates).

There were 163,761,093 shares of common stock, $0.01 par value per share, outstanding at March 1, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

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

Table of Contents

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; (iii) our ability to expand our Sprint network or to upgrade the Sprint network to accommodate new technologies; (iv) limited operating history in the PCS market and the possibility 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) changes in labor, equipment and capital costs; (xiv) any inability to comply with the indentures that govern our senior notes or credit agreements; (xv) changes in management; and, (xvi) 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

We are principally engaged in the ownership and operation of wireless communications. We are a network partner of Sprint and have the exclusive right to provide wireless services under the Sprint brand names within our service area.

Recent Developments

On February 10, 2005, we divested our relationship in IWO Holdings, Inc. (“IWO”). The information in Item 1. Business of this filing excludes the operations of IWO. Due to the uncertainty of this divestiture at December 31, 2004, our audited consolidated financial statements and all other Items in this filing include the operations of IWO on a consolidated basis.

Our service area consists of portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas. At December 31, 2004, we were providing wireless service to approximately 469,500 subscribers.

Our Affiliation with Sprint

Sprint 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 markets and market Sprint services. Through these affiliations, Sprint services are available in key cities contiguous to current and future Sprint markets.

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

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

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

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

Our Service Area

Our Sprint service area includes all or portions of 48 markets spanning over 179,000 square miles with a population of approximately 11.3 million people in portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas as a network partner of Sprint. The number of residents in our service area does not represent the number of Sprint subscribers that we expect to have in our service area.

Services and Features

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

We support Sprint’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 which can offer up to 7 days of standby time and up to 5.5 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 brand name.

We provide roaming service to both Sprint subscribers that are traveling through our service area as well as certain non-Sprint subscribers traveling through our service area. Sprint 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.

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Marketing Strategy

We benefit from the recognizable Sprint brand names and logos and from Sprint’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 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’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 name and reputation to attract subscribers. We benefit from Sprint’s national advertising campaign at no additional cost. Sprint 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’s products and services through radio, print, outdoor, billing inserts, direct mail and promotional displays in our retail stores.

Sponsorships

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

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, 2004, we had 37 retail outlets and kiosks in our service area. Our retail outlets are located in principal retail districts in each market, designed in accordance with Sprint 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 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, 2004, had a presence in 360 national retail locations in our area.

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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, 2004, we had approximately 168 independent agents under contract in our service area.

Other Sprint initiatives

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

Resellers

Effective July 2002, we agreed to participate in a reseller program in our service area through Sprint as part of the partnership between Sprint and Virgin Mobile USA, LLC, or Virgin Mobile. The agreement allows Virgin Mobile to sell prepaid wireless services and pay us for use of our network on a per minute basis. Virgin Mobile 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.

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 and our accessories from certain other third party vendors. No single manufacturer has accounted for more than 10% of our sales in the current reporting period or in the past three years.

Competition

We face significant competition in our service area from a number of competitors. There are four other national mobile telephony operators that offer service in at least some portion of our service area—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 Ninth Annual Commercial Mobile Radio Services (“CMRS”) Competition Report, released September 28, 2004, “. . . 97% of the total U.S. population lives in counties with access to three or more different operators offering mobile telephone service.”

In December 2004, Sprint announced its intention to merge with Nextel. We currently compete with Nextel in our service area. We are uncertain at this time of the impact of this merger on market competition.

Wireless local number portability (“WLNP”) was introduced in a portion of our markets in November 2003 and the balance of our markets in May 2004. WLNP allows customers to retain existing telephone numbers when switching from one carrier to another. The introduction of WLNP in all of our markets has resulted in higher customer turnover and increased operating costs.

In order to attract new subscribers, we have offered 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.

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

The main wireless technologies used in the United States are: Code Division Multiple Access, or CDMA and Global System Mobile Communications, or GSM.

Sprint 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 and Verizon Wireless, use CDMA 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 and Cingular use GSM technology.

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

Network Operations

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

For a discussion of recent developments in 2004 including our operating results, liquidity and relationship with Sprint, please refer to Recent Developments in Item 7. Management’s Discussion and Analysis of Financial Condition And Results of Operations.

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 churn.

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, 2004, we had 1,224 PCS cell sites, of which approximately 99% were co-locations and 1% was owned with network coverage for approximately 8.1 million residents out of approximately 11.3 million total residents. The number of people in our service area does not represent the number of Sprint subscribers that we expect to have in our service area.

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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 lease property for five switching centers in Louisiana, Georgia, Mississippi and 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 national platforms.

Interconnection

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

Network monitoring systems

We use Sprint’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.

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 material violations of FCC rules. All PCS licensees must satisfy coverage requirements. Failure to meet the coverage requirements may result in forfeiture of the license by the licensee.

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.

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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:

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 unless it involves non-controlling equity that exceeds fifty percent. 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 done so.

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Foreign ownership

Under existing law, no more than 20% of an FCC licensee’s capital stock may be owned, directly or indirectly, or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. If an FCC licensee is controlled by another entity, up to 25% of that entity’s capital stock may be owned or voted by non-US citizens or their representatives, by a foreign government or its representatives or by a foreign corporation. Additional indirect foreign ownership is permissible if such is deemed to be “in the public interest”. In addition, in response to the World Trade Organization (“WTO”) Basic Telecommunications Agreement, the FCC has relaxed its policy concerning whether indirect foreign ownership of common carrier licenses serve the public interest. The FCC now presumes that ownership by entities holding the citizenship of countries that are WTO members serves the public interest. However, ownership by entities from countries that are not WTO members continues to be subject to the effective competitive opportunities (“ECO”) test established by the FCC. The ECO test considers whether effective competitive opportunities exist for U.S. investment in the foreign investor’s “home market” for the analogous radio-based service.

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 systems.

Intellectual Property

The Sprint^® and Sprint^® 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 marks, 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 marks. We are the only person entitled to market Sprint products and services in our service area, except for the Sprint national marketing programs.

Employees

As of March 1, 2005, we had approximately 660 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 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 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

Introduction

In this section, unless the context indicates otherwise, “we”, “our” and “us” refer collectively to US Unwired and all of our subsidiaries.

In some cases 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.

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General considerations:

Investors should be aware that our business is subject to factors such as the following, some of which are beyond our control:

We rely on Sprint 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, Sprint 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 required to restate our financial statements. If that occurs with respect to us or any other Sprint affiliate, investors and securities analysts may lose confidence in us. In fact, we and Sprint 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 Our Relationship with Sprint.”

Risks Related to Our Business, Strategy and Operations

Overview of this subsection:

We have yet to operate profitably or achieve consistent positive cash flow. If that doesn’t change, we will not have enough cash to run our business. Revenues we receive from travelers in our territories will likely not meet our expectations.

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We have not yet operated our business profitably or achieved consistent positive cash flow.

We may incur operating losses while we expand our 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 current strategies seek to (1) limit capital expenditures to required technical upgrades and add cell site coverage only in areas that are expected to produce positive cash returns, (2) reduce the number of our employees and our corporate overhead and close retail outlets that do not meet minimum internal rates of return, (3) evaluate, and in certain cases renegotiate, certain expenses, (4) reduce customer turnover or churn rate and improve customer service and credit quality, (5) improve our relationship with Sprint, and (6) increase our market share among higher credit quality customers 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, 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:

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

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

Under our agreements with Sprint, we believe that Sprint can change the fee, called a travel rate, within certain limitations, that we receive and pay for each Sprint travel minute. Sprint has reduced the reciprocal travel rate from $.041 per minute in 2004 to $.033 per minute in 2005, which followed reductions in 2003. We have notified Sprint that we believe these particular reductions are not in accordance with our agreements with Sprint, and we have included these reductions among our claims in our lawsuit against Sprint that is discussed in more detail below under the caption “Risks Particular to Our Relationship with Sprint.” However, our recourse against Sprint for these reductions may be limited. Currently the revenues we receive for subscribers of Sprint and its other network partners using our networks exceed the expenses that we pay for our subscribers using their

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networks. The change in the reciprocal travel rate has, however, materially decreased our revenues, expenses and our net travel position, which is the difference between travel revenue and travel expense, and also materially decreased our cash flow from operations.

