Due to the mistakes, Leap has admitted that the following records can no longer be relied upon: the consolidated financial statements for the fiscal years ended December 31, 2012 and 2011; and the condensed consolidated financial statements for the fiscal quarters ended March 31, 2013 and 2012; June 30, 2013 and 2012; and September 30, 2012.
“The classification error related to certain purchases of property and equipment that were unpaid at each of the balance sheet dates (but that were scheduled to be settled in cash soon thereafter), which were incorrectly reflected as cash outflows from investing activities and cash inflows from operating activities,” Leap said in the filing.
According to a table adjusted for the errors, $49 million was subtracted from operating activities for 2011 and then added to investing activities. For 2012, $58 million was subtracted from investing activities and then added to operating activities.
Leap’s management has concluded that a “material weakness in internal controls over financial reporting existed during each of the affected periods and that the Company’s disclosure controls and procedures and internal control over financial reporting for such periods were therefore not effective.”
Leap added that it does not anticipate the filing errors to affect its merger with AT&T. In July, AT&T announced it was buying Leap for $1.2 billion. Leap investors are scheduled to meet Oct. 24 to vote on the deal.