##### 



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K/A
 (Amendment
No.2)
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2004
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 0-21213
 LCC International, Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware(State or Other Jurisdiction of
Incorporation or Organization)
    
    54-1807038(I.R.S. Employer
Identification No.)
 7925 Jones Branch Drive
McLean, VA(Address of Principal Executive Offices)
    
    22102(Zip Code)
 Registrants Telephone Number, Including Area Code:
(703) 873-2000
 Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
 Securities registered pursuant to Section 12(g) of the Act:
 Class A Common Stock, par value $.01 per share  (Title of Class)
 o þ
 o þ
 Indicate by check mark whether the registrant: þ o
 o
 þ o
 o þ
  *
    
    Due to the fact that the registrant is restating its financial statements for the
quarters ended September 30, 2004 and March 31, 2005 and for the year ended December 31, 2004, the
registrant did not file on a timely basis its Quarterly Report on a Form 10-Q for the quarters
ended June 30, 2005 and September 30, 2005.
   DOCUMENTS INCORPORATED BY REFERENCE




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EXPLANATORY NOTE
  1.
    
    Table of Contents  page numbers have been corrected.2.
    
    Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Restated; Liquidity and Capital Resources; Cash Requirements. The sub-heading
(Restated) has been centered under the column for the year 2004.3.
    
    Footnote 20  Segment Reporting. Extraneous wording in title has been deleted.       2




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
    
    Expanded the MD&A captions for operating expense and other income (expense) to include
segment information, so that the reader may reconcile segment profitability in MD&A to the
segment reporting footnote under SFAS 131.
    
    Revised the Statement of Operations to read Cost of revenue (exclusive of depreciation shown separately below).
    
    Disclosed in greater detail any events leading to changes in restructuring accruals.
 3




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TABLE OF CONTENTS
 PagePART IItem 1.
Business
    
    
    5Item 2. Properties
    
    
    21Item 3. Legal Proceedings
    
    
    21Item 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    22Item 6. Selected Financial Data  Restated
    
    
    22Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations   Restated
    
    
    23Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 8. Financial Statements and Supplementary Data  Restated
    
    
    37Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    67Item 9A. Controls and Procedures  Restated
    
    
    67PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    69Item 11. Executive Compensation
    
    
    69Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    69Item 13. Certain Relationships and Related Transactions
    
    
    69Item 14. Principal Accountant Fees and Services
    
    
    69PART IVItem 15. Exhibits and Financial Statement Schedules  Restated
    
    
    69
 4




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This Annual Report on Form 10-K/A contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. We intend our forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. These statements can be identified by the use of
forward looking terminology, such as may, will, expect, anticipate, estimate, or
continue or the negative thereof or other variations thereon or comparable terminology. Our
actual results could differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth elsewhere in this Form 10-K/A . See the
Risk Factors section of Item 1 Business for cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and uncertainties that
could cause actual results to differ materially from results referred to in forward-looking
statements.
 PART I
 Item 1. Business
 Overview
    Industry Background
 Wireless Telecommunications Networks
    5




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Growth and Evolution of the Wireless Telecommunications Industry
   Key Drivers of Change in Our Business
  
    
    The issuance of new or additional licenses to wireless service providers.After
receiving new or additional licenses necessary to build out their wireless systems, wireless
service providers must make decisions about what type of technology and equipment will be
used, where it will be located and how it will be configured. In addition, detailed site
location designs must be prepared and radio frequency engineers must review interference to
or from co-located antennae. Construction and equipment installation then must be performed
and professional technicians must install and commission the new radio equipment, test and
integrate it with existing networks and tune the components to optimize performance.
    
    The introduction of new services or technologies.Although wireless service providers
traditionally have relied upon their internal engineering workforces to address a
significant portion of their wireless network needs, the rapid introduction of new services
or technologies in the wireless market and the need to reduce operating costs in many cases
has resulted in wireless service providers and equipment vendors focusing on their core
competencies and, as a result, outsourcing an increasing portion of their network services.
Recently, several wireless service providers have upgraded or have begun upgrading their
networks to reduce the rate at which customers deactivate their wireless services and to
accommodate two recently introduced services: (i) push-to-talk, which allows wireless
callers to instantly connect directly with other wireless callers using the same network
simply by pressing a button on their handset (similar to a two-way radio); and (ii)
multimedia messaging, which allows wireless users to send and receive messages with a
combination of media elements such as text, image, sound and video.
    
    The increases in the number of wireless subscribers, the increase in usage by those
subscribers, and the scarcity of wireless spectrum.The increases in the number of
subscribers served by wireless service providers, the increase in usage by those
subscribers, and the scarcity of wireless spectrum require wireless service providers to
expand and optimize system coverage and capacity to maintain network quality. The wireless
system also must be continually updated and optimized to address changes in traffic patterns
and interference from neighboring or competing networks or other radio sources.
    
    The increasing complexity of wireless systems.As new technologies are developed,
wireless service providers must determine whether to upgrade their existing networks or
deploy new networks utilizing the latest available technologies in order to maintain their
market share. For example, overlaying new technologies such as 2.5G and 3G with an existing
network or deploying a new network requires wireless service providers to reengage in the
strategic planning, design, deployment, expansion, and operations and maintenance phases of
a new cycle in the life of an existing or new network. The consolidation of networks also
drives a need for resources to plan, optimize and implement change in existing networks.
 6




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The Need for Outsourcing
  
    
    offer turnkey solutions through in-country presence in the markets to be served;
    
    have expertise with all major wireless technologies;
    
    offer speed to market and cost effective network implementation;
    
    have experience working with all major equipment vendors; and
    
    have sufficient numbers of highly skilled employees capable of handling large-scale domestic and international projects.
 The LCC Solution
  
    
    Ability to deliver turnkey solutions.Our ability to provide the full range of design,
deployment, consulting and operations and maintenance services for wireless networks, which
we refer to as end-to-end or turnkey services, enables our wireless customers to engage us
as a single responsible party accountable for delivering and managing its wireless network
under a single contract. We coordinate our use of resources for each phase of the project
from planning to design and deployment to operations and maintenance of the wireless
network, enabling us to reduce the time and cost of our services. In order to supplement
such services, we have established a presence in Algeria, Brazil, China, Greece, Italy,
Spain, The Netherlands and the United Kingdom. We provide our customers with a primary point
of accountability and reduce the inefficiencies associated with coordinating multiple
subcontractors to enable projects to be transitioned from discipline to discipline in an
efficient manner.
    
    Expertise and experience with all major wireless technologies, system protocols and
equipment vendors.We have experience working with all major wireless access technologies,
including second generation, or 2G, 2.5G and 3G digital system protocols and their
respective migration paths, including: (i) Global System for Mobile Communications (GSM);
(ii) Time Division Multiple Access (TDMA); (iii) Code Division Multiple Access (CDMA); (iv)
Integrated Dispatch Enhanced Network (iDEN); (v) broadbands Local Multipoint Distribution
System (LMDS), Multichannel Multipoint Distribution Service (MMDS), 802.11x(Wi-Fi) and
802.16 (WiMax) technologies; (vi) Europes equivalent to iDEN referred to as Tetra; and
(vii) core network technologies.
  
    
    Speed to market.Our expertise, global presence and processes enable us to respond
quickly to support our customers deployment objectives. Members of our technical, design
and deployment teams often work together with the customer at the initial stage of a project
in order to plan an effective and efficient solution for the customers needs.
    
    Worldwide depth of resources.Our system deployment professionals collectively have
experience deploying networks in the major markets in the United States as well as many
countries throughout the world. As of December 31, 2004, approximately 54% of our billable
employees were employed outside the United States and represented 49 different
nationalities. During the past 20 years, our professionals have designed wireless networks
employing all major technologies in North America, Europe, Asia, Latin America, the Middle
East and Africa. Our professional staff is highly educated with many of our engineering
professionals holding masters degrees or doctorates.
 7




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LCC Services
  Technical Consulting Services
  Design Services
 Radio frequency and fixed network engineering.
  Competitive benchmarking.
 Deployment Services
 Program management.
 Site acquisition and development.
 8




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Regulatory compliance.
 Architecture and engineering.
 Construction and procurement management.
 Operations and Maintenance Services
  Geographic Organization
    Business Strategy
  
    
    Provide end-to-end services.We provide integrated end-to-end solutions ranging from
high level technical consulting, to system design and deployment, to ongoing operations and
maintenance services. Our ability to provide end-to-end, or turnkey, services enables our
wireless customers to engage a single, responsible party who is accountable for delivering
and managing its wireless network under a single contract. Accordingly, we leverage initial
consulting opportunities to secure later-stage system design and deployment contracts.
Engagements to provide design and deployment services help us secure ongoing operations and
maintenance projects, which is an emerging market segment. Providing ongoing operations and
maintenance services, in turn, positions us well for additional opportunities as wireless
service providers must either upgrade their existing networks or deploy new networks to
benefit from the latest available technologies. For example, during 2003, we were engaged to
perform turnkey services for U.S. Cellular and Sprint. In U.S. Cellulars case, we were
retained to provide network design, site acquisition, zoning, permitting, civil engineering
and construction services. In Sprints case, our history of performance in engineering
engagements helped us secure work for the remaining turnkey activities. Many clients
initially engage us to perform specific services, such as engineering services. Once we
secure a client relationship, we work to expand our relationship to provide additional
services offered by the company. We do this by understanding the clients needs and
leveraging our reputation and demonstrated performance on client engagements. We typically
self-perform network design, site
acquisition and zoning services and hire subcontractors to perform civil engineering and
construction services under our direct management. Self-performed work generally carries
higher profit margins than subcontracted work.
 9




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
    
    Increase our presence in new geographic areas to capture additional growth opportunities.
In order to realize the full benefit of wireless deployment worldwide, we target areas with
strong potential growth by creating a localized presence. We pursue this effort through
establishing a local presence, pursuing strategic acquisitions or entering into partnerships
to reach new markets. We currently have a localized presence in Algeria, Brazil, China,
Germany, Saudi Arabia, Greece, Italy, Spain, The Netherlands and the United Kingdom in
addition to the United States, and are considering expansion into other markets. To increase
our local presence in emerging areas, we have entered into several strategic acquisitions
and investments. In particular: (i) in January 2002 we acquired Smith Woolley Telecom, a
consulting firm in the United Kingdom specializing in site search, acquisition, design,
build, management and maintenance services; (ii) in July 2002 we acquired 51% of Detron LCC
Network Services, B.V., or Detron, a newly formed consulting firm in The Netherlands
specializing in deployment, management and maintenance services; and (iii) we have opened a
marketing office in Dubai from which we have pursued and secured projects in Saudi Arabia
and Qatar. We intend to continue to pursue organic growth in new markets as well as take
advantage of such opportunities as may occur to acquire or partner with high quality company
that accelerate our access to, and provide us with a local presence in, new markets.
    
    Benefit from parallel market opportunities using our current knowledge base.We actively
seek to expand into new markets through the use of our comprehensive knowledge of wireless
voice and data communications networks. We also believe that the rapid growth in the
worldwide use of wireless telecommunications has created a need for our services in related
fields. For example, because most wireless calls are ultimately routed through a wireline
network, traffic from wireless networks must be connected with switching centers within
wireline networks. Because our fixed network engineers determine the most effective method
to connect cell sites to the wireline backbone, and because many of the types of engineering
services provided to wireline operators are similar to the types of services we provide in
the wireless area, we have been engaged to provide wireline-related services by wireless
service providers and equipment vendors. We also are exploring fixed and mobile wireless
opportunities in the government and enterprise sectors. The United States government is
exploring ways to provide reliable wireless connectivity for all first-responders and
other law enforcement and public safety agencies using both existing and new networks and
technologies. Large enterprises also are beginning to explore how wireless technologies such
as the existing cellular and personal communication system, or PCS, services, as well as the
new Wi-Fi and WiMax technologies, may be used to enhance productivity and reduce operating
expenses. We have already provided consulting services to both government agencies and
corporate customers and we intend to expand our opportunities in these areas.
    