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

Our ability to achieve and sustain operating profitability will depend upon many factors, including our ability to effectively market Sprint services and manage customer turnover rates in our markets. To be successful, we will require continued development, construction, testing, deployment and operation of our networks. These activities are expected to place demands on our managerial, operational and financial resources.

Failure to timely expand our networks, or to obtain the equipment needed for completion on a timely basis, may result in a decrease in the number of expected new subscribers and adversely affect our results of operations.

We have completed the network build-outs required by our agreements with Sprint. Nevertheless, we may decide from time to time to build-out additional portions of our markets to increase the population that is covered by our Sprint service or we may acquire additional territory to be built out by acquiring additional markets from Sprint or by acquiring other Sprint network partners that have not completed their build-out requirements.

In order to expand our network, we must lease or otherwise retain rights to a sufficient number of radio communications and network control sites, complete the purchase and installation of equipment, construct the physical infrastructure and test the network. We must also meet all requirements of our agreements with Sprint and all FCC requirements. Regulatory changes, engineering design changes and required technological upgrades could affect the number and location of our towers as well as our ability to obtain sufficient rights to meet our network expansion goals. Any failure to expand our network on a timely basis may limit our network capacity and/or reduce the number of our expected new subscribers, either of which could adversely affect our results of operations and financial condition.

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.

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 we need to expand or complete our 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 we cannot get this equipment, we may fail to expand or construct our networks timely.

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 networks are either Lucent network, meaning that the network equipment is supplied by Lucent, or Nortel network, 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 supplying its equipment, we would be prevented or delayed in expanding or repairing the affected network.

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Any inability to expand our networks, or to keep them repaired, 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 own five licenses for 10 MHz of spectrum. Sprint 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 our results of operations and financial condition.

If we lose the right to install equipment on wireless towers or are 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.

Substantially all of our cell sites are installed on leased tower facilities that are shared with one or more other wireless service providers. 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 us, we would have to find new sites or may be required to rebuild the affected portion of our networks. In addition, the concentration of our cell sites with a few tower companies could adversely affect our results of operations and financial condition if we are unable to renew our 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 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 our 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 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 in the trading price of our common stock since our initial public offering, 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.

Class action and derivative lawsuits have been filed against us and/or certain of our executive officers and directors, which may require us to pay substantial damage awards.

In 2004 a federal class action lawsuit was filed, on behalf of all purchasers of our common stock between May 23, 2000 and August 13, 2002 (the “class period”), against us and three of our executive officers. This suit alleges that we and the other named defendants issued false and misleading statements to the investing public during the class period regarding our financial condition, which resulted in the artificial inflation of the price of our common stock during the class period. More specifically, the plaintiffs in this case allege that the defendants knowingly or recklessly failed to disclose and/or misrepresented that: (1) we were increasing our subscriber base by signing up high credit risk customers; (2) accounting changes implemented by us were done in order to conceal our declining revenues; (3) we had been experiencing high involuntary disconnections related to our high

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credit risk customers; (4) we experienced lower subscription growth as a result of our policy that required credit-challenged customers to pay substantial deposits upon initiation of services; and (5) we were engaged in a significant dispute with Sprint regarding our business relationship with that entity.

Also in 2004 a federal shareholder derivative action lawsuit was filed against certain of our executive officers and directors and against us as a nominal defendant. This suit, with which the class action lawsuit described above was consolidated, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment during the period between May 23, 2000 and August 13, 2002. More specifically, the plaintiffs in this case allege that: (1) our increasing revenues and profits from 2000 through 2002 were not the result of increased subscribers, but rather were the result of a scheme to artificially inflate the price of our common stock; (2) the defendants deliberately, repeatedly and systematically failed to exercise independent or effective judgment and oversight of our business and executives; (3) the defendants participated in and/or approved of such misconduct to obtain financial and social benefits for themselves, to enrich and further the personal and business interests of all of the defendants, and to allow many of the defendants to maintain their positions of control over us so that they would not be sued for wrongdoing; and (4) while disseminating this false information, certain of our officers and directors sold over $13 million of their personally held stock.

Also in 2004 a state shareholder derivative action lawsuit was filed against certain of our executive officers and directors and against us as a nominal defendant. This suit alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, and insider selling and misappropriation of information during the period between May 23, 2000 and August 13, 2002, which have caused substantial losses and other damages to us. The plaintiffs in this case make essentially the same allegations as the plaintiffs in the federal class action and derivative lawsuits described above.

We are vigorously defending these three lawsuits, but it is too soon to make any meaningful predictions as to their outcomes. However, should any of the plaintiffs in any of these lawsuits prevail, we may be required to pay substantial damages awards to the extent such awards exceed or are not covered by our insurance. Furthermore, we may be obligated to reimburse certain of our executive officers and directors for the expenses they have incurred and continue to incur as a result of these lawsuits to the extent such expenses exceed or are not covered by our insurance.

Expanding our territory may have a material adverse effect on our business and reduce the market value of our securities.

As part of our continuing operating strategy, we may expand our territory through the grant of additional markets from Sprint or through acquisitions of other Sprint network partners or other entities and/or assets associated with Sprint. These transactions may require the approval of Sprint and commonly involve a number of risks, including the:

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

We may be exposed to potential liabilities in our role as manager of IWO.

On February 10, 2005, the United States Bankruptcy Court approved a Plan of Reorganization of our former wholly owned subsidiary, IWO Holdings, Inc. (“IWO”), pursuant to which all of our equity ownership of IWO was eliminated and shares of IWO were issued to its existing creditors. We received no consideration in that transaction. However, we are required to manage IWO’s operations until June 10, 2005. It is possible that we will be exposed to certain potential liabilities in our role as manager of IWO during this period.

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

Much of our service area is on or near the Gulf of Mexico and could be damaged by bad weather, such as hurricanes and excessive rain. We may face service interruptions for indefinite periods if a major hurricane 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.

Our completed build-out does not cover all of our territories, which could make it difficult to maintain profitable customer bases.

As of December 31, 2004, we covered approximately 72% of the resident population in our territory, but our build-out does not cover all our service area. The coverage may not adequately serve the needs of the potential subscribers in the territory or attract enough subscribers to operate our business successfully. To correct this potential problem, we may have to cover a greater percentage of our territory than anticipated, which we may not have the financial resources to complete or may be unable to do profitably.

Sales of wireless products and services in our territory by “resellers” could reduce our number of subscribers and our margins.

We allow companies, called resellers, to sell wireless products and services in our territories. Our networks provide the wireless services that are sold by the resellers in our territories. We receive income from the resellers that we consider to be a fair return for this use of our networks. One of the resellers is 50% owned by Sprint.

Sales of wireless products and services in our territory by the reseller that is 50% owned by Sprint have had a positive impact on our operating margins and cash flow, but we cannot guarantee that this will continue in the future. Through a three-year agreement that expires in mid-2005, we allow this reseller to sell wireless products and services in our territories. The past practice has been for Sprint and this reseller to determine the amount that we receive on a per minute basis for use of our network. We cannot guarantee that this per minute rate will be continue to positively impact our operating margins and cash flow, nor can we guarantee that we will renew our contract in mid-2005.

