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8-K - FORM 8-K - LEAP WIRELESS INTERNATIONAL INC | a57282e8vk.htm |
EX-3.1 - EX-3.1 - LEAP WIRELESS INTERNATIONAL INC | a57282exv3w1.htm |
EX-4.1 - EX-4.1 - LEAP WIRELESS INTERNATIONAL INC | a57282exv4w1.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE Leap Contacts: Greg Lund, Media Relations 858-882-9105 glund@leapwireless.com Amy Wakeham, Investor Relations 858-882-9876 awakeham@leapwireless.com |
Leap Adopts Tax Benefit Preservation Plan
SAN DIEGO
September 14, 2010 Leap Wireless International, Inc. (NASDAQ: LEAP), a leading
provider of innovative and value-driven wireless communications services, announced today that its
Board of Directors has adopted a tax benefit preservation plan intended to preserve the long-term
value of the Companys net operating loss carryforwards.
As of June 30, 2010, Leap had net operating loss carryforwards (referred to as NOLs) of
approximately $1.7 billion, which could be used to reduce future federal and state income tax
obligations. However, the Companys ability to use these NOLs may be substantially limited if it
were to experience an ownership change as defined under Section 382 of the Internal Revenue Code.
In general, an ownership change would occur if stockholders that own (or are deemed to own) at
least 5 percent or more of Leaps outstanding common stock increased their cumulative ownership in
the Company by more than 50 percentage points over their lowest ownership percentage within a
rolling three-year period.
As part of the plan, the Companys Board of Directors declared a dividend of one preferred stock
purchase right on each outstanding share of Leap common stock. The dividend will be payable to
holders of record as of the close of business on September 24, 2010. Any shares of Leap common
stock issued after the record date will be issued together with the rights.
The preferred stock purchase rights are not currently exercisable and initially will trade only
with the Leap common stock. However, if any person or group acquires 4.99% or more of Leap common
stock, or if a person or group that already owns 4.99% or more of Leap common stock acquires
additional shares, then, subject to certain exceptions, the preferred stock purchase rights would
separate from the common stock and become exercisable for shares of Leap common stock having a
market value equal
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to twice the exercise price, resulting in significant dilution to the ownership interests of the
acquiring person or group.
Recent trading in the Companys stock has increased the risk of an ownership change under the tax
rules, said Doug Hutcheson, Leaps president and CEO. After thoughtful consideration, our Board
implemented this tax benefit preservation plan to help protect the value of our NOLs and reduce the
likelihood that changes in our investor base could have the unintended effect of limiting our ability to use
them. These NOLs represent a significant corporate asset that we believe will deliver substantial benefits
to our stockholders as we generate taxable income in the future.
The Companys Board of Directors has established a procedure to consider requests to exempt
acquisitions of Leap common stock from the plan if it determines that doing so would not limit or
impair the availability of the NOLs.
The rights will expire on September 30, 2020. The rights may also expire on an earlier date upon
the occurrence of other events, including a determination by the Companys Board of Directors that
the NOLs have been utilized or are no longer available, or that the plan is no longer necessary to
protect the NOLs. The plan also may be terminated at any time by the Board before the rights
become exercisable.
The plan is similar to tax preservation plans adopted by many other public companies with
significant NOLs. The issuance of the preferred stock purchase rights will not affect the
Companys reported earnings or loss per share and is not taxable to the Company or its
stockholders.
Additional information regarding the plan will be set forth in a Current Report on Form 8-K and in
a Registration Statement on Form 8-A that the Company is filing with the Securities and Exchange
Commission.
About Leap
Leap provides innovative, high-value wireless services to a fast-growing, young and ethnically
diverse customer base. With the value of unlimited wireless services as the foundation of its
business, Leap pioneered its Cricket® service. The Company and its joint ventures operate in 35
states and the District of Columbia and hold licenses in 35 of the top 50 U.S. markets. Through
its affordable, flat-rate
Leap Adopts Tax Benefit Preservation Plan | ||
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service plans, Cricket offers customers a choice of unlimited voice, text, high-speed data and
mobile Web services. Headquartered in San Diego, Calif., Leap is traded on the NASDAQ Global
Select Market under the ticker symbol LEAP. For more information, please visit
www.leapwireless.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements reflect managements current expectations
based on currently available operating, financial and competitive information, but are subject to
risks, uncertainties and assumptions that could cause actual results to differ materially from
those anticipated in or implied by the forward-looking statements. Our forward-looking statements
include our discussions regarding our expectation of generating future taxable income and deriving future benefits from our NOLs and are
generally identified with words such as believe, expect, intend, plan, could, may and
similar expressions. Risks, uncertainties and assumptions that could affect our forward-looking
statements include, among other things, our ability to generate future taxable income and realize
the benefit of our NOLs and other factors detailed in the section entitled Risk Factors included
in our periodic reports filed with the SEC, including our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2010, filed with the SEC on August 6, 2010.
All forward-looking statements included in this news release should be considered in the context of
these risks. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. Investors and
prospective investors are cautioned not to place undue reliance on our forward-looking statements.