    Attract and retain highly qualified personnel.As a service business, our success
depends on our ability to attract, train and retain highly skilled professionals. As a
result, we seek to recruit highly skilled personnel, facilitate their professional
development and create a business atmosphere that encourages their continued employment. As
of December 31, 2004, we had 960 employees, of which 792 were billable employees. As of that
date, approximately 54% of our billable employees were employed outside of the United
States. Our professional staff is highly educated with many of our engineering professionals
holding masters degrees or doctorates. Recognizing the critical importance of retaining
highly qualified personnel for our business, we work closely with our employees to develop
and enhance the technical, professional and management skills required to be successful at
our company. Our senior management believes it is critically important to create and
maintain an open culture that encourages learning, responsibility and collaboration. For
example, C. Thomas Faulders, III, our chief executive officer, hosts monthly teleconference
meetings with all employees to foster an open working environment. We recognize that
preserving our culture requires our employees to have a stake in the success of our
business. For that reason, we have granted stock options to a significant majority of our
employees, including our clerical and administrative support staff. We also invest in all of
our professionals by expanding their professional education through our Wireless Institute,
which provides training for our engineers and our customers covering the latest technologies
developed and deployed throughout the world.
 10




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##### 



Customers and Backlog
  
   Sales and Marketing
  Sales
  Marketing
  11




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Wireless Institute
  Competition
  
    
    internal staffs of wireless and wireline service providers;
    
    telecommunications equipment vendors, such as Ericsson and Nortel, which frequently
provide design and deployment services as part of an equipment sale or pursue large scale
outsourcing contracts on an independent basis;
    
    independent service companies, such as Wireless Facilities, Inc., which provide a full
range of wireless network services, and a large number of other companies that provide
limited wireless services;
    
    construction and project management companies, such as Bechtel Group Inc. and General
Dynamics, for the deployment of wireless networks;
    
    tower ownership and management companies, such as Crown Castle International and American
Tower Corporation, which provide tower deployment service capabilities; and
    
    information technology and consulting companies such as Bearing Point, Inc., Logica and
others, which have developed capabilities to deliver network consulting services to wireless
service providers.
    Employees
  12




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International Operations
     Government Regulation
  Risk Factors
 In any given year, we derive a significant portion of our revenues from a limited number of large
projects, and, if we are unable to replace these large projects upon completion, we could have a
significant decrease in our revenues which would negatively impact our ability to generate income.
  We generate a substantial portion of our revenues from a limited number of customers, and if our
relationships with these customers were harmed our business would suffer.
  Recent and continuing consolidations among wireless service providers may result in a significant
reduction in our existing and potential customer base, and, if we are unable to maintain our
existing relations with such providers or expand such relationships, we could have a significant
decrease in our revenues, which would negatively impact our ability to generate income as well as
result in lower profitability.
 13




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Many of our customers face difficulties in obtaining financing to fund the expansion of their
wireless networks, including deployments and upgrades, which may reduce demand for our services.
  Further delays in the adoption and deployment of next generation wireless networks could
negatively affect the demand for our services and our ability to grow our revenues.
   We may experience significant fluctuations in our quarterly results as a result of uncertainties
relating to our ability to generate additional revenues, manage our expenditures and other
factors, certain of which are outside of our control.
  
    
    the timing of receipt of new licenses, use of existing spectrum for new services, or financing by potential customers;
    
    service and price competition;
    
    the commencement, progress, completion or termination of contracts during any particular quarter;
    
    the availability of equipment to deploy new technologies such as 3G and broadband;
    
    the growth rate of wireless subscribers, which has a direct impact on the rate at which
new cell sites are developed and built; and
    
    telecommunications market conditions and economic conditions generally.
  14




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Our contracts typically contain provisions giving customers the ability to terminate their
contracts under various circumstances and we may not be able to replace the revenues from such
projects which may have an adverse effect on our operating results due to our decreased revenues.
  We may not receive the full amount of our backlog, which could harm our business.
  
    
    the price of the work to be done is fixed;
    
    the scope of the work to be done is fixed, both in definition and amount (for example,
the number of sites has been determined); and
    
    there is a written contract, purchase order, agreement or other documentary evidence
which represents a firm commitment by the client to pay us for the work to be performed.
   A large percentage of our revenues comes from fixed price contracts, which require us to bear the
risk of cost overruns.
  Because we recognize revenues on fixed price contracts using the percentage-of-completion method
of accounting, increases in estimated project costs could cause fluctuations in our quarterly
results and adversely affect our operating results.
  15




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If the percentage of our revenues derived from construction related activities increases, our
gross margins and our net income may suffer.
  If we are unable to collect receivables from development stage customers and other
telecommunications companies, our operating results may be materially harmed.
  If more of our customers require fixed price contracts with fewer milestones than in previous
years, we may not have sufficient access to working capital to fund the operating expenses
incurred in connection with such contracts, and we may not be able to perform under our existing
contracts or accept new contracts with similar terms.
  The extent of our dependence on international operations may give rise to increased management
challenges and could harm our results of operations.
  
    
    the effects of terrorism;
    
    the general economic and political conditions in each country;
    
    the effect of applicable foreign tax structures, including tax rates that may be higher than tax rates in the United States;
    
    tariff and trade regulations;
    
    management of a geographically diverse organization;
    
    difficulties and increased expenses in complying with a variety of foreign laws and
regulations, including labor, employment and immigration laws;
    
    changes in the applicable industry regulatory environments in foreign countries,
including delays in deregulation or privatization affecting the pace at which wireless
licenses are awarded; and
    
    the inability to benefit from tax losses incurred in different foreign jurisdictions.
 16




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Providing services outside the United States carries the additional risk of currency fluctuations
and foreign exchange controls imposed by certain countries since many of our non-U.S. projects are
undertaken in local currency.
  We face intense competition from many competitors that have greater resources than we do, which
could result in price reductions, reduced profitability and loss of market share.
      If we fail to manage the size of our billable workforce to anticipate increases or decreases in
market demand for our services, it could harm our competitive position and financial results.
  17




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Our ability to reduce our general and administrative expenses is limited.
  Competitors that offer financing to wireless customers pose a threat to our ability to compete for
business.
  Our inability to anticipate or adapt to changes in technology may harm our competitive position,
reputation and opportunities for revenue growth.
  We may not be able to hire or retain a sufficient number of qualified engineers and other
employees to meet our contractual commitments or maintain the quality of our services.
  Because we have experienced, and expect to continue to experience, long sales cycles, we expect to
incur significant costs to generate new business and our customer base may not experience growth
commensurate with such costs.
  18




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If wireless service providers, network equipment vendors and enterprises perform more network
deployment services themselves, our business will suffer.
  Government regulations may adversely affect our business.
  We may be unable to satisfy the accounting guidelines that govern the determination of the
realizable value of a deferred tax asset in a given tax jurisdiction, thus eliminating our ability
to recognize as an asset the tax benefit of operating losses in the same jurisdiction and causing
a reduction in our overall consolidated profitability.
  If we fail to retain our key personnel and attract and retain additional qualified personnel, our
ability to operate our business may be adversely affected.
  RF Investors, L.L.C., whose interests may not be aligned with yours, controls our company, which
could result in actions of which you or other stockholders do not approve.
   19




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Significant sales of class A common stock in the future may depress the trading price of our class
A common stock.
   Our relationship with Telcom Ventures may result in potential conflicts of interest.
  Our stock price and trading volume are volatile and could decline, resulting in a substantial loss
on your investment.
  
    
    our operating performance and the performance of other similar companies or companies deemed to be similar;
    
    actual or anticipated differences in our quarterly operating results;
    
    changes in our revenues or earnings estimates or recommendations by securities analysts;
    
    publication of research reports about us or our industry by securities analysts;
    
    additions and departures of key personnel;
    
    strategic decisions by us or our competitors, such as acquisitions, consolidations,
divestments, spin-offs, joint ventures, strategic investments, or changes in business
strategy;
    
    the passage of legislation or other regulatory developments that adversely affect us or our industry;
 20




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
    
    speculation in the press or investment community;
    
    changes in accounting principles;
    
    terrorist acts;
    
    general market conditions, including economic factors unrelated to our performance; and
    
    political or military events related to international conflicts, wars, or otherwise.
  Additional Information
 Form 10-K,
 Item 2. Properties
     Item 3. Legal Proceedings
  Item 4. Submission of Matters to a Vote of Security Holders
  21




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PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuers Purchases
of Equity Securities
  Quarter Ended:
    
    2003March 31
    
    $1.87 to $2.67June 30
    
    $2.05 to $3.15September 30
    
    $2.48 to $6.00December 31
    
    $4.15 to $6.85
 Quarter Ended:
    
    2004March 31
    
    $5.06 to $9.81June 30
    
    $3.36 to $6.48September 30
    
    $3.02 to $4.98December 31
    
    $3.06 to $6.05
  Equity Compensation Plan Information
  Number of securitiesNumber of securities
    
    
    
    
    
    
    remaining available forto be issued upon
    
    
    Weighted-average
    
    
    future issuance under equityexercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitieswarrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by
securities holdersEmployee Stock Option Plan
    
    
    3,531,418
    
    
    $
    4.83
    
    
    
    2,694,612Directors Stock Option Plan (Class A Common Stock)
    
    
    158,400
    
    
    
    8.11
    
    
    
    91,600Directors Stock Option Plan (Class B Common Stock)*
    
    
    45,000
    
    
    
    16.88
    
    
    
    Employee Stock Purchase Plan
    
    
    
    
    
    
    
    
    
    
    411,928Equity compensation plans not approved by security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    3,734,818
    
    
    $
    5.12
    
    
    
    3,198,140
 
 *
    
    Although the directors stock option plan authorizes the issuance of up to 250,000 shares of
class B common stock, the final grant of such options occurred in May 2000 pursuant to the
terms of the directors stock option plan. Note:
 Item 6. Selected Financial Data  Restated
  22




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##### 



Managements Discussion and Analysis of Financial
Condition and Results of Operations
 Years Ended December 31,2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004(in thousands, except per share data)(Restated)Revenues:Service
    
    $
    149,385
    
    
    $
    130,609
    
    
    $
    67,069
    
    
    $
    108,439
    
    
    $
    193,158Tower ownership and management
    
    
    1,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    150,393
    
    
    
    130,609
    
    
    
    67,069
    
    
    
    108,439
    
    
    
    193,158Cost of revenues (exclusive of depreciation shown
separately below):Service
    
    
    109,952
    
    
    
    103,535
    
    
    
    58,429
    
    
    
    88,998
    
    
    
    158,847Tower ownership and management
    
    
    333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total cost of revenues
    
    
    110,285
    
    
    
    103,535
    
    
    
    58,429
    
    
    
    88,998
    
    
    
    158,847Gross profit
    
    
    40,108
    
    
    
    27,074
    
    
    
    8,640
    
    
    
    19,441
    
    
    
    34,311Operating expenses:Sales and marketing
    
    
    7,833
    
    
    
    7,068
    
    
    
    8,095
    
    
    
    6,624
    
    
    
    7,986General and administrative
    
    
    19,673
    
    
    
    15,978
    
    
    
    20,311
    
    
    
    18,508
    
    
    
    27,446Restructuring charge
    
    
    (108
    )
    
    
    
    
    
    
    13,522
    
    
    
    (2
    )
    
    
    (1,166
    )Gain on sale of tower portfolio and administration, net
    
    
    (26,437
    )
    
    
    (2,998
    )
    
    
    (2,000
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    2,899
    
    
    
    3,012
    
    
    
    2,884
    
    
    
    3,860
    
    
    
    2,715Total operating expenses
    
    
    3,860
    
    
    
    23,060
    
    
    
    42,812
    
    
    
    28,990
    
    
    
    36,981Operating income (loss)
    
    
    36,248
    
    
    
    4,014
    
    
    
    (34,172
    )
    
    
    (9,549
    )
    
    
    (2,670
    )Other income (expense)Interest income (expense),
net
    
    
    1,688
    
    
    
    1,886
    
    
    
    818
    
    
    
    325
    
    
    
    (79
    )Other
    
    
    (787
    )
    
    
    22,113
    
    
    
    (3,767
    )
    
    
    1,218
    
    
    
    1,395Total other income (expense)
    
    
    901
    
    
    
    23,999
    
    
    
    (2,949
    )
    
    
    1,543
    
    
    
    1,316Income (loss) before income taxes
    
    
    37,149
    
    
    
    28,013
    
    
    
    (37,121
    )
    
    
    (8,006
    )
    
    
    (1,354
    )Provision (benefit) for income taxes
    
    
    16,531
    
    
    
    11,041
    
    
    
    (8,451
    )
    
    
    (1,483
    )
    
    
    4,957Net income (loss)
    
    $
    20,618
    
    
    $
    16,972
    
    
    $
    (28,670
    )
    
    $
    (6,523
    )
    
    $
    (6,311
    )Net income (loss) per share:Basic
    
    $
    1.01
    
    
    $
    0.83
    
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Diluted
    
    $
    0.93
    
    
    $
    0.81
    
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Weighted average shares outstanding:Basic
    
    
    20,360
    
    
    
    20,571
    
    
    
    20,902
    
    
    
    21,292
    
    
    
    24,381Diluted
    
    
    22,110
    
    
    
    20,916
    
    
    
    20,902
    
    
    
    21,292
    
    
    
    24,381Consolidated Balance Sheet Data (at year-end):Cash and short-term investments
    
    $
    42,335
    
    
    $
    53,142
    
    
    $
    39,329
    
    
    $
    31,031
    
    
    $
    23,092Working capital
    
    
    59,460
    
    
    
    72,134
    
    
    
    49,959
    
    
    
    54,980
    
    
    
    49,658Goodwill and intangibles, net
    
    
    57
    
    
    
    637
    
    
    
    11,273
    
    
    
    11,958
    
    
    
    12,848Total assets
    
    
    110,045
    
    
    
    112,231
    
    
    
    96,723
    
    
    
    118,591
    
    
    
    120,807Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,840
    
    
    
    147Shareholders equity
    
    
    68,416
    
    
    
    85,804
    
    
    
    61,088
    
    
    
    69,768
    
    
    
    67,705
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations-
Restated
 The following discussion and analysis should be read in conjunction with our consolidated
financial statements and the notes thereto and the other financial data appearing elsewhere in this
Form 10-K/A.
 Restatement of Financial Statements
  23