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Risks Related to Our Financing and Indebtedness

Overview of this subsection:

We have a substantial amount of debt. Furthermore, due to the liens on substantially all of our assets and the pledges of stock of our existing and future subsidiaries as collateral for our debt, debt holders may control our assets in the event of a default.

Our ability to make payments on our debt will depend upon future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which we cannot control. If the cash flow from operating activities is insufficient, we may continue to take actions such as delaying or reducing capital expenditures, further attempting to restructure or refinance our debt, or selling assets or operations, or we may seek additional equity capital. Any or all of these actions may not be sufficient to allow us to service our debt obligations or may adversely affect our results of operations. Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. The indenture governing our debt limits our ability to take several of these actions, and limits our ability to borrow more money. Our failure to generate sufficient funds to pay our debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of our stock or other securities or result in debt holders controlling our assets.

If we need additional financing that we cannot obtain, we may have to change our network construction plans and modify our business plans.

We expect to make significant capital expenditures to expand our networks. Actual expenditures may differ significantly from estimates. We would have to obtain additional financing to fund our network expansion plans if:

We cannot predict whether any additional financing will be available to us or on what terms such financing would be available. If we need additional financing that we cannot obtain, we will have to change our plans for the remainder of our network, which would adversely affect our expected future results of operations.

Our indebtedness places restrictions on us that will limit our operating flexibility and ability to engage in some transactions.

The indentures governing debt impose material operating and financial restrictions on us. These restrictions may limit our ability to engage in some transactions, including the following:

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

If specified events of default occur under our indentures, all amounts owed under our indentures may become due immediately.

If specified events of default occur under our indentures, all amounts owed under these indentures may be declared due and payable immediately. We cannot assure you that we will have sufficient funds at the time of any such event of default to satisfy this obligation or that restrictions in our credit facilities would allow us to do so.

Risks Particular to Our Relationship with Sprint

Overview of this subsection:

We depend heavily on Sprint. 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 does not succeed, it is highly unlikely that we will succeed. We have little influence with Sprint under our agreements with it. We have recently sued and been countersued by Sprint.

The termination of our affiliation with Sprint or Sprint’s failure to perform its obligations under the Sprint agreements would materially change the manner in which we conduct our business.

We own few of the FCC licenses that we operate and, instead, operate under the FCC licenses of Sprint that are applicable to our territory. Other than performing our contractual obligations under the agreements between us, Sprint is not obligated to provide us with any support in connection with our business or otherwise. Our ability to offer Sprint products and operate a wireless network is almost entirely dependent on our Sprint agreements remaining in effect and not being terminated. These agreements:

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Sprint may make business decisions that are not in our best interest, which may adversely affect our relationship with subscribers in our territory, increase our expenses, and/or decrease our revenues.

Sprint, under the Sprint agreements, has a substantial amount of influence and control over the conduct of our business. Conflicts between us and Sprint have arisen and, if Sprint owes us no duties except as set forth in the agreements, those conflicts may not be resolved in our favor. Accordingly, Sprint has made and may continue to make decisions that adversely affect our business, such as the following:

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Decisions such as those referred to above could adversely affect our relationships with subscribers by changing products, services and price plans to which those subscribers had become accustomed.

We deal with Sprint daily on a variety of issues. Sometimes we disagree with Sprint or oppose what Sprint would like us to do or require us to pay, and we have numerous disputes with Sprint 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 tells us we must adopt business methods or pricing plans that we think will hurt our business. Our disputes with Sprint, including our lawsuit against Sprint that is described below, could adversely affect our relationship with Sprint. Because we rely so heavily on our relationship with Sprint, any deterioration of that relationship or of Sprint’s desire to cooperate with us could adversely affect our business. In addition, Sprint’s level of control and influence over us would make it difficult for us to sell our business to anyone other than Sprint.

In the future, we may approach Sprint and seek to modify our agreements with Sprint and take other actions consistent with such objective. However, we have sued Sprint, bringing several claims, including claims under our agreements with Sprint that we believe we have against Sprint. In light of this suit, we have not yet determined whether we will approach Sprint and seek to modify our agreements or take other such actions. If we do approach Sprint, we can provide no assurance that any such modifications will be made.

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

We rely on Sprint to negotiate contracts with national retailers such as Best Buy and RadioShack to whom we sell our products. We are not permitted under our agreements with Sprint to enter into contracts with those retailers directly, unless Sprint allows us to do so. Our sales through national retailers who have contracted with Sprint account for almost 27% of our total sales. If Sprint 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.

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

If the proposed Sprint / Nextel merger is completed, we believe that Sprint will spin-off its wireline business. Should this spin-off occur, we are unsure of how such separation would impact Sprint. It may be disruptive to Sprint’s internal controls and procedures and, subsequently, have an adverse impact on us.

However, if the proposed Sprint / Nextel merger is not completed, Sprint apparently intends to reintegrate its 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 wireless 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 may adversely affect our ability to predict our results of operations.

Our dependence on Sprint injects a great degree of uncertainty into our business and financial planning. Inaccuracies in data provided by Sprint 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. Furthermore, if material internal control weaknesses exist at Sprint, we may not be able to provide timely and accurate information.

A significant portion of “Cost of Service” expenses and “Roaming” revenues in our financial statements relates to charges from Sprint. In addition, because Sprint 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 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 have discovered billing and other errors or inaccuracies that could be material to us. We have disputed invoices that Sprint has sent us in the amount of $35.1 million as of December 31, 2004. 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, such adjustments or charges may have a material adverse affect on our financial results in the period that the adjustments or charges are made and on our ability to make fully informed business decisions.

The inability of Sprint to maintain high quality back office services or our inability to use Sprint’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’s internal support systems, including customer care, billing and other back office support. Our operations could be disrupted if Sprint 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 vendors. We expect the rapid expansion of Sprint’s business and the consolidation of back office services by Sprint to continue to pose a significant challenge to its internal support systems. Additionally, Sprint 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. We depend on Sprint’s willingness to offer and provide back office services effectively and at competitive costs. Our agreements with Sprint provide that, upon nine months’ prior written notice, Sprint may elect to terminate any of these services. The inability of Sprint to maintain high quality back office services, or to provide us with adequate notification of its inability to continue to provide those services or our inability to use Sprint’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 to assist us in transferring our back office services

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from Sprint to a third party if we choose to do that, and any failure by Sprint to cooperate in this effort, such as by making a transfer cost prohibitive, could have an adverse effect on us.

If Sprint does not complete the construction of its nationwide wireless network, we may not be able to attract and retain subscribers.

Sprint 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 wireless network through Sprint’s own construction efforts and those of its network partners like us. Sprint and its affiliates are still constructing the nationwide network and do not yet offer wireless services, either on Sprint’s own network or through its roaming agreements, everywhere in the United States.

If one of our subscribers travels in an area where a Sprint 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 network does not allow for calls to be transferred without interruption between the Sprint 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 network. The quality of the service provided by another network may not be equal to that of the Sprint network, and our subscribers may not be able to use some of the advanced features of our network. This could result in customer dissatisfaction and loss of subscribers.

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

If Sprint does not succeed, our business may not succeed.

If Sprint 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 market share or brand name, our operations and profitability would likely be impaired. Sprint 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 wireless network through its own construction efforts and those of its network partners. Sprint is still constructing its nationwide network and does not offer wireless services, either on its own network or through its roaming agreements, in every city in the United States. Sprint’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.