---



##### 



Overview
   Americas:
 EMEA:
 24




---



##### 



Nonreportable segments:
       25




---



##### 



Trends That Have Affected or May Affect Results of Operations and Financial Condition
  
    
    project related revenues derived from a limited set of customers in each market where we
do business;
    
    our customers have faced difficulties in obtaining financing to fund the development,
expansion and upgrade of their networks;
    
    the acceleration or the delay associated with the introduction of new technologies and services by our customers;
    
    the management and the services composition of our fixed price contracts;
    
    the impact of the percentage of subcontracted work (versus self perform work) on our
large programs and the associated margin degradation; and
    
    increased spending by wireless service providers in the areas of network design,
deployment and optimization.
       26




---



##### 



Results of Operations
  Revenues, Cost of Revenues and Gross Margins
 Years Ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)
    
    
    
    
    
    
    (in thousands)
    
    
    
    
    
    
    (in thousands)(Restated)
    
    
    (Restated)Revenues:Americas
    
    $
    29,706
    
    
    
    
    
    
    $
    53,086
    
    
    
    
    
    
    $
    110,007EMEA
    
    
    34,755
    
    
    
    
    
    
    
    53,296
    
    
    
    
    
    
    
    78,172Nonreportable segments
    
    
    2,608
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    
    4,979$
    67,069
    
    
    
    
    
    
    $
    108,439
    
    
    
    
    
    
    $
    193,158(% of revenue)
    
    
    
    
    
    (% of revenue)
    
    
    
    
    
    (% of revenue)Cost of revenues:Americas
    
    $
    26,243
    
    
    
    88.3
    %
    
    $
    45,403
    
    
    
    85.5
    %
    
    $
    94,664
    
    
    
    86.1
    %EMEA
    
    
    29,600
    
    
    
    85.2
    %
    
    
    42,196
    
    
    
    79.2
    %
    
    
    60,511
    
    
    
    77.4
    %Nonreportable segments
    
    
    2,586
    
    
    
    99.2
    %
    
    
    1,399
    
    
    
    68.0
    %
    
    
    3,672
    
    
    
    73.7
    %$
    58,429
    
    
    
    87.1
    %
    
    $
    88,998
    
    
    
    82.1
    %
    
    $
    158,847
    
    
    
    82.2
    %Gross margin:Americas
    
    $
    3,463
    
    
    
    11.7
    %
    
    $
    7,683
    
    
    
    14.5
    %
    
    $
    15,343
    
    
    
    13.9
    %EMEA
    
    
    5,155
    
    
    
    14.8
    %
    
    
    11,100
    
    
    
    20.8
    %
    
    
    17,661
    
    
    
    22.6
    %Nonreportable segments
    
    
    22
    
    
    
    0.8
    %
    
    
    658
    
    
    
    32.0
    %
    
    
    1,307
    
    
    
    26.3
    %$
    8,640
    
    
    
    12.9
    %
    
    $
    19,441
    
    
    
    17.9
    %
    
    $
    34,311
    
    
    
    17.8
    %
 Americas
     27




---



##### 



EMEA
     Nonreportable Segments
   28




---



##### 



Operating Expenses
 Year Ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)(Restated)Sales and marketingAmerica
    
    $
    3,976
    
    
    $
    3,554
    
    
    $
    3,436EMEA
    
    
    2,156
    
    
    
    1,831
    
    
    
    3,682Nonreportable
segments
    
    
    1,963
    
    
    
    1,239
    
    
    
    8688,095
    
    
    
    6,624
    
    
    
    7,986Bad debt expense (recovery)America
    
    
    305
    
    
    
    23
    
    
    
    100EMEA
    
    
    2,075
    
    
    
    (2,052
    )
    
    
    26Nonreportable
segments
    
    
    349
    
    
    
    (390
    )
    
    
    192,729
    
    
    
    (2,419
    )
    
    
    145Shareholder note compensationAmerica
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    156
    
    
    
    
    
    
    
    1,240156
    
    
    
    
    
    
    
    1,240General and administrativeAmerica
    
    
    2,041
    
    
    
    1,901
    
    
    
    2,047EMEA
    
    
    5,696
    
    
    
    8,217
    
    
    
    11,192Nonreportable
segments
    
    
    9,689
    
    
    
    10,809
    
    
    
    12,82217,426
    
    
    
    20,927
    
    
    
    26,061Total general and administrativeAmerica
    
    
    2,346
    
    
    
    1,924
    
    
    
    2,147EMEA
    
    
    7,771
    
    
    
    6,165
    
    
    
    11,218Nonreportable
segments
    
    
    10,194
    
    
    
    10,419
    
    
    
    14,08120,311
    
    
    
    18,508
    
    
    
    27,446Restructuring charge (recovery)America
    
    
    773
    
    
    
    (460
    )
    
    
    (29
    )EMEA
    
    
    2,728
    
    
    
    458
    
    
    
    (567
    )Nonreportable
segments
    
    
    10,021
    
    
    
    
    
    
    
    (570
    )13,522
    
    
    
    (2
    )
    
    
    (1,166
    )Tower gainAmerica
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    (2,000
    )
    
    
    
    
    
    
    (2,000
    )
    
    
    
    
    
    
    Depreciation and amortizationAmerica
    
    
    717
    
    
    
    401
    
    
    
    492EMEA
    
    
    1,372
    
    
    
    2,873
    
    
    
    1,818Nonreportable
segments
    
    
    795
    
    
    
    586
    
    
    
    4052,884
    
    
    
    3,860
    
    
    
    2,715TotalAmerica
    
    
    7,812
    
    
    
    5,419
    
    
    
    6,046EMEA
    
    
    14,027
    
    
    
    11,327
    
    
    
    16,151Nonreportable
segments
    
    
    20,973
    
    
    
    12,244
    
    
    
    14,784$
    42,812
    
    
    $
    28,990
    
    
    $
    36,981
 29




---



##### 



Net bad debt expense (recovery)
  Shareholder note compensation
  General and administrative expenses
  Sales and marketing expenses
  Restructuring
  Tower gain
  30




---



##### 



Depreciation
  Other Income and Expense
 Years Ended December 31,2002
    
    
    2003
    
    
    2004(In thousands)
    
    
    (Restated)Other income
(expense):Interest
incomeAmerica
    
    
    62
    
    
    
    22
    
    
    
    27EMEA
    
    
    41
    
    
    
    144
    
    
    
    29Nonreportable
segments
    
    
    737
    
    
    
    281
    
    
    
    118840
    
    
    
    447
    
    
    
    174Interest
expenseAmerica
    
    
    (15
    )
    
    
    (6
    )
    
    
    (6
    )EMEA
    
    
    
    
    
    
    (116
    )
    
    
    (243
    )Nonreportable
segments
    
    
    (7
    )
    
    
    
    
    
    
    (4
    )(22
    )
    
    
    (122
    )
    
    
    (253
    )Gain (loss) on
equity
investmentAmerica
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    1,104
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    
    
    
    
    1,000
    
    
    
    7661,104
    
    
    
    1,000
    
    
    
    766Impairment of
assetsAmerica
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    (5,139
    )
    
    
    
    
    
    
    (181
    )(5,139
    )
    
    
    
    
    
    
    (181
    )OtherAmerica
    
    
    7
    
    
    
    1
    
    
    
    (31
    )EMEA
    
    
    (39
    )
    
    
    314
    
    
    
    122Nonreportable
segments
    
    
    300
    
    
    
    (97
    )
    
    
    719268
    
    
    
    218
    
    
    
    810Total
otherAmerica
    
    
    7
    
    
    
    1
    
    
    
    (31
    )EMEA
    
    
    1,065
    
    
    
    314
    
    
    
    122Nonreportable
segments
    
    
    (4,839
    )
    
    
    903
    
    
    
    1,304(3,767
    )
    
    
    1,218
    
    
    
    1,395TotalAmerica
    
    
    54
    
    
    
    17
    
    
    
    (10
    )EMEA
    
    
    1,106
    
    
    
    342
    
    
    
    (92
    )Nonreportable
segments
    
    
    (4,109
    )
    
    
    1,184
    
    
    
    1,418$
    (2,949
    )
    
    $
    1,543
    
    
    $
    1,316
 Interest income
  Interest Expense
  31




---



##### 



Gain (loss) on investments
  Impairment of investments
  Other income
  Income (Loss) Before Taxes
 Years Ended December 31,2002
    
    
    2003
    
    
    2004(In thousands)
    
    
    (Restated)Segment Income Before TaxesAmericas
    
    $
    (3,522
    )
    
    $
    1,821
    
    
    $
    9,258EMEA
    
    
    (5,038
    )
    
    
    573
    
    
    
    851Nonreportable
transactions
    
    
    (15,039
    )
    
    
    (10,402
    )
    
    
    (12,629
    )(23,599
    )
    
    
    (8,008
    )
    
    
    (2,520
    )Restructuring charge (recovery)Americas
    
    
    773
    
    
    
    (460
    )
    
    
    (29
    )EMEA
    
    
    2,728
    
    
    
    458
    
    
    
    (567
    )Nonreportable
transactions
    
    
    10,021
    
    
    
    
    
    
    
    (570
    )13,522
    
    
    
    (2
    )
    
    
    (1,166
    )Income (Loss) Before TaxesAmericas
    
    
    (4,295
    )
    
    
    2,281
    
    
    
    9,287EMEA
    
    
    (7,766
    )
    
    
    115
    
    
    
    1,418Nonreportable
transactions
    
    
    (25,060
    )
    
    
    (10,402
    )
    
    
    (12,059
    )$
    (37,121
    )
    
    $
    (8,006
    )
    
    $
    (1,354
    )
 Tax Expense
    32




---



##### 



Net Loss
    Liquidity and Capital Resources
  Sources and Uses of Cash
 Years Ended December 31,2002
    
    
    2003
    
    
    2004(in thousands)(Restated)Net cash used in operating activities
    
    $
    (2,855
    )
    
    $
    (19,584
    )
    
    $
    (4,473
    )Net cash used in investing activities
    
    
    (11,841
    )
    
    
    (2,770
    )
    
    
    (3,169
    )Net cash provided by (used in) financing activities
    
    
    (455
    )
    
    
    13,790
    
    
    
    629Net decrease in cash and cash equivalents
    
    $
    (15,151
    )
    
    $
    (8,564
    )
    
    $
    (7,013
    )
    33




---



##### 



Cash Requirements
 Years Ended December 31,2003
    
    
    2004(in thousands)(Restated)Cash and cash equivalents
    
    $
    28,943
    
    
    $
    21,930Restricted cash
    
    
    1,568
    
    
    
    1,162Short-term investments
    
    
    520
    
    
    
    Total cash and short-term investments
    
    $
    31,031
    
    
    $
    23,092Line of credit
    
    $
    1,840
    
    
    $
    147Working capital
    
    $
    54,980
    
    
    $
    49,658
   Payment Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    1 year
    
    1-3 years
    
    4-5 years
    
    5 yearsOperating lease obligations
    
    $
    18,810
    
    
    $
    6,054
    
    
    $
    9,395
    
    
    $
    1,262
    
    
    $
    2,099Sublease income
    
    $
    7,160
    
    
    $
    1,341
    
    
    $
    3,390
    
    
    $
    810
    
    
    $
    1,619
      34




---



##### 



Critical Accounting Policies
  
    
    revenue recognition;
    
    allowance for doubtful accounts;
    
    accounting for income taxes; and
    
    restructuring charge.
 Revenue Recognition
  Allowance for Doubtful Accounts
  Accounting for Income Taxes
   35




---



##### 



Restructuring Charge
  Related Party Transactions
    Recent Accounting Pronouncements
 Share-Based Payment Accounting
for Stock-Based Compensation Accounting for Stock Issued to
Employees.
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
   36




---



##### 



Item 8. Financial Statements and Supplementary Data- Restated
 Managements Report on Internal Control Over Financial Reporting
  
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect
on the financial statements.
  37




---



##### 




    
    A lack of an appropriate and comprehensive review of the accounting for
fixed-price customer contracts accounted for under the percentage-of-completion method.
Specifically, there was not an effective review of the performance status of fixed-price
contracts by personnel with sufficient knowledge of the related project to determine the
appropriate percentage of completion to be applied in recording revenues.
    
    A lack of adequate policies and procedures to identify the
terms and conditions of customer contracts that impact the accounting
for such contracts and a lack of oversight and review of the
accounting for such contracts to ensure that such contracts are
accounted for in accordance with generally accepted accounting principles.
    38




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
    
    A lack of an appropriate and comprehensive review of the
accounting for fixed-price customer contracts accounted for under
the percentage-of-completion method. Specifically, there was not
an effective review of the performance status of fixed-price
contracts by personnel with sufficient knowledge of the related
project to determine the appropriate percentage-of-completion to
be applied in recording revenues.
    