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

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

Sprint’s national network is a combination of networks. The large metropolitan areas are owned and operated by Sprint, and the areas in between them are owned and operated by Sprint network partners, all of whom are independent companies such as 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. If these companies have financial difficulties, the Sprint network could be disrupted in those companies’ territories, which could adversely affect our ability to attract and retain customers.

Certain provisions of the Sprint agreements may diminish our value and restrict the sale of our business.

Under some circumstances and without further stockholder approval, Sprint may purchase our operating assets at a discount to our “Entire Business Value.” In addition, Sprint must approve any change of control of ownership and must consent to any assignment of our Sprint agreements.

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Sprint also has a right of first refusal if we decide to sell certain operating assets to a third party. We are also subject to a number of restrictions on the transfer of businesses. These restrictions and other restrictions contained in the Sprint agreements could adversely affect the value of our common stock and other securities, may limit our ability to sell our business, may reduce the value a buyer would be willing to pay for our business and may reduce our “Entire Business Value.”

We may have difficulty in obtaining an adequate supply of certain handsets from Sprint, which could adversely affect our results of operations.

We depend on our relationship with Sprint to obtain handsets at a competitive cost. Sprint orders handsets from various manufacturers. We 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 our customer service and/or result in a decrease in our subscribers, which could adversely affect our results of operations.

We use our relationship with Sprint to obtain, sometimes at favorable prices, handsets and the equipment for the construction or expansion and operation of our networks. Any disruption in our relationship with Sprint could make it much more difficult for us to obtain this equipment.

Non-renewal or revocation by the FCC of our licenses or the Sprint licenses we use would significantly harm our business.

FCC licenses are subject to renewal and revocation by the FCC. Sprint’s licenses in our territory 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 license renewals. Any failure by Sprint or us to comply with these standards could cause revocation or forfeiture of the licenses for its territories. If any of the licenses of Sprint that we are using should be lost, we would be severely restricted in our ability to conduct our business.

If Sprint does not maintain control over its licensed spectrum, the Sprint agreements may be terminated, which would result in our inability to provide wireless service.

The FCC requires that license holders like Sprint and us maintain control of their licensed spectrum and not delegate control to third-party operators or managers. Although the Sprint agreements with us 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 agreements need to be modified to increase the level of licensee control, we have agreed with Sprint to use best efforts to modify the Sprint agreements to comply with applicable law. If we cannot agree with Sprint to modify the Sprint agreements, the agreements may be terminated. If the Sprint agreements are terminated, we would no longer be a part of the Sprint network and we would be severely restricted in our ability to conduct business.

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

On December 15, 2004, Sprint and Nextel Communications, Inc. announced that they had entered into a definitive agreement to merge Nextel into Sprint (the “Merger”). Nextel, directly and through its affiliate, Nextel Partners, is a provider of digital wireless communications services in our service area. Nextel Partners is a separate publicly traded company and is not a party to the Merger.

Under our agreements with Sprint, we have certain exclusive rights within our service area to offer wireless communications. We believe, based on currently available information that Sprint will be in violation of this exclusivity provision at some point following completion of the Merger. Accordingly, we and Sprint have begun a series of discussions relating, among other things, to the impact of the Merger, the treatment of Nextel assets and customers within our service area, and the future of our relationship with Sprint.

Our agreements with Sprint provide for specific remedies if Sprint materially violates them. We are in the process of studying the possible impact on our value and our business of any such remedies or whether any such remedies would be more or less favorable to us and our shareholders than the existing or any renegotiated arrangements with Sprint. We are also studying remedies available to us outside the agreements.

We plan to attempt to work with Sprint to reach mutually agreeable arrangements with respect to these matters. However, there can be no assurances that we will be able to reach such arrangements, or as to their terms or the likely impact on us of any such arrangements. There can also be no assurance that any remedies available to us will be sufficient to protect our business or value. If we fail to reach satisfactory arrangements or our remedies prove insufficient, we may suffer material adverse consequences.

Furthermore, if Sprint fails to perform any of its other obligations to us under our agreements with Sprint, the consequences to us could be severe and our rights against Sprint could be limited.

Sprint has notified us of charges and fees that it intends to pass on to us. We believe these charges and fees are material, and if Sprint is entitled to collect them, they could materially and adversely affect out results of operations and financial condition.

Sprint has presented us with a number of charges and fees, including:

Sprint 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 related to disputes that had been subject to the resolution process and to other disputes between

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Sprint and us that are not within the scope of the dispute resolution process. Sprint has sued us for recovery of approximately $30.4 million of fees and other charges that we have disputed, according to the latest court filings made by Sprint. The dispute resolution process under our agreements with Sprint has been terminated pending the outcome of our lawsuits.

The total amount of charges and fees we have disputed at December 31, 2004 is $35.1 million, up from the approximately $30.4 million reflected in the latest court filings made by Sprint. We believe that these charges and fees are material, and if Sprint 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 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 brand and logo is highly recognizable. If we lose our rights to use the Sprint brand and logo under our trademark and service mark license agreements, we would lose the advantages associated with marketing efforts conducted by Sprint. 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.

Our 2003 lawsuit against Sprint may cause Sprint to retaliate against us. The lawsuit and the counterclaim filed by Sprint against us may also cause further deterioration in our relationship with Sprint.

On July 11, 2003, we filed suit in federal court in Louisiana against Sprint. Our suit currently alleges, among other things, that:

Sprint filed a counterclaim against us alleging that we have refused to pay Sprint certain fees and charges we are obligated to pay under our agreements with Sprint, amounting to approximately $30.4 million according to the latest court filings made by Sprint.

We had a tense relationship with Sprint before we filed lawsuits against one another. Our allegations may cause further deterioration in that relationship, with the adverse effects that are described above.

Risks Particular to Our Industry

Overview of this subsection:

We face significant competition in our service areas from a number of competitors. The result is that prices of wireless services have 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

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

The wireless industry in general and Sprint in particular have experienced a high rate of subscribers who disconnect their service. This rate is referred to as churn. Factors that tend to contribute to higher churn include:

A high rate of subscriber churn could harm our competitive position and our 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 may elect to offer additional programs that may attract high credit risk subscribers.

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

There is intense competition in the telecommunications industry. We believe that the traditional dividing lines between long distance, local, wireless and Internet services are increasingly becoming blurred. Through mergers, joint ventures and various service bundling strategies, major providers, including Sprint, are striving to provide integrated solutions both within and across all geographical markets.

We expect competition to intensify as a result of consolidation within our industry and the rapid development of new technologies, products and services. We cannot predict which of many possible future technologies, products or services will be important to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products or services. Sprint’s and our ability to compete successfully will depend on marketing, sales and service delivery and on Sprint’s and 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. To the extent Sprint and we do not keep pace with technological advances or fail to respond timely to changes in competitive factors in our industry, we could lose market share or experience a decline in revenue and net income.

Many of our competitors have been operating for a number of years and serve a substantial subscriber base. In January 2003, the FCC rule imposing limits on the amount of spectrum that can be held by one provider in a specific market was lifted. Competition may continue to increase to the extent that there are mergers or other combinations involving our competitors or licenses are transferred from smaller stand-alone operators to larger, better capitalized and more experienced wireless communications operators. These wireless communications operators may be able to offer subscribers network features or products not offered by us. The actions of these

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wireless communications operators could negatively affect our customer churn, ability to attract new subscribers, average revenue per user and operating costs per customer.

We rely on Sprint’s agreements with competitors to provide automatic roaming capability to our subscribers in many of the areas of the United States not covered by the network operated by Sprint and its network partners, like us. Certain of Sprint’s competitors may be able to offer coverage in areas not served by Sprint’s and our wireless network or may be able to offer roaming rates that are lower than those offered by Sprint. Certain competitors have sought to modify the FCC’s rules to reduce access to their networks for automatic roaming in certain areas. We could incur additional costs to enable our customers to roam, or our customers could be unable to roam, in those markets where cellular operators do not make their networks available for roaming or roaming is not technically feasible.

Many wireless providers have been upgrading their systems and provide advanced and digital services to compete with Sprint’s services. Many of these wireless providers require their subscribers to enter into long-term contracts, which may make it more difficult for Sprint to attract subscribers away from these wireless providers.

Significant competition in the wireless communications services has resulted in us and our competitors offering lower prices and may result in our competitors offering new or better products and services. These factors could prevent us from operating profitably or reduce our profitability.

Competition in the wireless communications industry is intense. Our major competitors include such wireless companies as Verizon, T-Mobile, Cingular, Nextel and Alltel. Our ability to compete will depend, in part, on our 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 dependence on Sprint to develop competitive products and services and the requirement that we obtain Sprint’s consent to sell local pricing plans and equipment that Sprint has not approved may limit our ability to keep pace with competitors on the introduction of new products, services and equipment. Many of these competitors are larger than us, may have entered the wireless communications services market before we 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 we do.

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

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

Wireless service providers in the United States use one of two technological standards. Even though these two standards share basic characteristics, they are not compatible or interchangeable with each other. We and Sprint use the standard known as CDMA. If the other standard becomes preferred in the industry, we may be at a competitive disadvantage. If Sprint changes its standard, we will need to change ours as well, which will be costly and time consuming. If we cannot change the standard, we 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 networks to become obsolete. Sprint may not be able to respond to such changes and implement new technology on a timely basis, or at an acceptable cost.

If Sprint 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 and the technology used on our networks, or our business strategy may become obsolete. In addition, some wireless carriers, including Sprint and us, have implemented an upgrade to their digital systems known as one times radio transmission technology, or 1xRTT, which is also broadly known as a third generation technology throughout the industry. Some carriers are upgrading their digital systems to implement what is known as 1X EvDO, another 3G data technology that is more advanced than 1xRTT. 3G technology promises high-speed, always-on Internet connectivity and high-quality video and audio. We cannot assure you that we or Sprint can implement 3G technology successfully or on a cost-effective basis.

In addition, other technologies may decrease demand for our services. For example, other service providers have announced plans to sell and market an IEEE 802.11 standard, which we refer to as Wi-Fi, enabled handset. Such a handset would permit subscribers to communicate using voice and data services with their handset using voice over internet protocol, or VoIP, technology in any area equipped with a wireless internet connection, or hot spot, potentially bypassing our network. The number of hot spots in the United States is growing rapidly, with some major cities and urban areas being covered entirely. The availability of VoIP or another alternative technology to our subscribers could greatly reduce the usage of our network, which would have an adverse effect on our financial condition and results of operations.

Regulation by government and taxing agencies may increase our costs of providing service or require us to change our services, either of which could impair our financial performance.

Our operations and the operations of Sprint 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 regulators 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 that we alter the structure of our current relationship with Sprint. In addition:

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

Ownership of our 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 our 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 our common stock to be approximately 25%. Because our common stock is publicly traded, the level of foreign ownership may fluctuate.

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

Use of handsets 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 us to potential litigation. Any resulting decrease in demand for wireless services, or costs of litigation and damage awards, could impair our ability to achieve and sustain profitability.

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

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Some studies have indicated that some aspects of using wireless communications 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 communications 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 it continues to be enacted, would likely require wireless service providers to provide hands-free enhanced services, such as voice activated dialing and hands-free speaker phones and headsets, to sustain revenue from subscribers who make calls while on the road. Moreover, studies have found that driver distraction can occur regardless of whether hand-held or hands-free handsets are used, and that phone conversations create much higher levels of driver distraction than listening to the radio or even driving under the influence of alcohol. If legislation is adopted in our service areas banning all phone use while driving, our revenues could 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 since been dismissed. If we cannot build new towers, we may not be able to 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 wireless 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. If our assumptions in our business model are impacted by adverse factors as discussed below, it is likely that our business will suffer.

Although we have improved our leverage position, we still have a business being adversely affected by our increased competition, our relationship with Sprint, general economic conditions, and other factors. If these factors continue or deteriorate, it is likely that we will not have enough cash to operate our business. Our liquidity is dependent upon a number of factors. Should actual results differ from the assumptions underlying our business model, our liquidity position could be adversely affected. We could be required to raise additional capital that may or may not be available on terms acceptable to us, if at all. This could have a material adverse effect on our ability to achieve our intended business objectives.

Our business has been adversely affected by the following factors:

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

Based upon existing assumptions underlying our business model, we believe that we will have sufficient cash to fund our operations, debt service and capital requirements. Our funding status 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, our liquidity position could be adversely affected. We could be required to raise additional capital that may or may not be available on terms acceptable to us, if at all. This could have a material adverse effect on our ability to achieve our intended business objectives.

A recession in the United States involving significantly lowered spending could 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 recently experienced does not continue to improve and spending by individual consumers drops significantly, our business would be negatively affected.

A weak economy may have hurt the ability of our existing subscribers 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 decline. If all of the foregoing events reoccur, our financial and operational performance may suffer.

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 our charter and by-laws will make it difficult for anyone other than Sprint to acquire us without approval of our board of directors.

Our board of directors has implemented various 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

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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.

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.

We lease space for all of our switching centers. We lease all of our other retail outlets, kiosk floor space and sales and operations offices. As of December 31, 2004, we had 1,224 PCS cell sites, of which approximately 99% were co-locations and 1% was owned.

ITEM 3. Legal Proceedings

On January 4, 2005, our wholly-owned subsidiary, IWO Holdings, Inc. (“IWO”) and each of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under the provisions of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) (such case, the “Chapter 11 Case”). The Debtors continued to operate the businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In connection with the Chapter 11 Case, the Debtors also filed with the Bankruptcy Court on January 4, 2005 a proposed “pre-packaged” plan of reorganization, under which (i) the Debtors would pay in full the outstanding IWO senior credit agreement debt, (ii) IWO’s outstanding Senior Notes would be exchanged for all of the new common stock of IWO, (iii) all other general unsecured claims of IWO would be unimpaired and paid in full, and (iv) the existing common stock of IWO, all of which is owned by US Unwired, would be cancelled. On February 9, 2005, the Bankruptcy Court entered an order confirming IWO’s pre-packaged chapter 11 joint plan of reorganization (the “Plan”). Effective with the cancellation of the existing common stock of IWO on February 10, 2005, we ceased to have an equity interest in IWO, and none of our directors and officers are directors or officers of the newly formed company.

On July 11, 2003, US Unwired and two of its subsidiaries (collectively, “US Unwired”) sued Sprint Corporation and certain of its affiliates (collectively, “Sprint”) in the United States District Court for the Western District of Louisiana. The suit, as amended, alleges violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, breach of fiduciary duty, breach of contract, and fraud arising out of Sprint’s conduct in its dealings with US Unwired. US Unwired also seeks appointment of a receiver or fiscal agent over property and assets controlled by Sprint. US Unwired seeks monetary damages on its contractual claims totaling $35.1 million at December 31, 2004, and further monetary damages in connection with its RICO, breach of fiduciary duty, and fraud claims. Sprint filed its answer and a counterclaim, which, as amended, alleges that US Unwired owes Sprint approximately $30.4 million based on alleged contractual claims, according to the last court filings made by Sprint, and this alleged amount owed by US Unwired has increased since Sprint’s last court filings. On August 27, 2004, the Court appointed Robert S. Cohen, CPA, of Crowe Chizek & Company, LLP, as the special master to consider and make findings upon issues that arise out of the accuracy of the accounting for revenues Sprint passes on to US Unwired and the fees Sprint charges US Unwired. The special master will report proposed findings of fact to the Court. The Court has set a jury trial date for May 9, 2005. US Unwired does not believe that a negative outcome on Sprint’s counterclaim will have a material adverse effect on US Unwired.