    A lack of adequate policies and procedures to identify the
terms and conditions of customer contracts that impact the
accounting for such contracts and a lack of oversight and review of
the accounting for such
contracts to ensure that such contracts are accounted for in accordance with generally accepted
accounting principles.
 39




---



##### 



40




---



##### 



Report of Independent Registered Public Accounting Firm
 
       
 41




---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2002, 2003 and 2004
(In thousands, except per share data)
 2002
    
    
    2003
    
    
    2004(Restated)Revenues
    
    $
    67,069
    
    
    $
    108,439
    
    
    $
    193,158Cost of revenues (exclusive of depreciation shown separately below)
    
    
    58,429
    
    
    
    88,998
    
    
    
    158,847Gross profit
    
    
    8,640
    
    
    
    19,441
    
    
    
    34,311Operating expenses:Sales and marketing
    
    
    8,095
    
    
    
    6,624
    
    
    
    7,986General and administrative
    
    
    20,311
    
    
    
    18,508
    
    
    
    27,446Restructuring charge (note 8)
    
    
    13,522
    
    
    
    (2
    )
    
    
    (1,166
    )Gain on sale of tower portfolio and administration, net (note 4)
    
    
    (2,000
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    2,884
    
    
    
    3,860
    
    
    
    2,715Total operating expenses
    
    
    42,812
    
    
    
    28,990
    
    
    
    36,981Operating loss
    
    
    (34,172
    )
    
    
    (9,549
    )
    
    
    (2,670
    )Other income (expense):Interest income
    
    
    840
    
    
    
    447
    
    
    
    174Interest expense
    
    
    (22
    )
    
    
    (122
    )
    
    
    (253
    )Other (notes 10 and 11)
    
    
    (3,767
    )
    
    
    1,218
    
    
    
    1,395Total other income (expense)
    
    
    (2,949
    )
    
    
    1,543
    
    
    
    1,316Loss from operations before income taxes
    
    
    (37,121
    )
    
    
    (8,006
    )
    
    
    (1,354
    )Provision (benefit) for income taxes (note 14)
    
    
    (8,451
    )
    
    
    (1,483
    )
    
    
    4,957Net loss
    
    $
    (28,670
    )
    
    $
    (6,523
    )
    
    $
    (6,311
    )Net loss per share:Basic
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Diluted
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Weighted average shares used in calculation of net loss per share:Basic
    
    
    20,902
    
    
    
    21,292
    
    
    
    24,381Diluted
    
    
    20,902
    
    
    
    21,292
    
    
    
    24,381
  42




---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 December 31,2003
    
    
    2004(Restated)ASSETS:Current assets:Cash and cash equivalents (note 5)
    
    $
    28,943
    
    
    $
    21,930Restricted cash
    
    
    1,568
    
    
    
    1,162Short-term investments
    
    
    520
    
    
    
    Receivables, net of allowance for doubtful accounts of $466 and $620 at
December 31, 2003 and 2004, respectivelyTrade accounts receivable
    
    
    27,456
    
    
    
    46,214Unbilled receivables
    
    
    35,007
    
    
    
    28,696Due from related parties and affiliates (note 6)
    
    
    180
    
    
    
    80Deferred income taxes, net (note 14)
    
    
    3,547
    
    
    
    290Prepaid expenses and other current assets
    
    
    1,726
    
    
    
    1,586Prepaid tax receivable and prepaid taxes
    
    
    662
    
    
    
    683Total current assets
    
    
    99,609
    
    
    
    100,641Property and equipment, net (note 7)
    
    
    3,818
    
    
    
    4,218Investments in affiliates (note 12)
    
    
    764
    
    
    
    677Deferred income taxes, net (note 14)
    
    
    1,407
    
    
    
    858Goodwill (note 12)
    
    
    11,115
    
    
    
    12,246Other intangibles (note 12)
    
    
    843
    
    
    
    602Other assets
    
    
    1,035
    
    
    
    1,565$
    118,591
    
    
    $
    120,807LIABILITIES AND SHAREHOLDERS EQUITY:Current liabilities:Line of credit (note 13)
    
    $
    1,840
    
    
    $
    147Accounts payable
    
    
    11,485
    
    
    
    19,790Accrued expenses
    
    
    21,152
    
    
    
    21,840Accrued employee compensation and benefits
    
    
    5,525
    
    
    
    4,850Deferred revenue
    
    
    471
    
    
    
    985Income taxes payable (note 14)
    
    
    967
    
    
    
    1,570Accrued restructuring current (note 8)
    
    
    2,903
    
    
    
    1,562Other current liabilities
    
    
    286
    
    
    
    239Total current liabilities
    
    
    44,629
    
    
    
    50,983Accrued restructuring noncurrent (note 8)
    
    
    3,432
    
    
    
    1,339Other liabilities
    
    
    762
    
    
    
    780Total liabilities
    
    
    48,823
    
    
    
    53,102Commitments and contingencies (notes 13, 17, and 18)Shareholders equity:Preferred stock:10,000 shares authorized; -0- shares issued and outstanding
    
    
    
    
    
    
    Class A common stock; $.01 par value:70,000 shares authorized; 19,549 shares and 20,209 shares issued and
outstanding at December 31, 2003 and 2004, respectively
    
    
    195
    
    
    
    202Class B common stock; $.01 par value:20,000 shares authorized; 4,638 shares and 4,428 shares issued and
outstanding at December 31, 2003 and 2004, respectively
    
    
    46
    
    
    
    44Paid-in capital
    
    
    106,262
    
    
    
    107,773Accumulated deficit
    
    
    (36,602
    )
    
    
    (42,913
    )Note receivable from shareholder (note 6)
    
    
    (1,557
    )
    
    
    Subtotal
    
    
    68,344
    
    
    
    65,106Accumulated other comprehensive income  foreign currency translation adjustments
    
    
    1,424
    
    
    
    3,481Treasury stock (159,209 shares)
    
    
    
    
    
    
    (882
    )Total shareholders equity
    
    
    69,768
    
    
    
    67,705$
    118,591
    
    
    $
    120,807
  43




---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE LOSS
Years ended December 31, 2002, 2003 and 2004
(In thousands)
 Notes
    
    
    AccumulatedReceivable
    
    
    Otherfrom
    
    
    ComprehensivePreferred
    
    
    Common Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Shareholders
    
    
    Income
    
    
    TreasuryStock
    
    
    Class A
    
    
    Class B
    
    
    Capital
    
    
    Loss
    
    
    Deficit
    
    
    (note 6)
    
    
    (Loss)
    
    
    Stock
    
    
    Total(Restated)
    
    
    (Restated)
    
    
    
    
    
    
    (Restated)
    
    
    
    
    
    
    (Restated)Balances at
December 31, 2001
    
    
    
    
    
    $
    123
    
    
    $
    84
    
    
    $
    92,428
    
    
    
    
    
    
    $
    (1,409
    )
    
    $
    (2,325
    )
    
    $
    (3,097
    )
    
    
    
    
    
    $
    85,804Exercise/issuance
of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Issuance of common
stock
    
    
    
    
    
    
    23
    
    
    
    (21
    )
    
    
    1,521
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,523Payment from
shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    700Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (28,670
    )
    
    
    (28,670
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,670
    )Other comprehensive
income  foreign
currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,548
    
    
    
    
    
    
    
    
    
    
    
    1,548
    
    
    
    
    
    
    
    1,548Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (27,122
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balances at
December 31, 2002
    
    
    
    
    
    
    146
    
    
    
    63
    
    
    
    94,132
    
    
    
    
    
    
    
    (30,079
    )
    
    
    (1,625
    )
    
    
    (1,549
    )
    
    
    
    
    
    
    61,088Exercise/issuance
of stock options
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    590Issuance of common
stock
    
    
    
    
    
    
    47
    
    
    
    (17
    )
    
    
    11,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,572Payment from
shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (6,523
    )
    
    
    (6,523
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,523
    )Other comprehensive
income  foreign
currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,973
    
    
    
    
    
    
    
    
    
    
    
    2,973
    
    
    
    
    
    
    
    2,973Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,550
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balances at
December 31, 2003
    
    
    
    
    
    
    195
    
    
    
    46
    
    
    
    106,262
    
    
    
    
    
    
    
    (36,602
    )
    
    
    (1,557
    )
    
    
    1,424
    
    
    
    
    
    
    
    69,768Exercise/issuance
of stock options
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    1,410
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,415Issuance of common
stock
    
    
    
    
    
    
    2
    
    
    
    (2
    )
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101Discharge of
shareholder note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,557
    
    
    
    
    
    
    
    
    
    
    
    1,557Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,311
    )
    
    
    (6,311
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,311
    )Other comprehensive
income  foreign
currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    


    2,057Treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (882
    )
    
    
    (882
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,254
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balances at
December 31, 2004
(restated)
    
    
    
    
    
    $
    202
    
    
    $
    44
    
    
    $
    107,773
    
    
    
    
    
    
    $
    (42,913
    )
    
    $
    
    
    
    $
    3,481
    
    
    $
    (882
    )
    
    $
    67,705
  44




---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2002, 2003, and 2004
(In thousands)
 2002
    
    
    2003
    
    
    2004(Restated)Cash flows from operating activities:Net loss
    
    $
    (28,670
    )
    
    $
    (6,523
    )
    
    $
    (6,311
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    2,884
    
    
    
    3,860
    
    
    
    2,715Provision (recovery) for doubtful accounts (note 9)
    
    
    4,317
    
    
    
    (2,419
    )
    
    
    146Non-cash compensation attributable to shareholder note
    
    
    
    
    
    
    
    
    
    
    675Loss from investments in joint ventures, net
    
    
    
    
    
    
    126
    
    
    
    446Impairment of assets
    
    
    5,140
    
    
    
    Restructuring charge (reversal)
    
    
    13,522
    
    
    
    (2
    )
    
    
    (1,166
    )Gain on sale of tower portfolio
    
    
    (2,000
    )
    
    
    
    
    
    
    Changes in operating assets and liabilities:Trade, unbilled, and other receivables
    
    
    10,963
    
    
    
    (34,732
    )
    
    
    (12,540
    )Accounts payable and accrued expenses
    
    
    902
    
    
    
    13,666
    
    
    
    8,389Other current assets and liabilities
    
    
    (8,560
    )
    
    
    7,129
    
    
    
    1,773Other noncurrent assets and liabilities
    
    
    (1,353
    )
    
    
    (689
    )
    
    
    1,400Net cash used in operating activities
    
    
    (2,855
    )
    
    
    (19,584
    )
    
    
    (4,473
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,854
    )
    
    
    (1,812
    )
    
    
    (2,839
    )Proceeds from sale of property and equipment
    
    
    34
    
    
    
    69
    
    
    
    30Business acquisitions and investments
    
    
    (9,021
    )
    
    
    (1,027
    )
    
    
    (360
    )Net cash used in investing activities
    
    
    (11,841
    )
    
    
    (2,770
    )
    
    
    (3,169
    )Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    49
    
    
    
    11,572
    
    
    
    101Purchases of short-term investments
    
    
    (30
    )
    
    
    (20
    )
    
    
    520Proceeds from exercise of options
    
    
    134
    
    
    
    590
    
    
    
    1,415Decrease (increase) in restricted cash
    
    
    (1,308
    )
    
    
    (260
    )
    
    
    406Proceeds from line of credit
    
    
    
    
    
    
    10,831
    
    
    
    21,230Payments on line of credit
    
    
    
    
    
    
    (8,991
    )
    
    
    (23,043
    )Repayment of loan to shareholder
    
    
    700
    
    
    
    68
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (455
    )
    
    
    13,790
    
    
    
    629Net decrease in cash and cash equivalents
    
    
    (15,151
    )
    
    
    (8,564
    )
    
    
    (7,013
    )Cash and cash equivalents at beginning of period
    
    
    52,658
    
    
    
    37,507
    
    
    
    28,943Cash and cash equivalents at end of period
    
    $
    37,507
    
    
    $
    28,943
    
    
    $
    21,930Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    22
    
    
    $
    47
    
    
    $
    40Income taxes
    
    $
    1,545
    
    
    $
    288
    
    
    $
    266
     45




---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2002, 2003 and 2004 (Restated)
 (1) Restatement
    Consolidated Statement of Operations
 For the Year Ended December 31, 2004PreviouslyReported
    
    
    Adjustments
    
    
    RestatedRevenues
    
    $
    198,607
    
    
    $
    (5,449
    )
    
    $
    193,158Cost of
revenues
    
    
    162,930
    
    
    
    (4,083
    )
    
    
    158,847Gross
Profit
    
    
    35,677
    
    
    
    (1,366
    )
    
    
    34,311Operating
expenses:Sales and
marketing
    
    
    7,986
    
    
    
    
    
    
    
    7,986General and
administrative
    
    
    27,555
    
    
    
    (109
    )
    
    
    27,446Restructuring
charge
    
    
    (1,166
    )
    
    
    
    
    
    
    (1,166
    )Depreciation and
amortization
    
    
    2,715
    
    
    
    
    
    
    
    2,715Total operating
expenses
    
    
    37,090
    
    
    
    (109
    )
    
    
    36,981Operating
loss
    
    
    (1,413
    )
    
    
    (1,257
    )
    
    
    (2,670
    )Other income
(expense)Interest
income
    
    
    174
    
    
    
    
    
    
    
    174Interest
expense
    
    
    (253
    )
    
    
    
    
    
    
    (253
    )Other
    
    
    1,395
    
    
    
    
    
    
    