On August 12, 2004, a federal class action lawsuit was filed by Clodile Romero, Jr., individually and on behalf of all purchasers of our common stock between May 23, 2000 and August 13, 2002 (the “Class Period”), against us and three of our executive officers. This suit, which was filed in the United States District Court for the Eastern District of Louisiana, alleges that we and the other named defendants issued false and misleading statements to the investing public during the Class Period regarding our financial condition, which resulted in the

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artificial inflation of the price of our common stock during the Class Period. More specifically, the plaintiffs in this case allege that the defendants knowingly or recklessly failed to disclose and/or misrepresented that: (1) we were increasing our subscriber base by signing up high credit risk customers; (2) accounting changes implemented by us were done in order to conceal our declining revenues; (3) we had been experiencing high involuntary disconnections related to our high credit risk customers; (4) we experienced lower subscription growth as a result of our policy that required credit-challenged customers to pay substantial deposits upon initiation of services; and (5) we were engaged in a significant dispute with Sprint regarding our business relationship with that entity. The plaintiffs in this case seek: (A) compensatory damages against all defendants for all damages alleged to have been sustained as a result of the defendants’ alleged wrongdoing; (B) an award to the plaintiffs for their reasonable costs and expenses incurred in this action; and (C) other relief customarily sought in a class action lawsuit.

On August 25, 2004, a federal shareholder derivative action lawsuit was filed by Don Feyler, derivatively on behalf of us, against certain of our executive officers and directors, and against us as a nominal defendant. This suit, which was filed in the United States District Court for the Eastern District of Louisiana and with which the class action lawsuit described above was consolidated on December 6, 2004, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. More specifically, the plaintiffs in this case allege that: (1) our increasing revenues and profits from 2000 through 2002 were not the result of increased PCS subscribers, but rather were the result of a scheme to artificially inflate the price of our common stock; (2) the defendants deliberately, repeatedly and systematically failed to exercise independent or effective judgment and oversight of our business and executives; (3) the defendants participated in and/or approved of such misconduct to obtain financial and social benefits for themselves, to enrich and further the personal and business interests of all of the defendants, and to allow many of the defendants to maintain their positions of control over us so that they would not be sued for wrongdoing; and (4) while disseminating this false information, certain of our officers and directors sold over $13 million of their personally held stock. The plaintiffs in this case seek: (A) judgment against the individual defendants and in favor of us for the amount of damages alleged to have been sustained by us as a result of the individual defendants alleged breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment; (B) equitable and/or injunctive relief, including attaching, impounding, imposing a constructive trust on or otherwise restricting the proceeds of the individual defendants’ trading activities or their other assets so as to assure that the plaintiff, on behalf of us, has an effective remedy; (C) an award to us of restitution from the individual defendants and ordering disgorgement of all alleged profits, benefits and other compensation obtained by the individual defendants; (D) an award to the plaintiff for the costs and disbursements of this action; and (E) other relief customarily sought in a shareholder derivative action lawsuit.

On October 21, 2004, a state shareholder derivative action lawsuit was filed by Stephen Morris, derivatively on behalf of us, against certain of our executive officers and directors, and against us as a nominal defendant. This suit, which was filed in the 14^th Judicial District Court for the Parish of Calcasieu in the State of Louisiana, alleges that certain of our executive officers and directors committed violations of state law, including breaches of fiduciary duty, abuse of control, and insider selling and misappropriation of information during the period between May 23, 2000 and August 13, 2002, which have allegedly caused substantial losses and other damages to us. The plaintiffs in this case make essentially the same allegations as the plaintiffs in the federal class action and derivative lawsuits described above. The plaintiffs in this case seek: (A) all damages allegedly sustained by us as a result of the alleged breaches of fiduciary duty and abuse of control; (B) all equitable and/or injunctive relief permitted by law; (C) restitution and disgorgement of alleged profits; (D) attorneys’ fees and costs; and (E) other relief customarily sought in a shareholder derivative action lawsuit.

We are vigorously defending these class action and derivative lawsuits, but it is too soon to make any meaningful predictions as to their outcomes.

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

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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. Before that, our common stock was traded on the Nasdaq National Market under the symbol UNWR since May 23, 2000 and before 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 31, 2005 there were 323 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.

ITEM 5A. Changes in Securities

From May 26, 2004 to June 4, 2004, US Unwired exchanged 34.5 million shares of its common stock for $75.0 million face amount of its US Unwired 13 ³/8% senior subordinated discount notes. Exemption for such transaction is claimed pursuant to Section 3(a)(9) of the Securities Act of 1933.

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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. It includes the data of IWO that as of February 10, 2005 is no longer a subsidiary of ours. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein.

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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 and with the Risk Factors. 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.

Restatement of Prior Years

We recently reviewed our accounting practices with respect to operating leases with escalation provisions. As a result of this review and in consultation with the audit committee of our board of directors and our independent registered public accounting firm, Ernst & Young LLP, we determined that it was appropriate to restate our historical consolidated financial statements through September 30, 2004 (see Note 16 to the Consolidated Financial Statements for restated quarterly financial results of operations). Historically, when accounting for operating leases with escalation provisions, we recorded lease expense at the current rate specified in the lease. We re-evaluated our position and determined that our operating lease expense should be recognized on a straight line-basis over the term of the lease (as defined in Statement of Financial Accounting Standards (“SFAS”) No. 13, “Accounting for Leases”, as amended), which is consistent with the depreciable lives of our assets associated with the leased property. The adjustments, as discussed below, relate solely to the accounting treatment, and do not affect our historical or future cash flows or the timing of payments under the related leases.

As a result of these restatements, certain previously recorded amounts to our historical consolidated statements of operations have been adjusted as follows (in thousands, except for earnings per share):

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The cumulative impact of the adjustments for all years prior to the year ended December 31, 2002 was approximately $4.1 million and was recorded as an adjustment to our accumulated deficit in stockholders’ equity as of December 31, 2001.

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 contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, activation fee revenues and related expense, determination of fair value of separate units for the application of EITF 00-21, revenue recognition of contract cancellation and late fees, inventory reserves, intangible assets and contingencies. We base our estimates on our historical experience, the historical experience of Sprint and the historical experience of other Sprint 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 Processing

We rely on Sprint 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 and Sprint 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, 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 auditors engaged by Sprint 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. Our evaluation of the adequacy of these amounts includes our own historical experience and discussions with Sprint and other Sprint affiliates.

Revenue Recognition

We earn revenue by providing access to and usage of our network and sales of merchandise. Subscriber revenue consists primarily of a basic service plan (where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either exceed or are not covered by the basic service plan); long distance; and charges associated with travel outside our service area. Travel revenue is generated on a per minute basis when a Sprint subscriber outside of our markets uses our service when traveling through our markets. Foreign roaming revenue is generated when a non-Sprint customer

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uses our service when traveling through our markets. We recognize roaming revenue through an agreement that allows a reseller to sell prepaid wireless services in its markets. Revenues are recognized when amounts are considered to be earned under the respective service plans and collection of such amounts is considered probable.

Sprint retains 8% of collected service revenues from subscribers based in our service area, foreign roaming and for revenue generated under our reseller agreement. The amount of affiliation fees retained by Sprint is recorded as a Cost of service expense. Revenues derived from the sale of handsets and accessories by us and from certain roaming services (outbound roaming and roaming revenues from Sprint and its PCS network partner subscribers) are not subject to the 8% affiliation fee from Sprint.