    1,395Total other
(income)
expense
    
    
    1,316
    
    
    
    
    
    
    
    1,316Income
(loss)
before
tax
    
    
    (97
    )
    
    
    (1,257
    )
    
    
    (1,354
    )Provision (benefit)
for
taxes
    
    
    5,215
    
    
    
    (258
    )
    
    
    4,957Net income
(loss)
    
    $
    (5,312
    )
    
    $
    (999
    )
    
    $
    (6,311
    )
 46




---



##### 



Consolidated Balance Sheet
 December 31, 2004PreviouslyReported
    
    Adjustments
    
    RestatedCash
    
    $
    21,820
    
    
    $
    110
    
    
    $
    21,930Unbilled
receivables
    
    
    34,279
    
    
    
    (5,583
    )
    
    
    28,696Due from related
parties and
affiliates
    
    
    96
    
    
    
    (16
    )
    
    
    80Deferred income
taxes,
net
    
    
    1,148
    
    
    
    (858
    )
    
    
    290Current
assets
    
    
    107,072
    
    
    
    (6,431
    )
    
    
    100,641Total
assets
    
    
    126,380
    
    
    
    (5,573
    )
    
    
    120,807Accrued
expenses
    
    
    26,285
    
    
    
    (4,445
    )
    
    
    21,840Income taxes
payable
    
    
    1,683
    
    
    
    (113
    )
    
    
    1,570Current
liabilities
    
    
    55,541
    
    
    
    (4,558
    )
    
    
    50,983Total
liabilities
    
    
    57,660
    
    
    
    (4,558
    )
    
    
    53,102Accumulated
deficit
    
    
    (41,914
    )
    
    
    (999
    )
    
    
    (42,913
    )Accumulated other
comprehensive
income
    
    
    3,497
    
    
    
    (16
    )
    
    
    3,481Total shareholders
equity
    
    
    68,720
    
    
    
    (1,015
    )
    
    
    67,705Total liabilities
and shareholders
equity
    
    $
    126,380
    
    
    $
    (5,573
    )
    
    $
    120,807
 Consolidated Statement of Shareholders Equity and Comprehensive Loss
 For the Year Ended December 31, 2004PreviouslyReported
    
    Adjustments
    
    RestatedComprehensive
loss
    
    $
    (3,239
    )
    
    $
    (1,015
    )
    
    $
    (4,254
    )Accumulated
deficit
    
    
    (41,914
    )
    
    
    (999
    )
    
    
    (42,913
    )Accumulated other
comprehensive
income
(loss)
    
    
    3,497
    
    
    
    16
    
    
    
    3,481Total
    
    $
    68,720
    
    
    $
    (1,015
    )
    
    $
    67,705
 Consolidated Statement of Cash Flows
 For the Year Ended December 31, 2004Previously
    
    RestatementReported
    
    Adjustments
    
    RestatedCash flows from operating activities:Net
loss
    
    $
    (5,312
    )
    
    
    (999
    )
    
    $
    (6,311
    )Adjustments to reconcile net loss to net cash used in
operating
activities:Depreciation and
amortization
    
    
    2,715
    
    
    
    
    
    
    
    2,715Provision for doubtful
accounts
    
    
    146
    
    
    
    
    
    
    
    146Non-cash compensation attributable to shareholder
note
    
    
    675
    
    
    
    
    
    
    
    675Loss from investments in joint venture,
net
    
    
    446
    
    
    
    
    
    
    
    446Restructuring
reversal
    
    
    (1,166
    )
    
    
    
    
    
    
    (1,166
    )Changes in operating assets and
liabilities:Trade, unbilled, and other
receivables
    
    
    (18,223
    )
    
    
    5,683
    
    
    
    (12,540
    )Accounts payable and accrued
expenses
    
    
    12,763
    
    
    
    (4,374
    )
    
    
    8,389Other current assets and
liabilities
    
    
    1,960
    
    
    
    (187
    )
    
    
    1,773Other non-current assets and
liabilities
    
    
    1,413
    
    
    
    (13
    )
    
    
    1,400Net cash used in operating
activities
    
    
    (4,583
    )
    
    
    110
    
    
    
    (4,473
    )Cash flows from investing
activities:
    
    
    (3,169
    )
    
    
    
    
    
    
    (3,169
    )Cash flows from financing
activities:
    
    
    629
    
    
    
    
    
    
    
    629Net decrease in cash and cash
equivalents
    
    
    (7,123
    )
    
    
    110
    
    
    
    (7,013
    )Cash and cash equivalents at beginning of
period
    
    
    28,943
    
    
    
    
    
    
    
    28,943Cash and cash equivalents at end of
period
    
    $
    21,820
    
    
    $
    110
    
    
    $
    21,930
 (2)
Description of Operations
  47




---



##### 



(3) Summary of Significant Accounting Policies
 Principles of Consolidation
  Cash Equivalents
  Short-Term Investments
  Concentration of Credit Risk
  2003
    
    
    2004(In thousands)Europe
    
    $
    10,922
    
    
    $
    12,497Middle East/Africa
    
    $
    8,186
    
    
    $
    13,257Asia-Pacific
    
    $
    
    
    
    $
    797
   48




---



##### 



Fair Value of Financial Instruments
  Property and Equipment
   Computer equipment
    
    3 yearsSoftware
    
    3 yearsFurniture and office equipment
    
    3 to 7 yearsLeasehold improvements
    
    Shorter of the term of the lease or estimated useful lifeVehicles
    
    5 years
 Impairment of Long-Lived Assets
 Accounting for Impairment or Disposal of Long-Lived Assets.
 Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets,
 Investments in Affiliates
  Revenue Recognition
  49




---



##### 



Income Taxes
 Accounting for Income Taxes.
  Foreign Currency Translation
  Use of Estimates
  Stock-Based Compensation
 Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation.
  50




---



##### 



2002
    
    
    2003
    
    
    2004(In thousands, except per share data)(Restated)Net loss as reported
    
    $
    (28,670
    )
    
    $
    (6,523
    )
    
    $
    (6,311
    )Deduct total stock-based
employee compensation
expense determined under
fair value based method
    
    
    (2,562
    )
    
    
    (2,399
    )
    
    
    (2,236
    )Pro forma net loss
    
    $
    (31,232
    )
    
    $
    (8,922
    )
    
    $
    (8,547
    )Net loss shareAs reported:Basic
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Diluted
    
    $
    (1.37
    )
    
    $
    (0.31
    )
    
    $
    (0.26
    )Pro forma:Basic
    
    $
    (1.49
    )
    
    $
    (0.42
    )
    
    $
    (0.35
    )Diluted
    
    $
    (1.49
    )
    
    $
    (0.42
    )
    
    $
    (0.35
    )
 Other Comprehensive Income (Loss)
  2002
    
    
    2003
    
    
    2004Pretax
    
    
    Tax
    
    
    Net
    
    
    Pretax
    
    
    Tax
    
    
    Net
    
    
    Pretax
    
    
    Tax
    
    
    NetAmount
    
    
    Expense
    
    
    Amount
    
    
    Amount
    
    
    Expense
    
    
    Amount
    
    
    Amount
    
    
    Expense
    
    
    Amount(Restated)
    
    
    (Restated)
    
    
    (Restated)Foreign
currency
translation
adjustments
    
    $
    1,548
    
    
    $
    
    
    
    $
    1,548
    
    
    $
    2,973
    
    
    $
    
    
    
    $
    2,973
    
    
    $
    2,057
    
    
    $
    
    
    
    $
    2,057
 Recent Accounting Pronouncements
 Share-Based Payment Accounting
for Stock-Based Compensation Accounting for Stock Issued to
Employees.
 (4) Tower Portfolio Sale and Administration
   51




---



##### 



(5) Cash and Cash Equivalents
  2003
    
    
    2004(Restated)Cash in banks
    
    $
    25,443
    
    
    $
    21,930Treasury bills
    
    
    3,500
    
    
    
    $
    28,943
    
    
    $
    21,930
 (6) Related Party Transactions
      52




---



##### 



(7) Property and Equipment
  2003
    
    
    2004(In thousands)Computer equipment
    
    $
    15,195
    
    
    $
    15,910Software
    
    
    3,075
    
    
    
    4,816Furniture and office equipment
    
    
    10,075
    
    
    
    10,964Leasehold improvements
    
    
    1,632
    
    
    
    1,645Vehicles
    
    
    198
    
    
    
    19930,175
    
    
    
    33,534Less accumulated depreciation and amortization
    
    
    (26,357
    )
    
    
    (29,316
    )$
    3,818
    
    
    $
    4,218
 (8) Restructuring Charge
  53




---



##### 



Severance
    
    
    Facilities
    
    
    Total(in thousands)Restructuring charge
    
    $
    1,030
    
    
    $
    12,492
    
    
    $
    13,522Reclassification of deferred rent
    
    
    
    
    
    
    639
    
    
    
    6391,030
    
    
    
    13,131
    
    
    
    14,161Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (2,152
    )
    
    
    (2,152
    )Severance and associated costs paid
    
    
    (878
    )
    
    
    
    
    
    
    (878
    )Leasehold improvements and other assets written-off
    
    
    
    
    
    
    (1,461
    )
    
    
    (1,461
    )Other
    
    
    
    
    
    
    53
    
    
    
    53Restructuring payable as of December 31, 2002
    
    $
    152
    
    
    $
    9,571
    
    
    $
    9,723Reversal of excess severance
    
    
    (152
    )
    
    
    
    
    
    
    (152
    )Reversal for reoccupied space
    
    
    
    
    
    
    (385
    )
    
    
    (385
    )Additional charge for reduction of sublease income
    
    
    
    
    
    
    535
    
    
    
    535Restructuring charge
    
    
    (152
    )
    
    
    150
    
    
    
    (2
    )Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (2,971
    )
    
    
    (2,971
    )Leasehold improvements and other assets written-off
    
    
    
    
    
    
    (564
    )
    
    
    (564
    )Other
    
    
    
    
    
    
    149
    
    
    
    149Restructuring payable as of December 31, 2003
    
    $
    
    
    
    $
    6,335
    
    
    $
    6,335Reversal for reoccupied space
    
    
    
    
    
    
    (1,166
    )
    
    
    (1,166
    )Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (2,131
    )
    
    
    (2,131
    )Leasehold improvements and other assets written-off
    
    
    
    
    
    
    (214
    )
    
    
    (214
    )Other
    
    
    
    
    
    
    77
    
    
    
    77Restructuring payable as of December 31, 2004
    
    $
    
    
    
    $
    2,901
    
    
    $
    2,901
 54




---



##### 



December 31
    
    
    December 312003
    
    
    2004Accrued restructuring current
    
    $
    2,903
    
    
    $
    1,562Accrued restructuring non-current
    
    
    3,432
    
    
    
    1,339Accrued restructuring total
    
    $
    6,335
    
    
    $
    2,901
 (9) Recovery of Receivables
   55




---



##### 



(10) Impairment of Investments and Business Disposals
    (11) Investments
     56




---



##### 



(12) Business Combinations
       57




---



##### 



Amortization Expense2005
    
    $
    2832006
    
    $
    2612007
    
    $
    58$
    602
  2003
    
    
    2004Goodwill
    
    $
    11,115
    
    
    $
    12,246Other intangibles:Backlog
    
    $
    940
    
    
    $
    1,028Customer relationships
    
    
    998
    
    
    
    1,092Trade names
    
    
    190
    
    
    
    213Organizational Cost
    
    
    
    
    
    
    21Accumulated amortization
    
    
    (1,285
    )
    
    
    (1,752
    )Other intangibles
    
    $
    843
    
    
    $
    602
  2002Revenues
    
    $
    68,146Loss from operations before income taxes
    
    $
    (36,845
    )Net loss
    
    $
    (28,393
    )Net loss per share:Basic
    
    $
    (1.36
    )Diluted
    
    $
    (1.36
    )
 (13) Line of Credit
  (14) Income Taxes
  2002
    
    
    2003
    
    
    2004(in thousands)
    
    
    (Restated)Current:Federal
    
    $
    (8,885
    )
    
    $
    (633
    )
    
    $
    State and local
    
    
    (560
    )
    
    
    
    
    
    
    215Foreign
    
    
    590
    
    
    
    (332
    )
    
    
    936(8,855
    )
    
    
    (965
    )
    
    
    1,151Deferred:Federal
    
    
    433
    
    
    
    (442
    )
    
    
    3,216State and local
    
    
    (29
    )
    
    
    (76
    )
    
    
    590404
    
    
    
    (518
    )
    
    
    3,806Total
    
    $
    (8,451
    )
    
    $
    (1,483
    )
    
    $
    4,957
 58




---



##### 



2002
    
    
    2003
    
    
    2004(Restated)(in thousands)Domestic
    
    $
    (30,613
    )
    
    $
    (5,509
    )
    
    $
    (466
    )Foreign
    
    
    (6,508
    )
    
    
    (2,497
    )
    
    
    (888
    )Total
    
    $
    (37,121
    )
    
    $
    (8,006
    )
    
    $
    (1,354
    )
  2002
    
    
    2003
    
    
    2004(Restated)(in thousands)Tax provision (benefit) at statutory federal income tax rate
    
    $
    (12,992
    )
    
    $
    (2,802
    )
    
    $
    (474
    )Effect of:State and local income taxes, net of federal tax benefit
    
    
    (383
    )
    
    
    (114
    )
    
    
    523Foreign and tax credits
    
    
    2,868
    
    
    
    (753
    )
    
    
    (1,112
    )Non deductible expenses and permanent items
    
    
    356
    
    
    
    174
    
    
    
    565Other
    
    
    359
    
    
    
    (96
    )
    
    
    (762
    )Valuation allowance of deferred tax assets
    
    
    1,341
    
    
    
    2,108
    
    
    
    5,877Effective income tax provision (benefit)
    
    $
    (8,451
    )
    
    $
    (1,483
    )
    
    $
    4,957
  2003
    
    
    2004(Restated)(in thousands)Deferred tax assets:Accrued compensation
    
    $
    1,340
    
    
    $
    768Accrued expenses
    
    
    3,936
    
    
    
    2,344Foreign tax credit carry-forward
    
    
    3,049
    
    
    
    3,049Foreign net operating loss carry-forwards
    
    
    3,932
    
    
    
    6,408Research tax credit carryover
    
    
    340
    
    
    
    340Alternative minimum tax credit
    
    
    519
    
    
    
    519Net operating loss carryover
    
    
    1,459
    
    
    
    3,826Other
    
    
    176
    
    
    
    86Total gross deferred tax assets
    
    
    14,751
    
    
    
    16,847Less valuation allowance
    
    
    (8,321
    )
    
    
    (14,691
    )Deferred tax assets net of valuation allowance
    
    
    6,430
    
    
    
    2,649Deferred tax liabilities:Property and equipment
    
    
    (585
    )
    
    
    (812
    )Deferred revenue
    
    
    (147
    )
    
    
    (144
    )Other
    
    
    (744
    )
    
    
    (545
    )Total gross deferred liabilities
    
    
    (1,476
    )
    
    
    (1,501
    )Net deferred tax assets
    
    $
    4,954
    
    
    $
    1,148
  2003
    
    
    2004(Restated)Current asset
    
    $
    3,547
    
    
    $
    290Non-current asset
    
    
    1,407
    
    
    
    858$
    4,954
    
    
    $
    1,148
 59




---



##### 



(15) Health and Retirement Plans
       60




---



##### 



(16) Incentive Plans
   2002
    
    2003
    
    2004Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    4.0
    %
    
    
    3.254.05
    %
    
    
    4.004.40
    %Expected life
    
    27 years
    
    37 years
    
    37 yearsVolatility
    
    
    55115
    %
    
    
    4085
    %
    
    
    3898
    %
  2002
    
    
    2003
    
    
    2004Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    1.1
    %
    
    
    0.951.00
    %
    
    
    0.902.10
    %Expected life
    
    1 month
    
    1 month
    
    1 monthVolatility
    
    
    55115
    %
    
    
    4080
    %
    
    
    3893
    %
     61




---



##### 



2002
    
    2003
    
    2004Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Number of
    
    Average
    
    Number of
    
    Average
    
    Number of
    
    AverageShares
    
    Exercise Price
    
    Shares
    
    Exercise Price
    
    Shares
    
    Exercise Price(in thousands)
    
    
    
    
    
    (in thousands)
    
    
    
    
    
    (in thousands)Balance at beginning of year
    
    
    3,596
    
    
    $
    9.83
    
    
    
    4,376
    
    
    $
    7.18
    
    
    
    4,421
    
    
    $
    6.03Granted
    
    
    2,097
    
    
    
    3.14
    
    
    
    1,269
    
    
    
    2.56
    
    
    
    1,199
    
    
    
    5.89Exercised
    
    
    (22
    )
    
    
    4.84
    
    
    
    (155
    )
    
    
    3.14
    
    
    
    (423
    )
    
    
    2.86Cancelled
    
    
    (1,295
    )
    
    
    8.05
    
    
    
    (1,069
    )
    
    
    7.03
    
    
    
    (1,447
    )
    
    
    9.05Balance at end of year
    
    
    4,376
    
    
    
    7.18
    
    
    
    4,421
    
    
    
    6.03
    
    
    
    3,750
    
    
    
    5.17Exercisable at end of year
    
    
    2,369
    
    
    
    8.91
    
    
    
    2,474
    
    
    
    8.03
    
    
    
    2,128
    
    
    
    5.94
  Options Outstanding
    
    Options ExercisableWeighted Avg.
    
    
    
    
    
    
    
    
    
    Weighted Avg.Range of
    
    Number at
    
    Remaining
    
    Weighted Avg.
    
    Number at
    
    ExerciseExercise Prices
    
    December 31, 2004
    
    Contractual Life
    
    Exercise Price
    
    December 31, 2004
    
    Price(in thousands)
    
    (In years)
    
    
    
    
    
    (in thousands)$1.67  2.12
    
    
    456
    
    
    
    7.57
    
    
    $
    2.06
    
    
    
    224
    
    
    $
    2.07$2.20  2.38
    
    
    600
    
    
    
    8.10
    
    
    
    2.38
    
    
    
    159
    
    
    
    2.38$2.45  4.35
    
    
    560
    
    
    
    6.66
    
    
    
    3.46
    
    
    
    399
    
    
    
    3.46$4.54  5.64
    
    
    580
    
    
    
    4.44
    
    
    
    5.16
    
    
    
    509
    
    
    
    5.15$5.75  5.76
    
    
    137
    
    
    
    4.84
    
    
    
    5.75
    
    
    
    132
    
    
    
    5.75$5.84  5.84
    
    
    883
    
    
    
    9.23
    
    
    
    5.84
    
    
    
    289
    
    
    
    5.84$5.90  19.81
    
    
    534
    
    
    
    6.24
    
    
    
    11.49
    
    
    
    416
    
    
    
    12.883,750
    
    
    
    7.14
    
    
    
    5.17
    
    
    
    2,128
    
    
    
    5.94
 62




---



##### 



(17) Lease Commitments
    Rental ReceivablesRental Payable
    
    
    Under Subleases(In thousands)2005
    
    $
    6,054
    
    
    $
    1,3412006
    
    
    5,457
    
    
    
    1,9382007
    
    
    3,131
    
    
    
    1,0472008
    
    
    807
    
    
    
    4052009
    
    
    628
    
    
    
    405Thereafter
    
    
    2,733
    
    
    
    2,024$
    18,810
    
    
    $
    7,160
  (18) Commitments and Contingencies
  (19) Income (Loss) Per Share
 Earnings per Share"
 2002
    
    
    2003
    
    
    2004(Restated)Per Share
    
    
    Net
    
    
    
    
    
    
    Per Share
    
    
    Net
    
    
    
    
    
    
    Per ShareNet Loss
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Basic EPSNet loss available
to common
shareholders
    
    $
    (28,670
    )
    
    
    20,902
    
    
    $
    (1.37
    )
    
    $
    (6,523
    )
    
    
    21,292
    
    
    $
    (0.31
    )
    
    $
    (6,311
    )
    
    
    24,381
    
    
    $
    (0.26
    )Effect of Dilutive
SecuritiesStock option plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dilutive EPSNet loss available
to common
shareholders and
assumed
conversions
    
    $
    (28,670
    )
    
    
    20,902
    
    
    $
    (1.37
    )
    
    $
    (6,523
    )
    
    
    21,292
    
    
    $
    (0.31
    )
    
    $
    (6,311
    )
    
    
    24,381
    
    
    $
    (0.26
    )
  63




---



##### 



(20) Segment
Reporting
 Disclosures about Segments of an Enterprise and Related Information
   Operating Segments:
(In thousands)
 Americas
    
    
    EMEA
    
    
    Total2002Net revenue from external customers
    
    $
    29,706
    
    
    $
    34,755
    
    
    $
    64,461Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    29,706
    
    
    $
    34,755
    
    
    $
    64,461Depreciation and amortization
    
    $
    717
    
    
    $
    1,372
    
    
    $
    2,089Interest income
    
    
    62
    
    
    
    41
    
    
    
    103Interest expense
    
    
    15
    
    
    
    
    
    
    
    15Loss before taxes
    
    
    (3,522
    )
    
    
    (5,038
    )
    
    
    (8,560
    )Segment assets
    
    
    7,153
    
    
    
    37,942
    
    
    
    45,095Expenditures for property
    
    
    50
    
    
    
    2,242
    
    
    
    2,2922003Net revenue from external customers
    
    $
    53,086
    
    
    $
    53,296
    
    
    $
    106,382Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    53,086
    
    
    $
    53,296
    
    
    $
    106,382Depreciation and amortization
    
    $
    401
    
    
    $
    2,873
    
    
    $
    3,274Interest income
    
    
    22
    
    
    
    144
    
    
    
    166Interest expense
    
    
    6
    
    
    
    116
    
    
    
    122Income before taxes
    
    
    1,821
    
    
    
    573
    
    
    
    2,394Segment assets
    
    
    33,043
    
    
    
    51,368
    
    
    
    84,411Expenditures for property
    
    
    707
    
    
    
    1,040
    
    
    
    1,7472004 (Restated)Net revenue from external customers
    
    $
    110,007
    
    
    $
    78,172
    
    
    $
    188,179Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    110,007
    
    
    $
    78,172
    
    
    $
    188,179Depreciation and amortization
    
    $
    493
    
    
    $
    1,817
    
    
    $
    2,310Interest income
    
    
    27
    
    
    
    29
    
    
    
    56Interest expense
    
    
    6
    
    
    
    243
    
    
    
    249Income before taxes
    
    
    9,258
    
    
    
    851
    
    
    
    10,109Segment assets
    
    
    36,370
    
    
    
    62,676
    
    
    
    99,046Expenditures for property
    
    
    817
    
    
    
    1836
    
    
    
    2,653
 64




---



##### 



2002
    
    
    2003
    
    
    2004(Restated)RevenuesRevenues for reportable segments
    
    $
    64,461
    
    
    $
    106,382
    
    
    $
    188,179Revenues for non-reportable segments
    
    
    2,608
    
    
    
    2,057
    
    
    
    4,979Eliminations
    
    
    
    
    
    
    
    
    
    
    Total consolidated revenues
    
    $
    67,069
    
    
    $
    108,439
    
    
    $
    193,158AssetsTotal assets for reportable segments
    
    $
    45,095
    
    
    $
    84,411
    
    
    $
    99,046Assets not attributable to reportable segments:Cash and cash equivalents
    
    
    34,405
    
    
    
    25,225
    
    
    
    15,984Restricted cash
    
    
    
    
    
    
    
    
    
    
    232Short-term investments
    
    
    514
    
    
    
    520
    
    
    
    Deferred and prepaid tax assets
    
    
    12,720
    
    
    
    5,616
    
    
    
    1,832Property and equipment
    
    
    1,612
    
    
    
    1,048
    
    
    
    834Receivables
    
    
    624
    
    
    
    333
    
    
    
    1,946Prepaids
    
    
    1,480
    
    
    
    550
    
    
    
    230Investments
    
    
    
    
    
    
    764
    
    
    
    662Related parties
    
    
    10
    
    
    
    45
    
    
    
    41Other
    
    
    263
    
    
    
    79Total consolidated assets
    
    $
    96,723
    
    
    $
    118,591
    
    
    $
    120,807
 2002
    
    
    2003
    
    
    2004(Restated)Income (loss) before income taxes for reportable segments
    
    $
    (8,560
    )
    
    $
    2,394
    
    
    $
    10,109Gain on sale of tower portfolio and administration, net
    
    
    2,000
    
    
    
    
    
    
    
    Restructuring charge
    
    
    (13,522
    )
    
    
    2
    
    
    
    1,166Impairment of investments
    
    
    (5,139
    )
    
    
    
    
    
    
    Bankruptcy recoveries
    
    
    1,589
    
    
    
    
    
    
    
    General corporate expenses
    
    
    (13,489
    )
    
    
    (10,402
    )
    
    
    (12,629
    )Loss from operations before income taxes
    
    $
    (37,121
    )
    
    $
    (8,006
    )
    
    $
    (1,354
    )
 Segment
    
    Unallocated
    
    
    
    
    
    ConsolidatedOther Significant Items
    
    Total
    
    Expenditures
    
    Eliminations
    
    Total2002Depreciation and amortization
    
    $
    2,089
    
    
    $
    795
    
    
    $
    
    
    
    $
    2,884Interest income
    
    
    103
    
    
    
    737
    
    
    
    
    
    
    
    840Interest expense
    
    
    15
    
    
    
    7
    
    
    
    
    
    
    
    22Expenditures for property
    
    
    2,292
    
    
    
    562
    
    
    
    
    
    
    
    2,8542003Depreciation and amortization
    
    $
    3,274
    
    
    $
    586
    
    
    $
    
    
    
    $
    3,860Interest income
    
    
    166
    
    
    
    281
    
    
    
    
    
    
    
    447Interest expense
    
    
    122
    
    
    
    
    
    
    
    
    
    
    
    122Expenditures for property
    
    
    1,747
    
    
    
    65
    
    
    
    
    
    
    
    1,8122004 (Restated)Depreciation and amortization
    
    $
    2,310
    
    
    $
    405
    
    
    $
    
    
    