Revenues from the sales of merchandise, primarily wireless handsets and accessories, represent a separate earnings process and are recognized at the time of the customer purchase. These revenues and related costs are included in merchandise sales and cost of sales, respectively. We reduce recorded revenue for rebates and discounts given to subscribers on wireless handsets sales in accordance with Emerging Issues Task Force (“EITF”) Issue No. 01-9 “Accounting for Consideration Given by a Vendor to a Subscriber (Including a Reseller of the Vendor’s Products).”

We recognize revenues from activation fees in accordance with EITF No. 00-21. In May 2003, the EITF modified its previous consensus to EITF 00-21 to clarify the scope of Issue 00-21 and its interaction with other authoritative literature. As permitted under the modified consensus, we adopted this modified consensus effective July 1, 2003 for all revenue arrangements entered into subsequent to June 30, 2003. EITF 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. We believe that the sale of handsets and future service under contract should be 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 on their relative fair values.

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 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 historical trending to make our estimates. If the collections on late fees are less than that recognized, additional allowances may be required.

Inventory and Inventory Reserves

Inventory consists of wireless telephones and related accessories and is carried at cost. Cost is determined by the moving weighted average method, which approximates first-in, first-out.

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.

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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 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. We periodically and annually evaluate the adequacy of our accruals through analysis of historical information and discussions with Sprint. 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 indefinite lived assets as required by SFAS No. 142, Goodwill and Other Intangible Assets. The impairment analysis requires numerous subjective assumptions and estimates to determine fair value of the respective reporting units as required by SFAS No. 142. Depending on level of sales, our liquidity and other factors, we may be required to recognize impairment charges in the future.

Lease Transactions

We have entered into leases on towers owned by others to co-locate our cell sites. We have also entered into leases for properties related to our retail outlets, owned towers, certain office space and a portion of our network switching stations. Our accounting for an operating lease transaction as of the lease’s inception involves judgments in determining the number of lease renewals to be included in the lease term, in addition to the initial non-cancelable term, used to recognize rent expense on a straight-line basis. This judgment considers various factors that we would consider at the time of opting to renew such leases, particularly whether any non-renewal could result in economic detriment to us or the foregoing of an economic benefit available to us. Additionally, the lease term can impact the determination of the period over which the depreciable assets associated with operating leases are depreciated.

If a lease with a lease term containing one or more renewal periods is not renewed after the initial term has expired, then the carrying values of deferred rent resulting from straight-line recognition of rent expense and any lease related assets reflected in the consolidated balance sheet would be written off and reflected in our results of operations in the period such non-renewal has occurred.

Overview

We are principally engaged in the ownership and operation of wireless communications. We are a network partner of Sprint and have the exclusive right to provide wireless services under the Sprint brand names within our service area. Our service area consists of portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.

Recent Developments

In February 2004, we consummated the sale of our cellular operations, which included certain cellular towers, for $21.5 million and recognized a gain of $16.3 million that has been recorded as a gain on the disposal of discontinued operations. In March 2004, we sold 81 cellular and PCS cell site towers for $9.8 million. Concurrent with the sale, we entered into operating leases for a portion of the antenna space on the sold towers from the buyer for an initial term of 10 years, renewable at our option for three additional five-year terms at an initial rental of $1.4 million per year, increasing each year by 4% of the previous year’s rental. We recorded a deferred gain of approximately $1.8 million that will be recognized ratably over the initial 10-year term of the operating lease. Also during the three-month period ended March 31, 2004, we divested of other non-core assets

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including certain PCS licenses and a minority interest in an unconsolidated affiliate for $10.3 million and recorded a loss of $0.4 million. We used $11.0 million of the $41.6 million in proceeds to partially repay the US Unwired senior bank credit facility. The accompanying consolidated financial statements reflect our cellular operations as a discontinued operation.

During May and June 2004, we executed a series of transactions to refinance US Unwired’s debt that included:

On August 30, 2004, we purchased for $51.1 million approximately $48.0 million aggregate face value of US Unwired 13 ³/8% senior subordinated discount notes. We recorded a $4.5 million loss on extinguishment of US Unwired debt related to this transaction.

On November 1, 2004, we retired the remaining outstanding US Unwired 13 ³/8% senior subordinated discount notes by purchasing $41.1 million aggregate face value for $43.9 million.

On December 31, 2004, we sold, based upon an independent appraisal, our 50% ownership interest in a subsidiary for $30,000 to a related party and recorded a loss of $1.2 million resulting from the sale. The subsidiary held LMDS licenses in Texas, Arkansas, Illinois and Louisiana.

In December 2004, a series of actions were initiated that resulted in the reorganization of IWO. Effective with the consummation of the IWO reorganization on February 9, 2005 and the cancellation of the existing common stock of IWO on February 10, 2005, we ceased to have an equity interest in IWO.

In connection with the consummation of the IWO reorganization plan, IWO terminated its management agreement with US Unwired, dated April 1, 2004, as amended on January 3, 2005 (“the management agreement”). The termination of the management agreement is subject to a four-month transition period during which US Unwired will continue to provide transitional management and restructuring services to IWO as defined in the management agreement.

Due to the uncertainty as of December 31, 2004 of the IWO reorganization plan being completed, the accompanying audited consolidated financial statements do not reflect the effects of the IWO reorganization, and all discussions herein, unless otherwise stated, include IWO information consolidated with US Unwired.

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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.

Subscribers

We refer to our customers as “subscribers”. Gross additions refer to the total number of new subscribers added during the period. Net additions refer to the total number of new subscriber additions during the period reduced by any subscribers that have cancelled or terminated their service with us during this same period.

The number of gross additions increased for 2004 as compared to 2003 primarily as a result of our continuing marketing efforts to attract new subscribers, the increase in the number of people that we cover in our service area and our additional cell site coverage. The number of net additions increased for 2004 as compared to 2003 primarily as a result of a higher number of gross additions that was partially offset by lower churn.

The number of gross and net additions decreased for 2003 as compared to 2002 primarily as a result of our marketing efforts to target customers of good credit quality and the re-institution and increase of deposits for certain credit challenged subscribers.

Churn

Churn is the monthly rate of customer turnover expressed as a percentage of our overall average customers for the reporting period. Customer turnover includes both customers that elected voluntarily to not continue using our service and customers that were involuntarily terminated from using our service because of non-payment. Churn is calculated by dividing the sum of (i) the number of customers that discontinue service; (ii) less those customers discontinuing their service within 30 days of their original activation date; and, (iii) adding back those

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customers that reactivate their service, by our overall average customers for the reporting period; and dividing the result by the number of months in the period. Churn decreased for 2004 as compared to 2003 and for 2003 as compared to 2002 primarily as a result of a continuing improvement in the credit quality of our subscriber base.

Reseller Subscribers

We participate in a reseller program in our service area through Sprint as part of the partnership between Sprint 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. The number of Virgin subscribers increased each year primarily as a result of marketing and sales efforts.

Subscriber and Roaming Revenue

Subscriber revenue consists primarily of a basic service plan (where the customer purchases a pre-allotted number of minutes for voice and/or data transmission); airtime (which consists of billings for minutes that either exceed or are not covered by the basic service plan); long distance; and charges associated with travel outside our service area.

Roaming revenue consists primarily of Sprint travel revenue and foreign roaming revenue. Sprint travel revenue is generated on a per minute basis when a Sprint subscriber outside of our markets uses our service when traveling through our markets. Sprint travel expense is generated on a per minute basis when our subscribers travel outside our market area and use the Sprint network. Historically, our Sprint travel revenue exceeds our Sprint travel expense. Foreign roaming revenue is generated when a non-Sprint customer uses our service when traveling through our markets.