    $
    2,715Interest income
    
    
    56
    
    
    
    118
    
    
    
    
    
    
    
    174Interest expense
    
    
    249
    
    
    
    4
    
    
    
    
    
    
    
    253Expenditures for property
    
    
    2,653
    
    
    
    186
    
    
    
    
    
    
    
    2,839
 65




---



##### 



2002
    
    
    2003
    
    
    2004(Restated)Design
    
    $
    27,202
    
    
    $
    32,584
    
    
    $
    55,703Deployment
    
    
    36,493
    
    
    
    64,212
    
    
    
    116,005Operations and maintenance
    
    
    1,089
    
    
    
    3,135
    
    
    
    4,892Consulting
    
    
    2,285
    
    
    
    8,508
    
    
    
    16,558Total revenues
    
    $
    67,069
    
    
    $
    108,439
    
    
    $
    193,158
  2002
    
    
    2003
    
    
    2004(Restated)Net
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    NetRevenues
    
    
    Property
    
    
    Revenues
    
    
    Property
    
    
    Revenues
    
    
    PropertyAmericas:United States of America
    
    $
    28,812
    
    
    $
    1,978
    
    
    $
    53,137
    
    
    $
    1,706
    
    
    $
    111,184
    
    
    $
    1,605Other
    
    
    1,807
    
    
    
    95
    
    
    
    1,017
    
    
    
    81
    
    
    
    2,910
    
    
    
    82Total Americas
    
    
    30,619
    
    
    
    2,073
    
    
    
    54,154
    
    
    
    1,787
    
    
    
    114,094
    
    
    
    1,687Europe, Middle East and Africa:United Kingdom
    
    
    14,864
    
    
    
    1,430
    
    
    
    14,594
    
    
    
    603
    
    
    
    17,157
    
    
    
    279Netherlands
    
    
    10,425
    
    
    
    230
    
    
    
    12,977
    
    
    
    317
    
    
    
    18,892
    
    
    
    352Italy
    
    
    5,686
    
    
    
    1,215
    
    
    
    12,484
    
    
    
    1,023
    
    
    
    8,993
    
    
    
    617Algeria
    
    
    2,582
    
    
    
    18
    
    
    
    12,467
    
    
    
    87
    
    
    
    14,293
    
    
    
    37Saudi Arabia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,662Other
    
    
    1,474
    
    
    
    
    
    
    
    822
    
    
    
    
    
    
    
    3,175
    
    
    
    1,107Total Europe, Middle East and Africa
    
    
    35,031
    
    
    
    2,893
    
    
    
    53,344
    
    
    
    2,030
    
    
    
    78,172
    
    
    
    2,392Asia-Pacific
    
    
    1,419
    
    
    
    44
    
    
    
    941
    
    
    
    1
    
    
    
    892
    
    
    
    139Total revenues
    
    $
    67,069
    
    
    $
    5,010
    
    
    $
    108,439
    
    
    $
    3,818
    
    
    $
    193,158
    
    
    $
    4,218
 (21) Quarterly Data (Unaudited)
 20031st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except per share amounts)Revenues
    
    $
    17,140
    
    
    $
    18,187
    
    
    $
    29,350
    
    
    
    43,762Operating income (loss)
    
    
    (4,797
    )
    
    
    (3,695
    )
    
    
    (1,314
    )
    
    
    257Income (loss) before income taxes
    
    
    (3,460
    )
    
    
    (3,515
    )
    
    
    (1,451
    )
    
    
    420Net income (loss)
    
    
    (2,162
    )
    
    
    (3,975
    )
    
    
    (1,025
    )
    
    
    639Net income (loss) per share:Basic
    
    $
    (0.10
    )
    
    $
    (0.19
    )
    
    $
    (0.05
    )
    
    $
    0.03Diluted
    
    $
    (0.10
    )
    
    $
    (0.19
    )
    
    $
    (0.05
    )
    
    $
    0.03
 20041st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except per share amounts)(Restated)
    
    
    (Restated)Revenues
    
    $
    45,049
    
    
    $
    52,618
    
    
    $
    50,006
    
    
    $
    45,485Operating income (loss)
    
    
    (1,805
    )
    
    
    1,806
    
    
    
    672
    
    
    
    (3,343
    )Income (loss) before income taxes
    
    
    (1,645
    )
    
    
    2,186
    
    
    
    718
    
    
    
    (2,613
    )Net income (loss)
    
    
    (1,554
    )
    
    
    1,314
    
    
    
    639
    
    
    
    (6,710
    )Net income (loss) per share:Basic
    
    $
    (0.06
    )
    
    $
    0.05
    
    
    $
    0.03
    
    
    $
    (0.27
    )Diluted
    
    $
    (0.06
    )
    
    $
    0.05
    
    
    $
    0.03
    
    
    $
    (0.27
    )
  66




---



##### 



(22) Subsequent Event
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A. Controls and Procedures- Restated
  67




---



##### 




    
    We have instituted a requirement that Company personnel responsible for preparing an
estimate of the percentage-of-completion of the Companys fixed price contracts for
financial reporting purposes confirm in writing to the Chief Financial Officer on a
monthly basis that such personnel has confirmed the accuracy of such estimate with the
project managers with firsthand knowledge of the performance status of the contracts.
    
    We have reassigned responsibility within the accounting department for preparation
and review of the calculation of the percentage of completion for large fixed price
contracts. The person to whom the responsibility has now been assigned is more
experienced in accounting for large fixed price contracts. This person will be
supervised by the new VP Finance for the Americas who will review the calculations
monthly with the preparer and with the project manager responsible for the project.
    
    We have consolidated all contract administration functions under the Chief Financial
Officer.
    
    We have increased the required scrutiny of revenue and cost recognition calculations
made with respect to all customer contracts. Monthly contract reviews for the Americas
region will be attended by the CEO, the CFO and the senior executive responsible for the
Americas. More detailed contract reporting is being developed which will allow for more
detailed review.
    
    During the second quarter of 2005, we realigned the reporting relationships of all
regional financial management such that they now report directly to the Chief Financial
Officer.
  Item 9B. Other information
  68




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##### 



PART III
 Item 10. Directors and Executive Officers of the Registrant
  Item 11. Executive Compensation
  Item 12. Security Ownership of Certain Beneficial Owners and Management
  Item 13. Certain Relationships and Related Transactions
  Item 14. Principal Accountant Fees and Services
  PART IV
 Item 15. Exhibits and Financial Statement Schedules  Restated
           69




---



##### 



ExhibitNo.
    
    Description3.1
    
    Restated Certificate of Incorporation of the LCC
International, Inc. (the Company) (incorporated by
reference to Exhibit 3.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).3.2
    
    Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).4.1
    
    Form of Class A and Class B Common Stock certificates
(incorporated by reference to Exhibit 4.1 to Amendment No. 2
to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.1
    
    1996 Directors Stock Option Plan of the Company
(incorporated by reference to Exhibit 10.13 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.2
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated April 22, 1997 (incorporated by reference to
Exhibit 4.6 to the Companys Annual Report on Form 10-K
filed with the SEC on March 30, 1999).10.3
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated April 16, 1998 (incorporated by reference to
Exhibit 4.7 to the Companys Annual Report on Form 10-K
filed with the SEC on March 30, 1999).10.4
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated February 1, 2000 (incorporated by reference
to the Companys definitive proxy statement on Schedule 14A
filed with the SEC on April 24, 2000).10.5
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated January 30, 2001 (incorporated by reference
to Exhibit 4.5 to the Companys Annual Report on Form 10-K
filed with the SEC on April 2, 2001).10.6
    
    Amended and Restated Equity Incentive Plan of the Company
(formerly the 1996 Employee Stock Option Plan), dated March
10, 2004 (incorporated by reference to the Companys
definitive proxy statement on Schedule 14A filed with the
SEC on April 28, 2004).10.7
    
    Form of Terms and Conditions and Option Grant Letter under
the Companys Amended and Restated Equity Incentive Plan
(incorporated by reference to Exhibit 10.35 to the Companys
Annual Report on Form 10-K filed with the SEC on November
12, 2004).10.8
    
    1996 Employee Stock Purchase Plan of the Company, as amended
May 25, 1999 (incorporated by reference to Exhibit 4.7 to
the Companys Annual Report on Form 10-K filed with the SEC
on April 2, 2001).10.9
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for directors who will receive Class A
Common Stock other than Mark D. Ein (incorporated by
reference to Exhibit 10.44 to Amendment No. 2 to the
Companys Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20, 1996).10.10
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for Mark D. Ein (incorporated by reference
to Exhibit 10.45 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).10.11
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for directors who receive Class B Common
Stock (incorporated by reference to Exhibit 10.35 to
Amendment No. 2 to the Companys Registration Statement on
Form S-1, Registration No. 333-6067, filed with the SEC on
September 20, 1996).10.12
    
    Form of the Companys 1996 Employee Stock Option Plan
incentive stock option agreement (incorporated by reference
to Exhibit 10.41 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).10.13
    
    Form of the Companys 1996 Employee Stock Option Plan
non-incentive stock option agreement (incorporated by
reference to Exhibit 10.42 to Amendment No. 2 to the
Companys Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20, 1996).10.14
    
    Form of the Companys 1996 Employee Stock Option Plan, as
amended, non-incentive stock option agreement for eligible
persons who have executed grant letters on or after January
30, 2001 (incorporated by reference to Exhibit 10.26 to the
Companys Annual Report on Form 10-K filed with the SEC on
April 2, 2001).10.15
    
    Letter Agreement dated February 22, 1999, between the
Company and Terri Feely (incorporated by reference to
Exhibit 10.9 to the Companys Annual Report on Form 10-K
filed with the SEC on April 2, 2001).
 70




---



##### 



ExhibitNo.
    
    Description10.16
    
    Letter Agreement dated February 14, 2000 between the Company
and Michael McNelly (incorporated by reference to Exhibit
10.11 to the Companys Annual Report on Form 10-K filed with
the SEC on April 2, 2001).10.17
    
    Employee Agreement on Ideas, Inventions and Confidential
Information between Michael S. McNelly and the Company dated
July 20, 1998 (incorporated by reference to Exhibit 10.41 to
Amendment No. 1 to the Companys Annual Report on Form 10-K
filed with the SEC on December 20, 2001).10.18
    
    Acknowledgement Letter dated October 6, 2003 between the
Company and Michael S. McNelly (incorporated by reference to
Exhibit 10.18.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-108575, filed with the SEC on November 5, 2003).10.19
    
    Letter Agreement, dated December 12, 2002, between the
Company and Graham Perkins (incorporated by reference to
Exhibit 10.19 to the Companys Annual Report on Form 10-K
filed with the SEC on March 28, 2003).10.20
    
    Letter Agreement, dated February 13, 2002, between the
Company and Vincent Gwiazdowski (incorporated by reference
to Exhibit 10.20 to the Companys Annual Report on Form 10-K
filed with the SEC on March 28, 2003).10.21
    
    Agreement between C. Thomas Faulders, III, and the Company
dated as of December 10, 2004 (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the SEC on December 10, 2004.10.22
    
    Letter dated June 16, 2003, from the Company to Julie A.
Dobson (incorporated by reference to Exhibit 10.24 to
Amendment No. 2 to the Companys Registration Statement on
Form S-1, Registration No. 333-108575, filed with the SEC on
November 5, 2003).10.23
    
    Letter dated January 11, 2001, from the Company to Susan
Mayer (incorporated by reference to Exhibit 10.14 to the
Companys Annual Report on Form 10-K filed with the SEC on
April 2, 2001).10.24
    
    Letter dated June 19, 2001, from the Company to Susan Ness
(incorporated by reference to Exhibit 10.24 to the Companys
Annual Report on Form 10-K filed with the SEC on March 28,
2002).10.25
    
    Form of Indemnity Agreement between the Company and the
current and former officers and directors of the Company
(incorporated by reference to Exhibit 10.32 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.26
    
    Intercompany Agreement dated as of September 20, 1996 among
Telcom Ventures, RF Investors, L.L.C., LCC, L.L.C., the
Company, Cherrywood Holdings, Inc., Rajendra Singh, Neera
Singh, certain trusts for the benefit of members of the
Singh family, Carlyle-LCC Investors I, L.P., Carlyle-LCC
Investors II, L.P., Carlyle-LCC Investors III, L.P.,
Carlyle-LCC IV(E), L.P., MDLCC, L.L.C. and TC Group, L.L.C.
(incorporated by reference to Exhibit 10.30 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.27
    
    Registration Rights Agreement dated July 25, 1996 among the
Company, RF Investors, L.L.C. and MCI Telecommunications
Corporation (incorporated by reference to Exhibit 10.31 to
Amendment No. 1 to the Companys Registration Statement on
Form S-1, Registration No. 333-6067, filed with the SEC on
August 16, 1996).10.28
    
    Overhead and Administrative Services Agreement dated August
27, 1996 between the Company and Telcom Ventures, L.L.C.
(incorporated by reference to Exhibit 10.33 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.29
    
    Agreement of Merger dated September 15, 1996 between LCC,
L.L.C. and the Company (incorporated by reference to Exhibit
10.34 to Amendment No. 2 to the Companys Registration
Statement on Form S-1, Registration No. 333-6067, filed with
the SEC on September 20, 1996).10.30
    
    Agreement dated May 17, 1996, between LCC, L.L.C. and
West*Park Associates Limited Partnership for office space at
7925 Jones Branch Drive, McLean, Virginia, 22102
(incorporated by reference to Exhibit 10.23 to Amendment No.
1 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on August 16,
1996).10.31
    
    Ericsson Radio Systems AB Asset Purchase Agreement dated
August 25, 1999 (incorporated by reference to Exhibit 2.1 to
the Companys Current Report on Form 8-K filed with the SEC
on November 8, 1999).10.32
    
    Letter, dated October 22, 1999, among the Company, LCC
Europe AS and Ericsson Radio Systems AB (incorporated by
reference to Exhibit 2.2 to the Companys Current Report on
Form 8-K filed with the SEC on November 8, 1999).10.33
    
    Master Antenna Site Lease between Pinnacle Towers Inc. and
Microcell Management, Inc., dated February 24, 2000
(incorporated by reference to Exhibit 2.3 to the Companys
Current Report on Form 8-K filed with the SEC on March 20, 2000).
 71




---



##### 



ExhibitNo.
    