Effective January 1, 2004, Sprint reduced the reciprocal travel rate to $0.041 per minute in 2004 from $0.058 per minute in 2003. For 2004, the reduction in the travel rate has resulted in a decrease to our revenues of approximately $38.0 million, a reduction to our expenses of approximately $32.2 million and a reduction to our cash flow of approximately $5.8 million. Effective January 1, 2003, Sprint reduced the reciprocal travel rate for US Unwired from $0.20 per minute in 2002 to $0.058 per minute in 2003 and for Texas Unwired and Georgia PCS Management Inc. (“Georgia PCS”), both subsidiaries of LA Unwired, and IWO from $0.10 per minute in 2002 to $0.058 per minute in 2003. For 2003, the reduction in the travel rate resulted in a decrease to our revenues of approximately $133.4 million, a reduction to our expenses of approximately $107.4 million and a reduction to our cash flow of approximately $26.0 million.

Average Revenue per User

Average revenue per user (“ARPU”) is the average monthly service revenue per subscriber and is calculated by dividing total subscriber revenue for the period by the average number of subscribers during the period. We present ARPU excluding and including roaming revenue.

The increase in ARPU excluding roaming for 2004 as compared to 2003 was primarily as a result of an increase in data usage that was partially offset by more competitive plans that offer more generous allotment of minutes. The decrease in ARPU including roaming for 2004 as compared to 2003 was primarily as a result of the reduction in the reciprocal travel rate as discussed above that was partially offset by an increase in data usage.

The decrease in ARPU excluding roaming for 2003 as compared to 2002 was primarily as a result of more competitive plans that offer more generous allotment of minutes partially offset by an increase in data revenues. The decrease in ARPU including roaming for 2003 as compared to 2002 was primarily as a result of the reduction in the reciprocal travel rate as discussed above that was partially offset by an increase in data usage.

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Cost per Gross Addition

Cost per gross addition (“CPGA”) summarizes the average cost to acquire new customers during the reporting period. CPGA is computed by adding sales and marketing expenses and merchandise cost of sales and reducing the amount by the revenue from merchandise sales. The net amount is divided by the number of total new subscriber gross additions for the period. The decrease in CPGA for 2004 as compared to 2003 and for 2003 as compared to 2002 was primarily as a result of an overall decrease in our selling and marketing expenses.

Average Monthly Minutes of Use per Subscriber

We calculate average monthly minutes of use (“MOUs) per subscriber to provide us with an indication of the effectiveness of our basic service plans. We calculate average monthly MOUs per subscriber by dividing total subscriber minutes with and without roaming by the average number of our subscribers. Our average subscriber MOUs with and without roaming are increasing primarily as a result of more generous allotments of minutes in our basic service plans.

System Minutes of Use

System minutes of Use (“MOUs”) provide an indication of total network (“system”) usage. We track and evaluate system usage for our subscribers as well as other Sprint, Sprint affiliates and non-Sprint subscribers using our system in order to assess network capacity. Our overall system minutes are increasing primarily as a result of increases in subscribers and increases in minutes allotted to subscriber plans.

Resident Population/ Service Area

Our service area comprises a population (“Licensed POPs”) of approximately 17.6 million residents. When we use the term “Covered POPs”, we refer to that portion of residents in our service area that have service available as a result of our network build out. The number of people in our service area does not represent the number of Sprint subscribers that we expect to have in our service area. The increase in Covered POPs is the result of additional cell site towers (“towers”) that either we have constructed and own or where we have leased space on cell site towers owned by others.

Results of Operations

2004 compared to 2003

Revenues

Subscriber revenue

Total subscriber revenues was $429.6 million for 2004 as compared to $381.6 million for 2003, representing an increase of $48.0 million and was primarily the result of an increase in basic service and airtime revenue of $34.9 million related to the increase in our subscriber base and a $13.1 million increase in data usage as more subscribers use this service.

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Roaming revenue

Roaming revenue was $135.3 million for 2004 as compared to $128.6 million for 2003, representing an increase of $6.7 million and was primarily as a result of a $5.1 million increase in Sprint and Sprint affiliate subscribers traveling through our service area and $1.6 million increase related to other network usage that included resellers. We continue to add cell sites in locations that we believe will enhance service and increase our roaming revenue.

Merchandise sales

Merchandise sales were $28.1 million for 2004 as compared to $23.2 million for 2003, representing an increase of $4.9 million. The increase is primarily the result of an increase in initial sales to new subscribers. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace. We face significant competition in our marketplace and typically sell handsets below cost to new subscribers in order to remain competitive in the market place through steep discounts and instant rebates.

Other revenue

Other revenue was $1.8 million for 2004 as compared to $2.4 million for 2003, representing a decrease of $0.6 million that was primarily attributable to a decrease in co-location revenue as a result of selling towers where other carriers were renting space from us.

Operating Expense

Cost of service

Cost of service was $312.9 million for 2004 as compared to $309.0 million for 2003, representing an increase of $3.9 million that was primarily the result of a $2.1 million increase in lease expense primarily related to new cell site leases, a $4.4 million increase in Sprint franchise fees related to higher volume and a $3.4 million increase related to our subscribers traveling on Sprint and non-Sprint networks. This was partially offset by a $3.2 million decrease in handset upgrades, a $1.8 million decrease in bad debts as a result of our efforts to target subscribers in good credit standing and a $1.0 million decrease in circuit expenses that was primarily related to recoveries of reciprocal compensation and rate negotiations.

Merchandise cost of sales

Merchandise cost of sales was $56.7 million for 2004 as compared to $46.4 million for 2003, representing an increase of $10.3 million that was primarily the result of an increase in sales to new subscribers. The cost of handsets typically exceeds the amount received from our subscribers because we subsidize the price of handsets to remain competitive in the marketplace.

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General and administrative expense

General and administrative expense was $35.7 million for 2004 as compared to $31.4 million for 2003, representing an increase of $4.3 million that was primarily as a result of a $2.5 million increase in professional fees related to our restructuring of IWO and our Sprint lawsuit (see Item 3 Legal Proceedings) and a $2.0 million increase in other taxes that primarily related to a tax refund received in 2003. This was partially offset by a $0.2 million decrease in repairs and maintenance.

Sales and marketing expense

Sales and marketing expense was $92.4 million for 2004 as compared to $90.5 million for 2003, representing an increase of $1.9 million that was primarily as a result of an increase in agent commissions and handset subsidies of $7.7 million and a $1.3 million increase other sales and marketing expenses that was partially offset by a decrease of $4.9 million in advertising, a $1.8 million decrease in sales wages, taxes and benefits and a $0.4 million decrease in telephone expenses.

Non-cash stock compensation

Non-cash compensation was $0.4 million for 2004 as compared to $2.4 million for 2003, representing a decrease of $2.0 million that is primarily the result of a portion of our outstanding options being fully amortized. The non-cash stock compensation consists of compensation expense related to the granting of certain stock options of our stock in July 1999 and January 2000 with exercise prices less than the market value of our stock at the date of the grant and the impact of the stock options granted in connection with the IWO acquisition. The non-cash stock compensation expense is generally being amortized over a four-year period representing the vesting periods of the options.

Depreciation and amortization expense

Depreciation and amortization expense was $95.5 million for 2004 as compared to $119.5 million for 2003, representing a decrease of $24.0 million that was primarily as a result of fully amortizing the IWO subscriber base established as a result of our April 1, 2002 IWO acquisition.

Other Income/(Expense)