    Description10.34
    
    Settlement and Repurchase Agreement between the Company and
minority shareholders of Microcell Management, Inc., dated
February 15, 2000 (incorporated by reference to Exhibit
10.40 to Amendment No. 1 to the Companys Annual Report on
Form 10-K filed with the SEC on December 20, 2001).10.35
    
    Consulting Agreement, dated as of December 23, 2004, by and
among LCC United Kingdom and SEMAB Management Srl; Letter
Agreement, dated as of December 23, 2004, by and among SEMAB
Management Srl and LCC United Kingdom Limited; Letter
Agreement, dated as of December 23, 2004, by and among Carlo
Baravalle and LCC United Kingdom Limited; and Compromise
Agreement, dated as of December 23, 2004, by and among Carlo
Baravalle and LCC United Kingdom Limited (incorporated by
reference to Exhibit 10.01 to the Companys Current Report
on Form 8-K filed with the SEC on December 28, 2004).21
    
    List of Subsidiaries (incorporated by reference to Exhibit
21 to the Companys Annual Report on Form 10-K filed with
the SEC on March 23, 2005).23
    
    Consent of KPMG LLP.31.1
    
    Certification of Chief Executive Officer pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
   72




---



##### 



SIGNATURES
  LCC INTERNATIONAL, INC.By:
    
    /s/ Dean J. DouglasDean J. DouglasPresident and
Chief Executive Officer(Duly Authorized Officer)
  73




---



##### 



SCHEDULE II
 VALUATION AND QUALIFYING ACCOUNTS
 Column CColumn A
    
    Column B
    
    Additions
    
    Column D
    
    Column EBalanceat
    
    Charged to
    
    Charges to
    
    
    
    
    
    Balance atBeginning
    
    Costs and
    
    Other
    
    
    
    
    
    End ofDescription
    
    of Period
    
    Expenses
    
    Accounts
    
    Deductions(1)
    
    Period(In thousands)Year ended December 31, 2002 Allowance for doubtful accounts
    
    
    2,048
    
    
    
    4,317
    
    
    
    724
    
    
    
    3,967
    
    
    
    3,122Year ended December 31, 2003 Allowance for doubtful accounts
    
    
    3,122
    
    
    
    (2,419
    )
    
    
    253
    
    
    
    490
    
    
    
    466Year ended December 31, 2004 Allowance for doubtful accounts
    
    
    466
    
    
    
    146
    
    
    
    87
    
    
    
    79
    
    
    
    620
 
 (1)
    
    Deduction for write-off of receivables to allowance account. 74




---



##### 



EXHIBIT INDEX
 ExhibitNo.
    
    Description3.1
    
    Restated Certificate of Incorporation of the LCC
International, Inc. (the Company) (incorporated by
reference to Exhibit 3.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).3.2
    
    Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).4.1
    
    Form of Class A and Class B Common Stock certificates
(incorporated by reference to Exhibit 4.1 to Amendment No. 2
to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.1
    
    1996 Directors Stock Option Plan of the Company
(incorporated by reference to Exhibit 10.13 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.2
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated April 22, 1997 (incorporated by reference to
Exhibit 4.6 to the Companys Annual Report on Form 10-K
filed with the SEC on March 30, 1999).10.3
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated April 16, 1998 (incorporated by reference to
Exhibit 4.7 to the Companys Annual Report on Form 10-K
filed with the SEC on March 30, 1999).10.4
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated February 1, 2000 (incorporated by reference
to the Companys definitive proxy statement on Schedule 14A
filed with the SEC on April 24, 2000).10.5
    
    Amendment to 1996 Directors Stock Option Plan of the
Company, dated January 30, 2001 (incorporated by reference
to Exhibit 4.5 to the Companys Annual Report on Form 10-K
filed with the SEC on April 2, 2001).10.6
    
    Amended and Restated Equity Incentive Plan of the Company
(formerly the 1996 Employee Stock Option Plan), dated March
10, 2004 (incorporated by reference to the Companys
definitive proxy statement on Schedule 14A filed with the
SEC on April 28, 2004).10.7
    
    Form of Terms and Conditions and Option Grant Letter under
the Companys Amended and Restated Equity Incentive Plan
(incorporated by reference to Exhibit 10.35 to the Companys
Annual Report on Form 10-K filed with the SEC on November
12, 2004).10.8
    
    1996 Employee Stock Purchase Plan of the Company, as amended
May 25, 1999 (incorporated by reference to Exhibit 4.7 to
the Companys Annual Report on Form 10-K filed with the SEC
on April 2, 2001).10.9
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for directors who will receive Class A
Common Stock other than Mark D. Ein (incorporated by
reference to Exhibit 10.44 to Amendment No. 2 to the
Companys Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20, 1996).10.10
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for Mark D. Ein (incorporated by reference
to Exhibit 10.45 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).10.11
    
    Form of the Companys Directors Stock Option Plan stock
option agreement for directors who receive Class B Common
Stock (incorporated by reference to Exhibit 10.35 to
Amendment No. 2 to the Companys Registration Statement on
Form S-1, Registration No. 333-6067, filed with the SEC on
September 20, 1996).10.12
    
    Form of the Companys 1996 Employee Stock Option Plan
incentive stock option agreement (incorporated by reference
to Exhibit 10.41 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-6067, filed with the SEC on September 20, 1996).10.13
    
    Form of the Companys 1996 Employee Stock Option Plan
non-incentive stock option agreement (incorporated by
reference to Exhibit 10.42 to Amendment No. 2 to the
Companys Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20, 1996).10.14
    
    Form of the Companys 1996 Employee Stock Option Plan, as
amended, non-incentive stock option agreement for eligible
persons who have executed grant letters on or after January
30, 2001 (incorporated by reference to Exhibit 10.26 to the
Companys Annual Report on Form 10-K filed with the SEC on
April 2, 2001).
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##### 



ExhibitNo.
    
    Description10.15
    
    Letter Agreement dated February 22, 1999, between the
Company and Terri Feely (incorporated by reference to
Exhibit 10.9 to the Companys Annual Report on Form 10-K
filed with the SEC on April 2, 2001).10.16
    
    Letter Agreement dated February 14, 2000 between the Company
and Michael McNelly (incorporated by reference to Exhibit
10.11 to the Companys Annual Report on Form 10-K filed with
the SEC on April 2, 2001).10.17
    
    Employee Agreement on Ideas, Inventions and Confidential
Information between Michael S. McNelly and the Company dated
July 20, 1998 (incorporated by reference to Exhibit 10.41 to
Amendment No. 1 to the Companys Annual Report on Form 10-K
filed with the SEC on December 20, 2001).10.18
    
    Acknowledgement Letter dated October 6, 2003 between the
Company and Michael S. McNelly (incorporated by reference to
Exhibit 10.18.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration No.
333-108575, filed with the SEC on November 5, 2003).10.19
    
    Letter Agreement, dated December 12, 2002, between the
Company and Graham Perkins (incorporated by reference to
Exhibit 10.19 to the Companys Annual Report on Form 10-K
filed with the SEC on March 28, 2003).10.20
    
    Letter Agreement, dated February 13, 2002, between the
Company and Vincent Gwiazdowski (incorporated by reference
to Exhibit 10.20 to the Companys Annual Report on Form 10-K
filed with the SEC on March 28, 2003).10.21
    
    Agreement between C. Thomas Faulders, III, and the Company
dated as of December 10, 2004 (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the SEC on December 10, 2004 .10.22
    
    Letter dated June 16, 2003, from the Company to Julie A.
Dobson (incorporated by reference to Exhibit 10.24 to
Amendment No. 2 to the Companys Registration Statement on
Form S-1, Registration No. 333-108575, filed with the SEC on
November 5, 2003).10.23
    
    Letter dated January 11, 2001, from the Company to Susan
Mayer (incorporated by reference to Exhibit 10.14 to the
Companys Annual Report on Form 10-K filed with the SEC on
April 2, 2001).10.24
    
    Letter dated June 19, 2001, from the Company to Susan Ness
(incorporated by reference to Exhibit 10.24 to the Companys
Annual Report on Form 10-K filed with the SEC on March 28,
2002).10.25
    
    Form of Indemnity Agreement between the Company and the
current and former officers and directors of the Company
(incorporated by reference to Exhibit 10.32 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.26
    
    Intercompany Agreement dated as of September 20, 1996 among
Telcom Ventures, RF Investors, L.L.C., LCC, L.L.C., the
Company, Cherrywood Holdings, Inc., Rajendra Singh, Neera
Singh, certain trusts for the benefit of members of the
Singh family, Carlyle-LCC Investors I, L.P., Carlyle-LCC
Investors II, L.P., Carlyle-LCC Investors III, L.P.,
Carlyle-LCC IV(E), L.P., MDLCC, L.L.C. and TC Group, L.L.C.
(incorporated by reference to Exhibit 10.30 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.27
    
    Registration Rights Agreement dated July 25, 1996 among the
Company, RF Investors, L.L.C. and MCI Telecommunications
Corporation (incorporated by reference to Exhibit 10.31 to
Amendment No. 1 to the Companys Registration Statement on
Form S-1, Registration No. 333-6067, filed with the SEC on
August 16, 1996).10.28
    
    Overhead and Administrative Services Agreement dated August
27, 1996 between the Company and Telcom Ventures, L.L.C.
(incorporated by reference to Exhibit 10.33 to Amendment No.
2 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on September
20, 1996).10.29
    
    Agreement of Merger dated September 15, 1996 between LCC,
L.L.C. and the Company (incorporated by reference to Exhibit
10.34 to Amendment No. 2 to the Companys Registration
Statement on Form S-1, Registration No. 333-6067, filed with
the SEC on September 20, 1996).10.30
    
    Agreement dated May 17, 1996, between LCC, L.L.C. and
West*Park Associates Limited Partnership for office space at
7925 Jones Branch Drive, McLean, Virginia, 22102
(incorporated by reference to Exhibit 10.23 to Amendment No.
1 to the Companys Registration Statement on Form S-1,
Registration No. 333-6067, filed with the SEC on August 16,
1996).10.31
    
    Ericsson Radio Systems AB Asset Purchase Agreement dated
August 25, 1999 (incorporated by reference to Exhibit 2.1 to
the Companys Current Report on Form 8-K filed with the SEC
on November 8, 1999).10.32
    
    Letter, dated October 22, 1999, among the Company, LCC
Europe AS and Ericsson Radio Systems AB (incorporated by
reference to Exhibit 2.2 to the Companys Current Report on
Form 8-K filed with the SEC on November 8, 1999).
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##### 



ExhibitNo.
    
    Description10.33
    
    Master Antenna Site Lease between Pinnacle Towers Inc. and
Microcell Management, Inc., dated February 24, 2000
(incorporated by reference to Exhibit 2.3 to the Companys
Current Report on Form 8-K filed with the SEC on March 20,
2000).10.34
    
    Settlement and Repurchase Agreement between the Company and
minority shareholders of Microcell Management, Inc., dated
February 15, 2000 (incorporated by reference to Exhibit
10.40 to Amendment No. 1 to the Companys Annual Report on
Form 10-K filed with the SEC on December 20, 2001) .10.35
    
    Consulting Agreement, dated as of December 23, 2004, by and
among LCC United Kingdom and SEMAB Management Srl; Letter
Agreement, dated as of December 23, 2004, by and among SEMAB
Management Srl and LCC United Kingdom Limited; Letter
Agreement, dated as of December 23, 2004, by and among Carlo
Baravalle and LCC United Kingdom Limited; and Compromise
Agreement, dated as of December 23, 2004, by and among Carlo
Baravalle and LCC United Kingdom Limited (incorporated by
reference to Exhibit 10.01 to the Companys Current Report
on Form 8-K filed with the SEC on December 28, 2004).21
    
    List of Subsidiaries (incorporated by reference to Exhibit
21 to the Companys Annual Report on Form 10-K filed with
the SEC on March 23, 2005).23
    
    Consent of KPMG LLP.31.1
    
    Certification of Chief Executive Officer pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 77